tourism investment guidelines · contains planning and development guidelines for tourism projects...

TOURISM INVESTMENT GUIDELINESyOUR GUIDE TO TOURISM INVESTMENT IN VIcTORIa

tourismvictoria.com.au September 2008

Notice & Disclaimer

Use of these Guidelines

These Guidelines are intended to provide general guidance only and are not intended to provide financial advice or to be used as the basis for investment decisions. Specialist advice should be obtained regarding each project specific investment.

While endeavours have been made to provide reliable and accurate information in the Guidelines based on data currently available, Tourism Victoria does not warrant the accuracy, currency nor completeness of the Guidelines or any information contained in the Guidelines.

These Guidelines have been prepared solely for the purpose noted above and must not to be utilised or relied upon for any other purpose. Anyone using the Guidelines does so at their own risk and no responsibility is accepted by Tourism Victoria for any losses which might directly or indirectly result from any reliance on or use of the Guidelines.

tourism investment guidelines 1

Tourism is one of the fastest growing industries in Victoria, contributing $10.9 billion to our economy and employing 159,000 people.

Under the 10 Year Tourism and Events Industry Strategy, the Victorian Government aims to grow tourism to an $18 billion industry, employing 225,000 people by 2016. To achieve this aim, we need to enhance our existing tourism infrastructure, attractions and events as well as facilitate the delivery of new projects that capitalise on the State’s tourism strengths.

In an environment of strong international competition for the tourist dollar, partnerships between Government and industry, along with significant private sector investment, will be crucial for the ongoing success of tourism in this State.

The new Tourism Investment Guidelines: Your Guide to Tourism Investment in Victoria contains planning and development guidelines for tourism projects and is intended to assist in advancing projects from concept through to business planning and statutory planning stages.

The Victorian Government is committed to working with local government, community groups and investors who wish to explore the exciting opportunities available in Victoria.

I strongly encourage you to take advantage of this booklet as you develop and enhance your tourism product.

MESSaGE fROM ThE MINISTER

TIM HOLDING MP Minister for Tourism and Major Events

“

The Victorian Government is committed to working with local government, community groups and investors who wish to explore the exciting opportunities available in Victoria.”

2 tourism investment guidelines

Buckland Studio Retreat, Buckland Valley.


Message from the Minister 1

Introduction 4

Project Process Summary 6

Context For Tourism Investment 8

Market Identification 15

Concept Development 22

Project Approvals 32

Financing & Funding 48

Construction 56

Key Success Factors 58

Appendices 59

Summary – A. 10 Year Tourism & Events Industry Strategy 59

Sustainable Design 60B.

Key Organisations 61C.

cONTENTS

Cover image: Brambuk, Grampians. Photographer: Bindi Cole – Snap Happy.

Clyde Park Vineyard, Bannockburn. Photographer: Mark Chew

.


Tourism is a global growth industry.

In Victoria, tourism activity has grown dramatically over the last two decades.

Victoria’s principal tourism products – quality food and wine, events, natural attractions, cultural and heritage attractions, and retail diversity – have established a market identity and presence in Australia.

Victoria has a number of critical competitive advantages in relation to tourism options and development – distinctive and consistent marketing, a wide range of lifestyle experiences, compactness and excellent accessibility (internationally and throughout the State) to diverse destinations and venues that host major events for sport, culture and business.

Tourism is dynamic and competitive. Factors affecting its performance and operation include technological change, market influences, societal influences (environment, security, transportation, communications), and consumer preferences and aspirations. Understanding how such factors influence tourism choices made by consumers is essential for a successful and sustainable tourism industry. The full spectrum of factors that influence consumer choice – from global to local – also need to be considered together with how those factors affect different markets.

Development and Investment in Victoria’s Tourism Industry

Victoria has a comprehensive approach to tourism development and investment. The Victorian Government’s 10 Year Tourism and Events Industry Strategy (October 2006) establishes a strategic platform for tourism growth over the next decade.

Victoria’s key tourism industry objectives are:

Build upon existing strengths. •Develop new strengths. •Focus on long-term growth •opportunities. Strengthen the partnership between •Government and industry.

Assisting Tourism Investment

This document aims to assist individuals and organisations to become part of the Victorian tourism industry and assist its growth through investment and development of a tourism project.

It is a resource and procedure guide that aims to assist proponents with small to medium scale investment projects to conceptualise, plan and develop their projects.

The guidelines will:

Provide key data on the recent •performance of Victoria’s tourism industry and information on statistical resources available to help assess market opportunities. Outline the vital considerations in •identifying the market demand for an investment idea, selection of a location and a site and creation of a development concept. Identify the processes and pitfalls of •obtaining development approval for the concept.

Highlight local government’s central •role in informing and assisting tourism investors. It is also the primary approval body for development and its role in these processes are described in this document. Provide advice on the special requirements •that come into play if you are interested in investing in a project on public land. Describe the principal elements for •business planning and obtaining funds to turn the concept into reality. Finally, the realisation of your investment •is likely to require skill in the management of the construction phase to ensure quality and cost control.

Tourism Victoria’s Role

Tourism Victoria assists in the improvement of Victoria’s tourism assets by identifying economically and socially sustainable infrastructure opportunities, which will maintain the State’s competitive edge. Tourism Victoria’s strategic objectives include the expansion of private sector investment in tourism projects and the coordination of public infrastructure investment to gain optimum benefits for the tourism industry. This is achieved by providing data, new concept and investment ideas, information and facilitation of project approvals to both the public and private sectors.

This guideline provides a broad overview of the tourism investment process in Victoria. Opportunities and information about specialised tourism areas such as wine tourism, golf tourism, nature-based tourism, spa and wellness tourism, alpine tourism, Aboriginal tourism and other sectors are also available at Tourism Victoria’s website www.tourismvictoria.com.au. Similarly, also available on this website are Regional Tourism Action Plans and Concept Proposals for Tourism Development in Victoria 2005, which identify opportunities and directions for future tourism investment throughout the State.

INTRODUcTION

Twelve Apostles, Great O

cean Walk. Photographer: M

ark Watson.


Assess the site attributes and limitations – ✓enhance the attributes and minimise the limitations.

Prepare a functional layout that identifies the location, area ✓and relationship of activities to be carried out on the site.

Prepare a preliminary architectural concept design for the ✓project and proposals for services and facilities.

Ensure that the project concept includes sustainable design ✓approaches and proposals to minimise adverse on-site and off-site impacts.

Assess the project cost and initial feasibility and ensure ✓it is within the project budget.

Appoint architect. Consider various •concept options.

Obtain reliable cost estimate of proposed •development (appoint quantity surveyor to obtain estimate).

Have preliminary discussions •with potential financiers.

Concept Design

Ensure that the site is accessible and appropriately exposed ✓to the target market. Ensure that the site is suitable to accommodate the intended use and all ancillary services and facilities.

Consider the statutory approval requirements – is the use and ✓development permitted on the site?

Appoint planning advisor. •

Speak with local real estate agents. •

Discussions with local government •planning department.

Discussions with servicing authorities. •

Site Selection

Continued on next page

pROjEcT pROcESS SUMMaRy

The following is a quick reference for developing new tourism projects from concept to reality.

Collect and analyse data on the performance of the proposed ✓type of tourism product in the selected region/locality.

Identify the market segments likely to utilise the new product/ ✓service.

Are there opportunities in the region/locality to build on the ✓tourism strengths of the area or to form strategic alliances with others?

Assess consumer expenditure levels and preparedness to pay. ✓Assess price competitiveness and marketing expenditure ✓necessary to reach the market in both the start-up phase and once you are operational.

Determine the risks to the projected market performance of ✓the project.

Market research, local and regional data •collection.

Research activities to include: discussions •with Tourism Victoria, local government, local and regional tourism bodies, and evaluation of national demographic and tourism data.

Market Assessment

Can a gap in tourism products be identified? If so, why? ✓Does the concept have a ‘point of difference’? ✓Identify the region/locality of the new tourism product. ✓Identify the project team and specialist advisors. ✓

Preliminary assessment of products •in selected locality.

Preliminary assessment of competition, •quality and market strength.

Appoint architect, planner, and financial •adviser as required.

Coming up with a Tourism Concept

pROjEcT STaGE REqUIRED acTIONS (ThE TO-DO LIST) whaT NEEDS TO bE DONE


pROjEcT pROcESS SUMMaRy

Appoint a construction phase project manager. ✓Detail the project design and confirm the project cost. ✓Ensure competitive prices are obtained from builders for the ✓construction of the project.

Maintain tight management of the construction program, ✓development quality and variations to costs.

Appoint construction project manager. •

Obtain building construction quotes. •

Refine design and specifications with •architect to fit budget and quality outcome required.

Project Construction

Prepare a detailed financial submission for the consideration ✓of financial institutions and financiers.

Consider funding support that is available through State ✓and Federal agencies.

Consider equity partners or project sponsors ✓(not for profit proposals).

Identify potential financiers and identify •preferred funding arrangements.

Meet with Regional Development Victoria •and other State funding assistance agencies.

Contact Federal funding bodies. •

Obtaining Funding

Prepare a detailed Business Plan that includes business ✓structure, management, marketing and operation.

Include a detailed financial feasibility analysis that contains ✓a projection of longer term (say 10 year) cash-flow and profitability and considers changes to the project parameters with best and worse case scenarios.

Identify the potential staging of the development. ✓

Obtain advice from financial advisor •on Business Plan.

Discussions with accountant. •

Discussions with legal advisor. •

Financial Feasibility & the Business Plan

Identify the scope of requirements under the planning ✓scheme and other statutory provisions for planning permit approval, including a pre-application discussion with the local government.

Compile a planning application submission that responds to ✓the requirements of the planning scheme.

Consider an application for review to VCAT if the planning ✓permit application outcome is unfavourable.

Planning advisor to arrange pre-application •discussion with local government.

Meet with local government councillors if •significant local community issues are likely.

Obtain advice from planning advisor •and lawyer regarding VCAT application for review.

Development Approval

pROjEcT STaGE REqUIRED acTIONS (ThE TO-DO LIST) whaT NEEDS TO bE DONE

Meet with the local government – planning department, ✓economic development department, tourism services, infrastructure services and local councillor(s) to identify requirements and procedures.

Meet with neighbouring property owners and if required, ✓more broadly with community and specific interest groups to minimise potential objections to the project.

Meet with service authorities and related government ✓agencies to determine their requirements, including any special requirements that apply to public land and alpine resorts.

Discuss concepts with:

Local government. •

Adjoining landowners and the local •community as required.

Service authorities. •

Government departments including DSE •or Alpine Resort Management Board for public land.

Consultation


Victoria’s tourism industry competes on a national and international stage. Our attractions, experiences, facilities and services are assessed by Victorians and visitors alike, against those available interstate and around the world. Internet access and cheap air travel have broadened the options for travellers and holiday-makers. The tourism market is experienced and discerning.

Travel by Victorians within Victoria, constitutes the largest proportion of total tourism visitation in the State. Travel by interstate and international visitors within the State provides the greatest economic benefit to Victoria from tourism. Tourism investment decisions must recognise the highly competitive nature of the industry and the need to provide services that meet the needs of all travellers – 5 star to no star, indulgence to no frills, for fun and for business. Our product offer will be judged against a much more diverse range of options than in the past.

Performance & Importance

Tourism is a key economic activity for Victoria.

“In 2003/04 tourism and events contributed $10.9 billion or 5.3% of Gross State Product and employed 159,000 people or 6.6% of the State’s workforce. In the same year, more than 1.3 million international visitors spent more than $2.6 billion in Victoria. ” 1

In regional Victoria, tourism contributed $3.4 billion to the regional economy in 2003/04 and employed 61,000 people. This was 31% of the State’s total tourism output and 39% of the State’s total tourism employment.2

The State Government has invested heavily in the tourism industry and since 1999 nearly $350 million has been invested in marketing and product development strategies. This investment has been targeted towards achieving increased visitor yield and also improving visitation to the State. Increasing visitor yield requires tourism operators to match consumer preferences and expectations. Today’s tourists increasingly seek better standards of service and new experiences.

cONTExT fOR TOURISM INVESTMENT

p. 6, 1 10 Year Tourism and Events Industry Strategy, Dept of Innovation, Industry and Regional Development, October 2006

p. 34, ibid2

International and National Visitor Surveys, Tourism Research 3 Australia, year ending December 2006

(includes domestic & international expenditure)

Holiday 6,012*

Visiting friends and relatives 2,505*

Business 1,488*

International education 1,045*

Other 600*

fIGURE 1: ExpENDITURE IN VIcTORIa by pURpOSE ($M)3

Mantra D

eep Blue, Warrnam

bool.



p. 14, 4 10 Year Tourism and Events Industry Strategy, Dept of Innovation, Industry and Regional Development, October 2006

p. 15, ibid5

p. 7, ibid6

p. 11, ibid7

The 10 Year Tourism and Events Industry Strategy forecasts that overseas tourists are likely to account for 70% of overall tourism growth and almost 40% of tourism expenditure (currently 30%) by 2016 4. It is expected that the economic importance of overseas students to tourism yield will be maintained over the next decade.

“Asia is expected to be the primary sources of international growth, with China’s share of international visitors likely to increase from 9% to 19% in that period” 5.

The Tourism Strategy estimates, based on the continuation of recent growth, by 2016 tourism and events will be an $18 billion industry and one of the State’s leading exporters, contributing 7–8% of Gross State Product and employing 225,000 Victorians 6.

“The predominant sources of tourism expenditure are international and interstate visitors, who account for only one third of Visitor numbers but two thirds of expenditure. Increasing lengths of stay (international) and higher spends per night (interstate) have driven Victoria’s recent growth in visitor expenditure.” 7

Victoria has particular competitive advantages in relation to it’s:

Highly creative, consistent and •well-targeted advertising campaigns. Distinctive range of lifestyle experiences, •particularly in relation to its art, cultural and heritage precincts, shopping, nightlife, car touring and boutique food and wine. Compactness and agreeable seasonal •variations provide year round diversity and enhance the opportunities in Melbourne and regional Victoria. Internationally recognised cultural, •sporting and business events. Ability to attract increasing numbers •of international airlines flying directly into Melbourne and increased passenger capacity. Tertiary education institutions, which •attract large numbers of international students (who represent approximately 40% of present international yield).

Tarrawarra Estate, Yarra Valley. Photographer: Peter D

unphy.


Current Issues

At the national and international level there are several key influences on Victoria’s tourism future. They include:

Emergence of new markets – growing •middle class in China, India and other parts of Asia (China and India provided 70,000 visitors to Australia in 1996, which has grown by 500% today). To maximise benefits from these emerging markets, potential local experiences, infrastructure and services must meet the cultural requirements of these visitors. On-line tourism services available •through the internet (the information source of choice for many travellers). Local tourism businesses need to provide comprehensive product information to enable bookings to be made on-line. Tourist demands and expectations are •becoming increasingly sophisticated. Excellence in service standards is vital. There is a growing need for well trained and skilled tourism professionals to meet future expectations. Convenient access to information and its •widespread availability can also impact on attitudes and preferences when major natural, political or economic shocks occur.

Low cost air carriers provide a significant •incentive for consumers to take interstate or international holidays. The growing markets around the world •for specialised tourism niches, including nature based and health and well being activities and experiences. Global competition in tourism marketing •is increasing and effective coordinated campaigns are required to maintain and grow market share. Marketing to interstate and intrastate visitors must not be neglected if market share is to be maintained.

To ensure a competitive and responsive tourism industry in Victoria, the Government is committed to:

Giving higher priority to the tourism and •events industry in infrastructure planning and investment attraction. Creating a larger and more highly trained •tourism workforce. Strengthening the on-line presence of •Victoria’s tourism products and services. Integrating government decision-making •on economic, social and environmental issues in relation to tourism activities. Enhancing the reputation and •performance of Victoria for environmentally sustainable tourism.

