Proposed Cycle Tourism Track/Trail Facility in Omeo Region – Is it really viable?

I have some serious concern at the claimed benefit (detailed in Lakes Post 28.2.2018)  to the Omeo region of the proposed cycle facility currently approved for funding from public funds. Below are a set of statistics which are pertinent to this issue and which raise more than a few questions.  Bear in mind that this facility is mainly on DELWP land and will, I am advised, be operated by private enterprise!  All this with a cost, again from advice, of  $6.2 M.
Don’t get me wrong I am not against any worthwhile and viable tourism/sporting facility anywhere in our region, and especially in the Omeo area which needs an injection of tourism, but sustainable viable tourism, not one destined to fail at cost of the ratepayer.

Adventure Tourism has its place in East Gippsland, (and seems to be the in thing), but it must be economically viable, in my view and using Tourism Victoria's own data this project does not stack up.

Bridge at Ah Fong's Loop Trail

Clouds over the Hills on GAR

It has been claimed that the economic benefit to the region would be in the region of $28 M. This I find highly over estimated as can be seen from the following.   All figures are based on the sources detailed  at the end of this note, and from them the following statistics can be extrapolated:-
Single Visitor Day Spend Oct 2013/14     = $ 98.00 each.           Oct 2017 estimates  = $ 90.75 each
Single Visitor Overnight Spend 2013/14 = $196.00 each.           Oct 2017 estimates  = $362.55 each

Using a base figure of 10,000 visitors per annum:
Day spend totals 2013/14 = $  980,000.00       Oct 2017 Estimates to be  $   907,500.00       
Overnight spend 2013/14 = $1,960,000.00      Oct 2017 Estimates to be  $3,625,500.00

So 10,000 visitors spending the top estimates by Tourism Research Australia gives annual $3.6255M revenue.

To simplify $3.6255M per annum = $9932.876 per day 365 days per year.  Even adding a “churn” factor of 3 the annual revenue equals $10,876,500.00.

A view from the Gt Alpine Road

Near the Blue Duck Inn

Assuming over 5 years each year attracting 10,000 visitors, and each being an overnight visitor, the best-case scenario (using the highest estimates) economic benefit is a total of $18,127,500.00
Using the same basis total economic benefit over 7 years would be $25,378,500.00

Question: What is the basis and breakdown from which the claimed $28.5M benefit is made?

Attracting 10,000 visitors to a cycle track in the Omeo region annually seems highly unlikely, especially in early stages.  10,000 per annum = 833.33 per month = 192.3 per week (52 weeks) = 27.39 per day (365 per yr)

Further, can the region attract that number over a full 12 months? Some allowance must be given during the snow season and during bad weather, when visitation (cycle based) will be minimal at best.Conservatively, an allowance of two months for the snow season and bad weather is made. Therefore the 10,000 visitors have only 10 months to make their appearance. This equates in 10 months to 1000 per month = 233.33 per week (given a 30 day month) = 33.33 per day (given a 30 day month)

Given that these numbers are currently at or close to zero, and in any event will take time to grow to a level of 10,000 per annum (if at all), it will further extend the time taken to achieve the claimed economic growth. Indeed to achieve any increase in visitation will require considerable costs of advertising over an extended period (years).

Question: Have these costs been estimated, and are they included in the set up/ongoing costs (business plan) for the  facility?

Tall Gums on Gt Alpine Rd

This claimed growth must be balanced by an expected high level of required maintenance and inherent costs due to extreme weather conditions, and, if use is as claimed, fair wear and tear. These can only take place after the bad weather has subsided so further reducing the opening days of the facility.

Question: Have these costs been estimated and assessed, and included in estimates?

Given the current and minimal level of tourism promotion given to this area, and the questionable abilities of the current regional and shire-wide promotional bodies to successfully achieve significant increased visitation,(given recent results), it is further questioned if these figures can be achieved at all.

Omeo Caravan Park from Road

Question:  Has consideration been given to the travelling time to and from the location of the facility?  

From the Latrobe Valley, from Melbourne’s SE Suburbs, and from Melbourne itself. The following information is from Google maps and assumes no adverse conditions road-works or other delays.
Melbourne to Omeo    401 kms    4 hours 51 mins   Total return trip   802 kms   9 hrs 42 mins
Narre Warren to Omeo 360 kms  4 hours 20 mins    Total return trip  720 kms   8 hrs 40 mins
Morwell to Omeo  250 kms  3 hours 10 mins    Total return trip  500 kms   6 hrs 20 mins

These times will almost negate any day visitors from those areas, as it limits effective time on the track to an unacceptable figure. This further reduces the ability to attract high even acceptable levels of visitation from anyone other than the overnight visitor, and even then a high level of commitment would be required.
It is almost universally accepted in tourism circles that a total traveling time of 90 - 120 minutes in each direction is the norm and acceptable for the day tripper. Venues such a Phillip Island, Bellarine Penninsula, Gt Ocean Road, and Murray River region are classic examples, as is almost anywhere in Tasmania.

Hills in the Haze

On Top of the World  - GAR

The above are some of the concerns expressed at the rationale of this project, their claimed financial benefit, and the levels of financial support which could otherwise be spent in a more prudent manner and still able to attract significant benefits to the region.

Question:  Are Councillors being provided with well researched and accurate and up to date information?

Question: Is this facility really a viable proposition?, why is it being turned over to private enterprise to operate?

John Munns February 2018
Photographs John Munns

Gippsland Source Data: 
Victorian Regional Satellite Accounts 2013-2014 developed by Delotte Access Economics for Tourism Victoria Research factsheet produced by Tourism Victoria October 2015. (latest available as at Oct 2017)  The following should be noted in any calculations. Source:    National Visitor Survey, Regional Expenditure Model (REX), Tourism Research Australia.  Fact sheet produced by the TEVE Research Unit                                                                              Base:       Only those trips where Australian’s 15 years and over are away from home for less than 12 months are in scope. 
Tourism Victoria has worked with Deloitte Access Economics to produce regional Satellite Account estimates of the value of tourism to Tourism Victoria's regions. The figures are extracts from those estimates.    Calculations do not account for cpi increases.