Heritage railway financial problems.

[SLC001]

mods note - split from this thread

There is an alarming news item on the Express & Star website that the SVR may not make it to next year and is seeking to raise £1.5m. Several reasons quoted but electricity has gone up by 50% to circa £500,000 and passengers numbers are nowhere near pre-covid levels.

Are SVR unique in being in this position, i.e. struggling financially and needing to raise funds just to survive? Or is it poor management? I cannot believe that the SVR are in a position that other preserved railways are not to at least some extent. Of course, there is also the question of what happens after the £1.5m has been raised?

Or is it alarmist?

Severn Valley Railway launches urgent survival appeal warning it 'may not make it to next year'

One of the region's most popular tourist attractions has launched an urgent appeal for donations, as bosses warn it may not survive its current financial crisis.

www.expressandstar.com

Leaders at the Severn Valley Railway have today launched a £1.5 million 'Survival Fund' appeal, after a "double whammy" of "escalating costs and lower revenue" has prompted urgent action.
Bosses say the railway has been profoundly affected by changes in the financial climate over the past three years, as a result of the Covid-19 pandemic, the war in Ukraine, post-Brexit supply chain issues and the cost-of-living crisis.

 

[Simon11]

I saw this too and I think we may have a few more of the bigger railways having to launch funding drives likes these. Heritage railways which operate smaller locos will have less of an impact from coal increases and of course, if they run less/ smaller buildings requiring energy.

I did however spot that while Severn Railway cannot control coal and energy costs, they can certainly manage passenger numbers/ income. It is potentially alarming that they are struggling to hit numbers seen pre-covid while other railways have. Maybe due to weak management?

I have a concern that the £1.5m fundraising appeal above feels like your donations you give would go into the black hole without a visible impact (e.g. building new/ repairing infrastructure, restoring a new loco ect). Will be interesting to see how they do.

 

[kje7812]

I suspect some other railways are in similar situations but being less upfront about the challenges (though I seem to remember something from the North York Moors about needing grants/donations to survive, I'll have a dig for that).

 

[Brissle Girl]

Both the Mid Norfolk and Gloucestershire Warwickshire have appeals on at the moment in respect of urgent infrastructure repairs needed (the former just to reopen the full length of the line it would appear). But the SVR dwarfs either in terms of amount needed, which does worry me as to how much appetite enthusiasts have to dip their hand into their pocket at the moment to meet the growing demands for appeal funds.

 

[Cowley]

The story about the Severn Valley has also appeared on the BBC:

Severn Valley Railway launches £1.5M 'survival' appeal

Severn valley Railway says costs rose in the last year, while visitor numbers fell by a third.

www.bbc.co.uk

A heritage railway is appealing for £1.5m, for what it describes as a Survival Fund amid rising costs and falling visitor numbers.

The Severn Valley Railway, which runs trains between Bridgnorth and Kidderminster, said its electricity bill alone had more than doubled to nearly £500,000 in the last 12 months.

It also said visitor numbers had dropped by a third in that time.

 

[Intercity110]

Very upsetting news. If one of the biggest railways is struggling, will smaller ones make it to next winter?

 

[Ken H]

The story about the Severn Valley has also appeared on the BBC:

Severn Valley Railway launches £1.5M 'survival' appeal

Severn valley Railway says costs rose in the last year, while visitor numbers fell by a third.

www.bbc.co.uk

what are the SVR doing using all that leccy? I would have thought coal and diesel would have been a bigger issue for them.

 

[86246]

I suspect some other railways are in similar situations but being less upfront about the challenges (though I seem to remember something from the North York Moors about needing grants/donations to survive, I'll have a dig for that).

The North Yorkshire Moors Railway launched an appeal at the beginning of Covid and mentioned how much they miss out on. They set no target but the crisis appeal closed having raised £440k.

I have a concern that the £1.5m fundraising appeal above feels like your donations you give would go into the black hole without a visible impact (e.g. building new/ repairing infrastructure, restoring a new loco ect). Will be interesting to see how they do.

