TOURISM INVESTMENT GUIDELINES your guide to tourism investment in victoria
tourismvictoria.com.au September 2008 Notice & Disclaimer Use of these Guidelines These Guidelines are intended to provide general guidance only and are not intended to provide financial advice or to be used as the basis for investment decisions. Specialist advice should be obtained regarding each project specific investment. While endeavours have been made to provide reliable and accurate information in the Guidelines based on data currently available, Tourism Victoria does not warrant the accuracy, currency nor completeness of the Guidelines or any information contained in the Guidelines. These Guidelines have been prepared solely for the purpose noted above and must not to be utilised or relied upon for any other purpose. Anyone using the Guidelines does so at their own risk and no responsibility is accepted by Tourism Victoria for any losses which might directly or indirectly result from any reliance on or use of the Guidelines. message from the minister
“ The Victorian Government is committed to working with local government, community groups and investors who wish to explore the exciting opportunities available in Victoria. ”
Tourism is one of the fastest growing industries in Victoria, contributing $10.9 billion to our economy and employing 159,000 people. Under the 10 Year Tourism and Events Industry Strategy, the Victorian Government aims to grow tourism to an $18 billion industry, employing 225,000 people by 2016. To achieve this aim, we need to enhance our existing tourism infrastructure, attractions and events as well as facilitate the delivery of new projects that capitalise on the State’s tourism strengths. In an environment of strong international competition for the tourist dollar, partnerships between Government and industry, along with significant private sector investment, will be crucial for the ongoing success of tourism in this State. The new Tourism Investment Guidelines: Your Guide to Tourism Investment in Victoria contains planning and development guidelines for tourism projects and is intended to assist in advancing projects from concept through to business planning and statutory planning stages. The Victorian Government is committed to working with local government, community groups and investors who wish to explore the exciting opportunities available in Victoria. I strongly encourage you to take advantage of this booklet as you develop and enhance your tourism product.
TIM HOLDING MP Minister for Tourism and Major Events
tourism investment guidelines 1 Buckland Studio Retreat, Buckland Valley.
2 tourism investment guidelines contents Clyde Park Vineyard, Bannockburn. Photographer: Mark Chew.
Message from the Minister 1 Introduction 4 Project Process Summary 6 Context For Tourism Investment 8 Market Identification 15 Concept Development 22 Project Approvals 32 Financing & Funding 48 Construction 56 Key Success Factors 58 Appendices 59 A. Summary – 10 Year Tourism & Events Industry Strategy 59 B. Sustainable Design 60 C. Key Organisations 61
Cover image: Brambuk, Grampians. Photographer: Bindi Cole – Snap Happy. tourism investment guidelines 3 INTRODUCTION
Tourism is a global growth industry. Development and Investment in • Highlight local government’s central Twelve Apostles, Great Ocean Walk. Photographer: Mark Watson. In Victoria, tourism activity has grown Victoria’s Tourism Industry role in informing and assisting tourism dramatically over the last two decades. Victoria has a comprehensive approach investors. It is also the primary approval body for development and its role in these Victoria’s principal tourism products – to tourism development and investment. processes are described in this document. quality food and wine, events, natural The Victorian Government’s 10 Year Tourism • Provide advice on the special requirements attractions, cultural and heritage attractions, and Events Industry Strategy (October 2006) that come into play if you are interested in and retail diversity – have established a establishes a strategic platform for tourism investing in a project on public land. market identity and presence in Australia. growth over the next decade. • Describe the principal elements for Victoria’s key tourism industry objectives are: Victoria has a number of critical competitive business planning and obtaining funds advantages in relation to tourism options • Build upon existing strengths. to turn the concept into reality. and development – distinctive and consistent • Develop new strengths. • Finally, the realisation of your investment marketing, a wide range of lifestyle experiences, • Focus on long-term growth is likely to require skill in the management compactness and excellent accessibility opportunities. of the construction phase to ensure (internationally and throughout the State) • Strengthen the partnership between quality and cost control. to diverse destinations and venues that host Government and industry. major events for sport, culture and business. Tourism Victoria’s Role Assisting Tourism Investment Tourism is dynamic and competitive. Factors Tourism Victoria assists in the improvement This document aims to assist individuals affecting its performance and operation of Victoria’s tourism assets by identifying and organisations to become part of include technological change, market economically and socially sustainable the Victorian tourism industry and assist influences, societal influences (environment, infrastructure opportunities, which will its growth through investment and security, transportation, communications), maintain the State’s competitive edge. development of a tourism project. and consumer preferences and aspirations. Tourism Victoria’s strategic objectives include Understanding how such factors influence It is a resource and procedure guide that aims the expansion of private sector investment tourism choices made by consumers is to assist proponents with small to medium in tourism projects and the coordination essential for a successful and sustainable scale investment projects to conceptualise, of public infrastructure investment to gain tourism industry. The full spectrum of plan and develop their projects. optimum benefits for the tourism industry. factors that influence consumer choice The guidelines will: This is achieved by providing data, new – from global to local – also need to be • Provide key data on the recent concept and investment ideas, information considered together with how those factors performance of Victoria’s tourism and facilitation of project approvals to both affect different markets. industry and information on statistical the public and private sectors. resources available to help assess This guideline provides a broad overview market opportunities. of the tourism investment process in • Outline the vital considerations in Victoria. Opportunities and information identifying the market demand for an about specialised tourism areas such as wine investment idea, selection of a location tourism, golf tourism, nature-based tourism, and a site and creation of a spa and wellness tourism, alpine tourism, development concept. Aboriginal tourism and other sectors are • Identify the processes and pitfalls of also available at Tourism Victoria’s website obtaining development approval for www.tourismvictoria.com.au. Similarly, the concept. also available on this website are Regional Tourism Action Plans and Concept Proposals for Tourism Development in Victoria 2005, which identify opportunities and directions for future tourism investment throughout the State.
4 tourism investment guidelines tourism investment guidelines 5 project process summary
The following is a quick reference for developing new tourism projects from concept to reality.
PROJECT STAGE required actions (The to-do list) what needs to be done
Coming up with a ✓✓ Can a gap in tourism products be identified? If so, why? • Preliminary assessment of products Tourism Concept ✓✓ Does the concept have a ‘point of difference’? in selected locality. ✓✓ Identify the region/locality of the new tourism product. • Preliminary assessment of competition, quality and market strength. ✓✓ Identify the project team and specialist advisors. • Appoint architect, planner, and financial adviser as required.
Market Assessment ✓✓ Collect and analyse data on the performance of the proposed • Market research, local and regional data type of tourism product in the selected region/locality. collection. ✓✓ Identify the market segments likely to utilise the new product/ • Research activities to include: discussions service. with Tourism Victoria, local government, local ✓✓ Are there opportunities in the region/locality to build on the and regional tourism bodies, and evaluation tourism strengths of the area or to form strategic alliances of national demographic and tourism data. with others? ✓✓ Assess consumer expenditure levels and preparedness to pay. ✓✓ Assess price competitiveness and marketing expenditure necessary to reach the market in both the start-up phase and once you are operational. ✓✓ Determine the risks to the projected market performance of the project.
Site Selection ✓✓ Ensure that the site is accessible and appropriately exposed • Appoint planning advisor. to the target market. Ensure that the site is suitable to • Speak with local real estate agents. accommodate the intended use and all ancillary services • Discussions with local government and facilities. planning department. ✓✓ Consider the statutory approval requirements – is the use and • Discussions with servicing authorities. development permitted on the site?
Concept Design ✓✓ Assess the site attributes and limitations – • Appoint architect. Consider various enhance the attributes and minimise the limitations. concept options. ✓✓ Prepare a functional layout that identifies the location, area • Obtain reliable cost estimate of proposed and relationship of activities to be carried out on the site. development (appoint quantity surveyor to ✓✓ Prepare a preliminary architectural concept design for the obtain estimate). project and proposals for services and facilities. • Have preliminary discussions ✓✓ Ensure that the project concept includes sustainable design with potential financiers. approaches and proposals to minimise adverse on-site and off-site impacts. ✓✓ Assess the project cost and initial feasibility and ensure it is within the project budget.
Continued on next page
6 tourism investment guidelines project process summary
PROJECT STAGE required actions (The to-do list) what needs to be done
Consultation ✓✓ Meet with the local government – planning department, Discuss concepts with: economic development department, tourism services, • Local government. infrastructure services and local councillor(s) to identify • Adjoining landowners and the local requirements and procedures. community as required. ✓✓ Meet with neighbouring property owners and if required, • Service authorities. more broadly with community and specific interest groups to minimise potential objections to the project. • Government departments including DSE or Alpine Resort Management Board for ✓✓ Meet with service authorities and related government public land. agencies to determine their requirements, including any special requirements that apply to public land and alpine resorts.
Development Approval ✓✓ Identify the scope of requirements under the planning • Planning advisor to arrange pre-application scheme and other statutory provisions for planning permit discussion with local government. approval, including a pre-application discussion with the • Meet with local government councillors if local government. significant local community issues are likely. ✓✓ Compile a planning application submission that responds to • Obtain advice from planning advisor the requirements of the planning scheme. and lawyer regarding VCAT application ✓✓ Consider an application for review to VCAT if the planning for review. permit application outcome is unfavourable.
Financial Feasibility ✓✓ Prepare a detailed Business Plan that includes business • Obtain advice from financial advisor & the Business Plan structure, management, marketing and operation. on Business Plan. ✓✓ Include a detailed financial feasibility analysis that contains • Discussions with accountant. a projection of longer term (say 10 year) cash-flow and • Discussions with legal advisor. profitability and considers changes to the project parameters with best and worse case scenarios. ✓✓ Identify the potential staging of the development.
Obtaining Funding ✓✓ Prepare a detailed financial submission for the consideration • Identify potential financiers and identify of financial institutions and financiers. preferred funding arrangements. ✓✓ Consider funding support that is available through State • Meet with Regional Development Victoria and Federal agencies. and other State funding assistance agencies. ✓✓ Consider equity partners or project sponsors • Contact Federal funding bodies. (not for profit proposals).
Project Construction ✓✓ Appoint a construction phase project manager. • Appoint construction project manager. ✓✓ Detail the project design and confirm the project cost. • Obtain building construction quotes. ✓✓ Ensure competitive prices are obtained from builders for the • Refine design and specifications with construction of the project. architect to fit budget and quality ✓✓ Maintain tight management of the construction program, outcome required. development quality and variations to costs.
tourism investment guidelines 7 context for tourism investment
Victoria’s tourism industry competes on Mantra Deep Blue, Warrnambool. a national and international stage. Our attractions, experiences, facilities and services are assessed by Victorians and visitors alike, against those available interstate and around the world. Internet access and cheap air travel have broadened the options for travellers and holiday-makers. The tourism market is experienced and discerning. Travel by Victorians within Victoria, constitutes the largest proportion of total tourism visitation in the State. Travel by interstate and international visitors within the State provides the greatest economic benefit to Victoria from tourism. Tourism investment decisions must recognise the Performance & Importance Figure 1: expenditure in victoria highly competitive nature of the industry Tourism is a key economic activity for Victoria. by purpose ($M)3 and the need to provide services that meet “In 2003/04 tourism and events contributed (includes domestic & international expenditure) the needs of all travellers – 5 star to no $10.9 billion or 5.3% of Gross State Product star, indulgence to no frills, for fun and for and employed 159,000 people or 6.6% of business. Our product offer will be judged the State’s workforce. In the same year, more against a much more diverse range of than 1.3 million international visitors spent options than in the past. more than $2.6 billion in Victoria. ” 1 In regional Victoria, tourism contributed $3.4 billion to the regional economy in 2003/04 and employed 61,000 people. This was 31% of the State’s total tourism output and 39% of the State’s total tourism employment.2 The State Government has invested heavily in the tourism industry and since 1999 nearly $350 million has been invested * Holiday 6,012 in marketing and product development * Visiting friends and relatives 2,505
strategies. This investment has been targeted * Business 1,488 towards achieving increased visitor yield * International education 1,045 and also improving visitation to the State. Increasing visitor yield requires tourism * Other 600 operators to match consumer preferences and expectations. Today’s tourists increasingly seek better standards of service and new experiences.
1 p. 6, 10 Year Tourism and Events Industry Strategy, Dept of Innovation, Industry and Regional Development, October 2006 2 p. 34, ibid 3 International and National Visitor Surveys, Tourism Research Australia, year ending December 2006
8 tourism investment guidelines context for tourism investment Tarrawarra Estate, Yarra Valley. Photographer: Peter Dunphy.
The 10 Year Tourism and Events Industry “The predominant sources of tourism Strategy forecasts that overseas tourists expenditure are international and interstate are likely to account for 70% of overall visitors, who account for only one third tourism growth and almost 40% of tourism of Visitor numbers but two thirds of expenditure (currently 30%) by 2016 4. It is expenditure. Increasing lengths of stay expected that the economic importance of (international) and higher spends per night overseas students to tourism yield will be (interstate) have driven Victoria’s recent maintained over the next decade. growth in visitor expenditure.” 7 “Asia is expected to be the primary sources Victoria has particular competitive of international growth, with China’s share of advantages in relation to it’s: international visitors likely to increase from • Highly creative, consistent and 5 9% to 19% in that period” . well-targeted advertising campaigns. The Tourism Strategy estimates, based on • Distinctive range of lifestyle experiences, the continuation of recent growth, by 2016 particularly in relation to its art, cultural tourism and events will be an $18 billion and heritage precincts, shopping, nightlife, industry and one of the State’s leading car touring and boutique food and wine. exporters, contributing 7–8% of Gross • Compactness and agreeable seasonal State Product and employing 225,000 variations provide year round diversity Victorians 6. and enhance the opportunities in Melbourne and regional Victoria. • Internationally recognised cultural, sporting and business events. • Ability to attract increasing numbers of international airlines flying directly into Melbourne and increased passenger capacity. • Tertiary education institutions, which attract large numbers of international students (who represent approximately 40% of present international yield).
4 p. 14, 10 Year Tourism and Events Industry Strategy, Dept of Innovation, Industry and Regional Development, October 2006 5 p. 15, ibid 6 p. 7, ibid 7 p. 11, ibid
tourism investment guidelines 9 context for tourism investment Silverwater Resort, San Remo.
