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Talyllyn Finances

Discussion in 'Narrow Gauge Railways' started by brennan, Oct 19, 2016.

  1. brennan

    brennan New Member

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    Last issue of Steam Railway reported that the TR Company had an operating loss of £104,398 in 2015 and a loss of £80,773 in 2013.

    Something going wrong?
     
  2. simon

    simon Part of the furniture

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    I think this was discussed on here sometime ago. The operating company has been losing money for some time and is propped up by other parts of the organisation.

    Changing patterns of holidaying being one reason given.
     
    Last edited: Oct 20, 2016
  3. The Saggin' Dragon

    The Saggin' Dragon Part of the furniture Staff Member Moderator

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    Several railways have been in the same situation at times.
     
  4. jma1009

    jma1009 Member

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    The TR Co has regularly been bailed out by the TRPS on it's annual operating loss.

    It has been often said that the TR is run according to the whims and wishes of the TRPS membership, quite devoid of any commercial considerations.

    Whether that is a good thing or not is perhaps not the point except that arguably the TR Co has been insolvent for many years since the serious drop in passenger numbers since the early/mid 1970s.

    The 'Steam Railway' magazine fundraising for Dolgoch's new boiler mirrored at the time the commercial dept loss on the TR.

    There were numerous comments at the time that the TR could have paid for Dolgoch's' new boiler had the commercial department not made a hefty loss.

    Cheers,
    Julian
     
  5. Herald

    Herald Member

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    A further surprising statement in the Steam Railway article which seems to come from data on the Railway's website (quoted and linked below):

    "Traffic figures ended the year on 84,458 passenger journeys which was an increase of 0.3% on the 2014 figures. The Galas attracted more members than usually travel and that figure masks a decrease in public bookings of 4.0% to 35,090. A fares increase and improved Gift Aid take-up compensated for this and total traffic revenue increased by 6.1%."

    http://www.talyllyn.co.uk/internal/arrc-16d

    One hopes that the public bookings are generally for return tickets and therefore account for around 70,000 passenger journeys but even so it implies that the free travel arrangements for members and reciprocal arrangements for free travel with the Ffestiniog represent a significant opportunity cost to the business with a high percentage of journeys bringing no revenue.
     
  6. huochemi

    huochemi Member Friend

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    I think the "excessively democratic" structure of the TR is not necessarily helpful to commercial performance, but the railway company is run by the adults i.e. the TR board, the (indirect) TRPS' representatives on which are selected from the more capable of the council members, plus of course there is a paid management. There are also limitations in what you can do on the cost side as you cannot shrink your way to profitability, with the high operational gearing of a railway.

    The TR Co has been unprofitable for a long time, but it is now operating in accordance with the new heritage railway paradigm which, if not yet, will affect many other heritage railways: the railway operations need to be subsidised. Fortunately, we are in an era of availability of legacies, which defer the evil day when volunteers may need to pay to play. As a comparison, Severn Valley Railway (Holdings) PLC would have made losses of £323,000 and £201,000 in the last two years if donations made directly, if somewhat inefficiently, to the company had not been included in the results.

    The TR family thus finds itself with the strange paradox that the economics of operating the railway have never been worse but the cash balances have never been higher. Coupled with a general shortage of volunteers, this fits the operating environment they are in, as it means they can pay to get certain things done, rather than rely on volunteers as in the past. Thus for instance in the last year Holdings (the charity and holding co) made grants for the re-gauging of a loco, maintenance of a loco, refurbishment of toilets, purchase of a lathe, and a grant for employing certain staff.

    So yes, the picture does not look good, but no immediate need to panic.
     
  7. Reading General

    Reading General Well-Known Member

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    worrying situation. Where does the solution lie? Increasing commercial non operating activities?

    Possibly shortage of volunteers is the problem likely to get worse. Here I am sat in a railway desert , if only I lived near Towyn of a dozen other areas!
     
  8. paulhitch

    paulhitch Part of the furniture

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    I see from the Steam Railway report that the T.R. managed to lose over £29,000 on catering somehow.This is astonishing. Catering ought to be a source of net revenue for any tourist railway. Certainly it should not lose money.

    PH
     
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  9. 61624

    61624 Well-Known Member

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    I see from the Steam Railway report that the T.R. managed to lose over £29,000 on catering somehow.This is astonishing. Catering ought to be a source of net revenue for any tourist railway. Certainly it should not lose money.


    Unfortunately, the statement simply isn't true - it is all too easy to lose money with paid staff and an overambitious menu. That was a lesson learned the hard way at Fairbourne a few years ago, I speak from personal experience!
     
  10. paulhitch

    paulhitch Part of the furniture

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    I really cannot see how the statement "simply isn't true". I wish it were. The T.R. had a similar episode many years ago and the reaction of a Talyllyn stalwart I then knew was "It's a service to visitors not a source of profit". Whether this was due to embarrassment or a genuinely held (and misconceived) point of view I cannot say.

    PH
     
  11. Baldwin

    Baldwin Guest

    ....maybe it's just because there are too many narrow gauge railways in the area...?
     
  12. 3855

    3855 Member

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    I visited the railway on a mid week day in June with a group of friends, we bought tickets and rode the full length of the line, the train we caught was around a 1pm departure from Towyn and was well filled with passengers. On arrival back at Towyn we found the museum closed along with the cafe and were somewhat miffed as we had planned to visit both upon our return. There was a further departure after we had got back. Based on my visit there seem to a number of revenue earning opportunities missed so perhaps little wonder the company is trading at a loss.
     
