PROJECT REPORT ALS ISLAND RESORT STUDY: STAGE 1 MARKET STUDY & PROGRAMME RECOMMENDATION
PREPARED FOR FONDEN UNIVERSE SCIENCE PARK, NORDBORG, DENMARK
NOVEMBER 2013
FINAL REPORT
SUBMITTED BY ECONOMICS AT AECOM AECOM PROJECT NO. 60298731
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TABLE OF CONTENTS 1 Introduction ...... 8 2 Executive Summary ...... 9 Local & Site Area ...... 9 Overview of Local Market Conditions ...... 9 Available Resident & Tourists Markets ...... 10 Resort Hotel Market & Overview ...... 11 Holiday Homes Market Overview ...... 11 Campsite Market Overview ...... 12 Marine Leisure Market Overview ...... 12 Water Park Overview ...... 13 International Precedents ...... 14 Development Programme ...... 14 3 Local and Site Area ...... 16 Introduction ...... 16 Concept Overview ...... 16 Location and Access ...... 18 Site Review ...... 20 Site Strengths and Weaknesses ...... 22 Implications for the Study ...... 22 4 Overview of Local Market Conditions ...... 24 Introduction ...... 24 Economic Overview...... 24 Infrastructure Overview ...... 27 Climate Characteristics ...... 28 Implications for the Study ...... 29 5 Resident Market Overview ...... 31 Introduction ...... 31 Definition ...... 31 Total Resident Market ...... 32 Resident Market Characteristics ...... 33 Implications for the Study ...... 38 6 Tourist Market Overview ...... 40 Introduction ...... 40 Definition ...... 40 Total Unqualified Tourist Market ...... 40 Total Qualified Tourist Market ...... 42 Tourist Market Characteristics ...... 43 Implications for the Study ...... 48 7 Resort Hotel Market & Overview ...... 50 Introduction ...... 50 Hotel Accommodation Supply ...... 50 Hotel Accommodation Demand ...... 55 Other Hotel Operating Indices ...... 64 Implications for the Study ...... 67 8 Holiday Homes Market Overview ...... 69 Introduction ...... 69 Market Context ...... 69
Overview of Residential Product & Pricing ...... 71 Demand Characteristics ...... 79 Implications for the Study ...... 82 9 Campsite Market Overview ...... 84 Introduction ...... 84 Campsite Supply ...... 84 Campsite Demand ...... 90 Other Campsite Operating Indices ...... 98 Implications for the Study ...... 100 10 Marine Leisure Market Overview ...... 101 Introduction ...... 101 General Context ...... 101 Pre-Requisites for Marina Development ...... 103 Quayside Facilities and Services ...... 104 Regional Context ...... 108 Local Context ...... 110 Implications for the Study ...... 114 11 Water Park Overview ...... 115 Introduction ...... 115 Northern European Indoor Water Park Market Context ...... 115 National Attractions Overview ...... 116 Regional Indoor Water Park Overview ...... 117 Price & Length of Stay ...... 120 Operating Season ...... 121 Market Mix ...... 121 Market Penetration Rates ...... 122 Attendance ...... 123 Financial Performance of European Indoor Water Parks ...... 129 Implications for the Study ...... 130 12 International Precedents...... 132 13 Development Programme ...... 158 Introduction ...... 158 Summary of Key Determinants ...... 158 Development Concept Recommendation ...... 159 Design and Strategic Planning Considerations ...... 161 Development Programme Recommendation ...... 162 Development Programme Summary ...... 202 Development Phasing ...... 203 Next Steps ...... 204
INDEX OF TABLES/FIGURES
Figure 2.1: Available Resident & Tourist Markets to Als Island Resort, 2013-2028 ...... 10 Figure 2.2: Round-Trip Itinerary in Study Area ...... 13 Figure 2.3: Als Island Resort Water Park Attendance Scenarios, 2020 ...... 14 Figure 2.4: Development Programme Summary ...... 15 Figure 3.1: Preliminary Als Island Resort Concept Masterplan ...... 16 Figure 3.2: Client Vision ...... 17 Figure 3.3: Site Location Regional Context ...... 18 Figure 3.4: Site Location Local Area Context ...... 19 Figure 3.5: Site Boundary & Land Ownership ...... 20 Figure 3.6: Site Strengths & Weaknesses ...... 23 Figure 4.1: GDP in Denmark, 2003-2012 ...... 25 Figure 4.2: GDP per Capita, 2002-2011 ...... 26 Figure 4.3: Regional GDP per Capita, 2011 ...... 26 Figure 4.4: Inflation Rate, Denmark, 2002 – 2011 ...... 27 Figure 4.5: Temperature in Sonderborg Municipality ...... 28 Figure 4.6: Number of Days with Precipitation, Sonderborg Municipality ...... 29 Figure 5.1: Als Island Resort Drive Time Isochrones ...... 32 Figure 5.2: Resident Market Current & Projected Population, 2013-2028 ...... 32 Figure 5.3: Denmark, Syddanmark and Schleswig-Holstein Regions Age Profile, 2013 ...... 33 Figure 5.4: Employed in Syddanmark by Sector (thousands), 2012 ...... 34 Figure 5.5: Unemployment Rate (%), 2008 – 2012 ...... 35 Figure 5.6: Provincial Income per Household, 2007 - 2011 ...... 36 Figure 5.7: Average Household Income, 2007-2011 ...... 37 Figure 5.8: Household Annual Consumption by Type, Average 2009-2011 ...... 37 Figure 6.1: Total Unqualified Tourist Market ...... 40 Figure 6.2: Overlap between Catchment Area & Jutland ...... 41 Figure 6.3: Origin of Danish Tourists to South Jutland ...... 42 Figure 6.4: Total Qualified Tourist Market ...... 42 Figure 6.5: Domestic & International tourist market Projections, 2013-2025 ...... 43 Figure 6.6: Visitor Origin to South Jutland ...... 44 Figure 6.7: Purpose of VIsit, Denmark, 2011 ...... 45 Figure 6.8: Seasonality, Syddanmark Region, 2012 ...... 46 Figure 6.9: Length of Stay, 2013 ...... 46 Figure 6.10: Tourist per Capita Daily Expenditure, Syddanmark, 2009 – 2010 ...... 47
Figure 6.11: Tourism Expenditure Breakdown, Sønderborg, 2010 ...... 48 Figure 7.1: Denmark - Number of hotels ...... 50 Figure 7.2: Als Island – Lodging Operators ...... 51 Figure 7.3: Als Island Share of National Hotel Operations 1 ...... 51 Figure 7.4: Hotel1 Room Supply Growth 2007-2013 2 ...... 52 Figure 7.5: Als Island Share of Danish Hotel Rooms Supply 1 ...... 53 Figure 7.6: Als Island – Lodging Operators (on-Island Only) ...... 53 Figure 7.7: Seasonality - Monthly room occupancy Percentage ...... 55 Figure 7.8: Hotel Market Mix Comparison (Denmark / South Jutland) ...... 56 Figure 7.9: Geographic Origin of Hotel Demand (Denmark & Syddanmark) ...... 58 Figure 7.10: Geographic Origin of Hotel Demand (Als Island) ...... 59 Figure 7.11: Selected Als Island hotels - Double Occupancy Factors (DOF) & Average Length of Stay ...... 60 Figure 7.12: Hotel Room Occupancy – Average Annual Percentages Denmark, Syddanmark & South Jutland (2007 – 2012) ...... 61 Figure 7.13: Als Island Hotel Room Occupancy Ranges ...... 62 Figure 7.14: Als Island Hotels - Achieved Average Room RAtes ...... 62 Figure 7.15: Als Island Hotels - Achieved Average Rooms Revenue per available room (RevPAR) ...... 63 Figure 7.16: Als Island – Hotel Revenue Mix 1...... 65 Figure 7.17: Als Island hotel Expenses & Operating Profit Indices 1 ...... 66 Figure 8.1: Map of Holiday Home Clusters, Als Island ...... 70 Figure 8.2: Unit Sizes, Als Island, 2013 ...... 72 Figure 8.3: Plot Size : Net Unit Size Ratio, Als Island, 2013...... 73 Figure 8.4: Holiday Home Sale Prices, Denmark and Syddanmark, 2006 – 2011 ...... 75 Figure 8.5: Holiday Home Sales Prices, Als Island 2013 ...... 76 Figure 8.6: Price/Sqm, Als Island, 2013 ...... 77 Figure 8.7: Monthly Rental Income, Als Island, 2013 ...... 78 Figure 8.8: Gross Investment Yield, Als Island, 2013 ...... 78 Figure 8.9: Holiday Home sales, Denmark and Syddanmark, 2006 – 2011 ...... 79 Figure 8.10: Holiday Home Nights, Syddanmark Region, 2007-2012 ...... 80 Figure 9.1: Denmark - Number of CampSite Operators (high/Low Season) ...... 85 Figure 9.2: Als Island – Campsite Operators ...... 85 Figure 9.3: Als Island Share of Total Danish Campsite Operations 1 ...... 86 Figure 9.4: Campsite Spaces (units/pitches 1) Supply Growth 2007-2012 ...... 87 Figure 9.5: Als Island share of Danish Campsite unit/pitch Supply 1...... 88 Figure 9.6: Als Island – Campsite Supply characteristics (on-Island campsites only) ...... 88 Figure 9.7: Als Island – Campsite Operator & Unit/pitch 1 Supply mix ...... 89 Figure 9.8: Danish Campsite Seasonality ...... 91
Figure 9.9: Geographic Origin of Demand (Denmark & Syddanmark)...... 92 Figure 9.10: Geographic Origin of Demand (Als Island) ...... 93 Figure 9.11: Als Island – Campsite Leisure Markets ...... 94 Figure 9.12: Selected Campsites - Double Occupancy Factors (DOF) & Average Length of Stay ...... 94 Figure 9.13: Campsite Unit/Pitch Utilisation (Occupancy) (2007 – 2012) ...... 95 Figure 9.14: Achieved Average Campsite rate ranges ...... 97 Figure 9.15: Als Island – Campsite Average revenue Mix 1 ...... 98 Figure 9.16: Als Island Campsite Expenses & Operating Profit Indices 1...... 99 Figure 10.1: Orders of Yachts Over 25m ...... 102 Figure 10.2: Marina Overnight Stays by Region ...... 108 Figure 10.3: Principal Crusing Areas ...... 109 Figure 10.4: Study Area Major Marinas ...... 110 Figure 10.5: Profile of Marinas in Study Area ...... 110 Figure 10.6: Round-Trip Itinerary in Study Area ...... 112 Figure 10.7: Berth Mix ...... 113 Figure 10.8: Local Marina Berth Pricing ...... 113 Figure 11.1: Select Indoor Water Parks Attendance ...... 115 Figure 11.2: Top 20 Most Visited National Attractions, 2011 ...... 117 Figure 11.3: Regional Indoor Water Park Map ...... 118 Figure 11.4: Pricing Review at Northern European & Regional Indoor Water Parks ...... 120 Figure 11.5: Selected Indoor Water Park Market Mix ...... 122 Figure 11.6: Selected Indoor Water Parks Penetration Rates ...... 122 Figure 11.7: Opening Year Projected Attendance Scenarios ...... 125 Figure 11.8: Forecast Als Island Resort Market Segment Sizes (200, 500 & 750 Key Scenarios) ...... 127 Figure 11.9: Als Island Resort Water Park Attendance Scenarios, 2020...... 128 Figure 11.10: Indoor Water Parks Per Capita Revenues ...... 129 Figure 11.11: Water Parks Operating Expenses ...... 130 Figure 12.1: Center Parcs ...... 134 Figure 12.2: Center Parcs Continued ...... 135 Figure 12.3: Images of Center Parcs ...... 136 Figure 12.4: High Ropes ...... 137 Figure 12.5: High Ropes Continued ...... 138 Figure 12.6: Images of High Ropes Centres ...... 139 Figure 12.7: Integrated Water Park Hotel ...... 140 Figure 12.8: Integrated Water Park Hotel Continued ...... 141 Figure 12.9: Images of Splash Landings Hotel ...... 142
Figure 12.10: Glamping ...... 143 Figure 12.11: Glamping Continued ...... 144 Figure 12.12: Images of Feather Down Farms ...... 145 Figure 12.13: Watersports Centre ...... 146 Figure 12.14: Watersports Centre Continued ...... 147 Figure 12.15: Images of Watersports Centres ...... 148 Figure 12.16: Wildlife Centre ...... 149 Figure 12.17: Wildlife Centre Continued ...... 150 Figure 12.18: Wildlife Centre ...... 151 Figure 12.19: Culinary School ...... 152 Figure 12.20: Culinary School Continued ...... 153 Figure 12.21: Culinary schools ...... 154 Figure 12.22: Spa Facility ...... 155 Figure 12.23: Spa Facility Continued ...... 156 Figure 12.24: Spa Facility Continued ...... 157 Figure 13.1: Water Park Hotel – Preliminary Development Programme ...... 173 Figure 13.2: Water Park Hotel – Preliminary Development Programme Continued ...... 174 Figure 13.3: Base Case (500 key): Projected Design Attendance ...... 177 Figure 13.4: Base Case (500 key): Parking & Land Area Requirements ...... 177 Figure 13.5: Full Build Out: Projected Design Attendance ...... 178 Figure 13.6: Full Build Out: Parking & Land Area Requirements ...... 178 Figure 13.7: Boutique Marina Waterfront Hotel – Preliminary Development Programme ...... 183 Figure 13.8: Recommended Marina Berth Mix ...... 184 Figure 13.9: Programme Recommendation for Holiday Homes ...... 187 Figure 13.10: Parking Requirement for Holiday Homes ...... 189 Figure 13.11: Architectural Design Ideas ...... 190 Figure 13.12: Holiday Homes: Pricing Strategy...... 192 Figure 13.13: Campsite – Preliminary Development Programme ...... 198 Figure 13.14: Campsite – Preliminary Development Programme: Continued ...... 198 Figure 13.15: Commercial Units Preliminary Development Programme ...... 200 Figure 13.16: Development Programme Summary ...... 202
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1 INTRODUCTION
1.1 Fonden Universe Science Park appointed the Economics practice at AECOM to assess the market and economic viability of a proposed resort located on the north coast of Als Island in Denmark.
1.2 The concept plans for the proposed resort cover a 200-hectare site stretching from the existing Universe attraction to the sea. At this stage, potential land uses include a camp site, holiday homes, a hotel, a water park and a marina.
1.3 The aim of this study is to assess the economic feasibility of the proposed resort, determine an appropriate scale of the scheme to suit the market potential and evaluate its economic impact to the local area.
1.4 The initial concept and development plans for the resort have been well received by Sønderborg Municipality. Our study outputs will help the scheme’s Vision Group to refine the plans and review the scale of the development.
1.5 This preliminary Stage 1 report provides an overview of the available resident and tourist markets, local and regional competition, market evaluations of all proposed land uses as well as a recommended development programme. Once we have received feedback from this report we will prepare a Stage 2 report which will evaluate the forecast operating financial performance of the resort as well as its economic impact to the area.
1.6 This report has been prepared by Ben Martin (Principal), Vanessa Muscarà (Senior Consultant), Duncan Almond (Senior Consultant), and Jodie Lock (Senior Analyst).
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2 EXECUTIVE SUMMARY
LOCAL & SITE AREA 2.1 The proposed resort is located on the north side of Als Island in Denmark, approximately 60km from the border with Germany. The site is adjacent to Universe, an established attraction and the closest town is Nordborg which has a population of 6,500.
2.2 Als Island Resort is an important factor in the future tourism development plans of the island. The ambition of its Vision Group is to shift tourist’s perception of the island from a historically industrial area to a high-end tourist destination predominantly offering nature based activities.
2.3 Road access to the 200-hectare site is via the 405 road which runs through to the municipality’s capital Sønderborg, and connects to the E45 highway that runs north towards Aarhus and Billund and south to the German border. Billund and Copenhagen airports are within less than a two hour drive-time. Sønderborg domestic airport offers 10 daily flights to Copenhagen.
2.4 The topography of the site is such that there are only limited sea views and these would have to be protected within the master planning of the site in order to maximise the premiums that they might offer both for hospitality or residential real estate.
2.5 Development plans of a resort called Project Harbour including a 200-room hotel and a 6,000sqm indoor water park are currently underway on the Sønderborg waterfront. Despite the relatively narrower amenity mix at Project Harbour, the project poses reasonable competition to the proposed Als Island Resort since it is underpinned by a prominent architect (Frank Gehry), and is located closer to local population hubs.
2.6 Our review of the site indicates that it would be of a suitable scale for the envisaged project. There are a few hurdles that will need to be overcome – specifically, these include a requirement to fully assemble the ownership of the project site.
2.7 From a market perspective, Germans represent a key source of tourism and the strengthening reputation of the adjacent Universe park will provide some leverage for the new project within both the domestic and international markets. OVERVIEW OF LOCAL MARKET CONDITIONS 2.8 Compared to most of Europe, Denmark has a relatively stable economy equipped with strong institutions and policies. The region of Sydannmark contributed 19 percent towards national GDP in 2011, falling from approximately 20 percent in 2002. GDP per capita fluctuated around the €38,500 mark in Syddanmark between 2007 and 2011, approximately €5,400 lower than the national average.
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2.9 In 2011, the inflation rate across Denmark stood at approximately 2.8 percent following a period of modest fluctuation where inflation peaked at 3.4 percent in 2008.
2.10 The underlying vulnerability to political unrest and economic distress is very low in Denmark. This is emphasised by the country being ranked as the second least vulnerable country to political instability in the world.
2.11 Sønderborg Municipality has a mild climate with temperatures increasing to 17 degrees in summer and falling to one degree in winter. Being located in Northern Europe means that the country is subject to seasonal fluctuations in daylight hours. AVAILABLE RESIDENT & TOURISTS MARKETS 2.12 We have assessed the size of the residential market based on one and two-hour drive-time isochrones from the proposed site. Together the two isochrones cover a total area approximately equal to 90 of the Syddanmark region in Denmark and 55 percent of the Schleswig-Holstein region in Germany.
2.13 As illustrated in Figure 2.1, the total resident market available to Als Island Resort today amounts to a population of around 2.7 million and is forecast to reach around 2.8 million in 2028.
FIGURE 2.1: AVAILABLE RESIDENT & TOURIST MARKETS TO ALS ISLAND RESORT, 2013-2028
Segment 2013 2018 2023 2028 CAGR 1
Primary Market (0-60 mins) 328,000 324,000 321,000 324,000 -0.1% Secondary Market (60-120 mins) 2,399,000 2,406,000 2,412,000 2,451,000 0.1%
Total Resident Market 2,727,000 2,730,000 2,733,000 2,774,000 0.1%
Qualified Domestic Tourists 50,000 56,000 65,000 76,000 2.8% International Tourists 103,000 121,000 147,000 179,000 3.8% Visiting Friends & Relatives 74,000 75,000 75,000 75,000 0.1%
Total Tourist Market 228,000 252,000 288,000 330,000 2.5%
TOTAL AVAILABLE MARKET 2,955,000 2,982,000 3,021,000 3,104,000 0.3%
1 CAGR = Compound Annual Growth Rate Source: Danmark Statistik, DeStatis, Euromonitor, AECOM
2.14 Within a two-hour catchment area of the study site, we estimate the qualified domestic, international and visiting friends & relatives (VFR) tourist markets at around 50,000, 103,000 and 74,000 respectively. The total of 228,000 tourists is expected to increase to 330,000 by by 2028.
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2.15 The total available market to Als Island Resort is estimated to total 3.0 million today and to grow to 3.1 million by 2028. RESORT HOTEL MARKET & OVERVIEW 2.16 Our analysis of the Als Island hotel sector highlights a number of characteristics with regard to the size of the market, the hotel product mix, and overall operating indices.
2.17 Development of the industry and the associated lodging products to support it remain relatively un-evolved, particularly outside the more culturally diverse Sønderborg. The origins of such high levels of Island-wide tourism retardation would appear to lie in the historic development of its economy and the patriarchal nature of the industrial giant, Danfoss.
2.18 Als Island has gained an unfair and misguided reputation of being a predominantly industrial area and is considered un-conducive to tourism activity. These factors largely explain why the Island’s hotel operations are so disparate and fragmentary, both in product and operating terms.
2.19 The fact that Als is something of a ‘Sleeping Beauty’ in tourism development terms presents developers and tourism promoters alike with a rare opportunity to re-launch the Island’s image as a new and exciting destination with a hospitality product mix that is innovative, sensitive to the existing attributes of the area, environmentally responsible and tuned specifically to the emerging needs, trends, and sensitivities of today’s travel markets. HOLIDAY HOMES MARKET OVERVIEW 2.20 Als Island is recognised to be a desirable holiday home destination in Denmark, and is particularly popular with international tourists from Germany. The market is highly fragmented with a lack of integrated resort development and an array of low density standalone homes of varying quality that are widely dispersed across the island. The integrated resort concept is relatively untested and would offer something entirely new to the region.
2.21 The market for holiday homes on Als Island is currently a buyer’s market, with many units left unsold and there is continuing downwards pressure on prices as a result of the global economic downturn. Once the region has recovered from the knock-on effects of the global economic crisis, we anticipate the market for holiday homes with pick up again.
2.22 The average time taken to sell a holiday home in Denmark has increased fourfold over the past seven years, but it is easier to absorb prime properties into the market. If these high- end holiday homes are priced correctly, they can take three to six months to sell. This, coupled with the fact that investors consider prime property to be less risky, is a good reason for why Als Island Resort should consider targeting the high end of the market.
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2.23 The market for holiday homes in Denmark is highly seasonal with occupancy rates approaching 100 percent in July and remaining relatively low throughout the rest of the year. Managing this seasonality will be a challenge for the project. Whether to open Als Island Resort year-round or on a seasonal basis will doubtless be a point of debate. CAMPSITE MARKET OVERVIEW 2.24 Camping sector analysis on Als highlights the relatively unchanged nature of the Island’s supply over many years, and also the rather unsophisticated ‘hands-on’ approach of the majority of campsite owner-operators.
2.25 Occupancy challenges have, in part, reflected a range of exacerbating influences such as poor weather, and recessionary impacts on disposable incomes. But they also, arguably, reflect a lack of investment in camping innovation, not only in amenity provision for ‘lost’ markets such as teenagers, but also in new forms of more lucrative and inventive campsite accommodation and configuration.
2.26 The provision of exemplary traditional camping facilities, together with innovative new forms of ‘glamping’ could comprise a leading and, in a local market context, unique product development opportunity at this project. MARINE LEISURE MARKET OVERVIEW 2.27 Berthnights at marinas across all regions in Denmark has dipped since the start of the global economic downturn. Select itineraries however, have recently generated additional demand for berthnights at new marinas located in the study area, especially from network cruisers.
2.28 We feel there is an opportunity at Als Island Resort to offer a number of alternative routes to this round-trip route as illustrated in Figure 2.2 by the dotted lines, particularly between the east coastlines of the island to Ærø.
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FIGURE 2.2: ROUND-TRIP ITINERARY IN STUDY AREA
Source: Individual Marina Operators & AECOM
2.29 Existing marinas on the west coast of Als Island currently achieve occupancy rates of over 100 percent during the high season. Therefore we feel there is an opportunity to cater for the spin-off demand from these en-route marinas. WATER PARK OVERVIEW 2.30 We examined the potential performance of an indoor water park within the Als Island Resort against a number of comparable parks located in northern Europe and Denmark. Based on a number of performance characteristics we derived a suitable lead admission price and attendance projections.
2.31 Our view is that the lead admission price at Als Island Resort indoor water park should be set around DKK 150, reflecting a price per hour of DKK 38. In 2013 values, this price level lies below the recommended lead admission price at Project Harbour (DKK 160 expressed in 2009 values). Should Project Harbour not go ahead as planned, we believe that the lead price could be set up to DKK 160 provided the quality of the attraction offer is in line with indoor water parks that achieve similar prices per hour, namely Lalandia in Rødby or Dianabad in Austria.
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2.32 We also assessed a range of potential attendance scenarios for the proposed indoor water park, taking particular consideration of repeat visitation from on-site guests. These scenarios correspond to an indoor water park surrounded by gradually increasing resort lodging provision of 200 keys (in line with lodging provision at Project Harbour), 500 keys and 750 keys. The results are summarised in Figure 2.3.
FIGURE 2.3: ALS ISLAND RESORT WATER PARK ATTENDANCE SCENARIOS, 2020 Attendance per key 600 610 620
Water Park + 200 keys 155,000 157,000 159,000 Water Park + 500 Keys 334,000 339,000 344,000 Water Park + 750 keys 483,000 491,000 498,000
Source: AECOM INTERNATIONAL PRECEDENTS 2.33 Within an increasingly competitive international market context, resorts today typically offer a number of recreational amenities. While some are central to the overall theme or concept of the resort, such as a golf course, others play more of a supporting or ancillary role – though these can be just as crucial to the resort’s success and often feature heavily in marketing programmes.
2.34 The initial site planning work should give consideration not only to short-term development priorities but also to the long term profile of the scheme. The late addition of previously unplanned elements can have significant economic and operational impacts on a resort. It is therefore prudent to ensure that the long-term plans for the site allow a degree of flexibility, giving the developer the freedom to ‘move with the market’, as far as possible.
2.35 It must be considered that the over-development of amenities at the outset of the scheme may result in a capital cost burden that could sink the resort before it has time to become established. In addition, over-sized or under-utilised amenities can have a negative impact on the ambience of a resort and the guests’ experience. DEVELOPMENT PROGRAMME 2.36 In Figure 2.1 we provide a summary table of the development programme for the proposed resort.
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FIGURE 2.4: DEVELOPMENT PROGRAMME SUMMARY
Component Units / Area Notes
Resort Water Park Hotel 200 keys Dining options, spa, conference, retail, health club, outdoor amenities
Indoor Water Park 5,000 to 9,000sqm
Boutique Marina Waterfront Hotel 40 keys Dining options, lounge / bar, function space, libary
Marina 100 Wet Berths Marina administration within 50 Berth Dry-stack hotel complex
Holiday Homes 400 units Villas, townhouses, apartments
Camp Site Pitches 20 Glamping Support facilities, family dining, 200 Traditional and mini-market
Commercial Space 3,000sqm Retail, food & beverage, entertainment, leisure, non-commercial
Other Components Trails, high-ropes, adventure play ground, water sports centre, leisure club, amphitheatre, resort reception & security, resort services building.
Source: AECOM
2.37 In terms of phasing, we recommend that the resort hotel and indoor water park component are incorporated within the first phase of development along with the first phase of residential real estate and the glamping pitches. As a second phase of development, attention should turn to the marina and waterfront offer as this is located furthest from the Universe Park and the point of access to the site.
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3 LOCAL AND SITE AREA
INTRODUCTION 3.1 In this section we provide an overview of key characteristics of the project site, adjacent to the existing Universe attraction on Als Island in Denmark. Fundamental to the success of all resort developments are their location in terms of accessibility, natural beauty, drama and sense of arrival. Also of key importance are the activities currently being undertaken on the site boundaries and the general image of the surrounding area. Over the following pages we provide an overview of the local area context and the strengths and weaknesses of the site itself. CONCEPT OVERVIEW 3.2 The profile of a proposed project site must be considered in the context of the development vision for the scheme. In this instance the preliminary concept plans for the proposed resort cover a 200-hectare site stretching from the existing Universe park to the sea as illustrated in Figure 3.1.
FIGURE 3.1: PRELIMINARY ALS ISLAND RESORT CONCEPT MASTERPLAN
Source: Fonden Universe Science Park
3.3 The target market positioning of the resort is high-end. Potential land uses include holiday homes, a hotel, a campsite, a water park and a marina. The current breakdown of land uses is illustrated in Figure 3.2. It is our understanding that the number of proposed units is only indicative. In terms of phasing, the current plan is to deliver the project in three phases.
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FIGURE 3.2: CLIENT VISION Units Type Site Area Comments (Sqm)
Silo hotel 60 keys na Eight-storey hotel Marina Hotel 40 keys na With sea views Pier homes 10 boats na Seafront-homes 99 homes na Overlooking marina and restaurants Forest cottages 85 homes 6,800 80sqm houses Lakeside housing 50 boats 1,500 30sqm houses Lakeside hotel cabins 14 keys Na Properties in resort forest 300 homes 30,000 100sqm energy homes Land cabins 65 keys 2,275 Camping 600 pitches Na Incl. playground & communal centre Treetop camping 40 pitches 600 Marina 150 berths na Total 1,513
Leisure Ammeneties Resort reception Café, playground, electrical car chargers Entertainment centre Concerts, circus etc. Water activities 30,000 Mini Golf 2 x 18 holes Board Walk Link to Universe park
Na = not available / not applicable Source: Fonden Universe Science Park
3.4 The adjacent Universe attraction opened in 2005 as a year round operation but struggled to maintain target attendance levels. As a result, the attraction is now a seasonal operation and plans are in place to increase the current annual attendance of around 100,000 to 300,000 by 2018. To this end, Als Island Resort will contribute to Universe’s target by providing cross- over visitation from on-site resort guests via the Board Walk link.
3.5 The Als Island Resort is an important factor in the future tourism development plans of the island. Its economic impact is expected to have a multiplier effect throughout the island and beyond. Supported by the Municipality of Sønderborg, the resort’s main objective is to increase tourist overnight stays and create jobs by developing a high-end destination appeal to the local area.
3.6 The surrounding environment also plays an important role in the vision of the resort. For example, fishing in the island’s lake is considered a natural attraction that would entice tourists to increase their length of stay. Highlighting the island’s natural assets would therefore help to shift the island’s image from its current industrial feel to a more nature- based experience.
3.7 In addition, Sønderborg Municipality aims to become carbon neutral by 2029. This ethos will therefore be applied throughout the design and construction process of Als Island Resort.
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Unlike the Lalandia resorts in Billund and Rødby, where little attention was dedicated to the architecture of the holiday homes, the aim at the proposed Als Island Resort is to blend some of the lodging units into its natural landscape. LOCATION AND ACCESS 3.8 The project site is located in the south of Denmark, within approximately 60km of the border with Germany, as illustrated in Figure 3.3.
FIGURE 3.3: SITE LOCATION REGIONAL CONTEXT
Source: Google Earth
3.9 It lies within 5km of the town of Nordborg to the northwest, which has a population of around 6,500 and 16km drive to the north of Sønderborg, which has a population of approximately 28,000.
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3.10 Being located on an island, the range of access routes to the site is limited. The principle road access is via the 405 road which runs north through Als Island from Sønderborg. To the west of Sønderborg the road crosses the bridge which links the island with the mainland and connects with the arterial E45 highway that runs north towards Aarhus and Billund (and indirectly to Copenhagen) and south to the German border and ultimately to Hamburg.
3.11 There is a ferry that runs from Fynshav, approximately 15km to the south of the project site and connects with Bojden, but this will never be more than a secondary access route to the island, given the limited volume of traffic that this can support.
3.12 The principle access points for those travelling from abroad to the site by air are most likely to be Billund Airport and Copenhagen Airport, of which Billund is the closer at a drive time of around 1hr and 45 mins (160km approximately). In terms of domestic airports, from mid June of this year, 10 daily flights between Sønderborg and Copenhagen are run by two airlines; Aisle Express and Danish Air Transport.
3.13 The project site’s local area context is provided in Figure 3.4. As shown it occupies a continuous stretch of land that lies between the 405 road and the coast.
FIGURE 3.4: SITE LOCATION LOCAL AREA CONTEXT
Source: Google Earth
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SITE REVIEW Current Site Profile 3.14 The boundary of the proposed site is shown in Figure 3.5, which also sets out the range of site current site ownerships (i.e. this is a project site that has still to be fully assembled). Today, the individual sub-parcels that comprise the project site are primarily used as agricultural land or are protected woodland (in green). The Universe Park is located in the southwestern tip of the site.
FIGURE 3.5: SITE BOUNDARY & LAND OWNERSHIP
Site Boundary Plan Site Ownership Plan
Source: Fonden Universe Science Park
3.15 The land is gently undulating with a gradual slope towards the coast, along an axis that runs from southwest to northeast. The full length of the site along this access is approximately 2km, and it benefits from direct access to a foreshore area that is approximately 1km long.
3.16 The gentle topography of the site is most likely reflected in the profile of the bathymetry off the shoreline and this may have implications for the potential costs associated with creating a marina as part of the programme recommendation (i.e. there may be a requirement to dredge the access channel into a marina and continue to dredge the marina itself in order to ensure that it is accessible for a suitable range of craft).
3.17 The topography of the site is such that there are only limited sea views and these would have to be protected within the master planning of the site in order to maximise the premiums that they might offer both for hospitality or residential real estate. The woodland areas incorporated within the proposed site boundary are dominated by young commercial plantations, rather than mature environments.
3.18 The complex site ownership situation is not ideal as there will clearly be a need for determined negotiations to be completed in order to realise the development vision for the
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site. It is our understanding that there are currently eight different ownerships represented within the boundary of the site proposed for development, with only a minority stake falling under the ownership of Danfoss.
3.19 It is anticipated that the proposed resort would be accessed through an arrival zone at the southwestern perimeter of the land holding close to the existing Universe Park. Planning Framework 3.20 It is our understanding that the project site is currently not zoned for tourism development but that the zoning plan for the local area is under review and a submission will be made to change the proposed zoning to tourism, which would then support the proposed vision for the scheme. A key consideration that will have to be acknowledged within the future master planning of the site is the fact that development may not rise to a height that obscures views of the attractive church that is situated on a hill in Havnbjerg, to the west of the site. Surrounding Land Uses 3.21 The surrounding land uses are broadly compatible with the proposed concept. On the whole the surrounding area is used for agricultural purposes or is wooded. The primary exception to this is the Universe Park, which lies along the south-western border of the site (and takes up a total area of approximately 9ha) and the Danfoss offices which lie just to the south of the Universe Park and are unsightly.
3.22 As mentioned above, the largest conurbation close to the project site is Nordborg. This is a small country town that over the years has seen its fortunes intrinsically linked to those of the Danfoss company. In recent times, as the volume of activity within the Danfoss plant has reduced, the vibrancy of the town has been impacted. It is hoped that the proposed resort project will help to revitalise the area and the local economy – with a strengthened new focus on tourism-related businesses and development.
3.23 Prevailing winds flow from East-West across Als Island and this will have to be taken into consideration with regards to the planning of any marina component (i.e. the effective provision of shelter for vessels will be of paramount importance). Local Area Planned Developments 3.24 During the course of our research for this study, it was brought to our attention that there are currently plans to develop a mixed-use project (working title “Project Harbour”) on the Sønderborg waterfront. Designed by world renowned architect Frank Gehry, the proposed investment associated with this scheme is projected to total DKK 375 million.
3.25 It is our understanding that the project, which is set in a more urban context than the proposed Als Island Resort scheme, would include; a 6,000sqm indoor water park and a
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14,000sqm hotel comprising 200 rooms. An existing feasibility study completed in 2009 has forecast that the indoor water park will attract 240,000 visitors per annum.
3.26 Despite the relatively smaller scale and amenity mix at Project Harbour, the project poses reasonable competition to the proposed Als Island Resort since it is underpinned by a prominent architect and is located closer to local population hubs. Nevertheless, the Als Island Resort aims to offer more diversified and nature-based experiences. Surrounded by nature, Als Island Resort is likely to attract couples and families wishing to spend up to a week in a calmer setting undertaking activities including camping, sailing and fishing. Our study will assume that both projects go ahead. In this way, a more cautious assessment of the scale of the proposed Als Island Resort will be made. SITE STRENGTHS AND WEAKNESSES 3.27 Based on our field research and site visit, we set out in Figure 3.6 a summary of the strengths and weaknesses of the project site. The conclusions aim to inform the evaluation process for the remainder of the study. In planning for the implementation of the project, every effort must be made to build upon the strengths of the site and limit the impacts associated with the weaknesses. IMPLICATIONS FOR THE STUDY 3.28 The concept plan for the Als Island Resort is an ambitious one that envisages the creation of a scheme designed to represent a step-change for the local tourist economy. The proposed programme includes multiple accommodation types along with a range of leisure amenities including a water park component comprising an area of 30,000sqm. Our review of the site indicates that it would be of a suitable scale for the envisaged project, but there are a few hurdles, in addition to any challenges relating to the competitive market context, that will need to be overcome – specifically, these include a requirement to fully assemble the ownership of the project site and to work through a process of re-zoning the planning framework to make it compatible with the proposed land uses.
3.29 Als Island is comparatively remote location away from the principle highways through Denmark, but the site area is tranquil and the land plot does have charm and coastal setting. It is relatively easy to access from the German border – Germans represent a key source of tourism to Denmark – and the strengthening reputation of the Universe Park will provide some leverage for the new project within both the domestic and international markets. Every effort will need to be made within the master planning of the project to make full use of the sites undulating topography and both hinterland and sea views, where they are available.
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FIGURE 3.6: SITE STRENGTHS & WEAKNESSES
Strengths
Site is sufficiently large to accommodate a project that could have destination appeal The site has coastal frontage (which always drives premiums) Current land uses are compatible with proposed development concept There is little competitive development of scale in the surrounding area Site lies adjacent to the Universe Park, which is already an established attraction The site area is in general attractive, comprising agricultural land and woods The site setting is tranquil and commensurate with a resort operation The undulating topography does provide hinterland and coastal views from some points
Weaknesses
The site is currently owned by several different entities The planning framework will need to be changed to accommodate the concept The site includes a number of protected forest areas The bathymetry along the coast may make marina development costly The climate is cool in winter and this will have implication of year round operations The drive times to the principle airport gateways are quite substantial The site is located some distance off the arterial highway through Denmark There is limited existing tourism infrastructure in the local area
Source: AECOM
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4 OVERVIEW OF LOCAL MARKET CONDITIONS
INTRODUCTION 4.1 In this section we provide an overview of the local market conditions that underpin the Als Island resort project. We include a review of the general economic context, current and planned infrastructure development and the prevailing climate conditions, all of which have an impact on the proposed development opportunity. ECONOMIC OVERVIEW Introduction 4.2 Denmark is a stable market economy and has been a member of the European Union since 1973. It is among the richest countries in the world in terms of GDP per capita and is currently ranked as the world’s best economic climate for foreign investors, according to the Economist Intelligence Unit.
4.3 Denmark did not enter the Euro Zone, instead preserving the Krone as the official currency. Despite this, strong trade relations with Europe ensure that the Krone remains closely bound with the Euro. The International Monetary Fund (IMF) argues that Denmark is in a better position to effectively cope with the adverse effects of the financial crisis because of its solid institutions, strong policies and lack of exposure to subprime assets in the banking system. Gross Domestic Product (GDP) 4.4 Generally, GDP has followed a positive underlying trend over the past 10 years, rising from €164bn in 2003 to €256bn in 2012. The recent financial crisis meant that Danish GDP fell in both 2008 and 2009, as shown in Figure 4.1. It made a modest recovery in 2010, largely as a result of increased government spending, and this growth continued through 2011. GDP growth slipped again in 2012 (-0.5 percent), but broke out of its recession in the first quarter of 2013. Analysts had expected a 0.1 percent decline, so the 0.3 percent growth beat expectations and is a positive indicator for the economy.
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FIGURE 4.1: GDP IN DENMARK, 2003-2012
Source: Danmark Statistik
4.5 The region of Syddanmark, in which the project is located, contributed 19.1 percent towards total GDP in 2011 (the year in which most recent data is available). This percentage contribution has remained relatively stable over the past decade, experiencing a slight gradual decline from 19.9 percent in 2002. GDP per Capita 4.6 As shown in Figure 4.2, with the exception of a drop in 2009, GDP per capita has increased to around the €38,000 mark for Syddanmark region and around €43,000 for Denmark as a whole. In 2011, GDP per capita in Syddanmark (€38,700) was lower than the national average (€43,900), although the latter was distorted by the region of Hovedstaden (which includes Copenhagen). GDP per capita in Schleswig-Holstein region was €24,100 in 2009 (the most recent data available).
