Severn Valley Railway to launch £4,000,000 share issue.

Anyone got the actual passenger figures for the past few years? Yourself and generalgeekfinder have both said they are in decline, while I'm not so sure from memory
RE flood: I think what can be said is that the railway still recovering from it in the need to do infrastucture repairs that were pending at the time.

 

Just picking up on a few points from recent posts: I agree that sorting out the Bridgnorth shed/works complex is a top priority. I thought I read somewhere that space created will allow two locomotives to be under heavy overhaul at any one time instead of one. Thankfully so! I also read that this January a mezzanine floor is being installed in the boiler shop, this area will contain the new CNC lathe, an operative and programmer has been recruited, and as a start this machine will allow the SVR to produce its own firebox stays.
Passenger numbers: I recall the GM saying that "passenger spend" is important. I guess he means that if passenger numbers are stable, then he wants to provide the facilites for them to spend more of their cash on the railway, apart from just buying train tickets. There must be a "sweet spot" where you have a "comfortable" number of passengers, and they do indeed spend more. High numbers of "cheap" passengers in the financial sense, means having to run 7 and 8 coach trains will large engines, and probably not making much of an operating surplus from the actual timetabled trains. ( where is our financial friend from the NYMR...?)
A poster mentions coach party traffic. I wonder if they are profitable, in that they probably travel at a group discount, and if their arrival is not well planned it can seriously mess up accommodation for your ordinary passengers. I got caught like that last year when the Bluebell Pannier was inservice. Short formation and an unexpected coach party turned up. I elected not to travel because the train was packed to the rafters.
In the meantime, once services finish at the weekend then the priority must be to repair those locomotives that have failed at the year-end, and progress quickly the planned repairs/maintenance, ie 2857's steam pipe, 43106's dragbox, the "Manor" undergoing piston and valve work, and the as-yet undisclosed issue with 34053. In this respect, ie having a sufficient operative service fleet, nothing much changes, sadly so.

 

46118 "Passenger spend" is all very well, but the passengers have to be there to spend in the first place, and they simply are not. We are 30,00 plus down on peak. Additional available evidence suggests that spending is down across the entire Midlands leisure sector. In the real world no commercial activity would dream of budgeting at cost, if they did they would not survive for very long. In general coach parties do not just turn up on the day and expect a discount, if they do, then I would suggest discounts should not be available - booking in advance for any discount. With a little simple planning no overcrowded trains !


My real point was that if we want the SVR to operate as we would all like, then additional income from fare paying passengers is the only certain way forward. Only then will the infastructure, P-way, loco's, stock, etc. receive the investment they require - investment which is simply not available in the present situation.

 

I agree with your sentiment. My personal "passenger spend" is down, in fact I'm not at all profitable to the railway because I enjoy a priv. ticket, and I bring my own food and drink! However, I tend to stand (to be by a window behind the loco) so I dont actually take up a seat that a full-fare passenger can use. But that apart, you are right, we need more passengers, and then hope that the railway provides suitable retail opportunities along the way.
In case you dont know, the passenger target has been set at 205,000 for 2013, and with a financial budget that will deliver a £60,000 profit target.
I think the point I was trying to make, and why I hoped our NYMR accountant friend might be about, was that actually running steam-hauled services is never on its own going to generate much operating profit. Not unless the fares were much higher, and then you get into diminishing returns, because unlike commuters on Network Rail, our visitors dont "have" to travel with us.
I suppose you start from the basic premise that a medium sized steam loco needs a £500k overhaul every ten years, so that engine needs £50k a year put aside for that eventuality. Thats £50k pa divided by how many days it runs each season. Just doesn't look viable when you add in all the other overheads, coaching stock maintenance/overhaul, trackwork and infrastructure, paid staff wages, insurance, etc etc. I guess a certain Doctor realised that in 1963.
Maybe the best business case is a fleet of DMU's to whisk our visitors quickly and efficiently up and down the line from one "retail opportunity" to the next....Well maybe not, but you see what I am getting at from a financial point of view?
As an aside, I think Tom from the Bluebell makes a valid point about the "scatter gun" approach as to how the ten million is to be used, and where the priorites lie. Maybe however in the share prospectus you have to assume that you will not only raise the £3 million in shares but you will also find the additional £7 million in grants and the like. That however is not going to be a quick process, and hence it may well be several years before some of the wish-list become a reality. As I have said before, the immediate priority to my mind is to continue to be able to run steam-hauled services the full length of the line for the forseeable future, so that would mean spending on permanent way and infrastructure, together with loco overhaul and maintenance, even if the visitor centre at Bridgnorth waits a while longer.