I also thought along similar lines. Quoting a £1.5m figure may also put people off by thinking what use will their generous donation, big or small, will make given the massive overall appeal amount. I wish the SVR well and I may well contribute but this does not look good for their future.

 

[Vespa]

When any business is struggling, you need to open the books and look at what is costing a lot and what doesn't for the return it's giving, remove the dead weights, use smaller engines, less runs per day with a longer carriage set to make up for it, offer experiences at each end to make up for it like a 1940s, 50s and 60s theme static event which will not need too much outlay, invite vintage car events, theatre groups that want to show off their skills, the main costs are electricity, gas and coal look at ways of using it less for more return, have 5 year plan to recover the business and tighten your belts.

 

[Paul Hitchcock]

I heard a rumour, which turned out correct, about Severn Valley finances well over twelve months ago. Similarly, I heard last week of another prominent line with large financial problems.

Yet others have bounced back very successfully post lockdown. Why the dramatic difference?

 

[JonathanH]

Yet others have bounced back very successfully post lockdown. Why the dramatic difference?

Have they? It will depend on the cost of upkeep to a large extent, how big the operation is, the infrastructure to maintain, external contracts, how many paid staff they have or had, losses already made during Covid etc. There isn't just one type of heritage railway.

The Severn Valley is a 16 mile line, with a number of infrastructure issues.

This weekend is the Steam Gala. A day ticket is £34.20, discounted to this price from the on the day fare if you buy in advance, but should passengers be paying much more to ensure survival if the railway?

 

[Ken H]

I heard a rumour, which turned out correct, about Severn Valley finances well over twelve months ago. Similarly, I heard last week of another prominent line with large financial problems.

Yet others have bounced back very successfully post lockdown. Why the dramatic difference?

Announcing you have cashflow problems will alarm suppliers and banks who may buy their debt. So you suddenly find yourself having to pay up front for everything instead of 30-60 days later.
Thats what made Woolies go bust.

 

[STINT47]

The key question for me is why havevisitor numbers dropped by a third?

If I am to give them some money I want to know if they have any plans to address this drop in numbers as I fear that in another year they could be in the same situation asking for money again

 

[Titfield]

The key question for me is why havevisitor numbers dropped by a third?

If I am to give them some money I want to know if they have any plans to address this drop in numbers as I fear that in another year they could be in the same situation asking for money again

I understand that Swanage Railway passenger numbers are down by about 20%. From C200,000 passengers per annum to 160,000 passengers per annum.

It is extremely unlikely that many heritage railway management teams would all "become weak" at the same time. The probable cause is a macro change in customer behaviour which we have certainly seen in some aspects of day to day life*. The double whammy for heritage railways is a very significant rise in costs at the same time.

* Would you say for example that the management of pubs / restaurant chains has become weak at the same time judging by the well known problems and closures in the brewery and hospitality trades?

Many heritage railways last year trimmed their operating calendars and timetables. I wonder if this is having the inadvertent affect of hitting revenue (passenger numbers) more than it actually saves costs. Certainly one heritage railway familiar to me have stated that a very high % of their costs are fixed and actually trimming costs is very challenging indeed without impacting revenue and / or the customer experience.

 

[Ken H]

The key question for me is why havevisitor numbers dropped by a third?

If I am to give them some money I want to know if they have any plans to address this drop in numbers as I fear that in another year they could be in the same situation asking for money again

People are skint and preserved railways are expensive days out.
A small part of the population still scared of catching COVID.
After the lockdowns and travel restrictions. people just want to go to the sun this year. A wet week in Rhyl doesnt appeal.
Public transport has become traumatically unreliable, so people dont travel.

