With the help of a CairnsBlog reader, here's a few quick "back of a beer coaster" calculations, result in the following operating costs, excluding wages:-
- Water charges.
Present rate is $1.03 per kilolitre for commercial users. Would expect massive water usage with initial filling, maintenance, evaporation, splashing and visitors showering.
Would expect costs to be high with water pumping, filtering, chlorination, power, and security lighting
- Property insurance on large capital investment
- Public liability insurance on activity with risk of injuries or drowning.
- Workers compensation.
Based on the Queensland average premium of 1.15%, the cost on $2.7 million would be $31,050 per annum.
- Compulsory superannuation contributions.
9% of $2.7 million is $243,000
- Payroll tax.
Approx. $107, 500 per annum on $2.7 million total wages if only entity. Higher if other related entities also pay wages.
- After hours security
They didn't catch the CairnsBlog photographer last week.
- Maintenance costs including repairs and chemicals
- Telecommunications costs
- Vehicle expenses
- Etc, etc, etc
As an off-hand rule of thumb, one could realistically expect the other costs to at least equal, if not exceed, the wages total.
Paul Freebody has "conservatively estimated" annual visitor number to be around 250,000, based on some neighbouring tourism ventures are achieving.
- Even if he achieves this figure, based on an annual operating cost of $5.4 million, he would have to charge $21.60 admission per person just to break even.
- At 100,000 visitors per annum, the cost rises to $54.00 per person. After investing $30 million, he would probably expect a return on investment of 10% to 20%, equating to $3 to $6 million per annum.
- At 250,000 visitors per annum, a 10% ROI is $12, and a 20% ROI is $24 per visitor.
- At 100,000 visitors per annum, a 10% ROI is $30, and a 20% ROI is $60.
- Thus, if the operating cost assumptions are correct, even if he achieves 250,000 visitors per annum, and he is happy with a 10% ROI, he will need to charge every visitor $33.60.
- If Freebody wet dream only achieves 100,000 visitors per annum, and he requires a 20% ROI, the charges rise to $114.00 per visitor.
A little Google research provided the following details on some leading local tourism ventures.
- Kuranda Scenic Railway: 500,00 visitors per annum. One-way fare Adult $41, Child $21, Family $103. Return fare Adult $61, Child $21, Family $153
- Skyrail: Visitors per annum confidential Investment $35 million One way fare Adult $41 Child $20.50 Family $102.50 Return Adult $59 Child $29.50 Family $147.50
- Tjapukai Aboriginal Cultural Park: Visitors per annum 150,000 (2006) Investment $10 million Adult $33 Child $16.50 Family $82.50
- Green Island: Visitors per annum 385,000 (2004) Adult $73 Child $36.50 Family $183
- Paronella Park: Visitors per annum, around 150,000. Adult $32, Child $16, Family $86 (admission includes unlimited return visits for 12 months, nice.)
- Cairns Tropical Zoo: Adult $32 Child $16 Includes returns for next 2 days Yearly Pass Adult $56 Child $28 Family $140
- Sugarworld: Adult $12, Child 5-14 years $10, 3-4 years $4, 2 years and under free, Family $38
- Wet n Wild Gold Coast: Adult $49.95, Child $32.95. Annual pass: Adult $145.95, Child $95.95
Sugarworld at Edmonton, only opens on weekends, public holidays and school holidays, obviously as the majority of visitors are locals who either work or attend school.
Whilst Paul Freebody could realistically expect a lot more tourists on his pie-in-the-sky visitor numbers, he would still have a much higher number of visitors on weekends, public holidays and school holidays.
As there are 11 weeks of school holidays in Queensland, 42 weekends outside school holidays, and 4 public holidays outside school holidays, there would be 165 busy days and 200 quiet days.
On an assumption that visitor numbers would be 4 times greater on 165 days than on the other 200 days, then visitor numbers on the busy days would be 465 daily based on total visitors of 100,000 per annum, or 1,162 daily based on total visitors of 250,000 per annum.
The lower number, which is in keeping with his planned number of car park spaces, would result in extremely high entry prices, or very low gross income.
The higher number, which is in keeping with his expected visitor numbers, would require a much larger car park. He's planned on less than 200. Council say 700 is the minimum. Deputy Mayor Cochrane wants a compromise at 300.
Visitor numbers could also be expected to be lower during inclement weather during the annual wet season, and during the winter when unheated public pools actually close for the season.
I bet you didn't know, but in the 1980’s, a water-slide facility operated on a site on the western side of Lake Street near where the Playpen used to be. It used to be very popular prior to some moron placing old razor blades in the water, resulting in a few visitors sustaining cuts. There was a considerable amount of concern following the incident, with many visitors and former visitors worried about it occurring again, and the facility eventually closed down.
Some of the slides were transported to another water park in South East Queensland, and the remainder ended up at Sugarworld. I think the Lake Street facility was called Cairns Waterworks.
Now, where do I send my consulting bill to Paul? I mean, we are here to help.
Some food, and numbers, for thought.