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1 Scottish Canals Pricing Strategy Prepared for: Scottish Canals Canal House Applecross Street Glasgow G4 9SP 21 July 2016 gva.co.uk/geraldeve.com

2 Scottish Canals We are pleased to present our review and conclusions in connection with a pricing strategy for assessing and reviewing fair and reasonable residential and leisure mooring charges across the Scottish Canals canal network. This report also includes a review of transit and navigation licence charges. As is customary with reports of this nature, our findings should be regarded as valid for a limited period of time. We have no responsibility to update our report for events or circumstances which change after the date of this report. This report has been prepared as the basis of a consultation between Scottish Canals and their boating customers. It may not be published, reproduced or quoted in part or in whole, nor may it be used as the basis for any contract, prospectus, agreement or other document without our prior consent, which will not be unreasonably withheld. Any responsibility of Gerald Eve / Bilfinger GVA is limited to Scottish Canals and any use by third parties shall be solely at the risk of Scottish Canals and / or third parties. Our report does not examine any legal or regulatory requirements. Our Review reflects pricing of comparable transactions which have taken place prior to the EU Referendum. With the Referendum result now clear, there is a higher level of uncertainty around future performance of both commercial and residential property, at least in the short term. Our conclusions are based upon information provided to us by Scottish Canals and other boating organisations along with desk and field based research and discussions with boating users of the canal network. Thank you for your instruction. We trust this report is a useful reference document for the pricing Consultation. Yours faithfully, Contents 1. INTRODUCTION 3 2. EXECUTIVE SUMMARY 6 3. SCOTTISH CANALS NETWORK OVERVIEW CUSTOMER ENGAGEMENT FACILITIES AUDIT CUSTOMER SATISFACTION SURVEY RESIDENTIAL MOORINGS LEISURE MOORINGS TRANSIT CHARGES AND NAVIGATIONAL LICENSES 50 APPENDIX A: CALEDONIAN CANAL FACILITIES MATRIX 54 APPENDIX B: CRINAN CANAL FACILITIES MATRIX 55 APPENDIX C: FORTH & CLYDE CANAL FACILITIES MATRIX 56 APPENDIX D: UNION CANAL FACILITIES MATRIX APPENDIX E: BLUE SEA CONSULTING REPORT, FEBRUARY Martin Forbes Partner, Gerald Eve LLP Ian Derrick Senior Consultant, Bilfinger GVA July Moorings Pricing Review

3 Scottish Canals 1. Introduction 1. INTRODUCTION The British Waterways Board was established by the Transport Act 1962 to manage and maintain the inland waterways. Under the Scotland Act 1998, responsibility for the inland waterways in Scotland was devolved to the Scottish Parliament and transferred to The Scottish Ministers in The British Waterways Board, operating as Scottish Canals, operates in Scotland as a standalone public body following the transfer of functions of the British Waterways Board in England and Wales to the Canal & River Trust on 2 nd July Scottish Canals core duties are set out in legislation which gives them statutory responsibility for operating and maintaining the waterways in Scotland. Scottish Canals are legally required to provide services and facilities on the inland waterways and port facilities owned or managed by them with due regard to efficiency, economy and safety ; and comply with a range of other statutory duties and legal requirements relating to heritage, water quality, health and safety, human resources and asset management etc. In addition, Scottish Canals has a statutory obligation to exploit commercial opportunities to raise income in support of its navigational and safety functions and have a duty to act as if it were a company engaged in a commercial enterprise in its non-navigation commercial activities. Scottish Canals is, however, a not for profit organisation and all surplus revenue gained through commercial activity is to be reinvested in the core business of providing services and facilities to the canal network and contributing towards the Scottish Government s purpose. In 2014/15, Scottish Canals total revenue was million. This comprised 8.89 million of Government grant funding plus million of other income streams obtained from a number of sources, including mooring charge revenue which totalled 511,000 (2.7% of total revenue). Operating expenditure in the same year was million, therefore a 0.46 million shortfall against income. Similar to most public bodies, Government funding is coming under increasing pressure and organisations are obliged to run themselves in a financially responsible manner in order to meet their statutory requirements and aims of the Scottish Government (more information available from Transport Scotland s paper Making The Most of Scotland s Canals ). 1.1 Background to Review Whilst Scottish Canals is conscious of its need to operate as if it were a commercial enterprise it also recognises that it has a duty to be fair and reasonable and acknowledged that an independent organisation was required to review current residential and leisure mooring charges. As a result Gerald Eve LLP successfully won a tender to undertake the Review. Following appointment, the original remit of reviewing residential mooring charges was expanded to include leisure mooring charges. At this stage Bilfinger GVA were invited to contribute to the Review given their specialism in this market. At the same time GVA were tasked, in consultation with British Marine and RYA Scotland, to review the cost of Scottish Canal s transit and navigation licences for the canal network. July Moorings Pricing Review

4 Scottish Canals 1. Introduction For the avoidance of doubt, our remit does not include review of the way in which Scottish Canals is run as an Organisation, nor does it include a review of any contributions / charges made to Scottish Canals by commercial or third party organisations. Our Review is in relation to residential and leisure mooring charges, and transit and navigation licence charges only. How do Scottish Canals create a fair and equitable methodology for leisure and residential mooring prices? How do Scottish Canals establish market mooring charges for residential and leisure moorings across the Scottish canal network? 1.2 Purpose of Review Scottish Canals are required to operate the canal network on a financially sustainable basis, ensure best value is obtained from their existing assets, and seek viable opportunities to fund future investment in the canal network. How do Scottish Canals establish a fair and transparent mechanism for reviewing residential and leisure mooring charges in future years? How do Scottish Canals establish a charging structure for longer term leases? Residential and leisure moorings form part of the existing asset base. The overarching purpose of this Review is to provide a report with recommendations to meet the Aims of the Review (outlined below) for further Consultation with the boaters. Scottish Canals need to charge fair and reasonable prices in exchange for services provided to residential and leisure mooring customers, in order to contribute to running costs and maintenance in the canal network to ensure preservation of this national heritage asset and future viability. Our task is to determine what is a fair charge to the canal users and a fair return to the public purse. 1.3 Aims of the Review As publicised by Scottish Canals and as outlined at the three public meetings held in February 2016, the Review aims to address the following: Our understanding is that there is a need to establish a fair and appropriate mooring pricing structure, which is clear and transparent. Price adjustments over the past few years have created a disparity between mooring charges paid by the earlier users of the canals and the more recent users who tend to be paying significantly higher rates. There is a legacy of discontent from some of the boaters who have become accustomed to the comparatively low rates they were paying prior to Scottish Canal s investment in Living on Water (LOW). 1.4 Methodology Our methodology has evolved as the scope of the instruction has grown. There were a number of information gathering stages which shaped the outcome of the Review as outlined below: Meetings with Scottish Canals to gather and request required information. July Moorings Pricing Review

5 Scottish Canals 1. Introduction Gather and analyse Scottish Canals existing mooring charges. Hold public meetings with the boaters to offer a forum for their views to be raised and allow constructive points to be considered in our Review. Create an inbox for boaters to contributions. Appraise Blue Sea Consulting s February 2014 Leisure Moorings Pricing Strategy report. (We have permission from Blue Sea Consulting to paraphrase the factual content of their Report and the entire report is attached as Appendix E). Hold consultations with British Marine in order to understand what relevant lessons can be learned from the pricing approach (mooring fees and navigation / transit charges) undertaken by other bodies responsible for the inland UK waterway networks; Consult with Canal & River Trust and Waterways Ireland to provide an insight into how their pricing strategy has been established. Review current mooring charges across the wider UK inland waterways and identify a clear rationale/proposal for the appropriate charges for Scottish Canals. The scope of work was extended following feedback from the public meetings to include inspections and undertake an audit of the facilities provided at each site. July Moorings Pricing Review

6 Scottish Canals 2. Executive Summary 2. EXECUTIVE SUMMARY Residential Moorings Prior to the Living on Water (LOW) initiative there had been a piecemeal approach to pricing across the network. As a result there is a range of charges currently paid by boaters. In terms of residential boating, the market in Scotland is relatively new compared to other parts of the UK. At the time of writing there are 132 residential moorings at 17 sites across the Scottish Canal network. Each location has its own distinguishing features and respective mooring charges should reflect the facilities as well as local market conditions. From our study into residential pricing, approaches differ from operator to operator south of the Border the closest market geographically from which we can extract information. Some have established pricing via auction, some charge a flat rate over and above leisure charges, while others set rates according to supply and demand and apply a first come first served regime. In light of concerns voiced by boaters as to the means in which Scottish Canals have set pricing in the past (namely auctions), we have considered alternative methodologies other than relying solely upon existing lettings to establish what fair and reasonable prices should be. An initial idea was to explore the cost of creating, maintaining and operating residential moorings. Insufficient cost information was available to enable proper analysis on a locational basis, which ruled this approach out. Given the monopoly position that Scottish Canals effectively has in Scotland, the only approach we considered to be equitable was to benchmark to the relevant local housing market. To enable us to do this, we analysed how mooring charges at various locations on the English network related to the 2 bed letting market in the respective local area. There was a range of results, but there was correlation which suggested mooring charges were c.40-55% of the average monthly rent of a 2 bed flat in the same area. We then considered each of the Scottish Canal sites, researched and calculated the average 2 bed rent in each locale. We also canvassed the views of local letting agents experienced in the markets where there were a limited number of properties being actively marketed at the time of our research. Using these results, we applied a realistic 40% to the average rent, which is below the English average of 47%, to most of the mooring locations. When assessing the percentage to apply we took on board comments that boaters made regarding the superior nature of the canal networks south of the border. In marina settings, we increased the rate to 50%, as the evidence supported a higher percentage in these locations, and we felt this to be reasonable given the increased costs associated with marina development. The next stage was to reflect the facilities at each location using the findings of our facilities audit. We have prepared a Facilities Matrix, and made negative adjustments where necessary. Thirdly, we considered levels of demand at each location. There are presently no waiting lists for any LOW locations therefore we judged demand by the number of vacancies at each site and made adjustments as deemed necessary. Where there was highest July Moorings Pricing Review

7 Scottish Canals 2. Executive Summary availability we adjusted prices by -25% and where the site was fully let, we adjusted by +10%. Lastly, we felt we could not ignore the substantial body of letting evidence created by Scottish Canals over the last 12 months or so, given this is the very market we are to review. 31 lettings have taken place over this timeframe, and while we have taken on board the circumstances under which some of these prices have been set, we cannot disregard all this evidence entirely. This last step is a sense check. If a number of boaters have agreed to pay the same rate at the same location, this cannot be ignored entirely and reassuringly underpins our findings in most locations. Future Pricing Reviews We understand that it is the intention of Scottish Canals to standardise all residential licences in line with the LOW agreements and to review rents periodically. It is important that boaters are consulted on how the rates charged can be kept in line with the market and we suggest that the following options are considered: Should rents be reviewed periodically (either annually or 3 yearly) to the higher of the passing rent or the rent at which the mooring might reasonably be expected to be let in the open market with reference to comparable market rates achieved in that area as is the case for LOW agreements? Should the exercise just undertaken be repeated periodically and the residential letting market reviewed and the rates updated accordingly? Should rents simply be increased in line with RPI? Should rents be increased in line with RPI, subject to a minimum and maximum increase of 2% and 5%? Our recommendation would be for prices to be reviewed annually linked to RPI, subject to a collar and cap of 2% and 5%. The link to RPI provides an accepted connection to the wider economy, whilst the collar provides Scottish Canals with some growth during low inflationary periods and the cap protects the boaters during periods of high inflation. It would be left to Scottish Canals to market any vacant moorings with the intention of securing the best figure that the market is prepared to pay. Boaters who have already agreed their mooring charge are safe in the knowledge that any new evidence will not be used to increase their mooring charges going forward. If significant investment (above and beyond maintenance) is to be made in any location, Scottish Canals should reserve the right to implement above RPI / 5% charges. Any investment and subsequent price increases should be explained in full to the boaters moored at that location. Should rents be reviewed periodically in line with an average of recent deals completed at each location by Scottish Canals? Should rents be reviewed in line with movement in house price indices as published by Registers of Scotland? Local indices can be created using house price data. The Way Forward Residential Moorings In the case of the older style residential agreements all lettings will be transferred to new LOW licences and mooring charges will be set as per our proposed figures above. Where this results in a significant July Moorings Pricing Review