These directions and an action program are detailed in the Government’s 10 Year Tourism & Events Industry Strategy that was released in October 2006. The principal features of this strategy are:

Building upon existing tourism strengths •by improving the branding and marketing of Victoria; continuing to pursue major events and increasing aviation access. Developing new tourism strengths •by ensuring that public infrastructure development takes into account tourism requirements; continuing to attract and facilitate investment; enhancing service skills and standards; and promoting greater use of on-line services. Having a focus on long-term tourism •growth opportunities and in particular targeting emerging international markets; expanding the acquisition of business events; developing regional destinations; and building the synergies between tourism and international education. Strengthening the partnership between •Government and industry through better coordinated decision-making; policy coordination and advocacy; and continuing communication of the benefits derived from the tourism industry.

Further information on the key activities in relation to this Strategy is provided in Appendix A.


Silverwater Resort, San Rem

o.


Overview of the Tourism Investment Process

Successful development of a tourism project requires a coordinated and sustained process. A good idea, a desire to mix business and lifestyle in an attractive location or a stunning parcel of land may seem a reasonable basis to launch a tourism venture. As illustrated (fig. 2), realisation of a tourism development requires the successful conduct and negotiation of several processes to that end.

The following sections of the Guidelines provide details of:

How to take an idea to a realistic ▶development concept. The essential need to identify a market ▶for the tourism product. Selection of a suitable site, fitted to the ▶market and to be targeted and suited to the concept. Fitting the concept to the site attributes. ▶Discussions/consultation that is required ▶to inform the project in relation to legal requirements and avoid delays through community opposition.

The fundamental requirements to ▶demonstrate that the project is financially feasible and a sound investment. The procedures to obtain development ▶approval for the project. Considerations in relation to obtaining ▶finance and funding the development. The detailed design, tendering and ▶construction of the development.

Various advisors are essential to this process. They may include a project manager, town planner, architect, civil and other engineers, landscape designer, marketing consultants, financial and legal advisors or other specialists. Each advisor will play a key role at particular stages of the project. Selection of experienced and suitable advisors should be undertaken with research and careful consideration. It is highly desirable to define their scope of work with a written brief. Most professional associations can provide information on potential advisors in these fields.


fIGURE 2: TOURISM INVESTMENT pROcESS

Idea

Con

cept Con

sulta

tion Feas

ibili

ty

App

rova

ls

Fina

ncia

lA

rran

gem

ent

Con

stru

ctio

n

TIME

PRO

GR

ESS

Peppers Springs Retreat, Daylesford.


Investment Opportunities

Strategic studies by Tourism Victoria, regional tourism organisations and a number of local governments throughout Victoria have identified many investment opportunities in the State. They include:

Visitor accommodation in Melbourne •and throughout regional Victoria. Particular market niches have strong prospects including high yield high end accommodation, backpacker accommodation, bed and breakfast, alpine accommodation and cabins. The provision of nature based •experiences and accommodation, particularly supporting experiences in the Otway Ranges, Great Ocean Road Region, Grampians and East Gippsland. Similar facilities can be linked to trail networks or special recreation sectors such as bike touring, mountain biking, fishing and hiking. Food and wine products such as vineyard •accommodation, cellar doors and facilities that showcase regional food. Facilities that utilise Victoria’s extensive •geothermal and mineral spring resources such as day spas and health resorts. Aboriginal cultural heritage interpretation •and experiences. Golf based tourism and recreation •establishments. Water based attractions. •

Tourism Victoria’s web site provides details of plans and related research that describe current investment opportunities that support the strategic directions for Victoria.


Victoria’s Regional Tourism Action Plan •

2008–2011 and earlier Regional Tourism

Development Plans 2004–2007 for all

Regions

Concept Proposals for Tourism •

Development in Victoria 2005

Investment Guidelines for Wine Tourism•

Victoria’s Spa & Wellness Tourism •

Action Plan 2005–2010

Victoria’s Geothermal & Natural •

Mineral Water Tourism Investment

Opportunities 2007

Victoria’s Nature Based Tourism •

Strategy 2008–2012

Victoria’s Aboriginal Tourism •

Development Plan 2006–2009

Alpine Resorts 2020 Strategy•

TabLE 1: pLaNS aND STRaTEGIES ThaT IDENTIfy TOURISM INVESTMENT OppORTUNITIES IN VIcTORIa

The Buckland Studio Retreat café, Buckland Valley.


If we build it, will they come? The likelihood of a positive response and subsequent action to invest must be based on a sound understanding of the magnitude, nature and characteristics of the market. A creative tourism concept must have access to its intended market and be executed in a manner that meets that market’s expectations. A thorough analysis of the market opportunity is the essential starting point to develop and test an investment concept.

Opportunity Identification

The identification of a likely market, the prospects for market growth and their critical price point (willingness to pay) underpins the creation of a concept for the project.

“

Is there likely to be demand for this tourism idea? What is the number and characteristics of Visitors who might want to come to or use this facility?”Broad analysis should be carried out to initially scope an opportunity. This can occur through informal discussion and observation, coupled with basic research – web based tourism data, real estate data, operators in complementary fields, visitor information centre resources and similar areas. Opportunities may be defined through research into comparable geographic areas, from social and demographic trends or through data on economic or environmental change. Consider whether existing tourism facilities in the locality are performing to an optimum level – if not, what factors might be contributing to that performance.

MaRkET IDENTIfIcaTION

Identify potential market opportunities within the region:

Are there gaps in the current provision •

of services or facilities? If so, why?

Are there consumer trends that •

have not been recognised through

development in the region?

Are there strategic alliances that •

haven’t been developed or are

underdeveloped?

What is the delivery of complementary •

market products in the region?

What are the asset strengths of the region?•

Identify what is driving tourism activity •

and demand in the region.

Are there particular market segments •

for which the locality has appeal?

Are there special interest groups that •

are not catered for?

Market Intelligence & Data

Your market assessment must be based on a well-founded analysis of the supply and demand for the product. It must assess questions like “What are the trends local, interstate and overseas?”, “What are the drivers for this product and what local characteristics does it hope to harness?”, and “Can the product be distinctively branded?”.

For example, ecotourism is growing in popularity on a global basis. Australia has world-wide appeal for nature based experiences. Nature based tourism experiences appeal particularly to international tourists and travellers with higher education levels. Higher levels of per capita average expenditure are generally recorded for ecotourism trips.

Specific data on the ecotourism market can be obtained through the World Tourism Organisation, The International Ecotourism Society, Tourism Research Australia and Tourism Victoria. Victoria’s Regional Tourism Action Plan 2008–2012 identifies target markets and local development opportunities including nature based activities.

Key data sources include the International Visitor Survey, National Visitors Survey and Destination Visitor Survey series produced by Tourism Research Australia. The majority of regional and State data is available for free on Tourism Victoria’s corporate website and includes regional and market profiles.

Generally there is a time lag between the collection and publication of secondary data. It varies according to the nature of the data collected and it’s utility. There is a need to refine historic analysis with more current information and indicators for the future.

Local government may be able to provide data on existing approved tourist development, not yet commenced or proposals being considered. Similarly the identification of infrastructure projects committed or planned will assist with an appreciation of public sector priorities that may impact on potential tourist activity. Local government is also frequently the organiser or coordinator of major festivals and events in the locality. Data on programmes, attendance, target markets and plans for future development of these events may be of particular value. Where traffic data is available this can provide an indication of local activity trends and should be considered in the context of activities in the locality/region that may be contributing to observed traffic volume changes. Traffic data also provides an indicator of passing trade exposure and opportunities.

TabLE 2: MaRkET ESSENTIaLS SNapShOT

Mt Zero O

lives. Photographer: Helen H

iscocks.


The examination of this information should aim to provide an indication of the nature of the project opportunity, its target markets, potential scale and principal components.

Market Feasibility

A market feasibility study assesses the demand for a project. While the preliminary market data assessment may indicate an opportunity or gap in the market, a full market analysis is required to prepare a detailed project concept for financial evaluation.

The market feasibility study will:

Confirm and quantify potential markets•Assess the characteristics and requirements •of markets.Provide an analysis of the anticipated long •term performance of the project in the market place.Identify any barriers to successful •establishment and operation of the business (local image or reputation, labour and skills availability, goods supply limitations etc).


Tourism Research Australia www.tra.australia.com

International Visitor Survey •

National Visitors Survey •

Destination Visitor Surveys•

Australian Bureau of Statistics www.abs.gov.au

Overseas Arrivals and Departures•

Survey of Tourist Accommodation•

Tourism Satellite Account and others•

Tourism Victoria www.tourismvictoria.com.au

Regional Market Visitation and Profiles•

Market Segment data•

Visitor statistics for international, domestic •

and regional markets and others

Royal Automobile Club of Victoria www.racv.com.au

Accommodation listing•

The primary elements in this assessment are existing product demand and supply, current performance and level of utilization, direct competitor performance, anticipated change in supply and demand, initial and longer-term performance of the proposed tourism product.

Data on existing supply and demand will be of variable availability, quality and detail and will depend on the nature of the business proposed.

For example, data is available on accommodation establishments on a monthly basis for establishments with 5 or more rooms. It provides an overall indicator of visitor trends, seasonal variation and the performance of particular types of accommodation establishments. Local government may have more generalised visitor activity data and also particular statistics associated with attractions, festivals or events in a locality. The challenge is to identify data that informs an understanding of the size of a specific market segment, how it is provided for at present, its potential to increase and the price that consumers will pay for the service or attraction. Secondary data may not provide sufficient insight to the potential performance of a concept and it may need to be supplemented with primary research into matters such as visitor characteristics, travel patterns, expenditure, motivation for and purpose of travel, performance of identified competitors

and the like. Market research or tourism specialists should be contacted in relation to the conduct of surveys and analysis of data.

The market feasibility will also examine the external factors influencing current demand and likely to influence future demand including the focus of marketing at National, State, regional and local levels, infrastructure development that will for example, enhance the attractiveness of a locality, its accessibility or improve the cost of operations.

Market Penetration

The broad market statistics will lead to an assessment of market size. The critical issue is to estimate the likely penetration, ie. the proportion that can be attracted to the new product. A realistic determination should inform on the scale of the facility and its supporting elements.

These estimates may be derived from examining comparable facilities (relating daily visitation/occupancy to scale), examining the size of market segments and estimating share on a daily basis, consideration of the features or characteristics of the new product that will increase or impact on market share and consideration of competition for market share in the locality and what might be a reasonable proportion of that market likely to be captured by a new facility.

TabLE 3: kEy DaTa SOURcES

Lyall Hotel, South Yarra. Photographer: M

ark Chew.


The assessment of market penetration should be critically reviewed to evaluate its reasonableness. It is not a question of taking an arbitrary percentage; rather it assumes a realistic look at what actions will be taken to give the product an identity and to capture market share. Is it consistent or in contrast with the expected product quality in the locality?

Competition & Alliances

Existing developments need to be assessed as to their performance as a competitor and as a potential ally in capturing visitor interest. The presence of existing operators of a similar kind of business in a locality can create a critical mass and enhance the reputation and attraction of that area for that particular service, eg. bed and breakfast operations, fishing or boating tours, farm stays, golf courses and day spas.

Analysis of the nature and performance of competitors will provide an indication of the market segments visiting an area, volume of business and yield. It will also provide an indication of prevailing standards of quality and service and assist in the definition of a point of difference for a new venture.

The existence of other businesses in complementary fields in a locality can strengthen the total offer of a new business through the establishment of alliances, linkages and joint marketing. Research with existing operators will help to expand the possibilities for a new business.

Positioning / Brand

Establishing the image and position in the market of a new venture is a crucial step. Key motivators of consumer choice are a product’s image associations and confidence in a brand. Being part of an established brand brings with it market recognition, reputation and expectations of certain standards. Establishing an entirely new brand requires creativity in order to make it memorable. It demands a careful analysis of what will appeal to your target market and what local strengths might be harnessed.

Identification of the aspirations and values of the market segments to be targeted is critical to deciding on the quality and content of the venture. The development of establishments with well-known or internationally reputed brands provides status to a locality – a region, a town or a city precinct. New brands should take into account the profile and market segment appeal of existing operations. Is the prevailing market attracted to a locality likely to support the proposed product image or position or will development of new markets be required?

Branded accommodation has many advantages over independently operated properties. Branding accommodation requires payment for a licence (for a specific period of time) to trade under a particular brand’s name and use the associated name or logo. Branding is a way of distinguishing products from competitors. The benefits of aligning with a particular brand include:

Centralised reservation system – easier •for consumers to make a reservation. Collaborative marketing – global •marketing/promotional alliances to broaden exposure in the market (through brand recognition). Brand image and reputation – •identification of product and expectation of standards. Managerial expertise – assures •hotel investor of the strength of the management of the hotel and provides consistent quality and service with administrative guidelines. Access to higher level of demand and •lower costs – able to generate demand through brand loyalty. Financing opportunities. •


Novotel M

elbourne on Collins. M

antra on Russell.


Market Assessment Risks

The market assessment includes an appraisal of historic and contemporary performance of a locality and information on indicators of future performance. Projections on future performance are predicated on a range of assumptions. The analysis of future performance should be supported by an assessment of the factors that may impact on those projections.

The assessment should include alternative growth scenarios and enable the financial assessment to take such alternatives into account.

The factors that influence targeted markets and the likelihood of change in market opportunity need to be examined, eg. improved air access to competitor destinations and allowances made in the assessment.

The assessment must also consider the establishment and development phases as well as ‘normal’ operations. Internal and external factors that will influence performance of the business over time need to be considered in the assessment. The likelihood of change occurring in such factors represents the level of risk in relation to the assessment of demand.

Project Market Parameters

The analysis conducted should provide:Identification of target market segments•Assessment of market penetration with •estimates for the product of annual demand and identification of any seasonal variation (with monthly estimates desirable to address seasonality). Likely expenditure per capita on the •services to be providedThe sensitivity of the product price•Estimates of growth over time based on •various assumptions in relation to internal or external change.

The analysis should provide a clear basis for the design of the concept – what it will contain, scale, complementary facilities, quality, image, setting and location.

Preparing Market Assessment Studies

Specialist consultants should preferably be engaged for market and financial analysis. Such experts may include market research and development consultants, appropriately qualified accountants, and specialist tourism business consultants. General advice can also be obtained at minimal or no cost from financial institutions and from organisations listed in Appendix C.


RACV Cape Schanck Resort, Mornington Peninsula.


caSE STUDy 1

SEa MELbOURNE

SUccESS facTORS

Market research indicated that there was a gap in the provision of this type of service in Melbourne. •

Investor had a sound working knowledge of boating operations and chartering for fishing. •

Significant research conducted into the design and construction requirements for the vessel, •

which enabled it to be delivered on time and within budget.

Existing development in Victoria Harbour and its promotion by the State Government as a tourist •

destination provided an opportunity for high visibility and accessible base of operations.

Delivery of a high quality service has been a priority with the benefit of significant additional business •

through word of mouth recommendations. Internet marketing has also been effective.

Approvals processes require persistence, careful planning and good research. •

Important for investors to be familiar with financing and tax issues in order to gain optimum benefit •

from advisors.