46118

 

If my mental arithmatic is correct, an increase of 30,000 passengers would generate about 170,00 pounds additional profit, assuming a 30% mark up. This would be in addition to the expected 60.000 you give. This target number would still be well below previous best numbers so not be unrealistic. These additional passengers would also presumably contribute some additional spend - hope they all don't bring their own sandwiches !

The economics of the running the Railway are certainly a challenge, but a challenge that must be addressed if there is to be a brighter future.

 

I think that the SVR (and a number of other heritage railways) have concluded that the way forward is not more "bums on seats" at basic or even promotional fares - but the promotion of added value (and higher margin) offers such as private hire of saloon carriages, special trains and corporate hospitality and footplate experience courses

 

What about finding ways of incentivising people to come back and make a return visit to the line? Maybe they'll be planning on going back anyway, maybe they won't. But extra income is extra income.

Say a family of 2 adults and 2 kids visit a Thomas event (or another "premium priced" event). If they return to the line within a certain period, on an ordinary service day, and bring their Thomas tickets with them, let the kids travel free. If the parents are saving money on the tickets, perhaps they'll spend more money on other things at the railway.

 

Agreed Michael, and the SVR Christmas 2012 brochure showed that they are well aware of this higher value business, at least during the festive season: Santa Steam Specials and Santa Heralds, and then for pre-booked school groups the Christmas Cracker Express and Christmas Carol trains. Then, how many ways to dine on the SVR?: Christmas Luncheon trains, Evening Dining Trains, Christmas Carvery at the Engine House, festive Season Sunday Lunch, and last but not least hiring the Shrewsbury Saloon, dining for up to ten persons, £800.

As you say, the SVR is not alone in recognising this higher value traffic, and some special event traffic on our heritage lines forms a significant percentage of the revenue. I guess with the SVR a good festive season is vital.

EDIT: 5944: Indeed, the SVR has introduced an "Annual Pass" for families this year, which looks to be a very good deal if you intend to make several visits Not aware of the finer points, but I dont think the annual pass covers special events. I stand corrected if this is not so.

 

I think there will always be room for both types of traffic. But the big advantage of a lot of the types of traffic you mention is that they are pre-booked. So you take out a lot of the uncertainty in cash flow: you know you have the revenue in the bank regardless of what, say, the weather throws at you on the day. Whereas I suspect lines like Swanage are probably enormously weather dependent.

There is also potentially a big premium on ticket price. To take a Bluebell example: our all line fare is £13.50 (there are obviously member, group and advance discounts). Our Wealden Rambler, which is pre-booked, is £23.50 (with a group discount for ten or more). That's a £10 premium for which you get, basically, a cream tea. Whether you think that is good value for money is up to you; but effectively we have sold a cream tea (for which the ingredients might be a couple of quid) for £10, and also have the money in the bank before the train runs, so we know what size engine we need to roster (a class 2...). Provided you can create the market and sell the tickets, it is hardly surprising that such trains look commercially attractive!

Not just the SVR: I think for all lines. I vaguely recall a stat from our line that reckoned the gross cost of having a carriage unavailable during the Santa season was something like £17,000, i.e. that is how much we would lose in ticket revenue by running one five coach rather than six coach train for the whole season.

Tom

 

2007 (storm)
2008 - 238,056
2009 - 248,798 (AIUI 2nd highest ever)
2010 - 225,570 (Severn Valley Railway slashes child fares to £1!)
2011 - 215,310 (traffic income + £180k on reduced numbers)
2012 budget was (IIRC) 215,000 and to end of July was cumulatively ahead of budget. “However a combination of poor weather, and the Olympic effect, saw the Railway miss its financial and passenger target by up to 15% month on month between June and September. October and November have results have been to budget, and with a strong Santa performance there is a strong probability that we will finish the year near to budget”.

Patrick

 

It may well be too that those who pay £23.50 feel they get more of a "Special Experience" than those who pay £13.50 for a basic ride up and down with all the word of mouth marketing that follows.

 

I think the 2010 result is interesting - it does beg the question as to how much price elasticity of demand there is in this market - obviously if fares doubled, then numbers would fall - but does a pound or two either way make much difference to passenger numbers?

 

Which I guess is why we also have 1st class fares (really, I should have compared the Wealden Rambler prices with an all line 1st, not a third). After all, with a 1st, you still get exactly the same ride up and down and the same opportunity to look round museums, sheds etc as you would with a third - only the "exclusivity" is extra, but you pay a few pounds premium for it.