8 Scottish Canals 2. Executive Summary increase in the charge being paid we would recommend that the increase is phased in over a three to five year period. The additional increase would be over and above the proposed annual rental increase in line with RPI collared at 2% and capped at 5% to ensure the rent is in line with the current market rent. With regards to the LOW licences, which have been negotiated and agreed between the parties in the past 3 to 4 years, adoption of our proposed charges will result in instances where some boaters are facing an increase and others a decrease. It is clearly important that all parties are consulted in order to establish what the preferred approach to adoption is. It is also important to make this process as simple as possible. We are therefore of the opinion there are two options to be considered for consultation. Points for Consultation Should all existing LOW rates, as agreed at the outset of the original licences, become the initial rent of the new licence and thereafter be reviewed periodically in line with the outcome of the rent review consultation above. Or should the proposed mooring rates outlined in this Review be adopted for all LOW licences and thereafter be reviewed periodically in line with the outcome of the rent review consultation above? As with the older agreements above, where a new rate results in a significant increase then this can either be immediately adopted or phased in over an agreed period. We would recommend that this increase is phased in over a three to five period. The additional increase would be over and above the proposed annual rental increase in line with RPI collared at 2% and capped at 5%. Where the rent adopted decreases this can either take effect immediately upon commencement of a new licence or be phased in over an agreed period. Clearly the two sides will have a different view on this point but we would suggest that where the rent has decreased this should take effect from the start of a new licence. Again we would recommend that boaters are consulted on this matter and would suggest the following points be considered. Points for Consultation If adoption of the proposed rates results in an increase in the rent to be paid for a mooring, should this increase be paid immediately upon commencement of a new licence or be phased in over an agreed period, and if so over what time period? If adoption of the proposed rates results in a decrease in rent to be paid for a mooring, should this decrease take place immediately upon commencement of a new licence or be phased in over an agreed period, and if so over what time period? Leisure Moorings There is a substantial body of evidence regularly produced by lettings on the Scottish Canals. There is however a slight disharmonisation as a July Moorings Pricing Review

9 Scottish Canals 2. Executive Summary result of different pricing structures for existing and new customers having been implemented over the years. It is apparent that there is work undertaken already by Scottish Canals to pitch rates at appropriate levels to not only maximise income but also to ensure moorings are as full as possible. Where there are apparent vacancies at a popular location, it is often the case that the mooring is let, but the boat is out sailing etc. We attempted alternative approaches to setting fair and reasonable rates but each method would result in anomalies. There are numerous variables which influence pricing. Balancing / weighing up all the factors is difficult and many results were thrown up which were unrealistic when following our original prescriptive matrix. Our research has led us to the conclusion that the fairest way to set pricing is to implement a pricing matrix similar to the one first advanced in 2014 by Blue Sea Consulting (BSC). We have adopted the BSC matrix, but have taken this further and enhanced it based on our own research of comparator marinas and the outcome of our facilities audit. We compared the comparator mooring rates detailed in the BSC report (2013 prices) with current pricing (2016). There was a wide variance in price changes, but the net variance in the change of rates was +28%. We have set a standard marina charge applicable at each location which has been subsequently discounted based on the location and facilities found at each site. While we acknowledge that there is an element of subjectivity to preparing and categorising the matrix, it is the most equitable method we have discovered. The Way Forward Leisure Moorings Our suggestion is that leisure rates are reviewed on an annual basis, with reference to changes of the pricing of comparator marinas. When an appropriate market rent is achieved, RPI with collar and cap at 2 % and 5% should be suitable for maintaining the rate, with a full review every 3 or 5 years, utilising use of the pricing matrix. The benefit of adopting a pricing matrix is that it can be fine-tuned and tweaked depending on feedback or changes at a site which may warrant an up or down grade (such as enhanced or reduced facilities). Demand should be measured by occupancy levels. If a location is close to being full then the pricing recommended in the Review should be implemented. Should there be prolonged vacancies at a location then consideration should be given by Scottish Canals to offering a discount. Transit Charges and Navigation Licences Transit charges on the Scottish Canal network have historically increased at a relatively consistent rate. Navigation Licence fees have increased 41.4% over a six year period, although remained consistent between 2012 and One of the principle differences in fees when contrasting operations north and south of the border is the conflicting charging methodology. This difference makes it difficult to accurately compare methodologies as costs in Scotland are partly determined by the use of a boat whereas in England they are determined by the time period the licence is purchased for, with each network unique. July Moorings Pricing Review

10 Scottish Canals 2. Executive Summary We have found no merit in ranking navigational and transit charges by distance that boats travel. This would penalise boaters who decide to travel less and would only be applicable to commercial vessels. A balance is required between the cost of maintaining (i.e. dredging and weeds) the canal against achieving the necessary income. The Way Forward We advocate an RPI linked increase to these charges, subject to no worsening of the ability to navigate the canal. Increases over and above RPI should be subject to change in navigation (e.g. increase and decrease in costs of assisted passage) and any other related navigational costs. Points for Consultation between Scottish Canals and Boaters Are all parties agreeable to charges remaining at existing levels with annual increases linked to the RPI, subject to a collar and cap of 2% and 5%? As a general point, it is our recommendation that all mooring licences, both residential and leisure, across the canal network are held on (or moved to) the same terms and conditions. This is fair and reasonable to the boaters as all should be treated the same, and operationally from Scottish Canals point of view, it should assist and simplify management of the moorings. July Moorings Pricing Review

11 Scottish Canals 3. Scottish Canals Network Overview 3. SCOTTISH CANALS NETWORK OVERVIEW 3.1 Introduction The Scottish Canal network extends to 137 miles of inland waterways and is supplied by 19 reservoirs. A summary of the assets on the network includes: Scotland s canals were built between 1768 and 1822 and are Scheduled Monuments of National Significance recognised as part of Scotland s rich heritage and safeguarded for future generations. 1,500 ha of land and water 88 locks 98 road bridges 77 accommodation bridges 50 foot bridges 8 railway bridges 2 tow path bridges Passes through 9 local authorities 22 million visitors per annum Scottish Canals has a total of 552 moorings across Scotland of which 132 are classed as residential moorings across 17 locations. It is Scottish Canals aim to increase this number significantly in the next three years. *There are no moorings on the Monklands Canal. The Living on Water / residential moorings concept has been promoted in Scotland over the past three years following a conscious decision by Scottish Canals to invest in this sector, however the market remains relatively immature compared to south of the border where there is a large, established market for residential moorings. July Moorings Pricing Review

12 Scottish Canals 3. Scottish Canals Network Overview There are distinguishable features not only between each of the individual Scottish canals but also between the Scottish and English canal network as whole, which has posed a challenge to this Review of residential moorings. In terms of leisure boating, this market is more mature and there are Scottish comparator locations from which we are able to draw evidence. The comparisons are costal marinas and adjustment is required to adequately reflect the inherent characteristics of the canal network. Further detail on each of the canals is found below. As mentioned above, we have consent from Blue Sea Consulting to paraphrase their factual descriptions of the canals, which we have checked for accuracy: Scottish Canals operates a number of mooring facilities and one major marina (Seaport, Inverness) on the Caledonian. The visitor facilities at Banavie and Fort Augustus service major tourist hubs and as such are extremely popular (and often over-subscribed) whilst the longer stay moorings at Dochgarroch and Seaport are fully let, with waiting lists. In addition, the privately owned Caley Marina and Inverness Marina are also fully subscribed. Caley Marina and Inverness Marina provide service and repair facilities for visiting and permanent berth holders. There are also a number of passenger/trip boats and charter vessels working on the canal. 3.3 Crinan Canal 3.2 Caledonian Canal Name Max. Craft Length Beam Draft Name Max. Craft Length Beam Draft Crinan Canal 9 miles 26.82m (88ft) 6.09m (20ft) 2.2m (7.3ft) Caledonian Canal 60 miles 45.72m (150ft) 10.67m (35ft) 4.1m (13.5ft) The Caledonian Canal is Scottish Canals largest canal stretching from Inverness, in the east, to Corpach, in the west, and runs through some of the most dramatic scenery to be found on any waterway in the United Kingdom. Its former role as a commercial east/west link is clear from the dimensions of its locks and for this reason it makes an ideal short cut across Scotland for many leisure craft and small commercial vessels. The Crinan Canal is a scenic short cut allowing vessels to move from the Clyde to the West Coast, without having to round the Mull of Kintyre. Whilst there are long term leisure berth opportunities at Ardrishaig Basin, Bellanoch Marina and Crinan Basin the canal is generally perceived as a transit canal and as such most vessels will only remain for a day or so. The locks are not powered and therefore the transiting vessels need to be fully crewed if they are to enjoy the passage. July Moorings Pricing Review

13 Scottish Canals 3. Scottish Canals Network Overview In 2016 Scottish Canals took the decision to cancel the assisted passage scheme to help short-handed vessels pass through the network more easily. We received mixed feedback on this scheme from boaters. For vessels requiring assistance, a Partnership with a local business, the Yot Spot can now offer assisted passage from April to October. The ability to moor additional craft on the canal is limited but more moorings and stopping points would, we understand, be popular. A relatively new facilities block has been constructed at Crinan. While mixed views have been received in connection with the new facility, it may encourage more people to stay overnight in the basin when berths are available. There is also scope for vessels to anchor off the adjacent hotel in good weather. Around the villages of Crinan, Ardrishaig and Cairnbaan there are cafes and restaurants and in the winter boats are hauled out ashore at Cairnbaan. Crinan also has a good boatyard and chandler nearby. 3.4 Forth & Clyde Canal Name Max. Craft Length Forth & Clyde Canal 35 miles (63ft) Beam 6.00m (19ft 8in) Draft 1.83m (6ft) / Air. 3.00m (9ft 10in) Whilst lesser known than the Caledonian and Crinan canals by the coastal leisure boating market, the Forth and Clyde Canal still provides a popular, valuable and interesting lowland passage between the East and West Coast of Scotland and has an established community. Opened up as a result of the Millennium Link Project the canal is restricted not only by draft, but also by a number of low bridges and for these reasons yachts have to dismast at Grangemouth or at Bowling. Many modern motor boats (even up to 40ft), which do not have flybridges may be able to transit the canal, with the exception of the Glasgow Branch which is both shallower and narrower. There are a number of boats which enjoy the canal life of the Forth and Clyde Canal and the Union and rarely leave their confines. The Forth and Clyde canal has seen many developments over the years such as the Falkirk Wheel - connecting it to the smaller and narrower Union Canal - the Helix Park and the 30 m high Kelpie Horse Sculptures on its banks. The Paddle Sports Centre at Pinkston in the centre of Glasgow on the Glasgow branch opened in 2014 and provides a unique facility in the city. Also in the early part of 2014 the new 1km canal extension opened at Grangemouth making the eastern most access to the canal easier, ensuring that the transit of the canal will appeal to even more boats from both the east and west and making it even easier for boats based on the canal to access the Firth of Forth. July Moorings Pricing Review

14 Scottish Canals 3. Scottish Canals Network Overview Passing through a mix of scenery, communities, heritage and nature the Forth and Clyde Canal has a number of marinas on it, ranging from small modern basins housing twenty plus boats to the larger facilities at Grangemouth Sea Lock and Auchinstarry. The linear moorings along the canal are of varying ages and fit-out. Being mainly in the densely populated Scottish central belt, the canal is popular with boaters, anglers, paddlers, rowers, walkers and cyclists and as such is, in places, busy and vibrant; this can lead to conflict and for certain mooring areas to be busy and potentially less popular with long term boaters as there is demand on the facilities. Scottish Canals are aware of the conflicts and we understand work (as they are obligated to do) with all the interest groups to ensure the Canal can be enjoyed by all and that the varied uses coexist as harmoniously as possible and benefit each other. What contributions other user groups make to the maintenance and upkeep of the canal network are out with the scope of this Review. The Union Canal runs from the centre of Edinburgh, at Edinburgh Quay to the Falkirk Wheel and is the closest comparison to a traditional English canal that is to be found in Scotland. It does not benefit from the vast network that is available to Canal Boats in England and Wales, but is none the less well populated by traditional narrow boats. Being a contour canal the Union benefits from not having numerous locks to navigate and as such is an easy and relaxed canal to use. The scenery is attractive and again history, heritage and nature feature. Hire boats and trip boats operate along its length which can access the Forth and Clyde via the Falkirk Wheel. The size restrictions require a differing style of mooring facility when compared to the other Scottish Canals and they are predominantly linear in nature. 3.5 Union Canal Name Max. Craft Length Union Canal 31 miles 20.5 (67ft 6in) Beam 3.50m (11ft 6in) Draft 1.07m (3ft 6in) / Air. 2.70m (8ft 11in) July Moorings Pricing Review