DOckLaNDS, MELbOURNE

For more information go to: www.cruisevictoria.com.au

Charter hire catamaran with capacity for up to 150 passengers. Business provides pre-booked cruises of Port Phillip Bay for corporate functions, weddings, parties.

caSE STUDy 2

DOhERTy’S baLLaRaT LODGE & cONfERENcE cENTRE

baLLaRaT

For more information go to: www.dohertyhotels.com.au

SUccESS facTORS

A limited conference facility existed on this site when acquired by the current operators. A major •

opportunity for the expansion of this market was identified due to a limited level of competition in the

region, excellent access to a major market in Melbourne and strong growth identified in the business

sector. The opening of the facility has since provided access to a larger event and function market in the

region than was originally projected.

The success of the conference centre has been in part due to its flexible design and versatility for a wide •

variety of events and functions and incorporation of high end audio visual technology and comprehensive

kitchen facilities.

The comprehensive range of facilities on the site has provided access to diverse market segments – •

business, leisure, health, education and local.

The approvals process benefitted from local government assistance in relation to the lease of a portion •

of local government land. Successful consultation with local objectors enabled an extended approvals

timeframe to be avoided.

Continued direct marketing is important in the conferences and events market. •

Delivery of a high quality product at a competitive price has facilitated strong repeat business. A high level •

of staff retention with the required skills and outlook has been an important factor in this success.

Capacity to leverage off the existence of an established attraction in Sovereign Hill.•

Ballarat Lodge is an accommodation and conference complex located in Ballarat, opposite the nationally significant tourist attraction ofSovereign Hill. The 4½ star lodge provides 71 rooms and conference and meeting facilities that cater for 1,200 people. Other facilities includetwo restaurants, a bar and a health and beauty spa. Located in a majorregional centre, this complex services an extensive regional population and is conveniently located within 75 minutes drive from Melbourne.



Selection of a site for investment requires consideration of the physical area and setting that are required for the project, but also the regulatory requirements that must be satisfied for approval. Local government plays a major role in decision-making and the achievement of successful outcomes.

Site Selection (where to locate?)

The identification of a suitable site for a tourism development needs to take into account:

The site’s location in relation to the •businesses potential market. The setting of the site and the •surrounding development context. The particular characteristics of the site. •

Site choice must consider both macro and micro factors.

Site Macro factorsA large population base in close proximity to a site provides a significant market opportunity for the project. Sites within major centres or within easy access will potentially benefit from this market exposure (generally within 2 hours drive from Melbourne or 30 minutes to an hour from a provincial centre).

cONcEpT DEVELOpMENT

fIGURE 3

MaRkET ExpOSURE aND accESS

TRaVEL TIME aND DISTaNcE

LOcaTION DISTaNcE (kM) TIME (hRS)

Healesville

PortCampbell

PortFairyPortland

GippslandLakes

Mallacoota

WilsonsPromontory

Bright

Marysville

Albury Wodonga

Swan Hill

Mildura

Sorrento

Geelong

Queenscliff

ApolloBay

Warrnambool

Horsham

Daylesford

Bendigo

Ballarat

MELBOURNE

Echuca

MelbourneAirport

MilduraAirport

AlburyAirport

Avalon Airport

Bairnsdale

Traralgon

Lorne

Wangaratta

Sale

Falls Creek

Lake Eildon

Lakes Entrance

Rutherglen

Phillip Island

Yarrawonga

Nagambie

Beechworth

Melbourne to: Albury Wodonga 321 4Apollo Bay 194 3Bairnsdale 281 4Ballarat 115 1.5Beechworth 283 3.5Bendigo 150 2Bright 324 4Daylesford 114 1.5Echuca 230 3Falls Creek 385 5.5Healesville 65 1Horsham 301 4Lake Eildon 213 3.5Lakes Entrance 317 4.5Lorne 139 2Mallacoota 515 7Mildura 543 7Nagambie 135 1.5Phillip Island 142 2Port Campbell 226 3Port Fairy 300 4Portland 371 5Queenscliffe 105 1.5Rutherglen 292 3.5Sale 313 3Sorrento 112 2Swan Hill 336 4Traralgon 163 2Wangaratta 250 3Warrnambool 272 3.5Wilsons Promontory 215 3Yarrawonga 281 3.5

1 Melbourne 2 Daylesford & The Macedon Ranges 3 Yarra Valley & Dandenong Ranges 4 Mornington Peninsula 5 Phillip Island 6 Great Ocean Road 7 Goldfields 8 Grampians 9 Victoria’s High Country 10 Gippsland 11 The Murray


Proximity to a major population centre also brings with it the benefits of better access to labour and skills, cheaper goods and materials, more diversity in the services available and generally a higher order of available site infrastructure – water, sewerage, energy, and communications (fig. 3).

The most suitable site for a particular type of tourism investment will vary according to the image desired and nature of the business. The type of businesses or land uses in the surrounding area should complement the project, eg. accommodation to support an attraction, cafes/restaurants to support accommodation, parkland/open space near cultural/heritage establishments. A resort-based project will benefit greatly from a dramatic or unique setting, or one providing privacy or seclusion. The presence of industrial development nearby or a poor quality urban environment will detract from the image sought for the establishment.

Views to or from the site, attractive or identifiable vegetation or topography and /or close proximity to a water body (pond, lake, creek, river coast) will enhance the site.

The local climate and micro-climate of the site will influence both its use and design. From which direction are the prevailing winds? What are the minimum and maximum seasonal temperatures? How much sun exposure and rainfall? Will shaded or weather protected areas be required? The design will need to address these factors.

Similar establishments in the locality may be seen as competitors but they also bring the benefits of the development of a critical mass of businesses that enhances the market’s awareness and exposure to that particular product. It also brings the potential for collaborative marketing and greater opportunities for passing trade, for example Daylesford is known for spa tourism.

A major highway / main road location is highly desirable for accommodation establishments. Travellers expect to be able to find a bed on the main road. Main road locations provide essential visibility and passing trade exposure for a variety of businesses. In regional areas constructed (bitumen sealed) roads prove generally more acceptable for travellers, while the product at the end of a gravel road or track will have to work harder to ensure that the trip is worthwhile. Consider road traffic volumes and the split in the traffic between locals / business / trucks / visitors when evaluating the benefits of alternative sites. Good pedestrian access may also be essential for some businesses. Is the site within walking distance of other potential tourist destinations such as a public transport terminal or shopping precincts?

Site Micro FactorsWhile there are numerous external factors to consider in selecting a site, it must also be suited for the intended purpose. The site needs to be large enough to contain the full range of development envisaged – allow for growth, consider the preservation of any beneficial features, allow for convenient access and site circulation, the provision of on-site car parking and also landscaping may be required.

Experts may be required to advise whether there are attributes on the site of environmental, archaeological, heritage, cultural or scientific interest. The existence of a heritage building on the site may provide identity, character and a thematic base. There may also be heritage obligations regarding alterations to a building or site that need to be satisfied. Sites near the coast or water bodies are highly likely to be of importance in relation to Aboriginal cultural heritage.

The environmental state of the site also needs to be taken into consideration. For example, is the site contaminated from a previous industrial use; is it subject to flooding; does it contain acid sulphate soils; or is it subject to geotechnical risks (subsidence, slumping, slope failure and the like). It is essential to assess whether there will be extraordinary development costs, eg. special foundations or earthworks are required, or if there are significant constraints on parts of the land, eg. periodic flooding in relation to tidal peaks or from nearby drainage lines.

There is also a range of non-physical site factors that must be identified such as planning scheme zoning (what are the land uses permitted and the requirements for development – see next section), title particulars (lease, freehold, encumbrances or restrictions), land value and local government rates. Whether the site or proposed use may be able to access any government incentives, eg. heritage grants, tax concessions or rate reductions, needs to be ascertained.

Visitor Accommodation – •

Market exposure, visibility, access.

Resort – Special setting, •

distinctive site character.

Attraction – Market exposure, access, •

size of site.

Bed & Breakfast – special character, •

sense of privacy, access.

cONcEpT DEVELOpMENT

TabLE 4: SITE cONSIDERaTIONS fOR paRTIcULaR DEVELOpMENT


Concept Design

The preparation of the concept design is informed by the market assessment and the site evaluation. The site has been selected on the basis of the functional requirements of the project and the market to be served. Fitting the project to the site in an optimal manner requires an examination of the site opportunities and constraints. Site analysis (fig. 4) – mapping of the site micro factors as outlined will identify parts of the site well suited to arrival and principal building areas, service areas, access points and potential conflict zones, conservation areas, screening or landscaping zones.

Site analysis should identify:Topography •(high points, steep land, flatter areas). Drainage lines and susceptibility to flooding.•Vegetation type and quality.•Soil type and quality.•

Wetlands or other areas of significant •environment value.Views to and from the site.•Suitability of roads that provide access •to the site and access points onto the site.Location of existing services (water, •electricity, gas, sewerage, telecoms) and any extensions required.Aboriginal and post-settlement •heritage assets.Unstable or erosion prone land.•Climatic effects (wind exposure, shade •and sun exposure, precipitation).External impacts (traffic noise, signage, •night lighting, surrounding land uses).Existing buildings on the site and their •suitability for the proposed purpose or conversion.Neighbouring buildings and land uses •and in particular buildings used for residential purposes.

The site analysis should provide a summary of the site opportunities and constraints. The concept should take advantage of the opportunities available (for example, attractive views from parts of the site, areas of flatter land that is less costly to develop, parts of the site that may be conveniently and efficiently serviced, areas of attractive landscape) and avoid or minimise the development of the parts of the site that are constrained by areas of high environmental or heritage value, unattractive outlook, steep or potentially unstable land and similar factors.

From the mapping of these constraints and opportunities a number of development options for the site may be developed. A ‘high level’ evaluation of these alternatives should consider the overall project objectives, development costs (including the provision of on-site services), external impacts and relationships, staging and meeting market requirements.

cONcEpT DEVELOpMENT

fIGURE 4 : SITE aNaLySIS (ExaMpLE)

Otw

ay Fly Treetop Walk.

Source: Meinhardt Infrastructure & Environment and MGS Architecture Planning Interior Design


A matrix may be developed, for example that evaluates each option against criteria established for the project. Consider whether some criteria should be given greater importance (weighting) as part of this process.

Determinaton of a building envelope or development area from this process should include a functional layout of the activities within the building, described for each level as they may vary. The functional layout will consider the scale and location of each part of the building and how it relates to other components, eg. point of entry, reception, access to public areas (such as restaurants and bars), access to private areas (accommodation), kitchens, service areas and administration areas. The functional layout should also address external relationships such as the protection of areas susceptible to amenity impacts, visually exposed parts of the site and unattractive neighbouring site attributes. The planning scheme requirements in relation to siting and works requirements should be addressed in the resolution of the project’s functional layout.

Professional advice from town planners, landscape architects, architects, engineers and quantity surveyors would be advantageous to these processes.

The architectural advisor should play a major role in the creation of the initial preferred conceptual layout for the project. Following the resolution of this fundamental layout, the architectural design concept can be developed. This will include detailed and three dimensional consideration of the bulk and scale of the buildings, overlooking, overshadowing and other neighbouring amenity factors, architectural style and local character, car parking, on-site and off-site public spaces, entry and identity, signage and landscaping theme.

The concept design will require refinement through consideration of the project objectives and discussion on the proposal with the approval authorities, particularly local government. From these processes, resolved concept design plans should be produced that include as a minimum, site layout (including any demolition, excavations or earthworks and vegetation removal), building layout (for each level), elevations of buildings and additionally include proposals for materials and finishes, site parking, service operations, signage and landscaping as may be applicable. These plans will form the basis for seeking development approval for the project. A preliminary cost should be estimated for the project at this stage to ensure that it is within the set budget range.

fIGURE 5: pREpaRaTION Of cONcEpT DESIGN

cONcEpT DEVELOpMENT

Site Data Site Analysis

Concept DesignFunctional Layout

DEVELOPMENT OPTIONS

Milaw

a Cheese Factory. Photographer: Mojo Partners.


cONcEpT DEVELOpMENT

Considerations for the establishment of a tourism project by ‘not for profit’ organisations.

Creation of the ConceptIs the project consistent with the •

organisation’s principles and objectives?

If it is based on a collection, how eclectic •

is the appeal of that collection?

What is the principal theme and what •

thematic interpretation will be used to

unlock the stories?

Research the experiences of other •

organisations with like concepts – identify

the factors for success and potential pitfalls.

How big is the market attraction – the •

specialist enthusiast, the connoisseur or a

broader market?

Does the theme of the attraction/project fit •

the location?

An asset obtained for little or no cost may •

require high levels of capital to upgrade it or

make it fit for use and substantial continuing

maintenance expenditure.

The Incorporation Phase Obtain advice on the various forms of •

incorporation available and assess the

statutory requirements.

Are there ‘champions’ of the project and •

are they committed long term? Are they

prepared to demonstrate that commitment

through donations and /or support for fund

raising processes? Is the project likely to be

attractive to partners on a ‘sponsorship’ basis?

Is the project likely to meet criteria for •

government financial support?

Are there impediments to the project gaining •

‘Tax deductibility Gift Recipient’ status?

Assess the availability and cost of Public Risk •

and Product Liability insurance for the project.

Assess the availability of Volunteers and •

the demands the project might make in

terms of training, volunteer leadership and

communication.

The Business Planning Phase Ensure the Business Plan contains a credible •

rationale for the projections of Visitor

numbers and revenue.

What is the level of likely profitability? •

Will it be profitable or at least cash positive?

Is the project likely to be independently •

financially sustainable or will it require

on-going subsidy to meet operational costs

and depreciation, asset replacement costs

or upgrades?

Prepare a Risk Assessment Plan to identify •

potential financial risks and responses.

How will the project be marketed? •

Are there linkages available to other

marketing programs?

TabLE 5: TOURISM pROjEcTS by ThE ‘NOT fOR pROfIT’ SEcTOR

Role of Local Government

The local government for the locality of the project plays a key role in providing information that will assist the preparation of the concept and later, approval of the project.

There are several areas of local government management that can assist the preparation of a development concept.

Local governments commonly have economic development groups – persons who are responsible to promote the investment opportunities within local government and facilitate investment. The economic development group may be able to provide statistics on development, information on new projects in the pipeline, advice on areas where certain investment opportunities are being promoted,

employment profiles, demographic information, real estate information and contacts in State or regional agencies where further useful information and financial assistance may be obtained.

Local government often carries out tourism management and promotion and many run Visitor Information Centres. Local government may be able to provide advice on marketing campaigns, visitation statistics, visitor profiles, market performance, significant and competitor attractions, regional linkages and strategic plans for tourism in the local government or region. Local tourism groups work closely with local operators and also with regional bodies and Tourism Victoria.

YHA Eco Beach, Apollo Bay.


cONcEpT DEVELOpMENT

Before the development concept is resolved it is essential that preliminary discussions are held with the town planning department of local government. This is generally referred to as the ‘pre-application’ phase and the local planning department will be able to provide advice on:

Specific information requirements that •must be provided with the application for a permit. Information about the site and the •relationship of the development to the surrounding land uses. Identification of relevant policies of the •local government in the planning scheme that must be addressed and assistance in the interpretation of those policies to enable a suitable response to be made as part of the application.

The particular controls in the planning •scheme that will affect the proposal and which will need to be addressed in the application. The identification of local issues that need •to be considered in the development of the concept and any external or community consultation that should be undertaken before the concept is finalised for approval. The possible need for an Environmental •Effects Statement (EES), a Cultural Heritage Management Plan (CHMP) or other specific statutory process. Identification of Referral Authorities and •other organisations to be contacted at the concept stage, eg. the Department of Sustainability and Environment, water and sewerage authorities, VicRoads, Liquor Licensing Victoria, Victorian Casino and Gaming Authority etc. as appropriate.

The time frame for the approval •procedures to be carried out and steps in the process where the ‘clock stops’ in terms of the statutory time limits for approval.