Current Issues • Low cost air carriers provide a significant These directions and an action program are At the national and international level there incentive for consumers to take interstate detailed in the Government’s 10 Year Tourism are several key influences on Victoria’s or international holidays. & Events Industry Strategy that was released tourism future. They include: • The growing markets around the world in October 2006. The principal features of for specialised tourism niches, including this strategy are: • Emergence of new markets – growing nature based and health and well being middle class in China, India and other • Building upon existing tourism strengths activities and experiences. parts of Asia (China and India provided by improving the branding and marketing • Global competition in tourism marketing 70,000 visitors to Australia in 1996, which of Victoria; continuing to pursue major is increasing and effective coordinated has grown by 500% today). To maximise events and increasing aviation access. campaigns are required to maintain benefits from these emerging markets, • Developing new tourism strengths and grow market share. Marketing to potential local experiences, infrastructure by ensuring that public infrastructure interstate and intrastate visitors must and services must meet the cultural development takes into account tourism not be neglected if market share is to requirements of these visitors. requirements; continuing to attract and be maintained. • On-line tourism services available facilitate investment; enhancing service through the internet (the information To ensure a competitive and responsive skills and standards; and promoting source of choice for many travellers). tourism industry in Victoria, the Government greater use of on-line services. Local tourism businesses need to provide is committed to: • Having a focus on long-term tourism comprehensive product information to • Giving higher priority to the tourism and growth opportunities and in particular enable bookings to be made on-line. events industry in infrastructure planning targeting emerging international markets; • Tourist demands and expectations are and investment attraction. expanding the acquisition of business becoming increasingly sophisticated. • Creating a larger and more highly trained events; developing regional destinations; Excellence in service standards is vital. tourism workforce. and building the synergies between There is a growing need for well trained • Strengthening the on-line presence of tourism and international education. and skilled tourism professionals to meet Victoria’s tourism products and services. • Strengthening the partnership between future expectations. • Integrating government decision-making Government and industry through • Convenient access to information and its on economic, social and environmental better coordinated decision-making; widespread availability can also impact on issues in relation to tourism activities. policy coordination and advocacy; and attitudes and preferences when major • Enhancing the reputation and continuing communication of the benefits natural, political or economic shocks occur. performance of Victoria for derived from the tourism industry. environmentally sustainable tourism. Further information on the key activities in relation to this Strategy is provided in Appendix A.
10 tourism investment guidelines context for tourism investment
Peppers Springs Retreat, Daylesford. Overview of the ▶▶ The fundamental requirements to Tourism Investment Process demonstrate that the project is financially Successful development of a tourism project feasible and a sound investment. requires a coordinated and sustained process. ▶▶ The procedures to obtain development A good idea, a desire to mix business and approval for the project. lifestyle in an attractive location or a stunning ▶▶ Considerations in relation to obtaining parcel of land may seem a reasonable basis to finance and funding the development. launch a tourism venture. As illustrated (fig. 2), ▶▶ The detailed design, tendering and realisation of a tourism development requires construction of the development. the successful conduct and negotiation of Various advisors are essential to this process. several processes to that end. They may include a project manager, town The following sections of the Guidelines planner, architect, civil and other engineers, provide details of: landscape designer, marketing consultants, ▶▶ How to take an idea to a realistic financial and legal advisors or other specialists. development concept. Each advisor will play a key role at particular ▶▶ The essential need to identify a market stages of the project. Selection of experienced for the tourism product. and suitable advisors should be undertaken ▶▶ Selection of a suitable site, fitted to the with research and careful consideration. It market and to be targeted and suited to is highly desirable to define their scope of the concept. work with a written brief. Most professional ▶▶ Fitting the concept to the site attributes. associations can provide information on ▶▶ Discussions/consultation that is required potential advisors in these fields. to inform the project in relation to legal requirements and avoid delays through community opposition.
Figure 2: tourism investment process GRESS O easibility F PR Construction Consultation Concept Financial Arrangement ovals Idea Appr
TIME
tourism investment guidelines 11 context for tourism investment The Buckland Studio Retreat café, Buckland Valley. Investment Opportunities TABLE 1: plans and strategies Strategic studies by Tourism Victoria, regional that identify tourism investment tourism organisations and a number of opportunities in victoria local governments throughout Victoria have • Victoria’s Regional Tourism Action Plan identified many investment opportunities in 2008–2011 and earlier Regional Tourism the State. They include: Development Plans 2004–2007 for all • Visitor accommodation in Melbourne Regions and throughout regional Victoria. • Concept Proposals for Tourism Particular market niches have strong Development in Victoria 2005 prospects including high yield high end accommodation, backpacker • Investment Guidelines for Wine Tourism accommodation, bed and breakfast, alpine • Victoria’s Spa & Wellness Tourism accommodation and cabins. Action Plan 2005–2010 • The provision of nature based • Victoria’s Geothermal & Natural experiences and accommodation, Mineral Water Tourism Investment particularly supporting experiences in Opportunities 2007 the Otway Ranges, Great Ocean Road • Victoria’s Nature Based Tourism Region, Grampians and East Gippsland. Strategy 2008–2012 Similar facilities can be linked to trail networks or special recreation sectors • Victoria’s Aboriginal Tourism such as bike touring, mountain biking, Development Plan 2006–2009 fishing and hiking. • Alpine Resorts 2020 Strategy • Food and wine products such as vineyard accommodation, cellar doors and facilities that showcase regional food. • Facilities that utilise Victoria’s extensive geothermal and mineral spring resources such as day spas and health resorts. • Aboriginal cultural heritage interpretation and experiences. • Golf based tourism and recreation establishments. • Water based attractions. Tourism Victoria’s web site provides details of plans and related research that describe current investment opportunities that support the strategic directions for Victoria.
12 tourism investment guidelines tourism investment guidelines 13 14 tourism investment guidelines market identification Mt Zero Olives. Photographer: Helen Hiscocks. If we build it, will they come? The likelihood Table 2: MARKET ESSENTIALS SNAPSHOT Specific data on the ecotourism market of a positive response and subsequent can be obtained through the World Tourism Identify potential market opportunities action to invest must be based on a sound Organisation, The International Ecotourism within the region: understanding of the magnitude, nature and Society, Tourism Research Australia and characteristics of the market. A creative • Are there gaps in the current provision Tourism Victoria. Victoria’s Regional Tourism tourism concept must have access to its of services or facilities? If so, why? Action Plan 2008–2012 identifies target intended market and be executed in a • Are there consumer trends that markets and local development opportunities manner that meets that market’s expectations. have not been recognised through including nature based activities. A thorough analysis of the market opportunity development in the region? Key data sources include the International is the essential starting point to develop and • Are there strategic alliances that Visitor Survey, National Visitors Survey and test an investment concept. haven’t been developed or are Destination Visitor Survey series produced underdeveloped? by Tourism Research Australia. The majority Opportunity Identification • What is the delivery of complementary of regional and State data is available for free The identification of a likely market, the market products in the region? on Tourism Victoria’s corporate website and prospects for market growth and their includes regional and market profiles. critical price point (willingness to pay) • What are the asset strengths of the region? Generally there is a time lag between the underpins the creation of a concept • Identify what is driving tourism activity collection and publication of secondary data. for the project. and demand in the region. It varies according to the nature of the data “ • Are there particular market segments collected and it’s utility. There is a need to Is there likely to be for which the locality has appeal? refine historic analysis with more current • Are there special interest groups that information and indicators for the future. demand for this tourism are not catered for? Local government may be able to idea? What is the number provide data on existing approved tourist development, not yet commenced or and characteristics of Market Intelligence & Data proposals being considered. Similarly the Visitors who might want to Your market assessment must be based on identification of infrastructure projects a well-founded analysis of the supply and committed or planned will assist with an come to or use this facility? appreciation of public sector priorities that ” demand for the product. It must assess questions like “What are the trends local, may impact on potential tourist activity. Broad analysis should be carried out to interstate and overseas?”, “What are the Local government is also frequently initially scope an opportunity. This can occur drivers for this product and what local the organiser or coordinator of major through informal discussion and observation, characteristics does it hope to harness?”, and festivals and events in the locality. Data on coupled with basic research – web based “Can the product be distinctively branded?”. programmes, attendance, target markets tourism data, real estate data, operators in and plans for future development of these For example, ecotourism is growing in complementary fields, visitor information events may be of particular value. Where popularity on a global basis. Australia centre resources and similar areas. traffic data is available this can provide an has world-wide appeal for nature based Opportunities may be defined through indication of local activity trends and should experiences. Nature based tourism research into comparable geographic areas, be considered in the context of activities in experiences appeal particularly to from social and demographic trends or the locality/region that may be contributing international tourists and travellers with through data on economic or environmental to observed traffic volume changes. Traffic higher education levels. Higher levels of per change. Consider whether existing tourism data also provides an indicator of passing capita average expenditure are generally facilities in the locality are performing to an trade exposure and opportunities. recorded for ecotourism trips. optimum level – if not, what factors might be contributing to that performance.
tourism investment guidelines 15 market identification
The examination of this information should Lyall Hotel, South Yarra. Photographer: Mark Chew. aim to provide an indication of the nature of the project opportunity, its target markets, potential scale and principal components.
table 3: KEY DATA SOURCES Tourism Research Australia www.tra.australia.com • International Visitor Survey • National Visitors Survey • Destination Visitor Surveys Australian Bureau of Statistics www.abs.gov.au
• Overseas Arrivals and Departures The primary elements in this assessment are and the like. Market research or tourism • Survey of Tourist Accommodation existing product demand and supply, current specialists should be contacted in relation to • Tourism Satellite Account and others performance and level of utilization, direct the conduct of surveys and analysis of data. competitor performance, anticipated change Tourism Victoria The market feasibility will also examine the in supply and demand, initial and longer-term www.tourismvictoria.com.au external factors influencing current demand performance of the proposed tourism product. and likely to influence future demand • Regional Market Visitation and Profiles Data on existing supply and demand will including the focus of marketing at National, • Market Segment data be of variable availability, quality and detail State, regional and local levels, infrastructure • Visitor statistics for international, domestic and will depend on the nature of the development that will for example, enhance and regional markets and others business proposed. the attractiveness of a locality, its accessibility or improve the cost of operations. Royal Automobile Club of Victoria For example, data is available on www.racv.com.au accommodation establishments on a Market Penetration • Accommodation listing monthly basis for establishments with The broad market statistics will lead to an 5 or more rooms. It provides an overall assessment of market size. The critical issue indicator of visitor trends, seasonal variation Market Feasibility is to estimate the likely penetration, ie. the and the performance of particular types proportion that can be attracted to the new A market feasibility study assesses the demand of accommodation establishments. Local product. A realistic determination should for a project. While the preliminary market government may have more generalised inform on the scale of the facility and its data assessment may indicate an opportunity visitor activity data and also particular supporting elements. or gap in the market, a full market analysis is statistics associated with attractions, festivals required to prepare a detailed project concept or events in a locality. The challenge is to These estimates may be derived from for financial evaluation. identify data that informs an understanding examining comparable facilities (relating daily The market feasibility study will: of the size of a specific market segment, how visitation/occupancy to scale), examining the size of market segments and estimating share • Confirm and quantify potential markets it is provided for at present, its potential to on a daily basis, consideration of the features • Assess the characteristics and requirements increase and the price that consumers will or characteristics of the new product that of markets. pay for the service or attraction. Secondary will increase or impact on market share and • Provide an analysis of the anticipated long data may not provide sufficient insight to consideration of competition for market term performance of the project in the the potential performance of a concept share in the locality and what might be a market place. and it may need to be supplemented reasonable proportion of that market likely • Identify any barriers to successful with primary research into matters such to be captured by a new facility. establishment and operation of the business as visitor characteristics, travel patterns, (local image or reputation, labour and skills expenditure, motivation for and purpose of availability, goods supply limitations etc). travel, performance of identified competitors
16 tourism investment guidelines market identification Mantra on Russell. Collins on Melbourne Novotel .
The assessment of market penetration Positioning / Brand Branded accommodation has many should be critically reviewed to evaluate its Establishing the image and position in the advantages over independently operated reasonableness. It is not a question of taking an market of a new venture is a crucial step. properties. Branding accommodation arbitrary percentage; rather it assumes a realistic Key motivators of consumer choice are a requires payment for a licence (for a specific look at what actions will be taken to give the product’s image associations and confidence period of time) to trade under a particular product an identity and to capture market in a brand. Being part of an established brand’s name and use the associated name share. Is it consistent or in contrast with the brand brings with it market recognition, or logo. Branding is a way of distinguishing expected product quality in the locality? reputation and expectations of certain products from competitors. The benefits of standards. Establishing an entirely new aligning with a particular brand include: Competition & Alliances brand requires creativity in order to make it • Centralised reservation system – easier Existing developments need to be assessed as memorable. It demands a careful analysis of for consumers to make a reservation. to their performance as a competitor and as what will appeal to your target market and • Collaborative marketing – global a potential ally in capturing visitor interest. The what local strengths might be harnessed. marketing/promotional alliances to presence of existing operators of a similar kind Identification of the aspirations and values broaden exposure in the market of business in a locality can create a critical mass of the market segments to be targeted (through brand recognition). and enhance the reputation and attraction of is critical to deciding on the quality and • Brand image and reputation – that area for that particular service, eg. bed and content of the venture. The development identification of product and expectation breakfast operations, fishing or boating tours, of establishments with well-known or of standards. farm stays, golf courses and day spas. internationally reputed brands provides • Managerial expertise – assures Analysis of the nature and performance of status to a locality – a region, a town or a hotel investor of the strength of the competitors will provide an indication of the city precinct. New brands should take into management of the hotel and provides market segments visiting an area, volume account the profile and market segment consistent quality and service with of business and yield. It will also provide an appeal of existing operations. Is the administrative guidelines. indication of prevailing standards of quality and prevailing market attracted to a locality likely • Access to higher level of demand and service and assist in the definition of a point of to support the proposed product image or lower costs – able to generate demand difference for a new venture. position or will development of new markets through brand loyalty. The existence of other businesses in be required? • Financing opportunities. complementary fields in a locality can strengthen the total offer of a new business through the establishment of alliances, linkages and joint marketing. Research with existing operators will help to expand the possibilities for a new business.
tourism investment guidelines 17 market identification RACV Cape Schanck Resort, Mornington Peninsula. Market Assessment Risks Project Market Parameters The market assessment includes an appraisal The analysis conducted should provide: of historic and contemporary performance • Identification of target market segments of a locality and information on indicators • Assessment of market penetration with of future performance. Projections on estimates for the product of annual future performance are predicated on a demand and identification of any seasonal range of assumptions. The analysis of future variation (with monthly estimates performance should be supported by an desirable to address seasonality). assessment of the factors that may impact • Likely expenditure per capita on the on those projections. services to be provided The assessment should include alternative • The sensitivity of the product price growth scenarios and enable the financial • Estimates of growth over time based on assessment to take such alternatives various assumptions in relation to internal into account. or external change. The factors that influence targeted markets The analysis should provide a clear basis and the likelihood of change in market for the design of the concept – what it opportunity need to be examined, eg. will contain, scale, complementary facilities, improved air access to competitor destinations quality, image, setting and location. and allowances made in the assessment. Preparing Market Assessment Studies The assessment must also consider the Specialist consultants should preferably be establishment and development phases engaged for market and financial analysis. as well as ‘normal’ operations. Internal Such experts may include market research and external factors that will influence and development consultants, appropriately performance of the business over time qualified accountants, and specialist tourism need to be considered in the assessment. business consultants. General advice can The likelihood of change occurring in such also be obtained at minimal or no cost from factors represents the level of risk in relation financial institutions and from organisations to the assessment of demand. listed in Appendix C.
18 tourism investment guidelines tourism investment guidelines 19 CASE STUDY 1 sea melbourne
Charter hire catamaran with capacity for up to 150 passengers. Business provides pre-booked cruises of Port Phillip Bay for corporate functions, weddings, parties.