 

[D Williams]

If you are a saddo like me and spend time reviewing the annual accounts of heritage railways , that are readily available on the Companies House website, you will quickly appreciate that most are financial basket cases and survive only because of grants, donations, legacies and cash injections from the supporters organisation. The transfer , due to anno domini, of jobs from volunteers to paid staff , the perfect storm of Covid, rampant inflation, stringent compliance regulation, environmental pressures and vastly increased energy costs has overtaken any provisions that may have been made for inflationary pressures in a normal year. Unfortunately many railways are run by incompetent boards and have extended their operations far beyond what can be supported in the long term. A lot of chickens will be coming home to roost in the next two years. My advice is to experience heritage railways while you can.

 

[Paul Hitchcock]

Have they? It will depend on the cost of upkeep to a large extent, how big the operation is, the infrastructure to maintain, external contracts, how many paid staff they have or had, losses already made during Covid etc. There isn't just one type of heritage railway.

The Severn Valley is a 16 mile line, with a number of infrastructure issues.

This weekend is the Steam Gala. A day ticket is £34.20, discounted to this price from the on the day fare if you buy in advance, but should passengers be paying much more to ensure survival if the railway?

Yes

 

[JonathanH]

Yes

What examples can you cite where they have come back from 2020 stronger than before?

 

[Cowley]

People are skint and preserved railways are expensive days out.

I think this could well be a big part of the current problem. A lot of people just don’t have a great deal of disposable income at the moment.

If you are a saddo like me and spend time reviewing the annual accounts of heritage railways , that are readily available on the Companies House website, you will quickly appreciate that most are financial basket cases and survive only because of grants, donations, legacies and cash injections from the supporters organisation. The transfer , due to anno domini, of jobs from volunteers to paid staff , the perfect storm of Covid, rampant inflation, stringent compliance regulation, environmental pressures and vastly increased energy costs has overtaken any provisions that may have been made for inflationary pressures in a normal year. Unfortunately many railways are run by incompetent boards and have extended their operations far beyond what can be supported in the long term. A lot of chickens will be coming home to roost in the next two years.

That’s pretty well summed up. Apart what I said above we also have a perfect storm of other problems that have been building up over a longer time period.
These are very complex organisations to run when they’re on the scale of some of the larger lines.

My advice is to experience heritage railways while you can.

I must admit that I never thought the Severn Valley would be a line that we’d be talking about in this way. Apart from some shonky earthworks in places they always seemed pretty well on top of things.

 

[Ken X]

People are skint and preserved railways are expensive days out.

As a visitor to heritage lines we have certainly noticed the cost.
We are not real enthusiasts but enjoy industrial archeology of all types and providing there is something steamy on the front we're sorted .
Recently we had an aborted visit locally and diverted to the Bluebell Line to use the day. It was a surprise to be charged £28.50 each for a run up and down the line which was all we had time for.
A planned visit would certainly have been better value but it still stretches a pensioners budget for what to us is a "nice to have".
We are visiting the Watercress Line on Saturday to see relatives and have a day our and see the prices are similar. The bottom line is we will now restrict our visits to a maximum of a couple a year.
An essential it is not and unfortunately other costs will have priority.

 

[Titfield]

As a visitor to heritage lines we have certainly noticed the cost.
We are not real enthusiasts but enjoy industrial archeology of all types and providing there is something steamy on the front we're sorted .
Recently we had an aborted visit locally and diverted to the Bluebell Line to use the day. It was a surprise to be charged £28.50 each for a run up and down the line which was all we had time for.
A planned visit would certainly have been better value but it still stretches a pensioners budget for what to us is a "nice to have".
We are visiting the Watercress Line on Saturday to see relatives and have a day our and see the prices are similar. The bottom line is we will now restrict our visits to a maximum of a couple a year.
An essential it is not and unfortunately other costs will have priority.

Expensive or just not good value for money?

IMHO many lines - especially when operating a reduced timetable with only one loco in steam - are just not good value for money.

 

[Mcr Warrior]

IMHO many lines - especially when operating a reduced timetable with only one loco in steam - are just not good value for money.

A walk up "all line" (round trip) ticket on the East Lancs Railway is £22.00 in 2023, or £24.00 for a multi-trip "Day Rover".