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FIGURE 4.2: GDP PER CAPITA, 2002-2011
Note: 2011 is the most recent year for which data is available Source: Danmark Statistik
4.7 In Figure 4.3 we present regional variations in GDP per capita in 2011. As shown, the national average is skewed by Region Hovedstaden, in which Copenhagen is located. Ignoring this region, Syddanmark is relatively wealthy in comparison to other Danish regions. Regional data is yet to be released for 2012.
FIGURE 4.3: REGIONAL GDP PER CAPITA, 2011
Region 2011 2011 (DKK) (€)
Region Hovedstaden 391,000 52,400 Region Sjælland 225,000 30,200 Region Syddanmark 284,000 38,100 Region Midtjylland 288,000 38,600 Region Nordjylland 281,000 37,700
All Denmark 322,000 43,200
Source: Visit Denmark Taxation 4.8 Research indicates that some 30 percent of the Danish workforce is employed by the State, which compares to an OECD average of 15 percent. This large public sector is financed by
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some of the world’s highest taxes. VAT of 25 percent is levied on the sale of most goods and services, and income tax ranges between 42 percent and 63 percent progressively. Inflation 4.9 In Figure 4.4 we display the positive trend in the Danish inflation rate over the past 10 years. As shown, the rate of inflation has been subject to modest fluctuations, particularly following the global economic recession. In 2011, the CPI inflation rate stood at 2.8 percent.
FIGURE 4.4: INFLATION RATE, DENMARK, 2002 – 2011
Note: 2011 is the most recent year for which data is available Source: World Bank Political Stability 4.10 Denmark displays considerable stability in its politics and political institutions. The Political Stability Index, as measured by The Economist Intelligence Unit, ranked Denmark as the second least vulnerable country to political instability after its Scandinavian neighbour, Norway, in 2010. This means that the underlying vulnerability to political unrest and economic distress is very low. This is a positive indicator for the economy of Denmark. INFRASTRUCTURE OVERVIEW Roads 4.11 According to Vejdirektoratet, there are no new major road infrastructure projects taking place in the Syddanmark region of Denmark. However, a significant amount of maintenance and enhancement work is planned for late 2013 in the region. This work includes the installation of traffic surveillance, road resurfacing and road lighting.
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CLIMATE CHARACTERISTICS 4.12 Sønderborg Municipality has a temperate, mild climate with winters that are not particularly cold and summers that are not particularly warm. In Figure 4.5 we present the average temperature conditions by month. As shown, July and August are the warmest months with an average temperature of 17 degrees. Temperatures remain below five degrees between November and March. Given the profile of temperature in the region, outdoor leisure activity tends to be focussed from May to September.
FIGURE 4.5: TEMPERATURE IN SONDERBORG MUNICIPALITY
Source: Weatherbase
4.13 In Figure 4.6 we display the precipitation profile of Sonderborg Municipality. Rain is a regular year-round occurrence in the region, although snow is rare.
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FIGURE 4.6: NUMBER OF DAYS WITH PRECIPITATION, SONDERBORG MUNICIPALITY
Source: Weatherbase
4.14 Since Denmark has a relatively northern location compared with the rest of Europe, it is subject to seasonal fluctuations in the length of day with sunlight. During the shortest winter months, sunrise comes at around 8am and sunset occurs at 3.30pm. In contrast, long summer days benefit from sunlight between 3.30am and 10pm. IMPLICATIONS FOR THE STUDY 4.15 Compared to most of Europe, Denmark has a relatively stable economy equipped with strong institutions and policies.
4.16 The region of Sydannmark contributed 19 percent towards national GDP in 2011, falling from approximately 20 percent in 2002. GDP per capita fluctuated around the €38,500 mark in Syddanmark between 2007 and 2011, approximately €5,400 lower than the national average.
4.17 In 2011, the inflation rate across Denmark stood at approximately 2.8 percent following a period of modest fluctuation where inflation peaked at 3.4 percent in 2008.
4.18 The underlying vulnerability to political unrest and economic distress is very low in Denmark. This is emphasised by the country being ranked as the second least vulnerable country to political instability in the world.
4.19 Some 30 percent of the Danish workforce is employed by the State, who are financed by the world’s highest taxes.
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4.20 Sønderborg Municipality has a mild climate with temperatures increasing to 17 degrees in summer and falling to one degree in winter. Being located in Northern Europe means that the country is subject to seasonal fluctuations in daylight hours. The focus for outdoor leisure participation tends to be from 10am until 4pm.
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5 RESIDENT MARKET OVERVIEW
INTRODUCTION 5.1 This section includes an overview of the current and projected available resident market between 2013 and 2028 for the proposed Als Island Resort. Most land uses reviewed in this study examine market conditions within an area broadly including the Sønderborg Municipality as well as the wider Syddanmark region. However attractions, including water parks, consider a more explicit definition of the local resident catchment area. Standard industry methodology considers up to a two–hour drive-time from the proposed attraction site. The analysis is evaluated in more detail below.
5.2 The analysis is followed by an evaluation of resident market characteristics including age profile, the labour market, income levels and private consumption. The implications of all these characteristics are relevant to all land uses reviewed in this study. DEFINITION 5.3 We have reviewed the resident catchment market for the water park element of the resort using our standard methodology of travel-time catchment analysis. The available markets are defined by drive-time isochrones. In general, attractions draw residents living up to two hours away. The further away the resident lives, the lower the propensity that they will visit the attraction. Those visitors who live beyond the two-hour drive-time catchment area, are likely to stay in the area overnight and are therefore considered either domestic or international tourists, as appropriate.
5.4 We have defined the resident market as those people living within two hours travel time of the attraction, and we have considered two isochrones: 0-60 minutes drive-time from the site (primary market) and 60-120 minutes drive-time from the site (secondary market).
5.5 When overlaying the drive-time isochrones with a map of administrative areas of Denmark and Germany, the one-hour isochrone covers around 15 percent of the Syddanmark region as well as five percent of the Schleswig-Holstein region. Due to the close historic and cultural ties between South Jutland and Schleswig-Holstein and the ease of border-travel, we consider it appropriate to regard this market as part of the resident market for the proposed resort versus the tourist market. The area, in physical terms, between the one and two-hour isochrone encompasses around 75 percent of the Syddanmark region and 50 percent of the Schleswig-Holstein region.
5.6 The one and two-hour isochrones are illustrated in Figure 5.1.
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FIGURE 5.1: ALS ISLAND RESORT DRIVE TIME ISOCHRONES
Source: Microsoft MapPoint TOTAL RESIDENT MARKET 5.7 Figure 5.2 shows the current and projected number of residents within the one-hour and two-hour isochrones.
FIGURE 5.2: RESIDENT MARKET CURRENT & PROJECTED POPULATION, 2013-2028
Segment 2013 2018 2023 2028 CAGR1
Primary Market (0-60 mins) 328,000 324,000 321,000 324,000 -0.1% Secondary Market (60-120 mins) 2,399,000 2,406,000 2,412,000 2,451,000 0.1%
Total Resident Market 2,727,000 2,730,000 2,733,000 2,774,000 0.1%
1 CAGR = Compound Annual Growth Rate Source: Danmark Statistik, Statistisches Bundesamt, AECOM 5.8 The primary market is relatively small with just over 300,000 residents of which German residents account for just under half the market. The secondary market is significantly larger with almost 2.4 million people and consisting of around 60 percent German residents.
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5.9 The resident market growth rates are based on Danmark Statistik and Statistisches Bundesamt projections and these forecast slow, steady growth. This is predominantly due to population ageing, undoubtedly a key demographic challenge. The primary market is projected to grow at an annual growth rate of -0.1 percent per annum to reach 324,000 residents by 2028. The secondary market is expected to grow at a positive rate of 0.1 percent per annum to reach 2.5 million people by 2028. The total market is estimated to increase in size relatively modestly to 2.8 million by 2028. RESIDENT MARKET CHARACTERISTICS Age Profile 5.10 Figure 5.3 illustrates the age profile for residents of Syddanmark region in 2013 which broadly reflects the age profile in the available primary market to the proposed resort development and water park attraction on Als Island. The profile is compared to the national average and that of Schleswig-Holstein region in Germany, as this dominates the profile of the secondary market.
FIGURE 5.3: DENMARK, SYDDANMARK AND SCHLESWIG-HOLSTEIN REGIONS AGE PROFILE, 2013
Source: Danmark Statistik, Statische Amter
5.11 The age profile in Syddanmark region is broadly in line with that of Denmark as a whole. All the Danish geographical areas within every ten-year age category are evenly spread and lie no more than one percentage point apart. Schleswig-Holstein region has an aging population with 63 percent of the population being at least 40 years old. Essentially, the Danish population is somewhat more youthful.
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5.12 The age profile of the resident catchment market is an important factor to take into account when considering the target market for the Als Island Resort project. It will help determine the activities and amenities most suited towards those most likely to be drawn into the area, and in turn the resort itself.
5.13 By 2025, the proportion of Denmark’s population between the ages of zero to 29 years is forecast to remain stable at around 34 percent according to Danmark Statistik. An aging population is projected for both Syddanmark and across Denmark as a whole, with the proportion of the population aged over 65 increasing from 25 percent in both areas in 2011 to 31 percent and 30 percent in 2025 respectively. Employment 5.14 The largest employer in the region of Syddanmark is the public administration sector (32 percent) followed by trade and transport (24 percent), and the manufacturing sector (18 percent) as illustrated in Figure 5.4.
FIGURE 5.4: EMPLOYED IN SYDDANMARK BY SECTOR (THOUSANDS), 2012
Source: Danmark Statistik
5.15 The employment breakdown for Syddanmark is similar to that of Denmark as a whole. The main difference between the two data sets is the proportion of people employed in the manufacturing sector which is four percentage points higher in Syddanmark in comparison to Denmark overall.
5.16 Around 20,000 employees in the region of Syddanmark are employed in the arts, entertainment and recreation sector. This is approximately four percent of the total number
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of people employed in the region. Within Nordborg itself, a significant portion of the workforce are employed by Danfoss and Linak. Unemployment 5.17 Over the 2008 to 2012 period, the average unemployment rate in the Syddanmark region and Denmark followed the same trend. In Sønderborg Municipality, the rate was one percentage point higher than the Denmark average in 2009, as illustrated in Figure 5.5. Since 2010, the unemployment rate in Denmark, Syddanmark region and Sønderborg Municipality has stabilised at six percent.
FIGURE 5.5: UNEMPLOYMENT RATE (%), 2008 – 2012
Source: Danmark Statistik
5.18 According to Danmark Statistik, the unemployment rate in Schleswig-Holstein region of Germany, which dominates the secondary resident market, was 7.5 percent in 2011 (the most recent year available). This rate has been falling since the recession where it reached 8.2 percent in 2009. Income 5.19 Sydjylland, in which Sønderborg Municipality is located, has a very similar average household income to that of Denmark as a whole at approximately DKK 464,000 in 2011. Nordsjælland had the highest income per household in 2011, almost DKK 200,000 higher than Byen København, where Copenhagen is located. This information is shown in Figure 5.6.
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FIGURE 5.6: PROVINCIAL INCOME PER HOUSEHOLD, 2007 - 2011
Region 2007 2008 2009 2010 2011
Byen København 366,956 380,770 381,143 393,016 401,416 Københavns omegn 489,025 497,891 490,938 514,912 519,898 Nordsjælland 572,636 569,367 556,308 590,718 592,136 Østsjælland 518,516 523,803 515,204 531,109 536,108 Vest- og Sydsjælland 425,662 429,839 426,539 435,643 438,957 Fyn 412,183 422,005 418,484 428,672 432,041 Sydjylland 446,424 456,533 444,219 458,859 463,840 Østjylland 439,726 445,933 439,661 451,463 453,937 Nordjylland 425,273 433,539 425,796 436,743 443,829
Denmark 443,208 450,603 443,823 458,527 463,543
Source: Visit Denmark
5.20 The average household income in Sønderborg Municipality where the study site is located, increased from DKK 422,000 in 2007 before dipping to DKK 408,000 in 2009. In 2010, the figure recovered and increased further still in 2011 up to DKK 447,000. Figure 5.7 illustrates that the average household in Sønderborg Municipality has earned slightly below the national average since 2007 (around DKK -16,000 to DKK -35,000) but the margin has been closer in recent years (around DKK -16,000). The province of
5.21 Unfortunately, average household income is not collated at a regional level in Germany. However, we have been able to obtain data on average income per capita for Schleswig- Holstein region. In 2005, a typical inhabitant in the region had an average income of DKK 127,000 (€17,075). By 2009, this income had increased by more than DKK 11,000 (€1,500) to DKK 139,000 (€18,620). This upward trend is a positive indicator for the economy of the region, although up to date information is yet to be published.
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FIGURE 5.7: AVERAGE HOUSEHOLD INCOME, 2007-2011
Source: Danmark Statistik Household Annual Consumption 5.22 Over the 2009-11 period, the average Danish household annually spent an average of three percent more compared to the average household in the Syddanmark region, where Als Island Resort is located across most categories, as illustrated in Figure 5.8.
FIGURE 5.8: HOUSEHOLD ANNUAL CONSUMPTION BY TYPE, AVERAGE 2009-2011
Source: Danmark Statistik
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5.23 With respect to the recreation, entertainment and travel category the average Danish household spent DKK 33,874 (11.8 percent of GDP), marginally above the average household in the Syddanmark region (DKK 31,132, or 11.2 percent of GDP). Therefore, as a proportion of total spend, there is little difference between what is spent on leisure in Syddanmark in comparison to the country as a whole. Car Ownership 5.24 Car ownership is an important factor to consider within the resident market as the population’s mobility will significantly impact their propensity to visit the site. A common benchmark used to compare the car ownership rates of different countries is the number of vehicles per 1,000 inhabitants. Germany has 572 vehicles per 1,000 inhabitants (ranked 21st in the world for car ownership), whilst Denmark has 480 vehicles per 1,000 inhabitants (ranked 38th). Across EU27 countries, the average car ownership rate is 473 vehicles per 1,000 inhabitants. Therefore, Germans and Danes are more likely to use cars as a form of transport in comparison to the average European. IMPLICATIONS FOR THE STUDY 5.25 We have assessed the size of the residential market based on the one and two-hour drive- time isochrones. Together the two isochrones cover a total area approximately equal to 90 percent of the Syddanmark region in Denmark and 50 percent of the Schleswig-Holstein region in Germany.
5.26 Based on Danmark Statistik and Statistisches Bundesamt data, the primary market within the one-hour isochrone has a population of just over 300,000 and the secondary market within the one and two-hour isochrones has a population of around 2.3 million. The total resident market available to Als Island Resort is expected to remain relatively stable at around 2.6 million residents over the forecast period to 2028.
5.27 The population pyramids of Denmark, Syddanmark and Schleisweg-Holstein regions are reflective of mature economies, with Schleisweg-Holstein in particular showing clear signs of being burdened with an aging demographic. This suggests that a multi-generational concept might work well at Als Island resort, catering for all age groups.
5.28 Over the 2008 to 2012 period, the average unemployment rate in the Syddanmark region and Denmark followed the same trend. In Sønderborg Municipality, the rate was one percentage point higher than the Denmark average in 2009. Since 2010, the unemployment rate in Denmark, Syddanmark region and Sønderborg Municipality has stabilised at six percent. A low unemployment rate bodes well for resort development, since those in employment tend to consume the most and have higher disposable incomes. This allows them to participate more frequently in recreational activities and afford to go on vacation.
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5.29 The average household in Sønderborg Municipality earns slightly below the national average, but the margin has been closing in recent years. In 2011, an average household in the Municipality earned DKK 447,000.
5.30 With respect to the recreation, entertainment and travel category the average Danish household spent DKK 33,874, marginally above the average household in the Syddanmark region (DKK 31,132). However, this is in line with the fact that residents in this region earn less than the national average, meaning they may not necessarily have a weaker appetite for participating in such activities. When we compare the variation in leisure spend between the two areas as a proportion of total expenditure, there is little difference at all.
5.31 Germany has 572 vehicles per 1,000 inhabitants, whilst Denmark has 480 vehicles per 1,000 inhabitants. A relatively high car ownership figure (as is the case for the two countries contained within our resident catchment market) bodes well for the Als Island Resort project, since the majority of visitors to the development would most likely gain access via car.
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6 TOURIST MARKET OVERVIEW
INTRODUCTION 6.1 The tourist market represents a potential source of visitors to the proposed Als Island Resort. In this section, we provide estimates of the current and future size of the tourist available market with an emphasis on those staying within a one-hour drive-time catchment, as well as a review of key market characteristics such as seasonality of visitation, average length of stay (ALOS), visitor origin and purpose of visit. DEFINITION 6.2 Typically, we define the tourist market as visitors staying overnight in accommodation within a one-hour’s drive-time from the site. As mentioned in the previous section, the one-hour catchment area comprises approximately 15 percent of the Syddanmark region in Denmark and five percent of the Schleswig-Holstein region in Germany. TOTAL UNQUALIFIED TOURIST MARKET 6.3 Based on the above definition the total tourist market available to Als Island Resort comprises around 208,000 domestic tourists and 101,000 international tourists as illustrated in Figure 6.1. Including tourists visiting friends and relatives (VFR), we estimate that the total market available market to Als Island Resort amounts to 384,000 million tourists.
FIGURE 6.1: TOTAL UNQUALIFIED TOURIST MARKET
Segment 2013
Domestic Tourists (0-60 mins) 208,000 International Tourists (0-60 mins) 101,000 Sub Total 309,000
Visiting Friends & Relatives (VFR) 74,000
TOTAL UNQUALIFIED TOURIST MARKET 384,000
N.B. Totals may not add up due to rounding. Source: Danmark Statistik, Statistisches Bundesamt, Visit Denmark, AECOM
6.4 Estimates for the size of the VFR market are based our on a survey conducted by Visit Denmark in 2010 which reviews tourist trends in West and East Jutland, part of our catchment area as illustrated in Figure 6.2.
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FIGURE 6.2: OVERLAP BETWEEN CATCHMENT AREA & JUTLAND
Catchment area Jutland breakdown
Source: Google, Map Point
6.5 According to the survey, 24 percent of tourists staying in West and East Jutland are visiting friends and relatives. Given limited data for the site area, we considered this proportion a reasonable approximation to apply to the subject sub-total tourist market to derive the size of the VFR market.
6.6 A significant proportion of the domestic tourists are also counted in the resident market so in order to avoid double counting, we have to qualify the domestic tourist market by excluding any overnight tourists who also reside within the two-hour resident catchment area. The next section summarises how we derived this figure. Origin of Danish Tourists 6.7 A study recently conducted by Sønderborg Tourist Office identifies the origin of Danish tourists to South Jutland. The breakdown is illustrated in Figure 6.3.
6.8 By overlaying the population and domestic tourist catchments, we excluded around 50 percent of the total domestic tourist market in order to avoid double counting of tourists who also live within the two-hour resident catchment.
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FIGURE 6.3: ORIGIN OF DANISH TOURISTS TO SOUTH JUTLAND
Source: Sønderborg Tourist Office TOTAL QUALIFIED TOURIST MARKET 6.9 Figure 6.4 illustrates the sizes of the qualified domestic and international tourist markets based on the definitions described above. In 2013, we estimate the sizes of these markets to stand at 50,000 and 103,000 respectively amounting to a total of 228,000 tourists including VFR tourists. Extracting those counted within the resident catchment, the qualified market is slightly more modest in size (around 60 percent).
FIGURE 6.4: TOTAL QUALIFIED TOURIST MARKET
Segment 2013
Qualified Domestic Tourists (0-60 mins) 50,000 International Tourists (0-60 mins) 103,000 Sub Total 147,000
Visiting Friends & Relatives (VFR) 74,000
TOTAL TOURIST MARKET 228,000
N.B. Totals may not add up due to rounding. Source: Danmark Statistik, Statistisches Bundesamt, Visit Denmark, AECOM Future Market Size 6.10 Danmark Statistik does not provide tourism forecasts therefore we based our projections on official figures by Euromonitor. Figure 6.5 sets out the projected tourist markets available to the proposed Als Island Resort. According to Euromonitor, domestic tourism flows will grow
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at around one percent over the forecast period up to 2015. As the economy picks up, Danes are expected to holiday abroad again in larger numbers keeping domestic growth modest. International tourism will continue to grow slowly over the forecast period at an average annual growth of two percent.
FIGURE 6.5: DOMESTIC & INTERNATIONAL TOURIST MARKET PROJECTIONS, 2013- 2025
Segment 2013 2018 2023 2028 CAGR 1
Qualified Domestic Tourists 50,000 56,000 65,000 76,000 2.8% International Tourists 103,000 121,000 147,000 179,000 3.8% Visiting Friends & Relatives (VFR) 74,000 75,000 75,000 75,000 0.1%
Total Tourist Market 228,000 252,000 288,000 330,000 2.5%
1 CAGR = Compound Annual Growth Rate N.B. Totals may not add up due to rounding. Source: Danmark Statistik, Euromonitor, AECOM
6.11 From 2016, we applied a growth rate of three percent for the domestic market and four percent for the international tourist market, in line with long term trends. The growth for the VFR market is based on population growth in the catchment area (0.1 percent). We estimate that the total available tourist market will grow from 228,000 in 2013 to 330,000 in 2028. TOURIST MARKET CHARACTERISTICS Origin of International Tourists 6.12 International tourists make up 51 percent of total visitation to South Jutland, which compares to 34 percent in Syddanmark region and 40 percent across Denmark as a whole. As illustrated in Figure 6.6, the international tourist market to South Jutland is driven by visitors originating from Germany (80 percent), followed by Norway (eight percent), Netherlands (three percent) and Sweden (three percent). These are people who could potentially represent an important source of demand for accommodation and leisure amenities within the proposed resort.
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FIGURE 6.6: VISITOR ORIGIN TO SOUTH JUTLAND
Source: Danmark Statistik, Visit Denmark
6.13 Whilst it is good for the National and Regional economies that Germans like to holiday in Denmark, such a heavy reliance on one source market can be a risk factor for a resort development. If the German tourist market shrinks for any reason (such as a drop in disposable income or changing preferences), the resort would be more susceptible to difficulties in generating enough visitor demand. Purpose of Visit 6.14 The proportion of German visitors is especially high in this region owing to the fact that the German border is so easily accessible from the South. The proportion of German tourists across Denmark as a whole stood at 30 percent in 2010, a significantly lower percentage than for Sonderjylland Province.
6.15 Tourism to South Jutland is predominantly leisure-driven, with 82 percent of tourists travelling for this purpose in 2010 (the most recent data available). Business visitors account for 18 percent of tourists to the area. This is a similar breakdown to that of Denmark as a whole.
6.16 A more detailed breakdown on purpose of visit is only available at a national level. This data splits purpose of visit by domestic and international visitors, and long term and short term trips. We present this information in Figure 6.7. As shown, domestic tourists tend to visit friends and relatives (VFR) on short breaks (75 percent) and visit their holiday homes on longer breaks (44 percent compared to 40 percent for VFR). International tourists tend to come to Denmark with the intention to visit friends and relatives or enjoy city breaks when staying for less than four nights. This breakdown changes for longer stays where beach and city breaks are the most popular reasons for visiting.
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FIGURE 6.7: PURPOSE OF VISIT, DENMARK, 2011
Purpose of Visit Domestic International Short Stay Long Stay Short Stay Long Stay (<4 nights) (>4 nights) (<4 nights) (>4 nights) (%) (%) (%) (%)
Holiday Home 21 44 15 7 Beach 0 3 2 30 City 1 1 31 20 Nature 1 6 5 11 Visiting Friends & Relatives 75 40 34 16 Event Travel 0 2 4 3
Source: Danmark Statistik
6.17 The holiday home market forms a key segment of the tourism market in Denmark, particularly for domestic tourists. Considering a major part of the Als Island Resort project is centred on this land use, the fact that the appetite for such a vacation is high is a strong, positive factor. Seasonality 6.18 Of particular relevance to the Als Island Resort project is the seasonality of overnight stays in holiday resorts. This breakdown is displayed for Syddanmark region in Figure 6.8, which shows a clear peak in visitation over the school summer holiday season. Seasonality will need to be managed in order to dampen its impact on visitation at the resort. Soft programming, for example, can often be used to this effect (i.e. through the introduction of festivals and events to boost demand into the shoulder months). The seasonality of nights spent in hotels is not as prominent as is the case at holiday resorts. Despite this, seasonality is comparably less pronounced at holiday resorts in comparison to across all accommodation types across the wider region, peaking at 22 percent in July as opposed to 26 percent in Syddanmark region.
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FIGURE 6.8: SEASONALITY, SYDDANMARK REGION, 2012
Source: Danmark Statistik Average Length of Stay 6.19 Figures for the average length of stay amongst both domestic and international tourists to the Sønderborg Municipality are provided in Figure 6.9.
FIGURE 6.9: LENGTH OF STAY, 2013
Source: TNS, 2013
6.20 When looking at the domestic market on its own, the majority of tourists visiting Sønderborg stay for a short period of time, as one would expect, with more than half staying for just 1-3 nights. International tourists typically stay for a longer period of time (more than 60 percent
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stay for more than four nights). Almost one quarter of the total tourism market are day trippers, although the most predominant time period that visitors stay in the province is 1-3 nights.
6.21 According to Statische Amter, the average length of stay for tourists visiting the Schleswig- Holstein region of Germany was 4.0 nights in 2012, down from 4.2 nights in 2011. This region falls within our catchment market, and provides us with an indication of what the average length of stay might be at Als Island Resort based on current trends. Tourist Expenditure 6.22 The most relevant data relating to tourist spending within our subject market was drawn from the survey conducted by Visit Denmark in 2010. As shown in Figure 6.10, tourists visiting Syddanmark region for leisure purposes spend the most money per day, at DKK 528 in 2010. We note that average expenditure per day in this category fell by 7.2 percent between 2009 and 2010, whereas average expenditure grew in the business and camping categories.
FIGURE 6.10: TOURIST PER CAPITA DAILY EXPENDITURE, SYDDANMARK, 2009 – 2010
Type 2009 2010 (DKK) (DKK)
Leisure Visitors 569 528 Business Visitors 330 355 Camping 308 310
Source: Visit Denmark
6.23 In Figure 6.11 we display a breakdown of tourism expenditure by category for Sønderborg Municipality in 2010. As shown, domestic tourists spend the most money as a proportion of total expenditure on retail – which includes food and beverages and petrol – (34 percent), accommodation (25 percent) and transport (22 percent). International tourists spend the most money on retail (43 percent), other products (30 percent) and restaurants (13 percent). Internationally speaking, it is unusual for domestic tourists to spend a larger proportion of their total expenditure on accommodation than international tourists, but this could be a reflection of the international market’s appetite for camping and holiday homes as opposed to hotels.
6.24 In absolute terms, international and domestic tourists spend the same amount on leisure and cultural activities in Denmark whilst on holiday. However, as a proportion of total spend international tourists have more of an appetite for such activities.
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FIGURE 6.11: TOURISM EXPENDITURE BREAKDOWN, SØNDERBORG, 2010
Domestic Tourists International Tourists
Source: Visit Denmark IMPLICATIONS FOR THE STUDY 6.25 Typically, we define the tourist market as visitors staying overnight in accommodation within a one-hour’s drive-time from the site. Based on this rationale, we estimate that the domestic, international and VFR tourist markets amount to around 217,000 today, growing to 314,000 by 2028. Although the tourist market is relatively modest in size, the forecast growth trend is a positive indicator for the project.
6.26 Around 80 percent of international guests to the Syddanmark region, which covers the one- hour tourist catchment area, are from Germany reflecting the regions proximity to the border.
6.27 The tourist market is driven by leisure visitors and these will provide an important source market for the project site. Tourists visiting Syddanmark region for leisure purposes have the highest expenditure per day (DKK 528), followed by business tourists (DKK 358) and those who are camping (DKK 310). This is a positive factor for the Als Island Resort project, which will predominantly target these leisure visitors.
6.28 Tourism to the area is highly seasonal. This is supported by data regarding guests staying in holiday resort accommodation in Syddanmark region where 22 percent of visitors stay overnight in July alone. The seasonality profile of hotels is not as pronounced, although when looking at all accommodation types, seasonality is not as high for holiday resorts as for all accommodation types. Seasonality is an issue that will need to be carefully managed and
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a decision will need to be made as to whether or not to operate certain elements of the resort year-round.
6.29 The majority of domestic tourists visiting Sønderborg Municipality stay for a short period of time (more than half stay for just 1-3 nights). International tourists typically stay for a longer period of time (more than 60 percent stay for more than four nights). Capturing tourists hoping to spend a longer period of time in the area will help drive the resort development and encourage repeat visitation to different components of the project. On-site amenities and facilities should have a high appeal in order to target those who are in the area for a few days or visiting for a day trip.
6.30 Both domestic and international tourists visiting Sønderborg Municipality spend the largest proportion of their expenditure on retail, which includes food & beverage and petrol spend. Unusually, domestic tourists spend a greater proportion of their total budget on accommodation than international tourists. As a proportion of total spend international tourists have more of an appetite for such leisure and culture activities.
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7 RESORT HOTEL MARKET & OVERVIEW
INTRODUCTION 7.1 The Danish economy, like that of many European countries, remains fragile in the wake of the worst economic crisis since the 1930s. At the height of the downturn, Danish GDP fell by almost five percent, and consumer spending by 4.6 percent. Trends in the hotel market are closely correlated to macroeconomic indices and the economic slump has therefore had repercussions throughout the hospitality sector.
7.2 The financial crisis hit Denmark after a period of strong economic growth, during which the hotel market throughout much of the country thrived. Increases in demand drove up occupancies and average room rates alike, and fuelled investor interest in a number of Danish hotel sector ‘hotspots’ such as Copenhagen, enhancing the tourism-related ‘gravitational pull’ of these locations and exacerbating to some extent the post-downturn challenges faced by hotel operators and promoters in less developed or less established parts of the country with touristic potential, including Als Island.
7.3 In this section we detail the supply and demand characteristics of the Island’s hotel market in the context of national (Denmark), Regional (Syddanmark) and provincial (South Jutland) operating indices. We also consider the implications of current and envisaged local trading characteristics for the proposed Als Island Resort project. HOTEL ACCOMMODATION SUPPLY Hotel Operator Supply 7.4 Figure 7.1 illustrates the supply of hotel operations in Denmark as a whole, relative to the submarkets of Syddanmark and South Jutland.
FIGURE 7.1: DENMARK - NUMBER OF HOTELS
2007 2008 2009 2010 2011 2012 2013 1 Denmark 506 500 496 504 547 542 545 Syddanmark 136 135 133 133 143 140 140 South Jutland 89 89 85 84 92 90 90
Note: Analysis includes only hotels with 40 beds or more 1 Year to date. Source: Danmark Statistik , Sønderborg Tourism Office, AECOM
7.5 The number of lodging operators on Als Island is considerably lower than the totals detailed above, with only six local relevant hotel operators (i.e. properties with 40 beds or more).
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7.6 However, closer examination of the Island’s supply, which also includes alternative and smaller types of serviced accommodation provision (excluding campsites and commercial holiday homes), increases the range and scale of operators on the Island. These are divided into a number of classifications which are detailed in Figure 7.2.
FIGURE 7.2: ALS ISLAND – LODGING OPERATORS
Number of Operators
Hotels (>40 beds) 4 Hotels & Inns (<40 beds) 6 Hostels 2 Bed & Breakfast 6 Total 18
Source: Sønderborg Tourism Office, AECOM
7.7 Despite the diverse range of natural and cultural tourism attributes on Als, the overall supply of operators is low, with only 18 properties providing accommodation that ranges from a one-letting unit ‘Bed & Breakfast’ (Bøgebjerggård), to a 102-room branded commercial ‘Hotel’ (Scandic).
7.8 Further analysis of the distribution of Danish hotel operations (properties with a minimum of 40 beds) indicates that Als Island accounts for only one percent of the country’s overall supply, as detailed in Figure 7.3.
FIGURE 7.3: ALS ISLAND SHARE OF NATIONAL HOTEL OPERATIONS 1
Note: Als Island hotels lie within South Jutland Province and within Syddanmark Region 1 Hotels with 40 beds or more. Source: Danmark Statistik, Sønderborg Tourism Office, AECOM
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Hotel Room Supply 7.9 Figure 7.4 indicates the supply evolution of hotel rooms in Denmark as a whole, relative to that of Syddanmark and South Jutland.
FIGURE 7.4: HOTEL1 ROOM SUPPLY GROWTH 2007-2013 2
1 Hotels with 40 beds or more 2 2013 Year-to-date
Source: Danmark Statistik, AECOM
7.10 Despite the economic downturn, the supply of registered serviced hotel accommodation throughout Denmark grew between 2007 and 2013, from 42,006 rooms to 48,829 rooms.
7.11 Growth occurred over the same period both in Syddanmark (9,607 to 10,887 rooms) and South Jutland (6,207 to 7,161 rooms), with only a slight decrease recorded in these two areas in 2012.
7.12 Increased hotel room-stock on Als Island since 2006 is estimated at a more modest 36 rooms, following the inauguration of the 20-room Dyvig Badehotel in 2010 and the creation of 16 letting rooms at the Hotel Nordborg Sø in 2006.
7.13 Indeed, the more limited supply of full-service hotel accommodation on Als, relative to that of the wider Danish market as a whole, is highlighted further when the Island’s room-stock market share is examined in the context of the overall national supply.
7.14 This supply is detailed in Figure 7.5. The chart indicates the exceptionally low proportion of hotel rooms (0.5 percent) distributed amongst Als Island operators, as a proportion of the overall national supply.
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FIGURE 7.5: ALS ISLAND SHARE OF DANISH HOTEL ROOMS SUPPLY 1
Note: Als Island hotels lie within South Jutland Province and within Syddanmark Region 1 Hotels with 40 beds or more. Source: Danmark Statistik, Sønderborg Tourism Office, AECOM Als Island Hotel Accommodation Supply 7.15 As mentioned, hotel accommodation provision on the island is divided into a number of classifications, whose room-count and bed-count totals are detailed in Figure 7.6.
FIGURE 7.6: ALS ISLAND – LODGING OPERATORS (ON-ISLAND ONLY)
Number of Operators Number of Rooms 1 Number of Beds 1
Hotels (>40 beds) 4 246 500 Hotels & Inns (<40 beds) 6 80 156 School Group/ Family Hostels 2 98 380 Bed & Breakfast 6 19 59 Total 18 443 1,059
1 Figures include estimates Source: Sønderborg Tourism Office, AECOM
7.16 The previous tables clearly demonstrate the relatively meagre supply of existing local hotel accommodation.
7.17 There are no five-star operators on the Island and only two hotels that comply with international four-star standards (the Comwell and Dyvig Badehotel), although the latter of these two examples operates to an exemplary luxury boutique hotel standard.
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7.18 Hotels with over 40 beds account for just over a fifth of all Als Island lodging properties, but a larger share of all available lodging sector rooms (56 percent) and beds (46 percent).
7.19 Conversely, lower-quality smaller hotels and inns with less than 40 beds per property make up a larger share of actual operators (34 percent), but only 18 percent of available rooms and an even smaller 13 percent of available beds.
7.20 Bed and Breakfast operators, although accounting for just over a fifth of all lodging sector businesses, make up only four percent of available rooms and only five percent of available beds on the Island.
7.21 Budget-oriented hostel accommodation equates to 11 percent of individual operating businesses on Als, but with higher capacities per operator, they represent as much as a quarter of its room supply and almost a third of its bed supply.
7.22 The pattern of supply underlines the less-evolved status of tourism development on Als Island relative to that of more established tourism/resort areas in other parts of Denmark, Europe and the wider international community, where the structure of supply is distributed across a hospitality provision range that includes a greater share of higher quality and higher capacity resort hotel accommodation.
7.23 In such locations, the supply of international standard three-star to five-star hotel properties and corresponding room-stocks can reflect distribution patterns that range from a 50 percent or more share of total hotel properties, to a 75 percent or more share of total hotel rooms. International Brand Representation 7.24 The incidence of international hotel brands on Als Island is exceptionally low when compared to other more established tourism destinations, underlining the area’s less- evolved tourism profile to date.
7.25 Locally, there are only two significant branded operators, the Comwell and Scandic hotels, both of which are located within the more urban environs of Sønderborg and which operate largely as corporate business orientated hotels throughout most of the year.
7.26 Each property forms part of a network of similarly flagged hotels in a regional (Scandinavian/North European), rather than wider international brand context.
7.27 At the upper end of the international resort sector, the importance of brand is considered critical, not only to the market-positioning of a hotel or resort, but also to its ability to target and penetrate identified sources of demand, as well as attracting ‘brand loyal’ patronage to a new destination.
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HOTEL ACCOMMODATION DEMAND Seasonality 7.28 The seasonality of hotel demand is detailed in Figure 7.7. The monthly occupancy performance of Als Island hotels, although marginally lower than that of other parts of the country during low and shoulder tourist seasons, adheres generally to that of operators throughout the Danish provinces as a whole.
FIGURE 7.7: SEASONALITY - MONTHLY ROOM OCCUPANCY PERCENTAGE
Source: Danmark Statistik, Individual Hotels, AECOM
7.29 However, the orientation of demand on Als to leisure tourist markets during the peak summer months enables local hotels to achieve higher summer occupancies than the national average, despite the decline in corporate demand that also characterises trading patterns during this period at properties such as the Scandic and Comwell hotels.
7.30 Weak demand periods on Als Island follow the national pattern, the lowest levels of occupancy generally occurring from January to April and late October to December.
7.31 The ‘average’ seasonality performance of hotel operators on Als also disguises examples which outperform considerably the ‘norms’ expressed in the previous table. The 20-room Dyvig Badehotel near Nordborg, for example, achieves a seasonal occupancy pattern that is far more pronounced, the annual occupancy of the hotel being at, or in excess of, 80 percent.
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Market Sector Mix 7.32 Throughout Denmark as a whole, the Syddanmark region and South Jutland province, demand from Individual Leisure sources dominates that from other market sectors, whilst Individual Business and Group Business demand both exceed Leisure Group demand.
7.33 At hotels on Als Island that attract demand generated by on-island businesses such as Danfoss, Linak and Siemens, corporate demand is reported by some operators to have declined since the onset of the global economic downturn.
7.34 As a result, leisure related demand has increased its market share, in percentage terms if not actual overnight stays. The characteristics of demand in relation to hotel market mix are highlighted in Figure 7.8.
FIGURE 7.8: HOTEL MARKET MIX COMPARISON (DENMARK / SOUTH JUTLAND)
Denmark
South Jutland
Source: Danmark Statistik, AECOM
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7.35 The chart indicates that hotels in South Jutland attract almost three quarters of their roomnight demand from leisure sources, the bulk of which comprise independent travellers.
7.36 This contrasts with Denmark as a whole, the hotel industry nationally attracting less than two thirds of its overall demand from leisure tourist sources.
7.37 Analysis of the demand at hotels on Als Island paints a somewhat disorientating picture, relative to the market mixes detailed on the previous page. Whilst smaller hotel operators situated in picturesque tourism sites attract a largely leisure orientated clientele (as high as 80 percent at the Dyvig Badehotel near Nordborg), the situation at larger hotels in Sønderborg is somewhat reversed, with hotels such as the Scandic attracting as much as 85 percent of annual roomnight demand from corporate business sector sources.
7.38 Corporate demand at Als Island hotels is generated almost exclusively by its biggest businesses, Danfoss, Linak, and to a lesser extent Siemens.
7.39 Conference group demand, beyond that which is generated by the same local industries, is modest at the majority of hotels visited. Research respondents consider the island to have limited appeal to conference organizers, either from wider Denmark sources or from across the nearby border in neighbouring Germany.
7.40 A hotel’s specific location, even within a relatively small geographic area such as Als Island can influence significantly the demand mix. At the Scandic and Nordborg Sø hotels in Sønderborg and Nordborg, for example, management cite their respective locations amidst largely urban environments that lack immediate visual touristic appeal as a key factor behind their respective inability to attract significant levels of leisure demand throughout much of the year.
