By Douglas Messier
Plans for a visitor’s center at Spaceport America have continued to shrink due to a lack of funding and revenues. And that could pose significant risks to New Mexico’s plans to boost the local economy by attracting more than 200,000 visitors to the remote facility where Virgin Galactic plans to launch tourists into space.
In fact, the New Mexico Spaceport Authority appears to be going down the very path that its own Strategic Business Plan warns will result in a poor visitor experience and fewer tourists paying money to see the high-tech spaceport.
Original plans called for an elaborate stand-alone visitor’s center at the spaceport that would house exhibits, theater, restaurant and other amenities. Visitors would gather at welcome centers in the towns of Truth or Consequences and Hatch to board tour buses for a paid tour of the remote facility.
The welcome center in Hatch has been shelved due to an inability to find an appropriate site on which to build it. The New Mexico Spaceport Authority (NMSA) sought a private loan of $20 million to fund the visitor’s center, but it couldn’t obtain one at a good interest rate, KRQE reports.
The authority then asked the State Legislature for $1 million to construct a temporary hangar at Spaceport America. Legislators balked, instead providing a mere $115,000 — less than half the cost of a $250,000 ticket aboard Virgin Galactic’s suborbital SpaceShipTwo vehicle.
A new plan involves sectioning off a portion of the Virgin Galactic Gateway to Space hangar facility for the visitor’s center. Exhibits will be split the hangar and the welcome center in Truth or Consequences, according to New Mexico Spaceport Authority Executive Director Christine Anderson.
“It’s going to be the same show, it’s just not as elaborate a building on site as it would have been,” Anderson said….
“If we earn enough money, then we can build a fancier building,” Anderson said.
For now, the on-site visitor’s center will be a 4,000 square foot public gallery – which could open as early as September.
If funding for the Visitor’s Center in T or C stays on track – that could be open by Summer 2015.
Virgin Galactic says test flights could begin in the next few months, with full commercial operations beginning by the end of the year.
According to NMSA’s Strategic Business Plan, the effort will require adequate marketing of the remote location by an experienced hospitality management firm.
Assuming an appropriate level of marketing and given considerations for site remoteness, feeder market population base, and macroeconomic trends in the destination tourism industry, the NMSA conservatively projects the full Visitor Experience attendance to reach over 200,000 people annually, with over seventy percent (70%) of those expected to come from outside of New Mexico. The NMSA expects this level of traffic to be a boon to the local tourism economy, in large part due to planned NMSA efforts to cross-market and promote pre-existing and new local tourist experiences, venues, and businesses to spaceport visitors. By 2018, the NMSA intends for Spaceport America to become the number one tourism destination in the State, at least in terms of national and international awareness, if not in total visitation.
The Visitor Experience business line will be treated like a wholly-owned subsidiary, operated by a NMSA-licensed hospitality management firm that is responsible for turning a profit on behalf of the NMSA. The operator will earn all income from ticket sales, food and beverage, and merchandise, while paying for all visitor-related expenses including costs such as marketing, staffing, transportation, and, most importantly, a license fee back to the NMSA. Based on industry standard assumptions the NMSA forecasts the operator to make a profit in the first full year of operation. Taken as a whole, the Visitor Experience should generate more than enough income to allow for sufficient capital reinvestment in this business sector to encourage repeat visitors.
The Strategic Business Plan, which was published in January 2013, noted a slowdown in previous years in travel to New Mexico due to the recession and higher gas prices. It also warned that any cutbacks in the planned visitor experience could adversely impact the number of tourists.
Potentially compounding a general slowdown in demand for travel to New Mexico is the possibility of a Spaceport America visitor experience that is either under-capitalized in terms of facilities and experiential content, or more likely, not marketed well enough to attain awareness levels of 30% assumed in the demand projections. Additionally, the degree to which the local communities surrounding the spaceport are prepared to accommodate additional visitors in terms of hospitality services, infrastructure and amenities will impact the guest experience. Tourism relies on a critical mass of high quality activity and attraction to draw visitors to a particular place; if guests feel the activity failed to live up to their expectations, that there wasn’t enough to do, or that it
wasn’t “worth the visit,” then poor word-of-mouth and travel website reviews will swiftly kill a new destination. More critically, guests won’t be able to evaluate a destination at all if they don’t know about it and never visit in the first place. The baseline hospitality management firm proforma requires at least 10-15% of gross revenue to be spent on marketing during the first five years of operations.
Although Anderson is promising the “same show” to visitors, it will clearly not be identical to the one envisioned in the strategic plan. That could lead the same type of poor experience warned about in the plan.
Further, media reports from Truth or Consequences indicate that the town has not yet made many improvements to the “hospitality services, infrastructure and amenities” expected by tourists. The lack of investment in new hotels, restaurants and other services will likely continue until Virgin Galactic begins flying regularly from Spaceport America. In the meantime, if tours commence and visitors have a poor experience, then NMSA’s revenue plans could be seriously damaged.
Unfortunately, the strategic plan places a great deal of confidence in the full-scale visitor’s center that has been shelved for now.
The spaceport is neither immune to, nor able to influence larger market forces that impact leisure travel in the United States, however it is entirely within the control of the NMSA to develop a destination that is worthy of national and international visitation. For example, the NMSA has hired a world-class team of experts in the location-based entertainment field to design the content and facilities necessary to succeed in the mass tourism business. The consultants, primarily veterans of the Walt Disney Company, are developing all facets of the consumer face to Spaceport America, including branding, feasibility and market research, operational plans, facilities architecture, physical and virtual experience content, and sponsorship and fundraising.
Of course, much will depend upon when Virgin Galactic begins flying. The company is promising suborbital flights from New Mexico later this year. If that happens, NMSA will begin to see additional revenues from the flights and be on a better financial footing.