15 Scottish Canals 4. Customer Engagement 4. CUSTOMER ENGAGEMENT 4.1 Public Meetings Scottish Canals arranged for three meetings, held in early February 2016, for us to engage with their boating customers. These meetings were held to enable us to gain an insight into the boater community, gain better understanding of the issues experienced by boaters, and as a forum for constructive discussion relevant to our Review. A large number of points raised were applicable across all three canals. We have therefore summarised the key points/ideas relevant to this Review. 4.2 Caledonian Canal On the 4th February 2016 we met with c.30 leisure, residential and charity representing boaters at the Kingsmill Hotel in Inverness. There were a small number of vocal attendees present amongst the group and it was clear from the atmosphere in the room that there was a difficult relationship between Scottish Canals and a number of these customers. Notwithstanding, a number of constructive points were made. 4.3 Crinan Canal On the 2nd February 2016 we met 7 boaters at the Argyll Arms Hotel in Ardrishaig. The meeting provided helpful insight to the workings of the canal, and constructive feedback and suggestions were given. 4.4 Lowlands Canals On the 3rd February 2016 we met with boaters at the Falkirk Wheel. There was a mix of leisure, residential, commercial and charity interests represented. Again, a very insightful meeting was had with many relevant suggestions and points made Address mooringsreview@geraldeve.com (now closed) In addition to the public meetings, an address was set up to allow boaters an alternative method of submitting information or views. The address was advertised at the public meetings and on Scottish Canals website. 21 boaters ed with feedback for our consideration. A number of these boaters had been in attendance at one of the meetings. Again, a number of observations and constructive comments were made / reiterated by boaters. 4.6 Boaters Feedback We outline the pertinent points made by Boaters, in no particular order, which have assisted us with our deliberations. While relevant to individual site pricing, we have not listed the many site specific comments made and focused in this section on comments relevant to suitable methodology for setting fair and reasonable charges. General Mooring price should be a total charge including Boat Safety Certificate / navigation licence; Charges should reflect facilities /services provided at each location; July Moorings Pricing Review

16 Scottish Canals 4. Customer Engagement An income / revenue basis should be considered; An understanding of supply / demand is important and details of the waiting lists Scottish Canals hold should be requested. There were mixed feelings about level of service remaining at status quo if the prices were to remain stable/reduce i.e. some wanted better facilities and some were happy for services to remain at current levels if it meant the price did not increase. Some like more basic environment and were willing to pay less for lower level of services; When undertaking review need to have recognition of inherent restraints the canal has; Inflationary increases would be in principle acceptable; Cannot compare with European canals a more mature market; Cannot compare with English canals a more mature market and greater distances to cruise; Mooring charges seem to only take into account facilities - not cruising information/distances which is an important draw to the lifestyle/hobby. A criticism of the Blue Sea Consulting Report was that cruising distances were not reflected. Boaters want to cruise. Scottish Canals do not seem to understand this is an attraction of boating; Inherent restrictions of canal include the fact boaters cannot cruise and then return to home in same weekend due to lock restrictions; Any above inflationary increase would need to correlate with improvement in facilities/services; How did British Waterways obtain their prices previously in Scotland? Seemed to work quite well; Charging increases need to be transparent. Boaters need to be able to plan and budget ahead; Avoid shock similar to 60% increase in navigation charges this was not received well. In the past, Scottish Canals tried to compare and apply marina rates to canals this is not believed to be comparable; Relativity in locations needs to be reflected; Maintenance levels lower / services not increased since British Waterways days; If prices are reasonable, this will attract more boaters and create better and safer environment boaters want this; Where high availability, prices should be lowered to attract boaters. Overall, this would have desired effect of increased income; Imperative that a fair and transparent mechanism for establishing and reviewing charges is way forward; July Moorings Pricing Review

17 Scottish Canals 4. Customer Engagement Cannot compare superior marinas e.g. Inverkip incomparable with Scottish Canal marinas; Coastal marinas do not compare with inland marinas; Prices boaters want certainty over 3-5 years. Boaters invest large amounts in boats and need to be able to budget; Rent review mechanism inflation / price of living; On some canals (e.g. France) pay per lock/tolls for transiting; Residential / LOW Not agreeable to e-bay/auctions being used to set prices and cannot use e-bay/auction evidence. Need to go back to first principles boaters wanted assurances we would do that and not use Scottish Canals information as it is unreliable and a perception that prices gained in suspicious circumstances; 5% - 10% increases in past not well received. Difficult to cope with infrequent nature and magnitude of price increases; Pensions linked to inflation so can t afford above inflation price increases; Once a residential price has been agreed the price should only increase in line with RPI thereafter whilst that mooring occupier remains a customer. Other moorings can be let at the prevailing market rate even if this happens to be higher (or lower) than the previously agreed rates; Market charges then inflation + x% each year thereafter; Accepted that if investment were made at a site / tangible reasons it would be acceptable for a reasonable price increase above inflation; If at one location there were improvements and a reasonable increase imposed then how would it work if someone cruised along canal from elsewhere and used the new facilities. Their prices have not increased - is that fair? We were asked to review number of boats on the market for sale at each location to understand supply and demand; Council Tax at Kirkintilloch was comparable to mooring charges years ago why not link mooring charge to Council Tax. A counter point was made that Council Tax has been held artificially low for a number of years and no longer relevant; Views were that boaters generally happy with pricing based on length of boat; Suggestion if say a 3 year licence, freeze prices i.e. no increase for duration of licence. LOW charges not based on length. LOW licence is restrictive if want to sell boat. Boat and mooring cannot be sold together without penalty. July Moorings Pricing Review

18 Scottish Canals 4. Customer Engagement Leisure An alternative for leisure boaters would be to sell up and buy a camper van which would be cheaper, and provide more freedom and flexibility. We should consider caravan parks for a guide to pricing; Conversely, the caravan sector was said by some to be incomparable as far more competition and mature market; Categorisation / star ratings suggested by a leisure user (similar to camping sites); Look to other marinas for pricing guidance but reflect difference in characteristics. 4.7 Conclusions from the Boaters Feedback It was clear to see that the boaters are passionate about their way of life / hobby, use of the canals, and want to see the network thrive. The atmosphere at each of the meetings differed, but common themes emanated from all. The canals users have established a community and are keen to attract additional new boaters to the canals for a number of reasons including safety, camaraderie etc. Price is one of the barriers to entry and if the price is attractive enough, it will not only encourage existing canals users to remain, but also entice new boaters to this way of life / past time. Transparency over how prices have been arrived at, and future price increases was a concern. Boaters want clarity to enable them to budget for their chosen lifestyle. Most have invested heavily in the purchase of a boat, and future mooring charges are at this time an unknown variable. A number of boaters commented on the difficulty in which information in connection with pricing could be obtained from Scottish Canals, and the lack of user-friendliness of the website for boating customers was raised. Many boaters feel trapped in their current position, with the inability to assign a mooring without financial penalty when they wish to sell their boat. The position is reversed, in that when a boater wants to buy a boat no mooring is reportedly available in their desired location. How to tackle this issue is out with the parameters of this Review, however we suggest further consideration is given by Scottish Canals on how best to address this. An outcome from the boater feedback was a requirement to visit each of the main sites across the network. Scottish Canals agreed with us that to undertake our Review thoroughly the remit required to be expanded to allow a facilities audit to be carried out. This is detailed in Section 5. A large number of comments raised at the meeting and via were directed at a decline in customer service levels, maintenance, unsatisfactory opening dates/hours, trust/integrity and dissatisfaction with head office functions/the way in which Scottish Canals operates. It was clear similar frustrations were felt across the entire canal network, to varying degrees. Dissatisfaction with customer and maintenance service levels etc is difficult to accurately quantify and reflect in a pricing strategy. There is July Moorings Pricing Review

19 Scottish Canals 4. Customer Engagement clearly an intangible and variable human element involved and it was evident from the feedback received that service levels fluctuate widely on an individual basis. The service and customer care from the likes of former Crinan Canal Harbour Master, Alec Howie, and his team were commended by a number of boaters and likely the reason for a feeling of higher satisfaction from users of the Crinan Canal. Ultimately dissatisfaction manifests itself in customer demand levels. We were interested to learn if the degree of general dissatisfaction which we encountered at the public meetings expressed was in fact the general mood, and we were keen to ensure as many boaters as possible were allowed their say. On the whole, the feedback which Scottish Canals apparently receive tends to be more positive than negative which contradicted the sentiment at the meetings. It was suggested that the findings of the most recent Customer Satisfaction Survey was shared with us to consider comments from as wide a catchment as possible. A summary of the findings is provided at Section 6. July Moorings Pricing Review

20 Scottish Canals 5. Facilities Audit 5. FACILITIES AUDIT Issues with stones being thrown at residential boats. One of the outcomes of the public meeting was a need to visit each site to review the facilities on offer and to cross check that the facilities have been correctly advertised. Again, Scottish Canals were responsible for communicating the dates and approximate times of our visits. 5.1 Caledonian Canal The main sites on the Caledonian Canal were inspected on 7th April 2016 and the following are observations made and comments received from boaters. Seaport Marina/Muirtown: Pump Out - according to the facilities matrix advertised by Scottish Canals, there is a pump out at Seaport Marina/Muirtown. The location of the pump out is however at the top of the Muirtown Locks. In the winter it is not possible to access the pump out at the weekend as the locks are closed. In addition, according to local boaters, the facility was out of use a number of times last year. LOW moorings are furthest from the facilities. (The Counter argument was made by Scottish Canal staff that LOW moorings are located at the quieter end of the marina). No water supply for leisure moorings on Pontoons 1 & 2 at Seaport. We understand these are due to be replaced. It would be useful to know when as they are in a poorer condition compared to the others and do not have a water supply. At the time of our inspection there was large boat being refurbished on the next pontoon to the residential moorings, although Scottish Canals rules do not allow this and work was going on until 11 pm. Disgruntlement with Scottish Canals staff in terms of service/attitude (from 3 boaters). Dochgarroch: At Dochgarroch there was a complaint at the priority that Jacobite Cruisers enjoys having now taken over the main visitors berth. This causes issues for boaters east of the lock if they return too late to get through the lock, as often there is nowhere to tie up overnight. We understand that there is a proposal to remove a barge from Dochgarroch West and add further transit berths to alleviate the problem. It would be useful to know when this is due to happen as the argument is that the cost of moorings in Dochgarroch East cannot be worth as much as they were as they now are disadvantaged by the lack of transit berths in Dochgarroch West. (The position may have altered since our inspection). Laggan Top and Banavie: The facilities matrix advertises a shop nearby - at both locations, the reality is that a significant walk or a car is needed to reach July Moorings Pricing Review

21 Scottish Canals 5. Facilities Audit the service. In more general terms, the following comments were raised: Operating times restrict easy enjoyment of canal use. Fuel supply - there is a supply at a number of locations but this tends to be more expensive than competition. 5.2 Crinan Canal The main sites on the Crinan Canal were inspected on 7 th April 2016 and the following observations made. No boaters were in attendance during the visits but Alec Howie, now retired Harbour Master, provided a tour of Crinan Basin. Ardrishaig Lock 1: Shower facilities in poor condition. Ardrishaig Basin: Facilities in general not very easy to find/identify. Crinan Basin: Looked like water was available but not shown on skippers guide. General feeling amongst users that facilities block, while looks great, is not functional. Laundry facilities still not available as at time of inspection. Car parking at peak season can be difficult. 5.3 The Lowlands Canals The main sites on the Lowlands Canals were inspected on 4 th, 5 th and 7 th April 2016 and the following observations made and comments received from boaters. Bowling: Boaters feel WC blocks insufficient not big enough if Scottish Canals want to attract more boaters. Lock 11 Bridge: Broken lock on toilet. WCs deep cleaned for the first time in a long time the day before our visit. Residential boaters say they usually have to deep clean them. Bellanoch Bridge: Phone box does not work and has not done so for several years apparently (according to a local). The boaters oppose the proposed development of flats adjacent to the pontoons. There is a fear that residential development will lead to unsociable behaviour, akin to that experienced at Leamington in Edinburgh. July Moorings Pricing Review

22 Scottish Canals 5. Facilities Audit Auchinstarry: There is a perception that the development of the archways is a waste of money. Further development mooted which does not seem to stack up given there are existing vacant units. We understand tenants have expressed an interest, but have been frustrated by a lack of commercial reality (i.e. Scottish Canals were not willing to grant a sufficiently long term lease to allow an operator to write off fit out costs). In order to develop revenue streams, whilst at the same time promoting canal related use, the boaters had the idea of developing a boat yard on the land Scottish Canals plans to sell for flats. Insurance companies increasingly insist boaters store boats on land off-season due to increased claims due to bad weather etc. Development of a Marina is also a plausible idea however a view was expressed that there may be a conflict of interest as a Scottish Canals Board Member is a Director at Greenock (we do not know the extent to which any business plan has been researched for viability or feasibility). Pump out issue with smell. Security issues with youths from surrounding areas. Falkirk Wheel: Estimated 11 boats on the market for sale. Elsan - in poor condition. Security some issues with youths targeting boats on the linear moorings. Grangemouth (Kelpies): WC - flushing issues. Showers water pressure problems. Security pontoons have unsecure gates. Can be heavily populated with tourists visiting, using facilities and being nosy. Causewayend: Security issues. Request by residents to secure pontoon refused by Scottish Canals due to right of way access. Security pontoons not secure; can bypass the lock. Also, locks on linear mooring are broken. Refuse Collection not good condition. Tired looking and maintenance is in general poor. Linlithgow: Lack of signage for residential moorings. No water, but this is advertised. Parking advertised but not nearby. July Moorings Pricing Review