7.41 Conversely, their locations are also considered the key reason why they are better able to attract business demand associated with local commercial/industrial activity. Geographic Market Mix 7.42 Figure 7.9 overleaf highlights the geographic origin of demand within the Danish hotel sector.
7.43 Demand in Syddanmark is dominated by the domestic market (75 percent) - to a far greater extent, in fact, than the wider hotel industry averages for Denmark as a whole (54 percent).
7.44 The figures reflect, in part, the strength of demand from the wider international community for destinations such as Copenhagen, a World city, resulting in a dilution of domestic Danish demand when viewed nationally as opposed to regionally.
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FIGURE 7.9: GEOGRAPHIC ORIGIN OF HOTEL DEMAND (DENMARK & SYDDANMARK)
Denmark Hotels
Syddanmark Hotels
Source: Danmark Statistik, AECOM
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7.45 Of particular note in Figure 7.10 is the share of demand generated at local hotels from German sources (13 percent), relative to the regional Syddanmark average (three percent) or the wider national Danish average (four percent).
7.46 The strength of German demand locally reflects, to some extent, the proximity of Als and its South Jutland location to the German border as mentioned in our review of the tourist market, beyond which lies the extensive conurbation of Greater Hamburg.
FIGURE 7.10: GEOGRAPHIC ORIGIN OF HOTEL DEMAND (ALS ISLAND)
Als Island Hotels
Source: Individual Hotels, AECOM
7.47 As sample ‘averages’, however, the Als Island figures disguise ranges that see the German market representing as much as 30 percent of roomnight demand at hotels such as the Dyvig Badehotel near Nordborg, to as little as five percent at larger hotels in Sønderborg.
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Double Occupancy and Average Length of Stay 7.48 Double occupancy and length of stay ranges for Als Island hotels are detailed in Figure 7.11.
FIGURE 7.11: SELECTED ALS ISLAND HOTELS - DOUBLE OCCUPANCY FACTORS (DOF) & AVERAGE LENGTH OF STAY
Double Occupacny Factor Average Length of Stay Hotel Type Location (Guests Per Room) (Nights) Larger - Business Orientated Sønderborg 1.1 – 1.4 2.0 – 4.0 Smaller - Leisure Orientated Wider Als Supply 1.5 – 2.0 2.0 – 3.5
Note: Figures include research respondent estimates Source: Individual Hotels, AECOM
7.49 At locally researched hotels the sample average Double Occupancy Factor (DOF) varies considerably, depending on the type of hotel product and the nature of demand generated from property to property.
7.50 Larger operators in Sønderborg, such as the Comwell and Scandic hotels attract a mainly corporate client base throughout most of the year. Business visitors generate low DOF averages, typically around 1.0 visitor per room sold. However, holiday weekends and the summer month of July in particular result in demand at these hotels from predominantly leisure traveller and family orientated market sectors with DOFs close to or in excess of 2.0 persons per room sold. As a result, the overall DOF average is boosted at larger Sønderborg properties to an extent greater than that typically associated with business and conference orientated hotel operations.
7.51 Smaller hotels in less commercial and more touristic locations have a higher propensity to attract leisure tourist visitation throughout longer periods of the year. As a result, at hotels such as the Dyvig Badehotel, demand is more strongly influenced by couples and family groups with a marginally stronger propensity to generate higher DOFs than their ‘down town’ higher capacity hotel counterparts.
7.52 The average length of stay is also influenced by the prevailing nature of demand that varies on Als from operator to operator. Business orientated hotels attract relatively short stays during weekday periods, although long stays of several days or weeks are generated at some hotels by a small number of contractors associated with the Island’s leading enterprises such as Danfoss. Consequently, such visitors have the effect of increasing the overall average.
7.53 Similarly, at hotels with strong leisure market appeal, demand is increasingly orientated towards short-breaks and weekend visitation, resulting from a decreasing share of the leisure market booking traditional vacations of one week or more.
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Achieved Average Room Occupancy 7.54 Figure 7.12 outlines the average annual room occupancy performance of the hotel market throughout Denmark between 2007 and 2012, and compares national performance with that of regional performance in Syddanmark and provincial performance in South Jutland.
FIGURE 7.12: HOTEL ROOM OCCUPANCY – AVERAGE ANNUAL PERCENTAGES DENMARK, SYDDANMARK & SOUTH JUTLAND (2007 – 2012)
Source: Danmark Statistik, AECOM
7.55 Between pre-recessionary 2007 and the more fragile economic climate of 2009, average hotel occupancies across Denmark as a whole fell by over 6.5 points from 57.1 percent to 50.6 percent.
7.56 Since 2009, however, annual occupancies nationally have started to gradually rise once again. Between 2009 and 2012, Danish hotels achieved growth of 2.5 points to reach a Danish average room occupancy of just over 53 percent.
7.57 In Syddanmark, average hotel occupancy fell more alarmingly by over seven points from 52.8 percent in 2007 to 45.5 percent in 2009. Recovery since 2009, not surprisingly, has largely mirrored the national picture, with occupancy in the region having climbed by 2.75 points from 45.6 percent in 2009 to 46.7 percent in 2012.
7.58 At a provincial level, South Jutland has the lowest occupancies of our three comparable research samples, although movement in the market in terms both of occupancy increases and decreases has been less pronounced. Between 2007 and 2009, achieved averages fell from 46.3 percent to 45.6 percent, a drop of less than one point. Growth since then has
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been only marginal, annual occupancies in the province having climbed by just over one point from 45.6 percent in 2009 to 46.7 percent in 2012.
7.59 Average occupancies at Als hotels exhibit little consistency. The significant performance range and limited supply inhibits meaningful analysis of ‘collective’ sample averages.
7.60 Figure 7.13 highlights the wide-ranging room occupancy indices of Als Island hotels.
FIGURE 7.13: ALS ISLAND HOTEL ROOM OCCUPANCY RANGES
Annual Room Occupancy Hotel Type Location Percentage Range (2012) Larger - Business Orientated Sønderborg Area 60% - 70% Smaller - Mixed Market Nordborg Area 45% - 55% Smaller - Leisure Orientated Wider/Other Als Supply 50% - 80%
Note: Figures include research respondent estimates Source: Individual Hotels, AECOM
7.61 Leading the field are properties such as the Dyvig Badehotel. Since its inauguration in 2010, the enterprise has quickly built-up a reputation as one of the leading hostelries in the region. Its two restaurants, 20 letting units and associated marina facilities attract a mixed clientele comprising both Danish and international patrons. Its hotel accommodation and food and beverage operations now trade at enviable levels of occupancy and revenue.
7.62 Smaller, mixed-market hotels achieve occupancies more consistent with provincial, regional and national averages, whilst larger branded operators in Sønderborg exceed these norms by a considerable margin. Achieved Average Room Rates 7.63 Average achieved net rates per room sold are equally as diverse on Als Island. On the following page, Figure 7.14 highlights the achieved average net room rate ranges for our researched hotel sample.
FIGURE 7.14: ALS ISLAND HOTELS - ACHIEVED AVERAGE ROOM RATES
Average Annual Net Hotel Type Location Room Rate Range (DKK) Larger - Business Orientated Sønderborg Area 500 - 600 Smaller - Mixed Market Nordborg Area 450 - 550 Smaller - Leisure Orientated Wider Als Supply 1 400 - 500 1
Note: Figures include research respondent estimates 1 Excludes Dyvig Badehotel. Source: Individual Hotels, AECOM
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7.64 In the wake of the global economic downturn, annual average room rates fell sharply year- on-year in 2008 and 2009. Under pressure to shore-up occupancy and retain demand during this period, tariffs were subject to significant levels of discounting on the published rates of individual operators.
7.65 Signs of recovery, albeit modest, are evident amongst a number of Als Island hotels. At larger, business orientated operators in Sønderborg, room rate declines to all intents and purposes levelled out in 2009, and by late 2010 had started to grow. By 2012, average net rates at hotels like the Scandic had climbed steadily to levels commensurate with the pre- downturn trading climate. Rooms Department Revenue per Available Room (RevPAR) (Yield) 7.66 Despite recovery for some in room rate terms, tougher recessionary trading conditions have continued to inhibit room occupancy growth since 2009. The majority of research respondents indicate that although average annual room occupancies have improved, in most instances they have yet to match the levels achieved in the middle of the last decade.
7.67 As a result, Rooms Department yields remain stubbornly low, relative to those of five years ago. Current Rooms Department Revenues per Available Room (RevPAR) for researched hotel operators on Als Island are detailed in Figure 7.15.
FIGURE 7.15: ALS ISLAND HOTELS - ACHIEVED AVERAGE ROOMS REVENUE PER AVAILABLE ROOM (REVPAR)
Average Annual Net Hotel Type Location Rooms Dept RevPAR (Yield) Range (DKK) Larger - Business Orientated Sønderborg Area 300 - 420 Smaller - Mixed Market Nordborg Area 203 - 303 Smaller - Leisure Orientated Wider Als Supply 1 200 - 400 1
Note: Figures include research respondent estimates 1 Excludes Dyvig Badehotel Source: Individual Hotels, AECOM
7.68 Not surprisingly, the RevPAR indices between 2007 and 2009 make for equally disappointing reading, with average yields across the Danish hotel industry reported to be down by between 30 and 40 percent.
7.69 However, the downturn has forced operators to look more carefully at the yield management and marketing direction of their respective enterprises. Renewed efforts in 2011 and 2012 to improve RevPAR, together with a demand boost ‘windfall’ resulting from fragile and somewhat faltering economic recovery in Denmark, Germany and other parts (but not all) of Western Europe, has improved occupancy prospects and room rate forecasts across the majority of researched local hotels.
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OTHER HOTEL OPERATING INDICES Revenue Mix 7.70 Figure 7.16, overleaf, details the revenue mix ranges amongst Als Island hotel operators. The charts do not include data for the Dyvig Badehotel due to the nature of its unique and somewhat exceptional trading characteristics (in occupancy, room rate and revenue mix terms), which would otherwise skew the research sample analysis.
7.71 At a general level, income from overnight accommodation sales dominates the revenue mix, although at hotels with popular dining facilities, demand from non-residents for hotel food and beverage facilities can significantly boost the contribution from related sales.
7.72 In Nordborg, for example, the Nørherredhus Hotel is situated in a residential area opposite a ‘care home’ for the elderly. As a result, food and beverage income is boosted by regular event bookings for celebrations, anniversaries and funeral receptions.
7.73 Other hotels with strong food and beverage demand include the Baltic near Sønderborg and Dyvig Badehotel. Indeed the latter is nationally renowned as one of Denmark’s foremost dining venues, its hotel lodging facilities being largely supplementary to its restaurant operations.
7.74 Food and Beverage departments generate higher associated costs and expenses relative to Rooms Department sales. As a result, at those hotels with higher than average bar and restaurant income, overall Gross Operating Profitability percentages can be compromised.
7.75 Minor Operated Department (MOD) income and ‘Other’ revenue percentages can vary widely depending on the peculiarities of a given hotel and its accounting practices, but fall within the industry standard ranges and operating averages.
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FIGURE 7.16: ALS ISLAND – HOTEL REVENUE MIX 1
Larger Hotels - Business Orientated
Smaller Hotels - Mixed Market
Smaller Hotels - Leisure Orientated
1 Figures include research respondent and AECOM estimates (Analysis excludes Dyvig Badehotel) Source: Individual hotels , AECOM
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Hotel Expenses and Operating Profit 7.76 Figure 7.17 outlines the range of payroll, other expenses, and gross operating profitability associated with hotel operations on Als. The percentages are relatively wide ranging, reflecting the significant variances in the type and scale of lodging operations on the Island.
FIGURE 7.17: ALS ISLAND HOTEL EXPENSES & OPERATING PROFIT INDICES 1
Percentage of Revenue Range
1 Figures include research respondent and AECOM estimates Source: Individual hotels , AECOM
7.77 Labour costs have the most significant impact on overall profit margins. At hotels with a strong emphasis on food and beverage provision, staffing requirements are more significant, with consequential payroll expenses that can far exceed industry norms.
7.78 At the Dyvig Badehotel, for example, the renowned food and beverage facilities are to all intents and purposes the ‘raison d’être’ behind the venture’s creation. Despite being only a 20-bedroom hotel, the extensive food and beverage provision (its two restaurants and dining terraces provide 240 covers) and exemplary service standards result in the operation employing around 30 full-time-equivalent staff. This incurs an eye-watering payroll burden (by typical hotel operating standards) equivalent to around 40 percent of overall revenue. Not surprisingly with this and other uniquely expensive running costs, the hotel’s gross operating profitability (in percentage terms at least) is modest, and not reflective of hotel industry operating norms.
7.79 To more effectively manage costs, hotels such as the Scandic have adopted a more flexible approach to employment contracts. By using a greater number of part-time employees, labour levels can be controlled to match peaks and troughs in demand more effectively. As a
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result the hotel employs approximately 23 full-time equivalent employees, although the on- site figure can rise to as many as 40 personnel during periods of high hotel occupancy.
7.80 Labour costs at the remaining hotel operations on the Island range somewhere between these two examples.
7.81 Marketing costs also vary significantly from one operator to another, reflecting the diverse but relatively small lodging sector on Als from which our analysis is drawn. Smaller independent operators generally have a lower propensity to adopt costly and more pro- active promotional practices, whilst larger branded operators such as the Comwell and Scandic hotels benefit from accounting systems and head office support that automatically factors-in marketing activity and its associated costs.
7.82 Expenses associated with hotel administration, maintenance expenses, and utility costs as a percentage of overall revenue are generally in line with industry norms.
7.83 In general, however, relatively high manpower costs, together with moderate occupancy and room rate indices in some instances, can be seen to inhibit Gross Operating Profit, which at some hotels can result in lower than average GOP percentages (in a wider Western European context). IMPLICATIONS FOR THE STUDY 7.84 Our analysis of the Als Island hotel sector highlights a number of characteristics with regard to the size of the market, the hotel product mix, and overall operating indices.
7.85 It also indicates that, despite a significant number of potential tourism attributes on the Island, development of the industry and the associated lodging products to support it nevertheless remain relatively un-evolved, particularly outside the more culturally diverse Island ‘capital’ Sønderborg.
7.86 The origins of such high levels of Island-wide tourism retardation would appear to lie less in any short-comings of Als’s potential tourist market appeal, but rather in the historic development of its economy and the patriarchal nature of the industrial giant, Danfoss.
7.87 The company’s size enabled it to develop welfare programmes in the past that covered every aspect of life for its extensive employee base, from housing provision to emergency services. Over the decades this ‘cradle to grave’ approach to workforce welfare filtered through to wider aspects of the local economy, to some extent arguably suffocating entrepreneurial spirit in other sectors such as tourism, particularly in areas close to the company’s main production activity around Nordborg in the north of the Island.
7.88 With Danfoss’s ‘corporate giant’ presence having been established locally over many decades, it is also felt that Als Island has, to some extent, gained an unfair and misguided
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reputation of being a predominantly industrial area amongst the less well informed, and at the very least a place considered un-conducive to tourism activity. This perception is particularly prevalent within a Danish market context, which has further served over the years to suppress at worst, or inhibit at best its tourism evolution potential, despite its attractive coastline, cultural heritage, welcoming people, and verdant countryside landscape.
7.89 These factors largely explain why, in a collective sense, the Island’s hotel operations are so disparate and fragmentary, both in product and operating terms.
7.90 Ironically, the Island’s very lack of tourism evolution over the decades could also represent a ‘trump card’ in terms of the ability to launch major new tourism developments such as the proposed Sønderborg Harbour resort scheme and this project.
7.91 As Denmark and Europe emerge in the coming years from the ‘dark ages’ of possibly the most severe and long-lasting economic recession in modern history, this project and others on the Island are exceptionally well placed to capitalise on what will be a mix of pent-up and frustrated future tourist demand.
7.92 The fact also that Als is something of a ‘Sleeping Beauty’ in tourism development terms presents developers and tourism promoters alike with a rare opportunity to re-launch the Island’s image as a new and exciting destination with a hospitality product mix that is innovative, sensitive to the existing attributes of the area, environmentally responsible and tuned specifically to the emerging needs, trends, and sensitivities of today’s travel markets.
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8 HOLIDAY HOMES MARKET OVERVIEW
INTRODUCTION 8.1 In this section we identify key trends in the market for holiday homes on Als Island. We review demand for both the sale and rental of such properties, evaluating the products on offer and comparing investment yields at a selection of developments. We analyse the core features of holiday homes in the region, discussing their amenity provision, typical unit size, and product mix. We also evaluate pricing and rental strategies and look at the rate of absorption into the local market.
8.2 Our research programme for this study consisted of interviews with locally-based real estate agents, resort residential management companies, real estate economists and resort managers. The conclusions drawn in this section have been used to inform the development programme recommendation for the resort. MARKET CONTEXT 8.3 Over the last five years, the holiday home market on Als Island, and across Denmark as a whole, has been impacted by the global economic downturn. This has been demonstrated through downwards pressure on pricing, a softening in the pace of sales, and a shift in the motivation to buy such properties. Despite a softening in the condition of the market locally, in comparison to other regions of Denmark the holiday home market on Als Island has escaped relatively lightly. The main reason for this is the area’s popularity with German tourists.
8.4 Although not the most popular holiday home destination in Denmark (a position taken by West Jutland), Als Island is regarded to be a desirable touristic area. There are few integrated resort developments across Denmark, with the closest to the study site being Marina Fiskenæs Resort in Grästen. We have focussed our research on a number of these resort developments, as well as on holiday homes located on Als Island itself. We identified five key areas along the coast of the island with a notable cluster of holiday homes. These areas are highlighted on the map in Figure 8.1.
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FIGURE 8.1: MAP OF HOLIDAY HOME CLUSTERS, ALS ISLAND
Source: ADMB
8.5 The market is fragmented in nature and the island is scattered with individual holiday homes, mostly along the coast. The density of development is low, apartments are not the norm and much of the product is dated from the 1960s or 1970s and in need of refurbishment or revitalisation. Anecdotal evidence gathered through interviews with various industry representatives, such as real estate agents, resort managers, and economists specialising in the field, suggests that the market is unlikely to recover significantly in the short term. Legal Considerations 8.6 It should be noted that there is a specific legal framework surrounding home ownership, and the right to buy in Denmark. Existing Danish residents are permitted to buy property but persons with no permanent residence in Denmark and those who have not previously lived in Denmark for a consecutive period of five years are required to obtain permission from the Danish Ministry of Justice in order to purchase real estate in Denmark. However, EU nationals and EEA nationals may be able to avoid this process under certain circumstances. In addition, companies domiciled in the EU or EEA may also be exempt from this process in certain cases.
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Taxation 8.7 Capital Gains Tax on the proceeds derived from the sale of property and real estate is exempt from tax unless the property is resold within three years of purchase or one sells on a commercial basis.
8.8 There are also a number of property taxes in Denmark. A real estate tax of one percent of the property value is payable to the government every year. This national property tax increases to three percent if the property is worth more than DKK 3.0 million. Homes are re- valued on an annual basis. In addition to this, there is a one-off municipal real estate tax levied on the value of the land belonging to the property, which varies between 1.6 and 3.4 percent depending on the location. Research indicates that average municipal land tax is approximately 2.4 percent.
8.9 It is important to emphasise that you only pay the annual property value tax if you live in the house yourself, not renting it out to tenants or treating it as a second home. This is a huge incentive to investors. Transaction Fees 8.10 The seller covers real estate agent fees of approximately six percent of the property’s sale value. Legal fees – for mortgage deeds and other supplementary finance – can amount to 1.5 percent of the property’s sale price. The buyer bears half the cost of fees associated with producing final contracts, which total 0.6 percent. Additional costs include stamp duty, which varies between 0.6 and 1.5 percent depending on the sales price of the property. Mortgages 8.11 There are no legal or administrative barriers for foreign investors looking to access sources of local finance and mortgages, which tend to be provided by mortgage lenders. Ordinarily, one is able to borrow up to 80 percent of the property value, with a repayment period of up to 30 years. OVERVIEW OF RESIDENTIAL PRODUCT & PRICING Product Unit Type 8.12 The overall holiday home product profile on Als Island is dominated by low density standalone properties and there are relatively few developments that focus on higher density for apartment or townhouse product. The majority of units are individual, with no attachment to a wider resort development.
8.13 Resort projects are a relatively untested product in Denmark, and are comparatively uncommon. Marina Fiskenæs Resort in Grästen (the closest resort development to the Als
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Island Resort study site) has a product mix containing 148 homes that sleep up to eight people and just eight apartments sleeping two people per unit. Larger scale branded resort developments throughout Denmark including Lalandia Rødby and Lalandia Billund comprise standalone homes sleeping up to eight people at the Rødby resort and between four and eight people at the Billund resort. This highlights the appetite for larger, standalone units over smaller apartments. Unit Size 8.14 In Figure 8.2 we provide a breakdown of unit size for a selection of coastal holiday homes in various locations across Als Island. Units range in size between approximately 50 and 300sqm (net useable area), with an average sized unit being 95sqm. Larger units are typically found in Nordborg, although the difference in sqm size is minimal. These sizes are relatively modest by current international standards.
FIGURE 8.2: UNIT SIZES, ALS ISLAND, 2013
No. of Bedrooms Min Max Average (sqm) (sqm) (sqm) 2 56 79 68 3 49 90 71 4 61 300 104 5 91 158 125
Source: Various Agents & Developments
8.15 At Lalandia Billund Resort, holiday homes ranged in size between 68 and 122sqm (sleeping four to eight persons), whilst at Marina Fiskenæs Resort all homes are 100sqm (sleeping eight persons).
8.16 Anecdotal evidence suggests that Germans (who constitute the main source market for holiday home rentals) prefer larger units of at least 80 to 100sqm, favouring luxury and space. On the other hand, Danes prefer smaller units of 40 to 50sqm because they tend to stay for shorter periods of time in comparison to international tourists, perhaps holidaying for just three or four nights. Land Plots 8.17 Using our sample of holiday homes on Als Island, we found the average plot size to be 900sqm with a wide range of between 300sqm and 1,900sqm. Plots sizes were slightly smaller in Broager (500sqm) owing to its more urban location. In Figure 8.3 we display the plot size to net unit size ratio for a selection of holiday homes on Als Island.
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FIGURE 8.3: PLOT SIZE : NET UNIT SIZE RATIO, ALS ISLAND, 2013
Area Min Max Median Average Nordborg 5% 16% 10% 10% Augustenborg 6% 22% 7% 11% Sydals 5% 28% 9% 11% Broager 13% 13% 13% 13% Egendsund 5% 38% 12% 17% Total Als Island 5% 38% 10% 12%
Source: Various Agents & Developments
8.18 The average ratio is 12 percent, slightly lower than we typically see at resort developments worldwide, reflecting the relatively low development density in the area. Another reason for such a low density is the lack of clustered resort style product on offer. Number of Bedrooms 8.19 Discussions with property agents in the local area indicate that the most popular unit type has three bedrooms and that it is difficult to sell or rent out holiday homes with less than two bedrooms. This is because the majority of tourists staying in such homes do so as a family.
8.20 Generally speaking, holiday homes in the local catchment area can sleep between four and eight persons. The average number of people staying in a particular holiday home at any one time is six persons. Quality 8.21 The quality of product on offer varies significantly. We found that there are a large number of older properties on the market that were built in the 1960s and 1970s. On the whole, these homes are cheaper and of poor quality in comparison to the more modern homes built after the turn of the century.
8.22 Research indicates that modern, prime properties are far easier to sell than dated product, and are easier to rent out and maintain. Amenities and Facilities 8.23 As mentioned earlier, integrated resort developments are uncommon in Denmark, as already mentioned, and most holiday homes are standalone properties with little to no amenities attached or within close proximity.
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8.24 Holiday home management companies often provide cleaning services upon check out, as well as bed linen and discounted entry into nearby attractions. Few other services are provided.
8.25 Research indicates that few properties have access to pools, tennis courts, communal gardens or other facilities. Those that do are significantly more expensive to rent or buy. Service Charges and Bills 8.26 Typically, holiday home management companies request a 25 percent commission on rental income. This fee includes the management, marketing, cleaning and rentals of the property. The remaining 75 percent of total rental income goes directly to the owner.
8.27 Those renting out holiday homes tend to be requested to pay for electricity and water used throughout the duration of their stay. Meter readings are taken at the start and then end of a tenants stay, with the utility costs being deducted from the deposit paid prior to renting out the property. All other bills are split between the owner and the rental agency. Pricing 8.28 Denmark experienced a housing boom between 2004 and 2007, with property prices increasing by 49 percent (in real terms) according to the Association of Danish Mortgage Banks (ADMB). However, prices subsequently fell by about 19 percent (in real terms) between the third quarter of 2007 and the first quarter of 2010 due the global economic downturn.
8.29 There has been significant regional variation in the rate at which property prices have fallen across Denmark. Syddanmark and, in particular, Jutland were not as hard hit because it is far easier to rent out holiday homes to Germans in these areas, close to the national border. The trend in holiday home sales prices is displayed in Figure 8.4. As shown, in 2011 the average sales price of a holiday home in Syddanmark was approximately DKK 1.3 million, compared to DKK 1.1 million across Denmark as a whole.
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FIGURE 8.4: HOLIDAY HOME SALE PRICES, DENMARK AND SYDDANMARK, 2006 – 2011
Source: Danmark Statistik
8.30 As has been the case throughout Denmark as a whole, holiday home prices in Sønderborg Municipality have fallen since the start of the recession. Prices in the area are still adapting and there are many properties on sale. It is a very competitive market and prices look set to continue falling over the next year or two, according to the Danish Association of Chartered Estate Agents (ACEA).
8.31 Through our programme of interviews and by collating data on holiday home prices in the local area, we have been able to gain a further impression of sales prices on Als Island. In Figure 8.5 we provide an overview of unit prices in key areas on the Island. The average price of a holiday home in our sample was DKK 1.5 million. This lies above the median of DKK 1.4 million, indicating that our sample is slightly positively skewed. The range is wide, reflective of the broad variation in property quality and age. Many holiday homes on Als Island are outdated and not particularly aesthetically pleasing. Larger, more modern units built over the past 10 to 15 years have a higher price point.
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FIGURE 8.5: HOLIDAY HOME SALES PRICES, ALS ISLAND 2013
Area Min Max Median Average (DKK) (DKK) (DKK) (DKK)
Nordborg 795,000 1,575,000 1,145,000 1,162,778 Augustenborg 600,000 995,000 845,000 821,250 Sydals 895,000 1,995,000 1,595,000 1,628,909 Broager 645,000 3,495,000 2,195,000 2,111,667 Egendsund 495,000 4,995,000 1,567,500 2,156,250 Als Island 495,000 4,995,000 1,395,000 1,504,129
Source: Various Agents and Developments
8.32 As shown, prices holiday homes on sale in Broager and in Egendsund lie well above the average for the area. Anecdotal evidence suggests that Broager is sought-after because it is surrounded by water on three sides and has quick access via a major road which crosses the Egern Strait to the Jutland mainland. Homes on this peninsula also tend to be more modern in comparison to the 1960s and 1970s developments towards the North of the Island. A similar argument surrounding location can be made for Egendsund.
8.33 Homes at Marina Fiskenæs Resort were initially sold for between DKK 1.2 and 1.8 million (the most expensive units had sea views) between 2004 and 2006, the boom years. Over the last few years, a number of homes have been resold for DKK 1.2 million and we understand that if homes at the resort were to become available now, they would sell at this level, irrespective of their plot position relative to the sea. The sales price of units at both Lalandia Billund and Lalandia Rødby ranged between DKK 1.6 and 2.6 million when sold between 2007 and 2009. Price per Sqm 8.34 In Sønderborg Municipality, the average price per sqm of net built area pre-recession was approximately DKK 16,000 and post-recession it has fluctuated around DKK 14,000. This is a decrease of 12.5 percent, indicating that the area has not been as hard hit as the rest of the country where prices fell by 27.0 percent on average.
8.35 In Figure 8.6 we present an overview of price per sqm for holiday homes located across Als Island. As shown, prices are highest in Broager and lowest in Augustenborg. Nordborg, the area closest to the study site, is one of the cheaper places to purchase holiday homes in the municipality.
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FIGURE 8.6: PRICE/SQM, ALS ISLAND, 2013
Area Min Max Median Average (DKK/sqm) (DKK/sqm) (DKK/sqm) (DKK/sqm) Nordborg 4,983 19,207 14,494 13,832 Augustenborg 5,265 13,250 11,903 10,580 Sydals 5,265 23,952 17,337 17,574 Broager 13,163 36,406 20,514 23,361 Egendsund 9,706 33,300 16,796 19,150 Als Island 4,983 36,406 15,446 16,349
Source: Various Agents and Developments
8.36 By way of comparison, the sales price per sqm of units sold at Lalandia Billund ranges between DKK 21,300 and DKK 23,500, higher than the national average. The popularity of Legoland Billund would make these holiday homes more desirable and easier to rent out. At Marina Fickenæs Resort, the price per sqm (DKK 12,000 to DKK 18,000) is more in line with the average for our sample set (DKK 15,400), Sønderborg Municipality (DKK 13,400) and Denmark as a whole (DKK 13,700).
Rentals 8.37 The cost of renting a holiday home has been decreasing since the global economic recession and varies significantly depending on the season. Competition from Eastern Europe has also driven down prices. The amount paid depends upon location, proximity to the sea, condition of the home and the amenities attached.
8.38 According to real estate agents in the local area, it is possible to rent a well-appointed holiday home for DKK 4,000 per month, but rates fluctuate between DKK 1,000 and DKK 30,000. A 50 percent premium is to be expected between low and high season, with added premiums for a sea view (20 percent) and a high quality, modern property. We understand that few units have indoor pools, but those that do command a significant price premium.
8.39 Monthly rental income for a selection of holiday homes on Als Island is presented in Figure 8.7. As shown, an average property can command DKK 6,600 in rent every month.
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FIGURE 8.7: MONTHLY RENTAL INCOME, ALS ISLAND, 2013 Area Min Max Median Average Nordborg 4,167 6,250 5,000 5,083 Augustenborg 2,500 4,167 3,542 3,438 Sydals 3,750 8,333 6,667 6,818 Broager 2,917 14,583 9,167 8,889 Egendsund 2,083 20,833 6,667 9,063 Als Island 2,083 20,833 5,833 6,559
Source: Various Agents & Developments
8.40 At Marina Fiskenæs Resort, which is the closest resort to the proposed Als Island Resort, 100sqm holiday homes sleeping up to eight people are rented out for DKK 10,000 per week in high season and between DKK 4,000 and 6,000 in low season.
8.41 The average weekly rent at Lalandia Rødby in high season is DKK 16,000. For the same home (sleeping eight persons) in low season, this falls to DKK 13,700. Holiday homes can be rented out at Lalandia Billund for DKK 19,000 per week in high season and for DKK 17,000 in low season.
8.42 Gross investment yields (excluding management and letting fees) are almost uniform across Als Island, at approximately five percent. The lowest average gross investment yield in the area can be found in Nordborg (4.7 percent). This information is presented in Figure 8.8.
FIGURE 8.8: GROSS INVESTMENT YIELD, ALS ISLAND, 2013 Area Min Max Median Average (%) (%) (%) (%) Nordborg 3.8 5.3 5.0 4.7 Augustenborg 5.0 5.0 5.0 5.0 Sydals 5.0 5.1 5.0 5.0 Broager 5.0 5.4 5.0 5.1 Egendsund 5.1 5.1 5.0 5.1 Als Island 3.8 5.4 5.0 5.0
Source: Various Agents & Developments Absorption 8.43 We understand from the Danish Association of Chartered Estate Agents (DACEA) that the average absorption rate of holiday homes has increased significantly since the recession. In 2005, it took approximately 100 days to sell a holiday home whereas now it takes an average of 400 days. The number of registered holiday home sales for both Syddanmark and
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Denmark is displayed in Figure 8.9, highlighting the significant decrease in the number of sales post-recession.
FIGURE 8.9: HOLIDAY HOME SALES, DENMARK AND SYDDANMARK, 2006 – 2011
Source: Danmark Statistik
8.44 It is easier to absorb prime properties into the market, but our interviewees suggest that these units are often priced too high for the market. If the price is right, these units can take three to six months to sell.
8.45 It took less than a year for the first phase of 100 units at Marina Fiskenæs Resort to sell out in 2004. The units were completed in 2006. The remaining 56 units were pre-sold and built in the same year. The sales process was slightly different at Lalandia Billund with 761 units being sold off plan in 2007, 300 completed in 2008 and 461 completed in 2009. The presence of Legoland on an adjacent land parcel would have been a driving factor to the investor allowing for such high absorption rates, coupled with the strong economy at the time. A similar process occurred at Lalandia Rødby with 500 units sold off plan in 1986, and a further 250 units sold off plan in 2000. DEMAND CHARACTERISTICS Nights Spent 8.46 The number of nights spend in holiday homes in Syddanmark followed a similar trend to that of Denmark as a whole over the six year period between 2007 and 2012 with numbers falling in 2009 before slowly recovering. There was a clear peak in nights spent in 2008 (1.03 million), as shown in Figure 8.10. As in the case across Denmark as a whole, demand levels in
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the holiday home market increased in 2012 with demand reaching an all-time high in the region (just over 1.03 million nights). This is a positive indicator for the project.
FIGURE 8.10: HOLIDAY HOME NIGHTS, SYDDANMARK REGION, 2007-2012
Source: Danmark Statistik Seasonality / Occupancy 8.47 The market for holiday homes in Denmark is highly seasonal. In peak season (July), 100 percent occupancy is not uncommon. In low season it varies substantially, falling as low as 10 percent in many months.
8.48 Anecdotal evidence obtained through interviews with various real estate experts suggests that the high season is very short, which ties in with official statistics. One agency went so far as to say their high season runs from 13th July through to 3rd August only. Occupancy rates in this period approach 100 percent.
8.49 At Marina Fiskenæs Resort in Grästen, 50 percent of all guests stay in July with the distribution spreading outwards and down to just five percent from November through to January. The average annual occupancy at this resort was 40 percent in 2012, averaging at 50 percent over weekends and 80 to 90 percent during the high season. Buyer Profile Nationality 8.50 Danish law states that it is only possible to purchase holiday homes if you are a Danish National, as noted at the start of this section. Under certain circumstances foreigners with
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close ties to the country may be exempt from this rule – these people may have Danish parents or are married to a Dane. Age Profile 8.51 Through our programme of interviews, we understand that the majority of holiday home owners are aged 40 years and over. One interviewee from the DACEA advised us that younger people would like to buy holiday homes, but there is an affordability issue. When asked whether the appetite for holiday home purchases will continue into the next generation or two, we were advised that it would because Danish residents treat holiday homes as an important investment asset, that supplements salaries or pension incomes. Motive to Buy 8.52 Data is not collated on the reason why people buy holiday homes in Denmark. Since the market is very fragmented, with a limited number of resort developments and a large number of individual units, it is hard to determine people’s motives. However, anecdotal evidence obtained through interviews suggests that there is a relatively even split between those buying as an investment and those buying for a second home with a secondary income stream.
8.53 We understand that the number of people purchasing holiday homes as an investment has fallen in recent years. This has occurred because prices have been falling year-on-year since the onset of the global economic crisis. With this trend set to continue, investors are wary about placing their money in this market. There has been a shift in demand towards prime property, with more of a guaranteed return. This has led to difficulties regarding the sale of property of a lower quality, but is a positive indicator for this project site given its attractive coastal location. Renter Profile Nationality 8.54 We understand that 78 percent of guests staying in holiday homes in South Jutland are from Germany. This is likely to be because Germany borders the southern side of the province. Other than the domestic market, which accounts for 15 percent of visitors, further key source markets in the region include the Netherlands (two percent), Norway (two percent) and Sweden (one percent).
8.55 Although official data is not collated for Sønderborg Municipality, we have been able to obtain an indication of visitor origin from interviews with local real estate agents. The visitor profile of those staying in holiday homes in the area surrounding the study site is primarily made up of Germans (80 – 85 percent) and Scandinavians (up to 15 percent).
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Age Profile 8.56 The majority of Danish holiday homes are rented out by families with a household head who is at least 40 years old. It is not uncommon for two families to link up together and rent out a single holiday home, or for multi-generational holidays to take place in these homes. Length of Stay 8.57 Official data tells us that 44 percent of domestic tourists stay in holiday homes whilst visiting the Denmark for more than four nights. This proportion is far lower, at just seven percent, when we consider the international market. Just over one fifth of domestic tourists stayed in holiday homes for less than four nights in 2011, compared to 15 percent of international tourist staying for less than four nights.
8.58 Anecdotal evidence suggests that international tourists stay in Sønderborg Municipality for approximately one week, perhaps two. Domestic tourists stay in the area for long weekends or short breaks of around three or four nights.
8.59 The average length of stay for guests staying in holiday homes at Lalandia Billund, for comparison, is 4.5 nights, whilst at Lalandia Rødby it is 3.5 nights owing to the fact there are fewer local activities. The average length of stay at Marina Fiskenæs Resort ranges between two or three nights in low season (weekend breaks) up to 4.3 nights in high season. IMPLICATIONS FOR THE STUDY 8.60 Als Island is recognised to be a desirable holiday home destination in Denmark, and is particularly popular with international tourists from Germany. The market is highly fragmented with a lack of integrated resort development and an array of low density standalone homes of varying quality that are widely dispersed across the island.
8.61 The integrated resort concept is relatively untested and would offer something entirely new to the region. Very few holiday homes currently have access to communal sports facilities, food & beverage outlets or other resort-type amenities.
8.62 There are very few townhouses or apartments on Als Island, representing another untapped market. However, demand is highest for low density three bedroom individual units, since holiday homes are a popular accommodation type amongst families.
8.63 Owing to the low density of development on Als Island, the land plot to net unit size ratio is also low at around 12 percent. This is also partially due to a lack of clustered resort-type product on the island. When considering the density of the planned Als Island Resort, one must bear in mind the fact that visitors to the region are currently used to benefitting from a significant amount of external space.
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8.64 The market for holiday homes on Als Island is currently a buyer’s market, with many units left unsold and there is continuing downwards pressure on prices as a result of the global economic downturn. We understand there has been a shift in buyer motivation away from speculative investment. However, Danes do have an appetite for purchasing holiday homes which is a significant positive indicator for the project. Once the region has recovered from the knock-on effects of the global economic crisis, we anticipate the market for holiday homes with pick up again.
8.65 The cost of renting a holiday home on Als Island has fallen in recent years due to a downward pressure on prices as a result of competition from Eastern Europe. A fall in demand because of the global economic recession has also put a dampener on prices. Despite this, investment yields stand at approximately five percent across the Island.
8.66 The average time taken to sell a holiday home in Denmark has increased fourfold over the past seven years, but it is easier to absorb prime properties into the market. If these high- end holiday homes are priced correctly, they can take three to six months to sell. This, coupled with the fact that investors consider prime property to be less risky, is a good reason for why Als Island Resort should consider targeting the high end of the market.
8.67 The market for holiday homes in Denmark is highly seasonal with occupancy rates approaching 100 percent in July and remaining relatively low throughout the rest of the year. Managing this seasonality will be a challenge for the project. Whether to open Als Island Resort year-round or on a seasonal basis will doubtless be a point of debate.
8.68 Almost 80 percent of tourists to Syddanmark Province are German. Anecdotal evidence suggests that Germans prefer large, more luxurious holiday homes compared to other nationalities. Since the area is reliant upon these tourists, Als Island Resort will need to target their preferences in development programming for holiday homes on the site.
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9 CAMPSITE MARKET OVERVIEW
INTRODUCTION 9.1 Since the onset of economic recession in 2008, camping in many parts of the world has started to evolve and diversify with a new momentum. Whilst many emerging tourism trends are a direct response to the harsher fiscal climate and the leisure traveller belt- tightening associated with declining disposable incomes, some are also a genuine reflection of hospitality industry product innovation and a growing desire amongst increasingly urbanised people to get closer to nature (in ways perhaps less ‘rustic’ than traditional camping styles have facilitated in the past). Terms to describe new and re-emerging camping trends include ‘glamping’, ‘frugal camping’, ‘bamping’, and, ‘garden’ camping.
