Case Study

Steam Yacht Gondola Options Analysis

1Table of Contents

1Table of Contentsii

2Executive Summary1

3Introduction3

4Background3

5The Project Brief5

5.1.1Background5

5.1.2Objective5

5.1.3Approach5

5.1.4Delivery5

5.1.5Non-negotiable Items6

6Methodology6

7Market analysis6

7.1Direct Lake Coniston competition6

7.2Other lakes cruises7

7.3Tourism calls on time and money7

7.4Tourism trends8

8Statutory regulation8

9Operational issues9

9.1Staffing9

9.2Levels9

9.3Replacement crew10

9.4Training/skills10

9.5Succession planning10

9.6Booking/admin/customer contact11

9.7Booking system11

9.8Mooring and slipway use11

9.9Integration with National Trust and National Park Authority processes11

9.10Maintenance and funding12

9.11Commentary and passenger contact12

9.12Increasing use of volunteers12

10Options13

10.1Continue as now13

10.1.1Financial Impacts - Continue as Now15

10.2Increase evening cruises18

10.2.1Financial Impacts of Increase Evening Charters19

10.3Reduce daytime scheduled sailings and increase charters22

10.3.1Financial Impacts-Reduce scheduled sailings & increase charters23

10.4Extend daytime sailings – patterns, times, themes25

10.4.1Financial Impacts -Extend daytime sailings – patterns, times, themes27

10.5Sell/lease gondola29

10.5.1Financial Impacts of Sell/lease gondola30

10.6Operate franchise for Coniston Launches31

10.6.1Financial Impacts of Operate franchise for Coniston Launches33

10.7Operate Gondola as Charter only craft33

10.7.1Financial Impacts of Operate Gondola as Charter only craft34

11Financial Summary Table36

12Conclusion40

13Risk Analysis42

14Options Matrix44

15Appendices46

15.1Cost of additional hours by Crew46

15.2Cost of Additional Crew47

15.3Weekly Operating Costs48

15.4Average Passenger Numbers by Day49

15.5Weekly Occupancy 200650

The original Steam Yacht Gondola was built in Liverpool in 1859 to provide a tourist experience for the passengers of the newly opened Furness Railway Company and to entice travellers to Coniston, as the introduction of the railways to the central Lake District made visiting easier and increased the number of visitors that came to experience the wild north-western countryside.

In 1977 a group of enthusiasts persuaded the National Trust to purchase the derelict semi-submerged remnants of Gondola with the aim of returning her to original condition. Although little of the original craft could be utilised in her rebuilding she underwent a renaissance in 1979, including the retention of steam propulsion. She was immediately returned to her original purpose as a pleasure craft on Lake Coniston, a role that she continues to fulfil today.

Steam Yacht Gondola is one of the best known tourist attractions in the Lake District. Images of her steaming across the still waters of Coniston are seen around the world and for many people she is as much the image of the Lake District as are the fells. Her iconic status has spawned many imitators in the Lakes and further afield, but it is only on Coniston on the Steam Yacht Gondola (SYG) that the modern tourist can truly experience that which their Victorian forebears enjoyed almost 150 years ago.

Since being rebuilt and relaunched in 1979 the role of SYG has been that of a pleasure launch on Lake Coniston. The portfolio of the National Trust is varied, but the operation of a steam driven inland waterway passenger vessel is unique even across the breadth of the work of the Trust. Because of the specific nature of the role SYG carries out, she has had relatively little attention from regional or national staff and consequently changes in the way the vessel is operated have been primarily organic and reactive.

One outcome of operating outside the ‘normal’ structure of the NT is that the operation suffers from the uncertainty of feeling that it is between the two stools of conservation and income generation. For accounting purposes Gondola is operated through National Trust Enterprises as a commercial operation, although there is some evidence in the available accounts to suggest that if ‘commercial’ is the appropriate form, the operation of the vessel is not viable. The Property Manager, Skipper and crew view Gondola as a floating property that they feel would be better served being a general fund property or a special trust in debt. This commercial vs conservation question has resulted in a perception that there is a lack of long-term investment in the vessel and therefore uncertainty about how some of the future major costs will be met if Gondola has to fund them out of self generated income

There are a number of cruise and ferry operators in the Lake District (see Competitor Analysis below) on several Lakes. SYG has one direct competitor on Coniston in the form of Coniston Launch, who operate two craft taking passengers on a variety of sailings calling at a number of jetties on the shoreline. Just prior to the commencement of this analysis Coniston Launch was sold as a going concern to new owners who also operate Derwent Cruises on Derwent Water. At the time of writing it is impossible to say how the change in ownership will affect business for SYG, although it is reasonable to assume that the first season (2008) will be a settling in period and offers an opportunity for Gondola to generate additional business that has previously not been available.