23 Scottish Canals 5. Facilities Audit Boaters commented that they would like to see more facilities i.e. WC and shower block, CCTV, lights behind storage sheds, lockable sheds, pump out facilities, gates on pontoons. Misrepresentation in marketing material about the location being quiet and secluded. Limited navigation of canal. 5.4 Facilities Matrix Ratho: More facilities for visitor boats required. Issues obtaining a registered address with the Council. Laundry - constant issues with facilities. Security some issues with youths targeting boats on the linear moorings. Safety need more than one ladder in the basin. As a result of comments received at the boaters meetings we decided that it would be useful to try and prepare a matrix that would allow the benefits and issues of each location to be taken into account when assessing pricing. In order for us to provide a full analysis of each mooring location / marina we have developed a guide to facilities and services outlined in the table below. This involves scoring a range of criteria and services on a rating of 10 (excellent) to 0 (very poor). This has influenced our residential mooring pricing review detailed in Section 7 and was used to review Blue Sea Consulting s matrix which was used in undertaking our leisure mooring pricing review and matrix detailed in Section 8.4. Safety poor paving could cause an accident. Guide to Facilities/Services Matrix ( 0-10 sliding scale) Harrison Park: No access to shower lock broken. Leamington Wharf and Lochrin Basin / Edinburgh Quay: Water Supply fully functioning water supply 10; no water supply 0 Toilets Modern purpose built facility 10; graded down for age/condition/number; no toilets 0 Showers Modern purpose built facility 10; graded down for age/condition/number; no showers 0 Facilities not easily accessible and insufficient for the number of boaters at peak times of the year. Security and safety issues well documented. Electricity Power supply to bollard 10; no power 0 Fuel Supply Fuel within location 10; graded down if nearby; no fuel 0 Refuse collection Regular refuse collection 10; no refuse collection 0 Pump out Modern functioning pump out facility in location 10: graded down July Moorings Pricing Review

24 Scottish Canals 5. Facilities Audit Guide to Facilities/Services Matrix ( 0-10 sliding scale) for age/condition/proximity; no pump out 0 Storage (Residential only) Modern functional storage provided at location 10; no storage 0 Shops nearby Good quality convenience store with 10 minutes walk 10, graded down for offer and distance away; no shops 0 Laundry modern purpose built facility at location 10; graded down for age/condition/proximity; no laundry 0 Security/Safety Fully secured site or no issues 10; graded down for proximity to urban areas and no security 0 Parking dedicated parking at location 10; graded down for number and proximity; no parking 0 Guide to Facilities/Services Matrix ( 0-10 sliding scale) Scenic beauty attractive open countryside location 10; graded down to city/town 0 Our facilities matrix scoring is subjective, although we have attempted to ensure consistency by reference to the above guide. As part of this exercise we asked Scottish Canals to appoint someone with good working knowledge of the canals to independently score the facilities. While there were naturally some variances, there were no wide discrepancies and on balance the resultant scores for each location were relatively close. Telephone Telephone or strong mobile signal 10; no telephone or signal 0 Chandlery - modern purpose built facility at location 10; no chandlery 0 Boatyard boatyard at location 10; no boatyard 0 Proximity to sea 24 hour access to sea 10; graded down for restrictions due to locks or operational hours say -2 for each lock; no access 0 Inland shelter there are benefits to being inland, best of both 10; grade down the further inland? Cruising distances uninterrupted cruising 10; grade down 2 for multiples of 4 miles; less than 2 miles 0 Pub Modern pub within 10 minutes walk 10; graded down for quality and proximity; no pub 0 Restaurant - Modern restaurant within 10 minutes walk 10; graded down for quality and proximity; no restaurant 0 Proximity to city/town amenities city or town centre within 10 minutes walk 10; graded down for proximity; remote location 0 July Moorings Pricing Review

25 Scottish Canals 6. Customer Satisfaction Survey 6. CUSTOMER SATISFACTION SURVEY As mentioned above, Scottish Canals have commissioned a Customer Satisfaction Survey for the three main locations and this was still ongoing at the time of writing this report. It is intended that this survey will be carried out annually. We have been provided with some initial findings from the review and a brief summary of these are provided below. 6.1 Caledonian Canal There were 49 long term berth holder respondents to the survey, 40 of which are leisure users. Of the respondents, 38 or 78% were happy to berth their boat with Scottish Canals. Of the 11 respondents who answered in the negative, there were a range of reasons, but only three cited price as the main pressing concern for their negative response. 6.2 Crinan Canal There were 5 responses from Crinan Canal long term berth holders, all of which are leisure users. 80% were happy to berth their boat with Scottish Canals. The reason given by the negative respondent was the recent price consultancy and inactivity on fixing the barrier at Bellanoch Marina and the Crinan toilet block. were happy to berth their boat with Scottish Canals. The reason given by 16 of the 26 negative respondents included price. Lack of and poor maintenance of services, lack of dredging, lack of communication, lack of transit moorings and speed of passing boats were other reasons listed. 6.4 Conclusion On balance we were surprised with the outcome of the survey. Following the public meetings, we were left with a strong perception that Scottish Canals customers were very dissatisfied. The results of this survey prove this is not so, and while there are clearly issues that require to be addressed, and there are boaters who have undoubtedly in their opinion had bad experiences, there appears to be a large number of content boaters across the canal network. Many of the comments were positive and complimentary of Scottish Canals. Recipients of bad customer service tend to be more vociferous and ready to give feedback compared with those who have had a more positive experience. That said, often there can be a silent majority and this survey was important to try and establish if the mood we experienced at the meetings was indicative of the general feeling of all the canal users. 6.3 Lowlands Canal There were 72 responses from Lowland Canal long term berth holders, of which 39 are leisure users, 29 residential, and 4 commercial. 64% July Moorings Pricing Review

26 Scottish Canals 7. Residential Moorings 7. RESIDENTIAL MOORINGS 7.1 Introduction In this section Residential Moorings include Living On Water (LOW), Residential and Liveaboard Moorings. For the purposes of this review these categories are described as follows: LOW Residential An initiative started in 2012 by Scottish Canals to provide the opportunity to experience a different way of life living on Scotland s canal network. Considerable expenditure has been made to meet planning regulations and to provide pontoons and facilities to make this a possibility at a number of locations primarily across Central Scotland as well as at Inverness. Residential Residential mooring licences which have planning consent but pre-date the Living on Water initiative. Liveaboard Those living on board their boat but not moored in one particular location at a residential / LOW mooring. An issue arises when the boater fails to regularly move and thus become residential without the necessary planning permission or paying the appropriate mooring fee. Prior to the LOW initiative there had been a piecemeal and ad-hoc approach to pricing across the canal network. As a result there exists a wide range of charges currently being paid by boaters, even in the same location, across the three categories listed above. One of the challenges we encountered was to understand why there was such disparity, even at a location where all things being equal two mooring sites should be paying roughly the same, such has been the sporadic approach in the past. When some boaters advise they have faced a significant increase, it may be as a result of starting off from an unrealistically low base. Nevertheless, it is not practical for erratic price increases of varying degrees to be implemented, as Scottish Canals, and their boaters require to plan ahead and budget accordingly like any household/business. In terms of residential boating, the market in Scotland is relatively new compared to other parts of the UK where a large and diverse sector has grown over the years with a number of operators competing to provide residential moorings. The canal network in Scotland is the only feasible location for residential moorings and, as its custodian, Scottish Canals has a unique position and an unrivalled influence in the market. During the course of the public meetings it was suggested to us that we should not be comparing the Scottish Canal network with the English Canal network, which is considerably more mature and offers different opportunities. This is however the closest market from which we can draw any kind of comparison, albeit adjustments are required to reflect the fundamental differences between the two markets. In undertaking this review we spoke with representatives of Canal and River Trust (CRT), British Waterways Marinas Limited (BWML), Waterways Ireland and The Bridgewater Canal who were all very helpful but it became apparent that all had different ways of setting prices and administering their canals or river ways. CRT advised that they do not publish their pricing and it is very much arrived at on a supply and demand basis at individual locations. Residential moorings at popular locations are auctioned whilst the less popular locations are priced relative to the local market and July Moorings Pricing Review

27 Scottish Canals 7. Residential Moorings advertised accordingly. BWML differ slightly from CRT in that they do not use the auction approach but set their prices relative to nearby competition and then let on a first come first served basis. Both operators review their prices annually in line with movement in the market relative to their mooring locations. We also spoke to a representative of The Bridgewater Canal and understand that they charge a flat rate of 1,000 plus the relevant leisure rate per annum. Waterways Ireland s pricing is determined in accordance with Bye-laws and Statute dating from the 1980s and as a result this was of no assistance to for our Review. We were also asked, in a few locations, not to use the evidence set by boaters as some of the prices had been established by auction and there was concern that the auction process had not been truly transparent and fair. On the other hand, Scottish Canals stated that the auction process was conducted independently and was entirely above board and was used to establish mooring rates in the absence of any market precedent in Scotland when the LOW concept was first launched. Latterly, we understand that the majority of new mooring prices have been set by fixed price, negotiation or best bids in higher demand locations. We have listened to both sides and while we are not in a position to comment on the validity or otherwise of the claims, we have considered alternative approaches to pricing in our Review. We have however made the observation that setting prices by way of auction is a method used by CRT where there is strong demand for moorings in a location. Whilst we would suggest that this method is relevant for setting fair prices in a situation where there is high competing demand, if it is to be implemented then the process has to provide boaters with confidence in its transparency. The practice of closing dates in the wider property market is a possible method that could be adopted in the moorings market place where there is strong demand for a vacant mooring instead of an online auction process where the identity of the other bidders is unknown. Sealed best bids are invited, assessed and a time limit set to purify any conditions contained within the offer. The highest offer does not necessarily need to be accepted, other factors may result in a lower offer appealing more. In the housing market, disclosure of all the bids and conditions is not generally made and this is accepted practice. Whilst on the topic of the general housing market, there is a buyer beware caveat whereby a purchaser is expected to undertake necessary due diligence prior to purchase. Although, marketing information has to comply with the Property Misdescription Act 1991 whereby a buyer cannot be misled into a purchase, there is no requirement on sales information to alert the purchaser to defects / disadvantages of a property the purchaser is expected to do their homework. We would expect a degree of buyer beware to apply in the moorings market as well. 7.2 Background At the time of writing there were 132 residential moorings at 17 locations across the Scottish Canal network representing approximately 24% of the total number of moorings on the Scottish Canal network. The moorings are currently categorised and distributed as follows: July Moorings Pricing Review

28 Scottish Canals 7. Residential Moorings Table 7.2.1: Mooring allocation Site LOW (of which vacant) Residential (of which vacant) Liveaboard Muirtown Dochgarroch Gairlochy Ardrishaig Cairnbaan Bowling Lower Bowling Upper 4(3) 0 0 Bowling Helenslea 8(4) 4 0 Applecross Wharf 6(2) 0 0 Speirs Wharf 8(4) 0 0 Cadder Wharf 6(6) 0 0 Southbank Marina 8(6) 0 0 Auchinstarry 1 9(3) 0 Kelpies Marina Causewayend Basin Linlithgow East Ratho Marina Ratho Linear Leamington Wharf Lochrin Basin Totals 96(25) 18(3) Residential Mooring Rates As already mentioned above, each location has its own distinguishing features in terms of proximity to cities/towns or scenic rural location and provision of facilities from the basics such as power and water to proximity to shops and restaurants. The respective mooring charges should reflect the facilities provided as well as local market conditions in terms of supply and demand, and also any additional investment in the location in terms of facilities or services. As a result of the range of influencing factors, prices for residential moorings vary considerably across the UK from anything up to and beyond 10,000 per mooring pa. The top end prices are achieved in and around London and the south east with other city or large town locations achieving between 4,000 and 7,000 per berth pa. There are different approaches to establishing charges from one operator to another. As mentioned above some have established their residential rates through auctions; others charge an additional flat rate on top of the relevant leisure rate to reflect the higher costs associated with residential moorings; whilst another sets a rate and then operates a first come first served regime. Where demand is low all operators assess charges in the local area and a price is set accordingly. A prolonged period of vacancy will likely require a downwards adjustment. In light of concerns expressed at the public meetings regarding the means in which certain charges have been established we have given considerable consideration to how fair market mooring charges can be arrived at. An initial approach had been to consider the cost of creating and operating the moorings and calculate what income would be required to cover the cost. Whist we understand that the approximate cost of creating residential mooring sites with standard July Moorings Pricing Review