9.2 ‘Glamping’ merges the idea of glamour with camping. Examples can be found all over the world, from the deserts of Tunisia to the cooler climes of Northern Europe. It combines the amenities often associated with upscale hotel provision with the idea of sleeping in the outdoors. ‘Frugal Camping’ is the latest term for camping on a more limited budget. ‘Garden Camping’ is the outdoor garden-based equivalent of an indoor ‘sleepover’. ‘Bamping’, on the other hand, is a new term for camping with only the basic essentials such as a sleeping bag and a ‘rain cover’ instead of a tent.
9.3 Als Island’s camping sector sits somewhat outside these descriptions, its campsites having largely evolved along a tried and tested formula dating back throughout the latter half of the 20th Century. As such it has yet to embrace some of the newer trends currently making waves in the travel trade press and wider media, the Island’s campsites having largely operated over many years as simply-run, modest, independent family enterprises.
9.4 In this section we detail the supply and demand characteristics of the Island’s campsite market relative to the national Danish and regional Syddanmark experience. We also consider the implications of current and envisaged local campsite trading characteristics for the proposed Als Island Resort project. CAMPSITE SUPPLY Campsite Operators 9.5 The supply of campsite operations in Denmark as a whole is detailed overleaf in Figure 9.1 and is shown relative to the regional submarket of Syddanmark in which Als Island is situated.
9.6 The table emphasises the highly seasonal nature of campsite operations, many of which close somewhat unsurprisingly during winter months.
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9.7 As a result, only 57.3 percent of campsites throughout Denmark operate on a year-round basis, whilst in Syddanmark the share of operators that trade for a full 12 months is 59.7 percent.
FIGURE 9.1: DENMARK - NUMBER OF CAMPSITE OPERATORS (HIGH/LOW SEASON)
2007 2008 2009 2010 2011 2012 Denmark (High Season) 418 414 411 410 419 417 Denmark (Low Season) 177 229 161 221 186 239 Syddanmark (High Seasons) 132 130 130 129 132 133 Syddanmark (Low Season) 58 99 54 74 56 77
Note: Analysis includes only campsites with 75 units/pitches or more Source: Danmark Statistik , AECOM
9.8 On Als Island, campsite numbers are far fewer, with only 16 identified local operators. The quality of provision varies from very basic small providers, to much larger, more amenitised, family-orientated holiday centres.
9.9 Campsite operations on the Island are divided into a number of official classifications, detailed in Figure 9.2.
FIGURE 9.2: ALS ISLAND – CAMPSITE OPERATORS
Offical Classification Number of Operators
4-Star 1 3-Star 7 2-Star 6 1-Star 2 Total 16
Source: Sønderborg Tourism Office, AECOM
9.10 Although Denmark has a rich camping history and a relatively buoyant supply of site operators, the overall number of campsites on Als Island is modest, when considered in the context of its attractive coastline, rural charm and cultural/activity-orientated excursion opportunities. Only one campsite, Drejby Strand Camping, operates to an official four-star standard, whilst there are seven locations with three-star sites, six locations with two-star sites, and just two very basic one-star operators.
9.11 Further analysis of the distribution of Danish campsites (those with a minimum of 75 units/pitches) indicates that the Syddanmark region accounts for the largest share of individual campsite locations with 31 percent of the total national supply.
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9.12 Midtjylland has about a quarter of all operators, Nordjylland almost a fifth, whilst Sjælland and Hovedstaden represent 16 percent and 11 percent of operators respectively.
9.13 Within this national framework, and within the Syddanmark region overall, Als Island accounts for only four percent of the country’s campsite supply, as detailed in Figure 9.3.
FIGURE 9.3: ALS ISLAND SHARE OF TOTAL DANISH CAMPSITE OPERATIONS 1
Note: Als Island campsites lie within Syddanmark Region. 1 Analysis of campsites with 75 units or more (equating to an estimated 15 of the identified 16 on-Island operators). Source: Danmark Statistik, Sønderborg Tourism Office, AECOM Campsite Supply Growth 9.14 Figure 9.4 on the following page indicates the supply evolution of campsite units/pitches in Denmark as a whole, relative to that of Syddanmark in which this project will be located.
9.15 Nationally, growth in supply has been largely unaffected by the economic downturn. Between 2007 and 2008, the sector recorded only a modest drop in provision of just 321 units/pitches.
9.16 From 2008 onwards supply has increased year-on-year to a 2012 total of 98,052 pitches, representing an increase of over 10,000 and equivalent to 11.5 percent growth over the five year period.
9.17 Growth in the supply of campsite spaces in Syddanmark has been less pronounced. Since 2007, in only one year has there been a reduction in supply (2008), when the overall number of campsite spaces fell from 31,389 to 29,987, representing a drop of 1,402.
9.18 Since then, numbers have increased to a 2012 figure of 30,875, some three percent higher than in 2009.
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FIGURE 9.4: CAMPSITE SPACES (UNITS/PITCHES 1) SUPPLY GROWTH 2007-2012
1 Analysis of campsites with 75 units or more (equating to an estimated 15 of the identified 16 on-Island operators).
Source: Danmark Statistik, AECOM
9.19 The supply of campsite facilities on Als in relation to the wider national supply in Denmark is highlighted further when the market share of the Island’s campsite units/pitches are compared to the overall Danish supply. Figure 9.5 on the following page charts this supply. Syddanmark, with over 28,500 units/pitches leads the market, providing just over 29 percent of the national stock.
9.20 The Midtjylland region accounts for over a quarter of supply, with almost 27,000 units/pitches, whilst the Nordjylland and Sjælland regions each contribute 19,175 and 12,313 units/pitches respectively.
9.21 Hovedstaden, with only 8,764 units/pitches, equating to almost nine percent of the total market, is the only Danish ‘region’ to have a single figure share of the national supply.
9.22 The campsite unit total for Als (amongst operators with more than 75 pitches) is estimated at just over 2,000, equating to approximately 2.4 percent of the country’s overall supply.
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FIGURE 9.5: ALS ISLAND SHARE OF DANISH CAMPSITE UNIT/PITCH SUPPLY 1
Note: Als Island campsites lie within Syddanmark Region Als Island data includes estimates 1 Analysis of campsites with 75 units or more (equating to an estimated 15 of the identified 16 on-Island operators) Source: Danmark Statistik, Sønderborg Tourism Office, AECOM Als Island Campsite Unit/Pitch Supply 9.23 Campsite provision on the island is divided into a number of classifications, whose unit/pitch-counts are detailed in Figure 9.6.
FIGURE 9.6: ALS ISLAND – CAMPSITE SUPPLY CHARACTERISTICS (ON-ISLAND CAMPSITES ONLY) Offical Classification Number of Operators Number of Units/Pitches 1
4-Star 1 500 3-Star 7 1,045 2-Star 6 707 1-Star 2 99 Total 16 2,351
1 Figures include estimates Source: Sønderborg Tourism Office, AECOM
9.24 The previous table, together with Figure 9.7 overleaf, both serve to highlight the limited supply of campsite operators on Als Island.
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FIGURE 9.7: ALS ISLAND – CAMPSITE OPERATOR & UNIT/PITCH 1 SUPPLY MIX
Als Island Campsite OPERATOR Supply Mix
Als Island Campsite UNIT/PITCH Supply Mix
1 Includes unit/pitch research estimates. Source: Sønderborg Tourism Office, AECOM
9.25 As with the supply of hotels, there are no five-star campsites on the Island and, as mentioned, only one operator is compliant with four-star standards at Drejby Strand Camping.
9.26 Despite Drejby Strand accounting for only six percent of site operators, its scale and capacity result in it retaining more than a fifth of the market share of individual campsite units/pitches. Three-star campsites account for the largest share of overall supply, both in terms of the number of operators (43 percent) and also, with almost half the Island’s supply, their cumulative number of available units/pitches (46 percent). Basic two-star sites comprise over a third of operator numbers, but just over a quarter of available units/pitches,
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whilst lowest quality one-star operators, despite representing 13 percent of campsite businesses, nevertheless account for only four percent of available pitches. Operator Profile 9.27 Campsites on Als are typically owner-operated, having in a number of cases been developed as part of farm diversification activity after the Second World War and throughout the 1950s and 1960s. With campsites dating back to the post-war period at some locations, often retained in the same ownership for many years, operators have occasionally been able to recruit younger generations of the original founding family to manage and maintain facilities.
9.28 However, at other locations campsite proprietors are faced increasingly with the need to maintain levels of demand despite the multiple challenges of an ageing clientele, an ageing product offer, and an ageing owner/operator trying to cope with increased levels of campsite maintenance and upkeep. Facilities 9.29 Campsite facility provision on Als varies, in-line with the promoted standard (star rating) of sites across the Island. Better quality three-star and four-star campsites have the most extensive facility ranges which typically include all or a significant share of the following:
Shop; Snack bar/refreshment outlet; Customer Laundry facilities; Communal customer kitchen facilities; Power to individual campsite units/pitches; Communal bath/shower rooms and toilets; Children’s playground; Swimming pool. CAMPSITE DEMAND Seasonality 9.30 Seasonality traits for each of Denmark’s regions and Als Island are detailed in Figure 9.8. The monthly occupancy performance of Als Island campsites is broadly in-line with the operating characteristics of the country’s other regions and exhibits pronounced peaks and troughs in demand throughout the year.
9.31 By far the highest period of demand is July, a month when families in Denmark traditionally spend vacation time, echoing the buoyant July demand patterns also experienced by hotel operators on Als Island.
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9.32 Weak demand periods amongst local campsites follow the national pattern. The majority of operators trade for approximately eight months of the year, from March to September. In a number of Danish regions trading also occurs during the Christmas and New Year season in December. As a result, the lowest levels of occupancy generally occur from January to March and October through to late December.
FIGURE 9.8: DANISH CAMPSITE SEASONALITY
Source: Danmark Statistik, Individual Campsites, AECOM Geographic Mix 9.33 The geographic origin of demand (based on overnight stays) within the Danish campsite sector is detailed on the following page in Figure 9.9.
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FIGURE 9.9: GEOGRAPHIC ORIGIN OF DEMAND (DENMARK & SYDDANMARK)
Denmark Campsites
Syddanmark Campsites
Source: Danmark Statistik, AECOM
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9.34 With around 10.7 million campsite visitor nights spent at Danish campsites in 2012, just over three quarters was generated by the domestic market (8.3 million). Germany comprises the biggest single geographic foreign source, accounting for just over 1.5 million campsite visitor nights (14 percent).
9.35 In Syddanmark, however, Germany’s closer proximity to the region than other parts of Denmark results in a stronger share of campsite demand than that seen nationally, accounting for over a fifth (22 percent) of campsite overnight stays (approximately 895,000).
9.36 Figure 7.10 highlights the share of demand generated at local campsites from German sources and the way in which it differs from that derived nationally throughout Denmark, and regionally within Syddanmark.
FIGURE 9.10: GEOGRAPHIC ORIGIN OF DEMAND (ALS ISLAND)
Als Island Campsites
Source: Individual Campsites, AECOM
9.37 Based on responses from a selection of Als Island campsite operators, German visitors can be seen to dominate demand, accounting on average for almost three quarters (72 percent) of overnight stays. This compares to German demand in Syddanmark of 22 percent, and 14 percent in Denmark as a whole.
9.38 At some Als Island campsites, German demand comprises almost the entire market. As our research amongst hotel operators also suggests, the strength of German campsite demand locally reflects, in part, the proximity of Als Island to the German border and, in particular, demand generated in the Greater Hamburg area.
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Campsite Leisure Market Characteristics 9.39 The leisure market sub-sectors that make up the demand for Als Island campsites is varied and includes a mix of visitor types detailed in Figure 9.11.
FIGURE 9.11: ALS ISLAND – CAMPSITE LEISURE MARKETS Leisure Sub-Market Principle Demand Characteristics Families with young Children School holiday periods – short-breaks & longer vacations Multi-generational Family Groups School holiday periods – short-breaks & longer vacations Younger couples Throughout the operating season – short-breaks Older couples Throughout the operating season – longer vacations Recreational Anglers Throughout the operating season – small groups (male) – short-breaks Watersports 1 Enthusiasts Throughout the operating season – couples & small groups – short-breaks
1 Kite surfing, wind surfing. etc. Source: Individual Campsites, AECOM
9.40 Conspicuous by their absence from the above table are market sub-sectors that include older children. Most operators identify this market (i.e. families with older teenage offspring) as being one the most challenging and difficult markets to attract and retain, principally due to a perceived lack of age-appropriate on-site facilities and amenities. Double Occupancy and Average Length of Stay 9.41 Double occupancy and length of stay are detailed in Figure 9.12.
FIGURE 9.12: SELECTED CAMPSITES - DOUBLE OCCUPANCY FACTORS (DOF) & AVERAGE LENGTH OF STAY
Double Occupacny Factor Average Length of Stay (Guests Per Campsite Unit/Pitch) (Nights)
3.5 5 - 7
Note: Figures include research respondent estimates Source: Individual Campsites, AECOM
9.42 The double occupancy factor (DOF), at local campsites is influenced by seasonality and its effect on specific leisure markets with different DOF characteristics. During the peak summer month of July and during summer weekends, demand is dominated by family groups with children which can push up the number of occupants per campsite pitch to in excess of four people.
9.43 Conversely, during off-peak periods demand derives more strongly from older age groups that include retired couples and, consequently, fewer occupants per camping pitch.
9.44 Average length of stay is also influenced by specific demand patterns associated with key leisure tourist markets. Up to ten percent of demand amongst younger age groups is short-
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break orientated, generating shorter average lengths of stay of two or three nights. Generally, however, it is family orientated demand during traditional vacation periods that comprises the mainstay of occupancy at most campsites and typically involves bookings of up to seven nights.
9.45 Visitation averaging longer than seven nights is more commonly associated with older age groups, usually comprising retired and semi-retired leisure tourists. Achieved Average Campsite Occupancy 9.46 Figure 7.12 outlines the levels of unit/pitch utilisation of the campsite market throughout Denmark between 2007 and 2012, and compares national performance with that of regional performance in Syddanmark and local performance on Als Island.
FIGURE 9.13: CAMPSITE UNIT/PITCH UTILISATION (OCCUPANCY) (2007 – 2012)
Note: Yearly analysis incorporates an average seven month trading period. Includes Als Island research respondent estimates. Source: Danmark Statistik, Individual Campsites, AECOM
9.47 Annual campsite unit/pitch (trading period) occupancy levels, relative to those associated with hotel operations, are considerably lower. As evidenced in our analysis of monthly campsite visitation, seasonality is pronounced with very low demand outside the shoulder and peak months of June to August. Its effect inhibits overall trading period averages, which in 2008, before the impact of the recession, reached just over 20 percent in Syddanmark and locally on Als Island.
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9.48 As in other hospitality industry sectors, the economic crisis has affected campsite demand. In Denmark as a whole, campsite occupancy declines were the most dramatic, falling by three and half points between 2008 and 2012, from 19 percent to 15.5 percent.
9.49 In Syddanmark, the decline was a fractionally lower three point drop, from 20.6 percent in 2008 to 17.6 percent in 2012.
9.50 Research amongst local Als Island operators suggests, anecdotally, that campsite occupancies adhere closely to those of the country’s southernmost region, Syddanmark, although marginally higher peak season demand facilitates campsite utilisation on the Island that fractionally improves the overall performance indices relative to those of the wider region.
9.51 Consequently, Als Island campsite occupancies are estimated to have fallen the least amongst our examined samples, by only 2.6 points between 2008 and 2012.
9.52 However, unlike hotel occupancies, which since 2009 have been recovering thanks largely to a revival in corporate business travel, campsite occupancies have continued to decline. Research respondents on Als cite a number of reasons, not least amongst them being the absolute leisure orientation of the market. Employment insecurity together with lower levels of disposable income amongst key leisure demand sectors have been exacerbated by higher costs associated with almost everything essential to a camping holiday, particularly vehicle fuel and groceries. Almost all Als Island research respondents report considerable reductions in recent years in the levels of on-site retail spending on food, beverage and other comestibles.
9.53 At some campsite locations, operators also report a drop in the volume of ageing repeat visitors, who typically book a two-week summer vacation year after year (or who have a permanent on-site unit/pitch). As their propensity to travel declines they are not being replaced at the same rate by younger camping holiday enthusiasts.
9.54 Weather too, can play a part. For many people, gone are the days when camping vacations were booked and deposits paid up to a year in advance. Increasingly nowadays, travel plans are made with very short lead booking times, for stays of equally short duration. More reliable weather forecasting enables leisure travellers to make better-informed travel plans at the last minute that help to ensure a holiday or short-break with optimal weather conditions. Poor weather between June and September can have a detrimental effect, particularly on hospitality services such as camping that are orientated more towards ‘nature’ and ‘outdoor pursuits’.
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Achieved Camping Rates 9.55 Average achieved rates vary on Als Island depending on the standard of facilities provided and the tariff levels charged by campsites of different star ratings.
9.56 Figure 7.14 highlights the achieved average rate range per campsite unit/pitch for researched operators on Als Island. It also presents comparison of local rates with those of other European countries, including Denmark as a whole.
9.57 The rate ranges are based on the average achieved per overnight stay for a unit/pitch, inclusive of ‘per person’ tariffs, pitch rental, and additional associated charges such as electricity and other standard utilities.
FIGURE 9.14: ACHIEVED AVERAGE CAMPSITE RATE RANGES
Average Annual Location Unit/Pitch Rate Range (DKK) Italy 290 – 310 Spain 270 – 290 Denmark 250 – 270 Netherlands 250 – 270 France 245 – 265 Croatia 240 – 260 Als Island 235 – 255 Switzerland 230 – 250 Austria 210 – 230 Sweden 185 – 205 Germany 180 – 200 Hungary 170 – 190 Poland 145 – 155
Note: Figures include research respondent estimates Source: Individual Campsites, ADAC Infogramm, AECOM
9.58 The averages indicated by our researched Als Island campsites are marginally lower achieved rates than those for Denmark as a whole, although this is also likely to be a reflection of the fact that Als has a relatively high proportion of less expensive campsites in the one-star and two-star categories which together comprise over a third of available campsite units/pitches locally. In addition, three-star units/pitches at campsites of varying quality make up nearly half of the Island’s supply, whilst only a fifth of pitches comprise the more expensive supply of four-star facilities.
9.59 Despite weakening occupancies on Als, most research respondents have focussed on maintaining average rental rates throughout the economic downturn. Nonetheless, reduced yields combined with rising costs and expenses have impacted on profitability to a considerable degree.
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OTHER CAMPSITE OPERATING INDICES Revenue Mix 9.60 Figure 9.15 details the revenue mix ranges amongst Als Island campsite operators.
FIGURE 9.15: ALS ISLAND – CAMPSITE AVERAGE REVENUE MIX 1
1 Figures based on research respondent estimates Source: Individual Campsites , AECOM
9.61 Amongst Island campsite operators, the ranged revenue mix can vary considerably. At smaller, lower star-rated facilities such as the two-star, Købingsmark Strand Camping site in the north of Als, little if any revenue is derived from on-site retail sales. This is in contrast to larger, higher-rated operations such as the four-star Drejby Strand Camping in the South of the Island where retail and other facility provision is more extensive, and where the critical mass of on-site visitors generates more robust trading conditions. Campsite Expenses and Operating Profit 9.62 The campsite market on Als Island is, as mentioned, characterised by independent operators, a typical example being a husband and wife team, often supported by other family members or part-time employees at busier times in the seasonal calendar.
9.63 The need to reduce the payroll burden, in what is regarded as a relatively low revenue generating hospitality sector, is considered critical by most research respondents, if campsites wish to remain solvent. As a result, staffing levels are kept to an absolute minimum and in many instances owner/operators do not draw a salary directly from the business.
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9.64 Figure 9.16 outlines the range of payroll and other costs and expenses associated with campsite operations.
9.65 Marketing costs can vary significantly, ranging from operators who invest very little in promotion to those that are more pro-active in targeting demand.
FIGURE 9.16: ALS ISLAND CAMPSITE EXPENSES & OPERATING PROFIT INDICES 1
Percentage of Revenue Range
1 Figures include research respondent and AECOM estimates Source: Individual campsites, AECOM
9.66 Expenses associated with campsite administration are minimal, although maintenance costs as a percentage of overall revenues are generally higher and reflect to some extent the wear and tear inflicted on facilities usually situated in exposed Baltic coast locations and subject to the vagaries of harsh North European winters.
9.67 Gross Operating Profit (GOP) percentages have declined in recent years. The once typical averages of 50 percent to 60 percent are no longer achievable in the prevailing market conditions and in the face of ever-increasing costs and expenses.
9.68 Nevertheless, relative to hotel industry norms, campsite GOP percentages of around 40 percent are considerably higher, albeit derived from revenue streams that are, on average, far lower than those typically associated with hotel operations.
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IMPLICATIONS FOR THE STUDY 9.69 As with our hotel market research, camping sector analysis on Als highlights the relatively unchanged nature of the Island’s supply over many years, and also the rather unsophisticated ‘hands-on’ approach of the majority of campsite owner-operators.
9.70 Despite the ongoing popularity of camping in other parts of Europe, and indeed growth in the supply of camping pitches generally throughout Denmark, local operators in many instances are seeing declines in overall visitor numbers as younger campers fail to replace at an equitable rate the declining numbers amongst ageing and older camping devotees.
9.71 Occupancy challenges have, in part, reflected a range of exacerbating influences such as poor weather, and recessionary impacts on disposable incomes. But they also, arguably, reflect a lack of investment in camping innovation, not only in amenity provision for ‘lost’ markets such as teenagers, but also in new forms of more lucrative and inventive campsite accommodation and configuration.
9.72 The provision of exemplary traditional camping facilities, together with innovative new forms of ‘glamping’ could therefore comprise a leading and, in a local market context, unique product development opportunity at this project.
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10 MARINE LEISURE MARKET OVERVIEW
INTRODUCTION 10.1 As part of the study programme for this commission we have prepared a review of the marine leisure sector. It is our understanding that a 150-berth marina component is being considered for the proposed project site. In order to understand the setting for this vision, we consider the general rationale for marina development, the pre-requisites for successful operations and both the international, regional and local market context. GENERAL CONTEXT 10.2 Underlying growth for marina demand has risen over the last decade, though the sector has been under pressure over the last few years throughout the global recession. A fundamental issue that has faced the marine leisure sector around the world over this period is that it is much less costly and much less time-consuming to add new boats to the fleet than it is to develop new marinas. In addition, the environmental sensitivity associated with marina development has increased significantly in many countries. As a consequence, demand for the existing berths has been outstripping supply in many markets and there has been increasing pressure to build new marinas.
10.3 Due to the disparate nature of the sector, and privacy issues with regard to ownership, it is hard to verify the size of the marine leisure fleet at any one moment in time. However, one of the more reliable sources of information regarding the demand for vessels is the order books for the major shipyards around the world that are involved in their construction. A leading trade magazine, ShowBoats International, undertakes an annual review of the order books for all the major shipyards and publishes a summary of this information. In Figure 10.1 we show the total number of orders for all boats over 25 metres in length across all the major shipyards since 1999.
10.4 As indicated by the graph, the total number of orders for these large yachts increased steadily from 1999 to reach 1,019 in 2009. As mentioned above, the marine leisure sector has however felt the impact of the global economic crisis, with a downturn in demand of just under 40 percent over the 2009 to 2012 period. Although these figures are clearly related to larger vessels, the profile of growth is generally considered to be indicative of the sector as a whole. Given the scale and depth of the recession, it would have been unrealistic to imagine that the marine leisure sector would not be impacted like so many other businesses around the world.
10.5 The most recent information feeding through from yacht brokers, however, indicates that the level of activity and optimism within the sector has in fact strengthened slightly especially among pedigree yards and those building yachts over 40 meters and custom
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builds. There is a view that the market will gradually recover over time as the fundamental attraction of yachting and cruising remains; with a growing number of geographic markets around the world interested in both the ownership and chartering of vessels.
FIGURE 10.1: ORDERS OF YACHTS OVER 25M
Source: ShowBoats International Why Build Marinas? 10.6 In addition to the underlying demand-driven need to build additional new marinas to accommodate the global fleet, there are a number of other reasons why a developer might quite reasonably consider the inclusion of a marina component within an integrated tourism and leisure scheme:
Focus: Marinas can provide a much-needed focus to a waterfront development. They draw the eye and can provide a physical hub to a large project.
Image: Marinas, and the boats that use them, are generally associated with both a healthy lifestyle and luxury image. There is an aspirational quality to this image, which can be highly marketable.
Animation: Not only can marinas provide a physical focus for waterfront development, but typically provide a focus of operations and animation within a scheme. With boats coming and going, provisions being loaded and, potentially, teams preparing for regattas, etc there is plenty to watch in a busy marina and this activity draws people to the waterfront. As the footfall and dwell time around a marina increase so does the spending in retail units and food and beverage outlets, increasing the turnover of businesses on-site and the potential to drive higher rental revenues, as tenants are attracted to the waterfront.
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Wow Factor: Modern yachts are visually attractive. This combination can add a real ‘wow factor’ to a destination, drawing media attention, adding a degree of fascination for other people staying on-site, and raising the profile of the development as a whole.
Economic and Employment Benefits: In addition to the various benefits associated with image and physical planning, there are also economic and employment benefits associated with including a marina component within a destination. A good-sized marina will easily employ more than a dozen full-time staff as well as additional seasonal staff during the peak holiday period. A marina can also be a significant income generator both for a waterfront project and the local area, with revenues derived through tax, commercial operations, boat servicing and chartering, etc. 10.7 A key consideration that must however be recognised is the fact that the in-water infrastructure required for a marina development can be very costly to construct, depending on variables such as the bathymetry of the development site, prevailing wind conditions and land-side access issues. In considering the pros and cons of marina development there is inevitably a balance to strike between the benefits (both direct and indirect) and the construction and long-term maintenance cost requirements. PRE-REQUISITES FOR MARINA DEVELOPMENT 10.8 There are a number of key characteristics of successful marina developments. Consideration of these characteristics helps to shape our understanding of the potential and context for a marina. Marinas can be far more than a parking place for boats. The leading marinas now strive to offer what should be considered a hospitality experience, combining a mix of practical services and a range of quayside amenities.
Location: It is a fundamental pre-requisite of a successful marina operation to be located within an established sailing/cruising area or route. This will help to fuel both demand for annual berth rental as well as demand for transit quay moorings (i.e. short-stay overnight demand). The location of a proposed marina must also be considered within the competitive market context (i.e. giving consideration to the proximity, scale and profile of other marinas in the area).
Shelter: The raison d’être for a marina is to provide shelter for boats, no matter what their size. A safe mooring is vital and this must take into consideration prevailing wind issues and wave climate. Sea defences are required that ensure no damage is caused to the boats in the marina and that the residual wave action is comfortable for not only for those visiting the marina, but more particularly for those staying on-board overnight.
Access: Consideration must be given to access from both the sea and from land. There are inevitable uncertainties associated with the ability of sailing boats to determine when they may reach a marina and, to this end, 24-hour access from the sea is required. Landside access to the quay is also important as people preparing to depart, or returning from a trip, on their boat will typically have brought equipment and provisions with them in their car, which will need to be transferred to the boat. Providing this land-side access may be one of the master planning challenges.
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Compatibility with Surrounding Land Uses: Any new development that includes a marina component must give careful consideration to compatibility with surrounding land uses at the master planning stage. The marina should be located away from any operations that are going to create dust (which might settle on the boats), are likely to be associated with considerable noise pollution into the night, or might have implications for security (boats are valuable assets and are costly to maintain and/or repair). QUAYSIDE FACILITIES AND SERVICES 10.9 Based on research that we have undertaken over the years, we have included in the following paragraphs a summary of the quayside facilities and services that owners typically consider to be important. This may have implications for the development programme of facilities within the proposed schemes.
10.10 Interviews indicate that the range and quality of quayside facilities and services is only one of a number of selection criteria taken into consideration when planning a cruise itinerary.
10.11 In general, most boat owners like to go back to destinations that are familiar to them, where they might meet friends and acquaintances. They like to be seen by, and to meet friends, and prefer itineraries that combine time in popular ports or marinas that offer a range of restaurants and night time entertainment, with days in quiet secluded bays, where they can enjoy watersports in a high quality marine environment.
10.12 In addition, considerations that impact itinerary planning also include, at a very practical level, the ability to provision a yacht with a broad range of quality produce at a reasonable price, the availability of maintenance and servicing facilities, short travel times to airports (in some cases), utility costs, berthing fees and the services offered by, or through, the Harbour Master’s Office. Priority Facilities 10.13 We list below those facilities considered essential at the quayside or when mooring at a modern marina:
Mooring Buoys – Mooring buoys are considered a prerequisite for a quality marina, in order to avoid departure delays due to crossed anchor chains, etc.
Quayside Access – There is a preference for mooring stern-to, both for ease of access to the quay and for the reason that some owners and charter clientele enjoy the social aspect of dining and entertaining in view of the quay. Our research over the years has highlighted the importance of vehicular access along the quay both for provisioning yachts and for passenger pick-up and drop-off, where this can realistically be achieved.
Parking – Ample parking provision is considered an important requirement, preferably with spaces allocated to each mooring. It should be noted, however, that although yacht users stress the importance of vehicular access along the quayside for passenger pick-up
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and drop-off, there is a general view that parking should not be located directly on the quay. Quayside parking can be unsightly and detract from the beauty of the yachts and character of the marina environment.
Water & Electricity – It is essential that sufficient shore power is provided at each mooring for all on-board requirements. Although on-board generators can be used to supplement shore-power supplies, running these generators causes a measure of noise and exhaust pollution. Marinas should also be equipped to provide the necessary fresh water requirements, supplied at adequate pressure.
Fuel – The availability of fuel pumps and the effective management of this service is considered a priority. We would note that in some instances, and for various reasons, it is sometimes the case that a fuel quay is located close-by, but outside the perimeter of the actual marina itself. This reduces the generally negative visual impact of including a fuel quay within a marina and is clearly preferable in terms of health and safety issues. It should be noted that if fuel is available at another marina within a reasonably short cruise time this might be an acceptable alternative. There are various health and safety issues associated with providing a fuel quay which means that it may be impractical to include such a component in certain locations.
Telecommunications – Multiple direct-dial telephone connections are considered an essential requirement for a quality marina. In addition, there is a requirement for international cable/satellite television connections and Wi-Fi at each berth.
Provisions Outlet – Some form of provisions outlet should be provided close to the quay. However, it is not considered essential to provide a separate supermarket, post office, bank, pharmacy and news agency at the quayside. Rather, these functions can be combined within a single store, taking the form of a supermarket with a pharmacy and post office counter that offers a broad range of goods and an ATM.
Chandlery – It is generally considered beneficial for a modern marina to include a good quality chandlery offering parts and equipment necessarily for the day to day maintenance and operation of the boats. This chandlery should also stock the necessary parts and equipment for the range of water sports equipment typically stored on-board, such as and wind-surfers etc. Priority Services 10.14 In addition to the facilities listed above, boat owners typically consider that the following services should be offered as a priority.
Quayside Security – Security is a priority for most yacht owners and a closed circuit television network is typically required.
Administrative Assistance – Boat owners highlight the importance and benefit of effective and efficient administrative assistance from the Harbour Master’s Office, during extended operating hours. In addition to the administration of moorings, the office should be available to provide additional assistance that might include: travel services; boat valet services; brokerage and charter services; and assistance with provisioning, courier services etc.
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Refuse / Sewage Removal Services – Larger marinas should be equipped with grey and black water discharge connections and offer a regular and frequent quayside refuse collection service. Preferred Facilities and Services 10.15 Discussions with boat owners and charter operators over the last few years indicate that there are a range of facilities and services that would be beneficial - although not essential - to incorporate within, or close to, a modern marina.
Laundrette – Larger yachts are generally equipped to deal with on-board laundry requirements and boat owners in general tend not to highlight the provision of laundry services as a significant issue for the marina. However, occasionally more specialised services, such as dry cleaning, are required and could be provided at a laundrette. A laundry pick-up and drop-off service could be offered.
Accommodation – Whilst the provision of overnight accommodation at a marina is not considered a priority, the availability of accommodation in the local area may be advantageous for parties starting or finishing a cruise.
Restaurants - The provision of restaurants and other catering outlets at the marina is not considered essential, as many yachts have excellent kitchens. However, waterfront restaurants create animation and provide a possible alternative to dining on-board.
Informal Dining, Bars and Nightclubs – These were not consider a key priority for boat owners although some feel that it makes a pleasant change to dine and relax in a less formal environment on occasion.
Leisure Facilities – Although water sports may be readily available on-board, research highlights the appeal of children’s play areas, health and fitness facilities (swimming pools, cardio-vascular equipment, etc) and spa facilities.
Boatyard – There is a general consensus that boatyard facilities should be available for more serious maintenance, if required, certainly at larger marinas. However, these facilities should be discreetly located away from the prime moorings in order to minimise their visual impact and reduce noise pollution.
Retail – Although not considered a priority at the quayside, boat owners acknowledge the appeal of a mix of retail outlets in, or close to, the marina area. There is generally a two to three hour time slot between mooring and dinner when people like to explore the local area, often searching for gifts or souvenirs (indigenous crafts, jewellery, etc.) rather than essential goods. Marinas located within close proximity to a retail core are generally considered to have stronger appeal than those in more isolated locations.
Washroom and Shower Facilities – Although not essential, given the range of on-board facilities on most yachts, charter operators highlight the advantages of providing modest, but good quality on-shore facilities for and tends not to impact the decision relating to the cruising itinerary.
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Car Hire – The availability of a local car hire service is considered an advantage particularly in situations where boats remain moored in the same marina for a number of days and in locations where the wider area offers potential for day trip excursions.
Medical Support - Although the provision of a hospital near a marina is a welcome asset, it is not a key prerequisite. As all crew on the larger vessels tend to be first-aid trained and most yachts are linked up to Medlink, which supplies 24-hour medical assistance, the provision of a hospital does not impact the decision relating to the cruising itinerary. 10.16 In addition to outlining the range and character of facilities and services considered appropriate for a new marina, our research over the years has also highlighted the importance of creating an attractive, well-landscaped quayside environment that is welcoming, well-lit and well-maintained – the quality of the quayside should ‘echo the stature of the boats’.
10.17 We should conclude this sub-section by re-iterating the important fact that the range of available facilities and services at a new marina is just one of a number of criteria taken into consideration when considering where to keep a boat or which marinas to include as part of a cruise itinerary. Location, accessibility, familiarity and perceived image remain of fundamental importance. Patterns of Operation 10.18 Broadly speaking, there are three core groups of the marine leisure sector: day trippers, network cruisers and multi-network cruisers. Each sector has its own particular characteristics and the profile of provision within a development must reflect the likely mix of demand for the marina as a whole.
Day Trippers: Day trippers are likely to represent the core focus of business for a marina, using the full range of facilities, requiring parking provision and contracting berths on an annual or leasehold basis. This group is likely to include a mix of smaller craft than those cruising from marina to marina along a coastline or through different cruise networks. The boat owners are typically a highly vocal constituency that will have strong views regarding the operation of the marina.
Network Cruisers: The network cruisers are travelling along a stretch of coastline as part of an itinerary and may stay for a number of nights on transit berths. If fuel is available they may well replenish their stocks and may also take the opportunity to re-provision with fresh produce. Demand from this sector is typically seasonal and includes larger craft than the day tripper sector.
Multi-Network Cruisers: Many of the larger boats in the fleet are used for multi-network cruising. That is to say that they move from the Middle East to the Mediterranean or the Indian Ocean, etc as part of a global itinerary. These yachts often have professional management and extremely demanding clientele. Their movements are seasonal, shifting with the weather, and their scale is such that they need to replenish their stocks (i.e. fuel, water, non-perishable goods) much less frequently than smaller vessels.
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10.19 When considering the Als Island area, it is likely that demand for any marina will be drawn from a mix of day trippers and network cruisers given the local cruising opportunities for along the east coast of Jutland as well as the island of Fyn. REGIONAL CONTEXT 10.20 In this section we start by reviewing at a regional level in Denmark, the demand for overnight stays or berthnights at marinas followed by the supply of facilities. As illustrated in Figure 10.2, the study region of Syddanmark has historically generated the highest level of berthnights in Denmark which is a positive indicator for this project. As illustrated, in general levels of market demand dipped at the beginning of the recession, but have remained relatively stable since 2008.
10.21 This trend does seem to echo the observation made at the beginning of this section, that the marine leisure sector has been impacted by the global economic downturn, just like so many others.
FIGURE 10.2: MARINA OVERNIGHT STAYS BY REGION
Source: Danmark Statistik
10.22 In terms of supply of marinas, Figure 10.3 illustrates the two stretches of coastline that are the focus of this study; the east coast of Jutland and the west coast of Funen. A leading trade magazine, Sejlerens, provides facility and price information for all marinas that choose to advertise here.
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FIGURE 10.3: PRINCIPAL CRUSING AREAS
Jutland Funen
Als Island Resort
Source: Sejlerens
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LOCAL CONTEXT 10.23 Despite the general dip in berthnights at the start of the recession, we understand that select itineraries have recently generated new demand for overnight stays in marinas located in the study area, especially from network cruisers. In Figure 10.4 we start by illustrating the existing marina supply in the study area.
FIGURE 10.4: STUDY AREA MAJOR MARINAS
Source: Visit Denmark & AECOM
10.24 The existing berth capacities and ownership profile are summarised in Figure 10.5.
FIGURE 10.5: PROFILE OF MARINAS IN STUDY AREA Berth Maximum Marina Location capacity Length Ownership (metres)
1 Dyvig Bro Nordborg 100 25 Private 2 Dyvig bådelaugs Nordborg 200 15 Private 3 Mommark Havn Sydals 30 15 Private 4 Høruphav Lystbådehavn Sydals 300 25 Club 5 Augustenborg Yachthavn Augustenborg 220 20 Private 6 Sønderborg Lystbådehavn Sønderborg 640 17 Private 7 Sønderborg Havn Sønderborg 100 70 Municipality 8 Marina Fiskenæs Lystbådehavn Gråsten 228 15 Private 9 Marina Minde Egernsund 350 20 Private
Source: Visit Denmark & AECOM
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10.25 Based on interviews with local marina operators we understand that an increasingly popular round-trip itinerary of network cruisers, know to locals as Margurit Ruten, comprises the cities of Schleswig, Kiel and Flensburg in Germany, the west coast of Als Island followed by the northern most stop in Middlefart Havn, Svonderborg, and the marinas on the island of Ærø as illustrated in Figure 10.6.
10.26 This route is popular with network cruisers and as a result, the core business of the marinas along this itinerary tends to be transit berthnights. Throughout the season sailors tend to be locals at weekends while during the peak summer months sailors tend to arrive from as far as Sweden, Norway, Poland and The Netherlands.
10.27 Immediately outside this route, the core business of the marinas is less commercial, largely accommodating resident day trippers that pay a seasonal rent for a berth. An example of this type of marina in the Sønderborg Municipality is Marina Minde.
10.28 On the east coast of Als Island, besides the 30 berths available at Mommark Havn, whose core business is a campsite resort, there are currently few high quality, marinas in the study area that link this coastline to Ærø. Given the short distance between the two islands (approximately eight kilometres), there maybe an opportunity at Als Island Resort to offer a number of alternative routes to the round-trip network mentioned above. This is illustrated in Figure 10.6 by the dotted black lines.
10.29 This argument is supported by the fact that since opening in 2010, marina Dyvig Bro, one of the marinas on this popular round-trip route, has experienced up to a 60 percent annual increase in berthnights. This equates to 2,800 berthnights in the opening year, 4,500 in 2011 and 6,000 in 2012 as illustrated in Figure 10.6. The neighbouring Dyvig Bådelaug marina on the other hand, has experienced a stable level of berthnights over the same period.
