Have things changed?

We have tended to do similar when we have been up in Whitby- Wife had similar thoughts on the inflexibility, so we only ended up doing a shorter journey and then drove back to Whitby instead.

Chris

 

That is a surefire way for heritage railways to go bust. Earlier, someone mentioned the 2008-9 recession; what that didn’t bring was significant cost inflation. A fair bit of money needs to be hoarded to keep cash flow positive, and avoid running out. Spending out of general funds on projects that don’t immediately contribute to the bottom line risks leaving no future for savings in maintenance to benefit from.

Railways, like other attractions, are having to find alternatives to traditional markets because those traditional revenue streams aren’t scalable. I’m just back from a walk at Belton House, where they’re clearing up from their winter lights experience. That generates significant additional income for the NT, including members like me who have to pay for the event. Revenue that is way above what they’d get from their traditional revenue streams.

Somewhere (non rail) I’m involved, I hear people say “xyz activity is really important because it generates footfall and income”. I then see the numbers for both; suffice it to say that they don’t support the proposition.

Reflecting on the discussions, I put the mismatch down to two things. One is people’s innate bias about what is or isn’t important. The other, more importantly, is the difficulty many of us (and I include myself in this) have in relating amounts that seem significant personally to amounts that are significant to the organisations we support.


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Have things changed? In terms of customer behaviour, not very much I think as a result of covid directly. There is plenty of evidence of a tightening of expenditure this year, but is that covid, war in Ukraine or brexit? Probably all three of course, but it’s irrelevant really what the cause is, the effect is the same. Less leisure money.

To me the message we should take from the various indicators (some lines being 20%+ down on ordinary traffic, some beating special event numbers etc) is that customers are keenly assessing value. They are willing to pay and pre-book for things which appear to be scarce and of value.

So it’s no problem to get people to pay a premium for steam illuminations or a special event. Trains to destinations (like Whitby perhaps) will also book, and “days out” like the WHR perhaps. But, the perception of value has to be high. The IOWSR in a visitor area with self evidently lots to do relative to other options in a fairly contained geographical area is clearly going to do well. They are a great example of how to make the most of their market opportunities.

So, each railway is different and its problems unique, and yet the same. The question is how to demonstrate to enough people that your line is offering something of value that is at least as much as the headline price plus costs of getting there. Find the answer and one component of sustainability is addressed. (The other two are: keep the volunteers on side, win as much grant money as is sensible).

I think the only change really is that we have entered a recession, and that always makes everything a bit more difficult to achieve.

 

That was me. It wasn't particularly a well thought out thought but as we know history doesn't repeat but it does rhyme. I remember Sky at the time trying to create this disaster when campsites and local attractions were bucking the trend or on genuine upticks in business. A lot of midweek running seemed to be tied into coach parties, have they recovered from 2020? A customer base that broadly was the highest risk of COVID and saw the most deaths with restrictions that meant the coach tours would struggle for a while financially must have taken its toll.

 

There is an obvious problem of not knowing why people don't travel but the inflexibility of various line's offers has certainly reduced my ticket purchases in recent months.

Does any line actually have or use market research about reasons for visiting/not visiting and does such research include ticketing options? Pre-booking may also create issues where services can't run as originally hoped. Apart from costs incurred making refunds how much additional grief is caused to front line staff from aggrieved customers who think they've paid for a particular service only to find it isn't as planned?

 

Agreed on history rhyming - and I do think that railways in tourist areas may gain in income during a recession, losing some customers but gaining others as people cut back.

The difference for the railways, and where I was focusing more on the post I was replying to, is that they are facing significant increases in costs now that they weren't facing 15 years ago.

 

Interesting that a lot of discussion so far is about ticket flexibility (or lack thereof) and also about price- vs quality-sensitivity.

On our line, day rovers are back for those that want them - no need to prebook. But I do see three changes since pre-covid, not all of them good.

The first is (tied to the point about "people will pay if there is a quality product", pace @21B), a move to focus increasingly on an events-based model. Not necessarily enthusiast events, but things like SteamLights (which in our case runs from mid November to early January); ice skating, beer festivals, more reliance on dining trains etc. Those do naturally tend to be pre-booked, but "turn up and go" tickets are available at other times for those that want them.