Tom

 

Thanks Patrick
I remember that generalgeekfinder claimed that 2005 was the tipping point. These figures show that 2009 was, and remember the recession bit the hardest after 2009.
2012 was a write off weather-wise and I suspect the lack of steam during the early summer may have had an effect to some degree. The festive services seemed to quite well filled so the budget might be reached.
Passenger spending is important, but better that there are passengers than not. Balances need to made; something that caught my eye over christmas was the price at which the NR add-on was. In the summer, I'm sure this worked out at about £12, but looking at some of the outs last week the add-on was less than £10, which seems low. Something about £12 or 13 seems fair, it is less than a normal ticket so it would encourage people to come but the difference is too much to undercut the taking. (BTW for any wondering the outs were from local stations, I think Birmingham stations was the futherest and there were several stourbridge one so it wasn't like they were coming from any great distance, really)

 

The SVR is not principally a transport system - it is in the leisure business and passenger numbers are outside the railways control so they cannot and must not be the key factor in survival. As ever, control of costs must be the prime consideration and that is largely within the railways control (floods and other acts of God excluded). There does seem to be a lot of similarities between the SVR and NYMR in much of what is being discussed, unfortunately.

 

I guess the elasticity of the price - demand curve will only be evident when the critical point is reached - have we reached this point yet ? I agree that high end, prepaid business is a potential serious growth area, in addition these services can normally be run within normal timetabled services - as many are at present. I'm not convinced that 'bums on seats' should be dismissed out of hand. History shows that these passenger numbers are possible. The bottom line is the balance sheet. To improve that, as many customers as possible are required.

 

Whilst it has been shown that passenger numbers are not worth persuing at any cost the other side of the equation has received little or no attention on the SVR or indeed elsewhere.

Having published a timetable & with an expected size of train formation the basic costs have already been committed for the year.
What is then missing is a high level lead campaign to get each member (SVR = 13,000) to persuade say 2 extra people to travel as paying passengers who would not otherwise have travelled. If those at the top could encourage the membership to deliver this the result would be an extra 26,000 passengers per year or an extra income of nearly £400,000 + anciliary spending. That is the sort of surplus which needs to be generated annually to stand a chance of adequate reinvestment in the infrastructure.
Not a difficult task for each member?
With the development of "value added"fares described above selling what you have anyway (otherwise empty seats) must be the other part of the best way forward.

 

2005 saw 252,000 paying passengers, the best ever year.

1472, yes absolutely. Many of the SVR family are already avid ambassadors, but the very deep hole in the underlying accounts means motivating more of them to get behind such an elemental, low cost high yield programme and home grown scheme. To do this requires a new culture of truth Because the family needs to feel loved again. I remember the Member get a Member campaign that cost exactly diddley squat apart from some ink for the reliable but oh so worn Gestetner copy press in office...manually operated of course. Does either Waffler or Mr Bending remember the final outcome. Did it work?

Back to your roots chaps. You need to hit 250,000 again for year after year to buy yourselves out of the loco hire fiasco, do the identified infrastructure repairs, restore the cash reserves, and build something modest but deliverable at Brignorth. Meanwhile Kidderminster station staff have taken a renewed interest in the Kidderminster town station canopies, a massive step towards being a all weather attraction but that has been a promise for a long time. Be nice to finish Kidderminster Town. A much younger GF-G put a lot of effect into that in 1983.

What The valley needs right now is its true friends in the family and being ambassadors. Once they are back in the fold,there be no need of the GM and Director of Commerce, whose unsatisfactory efforts are spelled out in cold hard unarguable numbers, all signed by the auditors and just left to slide at consecutive H annual meetings but solemnly reproduced here by D1039. Bet Tigger didn't see that one coming!

The 2013 AGM season with be a gruelling one. GF-G will be there providing some scandal and local colour, and expecting at least one out of course resignation from the Inner cabinet. More than all that he will be there to prove that the SVR is loved by most of us and we do like seeing our beloved railway suffer from arrogance and ignorance of poor weak management.

Regards

GF-G

 

GF-G: Yes, well summarised. More passengers, a sufficient steam service fleet to avoid involuntary loco hire, necessary infrastructure repairs, replenish cash reserves,and something modest but deliverable at Bridgnorth.

I particularly like "something modest but deliverable at Bridgnorth". I assume here you refer to the "visitor facilities" question. The MPD/Works moves taking place now are needed to deliver more working steam motive power.

Regards

46118

 

2005 - 252k passengers
2006 - (unknown)
2007 - (flood + unknown)
2008 - 238k
2009 - 249k
2010 - 226k
2011 - 215k

Looking at those figures, to me the steep decline starts after 2009, not 2005 - as Kje7812 says. For the railway to have got back to within about 1% of its pre-flood figures by 2009 looks to me like a pretty good result; it is after that that things appear to have gone wrong. I think the comment about "Fantasy based assumptions posted as fact " could equally well be made about you trying to make the facts fit your theory that the rot started after 2005, when the figures show after 2009 is a much more likely date!

I assume you meant to have the word "not" somewhere in that sentence!

Tom