29 Scottish Canals 7. Residential Moorings facilities is in the order of 25,000 to 30,000 per mooring, Scottish Canals cannot provide costs for specific mooring locations given the way in which works are procured. We have, therefore, come to the conclusion that the best way we can be sure of calculating appropriate rates is to benchmark mooring charges to the relevant local residential market. For this reason we have looked at what information we could find in England and examined how the rates charged relate to the rents achieved for 2 bed flats located as close as possible to the particular mooring. The results are contained in the following table: Table 7.3.1: Relationship between Mooring Rates and 2 bed flat rents (England) Canal/Waterway Worcester & Birmingham Paddington Arm, Grand Union Grand Union, Leicester Arm Grand Union Site Diglis Basin Marina, Worcs. Engineers Wharf, Northolt, West London Market Harsborough Basin/Union Wharf Cowroast Marina, Herts. Mooring Rate pcm 2-Bed Flat Rate pcm Mooring Rate relative to 2- Bed Rate % 490 1,225 40% % 458 1,129 41% Coventry Exhall Basin % Ripon Ripon Racecourse, % Yorks. Humber Hull Marina, Yorks % River Trent Sawley Marina, Notts % Llangollen Leeds & Liverpool Lancaster River Great Ouse Whixall Marina, Shrops. White Bear Marina, Lancs. Galgate Marina, Lancs. Priory Marin, Beds % % % % Average 47% There was a range of results but there is a correlation between monthly mooring charges and the average monthly rent for a 2-bed flat. The evidence indicated that in many cases monthly mooring charges were c % of the average monthly rent of a 2-bed flat in the same area. The rate increases to 50%-60% when looking at offline marinas and the average rate across the sample was 47%. We are therefore of the view that a realistic approach to establishing mooring charges can be calculated as a percentage of rents for 2- bed flats in (or close to) each location. We have adopted a figure below the English average of 40% across the sites with the exception of Muirtown, Southbank, Auchinstarry and Ratho Marinas where we have adopted 50% to reflect the offline marina configuration. Offline marinas are more expensive to develop and therefore it is equitable to link these locations to a higher percentage. We have researched average rents sought for 2-bed flats located as close as possible to each of Scottish Canals residential mooring locations and also spoke to local letting agents to produce the figures outlined below. We have then calculated notional mooring rates using 40% or 50% of the annual rent to arrive at the following mooring rates: July Moorings Pricing Review

30 Scottish Canals 7. Residential Moorings Table 7.3.2: Relationship between Mooring Rates and 2 bed flat rents (Scotland) Mooring Site Comparison City/Town Ave. 2-bed Rental Rate (pcm)* 40% of Rental Rate (pcm) Notional Rate pa Muirtown Inverness ** 3,750 Dochgarroch Dochgarroch ,640 Gairlochy Fort William ,000 Ardrishaig Lochgilphead ,160 Cairnbaan Lochgilphead ,160 Bowling Bowling/ Dumbarton ,760 Bowling Lower Bowling/ Basin / Harbour Dumbarton * 3,450 Applecross Glasgow ,048 Speirs Wharf Glasgow ,048 Southbank Kirkintilloch ** 3,120 Cadder Bishopbriggs ,760 Auchinstarry Kilsyth ** 2,850 Kelpies Marina Grangemouth/ Falkirk ,280 Linlithgow Linlithgow ,240 Causewayend Linlithgow ,240 Ratho Marina Ratho Station ** 3,750 Ratho Linear Ratho Station ,000 Leamington Edinburgh ,680 Lochrin Edinburgh ,680 rents are usually agreed as little negotiation takes place in this marketplace. These calculations produce a range of notional rental rates for moorings ranging from 2,160 pa at the Crinan Canal locations to 4,680 pa at the Edinburgh locations. The next stage was to ensure the rate reflected the specific benefits and issues of each location and at this point we referred to the Facilities Matrix introduced at Section 5 above. We looked at those areas where an influencing factor scored 3 or less and deducted one point and where the score was between 4 and 6 we deducted 0.5. We took the view that if a score of 7 or more was awarded then the facility was of a sufficient standard/provision. These negative points were totalled and converted into a percentage to adjust the notional figures previously arrived at. Finally, we considered levels of demand for each of the locations as an overarching influence. There are no waiting lists for LOW moorings, therefore we have judged demand by the number of vacancies at each site. This last sense check step is considered a fundamental part of the equation and is evolutionary to take account of variable factors in the future. We graded each site based on the number of vacancies with the sites with most availability having the greatest discount (-25%). Where the site was full we reflected its popularity with a 10% addition. These adjustments produced the following notional rates: *pcm per calendar month ** rate calculated using 50% We have a degree of confidence that the quoting rents for the 2-bed flats are the achieved rents, as unlike the purchase market, quoting July Moorings Pricing Review

31 Scottish Canals 7. Residential Moorings Table 7.3.3: Adjusted Mooring Rates Mooring Site Notional Rate pa Facilities Adjustment Demand Adjustment Adjusted Notional Rate pa Muirtown 3, % 10.0% 3,713 Dochgarroch 2, % 10.0% 2,381 Gairlochy 3, % 0.0% 2,400 Ardrishaig 2, % 0.0% 1,944 Cairnbaan 2, % 0.0% 1,814 Bowling 2, % -15.0% 2,158 Bowling Lower Basin / Harbour 3, % -15% 2,698 Applecross 3, % -25.0% 2,035 Speirs Wharf 3, % -10.0% 2,112 Southbank 3, % -25.0% 2,083 Cadder 2, % -25.0% 1,635 Auchinstarry 2, % -10.0% 2,385 Kelpies Marina 2, % 0.0% 2,006 Linlithgow 3, % 10.0% 2,780 Cause end 3, % 10.0% 2,709 Ratho Marina 3, % 10.0% 3,630 Ratho Linear 3, % 10.0% 2,871 Leamington 4, % 10.0% 4,633 Lochrin 4, % 10.0% 4,633 In round terms, these calculations produce a range of notional rates pa from 1,600 at Cadder Basin to 4,600 at Lochrin Basin. In addition to the above exercise we have also considered the substantial body of evidence from new transactions involving the letting of 31 LOW moorings over the past 12 months or so, listed at Table This represents almost a third of the total number of LOW moorings and we are of the opinion that this evidence cannot be disregarded entirely and provides a good indication of where market rents are for each location particularly where there is a volume of transactions at a similar level in one location. Table 7.3.4: Recent Residential Mooring Lettings Canal Site Rate pa Date Comments Caledonian Muirtown 3,500 Jun 16 3 year agreement Caledonian Muirtown 3,500 May 16 3 year agreement Caledonian Muirtown 3,500 Oct 15 3 year agreement Caledonian Muirtown 3,500 Sep 15 3 year agreement Caledonian Muirtown 2,800 Aug 15 3 year agreement Caledonian Muirtown 2,800 Jun 15 3 year agreement Caledonian Muirtown 2,800 Jun 15 3 year agreement Caledonian Muirtown 2,800 Jun 15 3 year agreement Caledonian Muirtown 2,800 May 15 3 year agreement Forth & Clyde Applecross 1,750 Aug 16 3 year agreement Forth & Clyde Applecross 1,500 Jun 16 3 year agreement Forth & Clyde Applecross 1,750 May 16 1 year agreement Forth & Clyde Forth & Clyde Forth & Clyde Forth & Clyde Bowling Helenslea Bowling Helenslea Bowling Helenslea Bowling Helenslea 2,500 Apr 16 3 year agreement 2,500 Feb 16 3 year agreement 2,500 Oct 15 1 year agreement 2,500 Jun 15 3 year agreement Forth & Clyde Southbank 1,800 Oct 15 1 year agreement July Moorings Pricing Review

32 Scottish Canals 7. Residential Moorings Canal Site Rate pa Date Comments Forth & Clyde Auchinstarry 2,500 May 16 3 year agreement In arriving at our opinion of fair and reasonable market rates we have had regard to the following: Union Kelpies Marina 1,500 tbc Pending Our range of adjusted residential linked rates Union Causewayend 3,000 Mar 16 3 year agreement Union Causewayend 3,000 Jul 15 3 year agreement Recent mooring letting evidence at each location As a sense check, the relativities between locations Union Linlithgow East 3,000 Sep15 3 year agreement Union Linlithgow East 3,000 May 15 3 year agreement Table 7.3.5: Our opinion of fair and reasonable Mooring Rates Union Ratho Marina 3,625 Jun 16 3 year agreement Union Ratho Marina 3,500 Jan 16 3 year agreement Union Ratho Marina 3,500 Jan 16 3 year agreement Union Ratho Marina 4,000 Jun 15 3 year agreement Union Leamington 4,500 Jun 16 Union Leamington 4,000 Jun 15 Union Lochrin 360 Jun 16 Union Lochrin 333 Apr 16 Union Lochrin 333 May 16 All figures are inclusive of VAT but exclusive of the Navigation Licence. Source: Scottish Canals 3 year agreement. Long pontoon with storage. 3 year agreement. Long pontoon. 3 year agreement. The rate is per linear metre. 3 year agreement. The rate is per linear metre. The rate is per linear metre. Mooring Site Opinion of fair and reasonable Rate per berth pa (incl VAT) Muirtown 3,500 Dochgarroch 2,400 Gairlochy 2,400 Ardrishaig 1,950 Cairnbaan 1,800 Bowling 2,150 Applecross 2,000 Speirs Wharf 2,100 Southbank 2,100 Cadder 1,600 Auchinstarry 2,400 Kelpies Marina 2,000 Linlithgow 2,800 Causewayend 2,700 Ratho Marina 3,600 Ratho Linear 2,900 Leamington Lochrin* 4,500 (West) / 4,000 (East) 342 per linear meter Average 2,705 July Moorings Pricing Review

33 Scottish Canals 7. Residential Moorings *We understand that Lochrin will continue to be charged on linear meter basis, as per the recent lettings, given that all the moorings here are capable of accommodating broad beam boats. We have provided a single mooring rate per location for a standard mooring but within certain locations, in particular Leamington, there may be specific factors (i.e. storage and length of pontoon) affecting value that should be taken into account to arrive at either an enhanced or a discounted charge, as appropriate. In the case of Leamington, we suggest a discount is appropriate for the eastern most moorings to account for the disadvantages associated with the overhanging apartments. From the evidence presented to us we understand that all the western moorings have storage huts associated with these moorings which is another reason for this location to be charged a higher rate. There may also be certain occasions at a location where a mooring is significantly superior to others, i.e. an attractive view, which the other moorings do not benefit from, or a boater leases a storage hut. We feel that it is reasonable for Scottish Canals to apply an additional charge or premium, where applicable, on a case by case basis. It should also be noted that the above proposed mooring rates are for standard sized boats. Should a non-standard sized boat occupy a mooring, we suggest that Scottish Canals are reserved the right to consider these cases individually and price accordingly on a case by case basis. marketplace and then adjusting to reflect site specific price influencing factors underpins the mooring charges that we propose. 7.4 Licences and Review of Rents At present the LOW licences are either for a period of 1 year or 3 years and upon renewal the rent is reviewed to the higher of the passing rent or the rent at which the mooring might reasonably be expected to be let in the open market with reference to comparable market rates achieved in that area. This approach has not proven popular as at some locations it has resulted in large increases given the evolving nature of the market and the increasing popularity of residential moorings. This creates uncertainty for the boaters and requires a potentially drawn out rent review process to be undertaken by Scottish Canals, costing time and money. We understand that it is the intention of Scottish Canals for all residential licences to be drawn on similar terms to those agreed with the LOW customers and it is therefore important that all boaters are consulted on the form of these agreements and how rents will be reviewed. We are of the opinion that the boaters should be consulted on what they consider the best approach to reviewing rents is, and the following options should be considered: Points for Consultation It can be seen that the figures in the table above tend to support the mooring rates being achieved and we are of the opinion that our methodology of benchmarking to the local relevant residential Rents are reviewed periodically (either annually or 3 yearly) to the higher of the passing rent or the rent at which the mooring might reasonably be expected to be let in the open market with reference to comparable market rates achieved in that area. July Moorings Pricing Review

