Agenda item

Market testing of the Spa Complex and Whitby Pavilion

To consider a presentation by the Strategic Director (Hilary Jones).

 

Suggested time allocation: 2.10 – 2.55pm

Minutes:

The Committee received a presentation by the Strategic Director, Mrs Hilary Jones on progress with the market testing of the Spa Complex and Whitby Pavilion.  Mrs Jones advised the current challenges were:-

        Council Budget Pressures

         2012/13 - £250K reduction in Spa/Pavilion budget

         Year on year savings required as further reductions in grant funding were likely.

        Risk – deliverability of these savings and knock on impact on events programme.  This would be competing against all other budgets.

        Capital investment - £100k required for the Spa Bar

        Need for future investment in Ocean Room, Promenade lounge and Sun Court Cafe at a time when capital spending was under huge pressure.

        Return on investment from £6million investment and value for money from resource budget – securing substantial wedding bookings would assist. 

        Need to improve on offer events/entertainments, catering and business events /conferences / meetings, banquets

Procurement process

Mrs Jones explained the lengthy, extensive procurement process, at the end of which two Companies returned comprehensive outline solutions which were subject to robust evaluation.

Price

Mrs Jones advised Members that price was a key factor but we also needed to consider the importance of venues to the Borough and our Communities.  Mrs Jones also advised that this was not a statutory function but it was a Council priority to improve the “offer”.  The Council needed to sustain continued investment and development whilst mitigating risk and continued pressure on Council budgets.  There was the potential to make savings by reducing central management and support costs.

The Council was now at the detailed solution stage of the process and

        The responses from bidders to the detailed solution included how they would:

Ø      Deliver the service taking account of the Councils minimum requirement

Ø      Develop their programme of entertainments, conferences, events and community usage

Ø      Operate catering and bars

Ø      Market the venues

Ø      Maximise ticket sales and arrangements for sale of tickets

Ø      Maintain the properties, assure cleanliness and detail any capital expenditure

        In addition they provided a business case which set out the financial projections for the operation of the venues over the period of the contract.

Way forward

Mrs Jones advised that although both companies exceeded the Council’s current budget projections for the Spa Service over the 10 year period, there were significant difference terms of investment, subsidy proposals and financial model. Catering proposals were very positive from both companies, however, programming and conferencing proposals scored much higher from one company.  The assessment showed only one company’s proposals had the potential to meet all the Council’s requirements.  The recommendation had since been approved to progress to final tender stage with a single bidder – Sheffield International Venues (SIV).

Deliverability of SIV

Mrs Jones advised that SIV events were created in 2010 to drive maximum benefit from any event and they won a number of accolades.  They had:

        Experience of operating premier conference centres (Sheffield City Hall), banqueting houses (Ponds Forge), product launches & exhibitions (Ice Sheffield), competitions, event & meetings (EIS Sheffield).

        Were able to piggy back on business that had been won in Sheffield

        Would target aggressively the Southport Conference Market – develop “seaside conference destination”

        20% of events programme aimed at community events.

        Innovation in use of space for all event programming.  This was about how we could make the buildings the centre of much activity.

Programming Policy

SIV had used major promoters such as SJM, LiveNation, SA, Kennedy Street Enterprises and Phil McIntyre Entertainments.  They also had experience in delivering classical music programmes.  Other developments included the “Last Laugh Comedy Club’ - they were also interested in developing a sister club at Scarborough and “Grin Up North” – a comedy festival at Scarborough and Whitby.  They had also developed the “Festival Approach” (e.g. Sheffield’s “Urban Glastonbury” festival – Tramlines and other spin-off self promoted events (e.g. ‘Beasts in the Ballroom’).  SIV had also created a Model for “maximising the assets at the building” at Scarborough Spa and Whitby Pavilion in their programme.  The 1st year’s programme had also been provided in detail.

Catering and bars

        SIV have developed their own internal catering brand Foodetc to deliver exciting and innovative café bar concept.

        In 2009/10 generated £1.5m net trading profit from catering income.

        Delivered over 1000 catering events each year ranging from small parties to major sports and entertainment events (e.g. U2 outdoor concert – 52,000 guests)

        Offered full business to business solutions for conferences and meetings for between 2 and 2,200 delegates including bespoke packages.

