Durban — The financial plight of the Durban Marine Theme Park (DMTP) was laid bare during a presentation to the eThekwini executive committee (Exco) at a meeting on Tuesday.
A long-awaited feasibility study/ turnaround strategy for an expanded/ decentralised theme park was presented to the Exco after an on-site inspection of uShaka Marine World.
After hearing the presentation the Exco and said it would deliberate on the matter among committees before a final decision was made.
Recently, the city paid a grant of R160 million to DMTP and opposition parties called for a feasibility study.
The report suggested that the Exco should outsource Sea World to the SA Association for Marine Biological Research (Saambr); outsource all facilities with DMTP becoming facilities manager (lease all facilities); franchise agreements for selected facilities; and absorb DMTP into the municipality or sell uShaka (whole or part).
The report said three main aims for the development of the Point Marine Park in 2001 had been met. These were to increase tourist arrivals to Durban; inject additional revenue into the local economy; and rejuvenate the Point, which had been neglected.
The report stated that the park was expected to generate its own revenues to sustain itself from the following revenue streams: entrance fee from the guests contributing 53%; rental from tenants on village walk, 19%; restaurant operations food and beverage, 19%; retail operations merchandising, 2%; parking fees, 3%; functions and events, venue and related, 1%; and other sundry, 3%.
The cost drivers for DMTP were personnel costs (34%); marine biological services provided by Saambr (30%); electricity (10%); water and waste (6%); security (2%); rates (2%); lease of the parking area (2%); and property levies payable to Durban Point Waterfront development company (2%). These costs made up more than 80% of the cost of operating the park.
The report said DMTP had been experiencing growth stagnation and/ or reduction in paying footfall over the past few years (achieving an average of 850 000 a year), resulting in reduced or lack of growth in real terms in overall revenues, accumulated operating deficit and little or no cash flow reserves.
The footfall over the years was 888 677 (2018/19); 660 256 (2019/20); and 272 240 (2020/21).
The report stated that trading revenues improved from September 2021, with December 2021 and January achieving even better results, but the April 2022 floods had a negative impact on the performance in the Easter period. In addition, DMTP embarked on a process of developing a feasibility study in order to come up with a more sustainable business model for the park. The process commenced in January 2018 as a two-stage procurement process. It experienced numerous delays within the bid committees, including the need to negotiate a price for the preferred bid.
The execution of the project commenced in July 2021 and consisted of seven phases, of which five were completed. The board approved a business plan for the 2022/23 financial year as required by the Municipal Finance Management Act, and a detailed trading update report along with short- to medium-term interventions was provided to the council for the period up to May 31, 2022.
The business plan is based on the entity’s strategic plan for 2021/22 to 2023/24, the elements of which were also included in the trading update report.
uShaka Marine World CEO Ndabo Khoza told the Exco that they spent R8 million a month on water and R30m a year on electricity bills, an estimated R4m a month. He said they cannot turn off the pumps and water reticulation was important. Khoza said Kids World was being redesigned to adapt and appease “kids of 2022”, who like gadgets. He said the story behind the Phantom Ship and its image will be marketed to draw visitors.
The report recommended that some of the key opportunities to improve the situation were a major product revamp at Sea World and Wet 'n Wild; a complete revamp of some of uShaka’s existing facilities into something new; improving revenue management and implementing cost-cutting to improve profitability; changing the market perception that uShaka was only for families with younger children; and embedding technology throughout the experience.
Key threats to DTMP were the continued slow pace of development in the Durban Point Precinct, growing negativity towards animals in captivity, continued deterioration in the socio-economic environment and political instability in eThekwini Municipality.
The main challenges for uShaka were high seasonality and weather dependency; poor economic and tourism performance; costs of operating uShaka exceeded the revenue generated; and fixed costs have been increasing at unsustainable levels in relation to revenue growth.
Daily News