Docklands, Melbourne Success Factors
For more information go to: • Market research indicated that there was a gap in the provision of this type of service in Melbourne. www.cruisevictoria.com.au • Investor had a sound working knowledge of boating operations and chartering for fishing. • Significant research conducted into the design and construction requirements for the vessel, which enabled it to be delivered on time and within budget. • Existing development in Victoria Harbour and its promotion by the State Government as a tourist destination provided an opportunity for high visibility and accessible base of operations. • Delivery of a high quality service has been a priority with the benefit of significant additional business through word of mouth recommendations. Internet marketing has also been effective. • Approvals processes require persistence, careful planning and good research. • Important for investors to be familiar with financing and tax issues in order to gain optimum benefit from advisors.
20 tourism investment guidelines CASE STUDY 2 DOHERTY’S BALLARAT LODGE & CONFERENCE CENTRE
Ballarat Lodge is an accommodation and conference complex located in Ballarat, opposite the nationally significant tourist attraction of Sovereign Hill. The 4½ star lodge provides 71 rooms and conference and meeting facilities that cater for 1,200 people. Other facilities include two restaurants, a bar and a health and beauty spa. Located in a major regional centre, this complex services an extensive regional population and is conveniently located within 75 minutes drive from Melbourne.
Success Factors Ballarat
• A limited conference facility existed on this site when acquired by the current operators. A major For more information go to: www.dohertyhotels.com.au opportunity for the expansion of this market was identified due to a limited level of competition in the region, excellent access to a major market in Melbourne and strong growth identified in the business sector. The opening of the facility has since provided access to a larger event and function market in the region than was originally projected. • The success of the conference centre has been in part due to its flexible design and versatility for a wide variety of events and functions and incorporation of high end audio visual technology and comprehensive kitchen facilities. • The comprehensive range of facilities on the site has provided access to diverse market segments – business, leisure, health, education and local. • The approvals process benefitted from local government assistance in relation to the lease of a portion of local government land. Successful consultation with local objectors enabled an extended approvals timeframe to be avoided. • Continued direct marketing is important in the conferences and events market. • Delivery of a high quality product at a competitive price has facilitated strong repeat business. A high level of staff retention with the required skills and outlook has been an important factor in this success. • Capacity to leverage off the existence of an established attraction in Sovereign Hill.
tourism investment guidelines 21 concept development
Figure 3 travel time and distance Market Exposure and Access location distance (km) TIME (hrs) Melbourne to: 1 Melbourne Albury Wodonga 321 4 Mildura 2 Daylesford & The Macedon Ranges Apollo Bay 194 3 3 Yarra Valley & Dandenong Ranges Bairnsdale 281 4 Mildura Airport 4 Mornington Peninsula Ballarat 115 1.5 5 Phillip Island Beechworth 283 3.5 6 Great Ocean Road Bendigo 150 2 && 7 Goldfields Bright 324 4 8 Grampians Daylesford 114 1.5 Swan Hill 9 Victoria’s High Country Echuca 230 3 10 Gippsland Falls Creek 385 5.5 11 The Murray Healesville 65 1 Albury Airport Horsham 301 4 Yarrawonga Lake Eildon 213 3.5 Echuca Rutherglen Albury Wodonga Wangaratta Lakes Entrance 317 4.5 && Beechworth && Lorne 139 2 - Mallacoota 515 7 Bendigo Horsham Nagambie Bright Mildura 543 7 Falls Creek , . Nagambie 135 1.5 Lake Eildon Phillip Island 142 2 Port Campbell 226 3 Daylesford ' Port Fairy 300 4 Ballarat Melbourne Marysville Airport Mallacoota Portland 371 5 Healesville &% Queenscliffe 105 1.5 MELBOURNE ( Bairnsdale & Lakes Entrance Avalon Airport Rutherglen 292 3.5 Geelong Sale Gippsland Sale 313 3 + Traralgon Lakes Queenscliff Sorrento 112 2 Warrnambool ) Sorrento Port Swan Hill 336 4 Portland Fairy Lorne Phillip Island Traralgon 163 2 Port * Campbell Apollo Wangaratta 250 3 Bay Wilsons Warrnambool 272 3.5 Promontory Wilsons Promontory 215 3 Yarrawonga 281 3.5
Selection of a site for investment requires Site Macro factors consideration of the physical area and setting A large population base in close proximity that are required for the project, but also to a site provides a significant market the regulatory requirements that must be opportunity for the project. Sites within satisfied for approval. Local government major centres or within easy access plays a major role in decision-making and will potentially benefit from this market the achievement of successful outcomes. exposure (generally within 2 hours drive from Melbourne or 30 minutes to an hour Site Selection (where to locate?) from a provincial centre). The identification of a suitable site for a tourism development needs to take into account: • The site’s location in relation to the businesses potential market. • The setting of the site and the surrounding development context. • The particular characteristics of the site. Site choice must consider both macro and micro factors.
22 tourism investment guidelines concept development
Proximity to a major population centre A major highway / main road location table 4: site considerations for also brings with it the benefits of better is highly desirable for accommodation particular development access to labour and skills, cheaper goods establishments. Travellers expect to be and materials, more diversity in the services able to find a bed on the main road. Main • Visitor Accommodation – available and generally a higher order of road locations provide essential visibility Market exposure, visibility, access. available site infrastructure – water, sewerage, and passing trade exposure for a variety of • Resort – Special setting, energy, and communications (fig. 3). businesses. In regional areas constructed distinctive site character. The most suitable site for a particular type (bitumen sealed) roads prove generally • Attraction – Market exposure, access, of tourism investment will vary according more acceptable for travellers, while the size of site. product at the end of a gravel road or to the image desired and nature of the • Bed & Breakfast – special character, track will have to work harder to ensure business. The type of businesses or land uses sense of privacy, access. in the surrounding area should complement that the trip is worthwhile. Consider the project, eg. accommodation to support road traffic volumes and the split in the an attraction, cafes/restaurants to support traffic between locals / business / trucks The environmental state of the site also accommodation, parkland/open space / visitors when evaluating the benefits of needs to be taken into consideration. near cultural/heritage establishments. A alternative sites. Good pedestrian access For example, is the site contaminated resort-based project will benefit greatly may also be essential for some businesses. from a previous industrial use; is it subject from a dramatic or unique setting, or one Is the site within walking distance of other to flooding; does it contain acid sulphate providing privacy or seclusion. The presence potential tourist destinations such as a public soils; or is it subject to geotechnical risks of industrial development nearby or a poor transport terminal or shopping precincts? (subsidence, slumping, slope failure and quality urban environment will detract from Site Micro Factors the like). It is essential to assess whether the image sought for the establishment. While there are numerous external factors there will be extraordinary development costs, eg. special foundations or earthworks Views to or from the site, attractive or to consider in selecting a site, it must also be are required, or if there are significant identifiable vegetation or topography and /or suited for the intended purpose. constraints on parts of the land, eg. periodic close proximity to a water body (pond, lake, The site needs to be large enough to flooding in relation to tidal peaks or from creek, river coast) will enhance the site. contain the full range of development envisaged – allow for growth, consider the nearby drainage lines. The local climate and micro-climate of the preservation of any beneficial features, allow There is also a range of non-physical site site will influence both its use and design. for convenient access and site circulation, factors that must be identified such as From which direction are the prevailing the provision of on-site car parking and also planning scheme zoning (what are the winds? What are the minimum and landscaping may be required. land uses permitted and the requirements maximum seasonal temperatures? How for development – see next section), title much sun exposure and rainfall? Will shaded Experts may be required to advise particulars (lease, freehold, encumbrances or weather protected areas be required? whether there are attributes on the site or restrictions), land value and local The design will need to address these factors. of environmental, archaeological, heritage, cultural or scientific interest. The existence government rates. Whether the site or Similar establishments in the locality may of a heritage building on the site may proposed use may be able to access any be seen as competitors but they also bring provide identity, character and a thematic government incentives, eg. heritage grants, the benefits of the development of a critical base. There may also be heritage obligations tax concessions or rate reductions, needs mass of businesses that enhances the regarding alterations to a building or site to be ascertained. market’s awareness and exposure to that that need to be satisfied. Sites near the particular product. It also brings the potential coast or water bodies are highly likely to for collaborative marketing and greater be of importance in relation to Aboriginal opportunities for passing trade, for example cultural heritage. Daylesford is known for spa tourism.
tourism investment guidelines 23 24 tourism investment guidelines concept development Otway Fly Treetop Walk. Figure 4 : site analysis (example)
Source: Meinhardt Infrastructure & Environment and MGS Architecture Planning Interior Design
Concept Design • Wetlands or other areas of significant The site analysis should provide a summary The preparation of the concept design is environment value. of the site opportunities and constraints. informed by the market assessment and the • Views to and from the site. The concept should take advantage of the site evaluation. The site has been selected • Suitability of roads that provide access opportunities available (for example, attractive on the basis of the functional requirements to the site and access points onto the site. views from parts of the site, areas of flatter of the project and the market to be served. • Location of existing services (water, land that is less costly to develop, parts of the Fitting the project to the site in an optimal electricity, gas, sewerage, telecoms) site that may be conveniently and efficiently manner requires an examination of the site and any extensions required. serviced, areas of attractive landscape) and opportunities and constraints. Site analysis • Aboriginal and post-settlement avoid or minimise the development of the (fig. 4) – mapping of the site micro factors heritage assets. parts of the site that are constrained by as outlined will identify parts of the site well • Unstable or erosion prone land. areas of high environmental or heritage value, suited to arrival and principal building areas, • Climatic effects (wind exposure, shade unattractive outlook, steep or potentially service areas, access points and potential and sun exposure, precipitation). unstable land and similar factors. conflict zones, conservation areas, screening • External impacts (traffic noise, signage, From the mapping of these constraints or landscaping zones. night lighting, surrounding land uses). and opportunities a number of development • Existing buildings on the site and their options for the site may be developed. Site analysis should identify: suitability for the proposed purpose A ‘high level’ evaluation of these alternatives • Topography or conversion. should consider the overall project objectives, (high points, steep land, flatter areas). • Neighbouring buildings and land uses development costs (including the provision • Drainage lines and susceptibility to flooding. and in particular buildings used for of on-site services), external impacts and • Vegetation type and quality. residential purposes. relationships, staging and meeting market • Soil type and quality. requirements.
tourism investment guidelines 25 concept development
A matrix may be developed, for example The architectural advisor should play a major Milawa Cheese Factory. Photographer: Mojo Partners. that evaluates each option against criteria role in the creation of the initial preferred established for the project. Consider whether conceptual layout for the project. Following some criteria should be given greater the resolution of this fundamental layout, importance (weighting) as part of this process. the architectural design concept can be Determinaton of a building envelope or developed. This will include detailed and three development area from this process should dimensional consideration of the bulk and scale include a functional layout of the activities of the buildings, overlooking, overshadowing within the building, described for each level and other neighbouring amenity factors, as they may vary. The functional layout will architectural style and local character, car consider the scale and location of each part parking, on-site and off-site public spaces, entry of the building and how it relates to other and identity, signage and landscaping theme. components, eg. point of entry, reception, The concept design will require refinement access to public areas (such as restaurants and through consideration of the project objectives bars), access to private areas (accommodation), and discussion on the proposal with the approval kitchens, service areas and administration areas. authorities, particularly local government. The functional layout should also address From these processes, resolved concept design external relationships such as the protection plans should be produced that include as a of areas susceptible to amenity impacts, visually minimum, site layout (including any demolition, exposed parts of the site and unattractive excavations or earthworks and vegetation neighbouring site attributes. The planning removal), building layout (for each level), scheme requirements in relation to siting and elevations of buildings and additionally include works requirements should be addressed in proposals for materials and finishes, site parking, the resolution of the project’s functional layout. service operations, signage and landscaping Professional advice from town planners, as may be applicable. These plans will form landscape architects, architects, engineers the basis for seeking development approval and quantity surveyors would be advantageous for the project. A preliminary cost should to these processes. be estimated for the project at this stage to ensure that it is within the set budget range.
Figure 5: preparation of concept design
Site Data Site Analysis
DEVELOPMENT OPTIONS
Functional Layout Concept Design
26 tourism investment guidelines concept development
table 5: tourism projects by the ‘not for profit’ sector Considerations for the establishment The Incorporation Phase The Business Planning Phase of a tourism project by ‘not for profit’ • Obtain advice on the various forms of • Ensure the Business Plan contains a credible organisations. incorporation available and assess the rationale for the projections of Visitor Creation of the Concept statutory requirements. numbers and revenue. • Is the project consistent with the • Are there ‘champions’ of the project and • What is the level of likely profitability? organisation’s principles and objectives? are they committed long term? Are they Will it be profitable or at least cash positive? • If it is based on a collection, how eclectic prepared to demonstrate that commitment • Is the project likely to be independently is the appeal of that collection? through donations and /or support for fund financially sustainable or will it require raising processes? Is the project likely to be • What is the principal theme and what on-going subsidy to meet operational costs attractive to partners on a ‘sponsorship’ basis? thematic interpretation will be used to and depreciation, asset replacement costs unlock the stories? • Is the project likely to meet criteria for or upgrades? government financial support? • Research the experiences of other • Prepare a Risk Assessment Plan to identify organisations with like concepts – identify • Are there impediments to the project gaining potential financial risks and responses. the factors for success and potential pitfalls. ‘Tax deductibility Gift Recipient’ status? • How will the project be marketed? • How big is the market attraction – the • Assess the availability and cost of Public Risk Are there linkages available to other specialist enthusiast, the connoisseur or a and Product Liability insurance for the project. marketing programs? broader market? • Assess the availability of Volunteers and • Does the theme of the attraction/project fit the demands the project might make in the location? terms of training, volunteer leadership and communication. • An asset obtained for little or no cost may require high levels of capital to upgrade it or make it fit for use and substantial continuing maintenance expenditure.