10.30 In terms of berth occupancy over the 180-day business period, we understand that Dyvig Bro experiences a rate of between 80 and 100 percent during the high season from the end June to the second week in August and a rate of between zero to 10 percent between the third week in August to the end of October.
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FIGURE 10.6: ROUND-TRIP ITINERARY IN STUDY AREA Maximum Maximum Berth 2012 Marina / Harbour Vessel Draft Capacity Berthnights length depth (metres) (metres)
1. Flensburg +1,000 75 20.0 Na 2. Sønderborg** 640 Na Na 18,000 3. Dyvig Bro 100 25 6.0 6,000 4. Dyvig Bådelaug 200 15 4.0 6,000 5. Middelfart*** 505 +20 10.0 10,000 6. Lynø Na Na 3.0 5,000 7. Faabourg 118 +20 7.0 10,000 8. Svendborg**** Na Na Na 15,000 9. Marstal Havn og Marina 400 20 4.5 5,000 10. Søby 225 20 4.5 5,000 11. Ærøskøbing Na 20 4.5 5,000 Als Island proposed marina 150 Na Na Na
Na = Not available / Not Applicable *Combined demand for eight harbours **Combined demand for two marinas/harbour **Combined demand for four marinas/harbour *** Combined demand for Svendborg marinas Source: Individual Marina Operators & AECOM
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Marina Berth Mix 10.31 Based on interviews with marina operators along the round-trip itinerary in the study area, we understand that where there is capacity for vessel lengths over 20 metres, the marina profile includes around 15 percent of berths between 12 to 14.99 metres and five percent of berths over 15 metres. Throughout all the marinas in the itinerary the most common berth length is between zero to 9.99 metres (up to 40 percent) and between 10 to 11.99 metres (up to 60 percent). We have summarised this berth mix profile in Figure 10.7.
FIGURE 10.7: BERTH MIX
Marinas offering over 20m length berths Marinas offering less than 20m length berths
Source: Individual Marina Operators & AECOM Local Marina Berth Pricing 10.32 In Figure 10.8 we set out the current berthing tariff for marinas along the round-trip itinerary in the study area. The marinas based in Funen are currently charging the highest rates along the route.
FIGURE 10.8: LOCAL MARINA BERTH PRICING Transit Berth Dyvig Bro Dyvig Bådelaugs Middelfart Faabourg Ærøskøbing (Overnight) (DKK) (DKK) (DKK) (DKK) (DKK)
0 to 9m 100 110 115 120 110 9 to 12m 125 130 135 160 130 12 to 16m 140 140 165 200 150 16 to 20m 150 Na 195 275 200 Over 20m 160 Na 275 325 Na
Na = Not applicable Source: Sejlerens
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IMPLICATIONS FOR THE STUDY 10.33 Research indicates that global demand for larger yachts has felt the impact of the global economic crisis since 2009. The profile of growth is generally considered to be indicative of the sector as a whole.
10.34 The market trend is similar in Denmark where berthnight demand at marinas across all regions has dipped at the start of the recession. Select itineraries however have recently generated additional demand for overnight stays in new marinas located in the study area, especially from network cruisers. The itinerary comprises marinas in Germany, the west coast of Als Island followed by the northern most stop in Middlefart Havn, Svonderborg, and the marinas on the island of Ærø.
10.35 We feel there is an opportunity at Als Island Resort to offer a number of alternative routes to this round-trip route, particularly between the east coastlines of the island to Ærø. Located only eight kilometres apart, the distance between the two islands is modest. The prospect is further supported by the fact that existing marinas on the west coast of Als Island currently achieve occupancy rates of over 100 percent during the high season and are, in fact, having to turn boats away at peak times. Therefore we feel there is an opportunity to cater for the spin-off demand from these en-route marinas.
10.36 Up to 60 percent of berths at marinas throughout this round-trip itinerary range from 10 and 12 metres and up to 40 percent of berths are up to 10 metres long. In terms of pricing, these vessels are charged up to DKK 130 for an overnight stay on Als Island and up to DKK 160 for an overnight stay elsewhere on the route.
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11 WATER PARK OVERVIEW
INTRODUCTION 11.1 In this section we examine the potential performance of an indoor water park within the Als Island Resort in the context of northern European, national and regional benchmarks. In each case we analyse attendance, length of stay, admission pricing, seasonality, market mix, ownership, per capita spend, admissions yield and other key performance indicators where information is available. Our research was supplemented by AECOM’s long term experience in the sector as well as interviews carried out during our site visit with indoor water park managers in Denmark.
11.2 Based on the approach described above we derived forecast attendance through an analysis of market penetration rates, allowing for potential future competitive developments in the study area, namely Project Harbour. In determining this figure we provide an assessment of the recommended adult lead admission price taking into account local current and projected market conditions. NORTHERN EUROPEAN INDOOR WATER PARK MARKET CONTEXT 11.3 We start by providing attendance performance figures of our select sample of comparable indoor water parks. The ranking is summarised in Figure 11.1.
FIGURE 11.1: SELECT INDOOR WATER PARKS ATTENDANCE Park Location Square Metres Latest Attendance
Northen Europe AquaCity, Slovakia* Poprad, Slovakia 40,000 900,000 Tropical Islands* Krausnick, Germany 66,000 800,000 Alpamare Pfäffikon Zurich, Switzerland 25,000 500,000 AQUAtoll Neckarsulm, Germany 40,000 500,000 Erlebnistherme Maximare Bad Hamm, Germany 12,000 450,000 Sonnentherme Lutzmannsburg* Lutzmannsburg, Austria NA 430,000 Metrodome Barnsley, UK NA 400,000 Waterworld North Staffordshire, Uk NA 400,000 Alpamare Bad Tolz* Bad-Tolz, Germany 25,000 400,000 Flamingo Spa Waterpark & Wellness Vantaa, Finland 10,000 300,000
Denmark Lalandia Billund* Billund, Denmark 10,000 620,000 Lalandia Rødby* Rødby, Denmark 7,400 520,000 Project Harbour** Sønderborg, Denmark 6,000 240,000
*Water parks associated with lodging provision(adjacent hotel or resort accomodation) ** Planned development, forecast attendance figure provided NA = Not available Source: Individual Attractions, AECOM
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11.4 The target market position of Als Island Resort is high-end. In order to provide market context, we therefore reviewed a select sample of high quality northern European indoor water parks, often with a spa and wellness component which we deemed to be the most comparable to the current vision of the project. This mix of fun rides with a wellness spa component is well established and relatively unique to northern Europe.
11.5 Attendance levels among the reviewed set of parks vary greatly depending on the exact offer and setting (rural or urban). With around 800,000 visitors per annum, the most visited indoor northern European water park from the reviewed set is Tropical Islands in Germany. Indoor water parks associated with adjacent accommodation typically achieve attendance levels between 400,000 and 800,000.
11.6 The forecast attendance figure of Project Harbour (240,000), the planned indoor water park on the Sønderborg water front, lies at the bottom end of the reviewed set. This is largely a reflection of its available markets which is likely to be almost identical to that available to Als Island Resort. Although this gives us a reasonable indication of what the proposed indoor water park could achieve in terms of attendance it must be noted that it was derived without allowing for competition from other parks, dueto the timing of the work undertaken on the project. Moreover other factors play an important role in the forecast attendance figure provided, namely the target markets, (family versus business travellers), attraction offer and repeat visitation from on-site guests. At Project Harbour, on-site guests are forecast to contribute to one quarter of the attendance figure (60,000). The projected contribution to annual attendance from on-site guests staying at the proposed Als Island Resort is analysed in more detail later in this section of the report.
11.7 Among the reviewed set, the scale of this type of facility ranges from 7,400sqm up to 66,000sqm. As would be expected, large pool-based water parks are at the upper end of the range, while higher quality boutique-style spas tend to be smaller. NATIONAL ATTRACTIONS OVERVIEW 11.8 In order to provide market context at a national level we start by reviewing attendance figures at number of different category attractions in Denmark. Figure 11.2 lists the top 20 most visited theme parks, museums and zoos in Denmark in 2011 (last available data). Tivoli Gardens theme park in Copenhagen was the most visited attraction, while ARoS art museum in Aarhus more than doubled its visitor attendance due to the completion of a new circular skywalk attraction on its roof.
11.9 Djurs Sommerland, the only water park on the list, albeit outdoor, achieved an attendance of 662,410 (up 15 percent on 2010), ranking it the fifth most popular attraction in Denmark. The most popular attraction in the study region of Syddanmark was Legoland with an
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attendance of 1.7 million followed by Madsby Legepark (335,015) and Givskud Zoo (326,815).
FIGURE 11.2: TOP 20 MOST VISITED NATIONAL ATTRACTIONS, 2011 % change Park and Location from 2010 2011 1 TIVOLI GARDENS, Copenhagen, Hovedstaden 7.0% 3,963,000 2 DYREHAVSBAKKEN, Klampenborg, Hovedstaden 0.0% 2,500,000 3 LEGOLAND, Billund, Syddanmark 0.0% 1,700,000 4 ZOOLOGISK HAVE, KØBENHAVN, Copenhagen, Hovedstaden 9.0% 1,151,931 5 DJURS SOMMERLAND, Syddjurs, Midtjylland 15.0% 662,410 6 FAARUP SOMMERLAND, Blokhus, Nordjylland 6.0% 641,000 7 LOUISIANA, Frederiksborg, Hovedstaden 13.0% 629,057 8 AROS, AARHUS KUNSTMUSEUM , Aarhus, Midtjylland 136.0% 523,442 9 BONBON-LAND, Næstved, Hovedstaden -1.0% 443,739 10 RUNDETÅRN, Copenhagen, Hovedstaden 8.0% 422,155 11 NY CARLSBERG GLYPTOTEK, Copenhagen, Hovedstaden 18.0% 421,012 12 NATIONALMUSEET, PRINSENS PALAIS, Copenhagen, Hovedstaden -5.0% 413,481 13 ODENSE ZOO, Odense, Funen 16.0% 405,913 14 EXPERIMENTARIUM, Hellerup, Hovedstaden 32.0% 378,526 15 AALBORG ZOO, Aalborg, Nordjylland 15.0% 376,526 16 TIVOLI FRIHEDEN, Aarhus, Midtjylland 15.0% 372,886 17 DEN GAMLE BY, Aarhus, Midtjylland 15.0% 360,048 18 STATENS MUSEUM FOR KUNST, Copenhagen, Hovedstaden -22.0% 347,582 19 MADSBY LEGEPARK, Fredericia, Syddanmark 11.0% 335,015 20 GIVSKUD ZOO, Vejle, Syddanmark 17.0% 326,815
Source: Visit Denmark
11.10 The adjacent attraction to Als Island Resort, Universe Park, achieved an attendance figure of 106,000 in 2012, largely a reflection of the available markets as well as the theme of the park; a blend of rides and educational activities predominately appealing to families and the school market. We understand that the target attendance for 2013 is 115,000. REGIONAL INDOOR WATER PARK OVERVIEW 11.11 Figure 11.3 sets out the regional indoor water park market context for the proposed Als Island Resort. Given the more modest size of Marina Fiskenæs Vandland, we do not consider this facility direct competition. Within a one-hour drive time, the proposed water park will predominantly face direct competition from Project Harbour.
11.12 The remainder of the selected regional indoor water parks lie either outside or on the border of the proposed Als Island Resort two-hour drive time isochrone. Nevertheless the Lalandia parks are considered useful comparables since they are set within a holiday resort and their holiday packages include separate prices for water park day visitors.
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FIGURE 11.3: REGIONAL INDOOR WATER PARK MAP
Source: AECOM Lalandia, Billund 11.13 The Lalandia water park in Billund opened in 2009 and like its original sister park in Rødby, is set within a holiday resort including 841 keys of holiday home accommodation built in three phases. The operation is owned by Parken Sport & Entertainment, a company listed on the Copenhagen stock exchange. Parken Sport & Entertainment are also owners of F.C. Copenhagen.
11.14 The attraction component of Lalandia, Billund consists of a 10,000sqm tropical water park with a wave and activity themed pool, four themed water slides, a play area, a spa pool and two saunas. According to the water park manager, the park attracted 620,000 visitors in 2012 of which 502,000 (80 percent) were on-site guests. This figure represents an attendance per key ratio of around 600. According to the water park manager the ratio could be higher but guests choose to visit alternative attractions in the local area throughout their stay, namely neighbouring Legoland and Givskud Zoo.
11.15 On-site guests stay for an average of 4.5 days and are granted free access to the water park. In the low season, day visitor tickets are currently set at DKK 210 and DKK 160 for adults and children respectively. In the high season this year, from June to August, adult ticket prices will rise to DKK 220. Svømmestadion Danmark 11.16 This stand-alone water park is located in Esberg and covers an area of 10,000sqm. Water activities include a water chute, a wave pool, a pool for children, a 50m competition pool, a
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Turkish bath with a whirlpool, a sauna and a steam bath. Though significant in size, the water park lacks rides.
11.17 In January 2012 a wellness section with sauna, steam bath, spa, therapy bathtub, ice fountain, foot spa, treatment room and relaxation area opened on site. Unfortunately attendance figures are unavailable.
11.18 Tickets are currently set at DKK 70 and DKK 40 for adults and children respectively. Marina Fiskenæs Vandland 11.19 Located a 30-minute drive from Sønderborg, the resort opened in 2006 and includes a 200sqm water activity centre, a spa and wellness facility, 156 keys of lodging provision and a 228-berth marina. The water park component includes a 50m waterslide, a climbing wall, and a pool area.
11.20 According to the manager, the resort generates 4,300 overnight stays per annum and international guests drive for as long as eight hours from Norway, Sweden and The Netherlands to stay for an average of 4.3 days during the high season. Fifty percent of annual guests check-in the month of July. The proportion of international guests is around 30 percent during this period. The average annual occupancy of the resort is around 40 percent.
11.21 On-site guests are granted free access to the indoor water park. The facility opens to the public only on days when the resort is expected not to operate at full capacity. For day visitors, tickets are currently set at DKK 45 and DKK 30 for adults and children respectively. Lalandia, Rødby 11.22 The Lalandia water park in Rødby opened in 1988 and is set within a holiday resort. The operation is owned by Parken Sport & Entertainment, like Lalandia Billund.
11.23 The lodging component was completed over 10 years later. 500 units were sold off plan in 1986 followed by a further 250 in 2000. Today the resort includes 750 keys of holiday home/rental accommodation.
11.24 The attraction component of Lalandia Rødby consists of a water park with both an indoor and outdoor component. The indoor component covers an area of 7,400sqm and comprises three swimming pools, one children’s pool, six water slides and four spa pools. The outdoor component mainly consists of a Wild River water slide and heated pools. Other activities available to guests include football, indoor skating, miniature golf, badminton, tennis and other sport activities.
11.25 According to the water park manager, the park attracted 520,000 visitors in 2012 of which 468,000 (90 percent) were on-site guests. This figure represents an attendance per key ratio
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of around 620. According to the water park manager the ratio is high because there are no alternative activities for guests in the local area. As a result, the average length of stay of 3.5 days is lower than at Lalandia Billund. At Lalandia Rødby, the target market is mainly couples and families staying over a long weekend.
11.26 On-site guests are granted free access to the water park. For day visitors, tickets are currently set at DKK 180 and DKK 130 in the low season for adults and children respectively. During the high season from June to August, prices in 2013 will increase to DKK 200 and DKK 150 for adults and children respectively. PRICE & LENGTH OF STAY 11.27 Figure 11.4 summarises the price per hour price at a selection of indoor water parks where average length of stay (ALOS) data is available. Typically with attractions there is a correlation between the length of time visitors spend at an attraction and the admission price that can be charged for the attraction. The quality and nature of the regional attractions are a reflection of these figures.
FIGURE 11.4: PRICING REVIEW AT NORTHERN EUROPEAN & REGIONAL INDOOR WATER PARKS
Annual Lead Price ALOS Price/Hour Attendance (DKK) (hours) (DKK) Selected Northern European Indoor Water Parks Tropical Islands, Germany 800,000 257 4 64 Dianabad, Austria na 179 4 45 AQUAtoll, Neckarsulm, Germany 500,000 116 3 39 Sonnentherme Lutzmannsburg 430,000 152 4 38 Eurotherme na 179 5 36 Aquapark Tartlandia na 134 5 27 Erlebnistherme Maximare 450,000 75 4 19 Average 156 4 38
Selected Regional Water Parks Lalandia Billund 620,000 210 4 53 Lalandia Rødby 520,000 180 4 45 Svømmestadion Danmark na 70 4 (e) 18 Project Harbour* 240,000 150 4 (e) 38
*Proposed development, lead admission price expressed in 2009 values Note: (e) = estimate, na = not available/not applicable Source: Individual Attractions, AECOM 11.28 In 2013, the average lead price at a selection of northern European water parks stood at DKK 156, representing an average length of stay of 4 hours and a price per hour of DKK 38. The outliers in the sample include Tropical Islands and Erlebnistherme Maximare, with a price per hour of DKK 64 and DKK 19 respectively. The price range largely reflects the size of the
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attraction offer; 66,000sqm at Tropical Islands compared to 12,000sqm at Erlebnistherme Maximare.
11.29 Besides the Lalandia indoor water parks, the attraction offer at regional facilities is of modest quality. At DKK 257, the most expensive admission price within the set of regional indoor water parks is Lalandia Billund reflecting a price per hour of DKK 53. At the other end of the scale lies Svømmestadion Danmark which charges DKK 70, reflecting a price per hour of DKK 18.
11.30 Despite the apparent gap in indoor water park offer in the study area, determination of a suitable lead admission price for the water park within the proposed Als Island Resort must consider competition from planned Project Harbour. At this stage information regarding the exact water park offer at both planned projects is limited. We understand however, that both projects aim to become leading leisure and water park destinations in the region. Compared to more established operations however, such as Lalandia Rødby which has expanded gradually over the years, the product remains largely untested in the local market.
11.31 In the light of the above argument, our view is that the lead admission price at Als Island Resort indoor water park should be set around DKK 150, reflecting a price per hour of DKK 38. In 2013 values, the recommended price lies below the recommended lead admission price at Project Harbour (approximately DKK 160 in 2013 values). Should Project Harbour not go ahead as planned, we believe that the lead price could be set up to DKK 160 provided the quality of the attraction offer is in line with indoor water parks that achieve similar prices per hour, namely Lalandia in Rødby or Dianabad, Austria. OPERATING SEASON 11.32 The majority of the reviewed indoor water parks are year round operations with reduced business days between December and January. In Denmark, the longest closing period is for three weeks in December. Predominantly set within holiday resorts, peak attendance occurs over the June to August period. During this period, some operations choose to increase prices to the water park component of the resort. MARKET MIX 11.33 The market mix at the indoor water parks reviewed is illustrated in Figure 11.5. With a median of 78 percent, the visitor mix at indoor water parks is typically dominated by the resident market. However, indoor water parks associated with lodging provision such as Tropical Islands, consisting of an adjacent hotel or rooms integrated within a holiday resort, attract a relatively higher proportion of domestic and international tourists, at 41 percent compared to 23 perecent.
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FIGURE 11.5: SELECTED INDOOR WATER PARK MARKET MIX
Residents Tourists Primary Secondary Total Primary Secondary Total
All Selected Comparables Max 85% 40% 95% 35% 20% 55% Median 45% 24% 78% 18% 5% 23% Min 5% 5% 45% 0% 0% 5%
Selected Comparables associated with Lodging Provision Max 32% 40% 80% 35% 20% 55% Median 19% 34% 59% 25% 16% 41% Min 5% 27% 45% 15% 5% 20%
Source: Individual Attractions & AECOM MARKET PENETRATION RATES 11.34 Market penetration rates measure the proportion of the available market segments that visit an attraction. The market penetration is defined as the number of visitors to an attraction from a particular market segment divided by the size of that market segment. A range of local factors can affect the level of penetration rates achieved such as market competition, scale and profile of markets, culture and climate as well as the quality, scale and nature of the attraction itself.
11.35 Indoor water parks are generally located close to population hubs which they target as a main source of visitation. As a result, primary market penetration rates are typically much stronger than in other segments as illustrated in Figure 11.6. This type of attraction usually features significant repeat visitation and drives visits from its primary market through substantial sales of season passes.
FIGURE 11.6: SELECTED INDOOR WATER PARKS PENETRATION RATES
Residents Tourists Primary Secondary Total Primary Secondary Total
All Selected Comparables Max 18.1% 50.9% 22.0% 19.0% 28.9% 21.7% Median 8.4% 0.9% 4.6% 0.9% 1.2% 1.5% Min 4.0% 0.0% 2.2% 0.4% 0.1% 0.3%
Selected Comparables associated with Lodging Provision Max 18.1% 50.9% 22.0% 19.0% 28.9% 21.7% Median 5.5% 3.2% 5.8% 3.5% 1.2% 2.1% Min 4.0% 0.0% 4.1% 0.9% 0.7% 0.9%
Source: Individual Attractions & AECOM
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11.36 Indoor water parks associated with lodging provision exhibit stronger tourist market penetration rates, indicating that the attractions do not create a ‘destination’ tourist draw themselves, but are able to tap into the existing local tourist market. ATTENDANCE 11.37 For the purpose of assessing the potential attendance of the water park at Als Island Resort we considered an additional market segment, the on-site lodging population. Most on-site guests in the reviewed set of indoor water parks associated with lodging provision benefit from complimentary access to the resort’s water park therefore they are likely to generate significant repeat visitation.
11.38 We started by considering 200 keys, in line with the proposed lodging provision at Project Harbour. Since the current development plan is to gradually develop the resort over three phases, we considered three scenarios with gradually increasing on-site lodging populations corresponding to 200, 500 and 750 keys. Although the concept plans include up to 1,513 keys, the analysis primarily seeks to highlight the effect on the water park’s potential attendance as the resort reaches its critical mass.
11.39 With respect to the on-site guest market segment, instead of a market penetration rate, we applied a range of typical attendance per key ratios. The full analysis is laid out below. We start by considering our base assumptions. Assumptions 11.40 The attendance projections for the proposed Als Island Resort water park are based upon the following assumptions:
The attraction will be built to a high standard and contain a range of components with broad and highly repeatable appeal AECOM has assumed that the adult admission price at the water park will be DKK 160. Marketing will be strong with a sufficient budget to target residents and tourists staying in the resort as well as the wider regional area The park will provide sufficient content and experience to drive an average length of stay of between three and five hours There will be an experienced operations team There will be timely and well chosen reinvestment at an appropriate level to enhance and refresh the offer 11.41 We have assumed 2018 the opening year and 2020 onwards stable years.
11.42 These core assumptions form the basis for the following assessment and if they are not met, reaching the projected levels of performance may be unlikely.
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Derivation of Market Penetration Rates 11.43 In assessing the attendance potential of the proposed indoor water park, we have developed penetration rates reflecting the experience of comparable indoor water parks reviewed earlier in this report and the perceived conditions in the available market segments. However, this process cannot be analysed based on quantitative factors alone. We have therefore taken into consideration a number of qualitative factors specific to the proposed development as outlined below. Strengths and Opportunities
Lack of high quality indoor water parks in the region New concept within the local entertainment and leisure market Site location offering potential synergies in terms of cross-over visitation with Universe park Potential to drive high repeat visitation from on-site resort guests and the primary resident market segment Combined with the adjacent Universe park, the proposed water park represents an additional tourist attraction in the area Weaknesses and Threats
The primary resident market is relatively small with modest growth Potential low attendance levels during the winter months may make the project operationally unfeasible during this time Location on an island and site access limits draw from off-site resort guests Project Harbour represents direct competition in the local area. The first water park to open, will set a benchmark price for indoor water parks in the local area 11.44 We present estimated penetration rates for the proposed water park in Figure 11.7. As mentioned earlier, we have added an additional market segment relating to on-site guests for the purpose of projecting the resort’s water park’s attendance.
11.45 We start by illustrating projected attendance in 2018, the assumed opening year. The scenario assumes a minimum of 200 keys available on-site. We estimate that the indoor water park will generate an attendance of 159,000 in the opening year under the Medium scenario. The figure ranges from 150,000 to 167,000 in the Low and High scenarios respectively.
11.46 We justify in more detail the rational used to derive appropriate penetration rates and attendance per room ratios for all individual market segments below.
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FIGURE 11.7: OPENING YEAR PROJECTED ATTENDANCE SCENARIOS Market Size Market Penetration Rates Projected Attendance 2018 Low Medium High Low Medium High Resident Market (%) (%) (%) Primary Market 324,000 7.0% 8.0% 9.0% 22,680 25,920 29,160 Secondary Market 2,406,000 0.1% 0.2% 0.3% 2,406 4,812 7,218 Subtotal Resident Market 2,730,000 25,086 30,732 36,378
Tourist Market Domestic 27,000 4.0% 5.0% 6.0% 1,080 1,350 1,620 International 109,000 0.8% 1.0% 1.2% 872 1,090 1,308 VFR 75,000 3.5% 4.5% 5.5% 2,625 3,375 4,125 On-Site Guests (200 keys) 41,000 Na Na Na 120,130 122,180 123,820 Subtotal Tourist Market 252,000 124,707 127,995 130,873
TOTAL 2,982,000 149,793 158,727 167,251 Na = not applicable. Attendance derived from on-site guests is calculated an attendance per key basis.
Source: AECOM Resident Market 11.47 The penetration rate for the primary resident market has been set at eight percent. The figure lies just below penetration rates corresponding to indoor water parks with similar population ratios compared to the total resident market within the catchment area. The reason we have been slightly cautious with this figure is to allow for competition from Project Harbour.
11.48 Similarly, the penetration rate of 0.2 percent applied to the secondary resident market has been applied using a similar rational. In addition, a large share of the secondary resident market resides across the border in Germany. Therefore we feel this factor lowers the possible penetration rate compared to indoor water parks with secondary market isochrones located in one country. Tourist Market 11.49 Within Jutland, the Syddanmark region attracts the second highest level of overnight stays in Denmark after the Midtjylland region, a reflection of the area’s strong tourist appeal. Around two thirds of these overnight stays are represented by holiday resorts and camp sites which tend to generate average length of stays of up to seven days according to a survey by Visit Denmark. Over a week long stay we expect that the proposed indoor water park would strongly appeal to the tourist market as a reason for a day trip out.
11.50 We have set the penetration rate of five percent to the domestic tourist available market and 4.5 percent to the visiting friends and relatives (VFR) available market. The figures lie around 100 basis points above the median figure of comparable indoor water parks associated with lodging provision. The figure is a reflection of the size of the available
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domestic tourist markets compared to the total tourist market of comparable indoor water parks associated with lodging provision but also allows for competition from Project Harbour.
11.51 Finally, we have set the penetration rate for the international tourist market (one percent), lower than the domestic tourist market because we feel that Danes will not be limited to the water park’s marketing campaign just in peak tourist periods; they are more likely to hear about new price offerings year-round. Overall the figure is in line with the median range of comparable indoor water parks from the reviewed set and reflects the size of the available market. On-Site Guests 11.52 The proposed water park is expected to benefit from repeat visitation from on-site resort guests. Examples of indoor water parks associated with lodging provision among our reviewed set include regional market leaders such as Lalandia as well as Alpamare in Germany. For this scenario we considered an additional market segment relating to resort guests. This market segment was subtracted from both the domestic and tourist market segments in order to avoid double counting. Seventy percent of the estimated on-site guest population was subtracted from the domestic tourist available market and 30 percent was subtracted from the international tourist available market. This is a reflection of overnight stays in holiday resorts by nationality in the Syddanmark region according to Danmark Statistik.
11.53 We evaluated the lodging population of the proposed resort corresponding to 200 keys (in line with lodging provision at Project Harbour), 500 keys and 750 keys. The exercise aims to illustrate the increase in water park annual attendance from the gradual provision of additional accommodation over subsequent development phases. We estimate a total on- site lodging population of around 50,000, 102,000 and 121,000 guests respectively in a stable year (from 2023). Our estimates are based on a number of key assumptions formulated during the course of our interviews with key industry players as well as analyses of tourism characteristics relevant to the study area. We summarise our assumptions below.
Resort to open in 2018 Stable annual occupancy from year three, 2020 of 55 percent Average length of stay of 4 days 11.54 A summary of all market sizes considered for the purpose of assessing the resort’s annual water park attendance is summarised in Figure 11.8.
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FIGURE 11.8: FORECAST ALS ISLAND RESORT MARKET SEGMENT SIZES (200, 500 & 750 KEY SCENARIOS) Market Size (200 keys) Market Size (500 keys) Market Size (750 keys) 2018 2023 2028 2018 2023 2028 2018 2023 2028 Resident Market Primary Market 324,000 321,000 324,000 324,000 321,000 324,000 324,000 321,000 324,000 Secondary Market 2,406,000 2,409,000 2,451,000 2,406,000 2,409,000 2,451,000 2,406,000 2,409,000 2,451,000 Subtotal Resident Market 2,730,000 2,732,000 2,743,000 2,730,000 2,732,000 2,743,000 2,730,000 2,732,000 2,743,000
Tourist Market Domestic 27,000 30,000 41,000 ------International 109,000 132,000 164,000 90,000 109,000 141,000 75,000 91,000 123,000 VFR 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 On-Site Guests 41,000 50,000 50,000 87,000 102,000 113,000 102,000 121,000 132,000 Subtotal Tourist Market 252,000 287,000 330,000 252,000 286,000 329,000 252,000 287,000 330,000
Total 2,982,000 3,020,000 3,105,000 2,982,000 3,020,000 3,105,000 2,982,000 3,020,000 3,105,000
Source: AECOM
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Attendance per Key Ratios 11.55 Instead of considering an appropriate market penetration rate for on-site resort guests, we examined the ratio of water park visitors that a given number of keys typically attract. As such, we reviewed water parks associated with lodging provision in the region, namely Lalandia in Billund and Lalandia in Rødby. Compared to other indoor water parks in the reviewed set, Lalandia provides accommodation within its resort boundaries, in line with the vision for Als Island Resort. At these well established resorts we found that this ratio typically ranges from 600 to around 620.
11.56 Lalandia is part of an integrated resort including 750 keys in Rødby and 841 keys in Billund. Set within a more urban context, the resort offer at Billund targets residents up to three hours from the site, reflecting the holiday home ownership profile. Holiday home owners contribute to the water park’s annual attendance through repeat visitation throughout the year. According to the water park managers at Lalandia the attendance per key ratio is lower at Billund than at Rødby because the local area attraction offer in Billund is more diverse. At Billund, on-site guests have the choice of visiting neighbouring Legoland as well as Givskud Zoo. Set in a more rural environment, the profile of guests staying at the Rødby is more tourist-orientated. Outside the resort boundaries the alternative attraction offer is limited hence the higher attendance per key ratio. In both cases, attendance is boosted by granting resort guests complimentary access to the water park.
11.57 Thus, when considering the proposed indoor water park’s attendance scenarios we considered attendance per room ratios ranging from 600 to 620 against a range of keys, from 200 to 750. We believe the proposed water park will generate an attendance per room ratio somewhere in between the two figures of around 610 because the resort will offer guests both nature based activities as well as immediate access to the adjacent Universe park. We have summarised the range of attendance projections in Figure 11.9.
FIGURE 11.9: ALS ISLAND RESORT WATER PARK ATTENDANCE SCENARIOS, 2020 Attendance per key 600 610 620
Water Park + 200 keys 156,000 158,000 160,000 Water Park + 500 Keys 336,000 341,000 346,000 Water Park + 750 keys 485,000 492,000 500,000
Source: AECOM
11.58 We estimate that an Als Island Resort indoor water park would attract a minimum of 155,000 visitors per annum in a stable year based on 200 keys (hotel and other forms of accommodation), and an attendance per key ratio of 600. As the resort grows to 750 keys,
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for example, we estimate that the water park will attract a maximum of 498,000 visitors per annum based on an attendance per room ratio of 620. FINANCIAL PERFORMANCE OF EUROPEAN INDOOR WATER PARKS Per Capita Spend and Admissions Yield 11.59 Figure 11.1 details admission yields and visitor spend per capita at selected indoor water parks. Due to a strong level of discounting, the admission yields at indoor water parks are typically modest, averaging at 65 percent. The yield is highly dependent on the price structure at a given water park, as well as the proportion of children, groups and season pass holders in the visitor mix.
FIGURE 11.10: INDOOR WATER PARKS PER CAPITA REVENUES Per Capita Revenues Min Max Average % of Total
Admission Yield 35% 90% 65%
(DKK) (DKK) (DKK) Admissions 44 161 105 69% Food & Beverage 16 80 32 21% Merchandise 11 20 14 10% Total 88 189 151 100%
Source: AECOM
11.60 The total spend at indoor water parks is typically lower than the per capita spends achieved at theme parks as a result of lower lead prices and a shorter length of stay affecting mainly food and beverage spend.
11.61 As shown, indoor water parks tend to heavily rely on the admission income with 70 percent of revenues generated by ticket sales, compared to 60 percent at theme parks. The merchandise spend is modest and is towards the lower end of the range of spends achieved by theme parks. The other spend in most cases is negligible as a proportion of total revenue and therefore is not included in the revenue mix. In some cases, however, the ‘other’ spend may reach up to one percent of the total. Operating Expenses 11.62 Figure 11.11 sets out water parks’ operating expenses as a proportion of total revenue. Due to year round operation total cost as percentage of revenues is slightly higher at indoor water parks than at outdoor water parks. Costs at indoor water parks are also impacted by high utility costs relating to the need to keep the temperature at a constant warm level.
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FIGURE 11.11: WATER PARKS OPERATING EXPENSES % of Total Revenues Range Average
Staff 24 – 47 38 Marketing 4 – 12 6 Utilities 4 – 29 14 Maintenance 5 – 20 9 Other Costs 4 – 24 20 Total 59 – 96 87
EBITDA Margin 7 – 30 20
Source: AECOM EBITDA 11.63 Water parks are usually operated on a commercial, for-profit basis, and hence aim to achieve positive EBITDA margins. The degree of profitability varies widely depending on the quality of the attraction and operation, the amount of competition it faces and the size of the resident and tourist markets.
11.64 In general the EBITDA margins at water parks range from seven to 30 percent, averaging 20 percent. EBITDA margin at outdoor water parks is typically higher due to their short operating season (focused on summer when tourists are available). Margins at indoor water parks tend to also be depressed by high utility costs. Re-Investment 11.65 The relatively low cost of new equipment and pre-manufactured materials is an economic advantage of the water park product in comparison to other themed recreation attractions. Innovative technology continues to expand the variety of attractions and rides which can be incorporated in a water park, thereby enabling them to respond effectively to future changes in activity preferences and demographics. Water parks typically require an annual re-investment level of between five and seven percent of annual gross revenues to maintain quality levels and attract repeat visits. IMPLICATIONS FOR THE STUDY 11.66 We examined the potential performance of an indoor water park within the Als Island Resort against a number of comparable parks located in northern Europe and Denmark. In each case, we reviewed the size of their available markets, park offering, length of stay, visitor mix and penetration rates. Based on these performance characteristics we derived a preliminary illustrative lead admission price and attendance projections for the proposed
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indoor water park, under various development scenarios, and allowing for potential future competition from Project Harbour.
11.67 Typically with attractions there is a correlation between the length of time visitors spend at an attraction and the admission price that can be charged for the attraction. The quality and nature of the regional attractions are a reflection of these figures.
11.68 In the light of the above argument, our view is that the lead admission price at Als Island Resort indoor water park should be set around DKK 150, reflecting a price per hour of DKK 38. In 2013 values, this price level lies below the recommended lead admission price at Project Harbour (DKK 150 expressed in 2009 values). Should Project Harbour not go ahead as planned, we believe that the lead price could be set up to DKK 160 provided the quality of the attraction offer is in line with indoor water parks that achieve similar prices per hour, namely Lalandia in Rødby or Dianabad in Austria.
11.69 Attendance levels among the reviewed set of parks vary greatly depending on the exact offer from 300,000 to 800,000. The forecast attendance figure of Project Harbour, the competing planned indoor water park lies at the bottom end of this scale (240,000). Although the figure largely reflects identical available markets to the proposed indoor water park, it was derived without allowing for competition from it. In addition the figure also includes 60,000 entries from on-site guests.
11.70 We have assessed a range of potential attendance scenarios for the proposed indoor water park, taking particular consideration of repeat visitation from on-site guests. These scenarios correspond to an indoor water park surrounded by gradually increasing resort lodging provision of 200 keys, 500 keys and 750 keys. Based on appropriate penetration rates and attendance per key ratios, we estimate that the Als Island Resort indoor water park will attract 157,000 visitors in the first stable year (2020), corresponding to a 200-key resort. As more keys are provided throughout subsequent development phases, we estimate that the water park will attract 339,000 and 491,000 visitors corresponding to 500 and 750 keys respectively.
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12 INTERNATIONAL PRECEDENTS
12.1 The research programme for this study has covered various land uses proposed for development on the project site that are already represented within the local market, to a greater or lesser extent. However, there is a collection of land uses and amenities that are worthy of consideration for inclusion that are currently not well represented within the local market that we believe may be pertinent and worth of inclusion within the Als Island Resort.
12.2 Over the following pages we provide a profile of eight concepts, drawn from our international experience that we believe are worthy of consideration. These are:
Center Parcs High Ropes Course Integrated Water Park Hotel Glamping Watersports Centre Wildlife Centre Culinary School Spa 12.3 For each concept we provide an overview of their: development parameters; market demand characteristics; operating norms and appropriateness for consideration as part of the Als Island Resort project.
12.4 It is worthy noting that within an increasingly competitive international market context, resorts today typically offer a number of recreational amenities. While some are central to the overall theme or concept of the resort, such as a golf course, others play more of a supporting or ancillary role – though these can be just as crucial to the resort’s success and often feature heavily in marketing programmes.
12.5 A successful amenity strategy for a resort will match the mix, quantity and quality of amenities to the projected demand for both potential real estate purchasers (i.e. homebuyers) and the anticipated visitor profile of the development. Economic feasibility is arguably the most important factor to consider in the decision of whether or not to build any one particular amenity. Balancing the amenity costs against its benefits is also crucial when determining the phasing and timing of capital expenditures that are necessary for this amenity’s inclusion.
12.6 Site planning for a resort involves weaving various land uses into the natural environment to create a setting that will attract both visitors and homebuyers. While the physical attributes of the setting clearly have a strong influence on the project, the quality of the buildings and how they are integrated within this setting, and how the components are set against each other are critical in determining the overall character of the resort. It is important to identify
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the various potential land uses for consideration on the project site at the earliest stage of the master planning process, along with an assessment of surrounding uses, potential expansion zones for later phases of development and areas to be preserved.
12.7 It should also be noted that the initial site planning work should give consideration not only to short-term development priorities but also to the long term profile of the scheme. The late addition of previously unplanned elements can have significant economic and operational impacts on a resort. It is therefore prudent to ensure that the long-term plans for the site allow a degree of flexibility, giving the developer the freedom to ‘move with the market’, as far as possible.
12.8 In the case of larger projects, there is a clearer need to phase the introduction of amenity provision on the site. The over-development of amenities at the outset of the scheme may result in a capital cost burden that could sink the resort before it has time to become established. In addition, over-sized or under-utilised amenities can have a negative impact on the ambience of a resort and the guests’ experience.
