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Arena Analysis to enhance tourism
The analysis considers the operations of an arena which conducts exhibitions, conferences and performances which has been a place for the tourism. The Government intends to make investments of $ 2.1 million to expand the area and enhance its seating capacity so that more audience can be accommodated and more revenue can be generated.
The analysis considers a project which would enhance the seating capacity to 2000 seats for the arena and number of events which takes place would also increase. For the purpose of this project, it is imperative that the benefits which can arise are identified and further a cost benefit analysis is necessary so that financial feasibility of the project can be established.
The analysis would be focusing on the financial and economic value which the project can generate and how the same are measured. The economic and financial value for the project is shown in terms of jobs created, revenue, tax revenue and property valuation for the future. In addition to this, the analysis would show the relevance of sustainability in such projects and how sustainability practices for the business can be measured. In an overall basis, the analysis establishes the feasibility of the development project for the arena.
The main focus of the discussion is to test the viability of a project which focuses on enhancing the tourism revenue for the region. An arena is proposed to be developed so that the seating capacity and primary infrastructure is developed so that more audience can be attracted and overall revenue generating capacity can be enhanced.
The project which is considered would require an investment of $ 2.1 million from the Government which represents the outflow of cash and the inflow would be the revenue from sales of tickets, concessions, rental revenue, tax revenue for the government and higher property valuation (Pratt 2015).
The analysis focuses on anticipating the economic value which the project can generate along with the overall costs as well. In addition to this, the analysis covers a sustainability requirement for the project so that negative effects on the environment can be avoided. The next section explains some of the proposed economic benefits from the project.
The proposed economic benefits from the development of the project are appropriately listed below in a tabular format which also covers some of the long-term benefits:
| Direct Economic Benefits | Indirect Economic Benefits |
|
|
Estimation of Economic Benefits
Outflow of Funds:
Investment made by the Government = $ 2.1 million
Economic Benefits:
Direct Tourism Jobs = 750 jobs
Indirect Jobs = 200 jobs
Direct Employment multiplier = 1.1
Indirect Employment multiplier = 1.3
Total Job created = Direct Jobs * Direct Employment Multiplier + Indirect Jobs * Indirect Employment Multiplier
= 750 *1 + 200*3 = 750 + 600 = 1350 jobs
Revenue Estimation from Conferences, Exhibitions and Events
Expected Number of events = 150
Total Capacity = 2000 seats
Attending Capacity = 80%
Average Ticket price = $ 50
Concession revenue = $ 400,000
Rental Revenue = $ 250,000
Total revenue from the Venue = (Revenue generated from tickets +Concession revenue +Rental Revenue
= (2000* $ 50 *80%*150) + $ 400,000 + $ 250,000
= $ 120,00,000 + $ 400,000 + $ 250,000
= $ 12,650,000
Tax Revenue Anticipated
Tax revenue generated from Income taxes = Total revenue generated * 30% tax rate
= $ 12,650,000 *30% = $ 37,95,000
Tax revenue from Indirect Activities = ($ 400,000* 7% + 250,000*7%)
= $ 45,500
Property Taxes = $ 21,00,000* 30% = $ 630,000
Total Tax Revenue $ 30,45,000 +$ 38,500 + $ 630,000 = $ 3,713,500
Property Valuation
Property Value = $ 2100000
Increase in value = 20%
Revised Property Value = $ 2100000 *120% = $ 2520,000
Data sources Used
“Data Source: https://www.bea.gov/”
“Data Source: https://www.ibisworld.com/”
“Data Source: https://www.tourismeconomics.com/”
“Data Source: https://www.chamberofcommerce.com/”
In terms of computing the methodology, the following assumptions and methods are considered which are listed below:
Estimation of Direct Employment & Indirect Employment
• The analysis considers the industry standards for the estimating the number of employees and further employees from different venues in terms of numbers of employees.
• In the same manner, past trends for wages for employees and management staff for venues would be considered for estimating the costs which the business would be established.
Estimation of Earnings of the Venue
• The earnings which is estimated is based on the seating capacity and attendance of the guests who will be visiting so that ticket revenue can be established.
• The concession revenue would be considered based on the support services and further rental revenue would be considered as a part of revenue of the venue.
Estimating for Tax Revenue
• The tax revenue for the business is based on the income taxes and indirect taxes on the total revenue and concession revenue and rental revenue which the venue generates.
• The tax collected from property taxes which would enhance as the value of the property enhanced.
Property Valuation
• The property value for the venue which s being developed would enhance the value over the years and the growth rate is expected to be 20%.
The operations of creating a new arena with maximum seating capacity has to be carried out with consideration for the projects impact on the environment and natural resources.
The term "environmentally sustainable operations" describes development initiatives that contractors carry out in order to assume accountability for the environment and guarantee that no harm is done to it or its resources (Leonidou et al. 2017).
To achieve this goal, it is crucial that all actions be carried out using sustainable solutions in order to reduce their negative environmental effects. Here are some essential tactics that may be used to meet the sustainability requirements of the venue development:
• The construction operations requires lot of water and therefore it is important for the business to ensure that water conservation is done in an appropriate manner. The project manages needs to ensure that toxic materials are controlled and water sources are protected.
• The procurement strategies for the venue needs to be sustainable so that the materials are efficiently acquired and level of accountability is maintained in the construction operations.
• The management of the project needs to ensure that the source of energy which is to be utilized for the project should be renewable so that the same does not have any impact on the environment (Piercy and Rich 2015). The energy sources should be selected appropriately so that sustainability practices can be initiated further.
• The project manager should also should ensure that proper awareness regarding sustainable practices in the project so that appropriate practices are implemented and efficiency is achieved in the operations.
• The team also needs to ensure that the construction area is restored and area is improved so that the business can maintained accountability with the operations and efficiency can be maintained.
For the purpose of ensuring that the measurement of success of the strategies, some of the criteria needs to be considered so that efficiency can be maintained. The venue manager would be assessing the conservation of water levels, renewable energy levels which is consumed for the project and the sources which is used from which materials are acquired. The analysis would be requiring appropriate funds for ensuring that the venue can be developed so that accountability can be maintained.
Altinay, L. and Taheri, B., 2019. Emerging themes and theories in the sharing economy: a critical note for hospitality and tourism. International journal of contemporary hospitality management, 31(1), pp.180-193.
Hakan, K.U.M., Aslan, A. and Gungor, M., 2015. Tourism and economic growth: The case of next 11 countries. International Journal of Economics and Financial Issues, 5(4), pp.1075-1081.
Leonidou, L.C., Christodoulides, P., Kyrgidou, L.P. and Palihawadana, D., 2017. Internal drivers and performance consequences of small firm green business strategy: The moderating role of external forces. Journal of business ethics, 140, pp.585-606.
Piercy, N. and Rich, N., 2015. The relationship between lean operations and sustainable operations. International Journal of Operations & Production Management, 35(2), pp.282-315.
Pratt, S., 2015. The economic impact of tourism in SIDS. Annals of tourism research, 52, pp.148-160.
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