The local government infrastructure or engineering department should be contacted to identify issues relating to roads, drainage, street tree planting, site access and similar matters. Discussions with this department will generally provide more specific technical information that will assist in the concept’s refinement. Information may also be provided in relation to compliance requirements for other legislation, eg. Health registration. Local government engineering departments are not responsible for services such as water, electricity, gas and sewerage (in most instances) but will be able to assist in directing enquiries to the local providers of these services.

Corporate Plan Provide a strategic direction for tourism in the •

local government’s principal policy document.

Economic DevelopmentIdentify investment opportunities, provide •

local economic and social data and identify

opportunities for assistance and facilitation.

Economic development strategies for •

local government areas should address

the interrelationship between tourism and

other economic sectors, and their impacts

on existing infrastructure; and explore

opportunities for increasing economic benefit

through improved linkages within other parts

of the local and regional economy.

Tourism Provide data on tourism activities, conduct •

marketing campaigns, prepare tourism

development strategies, monitor visitation

and collect data.

Foster the establishment and facilitate the •

operations of local tourism organisations

and interests.

Planning Local planning policies or zoning may provide •

specifically for tourism development.

Local government should link the Regional •

Tourism Action Plans 2008-2011 into their

MSS or Local Planning Policy Framework.

Identify tourism development objectives •

and policy guidelines within strategy plans to

influence the development and assessment

of tourist proposals, and for use in marketing

local tourism development opportunities.

Local government can actively encourage •

appropriate tourism development, by

identifying precincts or individual sites

appropriate for tourism development.

Facilitate consultation between project •

proponents and stakeholder (particularly

communities).

Provide advice on statutory controls, •

information requirements and time frames.

Infrastructure & Engineering Provide information on requirements for •

roads, drainage and related infrastructure

and provide details of proposed public

works and related approvals.

Other tourism related initiatives of local

government might include:

Offering rate reductions or other financial •

assistance to attract investment likely to

generate long-term economic benefits for

the local government.

Conducting seminars for developers to •

identify opportunities on particular sites

or precincts, and outlining available local

government assistance, eg. provision of

professional or design expertise.

Financial incentives. •

It is critical that decision making by local

government in relation to tourism projects be

effectively internally coordinated.

TabLE 6: ROLE Of LOcaL GOVERNMENT IN RELaTION TO TOURISM pROjEcTS


Why is it Important?

According to the Green Building Council, buildings consume one third of the world’s resources; they use 42% of Australia’s energy; 12% of our water demand is consumed by buildings; up to 40% of waste going to landfill is from construction and deconstruction activities (predominantly the churn of refurbishments); and 40% of Australia’s air emissions are from buildings.

With the exception of hospitals, tourism accommodation can have the greatest environmental impact of any commercial buildings: it consumes energy, water and other resources 365 days a year. Support services such as laundries, restaurants, swimming pools, energy-intensive heating and cooling systems, gardens and other recreational facilities consume large amounts of resources.

Importantly, a number of recent international studies indicate a growing consumer awareness and concern of the environmental impacts of tourism. For instance, an April 2007 TripAdvisor survey of more than 1,000 travellers worldwide found that:

40% take environmentally-friendly •tourism into consideration when making travel plans; Just over a third (34%) said they would •pay more to stay at an environmentally-friendly hotel. When asked to specify how much extra they would be prepared to pay for ‘green’ accommodation, 25% said they would pay a 5-10% premium, and 12% would pay a 10-20% premium.

For investors and developers that are prepared to develop and promote environmentally sustainable tourism, there are obvious benefits.

Benefits of Sustainable Buildings

Sustainable buildings generally incur a small green premium above the costs of standard construction. But green buildings deliver a suite of financial and environmental benefits that conventional buildings do not. These benefits, such as energy and water savings, should be looked at through a whole of life or life cycle cost methodology, not just evaluated in terms of upfront costs.

From a life cycle savings evaluation it is documented that savings from investment in sustainable design and construction dramatically exceed any additional upfront costs.

International research has found that the average construction cost premium for green buildings is almost 2% – substantially less than is generally perceived. Increasingly the small green premium above the costs of standard construction is covered in high resale value of the asset, as a result of lower operating costs of sustainable buildings.

Other Benefits include:

Net savings from lower running and •maintenance costs;Improved corporate image through •a demonstrable commitment to the environment;Lower carbon dioxide • (CO2) emissions thanks to efficient energy use and the use of renewable energy technologies where this makes design and business sense;Better opportunities to let or sell in a •competitive market; andEnhanced occupant comfort, improving •productivity.

Sustainable Design and Construction Principles

A building’s life spans its planning, design, construction and operation; and its ultimate re-use or demolition. In the accommodation sector, often the entity responsible for design, construction, and initial financing of a building is different from those operating the building, meeting its operational expenses and paying employee salaries.

As a result, decisions made at the first phase of building design and construction can significantly affect the costs and efficiencies of later phases.

In a general context, sustainable design and construction principles for future tourism developments should:

Take into account the climate;•Be subordinate to and aesthetically •sympathetic with the natural environment and cultural context;Reinforce and exemplify environmental •responsiveness;Enhance appreciation and awareness of •the environment;Minimise pollution of soil, air and water ;•Use renewable indigenous building •materials wherever possible;Increase efficiency in the use of materials, •energy and other resources;Use life-cycle analysis in decision •making about material and construction techniques;Minimise the consumption of resources, •especially non-renewable ones;Maximise the use of materials with low •embodied energy;Identify opportunities for re-use and •recycling; andIdentify opportunities for water •conservation and re-use.

Tips for Sustainable Design are detailed in Appendix B.Further information regarding sustainable developments can be obtained from The Green Building Council Australia (GBCA), The Royal Australian Institute of Architects (RAIA) and the Australian Sustainable Built Environment Council (ASBEC). (see contacts Appendix C).

cONcEpT DEVELOpMENTSUSTaINabLE bUILDING DESIGN aND cONSTRUcTION


Case Study – RACV Inverloch

As part of its commitment to environmental outcomes in the conduct of its business and to assist members to reduce their environmental impact, the RACV has developed and applied environmental design criteria to its building, construction and refurbishment projects.

RACV’s new holiday facility at Inverloch has been designed to maximise the site’s natural attributes. The site is being revegetated with native grasses and trees – all indigenous species. The wetlands will provide habitat for birds and aquatic life while assisting with drainage and water quality management. Landscaping is being designed to minimise watering requirements.

The Inverloch resort is an affiliate of Green Globe, an international sustainable travel and tourism program. Similarly, redevelopment of the RACV Healesville Country Club in 2007 encompasses ecologically sustainable design provisions. Of note is the unique geo-exchange cooling system which will use the earth’s natural thermal energy to regulate temperature.

RACV Inverloch Resort, Inverloch.

cONcEpT DEVELOpMENTSUSTaINabLE bUILDING DESIGN aND cONSTRUcTION


The Eco Beach YHA at Apollo Bay is a 24 room (72 bed) budget accommodation development, located one street back from the harbour and foreshore of this west coast village. This is a “green” project that incorporates a high level of energy saving and environmentally sustainable features in its design. Apollo Bay is in the heart of the Great Ocean Road region, an iconic tourism destination for overseas, interstate and domestic tourists.

apOLLO bay

For more information go to: www.yha.com.au

SUccESS facTORS

Market opportunity was identified through the success of the Grampians YHA Eco Hostel, •

a similar YHA ‘green’ project in Halls Gap, and the high profile of the Great Ocean Road region.

The strong environmentally friendly design approach has been a major selling point with high appeal for •

youth hostel travellers, particularly international visitors.

Site selection met the needs of central accessibility for budget travellers (beaches, shops, bars); northern •

orientation that provided maximum solar benefit, attention to the amenity needs of adjacent properties,

sufficient space for necessary on-site parking and circulation and views to the surrounding hills.

The architect was provided with a clear brief for the project design that required attention to energy and •

water conservation, passive heating and cooling elements that met seasonal variation and the use of energy

saving technology without a reduction in guest comfort. These requirements were achieved through

building orientation, planning and design, material and colour selection, fixture and fittings selection, site

treatment and landscaping.

Marketing of the facility benefits significantly from the generic marketing of the Great Ocean Road, •

nationally and internationally, from the strength of the YHA hostel network and also from the local

Visitor Information Centre in Apollo Bay.

caSE STUDy 3

EcO bEach yha

Gaining approval for a project requires attention to the potential external impacts of a project and the statutory procedures that must be negotiated. Investors will usually need to engage closely with neighbours, the broader local community, local government and service authorities if they are to minimise the time frame and issues in the approval process.

What types of Approvals are required?

An examination of the planning scheme will have identified whether the proposed use and development is permitted under the planning scheme or not. The assessment of the planning scheme must identify whether there are parts of the development that are permitted and others that do not conform to the planning scheme requirements. In the event that an element of the use or development (or the proposal generally) does not comply with the planning scheme requirements then consideration will need to be given to:

Modifying the proposal to bring it within •the scope of what may be permitted under the planning scheme. Seeking an amendment to the planning •scheme to provide for an alternative zone for the site, or other alteration to the planning scheme provisions that would enable the development to be approved. Abandoning the site and seeking an •alternative location for the development.

If the concept is not consistent with the strategies and policies of the local government contained in the planning scheme it will be a significant task to achieve a modification to the planning scheme to enable the development to proceed. In this circumstance a decision to proceed with the project should only be taken after detailed discussions with Tourism Victoria, Department of Planning and Community Development, the local government and any referral authorities, eg. VicRoads, Department of Sustainability & Environment, Country Fire Authority, to establish a basis for the amendment.

On the basis that the proposed use and development may be permitted under the planning scheme an application for a planning permit needs to be prepared. Proceeding with a non-complying proposal would require a planning scheme amendment to be sought. These processes are described briefly. Information on the planning permit process and planning scheme amendment process is contained in Planning: a Short Guide (2005) which may be obtained from www.dpcd.vic.gov.au at the planning/planning permits/application process links.

Planning Requirements

Victoria’s Planning Framework

The provisions of the planning scheme that applies to the locality determine the planning requirements for a project. Victoria’s planning schemes are governed by the Planning and Environment Act 1987, which regulates land use and development. Generally local government administers planning schemes in Victoria (except for alpine resort areas – see Chapter 4) and the local government is responsible for the approvals required.

The planning scheme regulates the type of land use and the nature of development on all land. It may specify requirements that must be satisfied by the development. Throughout the State, planning schemes have a standard format and a number of standard provisions. There are also local provisions that are unique to that local government area and are applied to specified areas, sites or activities.

Information on all of Victoria’s Planning Schemes is available online at www.dpcd.vic.gov.au/planning. Information available includes all the planning scheme maps across the State and the details of the planning controls. A planning property report may be generated through this site that provides information on the planning controls applicable to a particular property.

pROjEcT appROVaLS

Come up with the idea and develop the concept. ✓Contact local government’s planning department to discuss the initial tourism concept and ✓Tourism Victoria on compatibility with the State’s Tourism product regions, and for assistance options.

Identify what planning policies affect the land where the development is proposed, ✓including the zoning of the subject land and the surrounding area.

Determine what issues, including design and siting issues, need to be investigated ✓to refine the initial concept.

Determine whether there are any relevant referral authorities that should be ✓consulted at the preliminary design concept stage.

Determine whether Councillors, local residents, or community groups should be consulted ✓prior to the lodgement of the planning application.

If appropriate, appoint professional design and planning assistance to assist with ✓concept development.

Refine the concept, in conjunction with local government officers and other relevant agencies, ✓after having investigated the relevant issues.

Identify what information needs to be included in the planning application; ✓this will depend on the location, scale and complexity of the proposal.

TabLE 7: SUMMaRy TOURISM pROjEcT appROVaL chEckLIST fOR DEVELOpERS



Planning Schemes

In Victoria a planning scheme has the following components:

State Planning Policy Framework (SPPF)The SPPF is common to all planning schemes and describes State planning policy in relation to matters of State importance. These policies include important principles for the coordination of development, protection of the environment, housing, economic development and infrastructure provision.

Municipal Strategic Statement (MSS) & Local Planning Policy Framework (LPPF)The MSS and LPPF are unique for each local government/municipality. The MSS succinctly describes the principal planning objectives and strategies for the municipality and is linked to the municipal corporate plan. The MSS provides an important foundation for decision making by local government on development proposals. The LPPF provides statements of planning policy and intended actions in relation to localities, uses or activities. The MSS and LPPF must be taken into account by local government when making a decision on a planning permit or planning scheme amendment.

ZonesThe planning scheme maps delineate the extent and nature of the land use zones that apply in each local government area. The zones are typically based on a primary land use (Residential, Business, Industrial etc) and the zone provisions describe the primary purposes of each zone and the controls in relation to land use and development. Within each land use zone the uses that are permitted without the need for a permit, require a planning permit or that are prohibited are detailed. Zones typically include decision guidelines, which are matters that the local government will consider when making a decision on a planning permit.

OverlaysOverlays operate in addition to the zone requirements. They may be applied to particular areas for a variety of reasons including special environmental, landscape or heritage values, particular physical constraints (flooding, land slip hazard for example) or specific design or development requirements. Overlays will influence how land may be used or developed and its requirements will be considered by the local government in deciding a planning permit. The number and type of overlay that applies will be particular to each parcel of land and across local governments. The specific details of all applicable overlays must be ascertained at the outset.

Other ProvisionsAll planning schemes contain a range of standard provisions that apply to specific land uses or development activities. They include advertising signs, access to main roads, car parking, multi-unit development and a range of other activities. These requirements may be relevant for some proposals and need to be checked in each instance. Planning schemes also contain information on procedures and interpretation, which affects the administration of the scheme and permit decision-making.

pROjEcT appROVaLS

Who is the planning authority? •

(Which local government?)

Does State or local policy provide •

support for the concept?

Are there specific local policies that •

apply to your type of proposal?

What zone is the land located in? •

Is the proposed use permitted?

Are there any overlay provisions that •

apply to the land?

Is the proposal affected by the general •

provisions of the planning scheme?

TabLE 9: pLaNNING/DEVELOpMENT appROVaLS – IDENTIfyING ThE pLaNNING REqUIREMENTS

Information available on the website of the Department of Planning & Community Development – www.dpcd.vic.gov.au/planning includes:

Access to Planning Scheme Documents •

and Maps for all local governments.

Content and current status of all planning •

scheme amendments.

A guide to the Victorian Planning System. •

Legislation and regulations that are •

applicable in the planning system.

Planning permit processes, permit types, •

application forms and other resources.

Government policy information that applies •

for example to Green Wedge areas, coastal

areas, Melbourne 2030, regional planning

and other topics.

Urban design objectives and considerations. •

Environmental assessment processes and •

guidelines including current project status.

A comprehensive range of planning related •

publications including fact sheets, guidelines

and advisory documents.

TabLE 8: pLaNNING DaTa SOURcES


Pre-Application Consultation

Considering the views of others about the impacts of development proposals is part of the formal planning approvals process. It is usually highly advantageous to discuss the concept with persons or organisations that may have an interest in a project (stakeholders) before the concept is finalised and the application is submitted. There may be several different points at which external views are fed into the formulation and detailing of the development concept.

Discussions with neighbours may identify potential impacts that can be eliminated or overcome with a variation to the design – moving a building, planting trees, changing the access point, earthworks, building design. Such modifications during the detailing of the concept may enable support for a project to be obtained. Negative reactions and concerns need to be addressed in the context of (amongst other things) the overall project objectives (will they be compromised by change?), project budget and viability (how do changes affect total costs and revenue), outcomes sought in the planning scheme (State and local policy, zones and overlays) and lateral alternatives to address such issues. Discussions

and communication that commences at an early stage in the creation of the project and continues will establish valuable relationships and the best outcome for all. Delays in the approval process and significant costs can also be avoided.