YHA Eco Beach, Apollo Bay. Role of Local Government employment profiles, demographic The local government for the locality of information, real estate information and the project plays a key role in providing contacts in State or regional agencies where information that will assist the preparation of further useful information and financial the concept and later, approval of the project. assistance may be obtained. There are several areas of local government Local government often carries out tourism management that can assist the preparation management and promotion and many of a development concept. run Visitor Information Centres. Local government may be able to provide advice Local governments commonly have on marketing campaigns, visitation statistics, economic development groups – persons visitor profiles, market performance, who are responsible to promote the significant and competitor attractions, investment opportunities within local regional linkages and strategic plans for government and facilitate investment. The tourism in the local government or region. economic development group may be Local tourism groups work closely with local able to provide statistics on development, operators and also with regional bodies and information on new projects in the pipeline, Tourism Victoria. advice on areas where certain investment opportunities are being promoted,
tourism investment guidelines 27 concept development
Before the development concept is resolved • The particular controls in the planning • The time frame for the approval it is essential that preliminary discussions are scheme that will affect the proposal and procedures to be carried out and steps held with the town planning department of which will need to be addressed in the in the process where the ‘clock stops’ local government. This is generally referred application. in terms of the statutory time limits for to as the ‘pre-application’ phase and the local • The identification of local issues that need approval. planning department will be able to provide to be considered in the development of the The local government infrastructure or advice on: concept and any external or community engineering department should be contacted • Specific information requirements that consultation that should be undertaken to identify issues relating to roads, drainage, must be provided with the application for before the concept is finalised for approval. street tree planting, site access and similar a permit. • The possible need for an Environmental matters. Discussions with this department • Information about the site and the Effects Statement (EES), a Cultural Heritage will generally provide more specific technical relationship of the development to the Management Plan (CHMP) or other information that will assist in the concept’s surrounding land uses. specific statutory process. refinement. Information may also be provided • Identification of relevant policies of the • Identification of Referral Authorities and in relation to compliance requirements for local government in the planning scheme other organisations to be contacted at other legislation, eg. Health registration. Local that must be addressed and assistance the concept stage, eg. the Department government engineering departments are in the interpretation of those policies to of Sustainability and Environment, water not responsible for services such as water, enable a suitable response to be made as and sewerage authorities, VicRoads, Liquor electricity, gas and sewerage (in most instances) part of the application. Licensing Victoria, Victorian Casino and but will be able to assist in directing enquiries Gaming Authority etc. as appropriate. to the local providers of these services.
table 6: role of local government in relation to tourism projects
Corporate Plan Planning Infrastructure & Engineering • Provide a strategic direction for tourism in the • Local planning policies or zoning may provide • Provide information on requirements for local government’s principal policy document. specifically for tourism development. roads, drainage and related infrastructure Economic Development • Local government should link the Regional and provide details of proposed public • Identify investment opportunities, provide Tourism Action Plans 2008-2011 into their works and related approvals. local economic and social data and identify MSS or Local Planning Policy Framework. Other tourism related initiatives of local opportunities for assistance and facilitation. • Identify tourism development objectives government might include: • Economic development strategies for and policy guidelines within strategy plans to • Offering rate reductions or other financial local government areas should address influence the development and assessment assistance to attract investment likely to the interrelationship between tourism and of tourist proposals, and for use in marketing generate long-term economic benefits for other economic sectors, and their impacts local tourism development opportunities. the local government. on existing infrastructure; and explore • Local government can actively encourage • Conducting seminars for developers to opportunities for increasing economic benefit appropriate tourism development, by identify opportunities on particular sites through improved linkages within other parts identifying precincts or individual sites or precincts, and outlining available local of the local and regional economy. appropriate for tourism development. government assistance, eg. provision of Tourism • Facilitate consultation between project professional or design expertise. • Provide data on tourism activities, conduct proponents and stakeholder (particularly • Financial incentives. marketing campaigns, prepare tourism communities). It is critical that decision making by local development strategies, monitor visitation • Provide advice on statutory controls, government in relation to tourism projects be and collect data. information requirements and time frames. effectively internally coordinated. • Foster the establishment and facilitate the operations of local tourism organisations and interests.
28 tourism investment guidelines CONCEPT DEVELOPMENT sustainable building design and construction
Why is it Important? Benefits of Sustainable Buildings Sustainable Design and According to the Green Building Council, Sustainable buildings generally incur a small Construction Principles buildings consume one third of the world’s green premium above the costs of standard A building’s life spans its planning, design, resources; they use 42% of Australia’s energy; construction. But green buildings deliver a construction and operation; and its ultimate 12% of our water demand is consumed by suite of financial and environmental benefits re-use or demolition. In the accommodation buildings; up to 40% of waste going to landfill that conventional buildings do not. These sector, often the entity responsible for design, is from construction and deconstruction benefits, such as energy and water savings, construction, and initial financing of a building activities (predominantly the churn of should be looked at through a whole of is different from those operating the building, refurbishments); and 40% of Australia’s air life or life cycle cost methodology, not just meeting its operational expenses and paying emissions are from buildings. evaluated in terms of upfront costs. employee salaries. With the exception of hospitals, tourism From a life cycle savings evaluation it is As a result, decisions made at the first phase accommodation can have the greatest documented that savings from investment of building design and construction can environmental impact of any commercial in sustainable design and construction significantly affect the costs and efficiencies buildings: it consumes energy, water and dramatically exceed any additional of later phases. other resources 365 days a year. Support upfront costs. In a general context, sustainable design and services such as laundries, restaurants, International research has found that the construction principles for future tourism swimming pools, energy-intensive heating average construction cost premium for developments should: and cooling systems, gardens and other green buildings is almost 2% – substantially • Take into account the climate; recreational facilities consume large amounts less than is generally perceived. Increasingly • Be subordinate to and aesthetically of resources. the small green premium above the costs sympathetic with the natural environment Importantly, a number of recent international of standard construction is covered in high and cultural context; studies indicate a growing consumer resale value of the asset, as a result of lower • Reinforce and exemplify environmental awareness and concern of the environmental operating costs of sustainable buildings. responsiveness; impacts of tourism. For instance, an April Other Benefits include: • Enhance appreciation and awareness of 2007 TripAdvisor survey of more than 1,000 • Net savings from lower running and the environment; travellers worldwide found that: maintenance costs; • Minimise pollution of soil, air and water; • 40% take environmentally-friendly • Improved corporate image through • Use renewable indigenous building tourism into consideration when making a demonstrable commitment to the materials wherever possible; travel plans; environment; • Increase efficiency in the use of materials, • Just over a third (34%) said they would • Lower carbon dioxide (CO2) emissions energy and other resources; pay more to stay at an environmentally- thanks to efficient energy use and the use • Use life-cycle analysis in decision friendly hotel. When asked to specify how of renewable energy technologies where making about material and construction much extra they would be prepared to this makes design and business sense; techniques; pay for ‘green’ accommodation, 25% said • Better opportunities to let or sell in a • Minimise the consumption of resources, they would pay a 5-10% premium, and competitive market; and especially non-renewable ones; 12% would pay a 10-20% premium. • Enhanced occupant comfort, improving • Maximise the use of materials with low For investors and developers that are productivity. embodied energy; prepared to develop and promote • Identify opportunities for re-use and environmentally sustainable tourism, recycling; and there are obvious benefits. • Identify opportunities for water conservation and re-use.
Tips for Sustainable Design are detailed in Appendix B. Further information regarding sustainable developments can be obtained from The Green Building Council Australia (GBCA), The Royal Australian Institute of Architects (RAIA) and the Australian Sustainable Built Environment Council (ASBEC). (see contacts Appendix C).
tourism investment guidelines 29 CONCEPT DEVELOPMENT sustainable building design and construction RACV Inverloch Resort, Inverloch.
Case Study – RACV Inverloch The Inverloch resort is an affiliate of As part of its commitment to environmental Green Globe, an international sustainable outcomes in the conduct of its business travel and tourism program. Similarly, and to assist members to reduce their redevelopment of the RACV Healesville environmental impact, the RACV has Country Club in 2007 encompasses developed and applied environmental design ecologically sustainable design provisions. criteria to its building, construction and Of note is the unique geo-exchange cooling refurbishment projects. system which will use the earth’s natural thermal energy to regulate temperature. RACV’s new holiday facility at Inverloch has been designed to maximise the site’s natural attributes. The site is being revegetated with native grasses and trees – all indigenous species. The wetlands will provide habitat for birds and aquatic life while assisting with drainage and water quality management. Landscaping is being designed to minimise watering requirements.
30 tourism investment guidelines CASE STUDY 3 eco beach YHA
The Eco Beach YHA at Apollo Bay is a 24 room (72 bed) budget accommodation development, located one street back from the harbour and foreshore of this west coast village. This is a “green” project that incorporates a high level of energy saving and environmentally sustainable features in its design. Apollo Bay is in the heart of the Great Ocean Road region, an iconic tourism destination for overseas, interstate and domestic tourists.
Success Factors Apollo Bay
• Market opportunity was identified through the success of the Grampians YHA Eco Hostel, For more information go to: www.yha.com.au a similar YHA ‘green’ project in Halls Gap, and the high profile of the Great Ocean Road region. • The strong environmentally friendly design approach has been a major selling point with high appeal for youth hostel travellers, particularly international visitors. • Site selection met the needs of central accessibility for budget travellers (beaches, shops, bars); northern orientation that provided maximum solar benefit, attention to the amenity needs of adjacent properties, sufficient space for necessary on-site parking and circulation and views to the surrounding hills. • The architect was provided with a clear brief for the project design that required attention to energy and water conservation, passive heating and cooling elements that met seasonal variation and the use of energy saving technology without a reduction in guest comfort. These requirements were achieved through building orientation, planning and design, material and colour selection, fixture and fittings selection, site treatment and landscaping. • Marketing of the facility benefits significantly from the generic marketing of the Great Ocean Road, nationally and internationally, from the strength of the YHA hostel network and also from the local Visitor Information Centre in Apollo Bay.
tourism investment guidelines 31 Project approvals
Gaining approval for a project requires table 7: summary tourism project approval checklist for developers attention to the potential external impacts of ✓✓ Come up with the idea and develop the concept. a project and the statutory procedures that ✓✓ Contact local government’s planning department to discuss the initial tourism concept and must be negotiated. Investors will usually Tourism Victoria on compatibility with the State’s Tourism product regions, and for assistance options. need to engage closely with neighbours, the ✓✓ Identify what planning policies affect the land where the development is proposed, broader local community, local government including the zoning of the subject land and the surrounding area. and service authorities if they are to ✓✓ Determine what issues, including design and siting issues, need to be investigated minimise the time frame and issues in the to refine the initial concept. approval process. ✓✓ Determine whether there are any relevant referral authorities that should be consulted at the preliminary design concept stage. What types of Approvals are required? ✓✓ Determine whether Councillors, local residents, or community groups should be consulted prior to the lodgement of the planning application. An examination of the planning scheme will ✓ If appropriate, appoint professional design and planning assistance to assist with have identified whether the proposed use ✓ concept development. and development is permitted under the ✓✓ Refine the concept, in conjunction with local government officers and other relevant agencies, planning scheme or not. The assessment of after having investigated the relevant issues. the planning scheme must identify whether ✓✓ Identify what information needs to be included in the planning application; there are parts of the development that are this will depend on the location, scale and complexity of the proposal. permitted and others that do not conform to the planning scheme requirements. In the event that an element of the use or On the basis that the proposed use and The planning scheme regulates the type of development (or the proposal generally) development may be permitted under land use and the nature of development does not comply with the planning scheme the planning scheme an application for a on all land. It may specify requirements requirements then consideration will need planning permit needs to be prepared. that must be satisfied by the development. to be given to: Proceeding with a non-complying Throughout the State, planning schemes • Modifying the proposal to bring it within proposal would require a planning scheme have a standard format and a number the scope of what may be permitted amendment to be sought. These processes of standard provisions. There are also under the planning scheme. are described briefly. Information on the local provisions that are unique to that • Seeking an amendment to the planning planning permit process and planning local government area and are applied to scheme to provide for an alternative zone scheme amendment process is contained specified areas, sites or activities. for the site, or other alteration to the in Planning: a Short Guide (2005) which may Information on all of Victoria’s Planning planning scheme provisions that would be obtained from www.dpcd.vic.gov.au at Schemes is available online at www.dpcd. enable the development to be approved. the planning/planning permits/application vic.gov.au/planning. Information available • Abandoning the site and seeking an process links. includes all the planning scheme maps across alternative location for the development. the State and the details of the planning Planning Requirements If the concept is not consistent with the controls. A planning property report may strategies and policies of the local government Victoria’s Planning Framework be generated through this site that provides contained in the planning scheme it will be a The provisions of the planning scheme information on the planning controls significant task to achieve a modification to the that applies to the locality determine applicable to a particular property. planning scheme to enable the development the planning requirements for a project. to proceed. In this circumstance a decision to Victoria’s planning schemes are governed proceed with the project should only be taken by the Planning and Environment Act 1987, after detailed discussions with Tourism Victoria, which regulates land use and development. Department of Planning and Community Generally local government administers Development, the local government and any planning schemes in Victoria (except for referral authorities, eg. VicRoads, Department alpine resort areas – see Chapter 4) and of Sustainability & Environment, Country the local government is responsible for the Fire Authority, to establish a basis for the approvals required. amendment.
32 tourism investment guidelines Project approvals
Planning Schemes table 8: planning data sources In Victoria a planning scheme has the Information available on the website • Planning permit processes, permit types, following components: of the Department of Planning & application forms and other resources. State Planning Policy Framework (SPPF) Community Development – • Government policy information that applies The SPPF is common to all planning schemes www.dpcd.vic.gov.au/planning includes: for example to Green Wedge areas, coastal and describes State planning policy in relation • Access to Planning Scheme Documents areas, Melbourne 2030, regional planning to matters of State importance. These and Maps for all local governments. and other topics. policies include important principles for the coordination of development, protection • Content and current status of all planning • Urban design objectives and considerations. of the environment, housing, economic scheme amendments. • Environmental assessment processes and development and infrastructure provision. • A guide to the Victorian Planning System. guidelines including current project status. Municipal Strategic Statement (MSS) • Legislation and regulations that are • A comprehensive range of planning related & Local Planning Policy Framework (LPPF) applicable in the planning system. publications including fact sheets, guidelines The MSS and LPPF are unique for each local and advisory documents. government/municipality. The MSS succinctly describes the principal planning objectives and strategies for the municipality and is Overlays Overlays operate in addition to the zone table 9: planning/development linked to the municipal corporate plan. The approvals – identifying the planning MSS provides an important foundation for requirements. They may be applied to requirements decision making by local government on particular areas for a variety of reasons • Who is the planning authority? development proposals. The LPPF provides including special environmental, landscape (Which local government?) statements of planning policy and intended or heritage values, particular physical actions in relation to localities, uses or constraints (flooding, land slip hazard for • Does State or local policy provide activities. The MSS and LPPF must be taken example) or specific design or development support for the concept? into account by local government when requirements. Overlays will influence how • Are there specific local policies that making a decision on a planning permit or land may be used or developed and its apply to your type of proposal? requirements will be considered by the local planning scheme amendment. • What zone is the land located in? government in deciding a planning permit. Zones Is the proposed use permitted? The number and type of overlay that applies The planning scheme maps delineate the will be particular to each parcel of land and • Are there any overlay provisions that extent and nature of the land use zones across local governments. The specific details apply to the land? that apply in each local government area. of all applicable overlays must be ascertained • Is the proposal affected by the general The zones are typically based on a primary at the outset. provisions of the planning scheme? land use (Residential, Business, Industrial etc) and the zone provisions describe Other Provisions the primary purposes of each zone and All planning schemes contain a range of the controls in relation to land use and standard provisions that apply to specific land development. Within each land use zone uses or development activities. They include the uses that are permitted without the advertising signs, access to main roads, car need for a permit, require a planning permit parking, multi-unit development and a range or that are prohibited are detailed. Zones of other activities. These requirements may typically include decision guidelines, which be relevant for some proposals and need are matters that the local government will to be checked in each instance. Planning consider when making a decision on a schemes also contain information on planning permit. procedures and interpretation, which affects the administration of the scheme and permit decision-making.
tourism investment guidelines 33 Project approvals
Pre-Application Consultation and communication that commences at an early Planning Application Requirements Considering the views of others about the stage in the creation of the project and continues Local government web sites will usually impacts of development proposals is part will establish valuable relationships and the best detail the information that must be of the formal planning approvals process. outcome for all. Delays in the approval process submitted to support a planning application. It is usually highly advantageous to discuss and significant costs can also be avoided. There may be general information the concept with persons or organisations More complex projects may require a strategy requirements and specific matters that are that may have an interest in a project to ensure that accurate information about the to be addressed for particular types of land (stakeholders) before the concept is finalised project is provided and that key persons or use or development. A systematic planning and the application is submitted. There may be organisations with an interest are informed and application that properly addresses all several different points at which external views engaged at critical points in the project’s progress. issues with a comprehensive analysis of the are fed into the formulation and detailing of proposal enables local government to make the development concept. Pre-application discussions should not an informed decision. There are statutory be limited to neighbours or community Discussions with neighbours may identify forms and fees that must be submitted with organisations. It is essential that discussions potential impacts that can be eliminated or each application. An incomplete application be held with the local government, service overcome with a variation to the design – will prevent the processing of the application authorities and similar statutory bodies. The moving a building, planting trees, changing from commencing. If there is insufficient discussions with local government should be the access point, earthworks, building design. information submitted with the application held, as a minimum in the following stages: Such modifications during the detailing of the a request will be made to supply further concept may enable support for a project to • Prior to the development of the concept. information and the ‘clock will stop’ – the be obtained. Negative reactions and concerns • Following analysis of the site and the creation statutory time-frame for processing the need to be addressed in the context of of a preliminary concept. application will be suspended. (amongst other things) the overall project • Prior to the planning application being Information requirements will vary between objectives (will they be compromised by finalised. proposals, but should generally include change?), project budget and viability (how It is important to be well prepared for the initial (where relevant). do changes affect total costs and revenue), and all subsequent meetings with the local • Identification of the relevant State and outcomes sought in the planning scheme (State government. It may be advantageous to provide Local planning policy frameworks of the and local policy, zones and overlays) and lateral information on the concept in advance to assist local government planning scheme. alternatives to address such issues. Discussions participants to prepare for the meeting. • Site analysis, identifying site opportunities and constraints. • The expected social, economic and Tarrawarra Estate, Yarra Valley. Photographer: John De La Roche. environmental impacts. • Detail of pre-application consultations, including discussions with local government officers, service agencies and local residents; with dates and discussion scope or outcomes. • Case studies relevant to the proposal. • A Site Plan, drawn to scale showing: –– site boundaries and dimensions; –– the location of existing buildings on the site, including identification of those proposed for retention and removal; –– areas of significant vegetation to be retained or removed; –– abutting land uses and buildings; and –– proposed setbacks of proposed site developments.