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FIGURE 12.1: CENTER PARCS Development Parameters Concept Overview The Center Parcs concept involved the creation of a low density lodge development surrounding a central leisure hub that typically contains a large indoor leisure pool within a heated, domed environment. Land/Built Area Considering the involvement of Center Parcs, or a similar development, requires significant capital investment and a large amount of land within a rural setting. The Center Parcs concept requires in the order of 700 to 900 lodges on a site of approximately 160 - 200ha. The viability of the operation is negatively affected if there are fewer lodges as the volume of on-site spend will, of course, decline. When selecting sites, Center Parcs prefers locations with a population greater than eight million people within a two-hour drive time. Capacity With approximately 700 lodges on-site and very high occupancy rates (around 90 percent), there is a requirement for a large number of on-site amenities. A typical programme for a Center Parcs development would include watersports facilities, sport centre, indoor games centre, swimming pool(s), food and beverage outlets and retail outlets, running and cycle trails, quad biking, high ropes courses, mini golf, football pitches etc. Construction Costs / Capital Investment The development cost of a new Center Parcs would most likely cost in the order of DKK 800 million to DKK 900 million today. The indoor leisure component within a Center Parcs project is considered central to its appeal (they typically comprise an area of around 20,000 to 30,000sqm). These components on their own are expensive to construct, typically ranging from €15 million to €20 million.
Market Parameters Breadth of Market Appeal The guest profile for Center Parcs is dominated by the family market (around 80 percent), with couples staying without children accounting for the remainder. The core body of guests are from the upper- middle socio-economic group (managers and professionals), and the majority live within a two hour drive time of the resort. Meeting and events facilities have been added to some resorts in recent years. Center Parcs offers team building and training activities to companies, as well as arranging conferences, events and business meetings. Seasonality Over the year, occupancy levels at a Ceter Parc could average from 80 percent or even higher. Occupancy levels range from 100 percent during the peak school holiday season and down to 60 percent in low periods, such as mid-week during school times. The peak month is August and the low month is November. The price difference for a weekend break (three night stay) almost halves between these two months. Repeatability The Center Parcs holiday resort concept has proven to be very popular and levels of repeat visitation are high (approximately 60 percent of guests are repeat customers). The wide range of activities and facilities on offer have broad appeal and are updated on a regular basis. Center Parcs offers incentives to loyal customers, which encourages repeat visitation. For example, when you make a repeat booking you get a 25 percent discount off your next visit.
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FIGURE 12.2: CENTER PARCS CONTINUED Operational Parameters Operating Characteristics Guest revenues are split as follows: accommodation (50 percent); catering (25 percent); retail (13 percent); and leisure (12 percent). The cost of goods sold for F&B averages at 30 percent and 62 percent for retail. Center Parc operations are typically profitable on an operating basis, but due to the high levels of capital expenditure involved, development payback periods can be lengthy. Staffing Requirements The staffing requirement is typically in the region of 0.7 to 0.8 full time employees (FTE) per lodge and tends distributed as follows: catering (37 percent); leisure operations (31 percent); housekeeping (15 percent); retail (eight percent); administration (five percent) and medical & security (four percent). Payroll costs equate to approximately one quarter of total revenues. Specialist Knowledge / Expertise The skill set of employees at Center Parcs varies greatly, with a combination of both skilled and unskilled workers. Specialists are needed for a large number of roles including management roles, spa personnel, lifeguards, chefs, therapists and nursery nurses. Other skills can be acquired through on the job training; such roles include housekeeper, retail assistant, handyperson and ranger. Center Parcs offer 150 courses to employees to ensure the right qualifications are in place for them to be able to perform their job. Leadership development programmes and work based apprenticeships are also on offer.
Appropriateness for Als Island Resort
Als Island Resort has a population of 2.6 million people within a two hour drive time, which is relatively low compared to typical requirement for a Center Parcs resort development (eight million). However, the Als Island Resort project site (200ha) is sufficiently large to play host to a Center Parcs development. However, capital investment will be high and therefore the risks associated with introducing such a concept on the project site would be high. It is important to note that the lodges within a Center Parc operation are rented rather than sold, so the financial model for the resorts would have a very different cashflow profile to a ‘for sale’ operation.
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FIGURE 12.3: IMAGES OF CENTER PARCS
Indoor Swimming Pool Outdoor Ponds
Spa Cycle Trails
Accommodation Sports Centre
Source: Center Parcs
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FIGURE 12.4: HIGH ROPES Development Parameters Concept Overview High ropes centres offer roped-based outdoor activities, generally high above the ground in trees or large manmade frames. The concept involves climbing ropes, zip wires, and moving between structures high above ground, whilst the rest of the activity group look on. Land/Built Area One of the benefits of incorporating a high ropes area as part of the amenity package provided by a resort is that these can represent a relatively modest capital investment. Centres range in size from a simple steel structure of 25sqm complete with a variety of courses, to a full-size activity centre (such as Go Ape! or Benmore Centre) of around 2,000sqm. Go Ape!, a popular example of a branded high ropes centre, typically offers a mix of rope-based leisure activities, such as zip-wires, rope assault courses and swings, as well as segway safaris Capacity Capacity considerations depend on the activities being offered and the markets being targeted. High ropes could simply be a supplementary stand alone activity, or part of a wider outdoor pursuits centre with a far higher capacity. Typically centres offer a staff to guest ratio of between one to six and one to 10 for the most dynamic activities, with groups of no more than 30 guests. The quality of the experience is anticipated to deteriorate with groups larger than this, although teambuilding activities can accommodate more. It is worth noting that whilst the capacity of the course itself might be limited watching those up high taking part in the activity typically provides good entertainment for many others down on the ground. Construction Costs / Capital Investment It is estimated that the construction costs associated with the development of an outdoor pursuits centre are likely to be around DKK 3,000 DKK 4,500 per sqm. Additional allowances will need to be made for the purchase of equipment for the centre. Steel high ropes structures cost DKK 450,000 to DKK 1.0 million, while wooden structures (both on the ground and in trees) begin at DKK 90,000 up to DKK 2.2 million. The capital investment required to set up a Go Ape! high ropes centre is in the order of DKK 3.1 million. This sum includes equipment, incorporation and accountancy fees and the construction of a staff cabin. Market Parameters Breadth of Market Appeal Research tells us that high ropes and outdoor pursuits centres are broadening their appeal to an expanding profile of market sectors. Whilst previously the underlying profile of demand was school groups, children’s parties and families with children, there has been a shift towards older groups. There are now 29 Go Ape! centres across the UK, for example, who also organise corporate events for between 15 and 280 people. Seasonality The seasonality of demand varies from activity to activity, with the majority being weather dependant. Therefore participation tends to drop off in the cooler months. However, improvements in the quality of outdoor sports clothing have meant that sensitivity to weather is less of an issue than ever before. A high ropes facility potentially represents a good source of demand during the quieter months of the year if a suitable programme of activities is created. Repeatability Experience proves that once a resort guest has tried a new activity during the early part of their visit, they are more likely to come back and develop their skills later on during the course of their stay. Every session tends to be different, depending on the weather, the people involved and the route taken on the high ropes course.
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FIGURE 12.5: HIGH ROPES CONTINUED Operational Parameters Operating Characteristics Revenue is generated from admissions and additional spend on food & beverages (F&B) and on-site retail. The main operating expense is payroll. Turnover at an average Go Ape! centre amounted to more than DKK 3.4 million in 2011, with a profit of DKK 415,000 per facility. Go Ape! has successfully expanded into the US and is hoping to break into the BRIC economies in the near future. Staffing Requirements As already mentioned, high ropes centres strive to offer a staff to guest ratio of one to six or one to 10. Safety is of great importance and adequate staffing is essential. Go Ape! employs an average of 16 staff members per site. Specialist Knowledge / Expertise All employees must be Health and Safety trained and experienced in handling the equipment involved. On the job training needs to be provided to equip employees with the right skills. Managerial positions will require a wider skill set. Appropriateness for Als Island Resort
A high ropes component could work well at Als Island Resort, providing additional activities for the core on-site target market – families. The concept will also appeal to the resident market, helping to drive day visits to the resort and increase visitation in the shoulder seasons. It is important to remember that these facilities have a participatory element to them as well as creating spectator appeal. Whether the high ropes facility becomes part of a larger outdoor pursuits centre or a standalone piece will affect the overall image of the resort. Both could work at the project site, although the latter will be easier to operate and has a significantly lower capital investment so is hence less of a risk.
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FIGURE 12.6: IMAGES OF HIGH ROPES CENTRES
Go Ape! Go Ape!
The Benmore Centre The Benmore Centre
High Ropes Structures High Ropes Structures
Source: Go Ape!, The Benmore Centre and Google Images
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FIGURE 12.7: INTEGRATED WATER PARK HOTEL Development Parameters Concept Overview The integrated water park hotel concept involves the creation of a hotel specifically developed to be attached to a water park component. These hotels are targeted at visitors wishing to visit the attached water park and often have a family-friendly theme running throughout the development. Land/Built Area There has been an increase in the supply of relevant hotels centred around theme parks and/or water parks in recent years. Splash Landings Hotel at Alton Towers in the UK is part of a 3.2sqkm resort that contains two hotels (including Splash Landings), a theme park, water park, spa, golf course and conference centre. The amount of land dedicated to an integrated water park hotel will depend on anticipated demand levels. However, the general rule of thumb is 50sqm to 70sqm per key for a three to four-star quality hotel. Capacity At Splash Landings Hotel, there are 216 rooms, a kids club, five food and beverage outlets, conference facilities and a number of spaces to cater for entertainment. However, Alton Towers is a prominent attraction in the UK, with approximately 2.7 million visitors per annum. An appropriate number of rooms and adequate additional facilities required at Als Island Resort will need to be related to the anticipated performance of the on-site water park and other components contained within the development. Construction Costs / Capital Investment Construction costs for hotels vary depending on the internal fit out, envisioned quality and structure of the land on which it will be situated. Our experience tells us that typical construction and fit-out costs are DKK 745,000 per key for a mid-scale hotel and DKK 1.4 million per key for a full-service hotel. This includes: land; soft costs; furniture; fixtures & equipment (FF&E); and pre-opening costs. Excluding land means that construction costs fall to DKK 634,000 and DKK 1.3 million for a mid-scale and full-service hotel respectively.
Market Parameters Breadth of Market Appeal The supply of operators able to attract a share of water park visitation related demand has grown year on year as repeat visitation patterns mature following an increase in product diversification. The visitor profile at the hotel is likely to be a cross-section of family groups and couples without children who are hoping to visit the water park and take part in other on-site activities. Our research also informs us that there is a growing trend in family-type groups, typically comprising two ‘mums’ travelling as companions with their respective children, but without their partners.
Guests to Splash Landings tend to live at least two hours away from the hotel itself, essentially visiting as domestic tourists. Conference facilities broaden the appeal of staying in such a resort. Conference related demand and corporate hospitality contribute to approximately one quarter of overall room night demand at Splash Landings Hotel.
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FIGURE 12.8: INTEGRATED WATER PARK HOTEL CONTINUED Market Parameters Repeatability The presence of an on-site hotel increases a resorts ability to attract demand over a prolonged period of time, increasing the average length of stay of guests who may otherwise visit a water park for a day trip. With an increased amount of time spent on site, visitation at other resort components, as well as on-site expenditure, will be likely to increase. Provided that the resort offers a broad product mix, repeat visitation will be more likely when an integrated hotel is present.
Operational Parameters Operating Characteristics Occupancy rates at an integrated water park hotel will be reflective of the seasonality patterns of the water park, which in turn are impacted by tourism flows in the local area. Splash Landings Hotel achieved occupancy rate of 66 percent during its first full year of operations. The achieved net average room rate and yield at Splash Landings were more than double that of the average rate in both the local area and nationally during its opening year. The earnings before tax and depreciation (EBITDA) percentage sat at around 25 percent. Staffing Requirements Typically, hotels require in the region of 1.2 employees per key. We understand that Splash Landings Hotel employs approximately 240 staff members, a ratio of 1.13 employees per key. Staffing levels should be considered on a departmental basis and, at an integrated water park hotel specific consideration will need to be given to the requirement for lifeguards within the water park itself. As with any leisure pool, staffing levels are higher than for a traditional lap pool. Typically we would expect 10 to 15 full-time employees with a rotation of part time workers. Specialist Knowledge / Expertise Employees should be equipped with hospitality skills and expertise, although not necessarily at entry level or in unskilled roles such as housekeeping. On the job training should be provided to all those who require it, as well as ongoing training in order to keep standards high.
Appropriateness for Als Island Resort During the peak summer months and at weekends, demand for on-site accommodation at Als Island Resort will be strong. However, it will be hard to achieve strong occupancy rates in low season, particularly given the highly seasonal tourist market in the region.
The creation of an all-weather combined water park attraction and associated hotel increases the ability of less weather-dependent operations to trade at more buoyant levels during low season.
An integrated water park hotel will work well if Als Island Resort is able to portray itself as a ‘destination resort’. This will require product and promotional refinements capable of widening further the market appeal and customer base of the venue as a whole.
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FIGURE 12.9: IMAGES OF SPLASH LANDINGS HOTEL
Water Park Component Themed Room
Water Park Component Water Park Component
Water Park Map Water Park Component
Source: Alton Towers
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FIGURE 12.10: GLAMPING Development Parameters
Concept Overview Glamping is a fusion of glamour and camping. The concept features exposure to the outdoors without the uncomfortable negatives, with the addition of home comforts such as ready-made high-end tents, electricity and the availability of gourmet food.
Land/Built Area Ideally, glamping (glamorous, or high end camping) sites should be situated in a rural location. In terms of built area, little is required. Road access, a cluster of accommodation bases/pitches and perhaps sheltered cooking facilities and a few leisure amenities, such as an adventure playground would be desirable. Several of the Feather Down Farm glamping sites, a large UK-based company specialising in offering glamping holidays, are set on farms with several hundred hectares. Some provide lodges as a form of accommodation, but others simply set aside an area for high-end tents (already erected, fitted out, and ready for use).
Capacity A typical glamping site would include an area for tents and/or lodges and a larger property for the hosts and associated services. Glamping resorts typically are more than campsites with hotel-style amenities and services, such as an on-site chef, luxury bedding and coffee on arrival. Most glamping sites offered by Feather Down Farm, for example, are sited on a farm owned by a family, and as such there tends to be a farmhouse on-site where the family provide meals and offer additional services on request.
Part of the appeal associated with glamping is being in a quiet, rural location away from a large number of people. Therefore, offering more than 15 to 20 pitches or lodges at any one time would likely have a negative impact on the experience.
Construction Costs / Capital Investment One of the benefits of incorporating a glamping site within the amenity package of a resort is that these represent a modest investment in physical structures. A number of lodges or cabins could be built, as well as an adventure playground, picnic tables, sheltered space for animals and cooking facilities. However, on the whole there is simply a requirement for an adequate amount of rural space.
Feather Down farm states that start up costs are approximately DKK 17,000 to DKK 52,000, although some farm owners spend in excess of DKK 216,000, if they are investing more negatively in on-site amenity provision.
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FIGURE 12.11: GLAMPING CONTINUED Market Parameters Breadth of Market Appeal Glamping, or glamorous camping, is an emerging trend, particularly at the middle to upper end of the socio-economic scale. The price point is higher than ordinary camping holidays, with our research suggesting price inelasticity of demand because visitors wish to experience nature without giving up too many of their own comforts. Glamping generally appeals to families, as well as couples without children seeking weekend breaks in the countryside. Since the concept of glamping is still in its infancy, we anticipate the popularity and breadth of appeal to increase over time. Those concerned about the environment or looking to escape from urban locations will be likely candidates to consider a glamping holiday. Seasonality Due to the heavy reliance on families, it is unsurprising that the seasonality pattern of glamping sites tends to match that of school holidays, with clear peaks over Easter and through July and August. Demand tapers off during the cooler, wetter months, partly a result of the weather. However, demand for weekend breaks during quieter months could help combat seasonality issues. Repeatability A visitor’s desire to return in the future will very much depend on their initial experience of glamping. Special packages aimed at providing new experiences, or discounts for returning visitors can be an important driver for repeatability.
Operational Parameters Operating Characteristics A typical farm can generate approximately DKK 560,000 income from overnight guests who ‘glamp’ on their land. Up to half of this income can come from secondary spend, such as bicycle hire and on-site farm shop sales, with the rest being from accommodation. Staffing Requirements Hospitality expectations are low, as such there is a minimal staffing requirement. In the case of Feather Down Farm experiences, glamping sites tend to be run by the family who own the farm itself. If considering providing additional services, such as guided walks, pony rides and cooking classes, staff requirements would increase accordingly. Specialist Knowledge / Expertise Experience in hospitality and management would be necessary for those in charge of the glamping resort. Aside from this, there is little requirement for specialist knowledge with regard to this kind of operation and much can be learned through on the job training. Appropriateness for Als Island Resort A glamping resort could work well on Als Island because it would offer something truly unique to the local market, making a statement in the area. The concept sits well with what already exists on the island and would offer clear product differentiation. Demand for glamping holidays is increasing in Europe and the concept benefits from a positive, aspirational image associated with nature, conservation and relaxation. The inclusion of a glamping site as part of Als Island Resort would not represent a costly investment and our research indicated that the area is already popular for camping.
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FIGURE 12.12: IMAGES OF FEATHER DOWN FARMS
Accommodation Accommodation
Activities Interior
Exterior Farm Shop
Source: Cool Camping and Feather Down Farm
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FIGURE 12.13: WATERSPORTS CENTRE Development Parameters Concept Overview The concept of a watersports centre is a type of outdoor pursuits centre involving the provision of a range of water-based activities, such as canoeing, wakeboarding and sailing. These centres tend to offer regular courses, as well as a range of one-off or drop-in activities often frequented by holidaymakers. Land/Built Area Similar to other outdoor pursuits centres, the incorporation of a watersports centre would be a relatively modest investment. Various water-based components included will depend on the scale and quality of facilities desired. Typically, provision for dinghy sailing, canoeing, windsurfing, and waterskiing are included. The required built area is unlikely to be more than 250sqm, but will depend on the number of guests anticipated. There will be a requirement for sufficient sea frontage to launch craft into the water. Capacity The capacity of the watersports centre should accommodate average demand levels during the peak season. Access should be restricted to resort guests and owners during peak months, however external memberships or day access may be encouraged during shoulder periods. Construction Costs / Capital Investment The construction costs associated with development of a water sports facility will depend on the scale of development, but we understand from our experience that costs are likely to range from around DKK 3,700 to DKK 6,000 per sqm for lightweight construction. Market Parameters Breadth of Market Appeal Active water-based activities, such as dinghy sailing, jetskiing and windsurfing, amongst others, are becoming increasingly popular and present at resorts. However, these continue to attract relatively modest levels of participation, largely due to the relatively high costs associated with watersports tuition and equipment costs. Despite active leisure participation levels increasing, changes to underlying demographics and disposable income levels cannot be ignored when determining the potential success of a watersports centre. Seasonality The seasonality of the watersports centre’s operation will depend on the location, weather and operating period of the resort as a whole. The relevant school holiday timetable will also affect the seasonality of this largely family-orientated facility. Repeatability Watersports participants are likely to return to the centre later on during their stay if they visit for the first time at the beginning of their stay and enjoy the experience. This allows guests to build on their skills or try a different activity, provided that there are a wide variety of water sports on offer.
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FIGURE 12.14: WATERSPORTS CENTRE CONTINUED Operational Parameters Operating Characteristics Research indicates that watersports centres are generally not strong financial performers in light of their modest levels of participation. Revenue is generated from watersports tuition, group classes and any associated food & beverage sales. Insurance costs are high because of the liability issues surrounding water-based leisure activities. Wages will constitute the greatest proportion of operational expenditures. Staffing Requirements A watersports centre will require around five to 10 full time employees (including lifeguards) as well as a rotation of part-time workers. Staffing requirements will vary depending on the capacity and attendance profile of the facility. Specialist Knowledge / Expertise Specialist knowledge will be required for lifeguards and those teaching water sports. Experience within the hospitality and catering sector will suffice in other areas of the operation. A considered approach must be taken with regard to the provision of lifeguards on the waterfront in order to ensure the safety of visitors and guests. Appropriateness for Als Island Resort
The concept represents an appropriate amenity option for Als Island Resort, since the site benefits from a long coastline and is set within an area already popular with tourists. There may be an opportunity to link the water sports centre to nearby schools or other holiday home clusters, strengthening demand for the centre and presenting economies of scale for the developer. The various activities and components of the water sports centre must be utilized at a sufficient rate to justify their inclusion. Membership tiers such as ‘full’, ‘family’ and ‘day passes’ can be introduced to encourage higher levels of participation and boost revenues for the operation.
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FIGURE 12.15: IMAGES OF WATERSPORTS CENTRES
Teeside Watersports Centre Sinai Blues Watersports Centre
Activities Activities
Wind Surfing Dinghy Sailing
Source: Google Images
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FIGURE 12.16: WILDLIFE CENTRE Development Parameters Concept In recent years the resort development sector has witnessed a growing trend in the introduction of nature or wildlife centres either contained within the boundaries of a resort or on adjacent land parcels. Internationally, some resorts are now anchored by wildlife centre, whilst others have incorporated botanical gardens, working farms and nature trails. Land/Built Area The requirement for built area would be for an educational centre, administration, maintenance/support facilities, all of which can be accommodated within a built area of 200 to 400sqm. In addition, structures to house any animals present on-site will be necessary. The land area requirement can vary significantly from just a few hectares up to hundreds or even thousands of hectares. Environmental zoning and preservation issues must not be ignored. Capacity Compared to many forms of resort amenity, the capacity of a nature or wildlife centre tends to be relatively unlimited. Visitors generally pay little to no fee for the experience which lasts for several hours. This therefore represents a high capacity/low price point amenity option for the resort. Construction Costs / Capital Investment The construction costs and capital investment involved with the creation of a wildlife centre depend on the site context. Typically, developers will seek to boost the usability of an existing natural environment and this may require some site preparation/preservation and a modest investment in the creation of walkways. The size and scale of the educational centre should be fitted to the natural landscape and typically represents a modest investment of between DKK 3,700 and DKK 6,000 per sqm.
Market Parameters Breadth of Market Appeal Research into market trends suggests a growing awareness and concern for the environment among western societies and the European travel industry. A micro-trend is emerging revolving around eco- friendly, back to basics resorts, a contrast to globalisation and the homogenisation of tourism experiences. Taking this into consideration, the inclusion of a wildlife centre within a resort environment presents an increasingly marketable option for the developer. Seasonality The seasonality of demand for outdoor experiences at a wildlife centre will depend to a large degree on the weather and visitation patterns of tourists to the local area. Attendance will fluctuate considerably as a result of weather conditions, although indoor components will not be as affected. If the focus of demand is from short-stay visitors to the resort, utilization rates will reflect the pervading school holiday profile. Offering entry to school groups, local residents and other domestic tourists within the local area will help boost visitation during the low season. Repeatability Outdoor activities are highly repeatable, as the experience changes each time. Each tour/walk will depend on the time of day, weather conditions, route taken and profile of the accompanying group. Therefore, although participation levels may be relatively modest, those who enjoy the outdoors and the experience associated with the educational centre will be likely to return on a regular basis.
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FIGURE 12.17: WILDLIFE CENTRE CONTINUED Operational Parameters Operating Characteristics Our experience and research into the sector tells us that wildlife centres do not support their operating budget on earned income from ticket sales and any additional visitor spend. State support, charity donations and income from other sources is generally requires to support annual operations. Revenues from a wildlife centre are likely to come from admissions, membership fees, tours, bike rentals, merchandise sales, facility rental and F&B sales, if incorporated. Payroll costs will be the main expense of the operation. Staffing Requirements A well-managed wildlife centre is likely to have a staff requirement of approximately 10 to 15 individuals. Staffing levels vary depending on the size of the centre and its associated land. However, there will need to be a visitor centre director, administrative assistant, bookkeeper, marketing assistant, visitor services manager, education coordinator, IT technician, grounds manager, shop manager and general maintenance staff. Specialist Knowledge / Expertise Nature based attractions and developments tend to be operated by those with a passion for the outdoors, environment and wildlife. Specialist expertise is necessary in order ensure environmental regulations are met. Knowledgeable staff will also improve the overall quality of the visitor experience. Appropriateness for Als Island Resort The inclusion of a wildlife centre within the amenity mix of Als Island Resort presents guests and visitors with a number of supplementary activities and also has an aesthetic value, influencing the overall image of the development. The ‘green’ concept stemming from the presence of a wildlife centre is highly marketable, both in regard to encouraging guests to stay at the resort by increasing the range of amenities and the ability to positively influence property values. However, nature preserves/wildlife centres may restrict potential expansion of the resort and residential development. Environmental considerations may override potential alternative and more profitable uses for the land. Although operational expenses will be low, it is unlikely that the centre would generate significant revenues. As such, considerations should be made regarding the overall impact of including this land use on the consolidated cash flow for the development.
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FIGURE 12.18: WILDLIFE CENTRE
Manu Wildlife Centre, Peru Educational Nature Centre
Nature Trail Nature Trail
Educational Activities Sporting Activities
Source: Google Images
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FIGURE 12.19: CULINARY SCHOOL Development Parameters Concept Overview A culinary school is an institution devoted to the education of food preparation, in this case integrated into a wider resort to offer an additional leisure amenity. Cooking school offer a range of culinary experiences, ranging from afternoon courses to multi-day destination packages. Land/Built Area Tourists typically choose cooking holidays based on location, though price and the existence of an accomplished chef can influence decisions. Through our research we understand that culinary studios are often located within a larger building, such as a winery, university campus or a resort. At Chateau Élan in France, a 150sqm culinary studio is set within a three-storey 3,900sqm winery that also includes wine production facilities, a tasting room, two restaurants, an art gallery and a retail outlet. However, the Culinary Institute of America (CIA) at Greystone is contained within a 10,900sqm building with 1,500sqm teaching kitchens, lecture halls, a retail store, a restaurant as well as research and development centres. Capacity The formats range from short demonstrations or half-day classes to multi-day destination packages, designed for travellers interested in a full immersion culinary travel experience. Some schools offer professional qualifications which take up to 21 months, although these tend to be taught at stand alone schools such as the CIA at Greystone. Resort cooking schools are designed to provide some entertainment and offer traditional activities to guests in addition to culinary classes. For example, Chateau Élan includes a golf course, spa and winery. On the other hand, CIA has several facilities and demonstration theatres and a variety of courses covering all elements of cooking skills, baking and wine and targeting professionals, career changers and amateurs. The number of classes held can vary from just 10 or 12 classes per month at the weekends to full-on degrees with daily classes. On average, there are 10 participants per class, although group classes can accommodate up to 20 participants. Professional institutions such as the CIA include lecture theatres that allow several hundred people to witness demonstrations. Construction Costs / Capital Investment Our research indicates that the construction cost of a culinary school would be around DKK 6,700 to DKK 7,500 per sqm, slightly higher than the cost of building a typical school in light of the specialist installations that required. Upfront capital investment will be necessary to provide for an adequate number of ovens, hobs, demonstration stages, projectors etc. Market Parameters Breadth of Market Appeal The market for culinary holidays has experienced significant growth over the last decade with many travel companies offering culinary holiday packages. Most cooking schools target hotel guests and class participants tend to be couples aged between 25 and 60 years. Offering a wide variety of classes will allow for a broader target market to be captured. Week-long courses and professional qualifications will help attract the local residents and professionals. However, most classes are relatively expensive which will price lower socio-economic groups out of the market.
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FIGURE 12.20: CULINARY SCHOOL CONTINUED Market Parameters Seasonality Resort culinary schools will broadly follow the seasonality profile of the resort itself, with peaks during the high season for tourists visiting the region. However, the operation of a culinary school is clearly not weather dependant and this is one of those amenities that can be used to stretch visitor demand through the shoulder months and into the winter/low season. Opening up the courses on offer to local residents will help dampen seasonal fluctuations. Classes tend to be more popular at the weekends than during the week, unless one is studying for a professional qualification at the school. Repeatability Travellers typically only want to spend one or two days of their holiday learning local cooking recipes. However, by varying the class theme on a regular basis, participants will be more likely to opt into multi- day cooking experiences or return later on in the year.
Operational Parameters Operating Characteristics Typically, a stand-alone cooking facility would generate revenues from classes and retail purchases and have operating costs including staff costs, facility rental, utilities, and food costs. However, resort culinary schools tend not to be operated as an individual entity because guests book packages that include both their accommodation and cooking classes. Research indicates that the operating margin for a culinary school is likely to be in the order of 25 to 40 percent. Staff costs are relatively modest and pricing can be quite high. Staffing Requirements The staffing requirement varies depending on the size of the culinary school. Resort cooking schools employ approximately 10 to 15 staff members, whilst larger, professional institutions have more than 100 employees. Specialist Knowledge / Expertise Qualified chefs and those with specific culinary experience will be required. In addition, cleaners and operations managers will be needed. If there is an on-site restaurant and/or retail outlet, there will be a further requirement for staff members with relevant experience in hospitality, waitressing and sales. Appropriateness for Als Island Resort A cooking programme can be a desirable amenity at a resort, however a combination of several amenities (such as food & beverage outlets, a winery and a spa) works best when attracting leisure and corporate business. The location of the culinary school inside the resort hotel would allow for a range of amenities in one place. Multi-day cooking experiences will help increase repeat visitation. The school should offer a variety of classes including one-day and two-day, as well as week-long courses targeting a broad market including hotel guests, local residents and professionals. Similar to Chateau Élan, the cooking school should offer private classes for corporate groups staying onsite or from nearby cities. Cooking demonstrations should also be held for visitors staying at the resort. Denmark has a strong gastronomic tradition, and we believe that the inclusion of a culinary school at the Als Island Resort would appeal to both the domestic visitor market as well as to tourists from Germany, who dominate the international tourist market.
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FIGURE 12.21: CULINARY SCHOOLS
Paresa Cooking School Chateau Élan
Chateau Élan Amateur Cooking Class
Culinary Institute of America Demonstration
Source: Chateau Élan, CIA, Bing Images
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FIGURE 12.22: SPA FACILITY Development Parameters Concept Spa offer water-based treatments alongside various personal care treatments within a relaxed environment. Those situated within a resort or hotel provide professionally administered spa services, fitness and wellbeing components and a healthy array of food and beverages. Land/Built Area The space requirement for spa operations can vary significantly depending on the concept. There are three main options for integrated resort developments: a destination spa (with an accommodation component), hybrid spa (a standalone spa within a resort setting), or an amenity spa (typically attached to a hotel). For the Als Island Resort project, a hybrid spa may be appropriate. This spa would be large enough to be a distinct resort component with a separate identity, but not so large as to dominate the theme of the resort. It should be situated in a quiet environment, away from both vehicle and foot traffic, at a distance from other resort components. An appropriate built area allowance would most likely range from 1,000sqm to 2,000sqm. Capacity A typical hybrid spa would include approximately 10 to 15 treatment rooms (one and two beds), indoor/outdoor pool, Jacuzzis, saunas, a high-end fitness centre and a beauty salon to accommodate 30 to 60 treatments per day in peak periods. Construction Costs / Capital Investment Although construction costs for spas vary considerably, our recent experience suggests that construction and fit-out costs can range from DKK 17,100 per sqm to DKK 31,300 per sqm at the top end of the market. Market Parameters Breadth of Market Appeal There is a growing interest in spa spreading across age groups and demographic markets. A new trend is ‘spa tapas’ which allows guest to sample a variety of shorter treatments at a cheaper rate, thus widening the breadth of appeal. Services catering to both wellness and medical treatments would appeal to a broader market, as would male-specific treatments. Additionally, services targeting younger adults will attract family business. Wider Market Context The international spa market is becoming more and more competitive. Spas are a pre-requisite in resorts and international benchmarks in terms of quality, price and services offered are increasing. Spas are a highly marketable asset. Seasonality The underlying profile for a resort spa is likely to reflect that of the tourist seasonality profile of the region. However, the inclusion of a spa component presents the opportunity to enhance the low-season product offer, building up demand in the quieter months of the year. Spa breaks often represent a key source of low season income for a resort.
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FIGURE 12.23: SPA FACILITY CONTINUED Market Parameters Repeatability ‘First time’ experiences will dictate a visitor’s desire to return in the future. Creating themes and special packages aimed at providing a new experience can often drive repeatability. Much of a spa’s operations are derived from the residential market segment, and as such membership packages can represent a useful driver for repeat business.
Operational Parameters Operating Characteristics The role of a spa within a resort has evolved over the last 15 years and many now operate as a separate entity of their own, generating profit rather than being considered a cost burden for a development. The largest revenue source for a spa is drawn from treatments which can cost anywhere from DKK 225 to as much as DKK 2,240. The sale of spa products also generates a solid revenue stream, typically representing 15 to 30 percent of total treatment revenues. Since there is a requirement for trained staff to provide treatments to guests, labour costs is the largest expense for spa operation, usually amounting to 50 to 55 percent of gross revenues. A well-managed, appropriately positioned spa should generate a profit margin in the region of 20 to 25 percent. Staffing Requirements Running a spa is a labour-intensive operation. Our research suggests a staffing requirement of between one and two employees per treatment on offer, as a rule of thumb. Specialist Knowledge / Expertise A spa should be staffed by trained and certified specialists. In addition to this, regular training and continued certification is essential to ensure that a spa is up to date with all treatments, services and trends. Spa personnel costs tend to be higher than other areas of a resort’s operations because of the skill requirements necessary for certain positions. Appropriateness for Als Island Resort
A spa is generally considered an essential component of a resort’s amenity offer nowadays. The inclusion of a spa at Als Island Resort would be a significant investment because the sector has become increasingly competitive over recent years and the benchmark for good quality has been raised, hence guest have higher expectations. Therefore, specialist input is required with regard to design and materials. Als Island Resort is well positioned to include a spa component, since the only spa within a resort in the study area is modest and located at Marina Fishinaes Resort, hence competition is limited. Including a spa would help to enhance the marketability of a resort and would help stretch the seasonality profile of visitation to Als Island Resort well into the shoulder months.
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FIGURE 12.24: SPA FACILITY CONTINUED
Utopia Spa Utopia Spa
Six Senses Six Senses
Banyan Tree Banyan Tree
Source: Google Images
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13 DEVELOPMENT PROGRAMME
INTRODUCTION 13.1 In this final section we consolidate our research findings and conclusions into a development programme recommendation for the proposed site. These concepts are preliminary in nature and will be subject to refinement as the physical master plan for the land-holding evolves. SUMMARY OF KEY DETERMINANTS 13.2 In determining the rationale for developing an integrated resort project adjacent to the Universe Park on Als Island, there are various fundamental market-related considerations that have influenced our appraisal. We have summarised ten of the most important below:
Local Area Context: The northern part of Als Island is an area that has historically been very closely linked with the commercial and manufacturing operations of Danfoss. As the scale of these operations has been dialled back over recent years, the requirement to evolve a new dynamic focus for the economy and employment has evolved. It is envisioned that tourism may provide this focus and the proposed scheme could act as a catalyst for the resurgence of the local economy and as a means of instilling a sense of pride and optimism within the community.
Tourist Market Context: The local area is currently not one of the ‘must see’ destinations in Denmark. However, it does attract some domestic demand and lies within easy access of key sources of visitor demand from Germany. Currently, tourist related activities are focused on hotel and holiday home usage, as well as marine leisure activities and camping. Opportunities exist to build on this activity.
Planning Context: Discussions with the client group suggest that the local authorities and the economic development ‘Vision Group’ are aware of the potential benefits associated with large-scale tourism development. This positive attitude ought to be reflected in a ‘can-do’ attitude towards facilitating the proposed scheme (i.e. in the form of changes to planning regulations, supportive destination marketing, etc.).
Hotel Market Context: There are currently few hotels of any scale that offer a high quality of built product or service, few that offer any significant form of on-site amenity provision and even fewer under the management of a recognised international brand.
Holiday Home Market Context: Research undertaken for this study indicates that there is an understanding within the domestic property market of the holiday property ownership within an integrated resort concept. However, to date the quality and volume of the second home offer on Als Island is comparatively limited suggesting potential opportunities within the market as the wider economic recession passes.
Camping Market Context: There is a demand for camp sites in the area and whilst the scale of the commercial activities associated with camping have historically been limited, there are emerging trends within the sector that involve higher-end products, prices and market positioning.
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Indoor Water Park Market: ‘Water play’ in general has appeal across a broad range of age groups and there is currently a market opportunity for adding such a component within the development concept for the resort. There is a chance of a competitive offer within the area, but we understand that little progress is being made with this initiative.
Marine Leisure Market: In developing the concept recommendation for the proposed resort, it is important to turn the potential ‘weakness’ of an island location – into one of the project’s strengths. The site does have access to the waterfront and region does benefit from being part of a cruise network. The opportunity should be taken to benefit from this fact through the creation of an animated waterfront environment within the master planning of the project.
Environmental Agenda: There is an ambition amongst the stakeholders supporting this proposed initiative to evolve a concept and programme recommendation aligned to the principles of environmental, economic and social sustainability. Opportunities should be provided for people to engage with nature and to build upon the values and principles relating to energy consumption and the use of our natural resources that are raised through the attraction offer at the Universe Park that will likely form the gateway to the resort. DEVELOPMENT CONCEPT RECOMMENDATION 13.3 Given the location, scale, context and profile of the project site, and the general market context, it is our view that a long-term development opportunity does exist to create a flagship resort project next to the Universe Park.
13.4 Based on our research and international experience, we recommend the development of a high-end integrated, master planned resort community that comprises two hubs: one focusing on a four-star integrated hotel and indoor water park; and the other located on the waterfront in the northeast corner of the project site. The resort would incorporate a hospitality product offer that incorporates a range of options, designed to target a mix of markets (thereby reducing demand-risk), supported by a blend of natural, built and soft amenity provision suitable to create destination appeal throughout the year. The rest should be a place for rest, relaxation and participation in a range of activities and experiences that echo the quality and profile of the surrounding natural environment.
13.5 The reason for proposing a higher-end market positioning is that this needs to be a development that Als Island can be proud of, this is in keeping with the aspirations of Danfoss and experience has shown that it is easier for a project to go down-market over time rather than up-market.
13.6 The accommodation product offer would include both short-term rental accommodation (i.e. hotels, camp site pitches and marina berths) as well as holiday homes. Incorporating a relatively substantial holiday home component, comprising ‘for-sale’ product, will help to underpin the underlying financial planning for the development.
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13.7 In summary, we recommend a development programme that includes the following components:
A mix of hotel lodging components designed to offer a range of visitor experiences comprising: a resort hotel (200 keys) integrated alongside an indoor water park and a boutique waterfront hotel (40 keys) situated on the quayside of a proposed marina.
A 100-berth marina designed to accommodate vessels ranging in length up to 25 meters in length, with an emphasis on berths below 15m long, representative to local market demand.
A substantial indoor water park, integrated with the resort hotel and comprising an area of 5,000sqm to 9,000sqm. We would in fact recommend that this amenity includes both an indoor and outdoor component, with the emphasis placed on creating an attractive indoor environment where guests can have fun and relax at any time of the year.
Several clusters of holiday homes, with an emphasis on low density development (i.e. detached product). We recommend a total unit count of 400 at build out, comprising 200 in Phase One of the development programme and followed by a further two phases of development, each comprising 100 units. The development programme would include a group of clustered product around the marina / waterfront.
Two land parcels allocated for camping, comprising a modestly sized but higher end ‘glamping’ product offer (20 pitches) and a more traditional camp site area comprising 200 pitches.
We propose the inclusion of a modest commercial component offering a range of food & beverage and retail options for on-site guests and visitors to the site. These would be located within the two proposed development hubs (i.e. around the water park hotel and the marina quayside). In total we propose a combined built area in the order of 3,000sqm of commercial space at build-out.
In addition to the core components listed above, we recommend that the resort should offer a range of other amenities and facilities including: a high-ropes course, zip wire, adventure playground, sports pitches, a kids club, amphitheatre, indoor sports hall, mini- golf, archery, tennis courts, resort reception and security, site administration, staff housing, water bodies and parkland areas, and a network of walking, cycling, nature, and running trails through the estate. 13.8 Over the following pages we consider each of these principle components in turn, outline our rationale and provide more clearly defined physical parameters. Whilst our recommendations are primarily based on factors relating to the market context and economics of large-scale resort development, we recognise that input will be required to refine these recommendations from experienced master planners and engineers, to determine space requirements and relationship, as well as deliverability.