More complex projects may require a strategy to ensure that accurate information about the project is provided and that key persons or organisations with an interest are informed and engaged at critical points in the project’s progress.

Pre-application discussions should not be limited to neighbours or community organisations. It is essential that discussions be held with the local government, service authorities and similar statutory bodies. The discussions with local government should be held, as a minimum in the following stages:

Prior to the development of the concept. •Following analysis of the site and the creation •of a preliminary concept. Prior to the planning application being •finalised.

It is important to be well prepared for the initial and all subsequent meetings with the local government. It may be advantageous to provide information on the concept in advance to assist participants to prepare for the meeting.

Planning Application Requirements

Local government web sites will usually detail the information that must be submitted to support a planning application. There may be general information requirements and specific matters that are to be addressed for particular types of land use or development. A systematic planning application that properly addresses all issues with a comprehensive analysis of the proposal enables local government to make an informed decision. There are statutory forms and fees that must be submitted with each application. An incomplete application will prevent the processing of the application from commencing. If there is insufficient information submitted with the application a request will be made to supply further information and the ‘clock will stop’ – the statutory time-frame for processing the application will be suspended. Information requirements will vary between proposals, but should generally include (where relevant).

Identification of the relevant State and •Local planning policy frameworks of the local government planning scheme. Site analysis, identifying site opportunities •and constraints. The expected social, economic and •environmental impacts. Detail of pre-application consultations, •including discussions with local government officers, service agencies and local residents; with dates and discussion scope or outcomes. Case studies relevant to the proposal. •A Site Plan, drawn to scale showing:•

site boundaries and dimensions; –the location of existing buildings on –the site, including identification of those proposed for retention and removal;areas of significant vegetation to be –retained or removed;abutting land uses and buildings; and –proposed setbacks of proposed site –developments.

pROjEcT appROVaLS

Tarrawarra Estate, Yarra Valley. Photographer: John D

e La Roche.


Elevations of proposed buildings and •infrastructure showing:

the elevations of every building and –associated infrastructure (eg. car parks);the relationship of the elevation of –proposed buildings and infrastructure to natural ground level, and showing any proposed cut and fill; and a schedule of finishes, detailing –proposed building materials, and the colour of the main external surfaces including roofs and buildings.

A landscape concept plan showing:•details of existing trees and shrubs and –proposed modifications; andany proposed landscaping, including –the type of trees and shrubs proposed, and their estimated heights at maturity.

Proposed signage or interpretative facilities. •Any management issues, for example •the restriction of domestic dogs and cats on land, which abuts a fauna reserve or National Park.

This is a general list of information which needs to supplemented and modified according to the particular development and specific requirements in the planning scheme as detailed in the zone, overlay or particular provisions.

Professional assistance is advantageous in this process to enable complete and correct documentation to be provided and to minimize delays through the need for further information to be submitted. This documentation may be examined by referral bodies and the general public and so it needs to present a comprehensive response to the information requirements and also address potential issues associated with the project.

Figure 6 illustrates the issues that are typically associated with various forms of tourism projects. The design should minimize the potential for such issues. The documentation that supports the project should address how such issues are to be mitigated. Specialist advice on traffic, environmental impacts, noise, visual impacts and similar matters may be required in some instances.

fIGURE 6 : pOTENTIaL ISSUES fOR TOURISM pROjEcTS

hOTEL • • • • • • •

MOTEL • • • •

caMpING / caRaVaN paRk • • • • • • •

TOURIST aTTRacTION • • • • • • • • • • • •

MUSEUM • •

hERITaGE aTTRacTION • • • •

NaTURE baSED aTTRacTION • • • • • • • •

cabINS • • • • • • • • • •

LODGE / RESORT • • • • • • • • • • •

hEaLTh Spa • • • • • • •

cELLaR DOOR • • • • •

MaRINa • • • • • • • • • • •

GOLf cOURSE • • • • • • • • • •

café / RESTaURaNT • • • • • • •

REcREaTION aTTRacTION • • • • • • • • •

aNIMaL baSED aTTRacTION • • • • • • • • •

pROjEcT TypE pOTENTIaL ISSUESc

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pROjEcT appROVaLS


Planning Scheme Amendment

Careful consideration needs to be given to proposing a project on a site that is not permitted under the planning scheme. If after a close assessment of the planning scheme it is considered that a strong case can be made for a change to the planning scheme then it may be possible to have the planning scheme amended so that the project may be considered. Initial discussions should occur at this stage with Tourism Victoria to inform this assessment.

The essential step in this process is to obtain support from the local planning authority for the amendment. This may be possible if for example:

The project outcomes are supported •by the local government corporate plan or State planning policy. Significant economic, community •or environmental benefits can be demonstrated. The current controls on the land are •inappropriate or anomalous. The change would achieve a better •strategic planning outcome.

A critical test for local government in deciding on an amendment is whether it is consistent with the future strategic directions for the local government. A reference point for local governments and the Department in advising the Minister is ensuring that the amendment satisfies the matters set out in the Planning Practice Note – Strategic Assessment Guidelines for Planning Scheme Amendments (see Department of Planning & Community Development web site www.dpcd.vic.gov.au).

fIGURE 7 : pLaNNING SchEME aMENDMENT pROcESS

If the local government agrees to support the amendment it will then request that the Minister for Planning authorise the amendment. In deciding whether or not to authorise an amendment the Minister gives consideration to consistency of the amendment with State policy or interests and whether the modification is of a local significance only. The Department of Planning & Community Development provides advice to the Minister in relation to the compliance of the proposed amendment with the objectives for planning in Victoria and strategic policy. Consultation with the Department on the proposed planning scheme change should be an early part of the amendment process. Authorisation by the Minister will enable a formal amendment to be prepared and the statutory procedures to be followed.

The amendment to the planning scheme may provide a change, which enables a permit to be applied for as a subsequent and separate process. Alternatively, amendments may also be structured to enable a development to proceed subject to conformity with a particular plan or set of criteria. There are also procedures that enable the concurrent amendment to the planning scheme and grant of a permit for a specific development.

These procedures will require expert assistance and it will generally take at least six to twelve months for an amendment to be prepared, considered and approved.

pROjEcT appROVaLS

Proposed planning scheme change discussed with Planning Authority

Requires support of the Planning Authority

Draft ammendmentto be prepared

Authorisation of the amendmentby the Minister

Decision by local government to adopt amendment for exhibition

Formal presentationof the amendment

Public Exhibition of amendment and submissions

Consideration of submissionsby local government

Panel Hearing and reportReferral of submissions to a Panel(incl. Priority Development Panel)

Gazettal of amendment

Final decision by local government on the amendment

Submission to the Minister for approval


Planning Application Submission & Assessment

Pre-application discussions with local government will clearly identify the required documentation to be submitted with a planning application, including the statutory forms, fee, plans and supporting information. The initial assessment by local government will be to determine whether there is sufficient information to enable the processing of the application. This reinforces the need for comprehensive documentation at the outset to avoid delays as there will be no further processing of the application by the local government until the additional information is submitted.

Satisfactory documentation will enable the local government to refer the application to any statutory referral bodies (eg. VicRoads, Catchment Management Authority, and Water Authority) and determine the notification required in relation to the application. Notification may involve advice by letter to neighbouring property owners and occupiers or more broadly, on-site signage and public newspaper notices. A period of at least 14 days is given for any submissions to be lodged on the application.

Pre-application consultation will assist in minimizing the formal objections to an application. When the notification processes have been completed the local government should be contacted to obtain information on any objections submitted. Local government will consider the submissions in making a decision on the application. If objections have been lodged the following courses of action may be appropriate:

Discuss with local government the •planning importance of the issues raised and changes that may be desirable.Amend the application to address •the issues – further notification may be required if the changes made are significant. Seek resolution of the issues through •a mediation process facilitated by local government. Directly discuss the issues with objectors. •

The content and impact of the objections will determine the most appropriate course and a combination of all of these processes may be desirable if there is an opportunity to resolve issues in order to achieve a direct approval and avoid the cost and delay of subsequent appeal processes through the Victorian Civil and Administrative Tribunal (VCAT). Agreement reached on changes to the proposal and subsequent actions – such as a withdrawal of an objection should be confirmed through written documentation.

Discussions as a result of objections will normally need to be concluded before the application is assessed and presented to local government for a decision. An officer of the local government will prepare a report on the application, which discusses the planning merits and issues including the proposal’s fit with policy and statutory requirements, the content of objections and any responses to those issues. The report will include the views of any referral bodies with an interest in the project.

fIGURE 8: pLaNNING pERMIT appLIcaTION

pROjEcT appROVaLS

Complete Planing Application Forms Compile all supporting Documentation

Lodgement and initial AssessmentFurther Information

Public NotificationReferrals

VCAT application for review– refusal or conditions, third parties

Local government decision– approval or refusal

Objections– consideration and mediationAssessment and report


Local government (or an appointed delegate in relatively straight forward cases) will make the decision on the application. An approval will contain a range of conditions that must be satisfied. These need to be examined and an application for a review of the decision may be made to VCAT if a condition is considered inappropriate, unnecessary or onerous. Similarly, a request may be made to VCAT for a review of a refusal of the permit. Where there have been objections, those parties also have the right to request a review of a decision by VCAT. Time limits exist for the right to request a review by VCAT for both applicants and objectors.

The VCAT review is independent and public. VCAT is the final arbiter in disputed planning decisions. There is however the right for a Supreme Court review of the legal aspects of a VCAT decision. The process is conducted by State Government appointed legal practitioners and planning experts. VCAT hearings are less formal than normal court proceedings and legal representation is not essential. Advice should be sought however on the benefit of conducting a review case with legal representation and the need to engage other experts (town planners, traffic consultants, environmental experts and others) in relation to particular aspects of the case. A matter brought before VCAT is heard ‘de novo’ – essentially the whole matter is heard afresh and the Tribunal stands in the shoes of the local government. The risk of this aspect needs to be recognised in deciding to refer a matter to VCAT.

Most hearings are conducted in Melbourne, but periodically cases are heard in major regional cities. VCAT hearings can be time consuming and costly for all parties and should be embarked on after due consideration. Decisions are normally provided several weeks after the hearing and local government is required to act administratively in accordance with the decision.

Aboriginal Heritage

Native TitleThe Commonwealth Native Title Act 1993 provides for the establishment and protection of a range of native title rights, and future regimes and compensation, and for determinations over future grants and acts affecting native title to land and water. The Act requires notification of development on or uses of public land to claimants, potential claimants, or owners. Developers are strongly advised to seek clarification of the Act and any associated issues, during early consultation with Aboriginal Affairs Victoria and the Department of Planning and Community Development.

Aboriginal Cultural HeritageThe Aboriginal Heritage Act 2006 provides for the management and protection of culturally sensitive landscapes. The Act applies to all land in Victoria. Development and activities proposed for example, near the coast or adjacent to water bodies may affect areas of indigenous cultural heritage value. The Aboriginal Cultural Heritage Act 2006 establishes a process to identify the potential for Aboriginal cultural heritage places and objects to be affected by development.

pROjEcT appROVaLS

Legislation: see Victorian Civil and Administrative Tribunal Act 1998

For information see VCAT web site www.vcat.vic.gov.au

Procedures guidance: Practice Note Planning & Environment List (No. 1) – General Procedures, Practice note VCAT No. 2 – Expert Evidence. See also Planning & Environment List Guidelines and other Practice Notes on the web site.

TabLE 10: REqUEST fOR REVIEw Of a DEcISION by VcaT

Foxeys Hangour W

inery, Red Hill. Photographer: John D

e La Roche.


The Aboriginal Heritage Regulations 2007 define areas of high cultural sensitivity and activities that may impact on Aboriginal cultural heritage values. A Cultural Heritage Management Plan (CHMP) may be required to protect places or objects of heritage value. Where there is a requirement for a Cultural Heritage Management Plan it is required as part of the planning permit application and approval process. A planning permit must be consistent with the provisions of a Cultural Heritage Management Plan.

A Cultural Heritage Management Plan is required for an activity if:

All or part of the activity area is an area •of cultural heritage sensitivity; andAll or part of the activity is a high •impact activity.

A high impact activity is an activity that is likely to harm Aboriginal cultural heritage and examples include:

Developments that require an •Environment Effects Statement. Larger scale residential or industrial •subdivisions on areas of cultural heritage sensitivity, which have not previously been significantly disturbed. Substantial infrastructure or resource •development projects on areas of cultural heritage sensitivity, which have not previously been significantly disturbed.

Other circumstances requiring a Cultural Heritage Management Plan are prescribed in the Regulations. Information on the requirements of the Aboriginal Heritage Act 2006 is available at www.dpcd.vic.gov.au/aav.

fIGURE 9: cULTURaL hERITaGE MaNaGEMENT pLaN (chMp) pROcESS

The diagram is an example of the process a developer would follow

when seeking approvals for a large scale subdivision/development.

pROjEcT appROVaLS

Developer decides that a CHMPis required after checking the

Regulations and any published guidelinesOR

Developer submits finished CHMP andprescribed fee to RAP for evaluation

Council advises that it is a prescribed activity on sensitive land and that it cannot make a planning decision

without an approved CHMP

Developer submits application to Local Council

without an approved CHMP

If RAP refuses to approve the Plan,the developer is able

to appeal to VCAT

Developer engages Cultural Heritage Advisor to prepare the CHMP

RAP responds to developer (within 14 days)

and elects to evaluate the CHMPDeveloper prepares CHMP

Developer notifies the Secretary, DVC and relevant

Registered Aboriginal Party (RAP)

Developer provides a copy of CHMP in support of application to Council for a Residential Subdivision Permit

Local Council able to decidewhether to grant or refuse

approval for subdivision

RAP has 30 days to review CHMP and to notify developer of any decision

Brambuk, Gram

pians. Photographer: Bindi Cole – Snap Happy.


Tourism Development on Public Land

Public land in Victoria is an extensive and valuable community resource comprising most of the coastal edges and foreshores of the State; National Parks, State Parks, State Forests and other reserves; river and lake reserves; our Alpine Resorts and a range of other special purpose public reserves such as flora and fauna reserves, gardens, cultural and historic sites. These areas contain approximately 8 million hectares and receive an estimated 130 million visit days from tourists and recreational visitors annually. The Minister for Environment and Climate Change is responsible for the management of this land, which is carried out by the Department of Sustainability and Environment and bodies such as Parks Victoria, Alpine Resort Management Boards and Committees of Management.

The use and development of public areas for tourism and other purposes is generally provided for through Management Plans and similar policy documents. Management Plans identify the nature, location and level of tourism related facilities and services to be provided on public land. Most facilities are provided by the State Government through the organisation responsible for the management of a particular area. There is however, a wide range of services that may be conducted by the private sector on public land. They may include services such as guided tours and interpretation, boat hire and equipment hire services, skill development, recreation experiences, special events and other activities. These activities may only be seasonal and may generally require minimal built infrastructure investment. Operators may be granted a business license and a short-term lease where a specific area of public land is to be used for the delivery of the service or as a base for such operations.

Opportunities for the development of major tourism facilities on public land, such as accommodation, boating facilities, cafes/restaurants, sports facilities are more limited but may be provided for as part of a management plan or master plan for a specific area. The preparation of such plans would identify the need for private sector development, its suitability, potential impacts, and examine alternatives to the use of public land for the proposed development.

Current policy directs major new tourism facilities to service visitors in National Parks to locations outside of the declared park area. This policy is subject to a review to enable developments satisfying criteria that include public need, benefit and ecological sustainable development principles to be considered.