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Figure 6 : POTENTIAL ISSUES FOR TOURISM PROJECTS project type potential issues a l ge a
l y erit a ter ac y ture
c cha rge ts a nd im pac menit
tion & tion
a remov tion a a c ge a i stru c ts a l im pac ess a er li c ul dis ste r l pp ter su h ts onomi c im pac b aff f u p u b li c l e c ab origin a l h ts im pac ca l cha r lo wa p in noise visu ot ts im pac sign a environment ts im pac veget wa gener r k ing ca r pa acc c ir tr
hotel • • • • • • • motel • • • • camping / caravan park • • • • • • • tourist attraction • • • • • • • • • • • • museum • • heritage attraction • • • • nature based attraction • • • • • • • • cabins • • • • • • • • • • lodge / resort • • • • • • • • • • • health spa • • • • • • • cellar door • • • • • marina • • • • • • • • • • • golf course • • • • • • • • • • café / restaurant • • • • • • • recreation attraction • • • • • • • • • animal based attraction • • • • • • • • •
• Elevations of proposed buildings and This is a general list of information which Figure 6 illustrates the issues that are infrastructure showing: needs to supplemented and modified typically associated with various forms –– the elevations of every building and according to the particular development of tourism projects. The design should associated infrastructure (eg. car parks); and specific requirements in the planning minimize the potential for such issues. The –– the relationship of the elevation of scheme as detailed in the zone, overlay or documentation that supports the project proposed buildings and infrastructure particular provisions. should address how such issues are to to natural ground level, and showing Professional assistance is advantageous be mitigated. Specialist advice on traffic, any proposed cut and fill; and in this process to enable complete and environmental impacts, noise, visual impacts –– a schedule of finishes, detailing correct documentation to be provided and and similar matters may be required in proposed building materials, and the to minimize delays through the need for some instances. colour of the main external surfaces further information to be submitted. This including roofs and buildings. documentation may be examined by referral • A landscape concept plan showing: bodies and the general public and so it needs –– details of existing trees and shrubs and to present a comprehensive response to the proposed modifications; and information requirements and also address –– any proposed landscaping, including potential issues associated with the project. the type of trees and shrubs proposed, and their estimated heights at maturity. • Proposed signage or interpretative facilities. • Any management issues, for example the restriction of domestic dogs and cats on land, which abuts a fauna reserve or National Park.
tourism investment guidelines 35 Project approvals
Planning Scheme Amendment Figure 7 : planning scheme amendment process Careful consideration needs to be given to proposing a project on a site that is not Proposed planning scheme change Requires support of permitted under the planning scheme. If discussed with Planning Authority the Planning Authority after a close assessment of the planning Authorisation of the amendment Draft ammendment scheme it is considered that a strong case by the Minister to be prepared can be made for a change to the planning scheme then it may be possible to have Formal presentation Decision by local government to the planning scheme amended so that the of the amendment adopt amendment for exhibition project may be considered. Initial discussions Consideration of submissions Public Exhibition of should occur at this stage with Tourism by local government amendment and submissions Victoria to inform this assessment.
Referral of submissions to a Panel Panel Hearing and report The essential step in this process is to obtain (incl. Priority Development Panel) support from the local planning authority for the amendment. This may be possible if Submission to the Final decision by local for example: Minister for approval government on the amendment • The project outcomes are supported by the local government corporate plan Gazettal of amendment or State planning policy. • Significant economic, community or environmental benefits can be demonstrated. If the local government agrees to support The amendment to the planning scheme • The current controls on the land are the amendment it will then request that may provide a change, which enables a inappropriate or anomalous. the Minister for Planning authorise the permit to be applied for as a subsequent • The change would achieve a better amendment. In deciding whether or not and separate process. Alternatively, strategic planning outcome. to authorise an amendment the Minister amendments may also be structured to gives consideration to consistency of the enable a development to proceed subject A critical test for local government in amendment with State policy or interests to conformity with a particular plan or set deciding on an amendment is whether it is and whether the modification is of a of criteria. There are also procedures that consistent with the future strategic directions local significance only. The Department enable the concurrent amendment to the for the local government. A reference point of Planning & Community Development planning scheme and grant of a permit for for local governments and the Department provides advice to the Minister in relation to a specific development. in advising the Minister is ensuring that the the compliance of the proposed amendment amendment satisfies the matters set out These procedures will require expert with the objectives for planning in Victoria in the Planning Practice Note – Strategic assistance and it will generally take at least and strategic policy. Consultation with the Assessment Guidelines for Planning Scheme six to twelve months for an amendment to Department on the proposed planning Amendments (see Department of Planning be prepared, considered and approved. scheme change should be an early part of & Community Development web site the amendment process. Authorisation by www.dpcd.vic.gov.au). the Minister will enable a formal amendment to be prepared and the statutory procedures to be followed.
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Planning Application Figure 8: planning permit application Submission & Assessment Pre-application discussions with local Complete Planing Application Forms Compile all supporting government will clearly identify the Documentation required documentation to be submitted with a planning application, including the Further Information Lodgement and initial Assessment statutory forms, fee, plans and supporting information. The initial assessment by local Referrals Public Notification government will be to determine whether there is sufficient information to enable the Objections processing of the application. This reinforces Assessment and report – consideration and mediation the need for comprehensive documentation at the outset to avoid delays as there will Local government decision VCAT application for review be no further processing of the application – approval or refusal – refusal or conditions, third parties by the local government until the additional information is submitted. Satisfactory documentation will enable the • Discuss with local government the Discussions as a result of objections will local government to refer the application to planning importance of the issues raised normally need to be concluded before the any statutory referral bodies (eg. VicRoads, and changes that may be desirable. application is assessed and presented to local Catchment Management Authority, and • Amend the application to address government for a decision. An officer of the Water Authority) and determine the the issues – further notification may local government will prepare a report on notification required in relation to the be required if the changes made are the application, which discusses the planning application. Notification may involve advice significant. merits and issues including the proposal’s fit by letter to neighbouring property owners • Seek resolution of the issues through with policy and statutory requirements, the and occupiers or more broadly, on-site a mediation process facilitated by local content of objections and any responses signage and public newspaper notices. A government. to those issues. The report will include the period of at least 14 days is given for any • Directly discuss the issues with objectors. views of any referral bodies with an interest submissions to be lodged on the application. The content and impact of the objections in the project. Pre-application consultation will assist in will determine the most appropriate course minimizing the formal objections to an and a combination of all of these processes application. When the notification processes may be desirable if there is an opportunity have been completed the local government to resolve issues in order to achieve a direct should be contacted to obtain information approval and avoid the cost and delay of on any objections submitted. Local subsequent appeal processes through the government will consider the submissions Victorian Civil and Administrative Tribunal in making a decision on the application. If (VCAT). Agreement reached on changes to objections have been lodged the following the proposal and subsequent actions – such courses of action may be appropriate: as a withdrawal of an objection should be confirmed through written documentation.
tourism investment guidelines 37 Project approvals Foxeys Hangour Winery, Red Hill. Photographer: John De La Roche. Local government (or an appointed delegate Aboriginal Heritage in relatively straight forward cases) will make Native Title the decision on the application. An approval The Commonwealth Native Title Act will contain a range of conditions that must 1993 provides for the establishment and be satisfied. These need to be examined and protection of a range of native title rights, an application for a review of the decision and future regimes and compensation, and may be made to VCAT if a condition is for determinations over future grants and considered inappropriate, unnecessary or acts affecting native title to land and water. onerous. Similarly, a request may be made The Act requires notification of to VCAT for a review of a refusal of the development on or uses of public land permit. Where there have been objections, to claimants, potential claimants, or those parties also have the right to request owners. Developers are strongly advised a review of a decision by VCAT. Time limits to seek clarification of the Act and any exist for the right to request a review by associated issues, during early consultation VCAT for both applicants and objectors. with Aboriginal Affairs Victoria and the
The VCAT review is independent and public. table 10: request for review Department of Planning and Community VCAT is the final arbiter in disputed planning of a decision by VCAT Development. decisions. There is however the right Legislation: see Victorian Civil and Aboriginal Cultural Heritage for a Supreme Court review of the legal Administrative Tribunal Act 1998 The Aboriginal Heritage Act 2006 provides aspects of a VCAT decision. The process is for the management and protection of For information see VCAT web site conducted by State Government appointed culturally sensitive landscapes. The Act www.vcat.vic.gov.au legal practitioners and planning experts. applies to all land in Victoria. Development VCAT hearings are less formal than normal Procedures guidance: Practice Note and activities proposed for example, near court proceedings and legal representation Planning & Environment List (No. 1) the coast or adjacent to water bodies may is not essential. Advice should be sought – General Procedures, Practice note affect areas of indigenous cultural heritage however on the benefit of conducting a VCAT No. 2 – Expert Evidence. value. The Aboriginal Cultural Heritage Act review case with legal representation and See also Planning & Environment List 2006 establishes a process to identify the the need to engage other experts (town Guidelines and other Practice Notes potential for Aboriginal cultural heritage planners, traffic consultants, environmental on the web site. places and objects to be affected by experts and others) in relation to particular development. aspects of the case. A matter brought before VCAT is heard ‘de novo’ – essentially Most hearings are conducted in Melbourne, the whole matter is heard afresh and the but periodically cases are heard in major Tribunal stands in the shoes of the local regional cities. VCAT hearings can be time government. The risk of this aspect needs to consuming and costly for all parties and should be recognised in deciding to refer a matter be embarked on after due consideration. to VCAT. Decisions are normally provided several weeks after the hearing and local government is required to act administratively in accordance with the decision.
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The Aboriginal Heritage Regulations 2007 figure 9: cultural heritage management plan (CHMP) process define areas of high cultural sensitivity and The diagram is an example of the process a developer would follow activities that may impact on Aboriginal when seeking approvals for a large scale subdivision/development. cultural heritage values. A Cultural Heritage Management Plan (CHMP) may be required to protect places or objects of heritage Developer decides that a CHMP Developer submits application is required after checking the OR to Local Council value. Where there is a requirement for Regulations and any published guidelines without an approved CHMP a Cultural Heritage Management Plan Developer engages Cultural Heritage it is required as part of the planning Advisor to prepare the CHMP permit application and approval process. Council advises that it is a A planning permit must be consistent Developer notifies the Secretary, prescribed activity on sensitive land and DVC and relevant that it cannot make a planning decision with the provisions of a Cultural Heritage Registered Aboriginal Party (RAP) without an approved CHMP Management Plan. RAP responds to developer A Cultural Heritage Management Plan (within 14 days) Developer prepares CHMP is required for an activity if: and elects to evaluate the CHMP • All or part of the activity area is an area of cultural heritage sensitivity; and RAP has 30 days to review CHMP Developer submits finished CHMP and and to notify developer of any decision prescribed fee to RAP for evaluation • All or part of the activity is a high impact activity. If RAP refuses to approve the Plan, the developer is able A high impact activity is an activity that is to appeal to VCAT
likely to harm Aboriginal cultural heritage Developer provides a copy of CHMP Local Council able to decide and examples include: in support of application to Council whether to grant or refuse for a Residential Subdivision Permit approval for subdivision • Developments that require an Environment Effects Statement. • Larger scale residential or industrial Brambuk, Grampians. Photographer: Bindi Cole – Snap Happy. subdivisions on areas of cultural heritage sensitivity, which have not previously been significantly disturbed. • Substantial infrastructure or resource development projects on areas of cultural heritage sensitivity, which have not previously been significantly disturbed. Other circumstances requiring a Cultural Heritage Management Plan are prescribed in the Regulations. Information on the requirements of the Aboriginal Heritage Act 2006 is available at www.dpcd.vic.gov.au/aav.
tourism investment guidelines 39 Project approvals
Tourism Development on Public Land Current policy directs major new tourism table 11: tourism & recreation use Public land in Victoria is an extensive and of public land facilities to service visitors in National Parks valuable community resource comprising to locations outside of the declared park most of the coastal edges and foreshores of The provision for tourism and area. This policy is subject to a review to the State; National Parks, State Parks, State recreation use of public land must enable developments satisfying criteria that Forests and other reserves; river and lake accord with the following principles: include public need, benefit and ecological reserves; our Alpine Resorts and a range of • The activity accords with the objectives sustainable development principles to be other special purpose public reserves such of the relevant reservation legislation considered. as flora and fauna reserves, gardens, cultural and related management plans and A license to conduct a tourism or and historic sites. These areas contain policies. recreation service on public land may be approximately 8 million hectares and receive • The activity is consistent with the sought through the body responsible for an estimated 130 million visit days from National Ecologically Sustainable the management of that land. Public land tourists and recreational visitors annually. Development objectives and principles. managers may also from time to time The Minister for Environment and seek the provision of commercial services • Meets demonstrated need and is Climate Change is responsible for the from the private sector through a public dependent on the natural and cultural management of this land, which is carried tender process. The provision of a major values of the area. out by the Department of Sustainability development on public land is also normally and Environment and bodies such as Parks • Risk levels are appropriate and pursued through public tender processes. Victoria, Alpine Resort Management Boards manageable. In addition to approval by the land manager and Committees of Management. • Community access is not unreasonably a planning permit from the Responsible The use and development of public areas restricted. Authority, usually the local government, will for tourism and other purposes is generally • Net public benefit is provided in the normally be required. A planning permit and provided for through Management Plans short and long term. other required approvals would need to be obtained following approval of the proposal and similar policy documents. Management ‘Sustainable Recreation & Tourism on Plans identify the nature, location and level Victoria’s Public Land’, DNRE, 2002 by the land manager and prior to the of tourism related facilities and services to commencement of any development. be provided on public land. Most facilities Lease and license terms are provided by the State Government Opportunities for the development of through the organisation responsible for major tourism facilities on public land, A license term of up to 10 years is available the management of a particular area. There such as accommodation, boating facilities, for operators on public land who can satisfy is however, a wide range of services that cafes/restaurants, sports facilities are more sustainable tourism criteria. may be conducted by the private sector limited but may be provided for as part of Lease terms for development on public on public land. They may include services a management plan or master plan for a land are generally limited to a maximum such as guided tours and interpretation, specific area. The preparation of such plans of 21 years, but vary according to the nature boat hire and equipment hire services, would identify the need for private sector of the reservation and the proposed use. skill development, recreation experiences, development, its suitability, potential impacts, In Alpine Resorts lease terms of up to special events and other activities. These and examine alternatives to the use of public 99 years may be granted. activities may only be seasonal and may land for the proposed development. generally require minimal built infrastructure investment. Operators may be granted a business license and a short-term lease where a specific area of public land is to be used for the delivery of the service or as a base for such operations.