A single, over just the Northern half of the line, i.e. from Ramsbottom to Rawtenstall, is £12.00. Is this particularly good value for the money or has it been priced that way to make the higher priced day tickets seem better value?

 

[Paul Hitchcock]

What examples can you cite where they have come back from 2020 stronger than before?

Actually, I said ''bounced back''. Two lines in this category are Dartmouth and Isle of Wight The latter had the most lucrative two years ever following lockdown.
Of course what the future may hold is surmise.

 

[Titfield]

Actually, I said ''bounced back''. Two lines in this category are Dartmouth and Isle of Wight The latter had the most lucrative two years ever following lockdown.
Of course what the future may hold is surmise.

Well of course intriguingly (at least to me) Dartmouth does not operate the typical heritage railway business model (it is a commercial operation as part of a much larger tourism enterprise) and the Isle of Wight operates a very "tight ship" with all the attraction at one central location (thus focusing on one site alone) and afaik owns all its own locos and does not have to hire in. It also seems to resist the temptation to stretch itself thus minimising risk.

 

[matt78]

What examples can you cite where they have come back from 2020 stronger than before?

This may be another example

Hopes new rail station will solve parking problems - BBC News

Tourists using the steam railway will finally be able to get on trains at the site.

www.bbc.co.uk

 

[Gloster]

Actually, I said ''bounced back''. Two lines in this category are Dartmouth and Isle of Wight The latter had the most lucrative two years ever following lockdown.
Of course what the future may hold is surmise.

I understand that there has been an increase in holidays in the UK and the Isle of Wight has done well out of this. As the Steam Railway is a well marketed attraction it probably is able to attract a fair number of these extra holidaymakers. Without being certain, the costs and difficulty of crossing the Solent mean that the line has always had a larger proportion of holidaymakers, who are likely to be freer with their spending than people just out for the day, than most lines. The same may be true of the Dartmouth line, as it is also in a tourist area. Those lines not in major tourist areas may be finding that it is the day trips that have fallen away. £xy for a family may be an expensive day out, but won’t seem so bad as part of the holiday spending.

 

[778]

If you are a saddo like me and spend time reviewing the annual accounts of heritage railways , that are readily available on the Companies House website, you will quickly appreciate that most are financial basket cases and survive only because of grants, donations, legacies and cash injections from the supporters organisation. The transfer , due to anno domini, of jobs from volunteers to paid staff , the perfect storm of Covid, rampant inflation, stringent compliance regulation, environmental pressures and vastly increased energy costs has overtaken any provisions that may have been made for inflationary pressures in a normal year. Unfortunately many railways are run by incompetent boards and have extended their operations far beyond what can be supported in the long term. A lot of chickens will be coming home to roost in the next two years. My advice is to experience heritage railways while you can.

Are steam railtours going to be in trouble as well, or are the problems faced by heritage railways less relevant for mainline steam operations?

 

[paul1609]

Actually, I said ''bounced back''. Two lines in this category are Dartmouth and Isle of Wight The latter had the most lucrative two years ever following lockdown.
Of course what the future may hold is surmise.

To be honest neither of those are typical heritage railways. One is the closest thing to a fully commercial company in the heritage sector. The other is basically a railway museum site with a 6 mile running line. Both in prime tourist spots.

 

[WAB]

I suspect some other railways are in similar situations but being less upfront about the challenges (though I seem to remember something from the North York Moors about needing grants/donations to survive, I'll have a dig for that).

I suspect many of the supporters' magazines will paint a similar picture - many of the railways are having a hard time at the moment.

 

[Paul Hitchcock]

Well of course intriguingly (at least to me) Dartmouth does not operate the typical heritage railway business model (it is a commercial operation as part of a much larger tourism enterprise) and the Isle of Wight operates a very "tight ship" with all the attraction at one central location (thus focusing on one site alone) and afaik owns all its own locos and does not have to hire in. It also seems to resist the temptation to stretch itself thus minimising risk.

Indeed so as well as all other equipment and the freehold.

This is debt free thus enabling losses in 2020 to be kept very modest