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270 TOURISM MANAGEMENT

Table 10.2 The possible structure for a simplified tourism business plan

Executive summary
 What type of business are you planning? What type of product or service will you
provide?
 What do you believe are the critical success factors for this type of business?
 Why does it promise to be successful?
 What is the growth potential?

Market for the business

 Who are your potential customers and what is the market?
 How will you price your product or service?
 What market share can you expect?
 How will you promote your business?

Management
 Who will manage the business?
 What skills and characteristics will they need?
 How many employees will you need?
 What tasks will they be deployed in?
 What will their remuneration be?
 Are there potential threats to your business?

Financial elements
 What will the business cost to open?
 What will be your projected assets, liabilities, and net worth?
 What is your total estimated business income for the first financial year?
 What sources of funding will you seek/use?

Many elements of a business plan can now be prepared with the aid of business planning software
available from banks and their small business venture/start-up units.

Box 10.1 A feasibility study for a new tourism

attraction: the scope and range of issues
The example that follows is a real-world example that has been modified so that, for
reasons of commercial confidentiality, the identity and location are not revealed. The
project, which was initially released to three consulting firms as an invitation to tender,
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THE MANAGEMENT OF TOURISM 271

consisted of a brief to evaluate the existing business plan for a new attraction on a
greenfield site, with no local competition. The brief asked for a detailed project proposal
that would outline the expertise of the consultants, the timescale in which they could
complete the tasks, their track record in previous projects, and the costs for undertaking
the task. Any area of feasibility work in tourism requires a multidisciplinary team, and in
this case quantity surveyors, a tourism planner, a tourism development expert with a
detailed knowledge of the region in which the attraction was to be sited, and a
managing partner were assembled to work on different aspects of the project. The brief
identified certain misgivings with an existing business plan prepared previously, and
questioned whether the financial assumptions and model on which the development
was based were sufficiently robust. As a result, the project examined:

 The objectives of the visitor centre development

 The business requirements of the visitor centre (i.e. the requirement from the client
that it had to be self-financing from visitor numbers and spending)
 Planning regulations for new developments in the region
 Existing and future tourism trends in the region, to understand if the outbound,
domestic and international tourism markets would generate enough business for the
new project on existing and future forecasts
 Local tourism statistics and surveys that illustrate visitor behaviour within the region
and their willingness to travel to a new attraction, based on existing travel patterns
 The impact of seasonality in visitor numbers and their impact on the business
model
 Visitor attraction trends in other countries and experiences of new developments
 Infrastructure constraints and opportunities to make the new development less or
more accessible, such as road improvements to cut journey times
 The market segments that were likely to use the new attraction, particularly the
schools market, tour groups and free independent travellers
 Methods of revenue generation, including visitor spending among domestic and
international visitors as well as day trippers
 Financial assumptions and projections for the Visitor Centre, including ownership
structures, visitor spending assumptions, refined assumptions based on actual
experiences at other attractions, and a model of the visitor mix and projected
numbers
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272 TOURISM MANAGEMENT

 Construction budgets, space usage and fit out within the new visitor centre, and
project programming to show the timelines for completion of each stage of the
development and cost implications of different options
 The preferred model of development and likely management model that would
work.

Box 10.1 shows a typical framework for many feasibility studies. The critical
element, which has proved so controversial in the UK, relates to the availability of
Millennium Fund grants to new visitor attraction developments. In many cases
consultants have over-estimated the market for these developments, and in some
cases the developments ran into financial trouble within 12–18 months of opening;
some of them have already closed (see Chapter 9). This highlights the problem that the
employment of consultants can pose for entrepreneurs and businesses: managers
need to have a degree of understanding of the business process involved in a business
plan and feasibility study. In each case, an impartial view or evaluation by a third
party may help to validate or reject the outcome of the study, rather than simply
reiterating the findings the client is looking for – which may lead to financial problems
when the plan is implemented. In other words, the multi-skilled nature of managing
a tourism business and new opportunities requires a balance of risk-taking
counterweighted by financial prudence and a questioning mind to ensure that any
investment is well used.

Summary
Managing tourism is a dynamic activity: change, more change and upheaval is a
function of managing a fast-changing business. These businesses are subject to the
vagaries of consumer tastes and market conditions, and can easily descend into crisis
following catastrophic events such as foot and mouth disease (see Chapter 13), other
disease outbreaks, civil disturbances, or environmental disasters such as hurricanes or
floods. There is a growing recognition among large tourism organizations that they
need to have contingency plans for such events.
However, this is probably less challenging than day-to-day operational issues and
responding effectively in a competitive market where cost, service quality and delivery