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table 12: legislation and public land
Legislation Purpose Agency Crown Land (/Reserves) Act 1978 To provide for the reservation of Crown Land. Department of Sustainability and Environment (DSE) Coastal Management Act 1995 To plan for and manage the sustainable use of DSE Victoria’s coastal resources. National Parks Act 1975 To preserve and protect National and State Parks. DSE Alpine Resorts Act 1983 To provide for the reservation of Alpine Resorts. DSE Alpine Resorts (Management) Act 1997 Provides for the establishment and functions of DSE Alpine Resort Management Boards. Planning and Environment Act 1987 Legislative framework controlling planning Department of Planning & Community approvals and scheme amendments. Development (DPCD) Forests Act 1958 To protect and manage State forests DSE Local Government Act 1989 Controls local government functions and DPCD responsibilities. Environment Effects Act 1978 An Act to require the environmental effects DPCD and DSE of certain works to be assessed. This Act provides for the environmental assessment of development that has the potential to impact on the environment. Environmental Protection & Biodiversity Protect biodiversity and associated Federal Government Conservation Act 1999 (federal) environmental issues.
Victoria’s Nature Based Tourism Strategy, table 13: information sources for tourism opportunities on public land 2008–2012 (VNBTS) recommends provisions for longer leases commensurate • Victorian Coastal Strategy and approved • Victoria’s Nature Based Tourism Strategy, with the level of investment for land that Coastal Action Plans 2008–2012 comes under the Crown Land (Reserves) • Relevant National Park or Foreshore • Public land legislation (see above) Act 1978 and the Forest Act 1958, Management Plans • See Appendix C – Key Contacts for and licences for tour operators to be a • Approved Park Management Plans the Department of Sustainability & maximum term of 10 years. The VNBTS or concept plans. Environment and Parks Victoria for contact encourages further development of nature • Alpine Resorts 2020 Strategy, information. based tourism accommodation projects Alpine Planning Scheme. in Victoria.
tourism investment guidelines 41 Project approvals Huski, Falls Creek. Photographer: Peter Bennetts. Tourism Development in Alpine Resorts • As the custodian of Crown Land, the The Victorian Alpine Resorts at Falls Creek, Minister’s consent is required for an Mt Buller, Lake Mountain, Mt Baw Baw, application for a planning permit. Mt Hotham, and Mt Stirling are subject to • The application will be referred to the specific arrangements for planning approvals relevant Alpine Resort Management and leases. Virtually all land in these Alpine Board for its views and requirements and Resorts is Crown Land. to the adjacent local government for its comments. Other authorities may also Development in all of these Alpine Resorts be contacted as part of the referral and is administered under the Alpine Resorts notification processes. Planning Scheme. The Minister for Planning is the Planning Authority and Responsible • Additional and specific information Authority for all planning matters. The may be required for each application. Department of Planning & Community This may include: Development administers the Alpine Resorts –– A flora and fauna assessment Planning Scheme for the Minister. (in relation to impacts on flora and These alpine areas are managed by Alpine fauna covered by the Flora and Resort Management Boards (constituted Fauna Guarantee Act 1988 and under the Alpine Resorts Management the Environment Protection and Act 1998) who have responsibility for the Biodiversity Conservation Act 1999). management of Crown Land in Alpine –– A geotechnical assessment of the site Resorts, the provision of a number of in relation to the stability of the land services and promotion of the Resorts. and design in order to avoid potential Alpine Resorts have been excised from local land-slip hazards. government boundaries, but the respective –– A Site Environmental Management local government is consulted as part of the Plan (SEMP) that identifies potential planning permit application process. environmental impacts and provides for management measures to reduce The Minister for Environment & Climate impacts both during construction and Change is responsible for the granting of ongoing. leases on Crown Land. The Alpine Resort Management Boards make recommendations Alpine areas are fragile and highly sensitive to the Minister on the grant of a new lease or natural environments. New development the extension of an existing lease. within these environments must be designed to minimise the environmental impact The procedures for planning permit and be appropriate to the extremes of applications are similar to those described in climate experienced – temperatures, wind, Section 4. The Alpine Planning Information ice, snow load, and snow deposition. These Kit provides a comprehensive guide to the matters must be thoroughly addressed in a regulations, procedures and requirements for development proposal within an alpine resort. applications (www.dpcd.vic.gov.au). The Minister’s decision on a planning permit Some key differences that should be noted: application in an alpine resort is subject • The Alpine Planning Unit at DPCD should to the same rights of review by VCAT as be contacted to obtain advice on the are all other planning permit application applicable planning controls, information decisions made under the Planning & requirements and pre-application meetings. Environment Act 1987.
42 tourism investment guidelines tourism investment guidelines 43 Project approvals Huski, Falls Creek. Photographer: Peter Bennetts. Alpine Resorts Leases All Victorian alpine resorts are Crown land permanently reserved under the Crown Land Reserves Act 1978. The exceptions are three small parcels of freehold land within the Mt Hotham Alpine Resort. Dinner Plain is also freehold alpine land but is not within a declared alpine resort. The State Government approved the Alpine Resorts Leasing Policy in 2002. (See www.dse.vic.gov.au/dse/index.htm and go to Recreation & Tourism/Alpine Resorts/ Projects/Alpine Resorts Leasing Policy). The policy provides: • The right for existing lessees to negotiate a new lease on the expiry of the lease term. • The value of the improvements to the Alpine Resort Management Boards have been delegated the power to issue new table 14: tourism development land rests with the lessee. in alpine resorts • A lease term that is commensurate leases in alpine resorts. Most tourism with the proposed use of the land and investment in alpine resorts occurs on the • Land in declared alpine resorts is almost the value of the investment. For major basis of the redevelopment of an existing exclusively Crown land. investment (in excess of $8 million) lease leased site. A new lease appropriate to • Declared alpine resorts are excluded from terms of up to 51 years are available. the use and magnitude of investment is adjacent local government areas and are Lease terms longer than 51 years up to negotiated for the development in that administered by Government appointed 99 years may be possible subject to an instance. The subdivision of a lease site may Alpine Resort Management Boards. occur with approval of the Minister. From acceptable business case. Investment of • The Victorian Planning Provisions time to time new sites for development $8 million or less will be provided with a apply to all alpine resorts, which are may be released within an alpine resort. shorter lease term as may be negotiated administered by the Department of The responsible Alpine Resort Management based on the levels and nature of Planning & Community Development Board would normally conduct an investment and development. (contact Alpine Resorts Unit, DPCD). expression of interest, a public auction and/ • The requirement for lessees to comply with The Minister for Planning is the or public tendering process to ensure the uniform standards of occupancy – planning, Responsible Authority. environmental and building policies, repair best public interest outcome. • Development approval processes and maintenance requirements. are similar to elsewhere in Victoria • Site rentals are determined on the basis but details are available in the Alpine of a market based site value reviewed Planning Kit (see DSE web site). each 3 years. • A standard lease document applies • Long-term standard leases apply to all to all new leases. new development within alpine resorts – see Alpine Resorts Leasing Policy on DSE web site for details. • See Appendix C – Key Contacts for the Alpine Resorts Unit and Department of Sustainability & Environment for contact information.
44 tourism investment guidelines project approvals Convent Gallery, Daylesford and the Macedon Ranges. Photographer: Peter Dunphy.
Victorian Water Authorities Goulburn-Murray Water Lower Murray Water The Victorian water industry provides Goulburn-Murray Water manages water- Lower Murray Water’s area of operation services to in excess of 4.6 million related services in a region of 68,000 square extends from Kerang to the South Australian people encompassing 100% of the State’s kilometres, bordered by the Great Dividing border taking in the municipalities of Mildura, population. Water business customers Range in the south to the River Murray in the Swan Hill and Gannawarra. continue to benefit from the improved levels north, and stretching from Corryong in the GWM Water of service and investment to protect public east, downriver to Nyah. Goulburn-Murray GWM Water is a government owned water and environmental health. Water also operates salt interception works business responsible for managing urban and The Victorian water industry covers the on the Murray downstream of Nyah, manages rural water supply systems in the Grampians, metropolitan and regional sectors of the Mildura Weir, delivers bulk water to supply Wimmera and Mallee regions of Western State. All Victorian water businesses are points outside it’s region and is the Victorian Victoria. GWM Water also own and operate 15 State Government Business Entities (GBEs). Constructing Authority for the Murray- major bulk water supply reservoirs and manage Water businesses are guided by skills based Darling Basin Commission. GMW also groundwater supplies and river diversions. They Boards of Directors. manages recreation and other public activities are also responsible for the implementation on and around our major water storages. The framework governing the conservation, of the Wimmera Mallee Pipeline project, with allocation and supply of water in Victoria Southern Rural Water construction already underway. has undergone significant change over the Southern Rural Water is responsible for Approval may be required from water last 25 years. As a result there are now 20 managing rural water resources across the authorities if your proposal requires access water businesses in Victoria, 16 regional water southern half of country Victoria, from the to a reticulated water supply and/or ground businesses in Victoria that provide urban and/or Great Divide to the coast. water reserves. rural services. Rural business regions include:
tourism investment guidelines 45 CASE STUDY 4 balgownie estate Balgownie Estate, Yarra Valley. Balgownie Estate at Yarra Glen is a vineyard, which has established a 5-star conference venue (up to 250 persons), accommodation (65 suites and studio rooms), restaurant and bar, cellar door and day health spa. The business is part of a well reputed wine brand, originally established in the Bendigo region. The Yarra Glen tourism business employs 70 persons (excluding the day spa).
Yarra Glen Success Factors
For more information go to: • A market opportunity was identified in the Yarra Valley based on the high level of visitation, a large potential www.balgownieestate.com.au market within 1 hour drive and the burgeoning reputation of the region for high quality food and wine. • The site selected for the project provides high quality views and has been important to the establishment of the image and quality of the business. • Extensive pre-concept consultation was carried out with the local government, Tourism Victoria, neighbours and other local stakeholders. This process ensured that factual information was provided concerning the project and it benefited from a number of useful suggestions that were taken on board in the project’s development. • The planning approval was a complex process and appointment of a planning consultant was valuable in obtaining the required approvals. • The project business plan and financial backing was established at an early stage of the process. This provided a sound basis for the extensive approval process that was required. • Knowledge of the construction industry enabled detailed management of the design process, refinement of details during the building phase and attention to construction issues as they arose. • Partnerships have been formed with other tourism businesses in the region. This enables the visitor experience offer to be broadened and is combined with joint marketing and packaging.
46 tourism investment guidelines tourism investment guidelines 47 financing and funding Crowne Plaza, Torquay.
Profitability is a fundamental requirement Preparation of the Business Plan table 15: business plan content for any sustainable commercial business Business Planning is a process of thinking A Business Plan scope should cover investment. Some tourism projects are strategically and combining information the following: however, established and operated by not about the future of a business. It requires for profit organisations - trusts, foundations, consideration of: • Executive Summary – brief summary of associations. The planning, financing project, project investment return and External factors and continuing funding for all tourism strategic issues. • the economy investment requires a business plan that • the market • Venture Profile – product description, is based on a sound assessment of the • customers and competition market opportunity, target markets, capital outlay, operating costs, revenue and SWOT analysis, consideration of Internal factors longer term considerations of maintenance, options, growth strategies, and project • internal organisation and management refurbishment and upgrade. risks. • product and market mix • facilities requirements • Business Structure and Management • technology needs – management structure, employment • finance details, project development management. The Business Plan enables full consideration of the proposal for a given time-frame, • Operation Plan – financial feasibility and is essential for obtaining finance from analysis, cash-flow budgets, return financial institutions. on investment, potential government financial support. It also assists to: • Marketing Plan – target markets, • Clarify many of the developer’s own communication tools, media, collateral questions and issues. material, and budget. • Provide a basis for future performance analysis and forward planning. • Appendix – supporting information such as developer credentials, market A summary of Business Plan content research details, and product details. requirements are discussed right (table 15). This discussion should be regarded only as a ‘first-pass’ guide.