  13. Reading General

    Reading General Well-Known Member

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    that's an interesting point of view. I thought it was because there were so many that people visited. I assume you are suggesting that the advent of the Welsh Highland has impacted the Talylyn?
     
  14. Baldwin

    Baldwin Guest

    ..no..maybe it's just run it's time and people want something else..and there's just not enough customers to go round..
     
    Last edited by a moderator: Oct 21, 2016
  15. huochemi

    huochemi Member Friend

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    The reality is that nearly all heritage railways trade at around the breakeven level, and are incapable of generating funds for new capital investment, and rely on donations etc to make ends meet. Some do a little worse, some a little better. I note for example that the Bluebell, in the well-heeled southeast, has made a loss of £220,000 in each of the last two years. albeit on a much larger turnover. The TR's problem, other than being in the wrong industry, is its location at Tywyn, which is a bleak little place, and has little else to offer visitors, but it cannot do much about that. Compare that to Portmadoc, which by comparison is a metropolis and much closer to the centre of Snowdonia and the tourist hordes.
     
  16. Bean-counter

    Bean-counter Resident of Nat Pres

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    If you strip out the sort of thing @huochemi refers to from 'Other Operating Income', then quite a number of seemingly financially 'successful' heritage railways tend to make Operating Losses. This usually is the combined results of all 'trading' - i.e. not just the Train Service but Sales and Catering etc. as well. What I find rather frightening is there seems to be an increasing attitude that this is 'fine' and indeed should be planned to be the case rather than 'expecting too much of the train service'. 'An easy life' is considered more important than basic financial viability in some quarters, except for the fund raisers expected to bridge the gap and keep the place running, that is!

    At the same time, indeed often the same people, will point out that members and the wider public will happily support restoration appeals, and even those for major repairs and renewals (which some argue should be paid for from the fare box) but will they really support, certainly to the required extent, a loss on operations just because those responsible for running the business won't drive the income line or control expenditure? Are people actually happy for their loves ones' legacies to be used this way? That is certainly not the feedback I have had, in some cases very personally directed! In reality, the Membership Fees end up plugging the gap, so the volunteers - and every member - are already 'paying to play' where 'playing trains' is the 'business approach' an organisation follows.

    I always aimed to report the 'Operating Result' as genuinely that and am pleased to say that the organisation I used to hold this sort of responsibility in achieved basically 'break-even' in the last 2 years, having improved the position from a loss over the proceeding years. This was done by driving income, creating new services, providing services passengers wanted to use and were willing to pay for, increasing efficiency by reducing empty trains and being careful/realistic with expenditure (i.e. still making necessary expenditure where needed). I would add these results were after deducting considerable write down of assets (Depreciation), a very high figure due to both the amount being spent on Capital Expenditure and the Depreciation policies in use.

    Any trading results only reflect Capital Expenditure through the Depreciation charge and I have often pointed out that many of the assets on which Depreciation is being charged were paid for by appeals, grants and/or bequests and hence the trading results were carrying on-going costs of assets they hadn't funded. The level of Capital Expenditure (or major renewals) that many Railways will need in coming years as locomotives, rolling stock and especially track, bridges and structures reach the end of the 'economic lives' and need major work is a massive challenge to the whole movement and something will stretch organisations' ability to raise 'charitable' funding anyway - is it really wise to base the Operational Business Model on 'don't expect the operations to break even', so that considerable fund raising is already needed to offset a drain on cash resources from ordinary operations?

    (I would add I also do not believe that simply jacking the fares through the roof is the answer - 800 passengers paying £20/head brings in more than 600 paying £25 and I don't believe many Railways, if any, can afford sufficiently detailed research on 'elasticity of demand' to be able to predict how much volume of business will be lost at various potentially higher fares, so any increase is based on 'let's see if we can get away with it' and once a reputation for being expensive and poor value for money is gained, it spreads rapidly and is difficult to lose! Furthermore, it saves next to nothing to run a train with say 200 passengers paying £25/head instead of 275 paying £20/head but total revenue is 10% more with the greater number of passengers, who will also probably feel more inclined to support the railway they are travelling on in any Appeals etc. than if they have been made to pay 'until the pips squeak' for their basic ticket!)

    Steven
     
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  17. nanstallon

    nanstallon Well-Known Member

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    The fact that there are so many narrow gauge railways in North Wales attracts many people to take their holidays there. The Talyllyn was the first, and has an authenticity that IMHO is not achieved by any other. I admire the Ffestiniog, but it has a much more commercial, rather than preservation, ethos. There is room for both, and for many more besides.

    John
     
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  18. Reading General

    Reading General Well-Known Member

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    oh Lord, that sounds ominous, I hope you're wrong!
    I do often wonder at the direction some lines take away from "preservation societies" towards being businesses, the magic surely is in the line having been and continuing to be saved by Volunteers. The Talylyn is of course the Icon of this.
     
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  19. richards

    richards Well-Known Member

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    It's not just a case of open or shut. You can change the way you run a business so that it doesn't make a loss, or as big as loss. Also, the finances for the whole organisation need to be looked at, as many companies (including steam railways) deliberately run parts of their business at a loss for various reasons. They are subsidised by revenue from elsewhere.
     
  20. Baldwin

    Baldwin Guest

    ...of course...but it seems the TR is not the only one in the financial position it is, the only way out is to attract customers that would of gone to other railways and for the TR that's not an easy job due to it's location..
     

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