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DESIGN AND STRATEGIC PLANNING CONSIDERATIONS 13.9 In order to attract resort guests and holiday home buyers to the site we recommend that the following points are considered with the design and strategic planning of the proposed resort:
Standards: The proposed development needs to be professionally designed in an innovative manner, built to a high specification, marketed assertively to a mix of potential users and maintained to a high standard.
Design: The design of the built components should be innovative, yet highly sensitive to the surrounding environment. We envisage the use of indigenous materials such as localised timber and stone.
Tranquillity and Exclusivity: The site and its setting exude a sense of tranquillity and it is our view that this is one of its major assets. The ambiance of the resort should be designed to offer a counter-balance to the hectic lifestyles of those living in conurbations such as Aarhus, Copenhagen and Hamburg.
Climate Considerations: The design and strategic planning for the resort needs to recognise that Als Island has a climate that can be warm in the summer but cool and damp in the winter. To this end, travel distances within the core/hubs of the design should be limited and the orientation must respect the prevailing East-West winds.
Layout Planning: We proposed that the master plan for the site should comprise two core hubs, in addition to an arrival / reception area. These would comprise a central core where the water park hotel would be located and a development hub at the marina that would comprise a modest residential component, a boutique hotel (with an integrated yacht club element) and a modest commercial component.
Sense of Arrival: Within the master planning of the resort, careful consideration will need to be given to the management of the overall ‘arrival sequence’. This will impact the character of the main entrance to the resort off the 405 road, alongside the existing Universe Park. The opportunity exists to use the prevailing topography (rising up and then overlooking the site) to leave a very strong first impression, but efforts will be required to fine tune this arrival sequence.
View Corridors: The undulating topography of the site is such that there are limited opportunities to safeguard or open up view corridors from certain locations towards the coast and back towards the church in Havnbjerg. Views create premiums for both hospitality product and residential real estate.
Sense of Place: For certain types of travel, such as a business trip, the visitor will probably prefer to stay within an environment that feels normal or familiar. For this reason, there is a tendency, particularly within urban hotel design, to present a standardised homogenous facility and service. The guest could be staying anywhere, but the ambiance is comfortable and familiar. In the case of leisure travel, however, guests want to know that they are staying somewhere unique and special. Developers are having to work hard to introduce a ‘sense of place’ on sites, such as this, that are to all intents and purposes, a blank canvas for development.
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Phasing Requirement: The size of the proposed site, and therefore the potential scale of the resort, is such that a phased approach to development will be required that recognises factors relating to market dynamics, development economics, logical construction management and expansion plans. This requirement will need to be reflected in both the master planning and strategic financial planning for the resort.
DEVELOPMENT PROGRAMME RECOMMENDATION 13.10 In the following sub-section we set out our proposed development programme recommendation for the resort, based on our review of the project site, our understanding of the client group’s development ambitions, our market findings and wider international experience. Resort Water Park Hotel Introduction 13.11 Hotel schemes that form integral elements of larger resort development projects are increasingly varied and wide-ranging in terms both of scale and concept. Thrill-ride orientated ‘Theme Park’ resorts with equally ‘themed’ lodging products are typified by benchmark operators such as Europa Park (Germany), Disneyland Paris (France), and Alton Towers (UK). Water park resorts centred on year-round aquatic attractions include the likes of Tropical Islands (Germany), Atlantis The Palm (Dubai), Splash Landings at Alton Towers (UK) and Atlantis Paradise Island (Bahamas). Integrated resorts which combine indoor water park elements with a more empathetic relationship with the natural world beyond the confines of the indoor attraction have been pioneered successfully by one of the world’s brand leaders in the field, Center Parcs, which now operates at a number of locations throughout the Netherlands, France, Belgium, Germany and the United Kingdom.
13.12 As such, all these examples are far removed from the traditional resort template of only a few decades ago and reflect the changing tastes and product preferences of increasingly diverse and discerning leisure travellers.
13.13 To date the reputation of much of the hotel lodging sector on Als Island has become reduced to a somewhat amorphous image, a largely ill-defined and relatively small market with a product mix ranging from larger volume-driven branded hotels to tiny (single key) independent Bed & Breakfast operators.
13.14 The first hotel on the Island to break this mould has been the small luxury operator, Dyvig Badehotel, whose attention to in-room amenities, interior design, food and beverage operations, and friendly, professional service, has created an exemplary hospitality product. The hotel has brought a whole new level of quality to the Als Island market and is, arguably,
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the first hotel to so positively and pro-actively profile the Island to a wider national and international market.
13.15 Consequently, within a resort hotel development context, different genres are likely to continue emerging in future with distinct, if sometimes overlapping characteristics.
13.16 In relation to the vision and concept development aspirations for the Als Island Resort project, we consider that elements both of the emerging lifestyle hotel sector and traditional resort operations are likely to play an important role in determining the differentiation of this project from existing templates of hotel design and operation. Water Park Resort Hotel Development Rationale 13.17 The proposed principal commercial lodging component of the scheme needs to be developed as an integral part of an exemplary resort community, in terms not only of its concept as a ‘water park’ resort hotel, but also both the design and execution of its built and landscaped elements. At its core should be a high-quality international standard resort hotel, with a spa and centre for wellbeing as key components of its leisure offering.
13.18 With this and other identified future resort schemes, Als Island is poised to emerge as an international resort destination, far removed from the long-established local independent operating traits that currently characterise much of the area’s local hotel supply.
13.19 Resort hotel development is evolving. At destinations throughout the world where the sector is more established, cutting edge design and stylish sophisticated interiors are complemented by beautiful locations and high levels of a unique new kind of relaxed but highly attentive and personalised service. Our vision for the proposed resort at this project aims to emulate the best of these physical characteristics and operating philosophies.
13.20 However, this project and the future hotel market of relevance, both at a local Als Island and wider Danish and North European level, will face numerous challenges, not least of which is to ensure sustainable levels of demand in a highly seasonal market sufficient to support the growing supply of international standard and, we envisage, strongly-branded competitive resort hotel operations, not only on Als (Sønderborg Harbour Project), but throughout other parts of Europe in the longer term.
13.21 Despite the potential for growth on Als Island, any increases in supply, not only locally but throughout wider Danish and Baltic/Scandinavian regions in general, could exacerbate problems associated with extreme troughs in demand that already define trading patterns in Syddanmark and South Jutland. Consequently, the challenge for operators on Als Island in future years will be to expand market demand beyond the traditionally stronger peak summer months. We consider that this objective will be reliant, to a considerable extent, upon the realisation of a number of key objectives. These principally include:
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13.22 Firstly, the increased provision of facilities, amenities and services with market appeal over and above that associated principally with Als Island’s peak summer season. Water park facility provision is a ‘given’ in this regard. But exceptional spa facilities are also a pre- requisite. We also consider that modestly scaled state-of-the-art multi-functional conference, meeting, and ‘other activity’ facilities will also widen the appeal of the hotel to an appropriate mix of niche market sectors.
13.23 Secondly, improved market penetration via more pro-active and innovative use of up-to- date technologies. With the growing use of on-line booking agencies and internet marketing services/affiliations it will be imperative for any new resort hotel development at this project to embrace such tools to their fullest effect in order to generate the best possible operating yields via promotional and product-packaging opportunities and special events. Whilst affiliation to a branded operator and/or membership of a leading marketing consortium will also help to establish the market-positioning of the proposed Als Island Resort hotel, in isolation it is unlikely to be sufficient to ensure the optimum trading capabilities of the new hotel, given the seasonality challenges that face operators in Als Island during winter and shoulder periods.
13.24 The eventual operator must also seek to establish the new hotel (together with its associated water park and other facilities), from the outset, as a unique venue, entirely distinguishable from other proposed competitive operations on Als Island. This project’s location and topographic strengths are exceptional attributes. Together with these, we consider the assumed operating excellence and physical design need also to be seen as complementary to, rather than competitive with, other new lodging schemes identified within the wider Als Island hotel sector, particularly those planned for the Sønderborg Harbour Project. Along with this scheme and any other future projects, the proposed Als Island Resort hotel needs to emerge as a distinct, innovative, stylish, mould-breaking operation, exceeding in style and operational excellence any integrated resort hotel within the growing supply of lodging operators in the wider region. Indeed, we consider the market positioning opportunities for the project to be capable of elevating Als Island’s status to one of greater international recognition, given the unique combination of location qualities, envisaged product excellence, service innovation and assumed brand awareness.
13.25 Existing and emerging new demand sectors for hotels (especially those developments that, like this project, are located within a relatively short flying and/or driving time of key source markets throughout Europe, and particularly Germany) also exhibit greater time-sensitivities and a move towards more frequent/multiple holidays throughout the year, of shorter duration than the traditional single annual one-week or two-week vacation. This trend is growing amongst all age groups, but is strongest amongst demand sources that include younger professionals and families with children, reflective of the increasing pressure being
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placed on the life-work balance and enhanced ‘family values’ in the envisaged post- recessionary climate in which this project will operate. Resort Hotels in Integrated Environments 13.26 In terms of on-site amenities and entertainment facilities at this project, some elements of the vacation travel community demand more from their hotel and resort environment than the product offer of the typical tried and tested (and increasingly unsatisfactory) resort hotel model. For many, it is no longer sufficient to simply provide the ‘three Ms’ - ‘mattress, meal and massage’, no matter how comfortable the accommodation, relaxed the dining experience, iconic the spa architecture, or life-enhancing the operating philosophy. Consumers also want a greater mix of on-site recreational opportunities and experiences. Integrated Resort Hotel - Amenity Provision 13.27 Unlike much smaller leisure-orientated hotel properties, such as Dyvig Badehotel, the scale of larger resort hotels and the typically greater number of rooms they provide obliges operators to more aggressively target a much wider range of market sectors capable of boosting overall levels of room occupancy.
13.28 At the proposed Als Island Resort project the provision of health and fitness facilities, a spa, tennis courts, exercise trails and on-site life-long learning opportunities (art and craft classes, cookery school courses, etc.) will be pivotal to meeting such expectations, together with a number of additional add-ons to this core requirement.
13.29 In this regard, soft programming and amenity planning will be central to the resort hotel’s ability to extend seasonal occupancy and appeal to special-interest groups during the low and shoulder seasons as well as those seeking personal growth and life-enhancing educational experiences. Courses and classes covering subjects that range from local/international culinary skills, arts and crafts, and eco-tourism pursuits to researching Als Island and Danish history and culture all have a role to play in generating demand. Integrated Resort Hotel - Conference Facilities 13.30 Depending on the location relative to source market demand, conference facility provision to a varying degree is considered a pre-requisite to strengthening a hotel’s wider market appeal.
13.31 Given a resort’s typical scale, wider amenity provision and larger average number of letting units, most integrated resort operations are predisposed to attracting demand from a market mix that includes group demand from conference and other ‘event’ sources.
13.32 Although seasonality and associated perceived ‘remoteness’ challenges are factors that inhibit MICE demand on Als Island, and currently limit it to more price-sensitive local demand sources, the location and site strengths of this project, together with its assumed
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branding, anticipated product strengths, and service excellence are likely to be of considerable appeal to niche MICE markets within the corporate and commercial sector. In order to generate occupancy and event-related food and beverage demand, we therefore recommend the provision of a purpose-built conference and function venue capable of accommodating groups of different sizes. Water Park Hotel Development Programme Implications For This Project 13.33 At the mid to upper-end of the market, resort hotels continue to evolve, the once caricatured image of somewhat formulaic operational characteristics increasingly giving way to a more diverse and dynamic ‘lifestyle’ orientated product range that attracts clientele from every age group. Our proposed Als Island Resort vision sits comfortably within these emerging trends.
13.34 As well as established vacation demand traits, emerging markets for such resort offerings are increasingly characterized by short-break/weekend demand and short-stay demand that can sometimes form part of a multi-destination tour of other Danish / Baltic / Scandinavian destinations. They share a common trait of distinct time-sensitivity, particularly amongst younger professionals.
13.35 As a result, operators increasingly aim to tap specifically into the ever-growing ‘product savvy’ awareness of today’s ‘quick-fix’, ‘de-stress’, ‘de-tox’ market. In so doing they have created not only a new ‘look’ for resort hotel and spa operations, but also a new approach to the concept and interpretation of ‘service’.
13.36 Success factors vary from one type of hotel to another, although particularly influential physical and operational traits noted at researched leading properties in other parts of the world include the availability of a wider range of recreational amenities. At the proposed Als Island Resort a state-of-the-art spa ‘retreat’ with outdoor as well as indoor spa zones that also incorporates the calm, tranquil setting of a secluded outdoor/open air yoga venue and a spa treatment ‘sanctuary’ (as well as more animated areas of hotel activity and food and beverage provision), will provide alternative leisure and dining opportunities to those of the water park and the wider integrated resort as a whole.
13.37 As part of an assumed brand, the proposed Als Island Resort hotel will also be able to develop links with other existing (and any planned new) group properties. This could imply potentially far-reaching positive consequences for this project, in terms of promotional opportunities and wider reciprocal brand/group product appeal amongst markets for its various hotel locations.
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Key Water Park Resort Hotel Markets 13.38 Given the anticipated supply and operational dynamics of the future resort hotel sector on Als Island (that also include the Sønderborg Harbour scheme), we consider that potential demand at this project will derive from a mix of sources that is to some extent an expansion of the summertime-orientated and leisure sector-dominated markets that prevail in July at existing leading operators in the area.
13.39 Market sectors that should be targeted as sources of demand will include:
13.40 Wholesale (tour operator/travel agent) and independent leisure traveller sectors. Leisure sector demand will generate the largest share of envisaged market mix. Accessibility from other parts of Denmark and proximity to the German border (and the Greater Hamburg area in particular) will enable this project to attract weekend and short-break visitors as well as longer-stay vacationers throughout a much extended summer season and throughout the shoulder and off-peak trading months, due to the year-round appeal of the resort water park, Universe park and other envisaged project attributes.
13.41 Leisure group demand throughout a year-long trading period will also be achievable based on specialist activity and ‘life-long learning’ programmes at the hotel that are tailored to niche markets. Examples include:
13.42 Cookery school (beginners to advanced programming offered on a schedule of varied single day-long courses, marketed via inclusive ‘hotel’ and non-resident packages and ‘gift voucher’ options – a tried and tested sales formula for this kind of product)
Wine appreciation Arts and crafts (painting, floristry, pottery, book binding) Creative writing Music ‘master class’ and concert events Bird watching Angling Culture and history Gardening and horticulture 13.43 Corporate MICE groups (meetings, incentive (groups), conferences and events). Although conference group demand on Als Island is relatively modest at present, this project’s unique attributes associated with its water park, marina, and other recreational pursuits will enable MICE event organisers to be targeted more effectively, particularly from corporate sources within Denmark as a whole and also northern Germany.
13.44 Individual corporate travellers. Despite the project location’s distance from the commercial hub of Als Island in Sønderborg, a small share of envisaged market mix will nevertheless
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derive from corporate sources associated with commercial activity at Danfoss’s headquarters, as well as other business activity in the Nordborg area and the wider Als Island.
13.45 ‘Other’ demand is also expected to represent a small share of the overall market mix and will include accommodation demand associated with marina users, weddings, functions and other celebratory events.
13.46 In addition, we anticipate non-resident demand for restaurants, bars and other hotel amenities (e.g. the cookery school, spa, etc.) to be generated by non-(hotel)-resident visitors associated with on-site holiday homes, campsite/glamping residents, marina berth users, and wider non-resident sources in the Als Island community. Water Park Resort Hotel - Programme Description 13.47 Demand for this project, whilst dominated for much of the year by the leisure sector is, as mentioned, nevertheless anticipated to extend to a wider market mix. As a result, the envisaged hotel will need to cater for markets with differing needs and expectations in terms of amenity provision, levels of service, room products and facilities.
13.48 Adults without children, older visitors on arts and crafts courses or cookery school events, corporate business visitors, and participants in meetings or incentive group events are more likely to prefer the calm, ‘chilled’, relaxed and ‘professional’ environs of a sophisticated hotel, albeit with proximity to other on-site recreational amenities.
13.49 Those requiring hotel accommodation for other leisure-orientated short-stays and longer holidays will have a higher propensity to travel as part of a group of friends or family (with young children and teenagers/young adults). Accommodation and amenity requirements for this market should include linked, inter-connected rooms and suites.
13.50 AECOM’s proposed Als Island Resort development scheme is based on the assumed creation of a four-star international branded water park resort hotel. Managed to a high-quality operating standard, the scale and assumed facility provision should be designed to quickly establish this project as a ‘destination’ resort within the Als Island and wider Danish market, in which the hotel and its associated amenities represent a product-offer positioned amongst the leading ranks of European resort development. Rooms and Suites 13.51 Our proposals include the creation of 200 letting units in total. We recommend that the hotel is developed with a number of larger family rooms in order to position the property towards the top of the current and anticipated future regional market of comparable and competitive resort hotel supply.
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13.52 Standard accommodation units of approximately 35sqm will position the room product within emerging room size trends. However, of the 200 total keys proposed, we recommend that around 30 percent are designed as larger, more flexible accommodation units. AECOM’s proposals include 40 spacious 45sqm family studios; 15 one-bedroom suites (80sqm); and five larger suites comprising two-bedroom guest accommodation of between 100sqm and 120sqm.
13.53 An emphasis on the provision of family-sized and suite accommodation works well at resort hotels and, as a relatively unique hotel attribute within the envisaged future supply of relevant Als Island competitive hotels, will represent a marketing and promotional advantage that is particularly useful in raising Rooms Department yields. Restaurants, Bars, and Entertainment 13.54 Food and beverage facilities at this project will need to take into consideration the anticipated utilisation levels from the various in-house market sources, together with non- resident related demand derived from other generators, such as on-site real estate (holiday home) residents. To a considerable extent, the water park resort hotel development (within the wider context of this project’s remote location from the restaurant and nightlife hotspots of wider Als Island will result in a relatively captive on-site resident market and, although food and beverage provision is anticipated at competitive outlets located beyond the confines of this project, we envisage that together with demand from the on-site resort population as a whole, income from food and beverage operations will be significant.
13.55 As part of the water park resort hotel scheme we therefore recommend the inclusion of a principal 200-cover all-day dining restaurant (with added seasonal outdoor seating), able to function both as an informal daytime restaurant but with the design and service capabilities to reflect a slightly more sophisticated night time ambiance. We also recommend the provision of a themed speciality restaurant of approximately 80 covers.
13.56 Beverage areas that include a main bar/lounge as well as a chameleon-like daytime bar/evening entertainment venue are also recommended.
13.57 Our projections of food and beverage income also include revenue from the sale of in-room mini-bar items to hotel residents. Conference / Meeting / Function / Private Dining Facilities 13.58 We anticipate that MICE demand will be attracted to the hotel due to the assumed water park and other facility provision, as well as envisaged service delivery merits of a branded hotel operator. As such the proposed Als Island Resort hotel is likely to appeal to a cross- section of domestic, local (Danfoss-related), regional and international corporate groups. It should also emerge, (albeit to a considerably smaller extent), as a favourable venue for non-
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residential activities, such as private functions, receptions, celebratory dinners and other events from demand sources in and around Nordborg and Sønderborg.
13.59 As a result, an important aspect of the hotel’s market appeal and promotional capabilities will be strengthened by the provision of a reasonably-scaled state-of-the-art meeting/function venue that can appeal to conference organisers and incentive group event planners.
13.60 A purpose-built, innovatively designed, sophisticated meetings and banqueting venue within the hotel will also serve a useful role, capable of providing both suitable function space for catered events, in addition to flexible accommodation for specialist activities connected with ‘special interest’ package activities (seminar rooms, demonstration space, studio areas, temporary craft workshops etc.).
13.61 Consequently, we recommend that a purpose-built conference and banqueting centre as part of the hotel development should incorporate a highly flexible range of multi-purpose meeting and function rooms, totalling approximately 700sqm. Amenity Spa 13.62 Spa provision at the Als Island Resort project will complement the anticipated wider product appeal of the resort in terms of its envisaged promotional objectives and broader operating philosophy as a leisure destination. As such there is a strong need to develop environmental attributes (in terms both of service and physical amenity provision) that for many sources of demand can tap directly into the need for recreational pampering and recuperation from the pressures of modern-life.
13.63 We recommend the creation of spa facilities of between 1,200sqm and 1,500sqm with a minimum of 16 treatment/therapy rooms. Included in this total we envisage up to five larger treatment rooms for couples. Dedicated spa refreshment facilities are also recommended.
13.64 In addition, we also recommend the provision of dedicated spa retail facilities (either a separate and distinct retail outlet or reception-orientated retail area) selling resort/specialist spa branded products and other spa-related goods.
13.65 The attractive verdant environs of the Als Island Resort project site, with its shady woodland areas lend themselves to the operation (in summer) of a spa-operated outdoor/open-air ‘retreat’ within the seclusion and tranquility of its green landscape.
13.66 Consequently we recommend the creation of a spa-operated, naturally landscaped open-air ‘sanctuary’, for use during the warmer (and drier) summer months, discretely situated (ideally) within a shaded area of one of the site’s woodland landscapes, and located with proximity to the main spa building. The outdoor sanctuary should include up to three yoga / T’ai Chi pavilions as well as a range of ‘open-air’ treatment rooms.
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Hotel Health, Fitness and Leisure Facilities 13.67 In addition to dedicated spa facilities, we also recommend the provision of hotel amenities incorporating a significant health and fitness area and including an indoor fully air- conditioned gym, jacuzzi, saunas, steam rooms and an indoor dance/yoga/classes studio.
13.68 We also recommend that as part of the overall leisure facility provision, the hotel project should also include at least two tennis courts. Jogging, walking and cycling trails should also be available to hotel residents within the wider resort development programme. Other Family-Friendly / Children’s Facilities 13.69 As our research indicates, the success factors that underpin resort hotel operations can vary from one property to another, although a particularly influential physical and operational trait includes the emergence of child/family-friendly facilities and service.
13.70 Complementary facilities that include a spa, adult-orientated dining facilities, other food and beverage options that offer dedicated ‘early’ family dining schedules, comprehensive baby and child-minding services, and also exemplary children’s activity programming will enable entire family groups (with children) to enjoy quality facilities geared towards ranging tastes, activity levels, and service requirements, alongside other market sectors that might be less predisposed (or even averse) to the presence of young people.
13.71 In light of these objectives, we recommend the incorporation of a range of children’s amenities, appropriate to different age ranges, including:
13.72 A crèche / ‘kindergarten’ for young children.
13.73 Hard and soft (including indoor and outdoor) programming Kids’ Club facilities, such as a dedicated ‘Adventure Zone’ playground/forest play camp and indoor clubhouse with age- range orientated play areas/rooms such as a toy room, creative zone, a multi-media games room for teens, and a sound-proofed music-making room/studio (equipped with drums, turntables, electric guitars, keyboards, basic recording equipment, etc).
13.74 Consideration should also be given to the provision of Kids’ Club dedicated food and beverage facilities (possibly during peak summer and school holiday periods when demand in Denmark from families with children is most pronounced), serving a range of healthy- option, but ‘young person-friendly’ fast-food-style snacks and beverages. An increasingly popular Kid’s Club dining concept includes supervised ‘hands-on’ food preparation by children themselves.
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Retail 13.75 We recommend the provision of retail facilities comprising up to three hotel shop units, of approximately 50sqm of retail space per unit, specialising in quality merchandise including clothing, beachwear, jewellery, toiletries, books, magazines and other giftware. Other 13.76 Other recommended resort amenities available to hotel residents, but not inherent parts of the water park resort hotel itself will include a marina-based water-sports activity centre specialising in recreational pursuits that include a dinghy sailing school, kite-surfing, wind- surfing, kayaking, etc. We recommend that the hotel includes a sophisticated library/media lounge geared towards an adult-only usage and incorporating intimate seating areas, internet access stations, a CD and DVD library (in addition to books, magazines, etc.). Parking 13.77 Hotel guests will be mainly car borne. We therefore recommend the provision of one parking space per hotel key, plus up to 40 additional overflow spaces for other ‘event’ attendees during periods of combined peak hotel demand and conference/function activity. Water Park Hotel Development Recommendations Summary 13.78 A summary programme of our recommended hotel components is set out in Figure 13.1 and Figure 13.2.
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FIGURE 13.1: WATER PARK HOTEL – PRELIMINARY DEVELOPMENT PROGRAMME
Hotel Programme Size/Capacity Number
Market Positioning Four-star international branded resort operation with family orientation and diverse amenity offer.
Room and Suite Mix Standard rooms (double / twin accommodation) 35sqm 140 Family Rooms (up to four person capacity) 45sqm 40 Suites (one-bedroom) 80sqm 15 Suites (two-bedroom) 100sqm -120sqm 5 Total Hotel Letting Units 200
Dining All-Day Dining 200 covers Speciality Restaurant 80 covers Outdoor (seasonal) Terrace (extension of All-Day Dining) 100 covers
Bars and Entertainment Main Bar/Lounge 80 covers 1 Chameleon Bar/Entertainment area 100 covers 1
Conference and Banqueting Flexible event/function room 200sqm 1 -sub-divisible into 2 smaller units 100sqm 2 Pre-Function Area 150sqm 1 Large Meeting Room 150sqm 1 Executive Boardrooms/Meeting Rooms 50sqm 2 Business Centre / Event Management Offices 40sqm 1 Cloakrooms 80sqm 2 External Terracing TBC Back of House TBC Total 700-750sqm (estimate)
Retail – Up to 3 outlets (50sqm of net retail space per outlet) 150qm 3
Source: AECOM
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FIGURE 13.2: WATER PARK HOTEL – PRELIMINARY DEVELOPMENT PROGRAMME CONTINUED
Hotel Amenity Programme Size/Capacity Number (Where Applicable) (Where Applicable) Amenity Spa 1,200sqm-1,500sqm (excluding outdoor areas) Treatment/therapy rooms, comprising: - Single occupancy 20sqm-25sqm 11 - Double occupancy 30sqm-35sqm 5 Total 16
Male and female changing rooms 2 Relaxation areas/chill-out zones 2 (minimum) Jacuzzis Steam Rooms Saunas Manicure and Pedicure Room Rassul / Mud Therapy Chamber Hammam Tepidarium Open air spa ‘sanctuary’, comprising: - Yoga / T’ai Chi / meditation pavilions; 3 - Open-air spa therapy/treatment ‘rooms’; 4-6 - Relaxation / chill-out spaces. 3 (minimum) Retail area 1 Juice Bar 1
Health Club 350 sqm Gym 1 Studio (dance / aerobics / pilates etc.) 1 Changing Rooms, showers, sauna and steam room 2
Outdoor Amenities Tennis Courts 2 Outdoor Leisure Pool (see water park recommendations) Indoor Leisure Pool (see water park recommendations) Children’s Play Pool (see water park recommendations)
Other Indoor Amenities Dedicated Cookery School facilities (maximum client capacity – 12) comprising: - Welcome area – incl. specialist cookery merchandise retail 20 sqm 1 - Changing rooms – Male & Female (lockers, toilets, showers) 35 sqm each 2 - Main teaching kitchen with individual work/prep areas 80 sqm 1 - Dining area 20 sqm 1 - Production Kitchen 40 sqm 1 - Preperation areas, storage and refrigeration TBC Total 300sqm (estimate)
Media Lounge/Guest Library (literature/DVDs/CDs etc.) 100 sqm
Parking Up to 100 fixed spaces
Source: AECOM
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Indoor Water Park Concept and Market Demand Sources 13.79 The indoor water park will be a core amenity component at the heart of the resort. It will be one of the principle focal points for the project and should be busy, dynamic and animated year round.
13.80 Demand will be drawn from a combination of on-site guests (i.e. those staying hotel, holiday home and tented accommodation), local residents and tourist staying overnight away from home within the area.
13.81 It is recommended that the development concept for the park includes a tropical environment that comprises are large leisure pool with a wave machine, a lazy river ride, an aqua blaster, a combination of flumes and large tipping buckets and water gun play areas. In addition there should be an outdoor component of the park that is connected to the indoor area through a swimmable air-lock tunnel / system. The pool should also include a hot-tub component and a shallow kiddies pool. Adjacent to the main pool area there should be a terraced space for loungers and tables. Ancillary uses will include changing areas, back of house spaces and poolside dining. Physical Planning Recommendations 13.82 The physical size of the water park component should reflect the projected demand requirement. In this instance we have conducted warranted sizing calculations based on an on-site accommodation stock of both 500 and 860 keys – depending on phasing and the project scaling ambitions of the client group.
13.83 With the exception of parking, it is neither economical nor necessary to plan an attraction to accommodate absolute peaks in attendance. A good balance is achieved if facilities are planned for the design day. The design day for the proposed indoor water park would most likely represent an average weekend day in the peak summer months.
13.84 The result of planning in this fashion is an attraction large enough to cope with very high numbers of visitors who come on peak attendance days during the season, while at the same time developing an attraction which is not so large it appears empty during quiet periods.
13.85 The attendance design day depends on the relevant propensities to attend by month and weekday as opposed to weekend. During the busiest periods, which typically coincide with the summer holiday period, visitor attendance is spread more evenly through the week than at other times of the year. During these peak times, each weekday accounts for 14 percent of the total weekly attendance, whilst weekend days account for only a fraction more at 15 percent. However, we anticipate that a larger proportion of visits will be made by residents
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living within one hour of the park during the rest of the year, since tourism will drop off in the region. Therefore, throughout the rest of the year, each weekday will account for 13 percent of total weekly attendance and weekend days account for 17.5 percent.
13.86 Entertainment content and attraction capacities are dependent on crowd levels occurring during the peak period of the design day. The peak-on-site crowd is determined by estimating the pattern of arrivals and departures during the operation period of the design day. The average length of stay at indoor water parks is around four hours and we therefore anticipate approximate 60 percent of the design day attendance to be in the park during the peak early afternoon period. Design Day Attendance Parameters 13.87 As outlined in previous paragraphs, the design day for the proposed indoor water park at Als Island Resort is based on the following assumptions:
Peak Month Attendance: July – 25 percent of annual attendance Weekly Attendance: 22.6 percent of July attendance. Design Day Attendance: weekend day during July – 15 percent of weekly attendance. Peak On-site Attendance: 60 percent of design day attendance 13.88 Allowing for attendance peaking within the day we estimate that during the busiest period of the day, 60 percent of the total day’s visitors would be on-site at any one time. However, typically the peak day attendance is 20 percent above the design day attendance and, as on any day, there will be a spread in the arrivals and departures in the peak day. Therefore we have assumed that the peak day peak on site attendance is 20 percent above the design day peak on site attendance.
13.89 Accessibility is critical to the success of any attraction and road access for cars and coaches is particularly important. Experience has shown that most visitors to medium and large attractions prefer to arrive by car. For the Als Island Resort site, we would expect that about 80 percent of day visitors to the park will arrive by car. We would expect a further 10 percent of day visitors to come by coach with the remaining 10 percent arriving by taxi or public transport. We have also allowed for an additional 10 percent of the spaces to accommodate staff parking. Base Case Development Scenario (500 keys of On-Site Accommodation) 13.90 The design day and peak on-site attendance based on an on-site accommodation stock comprising 500 keys (hotel accommodation and holiday homes) are shown in Figure 13.3. The peak-on-site attendance is estimated at around 1,700 for a 365 day operation in 2018.
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FIGURE 13.3: BASE CASE (500 KEY): PROJECTED DESIGN ATTENDANCE
2018 2023 2028 Annual Attendance 340,377 339,949 340,707 Peak Month Attendance 85,094 84,987 85,177 Weekly Attendance 19,215 19,191 19,233 Design Day Attendance 2,882 2,879 2,885 Peak On-Site Attendance 1,729 1,727 1,731 Source: AECOM 13.91 With a design day attendance of around 2,900 in 2023, a stable year, there would be a peak on site attendance of 1,700.
13.92 Figure 13.4 shows the estimated day visitor parking and land area requirements for the proposed indoor water park. As indicated, around 76 car parking spaces and one coach space would be required in 2023.
FIGURE 13.4: BASE CASE (500 KEY): PARKING & LAND AREA REQUIREMENTS 2018 2023 2028 Parking Requirements Peak On-Site Attendance (all day visitors) 1,729 1,727 1,731 Peak On-Site Attendance (excl. On-Site Guests) 178 178 181 Peak-Day On-Site Attendance (excl. On Site Guests) 213 213 217 People Arriving by Car 171 171 174 People Arriving by Coach 21 21 22 Car Spaces Required 68 68 69 Employee Parking Spaces 7 7 7 Car Parking Spaces Required 75 75 76 Coach Parking Spaces Required 1 1 1 Land Area Requirements (hectares) Peak On-Site Attendance 1,729 1,727 1,731 Visitor Area 0.5 0.5 0.5 Ancillary 0.1 0.1 0.1 Buffer 0.1 0.1 0.1 Car Parking 0.2 0.2 0.2 Coach/Bus Parking 0.0 0.0 0.0 Total Area (hectares) 1.0 1.0 1.0 Visitor Area 0.54 0.54 0.54 Non-Visitor Area 0.48 0.48 0.49
Source: AECOM
13.93 In terms of built area, the proposed indoor water park would require a visitor area in the order of 5,000sqm. Full Build-Out Scenario (860 keys) 13.94 Finally, the design day and peak on-site attendance based on the Full Build-Out scenario are shown in Figure 13.5. The peak-on-site attendance is estimated at around 2,800 for a 365 day operation in 2018 based on a 860-key resort.
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FIGURE 13.5: FULL BUILD OUT: PROJECTED DESIGN ATTENDANCE
2018 2023 2028 Annual Attendance 559,077 559,899 559,857 Peak Month Attendance 139,769 139,975 139,964 Weekly Attendance 31,561 31,607 31,605 Design Day Attendance 4,734 4,741 4,741 Peak On-Site Attendance 2,840 2,845 2,844 Source: AECOM 13.95 With a design day attendance of around 4,700 in 2023, a stable year, there would be a peak on site attendance of 2,800. However, typically the peak day attendance is 20 percent above the design day attendance and, as on any day, there will be a spread in the arrivals and departures in the peak day. Therefore we have assumed that the peak day peak on site attendance is 20 percent above the design day peak on site attendance, or 3,400 people in 2023.
13.96 Figure 13.6 shows the estimated day visitor parking and land area requirements for the proposed indoor water park. As indicated, around 1,200 car parking spaces and 10 coach spaces would be required in 2023.
FIGURE 13.6: FULL BUILD OUT: PARKING & LAND AREA REQUIREMENTS 2018 2023 2028 Parking Requirements Peak On-Site Attendance (all day visitors) 2,840 2,845 2,844 Peak On-Site Attendance (excl. On-Site Guests) 177 176 180 Peak-Day On-Site Attendance 212 212 215 People Arriving by Car 170 169 172 People Arriving by Coach 21 21 22 Car Spaces Required 68 68 69 Employee Parking Spaces 7 7 7 Car Parking Spaces Required 75 74 76 Coach Parking Spaces Required 1 1 1 Land Area Requirements (hectares) Peak On-Site Attendance 2,840 2,845 2,844 Visitor Area 0.9 0.9 0.9 Ancillary 0.2 0.2 0.2 Buffer 0.2 0.2 0.2 Car Parking 0.2 0.2 0.2 Coach/Bus Parking 0.0 0.0 0.0 Total Area (hectares) 1.5 1.5 1.5 Visitor Area 0.89 0.89 0.89 Non-Visitor Area 0.64 0.64 0.64
Source: AECOM
13.97 In terms of built area, the proposed indoor water park would require a visitor area in the order of 9,000sqm.
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Boutique Marina Waterfront Hotel Introduction 13.98 AECOM’s proposed development scheme for a second, smaller hotel operation at the Als Island Resort recognises the need at this location to create lodging concepts that are complementary to one another, each capable of attracting demand that is appropriate to its market and product positioning. Boutique Hotel Development Rationale 13.99 A proposed boutique ‘marina waterfront’ hotel is envisaged generally as a more adult- orientated operation, where the emphasis on family-friendly facilities and amenities is less pronounced. Its association with high quality marina facilities also represent a distinct product differentiation from the range of amenities recommended for the water park resort hotel.
13.100 As a result of these factors, the market mix between the two hotels is likely to differ, with a greater emphasis on less price-sensitive independent travellers. Although envisaged as a typically commercial high-end hotel operation, we consider the ability of the project to reflect an exclusive ‘yacht club’ atmosphere (as opposed to an actual membership orientated ‘club’) to represent an important attribute of the project’s potential market appeal, and a useful promotional marketing opportunity. Boutique Hotel Development Programme Implications For This Project 13.101 As a boutique hotel within a much wider leisure-orientated Als Island Resort community, the need for associated ‘in-house’ hotel amenities will be mitigated to a considerable extent by the provision of wider resort ‘on-site’ leisure activity and recreation opportunities that are also available to the boutique hotel residents.
13.102 Our recommendations for the proposed water park resort hotel detailed in the foregoing section include a high-end spa, multi-purpose flexible meeting space/life-learning centre facilites, cookery school, kids club and teen activity zones. The wider resort recommendations also include a number of food and beverage outlets of varying scale and operating style, as well as the indoor water park feature itself.
13.103 As a result, the opportunity to create a more upscale, sophisticated, intimate, and less heavily amenity orientated hotel product will enable the Als Island Resort to attract a wider client base. Whilst market profiling activity and the promotion strategies of the wider resort will be strengthened at a general level, so too will those of the Marina, in particular. Animation created by the hotel around the environs of the marina - its dining opportunities, assumed architectural/visual appeal, and hotel accommodation availability for an albeit small envisaged number of berth users will enhance the marina product attributes at this
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project to a level that exceeds both the aesthetic qualities and associated facility provision found at the majority of marina locations elsewhere along this part of the Baltic coast. Key Markets 13.104 As mentioned, the proposed boutique ‘marina waterfront’ hotel will appeal to less price- sensitive leisure market sectors. Its assumed more limited amenity offer will result in a less ‘family-friendly’ orientation and a stronger gravitational pull to adult visitors. In particular, we anticipate strong demand from older retired and semi-retired leisure travellers, younger professionals and (pre-family) younger couples.
13.105 Given the quality orientation of the hotel, its assumed picturesque location, and attractive architecture, then with appropriate restaurant/function space provision we anticipate that demand for overnight accommodation associated with functions and special events will be significant, particularly for weddings and other celebratory events. A modest share of leisure demand is also likely to be generated by water-borne marina visitors, particularly during the summer months.
13.106 The proximity of corporate giants such as Danfoss will also enable the hotel to attract a small amount of business demand from visiting executives requiring a more up-market and sophisticated hotel product.
13.107 Whilst the hotel will attract demand for longer ‘vacation’ stays, we anticipate that its particular appeal will be as a weekend and short-break destination for market sources throughout Denmark and northern Germany. However, the anticipated international recognition of the wider Als Island Resort will also enable the hotel to attract increasing levels of international demand from wider European sources. Boutique Marina Waterfront Hotel – Programme Description Guest Accommodation 13.108 We recommend the development of 40 main hotel letting units. We consider that all units should be developed as 40sqm to 45sqm luxury guest rooms, each with uninterrupted views of the Marina / Baltic Sea, spacious balconies and terraces, and with a high-end in-room amenity specification. Restaurants and Bars 13.109 Given the relatively modest scale of the proposed hotel (in terms of recommended keys), together with the assumed availability of other dining options throughout the Als Island Resort development, we recommend the provision of a single high quality restaurant operation of up to 130 to 150 indoor covers, with additional (seasonal) outside dining space overlooking the waterfront and marina.
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13.110 The restaurant is envisaged to be a very important part of the boutique hotel offer and demand from hotel guests is likely to be equalled on occasion by that from non residents. These include water park resort hotel guests, holiday home occupants, ‘glamping’ residents and other non ‘resort’ visitors from the wider Als Island community.
13.111 The assumed sophistication of the hotel and its appeal to identified target markets need to be reflected in the quality of the food and beverage offer. Like the water park resort hotel, it will be necessary at this project to deliver a dining experience that meets the market expectations of residents and targets non-resident users.