34 Scottish Canals 7. Residential Moorings Review rents periodically in line with an average of recent deals completed at each location by Scottish Canals. Review rents in line with movement in house price indices as published by Registers of Scotland. Local indices can be created using house price data. Periodically review the exercise that we have undertaken and review the residential letting market and update the prices accordingly. Increase rents in line with RPI. Increase rents in line with RPI, subject to a minimum and maximum increase of 2% and 5%. We recommend that the position is simplified and that annual licences are agreed between Scottish Canals and their residential customers. These licences will automatically renew each year provided that the terms of the Long Term Licence Moorings Booklet have been adhered to, a notice of termination has not been issued by the licensee and the rent is increased in line with movement in the Retail Price Index over the previous 12 month period. We are of the opinion that this approach would provide boaters with more certainty and should also reduce the time spent on administration by Scottish Canals. These new licences would be phased in on the expiry of any existing agreements. In periods of low inflation, as is the case at present, it will be difficult to maintain growth in income in line with the real growth in costs that outstrip low average price increases. We would therefore propose a minimum increase at, say 2% pa, which would equate to an increase of 50 pa when considering a mooring rate of say 2,500 pa. At the same time we recognise that this presents boaters with significant risk of substantial increases during inflationary periods and we would therefore propose to cap any increase in rent at 5% pa thus providing protection against significant short term price hikes to the boaters and some degree of certainty to both parties. It would remain necessary for Scottish Canals to actively market the remaining vacant moorings in order to continue to generate income to invest in the canal network. They should endeavour to secure the best figure that the market is prepared to pay for any vacant moorings and any that become vacant. We would recommend the best rent is obtained by way of either a best bids approach or by setting a price based on our opinion of market value above. These new transactions would not impact upon existing residents, whose rents would effectively be locked down from day one of their licence, subject to the collared and capped RPI rent review provisions. Cognisance is required by the boaters of the reasonable standpoint that capital investment (over and above maintenance) cannot be advanced without increased return to Scottish Canals. As a result, any proposed expenditure / investment at a particular location should be presented to the boaters prior to implementation explaining any requirement for an above inflation increase. 7.5 The Way Forward In the case of the older style residential agreements, we understand that all lettings will be transferred to new licences and rents will be set as per our proposed figures above. Where this results in a significant increase in the rent being paid we would recommend that the increase is phased in over a three to five period. The additional increase would be over and above the proposed annual rental increase in line with RPI collared at 2% and capped at 5% to ensure the rent is in line with the current market rent. July Moorings Pricing Review

35 Scottish Canals 7. Residential Moorings With regards to the LOW licences, which have been negotiated and agreed between the parties in the past 3 to 4 years, adoption of our proposed rates results will result in instances where some boaters are facing an increase in their rent and others a decrease. It is clearly important that all parties are consulted in order to establish what the preferred approach to adoption of the proposed rents is. It is also important to make this process as simple as possible. Our suggestions is that the proposed mooring rates listed above are adopted for all LOW licences and thereafter reviewed periodically in line with the outcome of the rent review consultation above. phased in over an agreed period, and if so over what time period? If adoption of the proposed rates results in a decrease in rent to be paid for a mooring, should this decrease take place immediately upon commencement of a new licence or be phased in over an agreed period, and if so over what time period? As with the older agreements above, where a new rate results in a significant increase then this can either be immediately adopted or phased in over an agreed period. We would recommend that this increase is phased in over a three to five period. The additional increase would be over and above the proposed annual rental increase in line with RPI collared at 2% and capped at 5%. Where the rent adopted decreases this can either take effect immediately upon commencement of a new licence or be phased in over an agreed period. Clearly the two sides will have a different view on this point but we would suggest that where the rent has decreased this should take effect from the start of a new licence. Again we would recommend that boaters are consulted on this matter and would suggest the following points be considered: Points for Consultation If adoption of the proposed rates results in an increase in the rent to be paid for a mooring, should this increase be paid immediately upon commencement of a new licence or be July Moorings Pricing Review

36 Scottish Canals 8. Leisure Moorings 8. LEISURE MOORINGS 8.1 Background Again there is a substantial body of evidence produced by lettings on the canals, although a significant amount of the activity appears to be on the Crinan and Caledonian Canals. Once more there is a slight disharmonisation of rates charged as a result of rates proposed by the Blue Sea Consulting (BSC) review being implemented for new lettings at some locations, while rates for existing customers increase at a different rate. 8.2 Comparator Pricing From our research it is apparent that the charges levied within the coastal locations are sensitive to those being charged by other nearby marinas. Table highlights the current annual rate at marinas located close to the Scottish Canals network, including both public and private marinas. This follows more extensive comparator pricing undertaken by BSC (which included English and overseas pricing). We have felt that it is more pertinent to this Review to focus on the Scottish comparables, however details of the additional pricing research are included in the BSC report (included as a separate Appendix). Table 8.2.1: Comparator Leisure Mooring Pricing 2016/17 Scottish Canals Location Nearby Competition Annual Rate (2016/2017, per metre) Crinan Ardfern Croabh Dunstaffnage Ardrishaig Tarbert * Portavadie Bowling Rothesay James Watt Dock ** Largs *** Kip Holy Loch Rhu Grangemouth Port Edgar North Berwick Dunbar Anstruther 78.65**** Seaport Caley Marina Inverness Marina Nairn ***** Banff Corpach Fort William Marina (Loch Linnhe) ****** Source: Bilfinger GVA / Gerald Eve * c.5% discount for locals ** 20% discount on published rate is offered to reflect ongoing works at Dock. Fee reduced to accordingly *** Charged at per metre for vessels measuring m, per metre for vessels measuring m and 425 per metre for vessels measuring 12.2m+. There is a flat rate of 1,313 for vessels up to 6m. **** 2014/15 pricing ***** not charged per metre scale of 243 (vessels up to 5m) to 1,393 ( m) and per metre for vessels 14m and above ****** swing moorings, not charged per metre for summer July Moorings Pricing Review

37 Scottish Canals 8. Leisure Moorings Our research, along with that undertaken by BSC, highlights that berthing prices vary considerably across the locations (similar to Scottish Canals network). Consistencies in pricing are most likely to be found in established markets with higher berthing occupancies (such as the Firth of Clyde) and are typically operated by commercial entities. 8.3 Pricing Changes We have compared the comparator marina pricing levels detailed in the BSC report (2013), with the latest (2016) levels to identify any trends in pricing. Scottish Canals Location Nearby competition James Watt Dock Annual Rate (2016/2017, per metre) Annual Rate 2013/14 % Difference % Largs % Kip % Holy Loch % Rhu % The analysis showed a wide variance in rates over the period. While some marinas have significantly increased mooring fees, including Anstruther (+42%) and Port Edgar (+25%), most have generally witnessed marginal increases, with the exception of Portavadie (-15%). The net variance in the change of rates was only +4%. The huge variance in rates charged suggest that other mitigating factors, such as occupancy and demand, impact on the prices set by the different marinas. Grangemouth Port Edgar % North Berwick % Anstruther % Seaport Caley Marina N/A Inverness Marina % Lossiemouth % Table 8.3.1: Comparator Marinas - Price Change Scottish Canals Location Nearby competition Annual Rate (2016/2017, per metre) Annual Rate 2013/14 % Difference Crinan Ardfern % Croabh N/A Dunstaffnage % Ardrishaig Tarbert % Portavadie % Bowling Rothesay % By comparison, with the exception of Crinan Canal (which has had a steady 10% increase between 2013 and current rates) there is a large variance in Scottish Canals mooring pricing over the same period. Prices on the Caledonian Canal vary from a 16% rise since 2013 (Laggan Avenue) to a 50% increase (Fort Augustus). However, the greatest variance can be seen on the Lowlands Canals. With the exception of Southbank Marina, which has remained at per metre, all other mooring fees have risen, some more than 70%, although some of these have come from a relatively low base. We highlight the pricing change on all four canals in the following tables. July Moorings Pricing Review

38 Scottish Canals 8. Leisure Moorings Table 8.3.2: Caledonian Canal Mooring Price Change Table 8.3.4: Lowland Canals Mooring Price Change Scottish Canals Location 2013 Rate Current Rate* % diff of 2015 and market Scottish Canals Location 2013 Rate Current Rate* Difference Banavie % Corpach % Corpach Reach % Dochgarroch East % Dochgarroch West % Fort Augustus % Gairlochy % Kytra % Laggan Avenue % Laggan Top % Seaport Marina % *These rates are illustrative only and are indicative of the highest of all fees payable at each location. Table 8.3.3: Crinan Canal Mooring Price Change Scottish Canals Location 2013 Rate Current Rate* difference Ardrishaig Basin % Ardrishaig Dummy Lock % Bellanoch Bridge % Bellanoch Marina % Bellanoch marina Swinging moorings % Cairnbaan Lock % Crinan Basin % Crinan Basin Dummy Lock % Crinan Rings % Lock 14 Crinan % Lock 4 Top % Oakfield Bridge % *These rates are illustrative only and are indicative of the highest of all fees payable at each location. Forth and Clyde Auchinstarry % Bowling Lower % Bowling Upper % Bowling Helenslea % Cadder N/A Camelon Lock % Grangemouth - Serviced % Grangemouth - Unserviced % The Falkirk Wheel Basin % The Falkirk Wheel Linear % Southbank Marina % Union Edinburgh Lochrin Basin % Ratho Marina N/A Ratho Linear % Causewayend N/A *These rates are illustrative only and are indicative of the highest of all fees payable at each location. We have held discussions with Highland Harbours, who cover the Highland Council area who have informed us that price increases in recent years have been between 2 and 4%, but as Highland Council has funding issues, they are therefore increasing their charges by 10% this year. July Moorings Pricing Review

39 Scottish Canals 8. Leisure Moorings 8.4 Pricing Matrix The research undertaken in this section and the preceding sections of this report has led us to believe the fairest approach for Scottish Canals to set pricing moving forward is to implement a pricing matrix for leisure moorings. This approach was first advanced and outlined by BSC in We have subsequently tried alternative methods of setting a fair and reasonable rate, but believe that their approach is the only way of setting a charging structure for Scottish Canals, largely due to the lack of direct competitor moorings (although the comparable marinas in Table have had an influence). We have set a standard marina charge applicable to each location. These standard charges represent what a full service marina, with high berthing occupancy in each of these locations could achieve. We have subsequently discounted rates for each mooring based on the criteria (location/facilities) which it falls under. The matrixes for each location are shown overleaf. Full details of each category is described in Section 5.3 of the BSC report is included as an appendix. We have adopted the BSC matrix, but adjusted these based on our research of comparator marina in each location and following our facilities audit described in Section 5. July Moorings Pricing Review

40 Scottish Canals 8. Leisure Moorings Table 8.4.1: Caledonian Canal: Pricing Matrix Urban & Coastal 300 Rural Inland 280 PRICING MATRIX (per m) LOCATION ATTRACTIVE TOWN CENTRE LOCATION Direct Access to the Sea TOWN CENTRE LOCATION up to 45 mins to Sea WITHIN WALKING DIST OF TOWN (1,000m) ISOLATED BUT ATTRACTIVE LOCATION DISADVANTAGED LOCATION ATTRACTIVE VILLAGE LOCATION WALKING DISTANCE TO VILLAGE FACILITIES ATTRACTIVE RURAL RURAL BUSY LOCATION DISADVANTAGED FACILITY A B C D E R A R B R C R D R E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY BANKSIDE NO SERVICES Source: Bilfinger GVA / Gerald Eve *Note We believe that 300 is the maximum that any full service marina could charge at either end of the canal, given North East rates (Seaport) and cruising distances (Corpach) **Note We have provided a discounted Inland rate, giving consideration to lower rates that can be achieved by inland moorings July Moorings Pricing Review

41 Scottish Canals 8. Leisure Moorings Table 8.4.2: Crinan Canal (Coastal): Pricing Matrix Crinan Coastal 330 PRICING MATRIX (per m) LOCATION ATTRACTIVE TOWN CENTRE LOCATION Direct Access to the Sea TOWN CENTRE LOCATION up to 45 mins to Sea WITHIN WALKING DIST OF TOWN (1,000m) ISOLATED BUT ATTRACTIVE LOCATION DISADVANTAGED LOCATION FACILITY A B C D E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY Source: Bilfinger GVA / Gerald Eve BANKSIDE NO SERVICES *Note We believe that 330 is the maximum that any full service marina could charge at the western end of the canal, giving consideration to comparator marinas on the West Coast July Moorings Pricing Review

42 Scottish Canals 8. Leisure Moorings Table 8.4.3: Crinan Canal (Inland): Pricing Matrix Crinan Inland 270* PRICING MATRIX (per m) LOCATION ATTRACTIVE VILLAGE LOCATION WALKING DISTANCE TO VILLAGE FACILITIES ATTRACTIVE RURAL RURAL BUSY LOCATION DISADVANTAGED FACILITY R A R B R C R D R E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY BANKSIDE NO SERVICES Source: Bilfinger GVA / Gerald Eve *Note We have provided a discounted Inland rate, giving consideration to lower rates that can be achieved by inland moorings July Moorings Pricing Review

43 Scottish Canals 8. Leisure Moorings Table 8.4.4: Crinan Canal (Ardrisaig): Pricing Matrix Ardrisaig Coastal 300 PRICING MATRIX (per m) LOCATION ATTRACTIVE TOWN CENTRE LOCATION Direct Access to the Sea TOWN CENTRE LOCATION up to 45 mins to Sea WITHIN WALKING DIST OF TOWN (1,000m) ISOLATED BUT ATTRACTIVE LOCATION DISADVANTAGED LOCATION FACILITY A B C D E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY BANKSIDE NO SERVICES July Moorings Pricing Review