A license to conduct a tourism or recreation service on public land may be sought through the body responsible for the management of that land. Public land managers may also from time to time seek the provision of commercial services from the private sector through a public tender process. The provision of a major development on public land is also normally pursued through public tender processes. In addition to approval by the land manager a planning permit from the Responsible Authority, usually the local government, will normally be required. A planning permit and other required approvals would need to be obtained following approval of the proposal by the land manager and prior to the commencement of any development.

Lease and license terms

A license term of up to 10 years is available for operators on public land who can satisfy sustainable tourism criteria.

Lease terms for development on public land are generally limited to a maximum of 21 years, but vary according to the nature of the reservation and the proposed use. In Alpine Resorts lease terms of up to 99 years may be granted.

pROjEcT appROVaLS

The provision for tourism and recreation use of public land must accord with the following principles:

The activity accords with the objectives •

of the relevant reservation legislation

and related management plans and

policies.

The activity is consistent with the •

National Ecologically Sustainable

Development objectives and principles.

Meets demonstrated need and is •

dependent on the natural and cultural

values of the area.

Risk levels are appropriate and •

manageable.

Community access is not unreasonably •

restricted.

Net public benefit is provided in the •

short and long term.

‘Sustainable Recreation & Tourism on Victoria’s Public Land’, DNRE, 2002

TabLE 1 1: TOURISM & REcREaTION USE Of pUbLIc LaND


LEGISLaTION pURpOSE aGENcy

Crown Land (/Reserves) Act 1978 To provide for the reservation of Crown Land. Department of Sustainability and Environment

(DSE)

Coastal Management Act 1995 To plan for and manage the sustainable use of

Victoria’s coastal resources.

DSE

National Parks Act 1975 To preserve and protect National and State Parks. DSE

Alpine Resorts Act 1983 To provide for the reservation of Alpine Resorts. DSE

Alpine Resorts (Management) Act 1997 Provides for the establishment and functions of

Alpine Resort Management Boards.

DSE

Planning and Environment Act 1987 Legislative framework controlling planning

approvals and scheme amendments.

Department of Planning & Community

Development (DPCD)

Forests Act 1958 To protect and manage State forests DSE

Local Government Act 1989 Controls local government functions and

responsibilities.

DPCD

Environment Effects Act 1978 An Act to require the environmental effects

of certain works to be assessed. This Act

provides for the environmental assessment of

development that has the potential to impact

on the environment.

DPCD and DSE

Environmental Protection & Biodiversity

Conservation Act 1999 (federal)

Protect biodiversity and associated

environmental issues.

Federal Government

pROjEcT appROVaLS

Victorian Coastal Strategy and approved •

Coastal Action Plans

Relevant National Park or Foreshore •

Management Plans

Approved Park Management Plans •

or concept plans.

Alpine Resorts 2020 Strategy, •

Alpine Planning Scheme.

Victoria’s• Nature Based Tourism Strategy,

2008–2012

Public land legislation (see above)•

See Appendix C – Key Contacts for •

the Department of Sustainability &

Environment and Parks Victoria for contact

information.

Victoria’s Nature Based Tourism Strategy, 2008–2012 (VNBTS) recommends provisions for longer leases commensurate with the level of investment for land that comes under the Crown Land (Reserves) Act 1978 and the Forest Act 1958, and licences for tour operators to be a maximum term of 10 years. The VNBTS encourages further development of nature based tourism accommodation projects in Victoria.

TabLE 12: LEGISLaTION aND pUbLIc LaND

TabLE 13: INfORMaTION SOURcES fOR TOURISM OppORTUNITIES ON pUbLIc LaND


Tourism Development in Alpine Resorts

The Victorian Alpine Resorts at Falls Creek, Mt Buller, Lake Mountain, Mt Baw Baw, Mt Hotham, and Mt Stirling are subject to specific arrangements for planning approvals and leases. Virtually all land in these Alpine Resorts is Crown Land.

Development in all of these Alpine Resorts is administered under the Alpine Resorts Planning Scheme. The Minister for Planning is the Planning Authority and Responsible Authority for all planning matters. The Department of Planning & Community Development administers the Alpine Resorts Planning Scheme for the Minister.

These alpine areas are managed by Alpine Resort Management Boards (constituted under the Alpine Resorts Management Act 1998) who have responsibility for the management of Crown Land in Alpine Resorts, the provision of a number of services and promotion of the Resorts. Alpine Resorts have been excised from local government boundaries, but the respective local government is consulted as part of the planning permit application process.

The Minister for Environment & Climate Change is responsible for the granting of leases on Crown Land. The Alpine Resort Management Boards make recommendations to the Minister on the grant of a new lease or the extension of an existing lease.

The procedures for planning permit applications are similar to those described in Section 4. The Alpine Planning Information Kit provides a comprehensive guide to the regulations, procedures and requirements for applications (www.dpcd.vic.gov.au).

Some key differences that should be noted:

The Alpine Planning Unit at DPCD should •be contacted to obtain advice on the applicable planning controls, information requirements and pre-application meetings.

As the custodian of Crown Land, the •Minister’s consent is required for an application for a planning permit. The application will be referred to the •relevant Alpine Resort Management Board for its views and requirements and to the adjacent local government for its comments. Other authorities may also be contacted as part of the referral and notification processes.

Additional and specific information •may be required for each application. This may include:

A flora and fauna assessment –(in relation to impacts on flora and fauna covered by the Flora and Fauna Guarantee Act 1988 and the Environment Protection and Biodiversity Conservation Act 1999). A geotechnical assessment of the site –in relation to the stability of the land and design in order to avoid potential land-slip hazards. A Site Environmental Management –Plan (SEMP) that identifies potential environmental impacts and provides for management measures to reduce impacts both during construction and ongoing.

Alpine areas are fragile and highly sensitive natural environments. New development within these environments must be designed to minimise the environmental impact and be appropriate to the extremes of climate experienced – temperatures, wind, ice, snow load, and snow deposition. These matters must be thoroughly addressed in a development proposal within an alpine resort.

The Minister’s decision on a planning permit application in an alpine resort is subject to the same rights of review by VCAT as are all other planning permit application decisions made under the Planning & Environment Act 1987.

pROjEcT appROVaLS

Huski, Falls Creek. Photographer: Peter Bennetts.


Alpine Resorts Leases

All Victorian alpine resorts are Crown land permanently reserved under the Crown Land Reserves Act 1978. The exceptions are three small parcels of freehold land within the Mt Hotham Alpine Resort. Dinner Plain is also freehold alpine land but is not within a declared alpine resort.

The State Government approved the Alpine Resorts Leasing Policy in 2002. (See www.dse.vic.gov.au/dse/index.htm and go to Recreation & Tourism/Alpine Resorts/Projects/Alpine Resorts Leasing Policy).

The policy provides:

The right for existing lessees to negotiate a •new lease on the expiry of the lease term. The value of the improvements to the •land rests with the lessee. A lease term that is commensurate •with the proposed use of the land and the value of the investment. For major investment (in excess of $8 million) lease terms of up to 51 years are available. Lease terms longer than 51 years up to 99 years may be possible subject to an acceptable business case. Investment of $8 million or less will be provided with a shorter lease term as may be negotiated based on the levels and nature of investment and development. The requirement for lessees to comply with •uniform standards of occupancy – planning, environmental and building policies, repair and maintenance requirements. Site rentals are determined on the basis •of a market based site value reviewed each 3 years. A standard lease document applies •to all new leases.

Alpine Resort Management Boards have been delegated the power to issue new leases in alpine resorts. Most tourism investment in alpine resorts occurs on the basis of the redevelopment of an existing leased site. A new lease appropriate to the use and magnitude of investment is negotiated for the development in that instance. The subdivision of a lease site may occur with approval of the Minister. From time to time new sites for development may be released within an alpine resort. The responsible Alpine Resort Management Board would normally conduct an expression of interest, a public auction and/or public tendering process to ensure the best public interest outcome.

pROjEcT appROVaLS

Land in declared alpine resorts is almost •

exclusively Crown land.

Declared alpine resorts are excluded from •

adjacent local government areas and are

administered by Government appointed

Alpine Resort Management Boards.

The Victorian Planning Provisions •

apply to all alpine resorts, which are

administered by the Department of

Planning & Community Development

(contact Alpine Resorts Unit, DPCD).

The Minister for Planning is the

Responsible Authority.

Development approval processes •

are similar to elsewhere in Victoria

but details are available in the Alpine

Planning Kit (see DSE web site).

Long-term standard leases apply to all •

new development within alpine resorts

– see Alpine Resorts Leasing Policy on

DSE web site for details.

See Appendix C – Key Contacts •

for the Alpine Resorts Unit and

Department of Sustainability &

Environment for contact information.

TabLE 14: TOURISM DEVELOpMENT IN aLpINE RESORTS

Huski, Falls Creek. Photographer: Peter Bennetts.


Victorian Water Authorities

The Victorian water industry provides services to in excess of 4.6 million people encompassing 100% of the State’s population. Water business customers continue to benefit from the improved levels of service and investment to protect public and environmental health. The Victorian water industry covers the metropolitan and regional sectors of the State. All Victorian water businesses are State Government Business Entities (GBEs). Water businesses are guided by skills based Boards of Directors.

The framework governing the conservation, allocation and supply of water in Victoria has undergone significant change over the last 25 years. As a result there are now 20 water businesses in Victoria, 16 regional water businesses in Victoria that provide urban and/or rural services. Rural business regions include:

Goulburn-Murray WaterGoulburn-Murray Water manages water-related services in a region of 68,000 square kilometres, bordered by the Great Dividing Range in the south to the River Murray in the north, and stretching from Corryong in the east, downriver to Nyah. Goulburn-Murray Water also operates salt interception works on the Murray downstream of Nyah, manages Mildura Weir, delivers bulk water to supply points outside it’s region and is the Victorian Constructing Authority for the Murray-Darling Basin Commission. GMW also manages recreation and other public activities on and around our major water storages.

Southern Rural WaterSouthern Rural Water is responsible for managing rural water resources across the southern half of country Victoria, from the Great Divide to the coast.

Lower Murray WaterLower Murray Water’s area of operation extends from Kerang to the South Australian border taking in the municipalities of Mildura, Swan Hill and Gannawarra.

GWM WaterGWM Water is a government owned water business responsible for managing urban and rural water supply systems in the Grampians, Wimmera and Mallee regions of Western Victoria. GWM Water also own and operate 15 major bulk water supply reservoirs and manage groundwater supplies and river diversions. They are also responsible for the implementation of the Wimmera Mallee Pipeline project, with construction already underway.

Approval may be required from water authorities if your proposal requires access to a reticulated water supply and/or ground water reserves.

pROjEcT appROVaLS

Convent Gallery, Daylesford and the M

acedon Ranges. Photographer: Peter Dunphy.


Balgownie Estate at Yarra Glen is a vineyard, which has established a 5-star conference venue (up to 250 persons), accommodation (65 suites and studio rooms), restaurant and bar, cellar door and day health spa. The business is part of a well reputed wine brand, originally established in the Bendigo region. The Yarra Glen tourism business employs 70 persons (excluding the day spa).

yaRRa GLEN

For more information go to: www.balgownieestate.com.au

SUccESS facTORS

A market opportunity was identified in the Yarra Valley based on the high level of visitation, a large potential •

market within 1 hour drive and the burgeoning reputation of the region for high quality food and wine.

The site selected for the project provides high quality views and has been important •

to the establishment of the image and quality of the business.

Extensive pre-concept consultation was carried out with the local government, Tourism Victoria, •

neighbours and other local stakeholders. This process ensured that factual information was provided

concerning the project and it benefited from a number of useful suggestions that were taken on board

in the project’s development.

The planning approval was a complex process and appointment of a planning consultant was valuable in •

obtaining the required approvals.

The project business plan and financial backing was established at an early stage of the process. •

This provided a sound basis for the extensive approval process that was required.

Knowledge of the construction industry enabled detailed management of the design process, •

refinement of details during the building phase and attention to construction issues as they arose.

Partnerships have been formed with other tourism businesses in the region. This enables the visitor •

experience offer to be broadened and is combined with joint marketing and packaging.

caSE STUDy 4

baLGOwNIE ESTaTE

Balgownie Estate, Yarra Valley.


Profitability is a fundamental requirement for any sustainable commercial business investment. Some tourism projects are however, established and operated by not for profit organisations - trusts, foundations, associations. The planning, financing and continuing funding for all tourism investment requires a business plan that is based on a sound assessment of the capital outlay, operating costs, revenue and longer term considerations of maintenance, refurbishment and upgrade.

Preparation of the Business Plan

Business Planning is a process of thinking strategically and combining information about the future of a business. It requires consideration of:

External factors the economy•the market•customers and competition •

Internal factors internal organisation and management•product and market mix•facilities requirements•technology needs •finance•

The Business Plan enables full consideration of the proposal for a given time-frame, and is essential for obtaining finance from financial institutions.

It also assists to:

Clarify many of the developer’s own •questions and issues. Provide a basis for future performance •analysis and forward planning.

A summary of Business Plan content requirements are discussed right (table 15). This discussion should be regarded only as a ‘first-pass’ guide.

fINaNcING aND fUNDING

A Business Plan scope should cover the following:

Executive Summary• – brief summary of

project, project investment return and

strategic issues.

Venture Profile• – product description,

market opportunity, target markets,

SWOT analysis, consideration of

options, growth strategies, and project

risks.

Business Structure and Management•

– management structure, employment

details, project development

management.

Operation Plan• – financial feasibility

analysis, cash-flow budgets, return

on investment, potential government

financial support.

Marketing Plan• – target markets,

communication tools, media, collateral

material, and budget.

Appendix• – supporting information

such as developer credentials, market

research details, and product details.

TabLE 15: bUSINESS pLaN cONTENT

Crowne Plaza, Torquay.


Management and Business Structure

Management StructureEarly decision on the legal form for business management is important. This has important functional and financial implications. Tourism investors are therefore strongly advised to seek professional legal and financial advice on the appropriate structures for their proposals. Common management options include proprietorship, partnership (including limited liability partnership) and proprietary company. These options are summarised in Table 16. Other more complex structures include joint venture arrangements and trusts. It is a legal requirement for limited liability companies to identify the structure, directors and any professional counselling to be used, ie. accountancy, legal, marketing, etc.

One of the earliest decisions to be made by the investor is the legal form of the business. Each of the options has advantages and disadvantages. Legal and financial advice should be sought before deciding which structure best suits the ownership and management of the proposed business venture.

Employment DetailsRegistration of a company requires information to be lodged that details information about directors and their qualifications, managers, staffing structure, and who the statutory officers are.

Project Development ManagementPlanning and implementing any development requires competent management. For larger projects, this may require a project management team. This will typically include the investor and other key stakeholders such as the landowner, architect builder, subcontractors, quantity surveyors, the development company, and possibly the financier. Project management in establishing a project is a specialist task. Its effectiveness can ‘make or break’ the project prior to it commencing operation.

Project Management companies exist to manage the interests of investors, and tourism investors should seriously consider the need for such professional service.

Operation Plan

The Operation Plan provides the financial ‘nuts and bolts’ of the proposal for analysis by investors or financiers. It is the most important component of the Business Plan and its professional development and presentation are essential. Its main elements are discussed below.

Detailed and Realistic Cash-Flow BudgetsAll possible costs including taxes, and all assumptions used to predict cash-flows (cash in and cash out) need to be identified and explained. For example, predicted annual tourist numbers need to be substantiated by actual visitor statistics to the area, and to other attractions of similar type and scale in the region or State. Cash-flow must be distinguished from profit. Profit measures revenue less expenditure, but does not include one-off capital expenditures on items like site acquisition, development construction, equipment purchase and

fit-out. It does however, include annual maintenance and depreciation as costs against the business. The period for which cash-flow projections need to be prepared, and their required level of detail requires discussion with professional advisers including prospective financiers. A business plan should normally cover no less than three years of operation, with at least the first year’s figures presented on a monthly basis.

