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ITEM EX10 - ANNEX 1

EXECUTIVE - 7 SEPTEMBER 2004

OXFORD CASTLE : HERITAGE INTERPRETATION CENTRE

1. This note has been prepared to assist understanding of the approach taken to the generation of visitor forecasts for the Oxford Castleyard Project. The issue of visitor forecasts has come to the fore during the HLF’s consideration of the Stage 2 submission. There is a natural concern that the project’s sustainability is highly sensitive to visitor numbers which are likely to account for more than two thirds of income. It is in this context that the HLF is seeking assurances on the willingness of the Oxford Preservation Trust and the County Council to provide revenue support for the project in the event that visitor numbers do not reach the levels forecast.
2. The Business Plan on which the Stage 2 submission was based adopted a ‘base case’ of 70,000 visitors per annum. Sensitivity tests considered that implications of visitor numbers falling to 60,000 per annum at which point it would be necessary to call upon OPT’s commitment to provide up to £50,000 revenue support for the first five years of the project’s life. There is now evident concern that visitor numbers could fall below 60,000 which is why the possibility of additional revenue support from the County Council has been raised. The following paragraphs set out the approach which has been used to generate the visitor forecasts.
3. In 1999 the County Council commissioned Haley Sharp to prepare an outline feasibility study for a potential visitor experience to be delivered as part of the Oxford Castle Project. This study generated visitor forecasts of 137,500 rising from 118,000 in the first year of operation.
4. Following the involvement of OPT in the project a critical review was undertaken of Haley Sharp’s work. DTZ Pieda Consulting developed visitor forecasts based upon three different techniques namely:

• A catchment analysis which considered the number of residents, tourists and school pupils staying within a 60 minute drive of the project. High and low market penetration rates were applied to these numbers to generate a potential range of visitors. This suggested that the project had the potential to attract between 73,500 and 105,500 visitors
• A comparative analysis was undertaken of paid and free visitor attractions in the Oxford area, together with a review of other jail and historic site based facilities across the UK. This demonstrated the wide range of visitor figures achieved. For example information was produced for 1999 visitor numbers of 175,000 for Christchurch College, 36,000 for the Museum of Oxford, and 118,000 for the Oxford Story
• A review was also undertaken of the likely peak day capacity of the Oxford Castleyard attraction as this can often determine the annual level of visitors.

5. It was on the basis of this work that the Stage 1 bid was made to the HLF. This put forward 70,000 visitors as the base case for business planning purposes. It was assumed that only 80% of this number would be achieved in the first year of operation and 90% in year 2. These visitor numbers assumed an adult price of £5.00 including VAT. It appears that this analysis was accepted by the HLF when they approved the Stage 1 bid. It is the practice of the HLF to seek independent advice on the business plan which in this case was provided by Jura Consultants.
6. To assist OPT in developing its Stage 2 submission the HLF provided development funding through which specialist museum consultants were employed to review the Stage 1 business plan and consider specifically the issues of educational use of the facilities and audience development. The resultant work undertaken by Hilary McGowan, supported by Elizabeth Newberry highlighted the Castleyard’s ability to benefit from positive trends in the visitor market in Oxford notwithstanding the negative effects of events such as the foot and mouth outbreak, 11 September 2001 and the invasion of Iraq. Updated visitor numbers for 2002 showed Christchurch College attracting 174,000 visitors, the Museum of Oxford 44,000 visitors. Figures were not available for the Oxford Story. Detailed work on the educational market resulted in a target of 5,000 children in assisted groups. This was an increase over the 3,000 implied in the Stage 1 bid.
7. Reflecting the need to position the project competitively within the Oxford visitor market Hilary McGowan recommended reducing the adult ticket price to £3.95 including VAT. As a result the ‘base year’ forecast of 70,000 visitors was left unaltered. However it was advised that initially visitor numbers are likely to be higher because of the early interest and publicity generated by the project. To gain added confidence in the level of visitor interest a survey of 303 people was undertaken at an Open Day at the castle in June 2003. This indicated the very high level of support for the project that exists, although the sample could not be viewed as fully representative of the potential visitor market.
8. Since the submission of the Stage 2 bid there has been further contact with the HLF and its consultants. This appears to indicate the concern which exists about the long-term viability of the project and in particular its sensitivity to visitor numbers. It is for this reason that OPT have sought and obtained the support of the County Council for the funding of an educational officer to be based at the Castleyard and for assistance with payroll, audit and collections fees. OPT have reaffirmed their commitment to provide revenue support of £50,000 per annum for the first five year’s of the project should that be required. However further comfort would be given to the HLF if the County Council indicated its willingness to stand behind the project if necessary.
9. Clearly there can be no certainty regarding the prediction of visitor numbers. However it is considered that the forecasts used in the developing the HLF bids have been prepared in a professional and robust manner. It should be noted that the estimates used have been pitched towards the lower end of what the market analysis indicates should be achievable and adjustments have been made to the proposed ticket price to ensure competitiveness. The business plan includes significant allowances for the repair and replacement of exhibits and in general terms has been prepared on a conservative basis. In this regard if the project was faced with a reduction in visitor numbers there is likely to be some scope for adjusting its budgets to limit the need for revenue support.

Chris Balch
Director

DTZ Pieda Consulting

23 August 2004

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