Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 200 - 216)



  200. Tell me that.

  (Mr O'Boyle) The market penetrations were: in 1996 266,000 day visitors, people who had come for the day; 33 per cent were coach bookings; 24 per cent were schools. Total visitors 324,000. In 1997, bearing in mind 1996 was nine months—

  201. That does not answer the question I asked you. I asked about local. School bookings would have been local. Some of the coach bookings would have been relatively local. How much was what we would call outside tourism?

  (Mr O'Boyle) I shall have to reply in writing, if I may, I do not have those.

  202. I am amazed; absolutely amazed. Here is a project which was deliberately put outside London—and one understands the motives for it—but it looks increasingly that it was rather like the Dome, only in this case it was a good project and will survive, but it was put in the wrong place. You do not actually know what your market was supposed to be. How much was intended to come from visitors from outside the region, not repeat visits from within the region which are much harder to get.

  (Mr O'Boyle) We do know and we know precisely.

  203. You are not giving that impression.

  (Mr O'Boyle) I do not have them to hand in a short period of time. I can provide you with chapter and verse.

  204. Did you not expect to be asked about this? Something which is intended to be a major attraction, a national attraction and indeed for people coming from abroad, not just intended to serve Leeds and its area, has to have additional attractions, because if it were dependent on the local market, once you have seen a piece of armour it looks much the same the second time you see that same piece of armour. The logic is for it to be near other attractions which themselves bring in people from a much wider area, is it not?

  (Mr O'Boyle) You are right.

  205. So people move from one to the other.

  (Mr O'Boyle) I have it here.

  206. There you are, you had it after all. I had confidence in you.

  (Mr O'Boyle) Thank you. In 1996 our primary market was 74 per cent, which is defined as nought to one hour's travel from Leeds. That was 238,500, market size 5.42 million, penetration rate 5.28 per cent. Secondary market: one to two hours, 12 per cent of our attendance, 38,500, market size 10.60 million, market penetration 0.43 per cent. Tourist market: 14 per cent, attendance 1996 45,000, market size 5.58 million, penetration rate 0.97 per cent. Our strategy for 1997 onwards was to raise the penetration rates in the one-hour-plus marketplace.

  207. That is a very, very difficult thing to do. I remember one of these theme parks was built in a place called Flint in Michigan based on the car industry and I went to look at it. Talking subsequently with some of the people who ran it, I told them that it could not be a success because no-one would come back twice because once you had seen it, you had seen it and there was nothing additional to attract people. How far have you achieved the 14 per cent which you wanted for other tourists?

  (Mr O'Boyle) Our whole strategy was to target the one-hour-plus market because this was a major catchment area that offered immediate growth potential. Our typical London national museums in the secondary market equate to 5.3 per cent penetration. In their primary market they get 5.5 per cent and we were getting 5.3 per cent. So you could see that we were demonstrating a very good local take-up and therefore the message was a focused message that along the corridors of the M62 the M1 and the A1 we should try to grow the secondary market up closer to the national museums.

  208. If you had got it up to the national museums' figure what difference would it have made to viability? Would you have been viable?

  (Mr O'Boyle) Transformed it.

  209. Get it up to London level.

  (Mr O'Boyle) It would have transformed the viability.

  210. I mean in percentage terms now not in growth.

  (Mr O'Boyle) The regional UK museums' secondary market penetration is one per cent on average. We were 0.4 per cent. So the comparator is not the same in terms of regional attractions for museums as opposed to national museums. We were looking to try to get our penetrations up closer to the regional. We were not trying to get to the national levels.


  211. You are sending us notes on a variety of things: cost of consultants, forecasts and your model of the financial effects of the various volumes. Given the Department has been aware for some time that the Government was moving towards a free museum strategy, have you done an estimate of the difference that would make to visitor numbers, up to trebling I guess, and to the debt pay-off time for RAI?