44 Scottish Canals 8. Leisure Moorings Table 8.4.5: Forth and Clyde Canal: Pricing Matrix (excluding Bowling) LOCATION 225 PRICING MATRIX (per m) LOCATION Coastal <45 minutes CITY LOCATION TOWN / VILLAGE LOCATION RURAL ATTRACTIVE RURAL UNATTRACTIVE FACILITY A B C D E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY Source: Bilfinger GVA / Gerald Eve BANKSIDE NO SERVICES * Note We believe that the maximum a full service marina on the Forth and Clyde canals (excluding Bowling) would be able to charge would be 225. There are no direct comparators that can be used to reference, however we believe 225 to be a robust figure July Moorings Pricing Review

45 Scottish Canals 8. Leisure Moorings Table 8.4.6: Bowling: Pricing Matrix LOCATION 275 PRICING MATRIX (per m) LOCATION Coastal <45 minutes CITY LOCATION TOWN / VILLAGE LOCATION RURAL ATTRACTIVE RURAL UNATTRACTIVE FACILITY A B C D E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY Source: Bilfinger GVA / Gerald Eve BANKSIDE NO SERVICES * Note - We believe that due to its proximity to the popular sailing waters of the Firth of Clyde, moorings at Bowling can support a higher rate than the rest of the Lowlands, however giving consideration to access, the standard rate should be less than that achieved by other full service marinas in the area July Moorings Pricing Review

46 Scottish Canals 8. Leisure Moorings Table 8.4.7: Union Canal: Pricing Matrix LOCATION 260 PRICING MATRIX (per m) LOCATION Coastal <45 minutes CITY LOCATION TOWN / VILLAGE LOCATION RURAL ATTRACTIVE RURAL UNATTRACTIVE FACILITY A B C D E MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD MARINA - FULL FACILITY - FULL SERVICE Marina Bankside BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY Source: Bilfinger GVA / Gerald Eve BANKSIDE NO SERVICES * Note We believe that a marina with full facilities on the Union Canal would be able to achieve a higher rate than one the Forth and Clyde canal and have set a standard rate of 260. There are no direct comparators that can be used to reference, however we believe 260 to be a robust figure July Moorings Pricing Review

47 Scottish Canals 8. Leisure Moorings The following tables highlight our categorisation of each mooring and the resulting price, measured against the current, published rates for new customers. We are aware that boaters have negotiated individual fees and therefore the percentage differences between what they currently pay and our suggested prices will vary from those detailed below. With a few exceptions, the majority of prices generally fall within a 10% increase or decrease of the current rates, suggesting that the published leisure mooring prices set on the Scottish Canals network are generally within broadly acceptable parameters. Table 8.4.8: Caledonian Canal: Pricing Matrix Caledonian Canal Current Rates* GVA / GE Rating GVA / GE Suggested Price % Change Current Rates / Suggested Rates Corpach - Basin A % Corpach - Reach RB % Banavie RB % Fort Augustus RA % Gairlochy RC % Kytra RC % Laggan Avenue RC % Laggan Top RC % Dochgarroch East RB % Dochgarroch West A % Seaport Marina B % Source: Bilfinger GVA / Gerald Eve / Scottish Canals *These rates are illustrative only and are indicative of the highest of all fees payable at each location. Table 8.4.9: Crinan Canal: Pricing Matrix Crinan Canal Current Rates* GVA / GE Rating GVA / GE Suggested Price % Change Current Rates / Suggested Rates Crinan Basin D % Crinan Basin Dummy Lock D % Lock 14 Crinan D % Crinan Rings RC % Bellanoch Marina RB % Bellanoch Marina Swinging moorings RB % Bellanoch Bridge RC % Cairnbaan Lock RC % Oakfield Bridge RB % Lock 4 Top RB % Ardrishaig Basin C % Ardrishaig Dummy Lock C % Source: Bilfinger GVA / Gerald Eve / Scottish Canals *These rates are illustrative only and are indicative of the highest of all fees payable at each location. Table : Union Canal: Pricing Matrix Union Canal Current Rates GVA / GE Rating GVA / GE Suggested Price % Change Current Rates / Suggested Rates Causeway End D % Ratho Marina C % Ratho Linear C % Source: Bilfinger GVA / Gerald Eve / Scottish Canals July Moorings Pricing Review

48 Scottish Canals 8. Leisure Moorings *These rates are illustrative only and are indicative of the highest of all fees payable at each location. Table : Forth & Clyde Canal: Pricing Matrix Forth & Clyde Current Rates* GVA / GE Rating GVA / GE Suggested Price % Change Current Rates / Suggested Rates Bowling Lower A % Bowling Upper A % Bowling Helenslea C % Cadder C % Southbank Marina C % Auchinstarry D % The Falkirk Wheel Basin D % The Falkirk Wheel Linear D % Camelon Lock C % Grangemouth (Kelpies) Marina Grangemouth Unserviced D % Source: Bilfinger GVA / Gerald Eve / Scottish Canals D % *These rates are illustrative only and are indicative of the highest of all fees payable at each location. 8.5 Conclusions Our research, and that undertaken by BSC, highlights a huge variation in pricing across the Scottish Canals network and comparator marinas, both in Scotland and elsewhere. This is further evidenced by discussions with British Marine in regards to the UK inland waterway network, who informed us that pricing is market driven and there is no such thing as an average marina, making benchmarking of marina pricing extremely difficult (a view also highlighted at the public meetings). They noted the variance of pricing achieved across England, noting that it is difficult to compare mooring fees across England, let alone comparing cross-border. This has led us to the development of the pricing matrix detailed in the previous section. To our knowledge, this approach to setting mooring rates has not been implemented in any waterway network. While we acknowledge that there is a strong element of subjectivity to preparing such a matrix, we would promote it as the most equitable available method of setting a pricing approach. Furthermore the approach of the matrix allows for it to be fine-tuned and tweaked depending on feedback or changes to any of the criteria listed, as well as feedback from boaters at the consultation stage. Our recommendation is that the leisure rates should be reviewed on an annual basis, using the pricing matrix approach and a review of pricing changes of comparator marinas identified. When an appropriate market rent is achieved, RPI should be suitable for maintaining the rate, with a full review every 3 or 5 years; this will be sufficient to ensure that RPI has kept up with the then appropriate market rent. An aggressive increase could result in a decline in occupancy levels but, similarly, consistent occupation over a long period of time might suggest the rate is low. When there is evidence of significant investment within a marina or location, then it will be appropriate to review the level of price increase above RPI. To ensure a clear and transparent process, this should be explained clearly, including details of the cost of investment, to boaters in order to quantify and substantiate any price increase. July Moorings Pricing Review

49 Scottish Canals 8. Leisure Moorings From discussions with the people dealing with the boaters in Crinan and Caledonian it is apparent that a good deal of work is done to pitch the rates at appropriate levels aimed at maximising income but also to keep the moorings as full as possible. A fair degree of market testing has already been undertaken and market intelligence is being gathered at source. Whilst we have given consideration to expanding the matrix to include a separate calculation measuring boaters satisfaction and demand, we do not believe this is a factor which can be accurately or adequately reflected, and would prove difficult to implement on an equitable basis. Gaining honest satisfaction is difficult to achieve as, by human nature, if customers are aware that giving negative feedback may result in a discount, they may be more inclined to do so. Demand should be measured by occupancy i.e. if a marina is near maximum occupancy, then the proposed mooring rates in Section 8.4 should be used. However, if occupancy rates are lower and Scottish Canals wish to fill the marina, then there would be merit in reviewing the rates for the forthcoming year and offering an appropriate discount. July Moorings Pricing Review

50 Scottish Canals 9. Transit Charges and Navigational Licences 9. TRANSIT CHARGES AND NAVIGATIONAL LICENSES 9.1 Scottish Canals Transit Charges Current and historic transit charges for each canal are shown in the following Table. There was a notable jump in the Crinan transit fee which was due to the implementation of mandatory assisted passage after the majority of boaters surveyed agreed for this to be introduced. This was then reduced in 2016/17 in accordance with its removal. Otherwise prices have increased at a relatively consistent rate. Table : Scottish Canals Transit Fees (Out / Return) Caledonian 7 nights Crinan 4 nights Lowlands 5 nights (10 nights from 2016) Source: Scottish Canals 2010/ / / / / / / / / / / / / / / / / / / / / / /4.10 * One member of staff to assist / ** Two members of staff to assist 5* 15** 5.10* 15.40** 7.50* 15.70** 19.80/ /15.65 Additional Day Scottish Canals Navigational Licenses Table highlights that the Navigational License fee has grown 41.4% over a six year period although remained consistent between 2012 and Table 9.2.1: Scottish Canals Navigation License Fee 2011/ / / / / / Source: Scottish Canals July Moorings Pricing Review

51 Scottish Canals 9. Transit Charges and Navigational Licences 9.3 Comparator Transit Charges We have undertaken research to establish navigational fees at other UK inland waterways. It is worth noting that terminology for a journey along the canal or river network varies between each Agency or Trust. Depending on the network it can be referred to as transit fee, toll or license to define a time period on the canal or river network that is not associated with annual leisure, commercial or residential contracts or licences. One of the principal differences in fees when contrasting operations north and south of the border is the conflicting charging methodology. Within the network controlled by the Environment Agency, Norfolk Broads, and Canal and River Trust Transit Fees are applicable to all vessels in addition to their berthing and Boat Safety Certificate charges. In Scotland, Scottish Canals operate a system similar to those in existence in other European countries where a Transit Licence covers the transit itself as well as short-term berthing. This difference in charging methodology makes it difficult to accurately compare the two charging methodologies as costs in Scotland are partly determined by the use of a boat, whereas fees in England are determined by the time period the licence is purchased for. In order to understand the costs on a comparable basis we have considered the charges applied to a Wide Beam Cruiser (10m) which uses the canal and river network across the UK. Licences for the English waterways have been calculated for a range of time periods and the mooring charges have been investigated. All three English waterways agencies require a boat to have a permanent berth in order to obtain a licence; visitor moorings are often free or relatively inexpensive. The permanent berths are often sold with annual contracts. For the purpose of this comparison the cost of an annual berth has been included to show the cost of keeping a boat on these waterways. Boat Safety Certificates are required on all UK inland waterways and costs of these vary regionally. Table 9.3.1: Wide Beam Cruiser UK Inland Waterway Price Differences Time Period Environment Agency (River Thames) Norfolk Broads Canal and River Trust Canal and River Trust (Rivers only) CRT and EA 1 Day 1 Week 1 Month 3 Months 6 Months Year Mooring 1600 ~ ~ ~ Table 9.3.2: Scottish Transit Licences Canal Nights Out Return Caledonian 7 Nights Crinan 4 Nights Lowlands 10 Nights Source: Bilfinger GVA / Blue Sea Consulting LLP 9.4 Comparator Navigational Licenses We outline the difference in pricing approach below. Norfolk Broads Annual tolls are payable on all vessels kept in the navigation area or adjacent waters for more than 28 days in any tolls year. Charges are July Moorings Pricing Review

52 Scottish Canals 9. Transit Charges and Navigational Licences based on square metre area and hence go up as the area increases. The amount by which they increase depends on the different type of craft and varies before and after 14m2. For a motor craft, prices range from (5m2 and under) to (20m2 and 9.53 per additional square metre). The annual toll applies at any time after 1 April, and a tolls plaque is issued that is valid until the end of the following March. There is no reduction in price for this. Tolls can be paid over the phone, by post or in person. Canal and River Trust License fees are charged on a 12, 6 and 3 month basis and there are separate charges for use of canals and rivers or for rivers only. If a boat is to stay on a Canal & River Trust managed waterway, it will need a long term boat licence. The definition of waterway includes the great majority of long term mooring sites and marinas, so all boats need a licence whether or not they actually go out for a cruise. If a licence is renewed before it expires, the owner can take advantage of a 10% discount on the standard fee ( Prompt Payment Discount. The normal, undiscounted licence fee applies in all other cases. Prices are a set fee based on the boat s length (per metre). Costs for canals and river use therefore ranges (before prompt discount) from (up to 5.49m) to 1, (up to 22.49m). Environment Agency Vessels on the Environment Agency network must pay a registration fee if it is to be used on inland waterways. These must be renewed each year for the waterway the boat is used on. Full rate registration charges apply to every boat, except certain visiting boats normally used on other waterways and launches registered on or after 1 September. All 'full rate' registrations expire on 31 December regardless of when they start (except for visitors); there is no other pro-rata rate for part of the registration year. For launches (any mechanically propelled vessel not being used solely as a tug or for the carriage of goods) on the River Thames, registration costs per complete square metre (minimum chargeable area of 5m2) and 10 per complete square metre for every additional one over 80m2. Developing a Standardised Pricing Approach for Scottish Canals The diverse and contrasting charging methodologies make it challenging to draw meaningful conclusions from the analysis especially when considered in isolation from leisure berthing charges. Our conversations with representatives of British Marine have further highlighted the lack in standardisation of these charges across the UK inland waterway network; each network is unique and this explains the variation in prices. We have found no merit in ranking navigational and transit charges by distance that boaters travel. This would penalise boaters who decide to travel less and would only be applicable to commercial vessels. Conversations with a representative of the RYA Scotland highlighted the major conflict facing Scottish Canals; the need to balance the maintenance of the canal against achieving the necessary income. They noted the issues in regards to maintenance on the canal (dredging and weeds) and how this is impacting on boaters ability to cruise the network. Consequently a large price increase given issues with navigation would not be fair to those using it. July Moorings Pricing Review