48 tourism investment guidelines financing and funding Business plan – key elements
Management and Business Structure table 16: business structure options Management Structure Early decision on the legal form for Option 1 Option 2 Option 3 business management is important. This Sole Proprietorship Partnership Proprietary Company has important functional and financial Advantages Advantages Advantages implications. Tourism investors are therefore • Simplest legal structure • Simplicity of formation • Separate legal identity strongly advised to seek professional legal • Low start up costs • Minimal start up costs • Limited liability and financial advice on the appropriate • Exclusive control of asserts • Increased access to finance • Preferable management structures for their proposals. Common and profits • Diversity of skills and structure management options include proprietorship, expertise • Ready access to finance partnership (including limited liability • Limited regulation and partnership) and proprietary company. protection from public These options are summarised in Table 16. scrutiny Other more complex structures include Disadvantages Disadvantages Disadvantages joint venture arrangements and trusts. It • Sole responsibility for all • Unlimited legal liability • Establishment costs is a legal requirement for limited liability debts and obligations • Public scrutiny • Increased regulation companies to identify the structure, directors • Possible difficulties in • Divided authority • More record keeping raising capital and any professional counselling to be used, • Potential for friction • Annual returns ie. accountancy, legal, marketing, etc. • Limitations on size • Available for public scrutiny One of the earliest decisions to be made by the investor is the legal form of the business. Each of the options has advantages and Project Management companies exist to fit-out. It does however, include annual disadvantages. Legal and financial advice should manage the interests of investors, and maintenance and depreciation as costs be sought before deciding which structure best tourism investors should seriously consider against the business. The period for which suits the ownership and management of the the need for such professional service. cash-flow projections need to be prepared, proposed business venture. and their required level of detail requires Operation Plan discussion with professional advisers including Employment Details The Operation Plan provides the financial prospective financiers. A business plan should Registration of a company requires ‘nuts and bolts’ of the proposal for analysis normally cover no less than three years of information to be lodged that details by investors or financiers. It is the most operation, with at least the first year’s figures information about directors and their important component of the Business presented on a monthly basis. qualifications, managers, staffing structure, Plan and its professional development and and who the statutory officers are. Financial Feasibility presentation are essential. Its main elements Financial feasibility assessment is needed, Project Development Management are discussed below. together with the market analysis, to gauge Planning and implementing any development Detailed and Realistic Cash-Flow Budgets the developer’s likely return from the requires competent management. For All possible costs including taxes, and all initiative, and whether its continuation is larger projects, this may require a project assumptions used to predict cash-flows (cash warranted. The analysis is also critical to management team. This will typically include in and cash out) need to be identified and obtaining finance. Therefore, realistic and the investor and other key stakeholders explained. For example, predicted annual appropriately indexed profitability and cash- such as the landowner, architect builder, tourist numbers need to be substantiated flow projections need to be prepared for subcontractors, quantity surveyors, the by actual visitor statistics to the area, and to both the development and operational life development company, and possibly the other attractions of similar type and scale of the project. financier. Project management in establishing in the region or State. Cash-flow must be a project is a specialist task. Its effectiveness distinguished from profit. Profit measures can ‘make or break’ the project prior to it revenue less expenditure, but does not commencing operation. include one-off capital expenditures on items like site acquisition, development construction, equipment purchase and
tourism investment guidelines 49 financing and funding Business plan – key elements (continued)
Key matters that should be included in the Return on Investment Sensitivity Analysis assessment (and which financial institutions The proposed investment’s profitability The financial feasibility assessment of the would generally require to support a funding needs to be determined as accurately as project should be tested as to the effect application) are: possible, supported by financial feasibility of a variation to key assumptions on the • Anticipated costs and contingency studies. Where information is available, profit outcome – sensitivity analysis. This analysis budgets, one-off costs such as capital projections should be compared to those can take the form of both negative and investment, future ongoing operating from other like investments. If the estimated positive changes. In making changes to costs including marketing, taxation and profit margin is a little more or less than the analysis assumptions, whether it be finance costs, and depreciation costs for what could be earned in a traditional ‘safe’ sales, pricing, cost of capital or to other plant and equipment. investment, proponents and investors should major costs the impact will be seen on the • Realistic estimates of short and long-term carefully consider the wisdom of proceeding. traditional measures such as rate of return projected revenues. Calculation of the Internal Rate of Return or net present value. To bring it back to • Anticipated short and long-term profit (IRR) provides a measure of the discount a more basic principle, this analysis will and loss. (interest) rate achieved by the initial capital examine the effect on cash-flow and in turn • Expected rates of return on investment investment and the anticipated future cash- the viability of the project. over a nominated period. flows. This measure can be effectively used This analysis will also provide an insight to • Projected discounted cash-flow analysis to compare the performance of different the project’s sensitivity to market factors over the life of the project to indicate concepts or options and enables comparison and its viability in the prospect of changing debt and project pay-backs. with other known investment returns. market forces. The modeling will give further • Sensitivities of the project to factors insight to what is required to ensure that the such as cost and timing overruns, higher project is a viable proposition. inflation and interest rates, decreased
patronage and occupancy rates, ie. Figure 10: assessment of project viability maximum reasonable adversity analysis. • Other reasonable investment assumptions. Project Design • Benchmarking to similar projects undertaken in the industry, where available; and • Appraisal of project options, eg. staged development or other modifications, Funding scaling down increased equity versus Capital Cost Revenue finance etc. Operating Cost The options appraisal is critical to enable Development Net Cash-Flow investment assessment. Options covered IRR need to include both: • Staged development of the project. Acceptable • Alternative options available to achieve similar or comparable tourism outcomes. Overview assessment of the relative viability Unacceptable of each option is required, to assist financiers and/or equity partners to determine the Review relative merits of the proposal within a broader context. Reasons for the choice of the preferred option need to be clear.
50 tourism investment guidelines financing and funding Business plan – key elements (continued)
Availability of Government Support • Proposed debt servicing arrangements Federal, State and local governments can table 17: indicative financial supported by expected cash-flow and submission checklist provide a range of support, particularly abilities to meet repayments and interest. where the investment can demonstrate • Business plan • Security offered over the development, significant economic benefits in a regional or • Track record which may include any land, leasehold State context. Such support could include • Financial standing interest, buildings, plant and equipment, grants, marketing assistance, infrastructure goodwill and debts. • Finance and repayment proposal provision or access to Government planning approval services and facilitation assistance. • Supporting documentation Documentation to Support All possible areas of Government support • Additional collateral security the Finance Proposal should be investigated at Local, State and The tourism developer will also need Federal levels. to provide the following support Tourism Victoria will assist investors Developer’s Track Record documentation with the Finance Proposal: to facilitate their investment projects. Financiers need knowledge of the • The previously discussed Business Plan Specifically, Tourism Victoria will assist with developer’s business track record, incorporating feasibility studies and the coordination of State agency advice particularly in business related to the management strategies. in the development approvals process. submission. Descriptions of past ventures • An assets schedule, including valuations Regional Development Victoria and the and of management experience and of property offered as financial security Victorian Business Centre should be credentials are essential. Developers with whether for the development site or contacted in relation to a broad range of limited experience in the tourism industry collateral security. support and assistance that is available. may be advised to consider employing a • Where construction would be needed, a manager experienced in the industry. quantity surveyor’s report substantiating Obtaining Financial Support Financial Standing design, construction and development Financial Submission Financiers assess a developer’s current costs. The Business Plan discussed earlier in personal and business financial positions, and • Group structure charts detailing this section, provides understanding of a past credit and financial commitment history. ownership shareholding and all connected proposal’s expected business and operating Financial statements including balance sheets, entities. environment to assist financiers and profit and loss statements, management • A schedule of the developer’s legal, investors ascertain debt servicing capabilities accounts and taxation returns will be financial and other key advisers. and requirements. required for current and recent past years. • Details of planning and development approvals required and obtained Financiers generally also require a detailed The Finance Proposal (refer Project Approvals). Financial Submission containing additional A viable finance proposal for the project will • A summary of the developer’s information including a project financing be needed. A financial consultant may be individual or connected entities’ proposal. This and other required information required for this task. The proposal will need financial statements, and explanations for is listed in table 17 as an indicative Financial to include at least: Submission ‘checklist’. Main elements are also any major fluctuations in trading discussed in this section. • The purpose of the required loan. and balance movements. • The amount of debt required, and the • Summaries and reconciliations of key Early consultation with potential financial proposed loan term. items in projected profitability and institutions is essential, to clarify their • The amount of equity to be injected by cash-flow budgets, to explain funding requirements. the developer, and its proposed timing. requirements. • The proposed method of debt • Relevant corporation documentation repayment, substantiated by cash-flow such as Memorandum and Articles of and other financial detail including Association, Trust Deeds etc; details of guarantee information if applicable, and the developer’s accounting system and the proposed exit strategy for the lender. reviews by independent accounting firms.
tourism investment guidelines 51 financing and funding At the Heads, Barwon Heads. Photographer: Mark Chew. Geelong Yacht Club, Photographer: Geelong. Mark Chew. Financing and Tax Considerations Equity versus Debt Finance Equity is the amount or proportion of the overall investment supplied by owners towards the venture. The greater the investor’s equity in the venture, the greater the risk being taken on its success. Equity provides funding opportunities where conventional security is not available, and where cash-flows are uncertain to support debt financing. Some specialised capital venture companies offer equity partnerships. Costs, project control and ownership issues of such partnerships will require professional legal and financial assessment. Debt finance may be obtained from various institutions such as • Current aged debtors and Credit Assessment Factors banks, building societies, finance companies, creditors listings and fixed asset In addition to financial security matters, credit unions and professional groups such depreciation schedules. financiers will generally assess the following as solicitors. • Realistic costs and timing factored credit risk factors: In determining the correct mix between into project expense considerations • Financial institution’s lending policy equity and debt finance for a development, such as lease payments, income tax, for the type of business. factors to be considered include: interest, superannuation contribution, • Proven market for the proposed venture • Developer’s funds potentially available. insurance, trading expenses, fringe product, benchmarked against the • Project size and cost. benefits tax, annual and long service leave, performance of existing clients in the • Taxation considerations. capital expenses and debt repayment. same market. • Gearing ratios for other ventures Availability of contingency funds should • Proponent’s experience, and business of that type. also be demonstrated. planning, and management skills. • Prevailing and anticipated interest rates. Additional Collateral Security • Ratio of debt versus equity. • Degree of control over the project Collateral is security pledged as a guarantee • Professional standing of consultants, development and cash-flow stream. for repayment of a loan. While the security advisers and contractors engaged Where interest rates are high or expected of a venture may be sufficient collateral, by the proponent; industry trends to be high, restricted borrowing may be financiers may also require additional and competition. desirable to reduce the risk of failure due collateral to guarantee payment. • Insurance availability for high risk to sudden interest rate increases. Examples may include a mortgage over the or unusual ventures. family home, or directors’ or shareholders’ • Proponent’s track record and guarantees. Developers may therefore disclosure integrity. need to be prepared to risk foreclosure of • Proponent’s analytical objectivity and mortgages if venture failure occurs. rigour used in assessing adverse factors impacting on cash-flow. Financiers may also require additional • Quality of the proponent’s business security such as fixed and floating debenture reporting systems. charges over the business, or charges over specific property or leasehold mortgages. Details of the above will be subject to individual circumstances and negotiation with prospective financiers.
52 tourism investment guidelines tourism investment guidelines 53 financing and funding
Also, debt financing conditions need to Some broad overview issues Infrastructure Bonds provide for projected business cash-flow and are discussed below. Infrastructure bonds may be applicable development requirements. For example, Types of Taxes to the financing of land/air transport or the choice of short, medium or long-term Relevant taxes include income tax, the GST, seaport infrastructure facilities associated debt finance, and whether on an interest- pay-roll tax, fringe benefits tax, land tax, local with a project. These would reduce project only or progressive repayment, can impact government rates and charges (including financing costs through concessional tax greatly on business viability. water rates, environmental levies, and treatment of paid bond interest. Other considerations include: general rates), bank account deposits and Company, individual or superannuation fund • Size of security sought by the debt financier. withdrawals taxes, and other Government investors may apply to the Commissioner of • Penalties potentially imposed against early licence fees and charges. Taxation for a tax rebate or tax exemption loan repayment. Taxation Deductions and Incentives against positive taxable income, over 15 years. • Consequences of late or non-payment Taxation deductions or incentives against As with all aspects of project financing, of debt. legitimate business establishment or it is important that professional advice be • Financier’s flexibility in meeting improvement expenses influence income sought on infrastructure bonds and any the needs of the business venture. tax liability and hence business viability. associated implications, where they are Taxation Considerations Operational expenditure is usually potentially applicable. Taxation is a major and complex deductible in the year incurred, while ‘capital’ consideration in the financial structuring of or structural expenditure over $300 is projects, and in business planning generally. generally deductible as depreciation over The apportionment of project, market and the approximated useful life of the asset. revenue risks between parties can impact Some conditional tax incentives may be greatly on a project’s viability. Most banks available to stimulate greater private sector have finance project teams to develop infrastructure investment. customised project financing structures and Depreciation proposals. Also, sensitive taxation aspects are Accelerated depreciation rates may apply usually confirmed via legally binding private against business plant and equipment taxation rulings obtained from the Australian (including those installed on leased Crown Taxation Office. Land). Guidelines are available from the Taxation law is constantly changing. Australian Taxation Office. It is, therefore, essential that prospective developers seek professional taxation advice in the early stages of concept development, for attention within business planning and associated feasibility assessment documentation.
54 tourism investment guidelines CASE STUDY 5 the buckland –studio retreat
The Buckland is an accommodation development of four studios complemented by a café/boutique function venue. The project is a 3½ hour drive from Melbourne and is located at the foot of the alpine area. Each studio is designed for a couple and features a luxury fit-out. The retreat is set in the stunning landscape of the Buckland Valley with views to Mt Buffalo. The popular regional tourist destination of Bright is only 10 minutes away.
Success Factors Buckland Valley, north east Victoria
• The project concept was based on extensive market research by the developer that initially looked broadly For more information go to: www.thebuckland.com.au at the ingredients that made luxury accommodation establishments successful and then at suitable locations (environment, destination, and landscape) that provided a market opportunity and affordable property prices. Statistical analysis was combined with field research of comparable businesses. • The site selected fitted the product image and market appeal desired. The spectacular views provided a unique setting. The location provided seclusion yet convenient access to both adventure and commercial facilities. The site area was sufficient for privacy for each studio and also for longer term development of later stages. • A business plan was developed early in the project’s conception. Initially the level of detail provided was sufficient for an in-principle funding approval. The plan was further detailed at a later stage for financial commitment and execution. The high level of detail in the business plan was critical to obtaining finance for the project. • The development approval process was lengthy and the proponent benefitted from early consultation with neighbours and the local government. A pro-active approach was adopted in pursuing the approval through a close association with local government staff and promptly dealing with issues raised. • The operators had a clear vision of the type of development that was desired. A close working relationship was established with the project architect who also managed the construction process. This relationship enabled the cost effective and timely translation of the vision to a reality. An environmentally sustainable design approach was incorporated in the concept. Control of the internal fit-out details remained with the operators. • Strong business relationships have been formed with wine and food producers, restaurants and recreation services in the area. This expands the potential offer to the visitor. • Considerable marketing was carried out before the project opened. Since opening, marketing has focussed on cultivating electronic and print media support, particularly outlets that are utilised by the target market.