The second and third are a cut-back service, in operating days and service level, on the days that are "normal" operating days. They introduce subtly different problems, hence treating them separately.

Why do I see those as not necessarily benign changes? Taking the first one, it builds in a couple of risks. Firstly, such events tend to be high stakes, high rewards. So the financial picture is being unbalanced by being increasingly reliant on a shorter part of the year and smaller number of services. On the Bluebell, I suspect we are making about a third of our fare income in two months of the year. My worry is that, while lights trains are all the rage now, in a few years time someone is going to put in a big up-front investment and find that the expected year-end economic boost fails to materialise.

On the cut-back service, taking the two points separately. My concern about a sparse service - say a one train service in our case - is that it really restricts visitors to a round trip, no getting out at intermediate stations. That's really not a very good way of highlighting the whole line, nor of trying to make the line a "whole day" attraction as is often stated. My concern is that people are focusing on per train costs and losing sight of why people choose not to visit any more on weekends when perhaps in previous years things were reasonably busy. I think for a longer line like the WSR or NYMR, where for many people, an out-and-back is what they intend to do, matching the number of trains to the number of seats likely to be sold probably works OK. But for a shorter line, you get back to the value point: why would I visit the Bluebell or Mid Hants on a one-train day when for the same fare I can go on a two-train day with much better travel options for intermediate breaks (and therefore much better value)?

As for days of operation - big railways consume money year round. So coupled to the train cost equation, increasingly we seem to be starting later in the year, waiting until we can fill a big train. That risks missing the cash flow boost in the shoulder seasons from running a smaller train - if that train meets at least its marginal cost of operation, my view is it is better to run it than not; not least because - if it doesn't run - no secondary spend either.

Finally, and also picking up on a point by @21B - "Find the answer and one component of sustainability is addressed. (The other two are: keep the volunteers on side, win as much grant money as is sensible)" is the point of keeping volunteers onside. The changes above seem to be not necessarily designed to keep volunteers motivated. I suspect many volunteers - at least those in the "operating" part of the tripod - do so because they want to recreate and experience a way of life from before. Trains of Lights are a long way from that ambition, and while I am sure most fully understand the need to make money to keep the show on the road, I wonder how many find that a couple of plods up the line in the dark in mid winter isn't quite the glamour they sought?

So there are changes, but from a leadership point of view, those changes have to occur at the correct pace. My concern is that many of the natural supporters of heritage railways might be left behind by the rate things are changing.

Tom

 

I have a lot of sympathy with what Tom is saying and would add the following comments/observations.

Be,ing in the group of people who can travel readily in out of the busier season, i.e we are retired, maybe a bit more targeted marketing to that sector would help with some incentives/experiences to temp them ?

With respect to breaking the journey there needs to be enough to tempt people and keep them occupied until the next train. SVR have Highley Nengine House and Bewdley which are both worthwhile stops, NYMR has Goathland which is worth a wander around, not quite sure what you would do at Horsted Keynes for an hour or so though. Now if the Carraige sheds were turned more into a Museum style that might work, plus a cafe that sold hot drinks and a cake or a cream tea ?

 

This is something I agree with and I find rather interesting when I have conversations with my Parents and friends regarding certain aspects regarding what what they do on the railway they volunteer on.
Much as it’s nice to show off a locomotive in a new livery in matching clothing why not take a leaf out the likes of Reggie Hanks or Chris Green and go round and have a chat with your staff in various departments, not just the managers, the boots on the ground as well.
Your volunteers are your greatest resource, it really doesn’t pay to ignore or annoy them, especially when some of them might have experience in a specific field you might need to ask them nicely for some help for in the future.

 

Just a thought on the pre-booking for one round trip issue. For some years my young family have had a weeks holiday in North Wales. In late 2021, when many English attractions were accepting pay on the day, Wales (not just railways) still wanted pre-booking. Trips that might be reserved for wet days were undertaken on sunny days and vica versa as thats when we had booked. Full day trips to railways (perhaps walking or having a pub lunch in-between) became a quick out and back, with a further attraction (at additional cost) having to be found for the rest of the day. With 2022 promising the same, we took our holiday in the Lake District instead, only pre-booking where we felt we had to for something special. We have already booked the same cottage in the Lake District for 2023 so the Welsh attractionshave lost at least two years ticket sales from us. If railways don't offer flexibility and the full day experience, they risk loss of some passengers and additional spend at a time when every penny counts.

