Presentation made at the CBD/IUCN TAPAS Group meeting on "Tourism partnerships and concessions in protected areas: Cooperating for success" meeting in the iSimangaliso Wetland Park

1. Sources of finance
31 May 2017
Block 7
Facilitators:
Dr Sue Snyman & Prof Paul Eagles
Image © stevepb via Pixabay

2. • Understanding financing
• Portfolio of revenue
streams
• Unique selling points
(USPs)
• Sound, financially viable
business
Financing tourism concessions
Image © geralt via Pixabay

3. Investors questions
• Will the business be viable?
• Is the sponsor credible?
• What collateral is available?
• Is this project profitable enough
for us to take the risk?
Image © 3dman_eu via Pixabay

4. Choosing the right investor
ü Identify appropriate investors
ü Sources: internet, local contacts
in tourism and development,
tourism information offices
ü Similar values and goals as the
PA
ü Track record in sustainable
tourism and commercial successImage © 3dman_eu via Pixabay

5. Background
• In wealthy countries, parks are often managed by
government agencies and rely on government funding.
• In poorer countries, parks rely heavily on tourism fees
and charges to finance park management
• In 2008, the average percentage of state park budgets
in the USA covered by user fees was 42%.
• In 2011, California State Parks closed 70 of its 278
parks in order to deal with a $33 million reduction in
government funds from the state.
• In 2018, Ontario Provincial Parks was 90% funded by
tourism fees.

6. Park Finance
• Most income for management comes
three sources:
1. Government tax revenue;
2. Tourist fees and charges, either directly to the
park or through concessionaire payments;
and,
3. Donations.

7. Insourcing Examples
• In Ontario, several major agencies are funded
entirely or mostly by tourist fees and charges:
– Niagara Parks Commission (Niagara Falls) (110%)
– Ontario Conservation Authority Parks (Watershed
Management) (100%)
– Ontario Provincial Parks (90%)

8. Balance of Taxes and Tourism
Taxes
Tourism

9. Background to Ontario Parks
• The finance for park management in many
jurisdictions is moving from government grants to
tourism fees and charges.
• In 1995, Ontario Parks received permission from
government to move to tourism funding.
• This presentation describes the financial
implications of this change.
• This is based on an analysis of the yearly income
spreadsheets from 1995 to 2012.

10. Policy Changes
• The policy changes in 1995 enabled
Ontario Parks to:
– Retain all income in a special purpose
account.
– Retain all income over the end of the fiscal
year.

12. Ontario Parks
• Ontario has the oldest and second-largest provincial
park system in Canada, starting with the establishment
of Algonquin National Park in 1893.
• By 2011, the Ontario system contained 630 provincial
of Algonquin National Park in 1893.
• By 2011, the Ontario system contained 630 provincial
parks and conservation reserves covering an area of
9.5 million hectares, or about 9% of the province.
• This area is larger than all US state parks combined.
• 110 operating parks with recreation services.

16. Tourism Volumes 1985 to 2016
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Visitor Days

17. Income 1995 to 2010
• From 1995 to 2010, Ontario Parks budget increased
from $28.2 to $76.5 million, an increase of 165%.
• In constant dollars, the overall Ministry of Natural
Resources operating budget was $700 million in
1995/96 and $400 million in 2010/11, a decrease of
43%.
• Therefore, the move from government funding to
tourism funding enabled Ontario Parks to gain a
substantial increase in budget, while if it had remained
tied to the government allocations for the larger MNR it
would have seen a substantial decrease.

18. Tourism Income
• In 1994, about 36% of the budget was earned by
park fees, but these were placed into central
government coffers.
• In 2012, 88% of the budget was earned by park
fees, and all of these were retained in the park
agency special purpose account.
• In 2015, 90% cost recovery from tourism fees
• Therefore, the income coming from tourism fees
and charges increased from 36% to 90% of the
budget.

19. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Series1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Series2 $18,181 $20,686 $26,141 $31,502 $40,413 $37,355 $43,224 $45,198 $46,244 $47,742 $57,158 $53,521 $62,456 $64,856 $64,793 $64,793 $64,979
Series3 8,607, 8,005, 8,339, 9,228,7 9,415,1 8,869,8 10,140, 10,493, 10,183, 9,754,3 10,517, 10,096, 10,377, 9,537,6 9,447,5 9,505,4 9,595,0
$18,181,527
$20,686,061
$26,141,371
$31,502,377
$40,413,891
$37,355,497
$43,224,735
$45,198,955
$46,244,306
$47,742,199
$57,158,758
$53,521,881
$62,456,115
$64,856,992
$64,793,877
$64,793,877
$64,979,103
$0.00
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00
$70,000,000.00
Dollars
Ontario Parks' Tourism Income

20. Ontario Parks’ Return per Visitor Day (1995 – 2011)
$2.11
$2.58
$3.13
$3.41
$4.29
$4.21
$4.26
$4.31
$4.54
$4.89
$5.43
$5.30
$6.02
$6.80 $6.86 $6.82 $6.77
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

21. Ontario Parks’ Tourism Income 1995 to 2010
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Day Use Income Camping Income Merchandise Sales Other Income

22. Income Sources
• Day use income increased 124%
• Camping income increased 225%
• Merchandise sales increased 409%
• Other income increased 9870%

23. Ontario Parks’ Fee Changes 1995 to 2010
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Campsite with
electricity
Campsite
without
elecKcity
Daily Vehicle
Permit
Minimum
Daily Vehicle
Permit
Maximum
Commerical Bus
Permit
1995 2010

24. Campsites
• Campsites differentiated into three levels: premium, middle
and low.
• Within each level there are subcategories according to:
– electricity on site,
– seniors’ discounts, and
– discounts for people with disabilities.
• Yurts (permanent tents) introduced into 11 parks.
• Rustic cabins introduced in 4 parks, cottages in 4.
• New campgrounds built in 4 parks.
• Internet campsite booking introduced.

26. SANParks and Ontario Parks Income
21
33
19
8 7
5
1
6
22
49
9
4
0
8
1
9
0
10
20
30
40
50
60
Percent of Budget
Income Categories
SANParks Ontario Parks

27. SANParks and Ontario Parks
• A comparison with South Africa National
Parks, who underwent a similar
transformation from government to tourism
funding in a similar time period, revealed that
the top three income sources for both park
systems are, in order:
– 1) accommodation;
– 2) government grants; and,
– 3) entrance fees.

28. Conclusions.
1. Is the government grant level reduced when
tourism funding increases?
Yes, the government grant was reduced from $28.8
million in 1994 to 10.6 million in 1995, a drop of 63%.
2. Do the park fees increase and how much?
• Campsite with electricity fees up 152%
• Campsite without electricity fees up 166%
• Daily use fees, up 79% in low use periods & 221% in
high use periods
• Commercial bus permit increased 207%

29. Conclusions
3. If fees increase, does use decline?
No, use increased from 7.5 million to 9.5 million
visitor days.
4. Are a wider variety of sources of income
utilized?
The number of income sources used doubled.
Differential fees introduced.

30. Conclusions
5. What are these new income sources?
1. reservation penalties for cancellations,
2. winter ski permits,
3. donations,
4. staff house fees,
5. park fines,
6. merchandise sales,
7. campfire wood sales,
8. camper supplies sales,

31. Conclusions
5. What are these new income sources?
9. recreation equipment rentals,
10. sales of cold beverages,
11. winter storage fees for recreation vehicles,
12. parking fees,
13. annual vehicle permits.

32. Summary
• The park tourism income increased
through three major factors:
– 1) increased levels of fees charged;
– 2) increased diversity of pricing; and,
– 3) broadening the income to include new
features.

33. Use of NGOs
• Non-government bodies (Friends Groups)
became more prominent in delivering
education, festivals, information delivery,
recreation, and occasionally food delivery
and transit.
• Several parks are entirely operated by NGOs.
• Decreasing use of concessionaires, and
replacement by park staff and NGOs.

36. Reference and Reading
• Eagles, Paul F. J. 2014. Fiscal Implications of
Moving to Tourism Finance for Parks: Ontario
Provincial Parks. Managing Leisure 19(1): 16-27.
• Eagles, Paul F. J., Julia Coburn and Bobbie
Swartman. 2014. Plan Quality and Plan Detail of
Visitor and Tourism Policies in Ontario Park
Management Plans. Journal of Outdoor
Recreation and Tourism DOI: 10.1016/j.jort.
2014.09.006

37. • Current sources of
financing in your
PAs
• Pros and cons of
each source
Discussion session 1

38. Discussion session 2
Group One: Financing options for investors
Group Two: Financing options for PAs
• Choosing the right investors
• What is needed to attract investors

39. Summary of the financing process