The location of Lake Coniston is away from the main tourist routes and as such the volume of potential passengers is limited in comparison to Windermere, Ullswater and Derwent Water.

Even though SYG is entered in the register of Historic Vessels (a national register maintained by British Maritime that certificates inland waterways and ocean going historic boats and ships) she has to operate within the passenger carrying regulations for craft operating on ‘Category C’ waters requiring equipment, crew competence and craft maintenance to be at a level approved by the MCA inspectorate. As in most industries the required standards for compliance are continually being reviewed and updated with amendments to the regulations being introduced on an almost annual basis. The cost of keeping up to date with compliance issues is not insubstantial.

During 2006 there was a workshop held with local and regional staff and managers to better understand the issues facing Gondola. Those initial findings have been extremely helpful in focussing the approach for this review, and many of the issues raised in this report have already been identified as requiring future actions. During discussions with the crew many of the same issues (especially relating to long-term financial security) were described as unresolved, although the regional perspective is that this is no longer a significant concern.

7.1Direct Lake Coniston competition

Coniston Launch Company is the other cruise operator on Coniston, although the business was sold in Jan 2008 for c£350,000 to Keswick Launch Company. This change in ownership will bring with it a period of uncertainty for Coniston Launch Co for the 2008 season. Given that Keswick Launch Company was not in direct competition with Coniston Launch, it is safe to assume that there will be a programme of investment by the new owners with a view to increasing income. The Coniston Launch Company has tried to differentiate their product by installing solar panels on their two vessels and promoting their ‘green’ credentials. They have operated two vessels and offer both short and long cruises, stopping at a number of jetties around the lake to enable passengers to undertake lake-side walks and complete circular trips. It is believed that their passenger numbers are around 30,000 people a year, considerably lower than those of SYG.

Coniston is not a honey-pot location in the same way as Keswick or Windermere, with a limited number of people seeking a cruising experience. Estimated numbers of people visiting Coniston each year are uncertain, but very low compared with Windermere having an estimated 14 million visitors a year (Lonely Planet Guide).

To differentiate SYG from other pale imitations the comparison between providing an attraction and a ferry has been drawn to highlight the uniqueness of the Gondola experience.

7.2Other lakes cruises

Cruises are available on Windermere, Derwent Water, Ullswater and Coniston. Of these only Coniston does not have a honey-pot location nearby with a ready supply of potential passengers to take a cruise on the lake. Ullswater and Derwent Water both also offer steam launches, whilst Windermere Lake Cruises describe themselves as ‘Windermere Steamers’, although they don’t have a steam powered craft.

There has not been any significant increase in the numbers of cruisers or cruising on any of the lakes in the last five years, although there has been a significant increase in the use of vessels for private charters and functions use.

The larger vessels that are in use by Windermere Lake Cruisers will carry a maximum of over 500 passengers, making them an ideal party venue or floating function suite. This market (on this scale) is not available on any of the other lakes, although Ullswater Steamers promote themselves for wedding receptions but with a scale of operation that is less than Windermere Lake Cruisers.

Windermere Lake Cruisers is quoted as having the highest number of visitors in the Lake District, and second only to Blackpool Pleasure Beach in the region with 1,267,066 paying passengers in 2006.

7.3Tourism calls on time and money

The VisitBritain data comparing 2005 with 2006 indicates that a growth in domestic short breaks has increased the numbers of visitors to rural areas including the Lake District, especially in the shoulder months and tourism and accommodation providers suggest that this trend is continuing. This has been a growing trend for the last ten years as households have increasing amounts of disposable income and leisure time is used for premium activities. The benefit of this change for short visit attractions such as SYG is the increase in the total number of visitors to the Lake District and therefore the increase in potential passengers .

7.4Tourism trends

Increasing concern about inflation and rising costs, credit squeeze and continuing concerns about both the environmental impacts of flying and the risks from global terrorism are seen as pressures that are likely to decrease the numbers of holiday trips taken abroad in the next twelve months . The general uncertainty surrounding financial and personal security will be a downward force on discretionary spend with the public spending less and saving more, and the balancing effect of the ‘shake out’ in cheap air travel resulting in increasing ticket costs and surcharges and a perception among customers of the relative increase in the cost of foreign travel.

Increased awareness of ‘green issues’ especially related to the impact of air travel also serves to deter a significant number of holidays abroad and offers increasing attractiveness for domestic exploration.

One of the growing trends is the expectation of a ‘real’ experience, rather than being shown an interpretation of how the real thing might be. This experiential approach is particularly helpful for SYG given her justifiable claim to offer an authentic “Victorian” experience .

This is an extract from the Steam Yacht Gondola Options Analysis carried out in 2008

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