Financial FeasibilityFinancial feasibility assessment is needed, together with the market analysis, to gauge the developer’s likely return from the initiative, and whether its continuation is warranted. The analysis is also critical to obtaining finance. Therefore, realistic and appropriately indexed profitability and cash-flow projections need to be prepared for both the development and operational life of the project.

OpTION 1 OpTION 2 OpTION 3

Sole Proprietorship Partnership Proprietary Company

Advantages

Simplest legal structure•

Low start up costs•

Exclusive control of asserts •and profits

Advantages

Simplicity of formation•

Minimal start up costs•

Increased access to finance•

Diversity of skills and •expertise

Limited regulation and •protection from public scrutiny

Advantages

Separate legal identity•

Limited liability•

Preferable management •structure

Ready access to finance•

Disadvantages

Sole responsibility for all •debts and obligations

Possible difficulties in •raising capital

Disadvantages

Unlimited legal liability•

Public scrutiny•

Divided authority•

Potential for friction•

Limitations on size•

Disadvantages

Establishment costs•

Increased regulation•

More record keeping•

Annual returns•

Available for public scrutiny•

fINaNcING aND fUNDINGbUSINESS pLaN – kEy ELEMENTS

TabLE 16: bUSINESS STRUcTURE OpTIONS


Key matters that should be included in the assessment (and which financial institutions would generally require to support a funding application) are:

Anticipated costs and contingency •budgets, one-off costs such as capital investment, future ongoing operating costs including marketing, taxation and finance costs, and depreciation costs for plant and equipment. Realistic estimates of short and long-term •projected revenues. Anticipated short and long-term profit •and loss. Expected rates of return on investment •over a nominated period. Projected discounted cash-flow analysis •over the life of the project to indicate debt and project pay-backs. Sensitivities of the project to factors •such as cost and timing overruns, higher inflation and interest rates, decreased patronage and occupancy rates, ie. maximum reasonable adversity analysis. Other reasonable investment •assumptions. Benchmarking to similar projects •undertaken in the industry, where available; and Appraisal of project options, eg. staged •development or other modifications, scaling down increased equity versus finance etc.

The options appraisal is critical to enable investment assessment. Options covered need to include both:

Staged development of the project. •Alternative options available to achieve •similar or comparable tourism outcomes.

Overview assessment of the relative viability of each option is required, to assist financiers and/or equity partners to determine the relative merits of the proposal within a broader context. Reasons for the choice of the preferred option need to be clear.

Return on InvestmentThe proposed investment’s profitability needs to be determined as accurately as possible, supported by financial feasibility studies. Where information is available, profit projections should be compared to those from other like investments. If the estimated profit margin is a little more or less than what could be earned in a traditional ‘safe’ investment, proponents and investors should carefully consider the wisdom of proceeding. Calculation of the Internal Rate of Return (IRR) provides a measure of the discount (interest) rate achieved by the initial capital investment and the anticipated future cash-flows. This measure can be effectively used to compare the performance of different concepts or options and enables comparison with other known investment returns.

Sensitivity AnalysisThe financial feasibility assessment of the project should be tested as to the effect of a variation to key assumptions on the outcome – sensitivity analysis. This analysis can take the form of both negative and positive changes. In making changes to the analysis assumptions, whether it be sales, pricing, cost of capital or to other major costs the impact will be seen on the traditional measures such as rate of return or net present value. To bring it back to a more basic principle, this analysis will examine the effect on cash-flow and in turn the viability of the project.

This analysis will also provide an insight to the project’s sensitivity to market factors and its viability in the prospect of changing market forces. The modeling will give further insight to what is required to ensure that the project is a viable proposition.

fIGURE 10: aSSESSMENT Of pROjEcT VIabILITy

Project Design

Review

Development

Acceptable

Unacceptable

Capital Cost

Funding

Revenue

Operating Cost

Net Cash-Flow

IRR

fINaNcING aND fUNDINGbUSINESS pLaN – kEy ELEMENTS (cONTINUED)


Availability of Government SupportFederal, State and local governments can provide a range of support, particularly where the investment can demonstrate significant economic benefits in a regional or State context. Such support could include grants, marketing assistance, infrastructure provision or access to Government planning approval services and facilitation assistance. All possible areas of Government support should be investigated at Local, State and Federal levels.

Tourism Victoria will assist investors to facilitate their investment projects. Specifically, Tourism Victoria will assist with the coordination of State agency advice in the development approvals process. Regional Development Victoria and the Victorian Business Centre should be contacted in relation to a broad range of support and assistance that is available.

Obtaining Financial Support

Financial SubmissionThe Business Plan discussed earlier in this section, provides understanding of a proposal’s expected business and operating environment to assist financiers and investors ascertain debt servicing capabilities and requirements.

Financiers generally also require a detailed Financial Submission containing additional information including a project financing proposal. This and other required information is listed in table 17 as an indicative Financial Submission ‘checklist’. Main elements are also discussed in this section.

Early consultation with potential financial institutions is essential, to clarify their requirements.

Developer’s Track RecordFinanciers need knowledge of the developer’s business track record, particularly in business related to the submission. Descriptions of past ventures and of management experience and credentials are essential. Developers with limited experience in the tourism industry may be advised to consider employing a manager experienced in the industry.

Financial StandingFinanciers assess a developer’s current personal and business financial positions, and past credit and financial commitment history. Financial statements including balance sheets, profit and loss statements, management accounts and taxation returns will be required for current and recent past years.

The Finance ProposalA viable finance proposal for the project will be needed. A financial consultant may be required for this task. The proposal will need to include at least:

The purpose of the required loan. •The amount of debt required, and the •proposed loan term. The amount of equity to be injected by •the developer, and its proposed timing. The proposed method of debt •repayment, substantiated by cash-flow and other financial detail including guarantee information if applicable, and the proposed exit strategy for the lender.

Proposed debt servicing arrangements •supported by expected cash-flow and abilities to meet repayments and interest. Security offered over the development, •which may include any land, leasehold interest, buildings, plant and equipment, goodwill and debts.

Documentation to Support the Finance Proposal

The tourism developer will also need to provide the following support documentation with the Finance Proposal:

The previously discussed Business Plan •incorporating feasibility studies and management strategies. An assets schedule, including valuations •of property offered as financial security whether for the development site or collateral security. Where construction would be needed, a •quantity surveyor’s report substantiating design, construction and development costs. Group structure charts detailing •ownership shareholding and all connected entities. A schedule of the developer’s legal, •financial and other key advisers. Details of planning and development •approvals required and obtained (refer Project Approvals). A summary of the developer’s •individual or connected entities’ financial statements, and explanations for any major fluctuations in trading and balance movements. Summaries and reconciliations of key •items in projected profitability and cash-flow budgets, to explain funding requirements. Relevant corporation documentation •such as Memorandum and Articles of Association, Trust Deeds etc; details of the developer’s accounting system and reviews by independent accounting firms.

fINaNcING aND fUNDINGbUSINESS pLaN – kEy ELEMENTS (cONTINUED)

Business plan•

Track record•

Financial standing•

Finance and repayment proposal•

Supporting documentation•

Additional collateral security•

TabLE 17: INDIcaTIVE fINaNcIaL SUbMISSION chEckLIST


Current aged debtors and •creditors listings and fixed asset depreciation schedules. Realistic costs and timing factored •into project expense considerations such as lease payments, income tax, interest, superannuation contribution, insurance, trading expenses, fringe benefits tax, annual and long service leave, capital expenses and debt repayment. Availability of contingency funds should also be demonstrated.

Additional Collateral SecurityCollateral is security pledged as a guarantee for repayment of a loan. While the security of a venture may be sufficient collateral, financiers may also require additional collateral to guarantee payment.

Examples may include a mortgage over the family home, or directors’ or shareholders’ guarantees. Developers may therefore need to be prepared to risk foreclosure of mortgages if venture failure occurs.

Financiers may also require additional security such as fixed and floating debenture charges over the business, or charges over specific property or leasehold mortgages. Details of the above will be subject to individual circumstances and negotiation with prospective financiers.

Credit Assessment FactorsIn addition to financial security matters, financiers will generally assess the following credit risk factors:

Financial institution’s lending policy •for the type of business. Proven market for the proposed venture •product, benchmarked against the performance of existing clients in the same market. Proponent’s experience, and business •planning, and management skills. Ratio of debt versus equity. •Professional standing of consultants, •advisers and contractors engaged by the proponent; industry trends and competition. Insurance availability for high risk •or unusual ventures. Proponent’s track record and •disclosure integrity. Proponent’s analytical objectivity and •rigour used in assessing adverse factors impacting on cash-flow. Quality of the proponent’s business •reporting systems.

Financing and Tax Considerations

Equity versus Debt FinanceEquity is the amount or proportion of the overall investment supplied by owners towards the venture.

The greater the investor’s equity in the venture, the greater the risk being taken on its success. Equity provides funding opportunities where conventional security is not available, and where cash-flows are uncertain to support debt financing.

Some specialised capital venture companies offer equity partnerships. Costs, project control and ownership issues of such partnerships will require professional legal and financial assessment. Debt finance may be obtained from various institutions such as banks, building societies, finance companies, credit unions and professional groups such as solicitors.

In determining the correct mix between equity and debt finance for a development, factors to be considered include:

Developer’s funds potentially available. •Project size and cost. •Taxation considerations. •Gearing ratios for other ventures •of that type. Prevailing and anticipated interest rates. •Degree of control over the project •development and cash-flow stream.

Where interest rates are high or expected to be high, restricted borrowing may be desirable to reduce the risk of failure due to sudden interest rate increases.


Geelong Yacht Club, Geelong. Photographer: Mark Chew

. At the H

eads, Barwon H

eads. Photographer: Mark Chew

.


Also, debt financing conditions need to provide for projected business cash-flow and development requirements. For example, the choice of short, medium or long-term debt finance, and whether on an interest-only or progressive repayment, can impact greatly on business viability.

Other considerations include:

Size of security sought by the debt financier. •Penalties potentially imposed against early •loan repayment. Consequences of late or non-payment •of debt. Financier’s flexibility in meeting •the needs of the business venture.

Taxation ConsiderationsTaxation is a major and complex consideration in the financial structuring of projects, and in business planning generally. The apportionment of project, market and revenue risks between parties can impact greatly on a project’s viability. Most banks have finance project teams to develop customised project financing structures and proposals. Also, sensitive taxation aspects are usually confirmed via legally binding private taxation rulings obtained from the Australian Taxation Office.

Taxation law is constantly changing. It is, therefore, essential that prospective developers seek professional taxation advice in the early stages of concept development, for attention within business planning and associated feasibility assessment documentation.

Some broad overview issues are discussed below.

Types of TaxesRelevant taxes include income tax, the GST, pay-roll tax, fringe benefits tax, land tax, local government rates and charges (including water rates, environmental levies, and general rates), bank account deposits and withdrawals taxes, and other Government licence fees and charges.

Taxation Deductions and IncentivesTaxation deductions or incentives against legitimate business establishment or improvement expenses influence income tax liability and hence business viability. Operational expenditure is usually deductible in the year incurred, while ‘capital’ or structural expenditure over $300 is generally deductible as depreciation over the approximated useful life of the asset. Some conditional tax incentives may be available to stimulate greater private sector infrastructure investment.

DepreciationAccelerated depreciation rates may apply against business plant and equipment (including those installed on leased Crown Land). Guidelines are available from the Australian Taxation Office.

Infrastructure BondsInfrastructure bonds may be applicable to the financing of land/air transport or seaport infrastructure facilities associated with a project. These would reduce project financing costs through concessional tax treatment of paid bond interest.

Company, individual or superannuation fund investors may apply to the Commissioner of Taxation for a tax rebate or tax exemption against positive taxable income, over 15 years.

As with all aspects of project financing, it is important that professional advice be sought on infrastructure bonds and any associated implications, where they are potentially applicable.


The Buckland is an accommodation development of four studios complemented by a café/boutique function venue. The project is a 3½ hour drive from Melbourne and is located at the foot of the alpine area. Each studio is designed for a couple and features a luxury fit-out. The retreat is set in the stunning landscape of the Buckland Valley with views to Mt Buffalo. The popular regional tourist destination of Bright is only 10 minutes away.

bUckLaND VaLLEy, NORTh EaST VIcTORIa

For more information go to: www.thebuckland.com.au

SUccESS facTORS

The project concept was based on extensive market research by the developer that initially looked broadly •

at the ingredients that made luxury accommodation establishments successful and then at suitable locations

(environment, destination, and landscape) that provided a market opportunity and affordable property prices.

Statistical analysis was combined with field research of comparable businesses.

The site selected fitted the product image and market appeal desired. The spectacular views provided a unique •

setting. The location provided seclusion yet convenient access to both adventure and commercial facilities.

The site area was sufficient for privacy for each studio and also for longer term development of later stages.

A business plan was developed early in the project’s conception. Initially the level of detail provided was sufficient •

for an in-principle funding approval. The plan was further detailed at a later stage for financial commitment and

execution. The high level of detail in the business plan was critical to obtaining finance for the project.

The development approval process was lengthy and the proponent benefitted from early consultation with •

neighbours and the local government. A pro-active approach was adopted in pursuing the approval through a

close association with local government staff and promptly dealing with issues raised.

The operators had a clear vision of the type of development that was desired. A close working relationship was •

established with the project architect who also managed the construction process. This relationship enabled the

cost effective and timely translation of the vision to a reality. An environmentally sustainable design approach was

incorporated in the concept. Control of the internal fit-out details remained with the operators.

Strong business relationships have been formed with wine and food producers, restaurants and recreation •

services in the area. This expands the potential offer to the visitor.

Considerable marketing was carried out before the project opened. Since opening, marketing has focussed on •

cultivating electronic and print media support, particularly outlets that are utilised by the target market.

caSE STUDy 5

ThE bUckLaND –STUDIO RETREaT



Taking the project concept from approval to reality requires the coordinated input from a range of professions and services.

The appointment of a project manager for this phase is desirable to ensure:

Effective coordination of the completion •of the detailed design phase. Competitive prices for construction are •secured. The construction phase is managed •efficiently and cost effectively.

Figure 11 describes the main activities in this phase.

Detailed Design

Approval of the concept design enables the project to proceed to detailed design. A qualified Architect may be engaged to co-ordinate the preparation of detailed documentation. Incorrect or inadequate documentation of the design can lead to a misinterpretation of the design intent and time and cost overruns. The design must meet regulatory and authority requirements and local design standards. Preparation of the documentation may involve the appointment of sub-consultants, as required (eg. engineers, environmental scientists, heritage advisors, quantity surveyors, landscape architects, etc).

The content of this phase includes:Detailed architectural drawings, structural •design, building services design (cooling and heating, electrical services including lighting, hydraulic services including fire protection, lift services, security, information technology systems), building materials (internal, external, finishes and colours).

Interior design, fixtures and fittings •and furnishings. Site works including earthworks, fill and •excavation, vegetation retention and removal, erosion remediation and land stabilisation. Civil works including roads, car parks, •pathways, service connections and distribution throughout the site, service areas, drainage and storm water management, waste storage and disposal. Site landscaping, plant maintenance •systems, water storage, fire hazard minimisation. Signage and external lighting. •

All detailed design should address access and facility requirements for disabled persons, energy efficiency and sustainable development elements – alternative energy systems, water conservation and recycling, heating and cooling systems, recycled materials, waste management and recycling (see Sustainability Victoria website – www.sustainability.vic.gov.au).