13.112 This should include the chameleon-like flexibility of a restaurant with sub-divisable internal spaces that can appeal with equal strength as a relaxed and animated weekend ‘brunch’ venue or a sophisticated night-time dining facility. Design schemes in all cases should seek to maximise waterfront, marina and ocean views from the principal dining areas.
13.113 With only one recommended restaurant, it will be important to ensure the creation of exciting and innovative concepts that incorporate cutting-edge approaches to food and service delivery such as fusion cuisine, a ‘signature’ restaurant operation and other trend- setting options.
13.114 Our recommendations also include the provision of a relaxed and sophisticated hotel ‘piano bar’ and the guest room provision of hotel mini-bars. Function / Event / Private Dining Facilities 13.115 Potential demand for weddings and other functions at this hotel is likely to be considerable, given its beautiful coastal location, attractive marina views, and other assumed aesthetic attributes. As a wedding venue the appeal of the hotel as a ‘one-stop-shop’, able to provide overnight guest accommodation, wedding ceremony space, and reception facilities all under one roof, will be considerable. Similarly, other celebratory events will be attracted to the hotel for comparable reasons.
13.116 Consequently, we recommend the creation of an attractive multi-purpose function and banqueting space capable of accommodating up to 150 diners (assuming round tables for 10 persons each).
13.117 The space should be created with flexibility and multi-divisibility so that smaller events can be catered for, and so that smaller spaces can also be used for alternative activity such as corporate meetings and small commercial events. Retail 13.118 Given the scale of the hotel, the ability of the resident population to support significant retail sales will be limited. We therefore recommend the sale of a modest supply of ‘guest essentials’ via hotel reception, and the provision in public areas of the hotel of attractive
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display cases offering exclusive merchandise such as, jewellery, fragrances, watches, leather goods, and other accessories).
Other 13.119 As a high-end boutique hotel it will be appropriate to offer a small sophisticated library and media lounge offering books, magazines, CD and DVD loans, internet stations, in an intimate, interior design-led environment. Parking 13.120 We anticipate that demand for this hotel will be largely car borne, and that at peak times (weekends and summer season periods) the hotel will trade at very high levels of occupancy. Given also the adult orientation of demand we recommend the creation of at least one parking space per hotel room.
13.121 Additional overflow parking will be required to accommodate demand associated with non- resident restaurant visitation as well as wedding/event demand. Consequently, our parking recommendation incorporates:
13.122 40 hotel guest parking spaces;
13.123 Up to 60 additional hard-standing spaces.
13.124 Consideration should also be given to the provision of additional temporary overflow and/or alternative resort parking at those times when restaurant, function room and hotel demand are all maximised.
13.125 A summary programme of our recommended hotel components is set out in Figure 13.7.
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FIGURE 13.7: BOUTIQUE MARINA WATERFRONT HOTEL – PRELIMINARY DEVELOPMENT PROGRAMME
Hotel Programme Size/Capacity Number (Where Applicable) (Where Applicable) Market Positioning Exclusive four-star boutique operation with adult orientation and limited amenity offer. Room and Suite Mix Standard rooms (double / twin accommodation) 40sqm – 45sqm 40
Dining Speciality Restaurant 150 covers Outside Summer Terrace (extension of main restaurant) Up to 100 covers
Bars and Entertainment Main ‘Piano’ Bar/Lounge 60 covers
Function/Wedding/Banquet Sace Flexible event/function room 150 covers - sub-divisible into 4 smaller units 25 covers Cloakrooms 80sqm External Terracing TBC Back of House TBC
Other Media/Internet Lounge and Guest Library 80sqm (literature/DVDs/CDs etc.)
Up to 100 fixed spaces Parking Plus additional overflow provision
Source: AECOM Marina Programme Concept and Market Demand Sources 13.126 Based on the profile of existing marina supply around Als Island and trends in demand for cruising in the wider area, we believe that there is an opportunity to develop a modestly sized marina component as part of the resort – assuming that this is technically possible from a marine engineering perspective and at reasonable cost. The marina would provide a focus for water sports activity at the resort and an animated environment as a secondary hub within the project master plan.
13.127 It is envisaged that demand for berths would comprise a mix of both annual berth rentals and transit demand. The annual berth demand would primarily be borne from those owning holiday homes on site, whilst transit berth demand would be dominated by Danish and German-owned boats cruising around the region during the summer months. We estimate that annual rental contracts will represent around 20 percent to 30 percent of demand
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(once operations have stabilised and all the holiday homes are sold) with the remainder drawn from transit berth demand. Physical Planning Recommendations 13.128 A recommended berth mix of the proposed marina at Als Island Resort is provided in Figure 13.8. Since the target market of the marina is high-end, we have included a small proportion of berth lengths over 12 and 15 metres primarily because these vessels provide an attractive back drop that would enhance the marina experience of on-site guests staying at Als Island Resort. In addition, a similar berth profile is found not too far away at Dyvig Bro marina on the east coast of Als Island where the occupancy rate reaches up to 100 percent in the high season.
FIGURE 13.8: RECOMMENDED MARINA BERTH MIX Berth Length Number Proportion of Berths
0 to 9.99 metres 35 35% 10 to 11.99 metres 50 50% 12 to 15 metres 10 10% Over 15 metres 5 5% Total 100 100%
Source: AECOM
13.129 In addition to the ‘wet berths’ provided in the marina, we recommend that the development programme for the marina operation should include a modest ‘dry-stack’ facility for 50 smaller craft (up to 8m in length). These spaced will most likely accommodate demand from holiday home owners that choose to store their boats here during the low season. This multi-storey storage system can provide additional revenue in the form of rent, frees up capacity in the water and is marketable to boat owners as it helps to keep maintenance costs for the boats down.
13.130 Essential quayside services would include: water, electricity, sewage pump out, internet access, telephone and cable television, and should be provided with minimal visual impact. Although a fuel quay within the marina is an added convenience, it is often omitted from amenity marinas particularly if there are other fuel provisions in the marina’s proximity. In the case of this facility, we would suggest that the fuel quay at Dyvig Bådelaug would present an adequate alternative.
13.131 Security and 24-hour access are of paramount importance for a marina. Whilst boats tend to have their own security systems, it is considered that marina operators have responsibility to provide a safe and secure quayside environment. 24-hour access from both land and the sea is required for contract and transit berths alike.
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13.132 In terms of maintenance and hard-standing facilities, the existing marinas on Als Island, namely Dyvig Bro and Dyvig Bådelaug, use those based in Nordborg and Holm (600 metres from Dyvig Bro) respectively. Therefore we recommend that the opportunity to use the same facility and amenity arrangements are explored for the proposed Als Island Resort marina. Alternatively, we understand that many vessels prefer to use maintenance facilities based in Flensburg or Augustenborg. Parking provision associated with the marina operation need only be limited since the core business of the proposed marina at Als Island Resort is likely to be transit berths.
13.133 The built area component associated within the marina operation will total approximately 250sqm allowing for an administrative office, reception area, staff welfare facilities, a workshop and changing / shower rooms. It is envisaged that this space allocation could be incorporated within the proposed boutique marina hotel or alongside other commercial units along the waterfront around the marina. Holiday Homes Concept and Demand Sources 13.134 Integrated resort developments incorporate holiday homes into their development programme primarily to provide vivacity to the project, increase utilisation rates at the on- site amenities, and drive up project revenues.
13.135 There are currently no examples of integrated resort developments on Als Island offering the range of amenities and services proposed at Als Island Resort. Holiday homes on the island have been traditionally low density, stand alone villas of varying quality with a lack of facilities and services on offer. The development of new, good quality holiday homes at Als Island Resort would offer clear product differentiation, offering something entirely unique and significantly better to the local area.
13.136 Clustered product is unusual on Als Island, but the incorporation of a modest number of these units at Als Island Resort will assist in establishing a vibrant core around the marina component.
13.137 The preliminary concept plans for Als Island Resort cover a 200-hectare site, with development being delivered over three phases. We recommend delivering 400 holiday home units over the course of these three phases: 200 units in Phase 1; 100 units in Phase 2; and 100 units in Phase 3.
Geographic Source Markets 13.138 Holiday home units at Als Island Resort will be sold to the domestic market in light of strict restrictions on foreign ownership. The main target market for holiday home rentals will be German tourists who currently account for four-fifths of visitors to Sønderborg Municipality.
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We understand that Germans favour space and luxury, so we have accommodated for this in our development programme.
Demographic Profile 13.139 Our research indicates that the buyer profile tends to be those aged 40 years and above who are seeking a second home for their families or a second income stream with the intention to rent their holiday home out. Although the younger segment of the market is typically more constrained by budget, we do see the scope to target the more aspirational end of this segment in light of the clustered product on offer at the marina waterfront. These units are smaller in size and have lower price points.
13.140 Traditionally, holiday homes located on Als Island receive a high proportion of their rental demand from families, particularly during the summer school holidays. Although we expect the majority of demand for holiday home rentals at Als Island Resort to be derived from this group, we predict an increased share from couples in light of the range of amenities on offer at the resort.
Buyer Motivation 13.141 Discussions with real estate experts in the local area indicated that the motivation to buy used to be split equally between lifestyle buyers and those buying as an investment. This profile changed following the global economic recession with a shift away from investment motives because of a lack of confidence in the market and falling property prices. We anticipate that the market will recover, although this may take some time, and since the holiday homes on offer present something unique to the market, investors will be more likely to invest in units at Als Island Resort. We therefore expect a return to the 50:50 split between lifestyle and investment as a motive to purchase holiday homes on this particular site. Programme Description and Design Requirements 13.142 We set out in Figure 13.9 the recommended holiday home development programme for the 400 units at Als Island Resort (i.e. at build-out).
13.143 Average sizes relate to internal space, which is net of patios, balconies, terraces and communal space.
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FIGURE 13.9: PROGRAMME RECOMMENDATION FOR HOLIDAY HOMES
Type No. Units Net Floor Combined Plot Size Combined Unit Mix Area NFA Plot Size (sqm) (%)
Apartments Two-Bedroom 10 50 500 50% Three-Bedroom 10 65 650 50%
Total 20 1,150 5%
Townhouses Three-Bedroom 24 80 1,920 400 9,600 60% Four-Bedroom 16 100 1,600 600 9,600 40%
Total 40 3,520 19,200 10%
Villas Three-Bedroom 153 120 18,360 800 122,400 45% Four-Bedroom 119 150 17,850 1,250 148,750 35% Five-Bedroom 53 180 9,180 1,500 76,500 15% Five-Bedroom Trophy 17 250 4,250 2,000 34,000 5%
Total 340 49,640 381,650 85%
PROJECT TOTAL 400 54,310 400,850 100%
Source: AECOM
Number of Units 13.144 Absorption rates have struggled to pick up following the economic recession; however, Als Island Resort offers a unique opportunity for buyers to purchase a unit within a resort setting. We also understand that absorption rates are much lower for prime properties, taking up to one quarter of the time to sell in comparison to an average holiday home.
13.145 Despite this, we wish to remain conservative in our delivery of holiday home units into the marketplace. As such we recommend delivering 400 holiday home units over three phases: 200 units in the first phase; 100 units in the second phase; and 100 units in the third phase. Unit Types Single Family Homes / Villas 13.146 We anticipate that the majority of demand will be centred on three or four bedroom standalone villas (single family homes), so we have accounted for this in our development programme. In addition, it is important to have some larger and higher-quality units in order to have the flexibility to meet different types of demand. As a result of this and the fact that the large development area at Als Island Resort presents an opportunity to create a divergent product offer, we have included a small proportion of five bedroom units in our development programme.
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13.147 The villa programme of 340 holiday homes ranges from three-bedroom units to five- bedroom trophy villas and includes four distinct products. The smallest standalone units will be three-bedroom villas at 120sqm, which will be complemented by four-bedroom and five- bedroom villas of 150sqm and 180sqm respectively. We foresee the inclusion of just 17 five- bedroom trophy properties of 250sqm, which will achieve the highest price point and command the largest plot sizes.
Clustered Product 13.148 Clustered product is unusual on Als Island, but the incorporation of a modest number of these units at Als Island Resort will assist in establishing a vibrant core around the marina component.
13.149 We have included 20 apartments and 40 townhouses within our development programme. The two-bedroom apartments are 50sqm and the three-bedroom apartments are 65sqm. The townhouses have either three or four bedrooms and are 80sqm and 100sqm respectively.
Unit Sizes and Land Plots 13.150 We have recommended slightly larger units than what currently exists in the local market since we will be targeting the middle-upper end of the market with a specific focus on being able to rent out homes to Germans, who have a preference for larger, more luxurious standalone units.
13.151 Our recommended plot sizes fall in line with those found in the local market, with a plot density of between 12 and 20 percent. Plot sizes will range between 400sqm and 2,000sqm depending on the unit size and the findings of the master planning exercise that will have to be taken further into the development planning process. The exception to this is our clustered apartments, which do not offer external space since they are located in the marina / waterfront core of the resort. Parking 13.152 In Figure 13.10 we outline the number of parking spaces per unit alongside the total number of spaces required across all holiday home units at Als Island Resort. The number of spaces required increases as the net floor area of each unit type increases.
13.153 We anticipate an allocation in the order of 816 parking spaces to be necessary for the holiday home component of Als Island Resort.
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FIGURE 13.10: PARKING REQUIREMENT FOR HOLIDAY HOMES
Type Spaces per Unit Total Number of Spaces
Apartments Two-Bedroom 1.0 10 Three-Bedroom 1.5 15
Total 25
Townhouses Three-Bedroom 1.5 36 Four-Bedroom 2.0 32
Total 68
Villas Three-Bedroom 2.0 306 Four-Bedroom 2.0 238 Five-Bedroom 2.5 128 Five-Bedroom Trophy 3.0 51
Total 723
PROJECT TOTAL 816
Source: AECOM
Design 13.154 The overall design needs to be high quality and contemporary to appeal to a higher-end clientele. Balance will be required to ensure architecture is cutting-edge, but still retains a sense of place in the natural surroundings of the site. A modern style blended with traditional materials with work well to fit the homes into the natural landscape whilst at the same time clearly differentiating the units from current product in the local market.
13.155 The design of the holiday home units should be adaptable to the changing seasons because the product will attract both secondary and investor buyers who will hope to rent their units out as much as possible throughout the year. It is important that these holiday homes are consistent with the style and architecture of the hotel and other amenities.
13.156 We display a number of suggested architectural design ideas in Figure 13.11.
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FIGURE 13.11: ARCHITECTURAL DESIGN IDEAS
Smaller Units Smaller Units
Interior Design Interior Design
Larger Units Larger Units
Source: Google Images
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Internal Fit-Out 13.157 Waterfront views, both complete and partial, will need to be maximised and shall command price premiums. Balconies should be added to every unit, with ample terraces offered for all homes. Efforts to integrate the indoors and outdoors through glass sliding doors and floor- to-ceiling windows and skylights should be introduced. Within the development mix, and where the location is appropriate, consideration should be given to incorporating a number of ‘upside-down’ properties where the living space is on the upper floors, benefitting from the available view and the sleeping accommodation is on the ground floor.
13.158 High specification kitchens and bathrooms, covered and secure parking, security, central heating and air conditioning are prerequisites in today’s market. Homes should also offer a high level of in-home technological connectivity, for example wifi, digital television and adequate telephone reception. A hot tub should be added to the more luxurious, larger units. Optional interior design and furniture packages should be offered for those who do not have the time or inclination to furnish these properties themselves. Key Amenities and Services 13.159 Those staying in holiday homes on Als Island will have access to the range of services and amenities on offer across the wider resort, therefore we do not recommend the provision of additional on-site amenities.
13.160 The option to provide housekeeping, transfers, and laundry services should be facilitated. In addition, units should benefit from 24 hour roving security, 24 hour concierge, 24 hour property management response service and charging privileges at the wider resort. Rental Pool Option 13.161 We anticipate significant demand for short-term rentals during peak holiday periods, particularly from the German market. Therefore, there will be a requirement for the coordinated management of holiday home lettings, with service charges for this standing at approximately 20 to 25 percent of rental income. This programme should be optional for holiday home owners. Key Performance Indicators Pricing 13.162 The pricing strategy for the residences at the site will vary depending on the unit size, type and location. Those units benefitting from sea views will command an additional premium.
13.163 The pricing strategy outlined in Figure 13.12 reflects an appropriate balance between pricing and unit absorption. It is important for a new resort to create momentum and excitement, which will allow for future price up lifts; as such we suggest somewhat conservative prices at
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the outset of the project. Therefore, we propose an approach whereby values rise in subsequent years, assuming the take-up of units is sufficient.
13.164 If the pricing strategy is too aggressive, the project will suffer from low absorption rates in an already difficult market. These prices are ambitious given the local market context, but they recognise the unique appeal and quality of the resort envisaged.
FIGURE 13.12: HOLIDAY HOMES: PRICING STRATEGY
Type No. Units Average Unit Price Average Gross Sales Price/Sqm Revenue (DKK) (DKK/Sqm) (DKK)
Apartments Two-Bedroom 10 950,000 19,000 9,500,000 Three-Bedroom 10 1,100,000 16,923 11,000,000
Total 20 20,500,000
Townhouses Three-Bedroom 24 1,400,000 17,500 33,600,000 Four-Bedroom 16 1,600,000 16,000 25,600,000
Total 40 59,200,000
Villas Three-Bedroom 153 1,900,000 15,833 290,700,000 Four-Bedroom 119 2,300,000 15,333 273,700,000 Five-Bedroom 51 2,700,000 15,000 137,700,000 Five-Bedroom Trophy 17 3,500,000 14,000 59,500,000
Total 340 761,600,000
PROJECT TOTAL 400 841,100,000
Source: AECOM
13.165 Recommended launch prices range from DKK 950,000 for a two-bedroom apartment to DKK 3,500,000 for a five-bedroom trophy villa. Prices outlined in this report are averages, and subject to an individual unit’s location and/or views, we would expect ranges to be around +/- 10 percent.
13.166 Our recommended pricing for these units is slightly above the wider local market, but in line with comparable resort developments in Denmark. This is largely because we expect this product to be of a higher standard and greater exclusivity, boosted by a range of amenities on offer within the wider resort. At the same time, we are conscious of dampening absorption rates by setting prices too high. Sales Absorption 13.167 With market conditions currently very challenging, and with an uncertain outlook, we present relatively conservative projections of sales absorption at Als Island Resort. We feel
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this is appropriate in the circumstances, although we have also considered that the quality proposed for the unit inventory is above and beyond what is currently available in the market, which will encourage investor interest.
13.168 There is a strong argument for a phased release of units into the market because the product on offer differs substantially from those currently being sold on the local market. As the project’s reputation grows and the resort becomes more established, the opportunity to strengthen prices will increase. We would recommend withholding some of the most appealing products during the first few years of operations in order to allow the project’s reputation to develop.
13.169 We project annual sales of between 50 and 100 sales per annum assuming that it will be at least two years before this product hits the market and that the development as a whole is effective and professionals promoted. Achieving this level of sales will require substantial and sustained marketing to promote project awareness, such as on-site sales promotion and the involvement of real estate agents in key source markets across the country. Sales and Marketing Approach 13.170 The development of holiday homes at Als Island Resort will require an extensive and well- targeted approach to sales and marketing. Strategies typically used for the promotion of residential sales at resort developments internationally include:
Launch event Local real estate agents Show homes Specific ‘Als Island Resort’ concept-driven marketing Targeted private invitations Journalist tours Sponsorship of events held in the local area Advertising at ports/marinas, airports and train stations Use of social media 13.171 The most important factor to consider is correct pricing levels for the units on sale. Second home buyers tend to be particularly money-savvy and in today’s market scrutinize the perceived value of their purchase to a greater degree than ever before. It is important that the product being delivered in consistent across unit types and delivers the expected levels of service, including pre-sales and after-sales care.
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Camping Sites 13.172 Camping is an established part of the tourism industry throughout much of northern Europe. Denmark is no exception in terms of its popularity amongst the camping fraternity, as the many campsites throughout the country attest.
13.173 In general, the supply of campsite facilities on Als Island is typical of the genre, relatively simple in its composition, offering an unsophisticated but reliable product that remains popular with users. Despite emerging trends in camping participation and provision, local operators have yet to embrace more innovative approaches to this age-old tourist activity.
13.174 Foremost amongst them, both in media exposure terms and growing participation rates, is ‘glamping’, a recently introduced term to define a new form of ‘glamorous camping’, for those travellers that have a desire to get back to nature, sleeping in more remote ‘outdoor’ environments ‘under the stars’ (or at least under canvas!).
13.175 For the less hardy leisure traveller, ‘glamping’ retains many of the creature comforts more commonly associated with a boutique hotel in terms of guest amenities such as luxury beds/linens, plumbed sanitation (toilets and bathrooms) and personalised food and beverage options.
13.176 Consequently, at the Als Island Resort project, opportunities exist to incorporate a more diverse range of visitor camping experiences. Development Programme Rationale 13.177 In keeping with the high-end, innovative aspirations of this project and its envisaged amenities and lodging components, we recommend a two-phase approach to campsite development.
13.178 Campsite operations are highly seasonal operations that during the summer months will be capable of substantially increasing the Als Island Resort on-site population and related demand for key components such as the water park. They will also help to boost demand for other resort amenity provision and alternative soft programming activities.
13.179 First phase camping development recommendations at this project are for the creation of a state-of-the-art ‘glamping’ site, that would comprise a total of 20 pitches (pre-erected tents with the capacity to accommodation up to 6 or 8 guests. As a second phase, the addition of a traditional campsite will enable a more gradual introduction and integration of disparate resort users that include high-end, high spending boutique marina waterfront hotel visitors, middle income ‘glamping’ and water park resort hotel residents, holiday home occupants and, in some instances, more price-sensitive traditional camping enthusiasts. Including the higher-end product offer (Glamping) at the outset will help to ensure that the resort is well- positioned from the outset – it is easier to go downmarket and upmarket over time.
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13.180 In addition, later phasing of traditional campsite facilities will allow other on-site components to ‘bed-in’ and establish stable trading levels more effectively. It will also enable local operators outside the resort to boost the profile and marketability of their own enterprises on the strength of the added appeal afforded by the creation of the water park and other resort amenities.
13.181 Together with the existing Universe park, the improved year-round ‘destination’ status of Als Island is envisaged to dramatically (and positively) influence the trading levels of other hospitality and related service providers in the area, as well as boosting levels of non resident demand for this project. Key Campsite Markets 13.182 Market demand for the camping component of the resort will be entirely leisure-oriented and will most likely comprise the following:
Families with young children and teenagers. This sub-sector will represent the biggest market, given the anticipated ‘pulling power’ of the water park and our recommended enhanced resort amenity provision for older teenage children. Typically short-break orientated. Older couples – traditional campers exhibiting longer than average lengths of stay. Young couples, including groups of friends attracted by the water park, coastal water sports (kite-surfing, wind-surfing, etc.), and other on-site amenities. Typically short- break orientated. Older adult groups. Demand associated with cookery school and other life-long learning centre programmes will be orientated mainly to hotel accommodation provision. However, we anticipate that in the longer-term a modest share of more price-sensitive demand will choose to use more affordable resort campsite facilities. We also envisage that, as is the case already at a number of campsites on the Island, demand from groups of anglers will also boost campsite demand, subject to appropriate management of lake fishing stocks and/or sea angling areas. 13.183 It is envisaged that demand for the more luxurious ‘glamping’ product would be drawn from a similar demographic cross-section of markets as for the traditional camping option, though from those from within the higher socio-economic groups, prepared to spend a little more on their holiday accommodation. Campsite - Programme Description 13.184 Demand for campsite facilities, whilst uppermost during the peak summer months around July, will nevertheless be spread over a longer shoulder period than is the current norm on the Island, due to the availability of year-round, all-weather attractions such as the indoor water park.
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13.185 AECOM’s proposed Als Island Resort development scheme is based on the assumed incorporation of a five-star glamping offer and a four-star international standard campsite. Managed to a high-quality operating standard, the scale and assumed facility provision should be designed to quickly establish this later phase of the resort development as the leading camping ‘destination’ within the Als Island market, in which the campsite and its associated resort amenities represent a product-offer unlike anything currently available locally. Camping Units/ Pitches 13.186 Our proposals include the creation of 20 glamping site (with pre-erected tents) and 200 standard pitches each provided with metered electricity connections. As mentioned above, it is envisaged that the luxury tents for glamping would accommodation from 6 to 8 people and comprise a canvas tent erected over a raised wooden base. The fit out for these tents would include beds, bunk beds and box beds, a flushable toilet, storage, oil lamps (no electricity) kitchen area with plumbed sink, a dining table and chairs and a log burning stove for cooking and heating.
13.187 An emphasis on the provision of complementary communal facilities will also be important in establishing the campsite operation at the upper end of the four-star market. Restaurant & Bar 13.188 Camping is by its very nature a self-catering orientated activity, but emerging trends indicate increasingly that at the upper end of the campsite market additional amenities and services are becoming more popular. Whilst the scale and mix of available food and drink venues throughout the wider resort will be considerable, we believe an opportunity at this project exists to develop a dedicated campsite bistro and bar, offering simple, wholesome, family- friendly menus and a convivial, relaxed daytime and early evening bar (located with appropriate (disturbance-avoiding) proximity to the camping areas) where visitors can socialise with like minded leisure travellers. Other Family-Friendly / Children’s Facilities 13.189 Universal amongst almost all researched campsite operators is the provision of children’s play facilities. A child/family-friendly amenity at this location will be essential, even though the wider Als Island Resort will have an extensive range of available attractions and activity options to suit all ages. We recommend the incorporation of children’s campsite amenities that include: a crèche / ‘kindergarten’ for young children; hard and soft programming Kids’ Club facilities, such as a dedicated indoor/outdoor ‘Play Zone’ and indoor clubhouse with age-range orientated play areas; outdoor family swimming pool, incorporating a child- friendly paddling pool area.
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Reception and Retail 13.190 We recommend the provision of a visitor reception area and retail facilities comprising zoned retail spaces that offer a general grocery store, a specialist produce delicatessen, and a general gift shop/newsagent. Retail space should be developed of between 150sqm and 200sqm, incorporating greengrocery, fishmongery, butchery, and other general goods, a selection of gourmet local organic produce, a cooked meats/cheeses/salads counter, and a range of other merchandise including clothing, beachwear, beach toys/games, toiletries, books, magazines, newspapers and other giftware. This shop will also provide for the day to day grocery requirements of those staying in holiday homes on the site. Other 13.191 Other recommended campsite amenities include a centralised guest utilities building housing: visitor self-service laundry facilities; communal kitchen (for the traditional campsite users) with individual cooking stations; bathroom facilities with individual showers and toilets. Parking 13.192 We propose that there should be a centralised parking area for the glamping pitches (20) in order to avoid the presence of cars negatively impacting the visitor experience. The spaces allocated for those glamping should however be reasonably convenient, but tucked out of site of the pitches themselves.
13.193 For the traditional campsite pitches (200) it is considered more acceptable to incorporate individual vehicle parking provision within the pitch/area allocation, minimising the need for additional spaces. However, we recommend that Campsite Reception parking for between five and ten vehicles (with trailers) is incorporated into the development to facilitate smooth access and egress to the campsite (and temporary visitor holding areas) during busy arrival and departure periods and ‘changeover’ days. Traditional Campsite Development Recommendations Summary 13.194 A summary programme of our recommended glamping and traditional campsite components is set out in Figure 13.13 and Figure 13.14.
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FIGURE 13.13: CAMPSITE – PRELIMINARY DEVELOPMENT PROGRAMME
Campsite Units Pitches Programme Size/Capacity Number (Where Applicable) (Where Applicable) Market Positioning Five-Star Glamping product and Four-star high-quality international standard campsite operation with family orientation and strong guest services/amenity offer.
Camping Glamping Units/Pitches 20 Standard Units/Pitches 200
Source: AECOM
FIGURE 13.14: CAMPSITE – PRELIMINARY DEVELOPMENT PROGRAMME: CONTINUED
Campsite Amenity Programme Size/Capacity Number (Where Applicable) (Where Applicable) Outdoor Amenities Children’s crèche / ‘kindergarten’ 1 Kids’ Club facilities - indoor/outdoor ‘Play Zone’ 1 Swimming pool & child-friendly paddling pool 1
Dining Bistro & Bar 50-60 covers
Reception and Retail Reception Office (check-in/out plus Tourist Information) Retail Outlet 150sqm-200sqm 1
Other Self-service laundry Kitchen with individual food preperation/cooking areas Up to 10 stations Male/Female bathroom facilities (showers, toilets) 2
Parking Reception Parking Spaces Vehicle plus trailer Up to 10
Source: AECOM
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Commercial Space Rationale and Key Markets 13.195 The development programme recommendation for the site includes two principle hubs or resort centres – one located around the water park hotel and the other located around the marina. It will be important for the success of the project that these are both attractive settings that have a sense of place and some destination appeal or draw. They will provide an important focus and hub for the on-site community both during the summer, but more importantly, during quieter times of the year when the on-site population will, inevitably, drop. They should also act as venues for performances, festivals and events both during the summer and into the winter.
13.196 We proposed that a central piazza be created around the water park hotel that comprises such elements as dancing fountains, a sunken performance area and a modest mix of retail (convenience and speciality/tourist retail), food & beverage, entertainment and leisure in addition to the units included within the hotel itself. In addition this piazza area might include non-commercial components such as a village-hall and tourist information centre.
13.197 At the waterfront, the quayside infrastructure, in addition to the proposed boutique hotel, marina administration offer and clustered residential units, could include additional food & beverage and retail to help build the destination as a attractive place to visit and relax. Programme Description 13.198 In determining the size and profile of this component there is a need to balance the requirement to create a critical mass of commercial activity whilst at the same time remaining firmly grounded in the reality of seasonal demand fluctuations. It will be important to ensure that the units included within central core and the waterfront are busy and that none stands empty due to a lack of demand from on-site visitors.
13.199 A recommended development programme for the commercial components is set out in Figure 13.15. The profile and scale of the commercial components has been determined based on the key/unit count proposed for development, and the requirement to create a critical mass of dynamic commercial activity at the resort.
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FIGURE 13.15: COMMERCIAL UNITS PRELIMINARY DEVELOPMENT PROGRAMME
Component Type Indicative Tenants
Central Resort Hub Retail @ 400sqm Artisan produce, bakery, gourmet food, gifts.
Food & Beverage @ 1,000sqm Family restaurant, bistro, coffee shop, cafe
Entertainment & Leisure @ 800sqm Chameleon bar, night-club, soft play centre
Non Commercial @ 200sqm Tourist information, guest reception, crèche.
Marina Waterfront Retail @ 200sqm Chandlery, mini-market
Food & Beverage @ 400sqm Bistro, coffee shop, cafe
Source: AECOM
Other Components 13.200 In addition to the core components of the development programme recommendation described over the previous pages, we would suggest that there are a number of other amenities that should be included on the site. These are listed below:
Trails: We anticipate that the peace and tranquillity of the site setting and the quality of the natural environment will be two of the strongest aspects of the resort offer. In order to make the best use of these two features of the development we recommend that the master plan for the site should include an extensive infrastructure of tracks and trails for walkers, joggers and cyclists. This network should include trail loops of a variety of lengths, so that there is something to suit all abilities and ages.
High-Ropes Course: As part of the amenity product offer for the resort, we recommend the inclusion of a High-Ropes Course (and zip wire) in a location close to the main resort hotel. Given that the trees within the wooded areas on the site are not mature we recommend that the high-ropes component should be based on a built structure, which will have a number of activity stations. In terms of its positioning, it will be important to allow for spectator areas around the base of the structure for those not taking part to watch and enjoy the entertainment.
Children’s Adventure Play Park: This would comprise an area of around 1,000sqm and include rope-ways, climbing frames, swings and ropes, slides, and aquatic-based elements – there would be no mechanical elements in the park and only natural
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elements would be used in its construction. Such a component would be highly marketable to the family market (with younger children).
Water Sports Centre: We propose that a watersports centre be included within the amenity offer at the resort. This should be located close to the marina and would comprise a built area of around 250sqm comprising an area for administration, showers/changing, storage and a small workshop.
Leisure Club: A range of leisure facilities will be included as part of the hotel operation (i.e. spa, tennis courts, etc.), but in addition to these we recommend the inclusion of an outdoor all-weather sports pitch for basket-ball, volley ball, etc. as well as four additional tennis courts (at build out) and two football pitches. In addition we propose the development of a multi-purpose sports hall and gymnasium (3,000sqm) that can be used for a range of racket and ball sports for all on-site guests and could also incorporate a fitness centre and aerobics studio.
Amphitheatre: We recommend that the development programme for the resort should include an open-air amphitheatre for outdoor concerts and events. We would suggest that the inclusion of an amphitheatre with the capacity to accommodate around 500 spectators would provide a potentially attractive resource for the resort. The performance programme should be designed to appeal to a mix of both overnight guests and on-site residents. The amphitheatre should be positioned, and orientated, on the site in such a way as to maximise views to the rear of the stage.
Landscaping: It will be important to set the proposed development components within an attractive natural setting. Not only with the quality of the environment be a key marketing message for the resort but landscaping has the benefit of improving with age (as it matures), whilst built components begin to show wear and tear. Within the landscape proposals for the resort we envisage the creation of both structured and natural parkland areas as well as a mix of water features such as a small lake, gently flowing streams, etc. The landscaping plan for the resort should impact the visitor experience from the moment that guests arrive on-site (i.e. it needs to impact their sense of arrival and set the tone for the whole visitor experience at the resort).
Resort Reception and Security: The predominantly domestic market buying into, and visiting, the resort will expect to benefit from a high level of security. This will have to be both unobtrusive security, such as CCTV, as well as a more overt security presence. We recommend that a built allowance of 250sqm should be made for the development of a resort reception and security point, where first time visitors can receive instruction and orientation and guests, vehicles, bags and equipment can be security screened. This building would essentially have to be located relatively early on in the arrival sequence.
Resort Services Building: Given the substantial size of the proposed resort there will be a requirement to include a number of maintenance and storage sheds around the site to accommodate day to day operations. We would recommend an allowance of 2,000sqm, with sheds and stores sited discretely around the site in a manner that balances the need for these buildings to be screened (as far as is reasonably possible) with the requirement for time and cost efficient resort maintenance operations.
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Soft Amenity Programming: One of the disadvantages of built amenities is that they are generally designed for a very specific task. For example, a spa is designed to operate as a spa and it would be difficult to reconfigure the facility for an alternative use if desired. So called ‘Soft Amenities’ however, include the programme of events, activities, courses and classes that are offered within a resort. These can be highly marketable and, more importantly, can be easily changed and adapted to flow with the trends of the market. For example, it may be that one year painting courses are extremely popular. However, if bookings drop off dramatically the next year, it is a reasonably straightforward exercise for the resort to drop the painting course in favour of the latest fad or fashion. For this reason, we recommend that in addition to the built amenities outlined within this section, the resort should also offer a broad and extensive programme of courses, events, classes and activities that can be adapted to suit market demand, but which will certainly add to the marketability of the project. DEVELOPMENT PROGRAMME SUMMARY 13.201 In Figure 13.16 we provide a summary table of the development programme for the proposed resort.
FIGURE 13.16: DEVELOPMENT PROGRAMME SUMMARY
Component Units / Area Notes
Resort Water Park Hotel 200 keys Dining options, spa, conference, retail, health club, outdoor amenities
Indoor Water Park 5,000 to 9,000sqm
Boutique Marina Waterfront Hotel 40 keys Dining options, lounge / bar, function space, libary
Marina 100 Wet Berths Marina administration within 50 Berth Dry-stack hotel complex
Holiday Homes 400 units Villas, townhouses, apartments
Camp Site Pitches 20 Glamping Support facilities, family dining, 200 Traditional and mini-market
Commercial Space 3,000sqm Retail, food & beverage, entertainment, leisure, non-commercial
Other Components Trails, high-ropes, adventure play ground, water sports centre, leisure club, amphitheatre, resort reception & security, resort services building.
Source: AECOM
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DEVELOPMENT PHASING 13.202 As projects grow in size from a holiday homes to a full master-planned community of several hundred hectares complemented by a mix of various amenity facilities, consideration of the phasing of development and the timing and sequence of construction becomes critical. The physical scale of these phases will depend on several factors including market context, site topography, the availability of utilities and various other considerations.
13.203 Particularly careful consideration needs to be given to the size and mix of components included within the first phase of a resort development. Issues for consideration include an understanding of the market’s ability to absorb the proposed product within a reasonable time period; the need to establish an on-site population with sufficient critical mass to support the operations of any amenity or retail provision, and the need to clearly demonstrate to the market the resort’s concept vision and quality aspirations. We would note that it can be useful to incorporate a relatively broad mix of real estate product within the first phase of a large-scale resort scheme in order to test the market’s response. This exercise can then be used to inform subsequent phases of development.
13.204 The financing of resort development will also determine the phasing process. Quite often, pre-sales or off-plan residential sales will help to provide funding with which to initiate the first phase of a scheme. Access to public services and utilities must be considered when selecting which portion of the development should constitute the first phase. If the project is relatively inaccessible by existing roads, these must be extended to the first phase before development begins. It might be necessary to increase the price of the plots in the first phase to offset these initial costs. However, it is more typical for developers to spread the costs of extending infrastructure over the entire project, which requires a carefully planned cash flow analysis. If long extensions of roads or utilities are needed to service the first phase, this must be considered in the financial planning of the project.
13.205 Sometimes the location of the first phase is governed by marketing considerations, such as visibility or proximity to a primary or principle amenity. The increased marketability of houses benefiting from front-line sea views, for example, is typically reflected in increased property values and product absorption rates.
13.206 In the case of larger projects, such as this, amenities should be phased as units are constructed. Initial amenities should be representative of future provision in terms of quality and type so that no question exists of misrepresentation by the developer. A general rule of thumb is to measure costs of amenities in terms of dollars spent per unit; each phase should include appropriate amenities to maintain a roughly equal expenditure per unit. Developers must include in the cost per unit of amenities the cost of carrying part of the maintenance and operating expenses, pending completion of other phases. Within a destination resort,
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amenities should be phased in increments commensurate with the size of the on-site population (comprising those in lodging accommodation, second home residents, etc.). This approach ensures that financing and maintenance costs are kept in check and avoids a situation in which facilities are built and require maintenance but go largely unused for several years.
13.207 In the case of the Als Island Resort, we recommend that the resort hotel and indoor water park component are incorporated within the first phase of development along with the first phase of residential real estate and the glamping pitches. As a second phase of development, attention should turn to the marina and waterfront offer as this is located furthest from the Universe Park and the point of access to the site. NEXT STEPS 13.208 Within the pages of this report we have summarised the market research upon which the conclusions have been made that have informed our development programme recommendations for the client group. It seems clear to us that for any project to succeed on this site it must have ‘destination appeal’, be innovative and appeal to a cross-section of markets and real estate sectors. It will also be necessary to have realistic expectations with regards to product positioning and financial performance.
13.209 In progressing from this point, there will clearly be a need to help the client group understand the financial risks and potential returns associated with moving forward with this development initiative. To this end, the next phase of our scope of services for this study involves the preparation of a financial model designed to reflect the content of the development programme set out in this section.
13.210 We will then populate this model with performance assumptions based on our market research, international experience and input from the client group (specifically relating to financing assumptions). In addition, we will require input from appropriately qualified cost consultants. The selected cost consultants will have to estimate the costs associated with realising this development vision. These costs will then be set against the projected revenues derived from the scheme in order to determine figures for the potential financial return that might be generated for the client group under various different scenarios. In addition, at that time we will be in a position to measure the economic and employment impact associated with realising the project.
13.211 In conclusion, it is our view that the project site is an attractive piece of property and does present a long-term resort development opportunity. The natural quality of the site, its setting, scale and coastal frontage are such that it has the potential to rise as a flagship project for Als Island and, over time, a catalyst for economic growth and community pride in the area.
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