  (Mr Young) No, not exactly that but if I might add force to something Mr Wilson said, the new strategic plan for the Armouries, drawn up since this deal was finalised, posts an increase of 40 per cent of visitors on the basis of free access for children and pensioners and one pound for adults, rising to 250,000 by 2003-04, rather lower than some of the figures being mentioned in previous questioning. That would make optimistic Mr O'Boyle's 30-year payback. So in the figures the company produces they must be making some more optimistic projections of visitor spend or something. In our judgement it will take at least 30 years for these investors to get anything[11].

  212. We shall see that from his figures no doubt. In the negotiating process, did you do a calculation of net present value of the income streams implicit in the catering and car parks which you made over to RAI? That is in effect a gift you made in exchange.

  (Mr Young) We did not do exactly that calculation. What we did do was import into the agreement something mentioned in paragraph 1.107, which means that once the RAI gets enough from its corporate entertainment and catering to pay off the debt to the bank, at that point the Armouries get 20 per cent of RAI's income. That was our answer to it. It was an imponderable question but that was our answer to it, to make sure that if they do pay back—and it is a big "if"—then the Armouries, the public sector, gets 20 per cent.

  213. That is not really the comparison I am looking at. The comparison I am looking at is the force majeure outcome which Mr Williams commented on earlier. I am sure we can calculate, can we not, C&AG, what the range of net present values were which arose from that?

  (Sir John Bourn) Yes, we will do that.

Mr Rendel

  214. There seems to be a bit of a conflict between the two witnesses in a sense. As I understood Mr O'Boyle at the beginning, he was saying that if they had had an effectively free or very low cost entry price the place would have been packed full and it would have become intolerable. Mr Young now seems to be telling us that is not true and what is virtually a full price will actually mean even lower figures than were originally predicted at a price of £5 or £7. There seems to be a bit of conflict there between the two views.

  (Mr Young) All I am doing is telling you the content of the current strategic plan from Royal Armouries. It is not my figure. The Royal Armouries' trustees have agreed, as I understand it, a strategic plan which allows for an increase in visitor numbers of the Leeds museum up to 250,000 for the year 2003-04.

  215. It sounds as though the conflict is between the Royal Armouries and RAI.

  (Mr Wilson) May I attempt an explanation? I think what Mr O'Boyle said was that he was concerned that if it were free—and his concern was before it opened—there would be even more people than predicted and therefore it could not cope. Obviously as soon as it opened we were achieving nowhere near the numbers. That was what he was trying to express. Therefore there is no direct correlation between that and what we are now projecting. As far as the Royal Armouries are concerned, I do not want to be sitting here in another three or four years' time explaining to you why we have failed to meet visitor targets. Therefore we have set targets which we believe—not consultants believe—in all the circumstances applying are achievable. Those visitor targets are set during the period when we are going to be surrounded by a very large building site. The building site once it is completed should then give us a visitor attraction around us which we hoped to have from day one, which we always believed would attract large numbers of people to that part of Leeds. It had also originally been intended that that would have better access to it than it now has because there was to be a light rail transport system bringing people directly from a large car park by the M1 south of Leeds so that it would be very easy and attractive to come to the museum. That has not yet happened. Until those things happen, we are not going to be predicting large numbers of visitors, unless by any chance all the other things we do actually bring them about. If they do, I shall be delighted and I hope everyone else will be. We are going to be extremely prudent from now on.

Mr Steinberg

  216. I clicked earlier on something you said and I do not know whether it was just my imagination. You seemed to say that you had worries that the information you had been given by MORI were legitimate worries. Is it fair to say that you passed those worries to RAI who ignored them?

  (Mr Wilson) Yes, it is fair to say that we discussed those. I believe we had a two-day session before opening in 1995 when this was discussed. The Royal Armouries' representatives did express concerns about the levels of pricing which were being suggested by RAI.

  Mr Steinberg: Why did you not tell us that right at the very beginning?

  Chairman: One last point in that case. May we have copies of all of the consultants' forecasts from the beginning? Thank you very much. It remains but for me to thank you for coming and to say on a personal note, though I try not to let any sentiment be introduced into these hearings, that I have been to your museum and it is very impressive. It is just a pity the numbers are not. Thank you very much indeed.

11   Note: See Evidence, Appendix 2, page 21 (PAC 171). Back

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