The detailed design phase should also examine the construction program and phasing of the development stages according to funds availability, market demand or related factors. Detailed design requires a further and more detailed cost assessment of the development by a quantity surveyor. This cost assessment may require further refinement of the detailed design to bring the project within a desired budget range.

fIGURE 1 1: pROjEcT DELIVERy fLOwchaRT

Appoint Project Manager

Prepare ConstructionDocumentation

Obtain Construction Approvals

Appoint Construction Manager

Site Establishment

Compliance of Works Contact ClosureConstruction

Seek Builder Selection Process Establish Contract

cONSTRUcTION


Construction Tendering / Pricing

The most common method of engaging a builder (or other contractors) to undertake the required works is through a tendering process. There are a number of ways in which this process can be undertaken including the following:

Selective tendering – where 3 or more 1. contractors are invited to submit a proposal/fee.

In this process, contractors may be selected from a pre-qualification list – which includes organisations that have previously submitted general company information through a Registration/Expression of Interest process. Government departments generally utilise this method.

Open tendering – where a general 2. advertisement is placed in the paper, online and/or through an agency calling for a fee proposal.

Project Construction

Assuming all relevant approvals have been obtained, the key steps in the construction phase are:

Tendering – advertising, assessment/•negotiations and awarding the contract. Site establishment – contractor gains access •to site and sets up office/amenities and materials start to be delivered to the site. Contractual construction phase – •supervisor/project manager oversees the works.

Once the project is ready to proceed, a construction manager should be appointed to oversee the works. This person co-ordinates the construction team (including the architect and contractors) on behalf of the client and is charged with the task of getting the project to a practical completion stage within budget and time limitations.

Key roles may include:

Managing the selection and appointment •of contractors. Planning and managing the various •building activities – via phone calls, emails, faxes, site inspections and site meetings. Managing contract variations. •Processing claims for payment. •

While the Project Manager is primarily responsible for the coordination of all construction activities, the Architect plays an important role in this construction phase, as it is their design and vision that is being implemented. The Architect should undertake regular inspections of the construction works to ensure that the design intent is being interpreted correctly. This also allows them to rectify any issues as they arise.

The Construction Manager has a principal responsibility to ensure that all OHS Standards on the construction site are satisfied and that the project program is met. In some regional locations the timely sourcing of materials, specialist contractors and delivery of specified fittings needs to be realistically factored into the construction program.

The successful completion of the project construction phase can be influenced by a number of factors, which include:

Getting good advice throughout the •process, including planning, quantity surveying and financial. Selecting good contractors with a proven •track record in the field. Do not select a contractor based on price alone. Undertake reference checks to verify prior experience and quality of work. Having a realistic budget for the works •that makes provision for unexpected cost increases. Keeping design changes and variations •to a minimum. Following the correct processes and •not cutting corners.

Under budgeting, which may be due •

to a wide range of design (design

complexity, unresolved details, selection

of fittings, finishes or materials and

other aspects) or site factors (ground

conditions, vegetation, demolition/

remediation works etc).

Conservative quantity surveyor costs. •

Cost escalation during construction, •

eg. fuel prices and materials, which may

occur between the detailed design

and construction phases or during

construction. There are often many

external factors that have an impact

on prices.

Selecting a contractor based on a •

low price – this will often be due to a

contract with no contingencies included,

and will generally lead to price variations

throughout the construction stage.

Under estimating the construction •

period (eg. due to bad weather) – which

can lead to delays and escalating costs.

cONSTRUcTION

TabLE 18: whaT aRE ThE pRIcING TRapS ThaT INExpERIENcES INVESTORS OfTEN faLL INTO?


The conception and development of a successful and sustainable tourism project should have the following attributes:

Point of Difference ✓ The project should be based on a good idea

Quantified Market Demand ✓ Comprehensively research the market opportunity.

Location, Location, Location ✓ The location should suit the proposed use and enhance appeal.

Sustainable Design ✓ Design for your customers, the environment, the surrounds and the budget.

Manage the Approvals Process ✓ Understand approval processes and consult broadly to minimise delays.

Financial Feasibility ✓ Test the financial viability of the project and identify risk areas.

Sound Business Plan ✓ To obtain financial support detail your plan for the business to succeed.

Effective Construction Management ✓ Ensure management of all construction activities to deliver it on time and budget.

Experienced Specialist Advisors ✓ Choose experienced specialists to advise and assist in the project throughout its various stages.

kEy SUccESS facTORS

TabLE 19: kEy SUccESS facTORS

Royal Mail H

otel, Dunkeld.


appENDIcESappENDIx a SUMMaRy - 10 yEaR TOURISM & EVENTS INDUSTRy STRaTEGy

ObjEcTIVE

Building upon existing strengths. A.

Develop new strengths. B.

Focus on long-term C. growth opportunities.

Strengthen the partnership D. between Government and Industry.

Improving the branding and marketing of Victoria. 1.

Major events. 2.

Aviation access. 3.

Infrastructure development. 4.

Investment attraction and facilitation. 5.

Skills and service standards. 6.

Third generation customer conversion services. 7.

Emerging international markets. 8.

Business events acquisition. 9.

Regional destination development. 10.

Building synergies between tourism and 11. international education.

Promoting better decision-making. 12.

Coordination and policy advocacy. 13.

Communication. 14.

Soundly researched based marketing campaigns. •Complement national campaigns effectively. •Respond to contemporary influences. •Target high yield markets. •

Actively support and pursue the retention, acquisition, staging •and management of major events.

Pursue further Network Development Agreements with high •value carriers. Strengthen efforts on international aviation policy •development and access advocacy.

Ensure the tourism and events industry needs are considered •in the planning of major infrastructure projects.

Expand private investment into tourism assets, particularly from •international sources.

Continue implementation of the Tourism Excellence Program. •Prepare a Workforce Development Plan for the tourism •industry.

Maintain Tourism Victoria’s leadership in on-line services •through innovation and new technology applications. Assist the industry to develop its on-line capability. •

Support development (infrastructure, skills, and products) that •meets the needs of potential international markets. Target emerging Asian markets, particularly China. •

Strengthen the capacity of the Melbourne Convention and •Visitors Bureau to capture business events. Improve business event attraction •in regional Victoria.

Continue implementation of the Government’s regional •economic strategy – Moving Forward, Making Provincial Victoria the Best Place to Live, Work and Invest. Convene a Regional Tourism Summit to address regional •tourism issues.

Assist educational organisations in the promotion of Melbourne •as an attractive study destination.

Promote a Destination Management approach to Victoria’s •tourism and events industry through whole-of-government decision making. Establish a Victorian Tourism and Events Advisory Council to •oversee implementation of the 10 year Strategy.

Strengthen the role of local government through expanded •Regional Tourism Development Plans and acquisition of necessary industry skills. Advocate Victoria’s interests at the Commonwealth level. •

Continue programs to communicate the economic significance •of tourism. Develop a communications strategy to highlight the importance •of the tourism and events industry.

acTIONS kEy acTIVITIES


Energy Conservation

Incorporate passive solar design principles •to maximise day-lighting and passive heating opportunities.

Incorporate energy efficient design principles •to minimise active heating and cooling requirements.

Specify energy efficient equipment and •lighting systems.

Provide efficient control and effective •maintenance systems, including monitoring of energy consumption.

Optimise opportunities to use renewable •energy sources and incorporate renewable energy technologies wherever possible.

Minimise embodied energy in construction •materials.

Water Conservation

Facilitate opportunities for on-site treatment •and reuse of grey-water and black-water (sewage) streams

Minimise water consumption through practices •such as:

installing rain water and storm water –collection tanks.

installing reuse systems for grey water –

providing water efficient facilities and –equipment.

providing effective monitoring and –maintenance systems.

Minimisation of Fossil Fuel Usage associated with Transport

Facilitate staff access to public transport.•

Encourage cycling by providing showering and •storage facilities.

Facilitate the use of appropriate •communication technologies, such as tele- and video conferencing facilities.

Minimise on-site car parking facilities.•

Minimise transport distances involved in the •demolition, recycling, construction, fit-out and operational phases of the project.

Preserve Natural Features of Site

Avoid development on sites or sections •of sites of high ecological value.

Minimise disturbance to site and regional •ecosystems during construction and operation.

Restore land equivalent to the area disturbed •by the building and where possible the ecological footprint associated with operational activities.

Building Materials Conservation

Mo• dify existing facilities to serve new requirements and reuse existing materials.

Minimise building materials produced from •limited or ecologically unsustainable natural resources.

Minimise building materials that have •damaging ecological effects during harvesting, manufacturing, and/or construction.

Minimise the use of building materials •with high embodied energy.

Minimise life cycle costs through using materials •and equipment requiring minimal maintenance and with maximised expected useful life.

Maximise the use of recycled content material •where there is a cost difference of less than 5%.

Waste Minimisation

Maximise building longevity through creation of •flexible and readily adaptable designs.

Provide facilities to assist office waste •separation into reusable, recyclable, compostable and landfill components.

Minimise construction waste going to land fill •through a material tracking system.

Incorporate organic and water-based site •waste disposal systems into landscaping design.

Enhancement of Indoor Environmental Quality

Minimise all work spaces exposed to glare and •excessive lighting.

Provide all building occupants with a view to •the outside.

Use air conditioning systems that allow for the •supply of fresh outside air.

Shield all building occupants from •Electromagnetic Radiation (EMR) sources.

Appropriate Landscaping

Design landscaping to facilitate year round •moderation of the internal climate.

Minimise erosion potential.•

Plant indigenous flora, and where appropriate, •food-generating plants.

Design landscaping to allow external meeting •and break out areas.

Maximise the reuse on site of all rock and •topsoil emanating from excavations work.

Maximise the use of recycled compost, soil •conditioners and mulches.

Enhance Community Life

Involve the local community appropriately in •the design process.

Respect, reflect and integrate the development •with the surrounding culture and activities of the district.

Create facilities that are accessible and available •for community use.

Purchase local products and services where •possible.

Maintenance

Provide legal structures (building leases, •maintenance agreements, strata titles and tenancy agreements) to preserve the environmental performance of the building.

appENDIcESappENDIx b SUSTaINabLE DESIGN aND cONSTRUcTION fOR TOURISM DEVELOpMENT

TIpS fOR SUSTaINabLE DESIGN aND cONSTRUcTION fOR TOURISM DEVELOpMENTS

Adopted from DSE’s ESDC Principles and Guidelines for Capital Works Projects


Aboriginal Affairs VictoriaDepartment of Planning and Community Development (DPCD)GPO Box 2392MELBOURNE VIC 3001Phone: 1300 366 356www.dpcd.vic.gov.au/aav/

Alpine Planning Unit Department of Planning and Community Development, North East Region89 Sydney RoadBENALLA VIC 3672Phone: 03 5761 1611

Australian Institute of Landscape ArchitectsLevel 1, 41 Exhibition StreetMELBOURNE VIC 3000Phone: 03 9650 1898Fax: 03 9650 3360Email: [email protected]

Australian Bureau of StatisticsGPO Box 2796YMELBOURNE VIC 3000Phone: 1300 135 070Fax: 1300 135 211Email: [email protected]

Australian Market & Social Research SocietyLevel 1, 3 Queen StreetGLEBE NSW 2037Phone: 02 9566 3100Fax: 02 9571 5944Email: [email protected]

Australian Sustainable Built Environment Council20 Bryant Street, FLEMINGTON [email protected] www.asbec.asn.au

Business Victoria121 Exhibition Street MELBOURNE VIC 3000Phone 13 22 15Fax: 03 9651 9770Email: [email protected]

Consumer Affairs Victoria (Liquor Licensing)Level 2, 452 Flinders StreetMELBOURNE VIC 3000Phone: 1300 55 81 81Email: [email protected]

Department of InfrastructureGPO Box 2797MELBOURNE VIC 3001Phone: 03 9655 6666Fax: 03 9655 6762www.doi.vic.gov.au

Department of Planning and Community Development (DPCD)GPO Box 2392MELBOURNE VIC 3001Phone: 1300 366 356www.dpcd.vic.gov.au/aav/

Department of Primary IndustriesGPO Box 4440MELBOURNE VIC 3001 Phone 03 9658 4000 Email: [email protected]

Department of Industry Innovation and Regional DevelopmentInvest VictoriaGPO Box 4509MELBOURNE VIC 3000Phone: 03 9651 8100Fax: 03 9651 9531Email: [email protected]

Department of Sustainability and Environment8 Nicholson StreetEAST MELBOURNE VIC 3002Phone: 03 9637 8000, 13 61 86www.dse.vic.gov.au

Environment Protection AuthorityInformation CentreH&WT Tower40 City RoadSOUTHBANK VIC 3006Phone: 03 9695 2722Fax: 03 9695 2785www.epa.vic.gov.au

GBCA MelbourneLevel17, 500 Collins Street, MELBOURNE VIC 3000Phone: 03 8612 2000Fax: 03 9614 8338www.gbca.org.au

GWM WaterPO Box 481HORSHAM VIC 3402Phone: 1300 659 961 www.gwmwater.org.au

Goulburn-Murray WaterPO Box 165TATURA VIC 3616Phone: 03 5833 5500www.g-mwater.com.au

Heritage Victoria and Heritage CouncilLevel 22, 80 Collins StreetMELBOURNE VIC 3000Telephone: 03 9655 6519www.heritage.vic.gov.au

Lower Murray WaterPO Box 1438 MILDURA VIC 3502Phone: 03 5051 3400www.gwmwater.org.au

Municipal Association of VictoriaGPO Box 4326PPMELBOURNE VIC 3001Phone: 03 9667 5555Email: [email protected]

Parks Victoria10/535 Bourke StreetMELBOURNE VIC 3000Phone: 03 8627 4699 Fax: 03 9629 5563www.parkweb.vic.gov.au

Planning Institute of Australia60 Leicester StreetCARLTON VIC 3053Phone: 03 9347 1900Fax: 03 9347 2900Email: [email protected]

Property Council of Australia Level 7, 136 Exhibition StreetMELBOURNE VIC 3000Phone: 03 9650 8300Fax: 03 9650 8693www.propertyoz.com.au

Regional Development Victoria GPO Box 4509MELBOURNE VIC 3000Phone: 13 22 15Email: [email protected] www.iird.vic.gov.au

Royal Australian Institute of Architects1st floor , 41 Exhibition Street, MELBOURNE VIC 3000PO Box 18025Phone: 03 8620 3866Fax: 03 8620 [email protected]

Southern Rural WaterPO Box 153MAFFRA VIC 3860Phone: 03 5139 3100www.srw.com.au

Sustainability VictoriaLevel 28, 50 Lonsdale StreetMELBOURNE VIC 3000Phone: 03 8626 8700Fax: 03 9663 1007www.sustainability.vic.gov.au

Tourism Alliance VictoriaLevel 3, 114 Flinders StreetMELBOURNE VIC 3000Phone: 03 9650 8399Fax: 03 9650 8543Email: [email protected] www.tourismalliance.com.au

Tourism AustraliaLevel 4, 80 William StreetEast Sydney NSW 2000Phone: 02 9360 1111Fax: 02 9361 1388Email: [email protected]

Tourism Research AustraliaPO Box 1110BELCONNEN ACT 2616Phone: 02 6228 6100Fax: 02 6228 6180www.tra.australia.com

Tourism Victoria 32/121 Exhibition Street MELBOURNE VIC 3000 GPO Box 2219TMELBOURNE VIC 3001Phone: 03 9653 9777Fax: 03 9653 9722www.tourismvictoria.com.au

VICROADSHead Office Administration60 Denmark StreetKEW VIC 3101Phone: 13 11 74www.vicroads.vic.gov.au

appENDIcESappENDIx c kEy ORGaNISaTIONS