 

One thing with reducing the number of operating days is that a loco which has had a very expensive overhaul has fewer days to earn money.

That might mean fewer locos in time , but if railways still need as many locos as before at peak times (August/Christmas) then it could be harder to meet the demand in those peaks with the pool available

Jon

 

Just taking this point, I would highlight two possible issues here. The first is that these events involve committing expenditure up front, with limited scope to cut back in response to lower than expected uptake. Taking a beer festival example, where I have some organising experience, the effect is that it only takes a small trimming of demand to move from very profitable to breakeven or even loss making.

The second is what I'd call the "Thomas factor". That was a stalwart of heritage railways for many years, but has increasingly become unviable. That's not to rehearse the arguments about license rights (they've been done to death), but to highlight that the golden goose can stop laying golden eggs in favour of baser metals.

 

Tom makes a number of interesting points which I agree with. The tension between the events that sell (at least for now) and the motivation of volunteers is real and must be managed. But I think that the second tension between the desire to conserve costs and the service that results actually being so much less attractive that it makes any service at all less viable. It seems to me that the service has to be frequent on an “ordinary day” in order that that the offer to the customer is engaging and attractive, but that risks too great an expense. The answer might be (for some) fewer days of operation but with more trains on each day?

 

There is a side issue to this in that locos, which in peak season remain warm by working 7 days/week continuously between washouts, suffer fewer cold to hot thermal cycles and require less fuel each shift to be brought into steam than with intermittent use. That has consequences on boiler life (and overhaul costs) and the amount of fuel used per operating day. It is too easy to get into the narrow bean counting mind set and overlook less obvious issues which result from reducing the number of days a service is provided.

On the flip side, and I have not yet seen this mentioned, it is likely to be more feasible to reduce reliance on paid staff if a railway does not operate on say two, preferably adjacent, days each week. The resulting window takes some pressure off and may enable more tasks to revert to volunteers. That trend may be forced on some railways where an unmanageably large staff overhead can no longer be funded by a reduced operation.

 

Both the number of days of operation available to earn money for the next overhaul and the boiler cycles issue have a limited impact on overall railway economics I think.

There is no point running unless the revenue (from all sources) exceeds the costs. Roughly the cost per train day on standard gauge is £2000 (an example). That cost is about the same whether you run one trip or 6.

Now if your day time yields £1000 in walk up fares and the evening brings another £2000. The evening (dining) subsidised the daytime. But all is good and you have £1000 towards caped (loco overhauls, track, carriages etc etc etc).

Midweek outside school hols… you might take £1500. £500 to make up on other days, by donations or grants to break even let alone make a capex contribution.

more difficult to assess though is the need to maintain cash flow. This is typically more important than making a notional profit everyday, but more difficult to assess changes.

 

It isn’t the reduced operation that will not fund the staff. Rather the lack of traffic which will pay fares.

IF there is enough cash flow and the fare box on remaining days is strong, then it might be that the same staff can be supported even though the number of days is drastically reduced. It depends.

 

The thing that really sticks in my head about this is that it is very difficult to have a metric for things that don't happen. So say you are a railway's commercial manager, and you start with the attitude "Times are terrible, people are spending less. We need to move to fewer trains and pre-booked event style experiences." You dissuade walk up and casual visitors either explicitly or through an attitude inferred by your communications to the public, so they don't turn up. You look at your figures and they justify everything you previously thought to be true. Were you right? Or can you just not measure something that isn't happening?

 

The danger of the self fulfilling prophecy!

 

We've been through this lots of times before - it's called Management by Walking About (MBWA) and there is far, far too little of it!

 

I don't much care for the pre-booking concept but I think it has one important advantage to the seller - and that is the opportunity to try to up-sell "extras", whether this is catering options or discounted tickets to other associated attractions, or provide offers to better fill trains at quieter times. I don't think we've seen much of this yet.