        Would introduce a number of mobile kiosks to increase average spend per head.

        A full selection of proposed menus had been provided.

Marketing Strategy

Mrs Jones advised that marketing plans would be developed for each site. In addition a mobile site would be created to attract new audiences.  The Marketing Strategy would also focus on internet search engine optimisation and links with social networking sites (e.g. facebook, Twitter); use of emails to customers with the latest offers and shows on sale.  Other plans included a specific Events brochure with varying inserts allowing customers to receive only the information they require; increased revenue in the Pavilion café by use of loyalty cards and promotions in the Whitby Gazette; digital signage in box office showing all latest sales and enabling customers to receive brochures on their phone.

SIV ticket sales/hire strategy

        AudienceView Ticketing System – with pick a seat.

        A box office onsite at Scarborough Spa. The potential for a manned box office and Whitby Pavilion and extended opening times would be investigated.

        Own ticketing agency The Arena Ticket Shop.

        Sell for 41 different venues and over 400 events gave the opportunity to cross promote Scarborough/Whitby.

        Intention for charging was to be as flexible as possible with a variety of pricing mechanisms including community pricing on a case by case basis and Council discount – free room hire and 20% discount on catering and equipment hire at cost price.

SIV Customer care

Mrs Jones advised that SIV had extensive customer care procedures in place and had been afinalist for the Customer focus category of the National Business Awards 2010.  The development of their “Have One on Us” Scheme had resulted in a 20% drop in complaints received.

SIV Venue maintenance

Proposals for redevelopment and investment in the venues were in place.  The Council would provide £100k which had previously been allocated as part of the Spa Redevelopment funding.  SIV had a comprehensive planned preventative maintenance (PPM) schedule.  An enhancement plan to improve both the serviceability and the customer experience would be developed and building cleaning would be undertaken by in house dedicated cleaning staff, with the exception of specialist cleaning.

Consultation and negotiation

Mrs Jones advised that a period of consultation would now be undertaken with various stakeholders including Members and staff and a report on the final tender offer would be presented to Cabinet in July 2012.

Members’ debate

Members commented and asked questions which Mrs Jones responded to as follows:-

The Scarborough Spa Orchestra wasn’t mentioned?

SIV had experience of working with classical music – this had been specifically mentioned and they would be looking to develop it further as the Orchestra was a key part of the offer.

What safety net would be in place – would we be able to monitor the programme as we didn’t want a similar situation as had happened at the Open Air Theatre?

This point was taken on board – as with all Council’s we had to be a “learning Council”.  The detail would be “teased out” – one impressive feature was SIV have a very strong understanding of the Council’s needs.  SIV still worked with Sheffield City Council although the Council no longer provided any subsidy.  Key questions should be asked and key monitoring points would be put in place.

Did we have any details of the likely subsidy – would this be very significant?

The buildings were very expensive to maintain – this was a concern.

What controls would be put in place to avoid a similar situation as had happened previously?

Mrs Jones responded that whilst she was unable to give any financial information at a public meeting, she agreed that the buildings needed proper maintenance and the detailed process would hopefully provide comfort.  Members would be given the opportunity to ask questions. The provision of conferences and entertainments could potentially provide a profit which could be invested in the buildings.

Previous concerns regarding the programming at the Open Air Theatre were reiterated – would there be a safety net?  Would local needs come first or would SIV price local people out of the market?  Whitby Pavilion was run by local need.

A “safety net” would be a specific requirement of the tender and this was being undertaken by the Council’s Legal Services.  As regards local community needs, this was part of the Council’s minimum requirements as the Council required that the local community could use facilities without being “priced out”.  Sheffield City Hall was currently used 20% of the time by local events.

Councillor Jefferson who had been the Portfolio Holder when the process commenced commented that there had been much emphasis on community use which she fully supported.  Councillor Jefferson considered that SIV were very aware of what was required in the Council’s venues.  In addition the company had appeared very vibrant and they had ideas for both venues.

Councillor Watson added that it was important to put aside funds to provide for future maintenance each year.

RESOLVED that the presentation be noted.