tourism investment guidelines 55 construction
Taking the project concept from approval to Figure 11: project delivery flowchart reality requires the coordinated input from a range of professions and services. 9:I6>A:99:H> • Competitive prices for construction are I:C9:G>C<$EG>8>C< secured. • The construction phase is managed efficiently and cost effectively. Seek Builder Selection Process Establish Contract Figure 11 describes the main activities in this phase. 8DCHIGJ8I>DCE=6H: Detailed Design Appoint Site Establishment Approval of the concept design enables Construction Manager the project to proceed to detailed design. A qualified Architect may be engaged to Construction Compliance of Works Contact Closure co-ordinate the preparation of detailed documentation. Incorrect or inadequate documentation of the design can lead to a misinterpretation of the design intent and • Interior design, fixtures and fittings All detailed design should address access time and cost overruns. The design must and furnishings. and facility requirements for disabled meet regulatory and authority requirements • Site works including earthworks, fill and persons, energy efficiency and sustainable and local design standards. Preparation excavation, vegetation retention and development elements – alternative energy of the documentation may involve the removal, erosion remediation and systems, water conservation and recycling, appointment of sub-consultants, as required land stabilisation. heating and cooling systems, recycled (eg. engineers, environmental scientists, • Civil works including roads, car parks, materials, waste management and recycling heritage advisors, quantity surveyors, pathways, service connections and (see Sustainability Victoria website – landscape architects, etc). distribution throughout the site, service www.sustainability.vic.gov.au). areas, drainage and storm water The content of this phase includes: The detailed design phase should also management, waste storage and disposal. • Detailed architectural drawings, structural examine the construction program and • Site landscaping, plant maintenance design, building services design (cooling phasing of the development stages according systems, water storage, fire hazard and heating, electrical services including to funds availability, market demand or minimisation. lighting, hydraulic services including fire related factors. Detailed design requires a • Signage and external lighting. protection, lift services, security, information further and more detailed cost assessment technology systems), building materials of the development by a quantity surveyor. (internal, external, finishes and colours). This cost assessment may require further refinement of the detailed design to bring the project within a desired budget range. 56 tourism investment guidelines construction Construction Tendering / Pricing Key roles may include: table 18: what are the pricing traps that The most common method of engaging a • Managing the selection and appointment inexperiences investors often fall into? builder (or other contractors) to undertake of contractors. the required works is through a tendering • Planning and managing the various • Under budgeting, which may be due process. There are a number of ways in building activities – via phone calls, emails, to a wide range of design (design which this process can be undertaken faxes, site inspections and site meetings. complexity, unresolved details, selection including the following: • Managing contract variations. of fittings, finishes or materials and other aspects) or site factors (ground 1. Selective tendering – where 3 or more • Processing claims for payment. conditions, vegetation, demolition/ contractors are invited to submit a While the Project Manager is primarily remediation works etc). proposal/fee. responsible for the coordination of all • Conservative quantity surveyor costs. In this process, contractors may be construction activities, the Architect plays selected from a pre-qualification list – an important role in this construction • Cost escalation during construction, which includes organisations that have phase, as it is their design and vision that eg. fuel prices and materials, which may previously submitted general company is being implemented. The Architect occur between the detailed design information through a Registration/ should undertake regular inspections of and construction phases or during Expression of Interest process. the construction works to ensure that the construction. There are often many Government departments generally design intent is being interpreted correctly. external factors that have an impact utilise this method. This also allows them to rectify any issues as on prices. they arise. 2. Open tendering – where a general • Selecting a contractor based on a advertisement is placed in the paper, The Construction Manager has a principal low price – this will often be due to a online and/or through an agency calling responsibility to ensure that all OHS contract with no contingencies included, for a fee proposal. Standards on the construction site are and will generally lead to price variations satisfied and that the project program is throughout the construction stage. Project Construction met. In some regional locations the timely • Under estimating the construction Assuming all relevant approvals have been sourcing of materials, specialist contractors period (eg. due to bad weather) – which obtained, the key steps in the construction and delivery of specified fittings needs to can lead to delays and escalating costs. phase are: be realistically factored into the • Tendering – advertising, assessment/ construction program. negotiations and awarding the contract. The successful completion of the project • Site establishment – contractor gains access construction phase can be influenced by to site and sets up office/amenities and a number of factors, which include: materials start to be delivered to the site. • Getting good advice throughout the • Contractual construction phase – process, including planning, quantity supervisor/project manager oversees surveying and financial. the works. • Selecting good contractors with a proven Once the project is ready to proceed, a track record in the field. Do not select construction manager should be appointed a contractor based on price alone. to oversee the works. This person co- Undertake reference checks to verify ordinates the construction team (including prior experience and quality of work. the architect and contractors) on behalf of • Having a realistic budget for the works the client and is charged with the task of that makes provision for unexpected getting the project to a practical completion cost increases. stage within budget and time limitations. • Keeping design changes and variations to a minimum. • Following the correct processes and not cutting corners. tourism investment guidelines 57 Key success factors The conception and development of a successful and sustainable tourism project should have the following attributes: table 19: key success factors Point of Difference ✓ The project should be based on a good idea Quantified Market Demand ✓ Comprehensively research the market opportunity. Location, Location, Location ✓ The location should suit the proposed use and enhance appeal. Sustainable Design ✓ Design for your customers, the environment, the surrounds and the budget. Manage the Approvals Process ✓ Understand approval processes and consult broadly to minimise delays. Financial Feasibility ✓ Test the financial viability of the project and identify risk areas. Sound Business Plan ✓ To obtain financial support detail your plan for the business to succeed. Effective Construction Management ✓ Ensure management of all construction activities to deliver it on time and budget. Experienced Specialist Advisors ✓ Choose experienced specialists to advise and assist in the project throughout its various stages. Royal Mail Hotel, Dunkeld. 58 tourism investment guidelines appendices appendix A Summary - 10 Year Tourism & Events Industry Strategy objective Actions key activities A. Building upon existing strengths. 1. Improving the branding and marketing of Victoria. • Soundly researched based marketing campaigns. • Complement national campaigns effectively. • Respond to contemporary influences. • Target high yield markets. 2. Major events. • Actively support and pursue the retention, acquisition, staging and management of major events. 3. Aviation access. • Pursue further Network Development Agreements with high value carriers. • Strengthen efforts on international aviation policy development and access advocacy. B. Develop new strengths. 4. Infrastructure development. • Ensure the tourism and events industry needs are considered in the planning of major infrastructure projects. 5. Investment attraction and facilitation. • Expand private investment into tourism assets, particularly from international sources. 6. Skills and service standards. • Continue implementation of the Tourism Excellence Program. • Prepare a Workforce Development Plan for the tourism industry. 7. Third generation customer conversion services. • Maintain Tourism Victoria’s leadership in on-line services through innovation and new technology applications. • Assist the industry to develop its on-line capability. 8. Emerging international markets. • Support development (infrastructure, skills, and products) that meets the needs of potential international markets. • Target emerging Asian markets, particularly China. C. Focus on long-term 9. Business events acquisition. • Strengthen the capacity of the Melbourne Convention and growth opportunities. Visitors Bureau to capture business events. • Improve business event attraction in regional Victoria. 10. Regional destination development. • Continue implementation of the Government’s regional economic strategy – Moving Forward, Making Provincial Victoria the Best Place to Live, Work and Invest. • Convene a Regional Tourism Summit to address regional tourism issues. 11. Building synergies between tourism and • Assist educational organisations in the promotion of Melbourne international education. as an attractive study destination. 12. Promoting better decision-making. • Promote a Destination Management approach to Victoria’s tourism and events industry through whole-of-government decision making. • Establish a Victorian Tourism and Events Advisory Council to oversee implementation of the 10 year Strategy. D. Strengthen the partnership 13. Coordination and policy advocacy. • Strengthen the role of local government through expanded between Government and Regional Tourism Development Plans and acquisition of Industry. necessary industry skills. • Advocate Victoria’s interests at the Commonwealth level. 14. Communication. • Continue programs to communicate the economic significance of tourism. • Develop a communications strategy to highlight the importance of the tourism and events industry. tourism investment guidelines 59 appendices appendix B sustainable design and construction for tourism development Tips for Sustainable Design and Construction for Tourism Developments Energy Conservation Preserve Natural Features of Site Enhancement of Indoor • Incorporate passive solar design principles • Avoid development on sites or sections Environmental Quality to maximise day-lighting and passive heating of sites of high ecological value. • Minimise all work spaces exposed to glare and opportunities. • Minimise disturbance to site and regional excessive lighting. • Incorporate energy efficient design principles ecosystems during construction and operation. • Provide all building occupants with a view to to minimise active heating and cooling • Restore land equivalent to the area disturbed the outside. requirements. by the building and where possible the • Use air conditioning systems that allow for the • Specify energy efficient equipment and ecological footprint associated with operational supply of fresh outside air. lighting systems. activities. • Shield all building occupants from • Provide efficient control and effective Building Materials Conservation Electromagnetic Radiation (EMR) sources. maintenance systems, including monitoring of energy consumption. • Modify existing facilities to serve new Appropriate Landscaping • Optimise opportunities to use renewable requirements and reuse existing materials. • Design landscaping to facilitate year round energy sources and incorporate renewable • Minimise building materials produced from moderation of the internal climate. energy technologies wherever possible. limited or ecologically unsustainable natural • Minimise erosion potential. • Minimise embodied energy in construction resources. • Plant indigenous flora, and where appropriate, materials. • Minimise building materials that have food-generating plants. damaging ecological effects during harvesting, • Design landscaping to allow external meeting Water Conservation manufacturing, and/or construction. and break out areas. • Facilitate opportunities for on-site treatment • Minimise the use of building materials • Maximise the reuse on site of all rock and and reuse of grey-water and black-water with high embodied energy. topsoil emanating from excavations work. (sewage) streams • Minimise life cycle costs through using materials • Maximise the use of recycled compost, soil • Minimise water consumption through practices and equipment requiring minimal maintenance conditioners and mulches. such as: and with maximised expected useful life. –– installing rain water and storm water • Maximise the use of recycled content material Enhance Community Life collection tanks. where there is a cost difference • Involve the local community appropriately in –– installing reuse systems for grey water of less than 5%. the design process. –– providing water efficient facilities and • Respect, reflect and integrate the development Waste Minimisation equipment. with the surrounding culture and activities of • Maximise building longevity through creation of –– providing effective monitoring and the district. flexible and readily adaptable designs. maintenance systems. • Create facilities that are accessible and available • Provide facilities to assist office waste for community use. Minimisation of Fossil Fuel Usage separation into reusable, recyclable, • Purchase local products and services where compostable and landfill components. associated with Transport possible. • Facilitate staff access to public transport. • Minimise construction waste going to land fill • Encourage cycling by providing showering and through a material tracking system. Maintenance storage facilities. • Incorporate organic and water-based site • Provide legal structures (building leases, • Facilitate the use of appropriate waste disposal systems into landscaping design. maintenance agreements, strata titles and communication technologies, such as tele- and tenancy agreements) to preserve the video conferencing facilities. environmental performance of the building. • Minimise on-site car parking facilities. • Minimise transport distances involved in the demolition, recycling, construction, fit-out and operational phases of the project. Adopted from DSE’s ESDC Principles and Guidelines for Capital Works Projects 60 tourism investment guidelines appendices appendix C key organisations Aboriginal Affairs Victoria Department of Infrastructure Heritage Victoria Southern Rural Water Department of Planning and GPO Box 2797 and Heritage Council PO Box 153 Community Development (DPCD) Melbourne VIC 3001 Level 22, 80 Collins Street Maffra VIC 3860 GPO Box 2392 Phone: 03 9655 6666 MELBOURNE VIC 3000 Phone: 03 5139 3100 Melbourne VIC 3001 Fax: 03 9655 6762 Telephone: 03 9655 6519 www.srw.com.au Phone: 1300 366 356 www.doi.vic.gov.au www.heritage.vic.gov.au Sustainability Victoria www.dpcd.vic.gov.au/aav/ Department of Planning and Lower Murray Water Level 28, 50 Lonsdale Street Alpine Planning Unit Community Development (DPCD) PO Box 1438 Melbourne VIC 3000 Department of Planning and GPO Box 2392 Mildura VIC 3502 Phone: 03 8626 8700 Community Development, Melbourne VIC 3001 Phone: 03 5051 3400 Fax: 03 9663 1007 North East Region Phone: 1300 366 356 www.gwmwater.org.au www.sustainability.vic.gov.au 89 Sydney Road www.dpcd.vic.gov.au/aav/ Municipal Association of Victoria Tourism Alliance Victoria BENALLA VIC 3672 Department of Primary Industries GPO Box 4326PP Level 3, 114 Flinders Street Phone: 03 5761 1611 GPO Box 4440 MELBOURNE VIC 3001 Melbourne VIC 3000 Australian Institute of Melbourne VIC 3001 Phone: 03 9667 5555 Phone: 03 9650 8399 Landscape Architects Phone 03 9658 4000 Email: [email protected] Fax: 03 9650 8543 Level 1, 41 Exhibition Street Email: [email protected] www.mav.asn.au Email: [email protected] Melbourne VIC 3000 www.dpi.vic.gov.au Parks Victoria www.tourismalliance.com.au Phone: 03 9650 1898 Department of Industry Innovation 10/535 Bourke Street Tourism Australia Fax: 03 9650 3360 and Regional Development MELBOURNE VIC 3000 Level 4, 80 William Street Email: [email protected] Invest Victoria Phone: 03 8627 4699 East Sydney NSW 2000 www.aila.org.au GPO Box 4509 Fax: 03 9629 5563 Phone: 02 9360 1111 Australian Bureau of Statistics Melbourne VIC 3000 www.parkweb.vic.gov.au Fax: 02 9361 1388 GPO Box 2796Y Phone: 03 9651 8100 Planning Institute of Australia Email: [email protected] MELBOURNE VIC 3000 Fax: 03 9651 9531 60 Leicester Street www.tourism.australia.com Phone: 1300 135 070 Email: [email protected] Carlton VIC 3053 Tourism Research Australia Fax: 1300 135 211 www.invest.vic.gov.au Phone: 03 9347 1900 PO Box 1110 Email: [email protected] Department of Sustainability Fax: 03 9347 2900 Belconnen ACT 2616 www.abs.gov.au and Environment Email: [email protected] Phone: 02 6228 6100 Australian Market 8 Nicholson Street www.planning.org.au Fax: 02 6228 6180 & Social Research Society EAST MELBOURNE VIC 3002 Property Council of Australia www.tra.australia.com Level 1, 3 Queen Street Phone: 03 9637 8000, 13 61 86 Level 7, 136 Exhibition Street Tourism Victoria Glebe NSW 2037 www.dse.vic.gov.au MELBOURNE VIC 3000 32/121 Exhibition Street Phone: 02 9566 3100 Environment Protection Authority Phone: 03 9650 8300 MELBOURNE VIC 3000 Fax: 02 9571 5944 Information Centre Fax: 03 9650 8693 GPO Box 2219T Email: [email protected] H&WT Tower www.propertyoz.com.au MELBOURNE VIC 3001 www.mrsa.com.au 40 City Road Regional Development Victoria Phone: 03 9653 9777 Australian Sustainable SOUTHBANK VIC 3006 GPO Box 4509 Fax: 03 9653 9722 Built Environment Council Phone: 03 9695 2722 Melbourne VIC 3000 www.tourismvictoria.com.au 20 Bryant Street, Fax: 03 9695 2785 Phone: 13 22 15 VICROADS FLEMINGTON VIC www.epa.vic.gov.au Email: [email protected] Head Office Administration [email protected] GBCA Melbourne www.business.vic.gov.au 60 Denmark Street www.asbec.asn.au Level17, www.iird.vic.gov.au Kew VIC 3101 Business Victoria 500 Collins Street, Royal Australian Institute Phone: 13 11 74 121 Exhibition Street MELBOURNE VIC 3000 of Architects www.vicroads.vic.gov.au Melbourne VIC 3000 Phone: 03 8612 2000 1st floor , 41 Exhibition Street, Phone 13 22 15 Fax: 03 9614 8338 Melbourne VIC 3000 Fax: 03 9651 9770 www.gbca.org.au PO Box 18025 Email: [email protected] GWM Water Phone: 03 8620 3866 www.business.vic.gov.au PO Box 481 Fax: 03 8620 3886 Consumer Affairs Victoria Horsham VIC 3402 [email protected] (Liquor Licensing) Phone: 1300 659 961 www.architecture.com.au Level 2, 452 Flinders Street www.gwmwater.org.au Melbourne VIC 3000 Goulburn-Murray Water Phone: 1300 55 81 81 PO Box 165 Email: [email protected] Tatura VIC 3616 www.consumer.vic.gov.au Phone: 03 5833 5500 www.g-mwater.com.au tourism investment guidelines 61