53 Scottish Canals 9. Transit Charges and Navigational Licences We therefore advocate a similar approach to mooring fees, involving a RPI increase with cap and collar; subject to no evidential worsening in the ability to navigate the canal. Increases over and above this should be subject to change in navigation (e.g. increase and decrease in costs of assisted passage) and any other related navigational costs. Again, any reason for price increases needs to be explained to boaters. Points for Consultation between Scottish Canals and Boaters Are all parties agreeable to charges remaining at existing levels with annual increases linked to the RPI, subject to a collar and cap of 2% and 5%? July Moorings Pricing Review

54 Scottish Canals Appendices APPENDICES Appendix A: Caledonian Canal Facilities Matrix Site Power Water Toilets Showers Fuel Refuse Pump out/elsan Laundry Limited Parking Chandlery Boat yard Nearby shop Nearby pub/restaurant Corpach Corpach Reach Banavie Gairlochy 1 Laggan Avenue Laggan Top Kytra Fort Augustus Dochgarroch West 5 Dochgarroch East 5 Seaport Marina/Muirtown Note 1 Limited power provision. Note 2 No water available on pontoons 1 or 2. Note 3 Situated at top of Muirtown Locks presenting accessibility issues during winter canal operating hours. Note 4 These facilities are available at Caley Marina at the top of the Muirtown Locks. Note 5 Restaurant without licence. July Moorings Pricing Review

55 Scottish Canals Appendices Appendix B: Crinan Canal Facilities Matrix Site Power Water Toilets Showers Fuel Refuse Pump out/elsan Laundry Limited Parking Chandlery Boat yard Nearby shop Nearby pub/restaurant Crinan Basin Crinan Basin Dummy Lock Lock 14 Crinan 1 1 Crinan Rings Bellanoch Marina 3 Bellanoch Bridge Bellanoch Swing Moorings 3 Cairnbaan Lock 5 Lock 4 Top Oskfield Bridge 4 4 Ardrishaig Dummy Lock Ardrishaig Basin Note 1 we understand that there are mixed views regarding the practicality of the toilet block amongst boaters Note 2 - not open at the time of our inspection in April 2016 Note 3 washing machine in lades toilet Note 4 - Lochgilphead July Moorings Pricing Review

56 Scottish Canals Appendices Appendix C: Forth & Clyde Canal Facilities Matrix Site Power Water Toilets Showers Fuel Refuse Pump out/elsan Laundry Parking Chandlery Boat yard Nearby shop Nearby pub/restaurant Bowling Lower Bowling Upper Bowling Helenslea Applecross Street Speirs Wharf Cadder Southbank Marina 1 Auchinstarry Falkirk Wheel Grangemouth Note 1 Not in marina itself but nearby. July Moorings Pricing Review

57 Scottish Canals Appendices Appendix D: Union Canal Facilities Matrix Site Power Water Toilets Showers Fuel Refuse Pump out/elsan Laundry Limited Parking Chandlery Boat yard Nearby shop Nearby pub/restaurant Causewayend 1 Linlithgow Ratho Marina Ratho Linear Harrison Park 2 2 Leamington Lochrin Basin Note 1 Nearby restaurant only open at lunchtime. Note 2 Not to every berth. July Moorings Pricing Review

58 Scottish Canals Appendices Appendix E: Blue Sea Consulting LLP Leisure Moorings Pricing Strategy Report, February 2014 July Moorings Pricing Review

59 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Leisure Moorings Pricing Strategy February

60 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Control Sheet CLIENT: Scottish Canals PROJECT TITLE: Leisure Moorings REPORT TITLE: Pricing Strategy PROJECT REFERENCE: 0107SC Issue and Approval Schedule: ISSUE 1 Name Signature Date Prepared by Craig Latimer (CL) 6/02/2014 Reviewed by Martin Latimer 7/02/2014 Approved by Craig Latimer 7/02/2014 Revision Record: Issue Date Status Description By Check App 2 08/05/2015 Draft Changes made to pricing matrix CL ML CL 3 2

61 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Contents 1.0 Executive Summary Project Brief Project Background Caledonian Canal Crinan Canal Forth & Clyde Canal Union Canal The Nature of Berthing Facilities on the Canals Pricing UK Pricing - Coastal Marina Comparisons Research & Comparable Pricing Charging Matrix Description Why use a Charging Matrix? Defining the Matrix Parameters The Matrix Parameters - Location The Matrix Parameters Facilities Price Matrix Proposed Pricing The Caledonian Canal The Crinan Canal The Forth & Clyde Canal Union Canal

62 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Implementation Consultation Conclusion Appendices

63 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Executive Summary Scottish Canals has instructed Blue Sea Consulting LLP (BSC LLP) to undertake a review of current leisure berthing rates on its canal portfolio with a view to establishing a coherent and sustainable pricing policy for leisure craft. BSC LLP has created a Charging Matrix based on comparable evidence gathered from relevant sources and market knowledge. The Matrix will permit Scottish Canals to set a strategy for consultation with stakeholders on pricing and berthing provision whilst also aiding decisions on investments, policy and new developments. The brief considered the following points: Review marina and mooring detail supplied by Scottish Canals for Leisure Moorings on the; Union, Forth & Clyde, Crinan and Caledonian Canals Undertake market review of relevant mooring and berthing facilities Design and prepare facility scoring matrix Preparation of pricing regime Scottish Canals manager s from the Lowland, Crinan and Caledonian canals provided BSC LLP with comprehensive information regarding the current charging rates for leisure craft in addition to their thoughts on the condition and scope for improvement of their facilities. BSC LLP undertook a review of the wider market to establish wider marina pricing practices to support the information provided by Scottish Canals. This information was reviewed and has been referred to when considering the rating of facilities and locations in this report. It is clear from our review of comparable marinas in Scotland, England, Ireland and selected countries in Europe that berthing prices vary considerably not only at Scottish Canals own facilities but in numerous other locations. Consistencies in pricing are most likely to be found in established markets with higher berthing occupancies and usually operated by commercial entities. BSC LLP found significant inconsistencies in pricing and the provision of facilities most prevalent in under-developed markets, particularly inland locations where the offer varied considerably and also in trust and public sector operated facilities. Blue Sea Consulting consider that Scottish Canals has a high quality offer in terms of service and in most instances the current facilities meet with the approval of customers. The network offers some of the most scenic and appealing locations in the UK and the variety along the relatively short 135 miles of navigable canals gives users the opportunity to experience a wide range of activities, history, heritage, flora and fauna. For this reason Scotland s canals offer some unique opportunities. The nature of Scottish Canals berthing facilities is diverse and the report highlights that the network appears to have evolved over time rather than being developed through a strategic plan from the outset. As a result some locations do not meet market demand in terms of facilities and service. Through our research for this report and as highlighted by the information provided by Scottish Canals, in a number of areas demand outstrips supply. 5

64 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) It is clear that there are opportunities to increase leisure berthing facilities or improve/expand existing moorings or marinas; however, BSC LLP is concerned that under the current pricing regime this would not represent the best investment for Scottish Canals. The Charging Matrix (and the tables in the report) set out to illustrate where Scottish Canals current berthing provision sits in the market and where it should be positioned in order to be a sustainable proposition. It is not practical within the scope of this report to detail the pros and cons of every mooring facility. However, in arriving at the Charging Matrix, BSC LLP has carried out an overview of each facility and location. The information gathered from this has influenced the production of The Matrix. If investment in marinas and moorings on the Canals is to be increased to meet demand it stands to reason that it must be financially sustainable to justify investment by Scottish Canals and encourage private sector investment. The standard charge in the Matrix has been set at 350 per m, being the rounded average of the leisure mooring rates (per metre annual single payment rate) of Ardfern and Dunstaffnage marinas. The justification for basing the Matrix (100%) reference on this is that they represent full service marinas enjoying robust berthing occupancies and have rates that ultimately a coastal marina at any of the coastal entrances to the Scottish Canals network could achieve. It is always the case when setting a Matrix based charging system that a subjective decision has to be made on what represents the A1 (100%) proposition. This will always be the subject of debate but BSC LLP has nearly 45 years of experience of the leisure market and has used this on arriving at our proposal. Fine tuning of the headline charging rate and discount percentages on a regional basis will need to be discussed to ensure the accuracy of the Matrix for all Scottish Canal locations. Our matrix has illustrated that there is potential to review the leisure mooring pricing policy across Scottish Canals network and that with targeted implementation there is scope for improved facilities and revenues in a number of locations. However, it is of vital importance for the implementation of any pricing review that Scottish Canals understand the true cost of operating each facility (or group of facilities) to ensure that any modification to price ensures a realistic future for the operation of the canals. BSC LLP believe that the private sector could have a major role to play in improving the facilities available to users of the canals as the level of Scottish Canals investments will to a degree be limited by the manner in which it is funded. As previously stated, the private sector will only be brought on-board if there is proof of a commercial return on a sustainable basis, from which BSC LLP has ascertained would be unlikely under the prevailing pricing regime. There is evidence in certain areas of the canal network that Scottish Canals charging may in fact be suppressing existing private sector operations and so a change to the pricing regime may encourage them to expand and invest. In order to progress towards a commercial pricing structure, it will be necessary for Scottish Canals (through consultation) to gain the support of its varied client and stakeholder base. This will require sensitive consultation with the support of robust comparative evidence to justify the necessity for price change. These stakeholders must understand that to provide an improved network of facilities a commercial return is a prerequisite. 6

65 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Project Brief Scottish Canals has instructed Blue Sea Consulting LLP (BSC LLP) to undertake a review of current berthing rates on its canal portfolio with a view to establishing a coherent and sustainable pricing policy for Leisure craft. The instruction is to consider the current facilities in the context of comparable offerings in Scotland, England, Ireland and selected European countries. A pricing matrix is to be created that considers the range of features that affect price with the goal of facilitating the transparent pricing of current and future canal facilities. The matrix is to be based on comparable evidence gathered from relevant sources which will permit Scottish Canals to set a strategy for consultation with stakeholders on pricing and berthing provision. It is proposed that this matrix will be based on the grading of berthing facilities at around 50 present locations on the Union, Forth & Clyde, Crinan and Caledonian Canals. As an output this matrix and grading system should aid Senior Management in making decisions on investment and future development of canal berthing provision and services. In line with the above overview the report considers the following in arriving at a robust pricing policy proposal: Review marina and mooring detail supplied by Scottish Canals for Leisure Moorings on the; Union, Forth & Clyde, Crinan and Caledonian Canals Undertake a broad market overview of relevant mooring and berthing facilities in the UK and Ireland with comparators from Europe Design and prepare facility scoring matrix Preparation of pricing regime with comments 7

66 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Project Background Scottish Canals network consists of some 135 miles of navigable canal spread over 4 canals, many traversing some of the most scenic parts of Scotland while some stretches flow through more urban landscapes. They provide ever changing scenery and a link to some of Scotland s finest heritage whilst each canal has a character of its own. The physical characteristics of each canal dictate the size and nature of the vessels found on the waterways with available depth, beam and air draft being the main influencing factors on craft. The canals provide not only a corridor for leisure and commercial vessels but are also arteries which facilitate wider leisure activities and regeneration opportunities. They play an important environmental role being home to a wide range of flora and fauna. It is this diversity of character and activity that has an influence on the berthing that is required or deemed suitable within each location. The navigable distances, character and vessel capacity for each canal can be seen below: 3.1 Caledonian Canal Name Max. Craft Length Beam Draft Caledonian Canal 60 miles 45.72m (150ft) 10.67m (35ft) 4.1m (13.5ft) The Caledonian Canal is Scottish Canals largest canal stretching from Inverness, in the east, to Corpach, in the west, and runs through some of the most dramatic scenery to be found on any waterway in the United Kingdom. Its former role as a commercial east/ west link is clear from the dimensions of its locks and for this reason it makes an ideal short cut across Scotland for many leisure craft and small commercial vessels. Scottish Canals have a number of mooring facilities and one major marina (Seaport, Inverness) on the Caledonian, although there is scope for increased visitor and permanent moorings/ marinas at points of interest along its length. The visitor facilities at Banavie and Fort Augustus service major tourist hubs and as such are extremely popular (and often over-subscribed) whilst the longer stay moorings at Dochgarroch, Seaport and the privately owned ones at Caley Marina are fully let, with waiting lists. The view has been regularly expressed that more mooring facilities would attract more vessels to this canal both for transit and annual mooring. Caley Marina and Inverness Marina provide service and repair facilities for visiting and permanent berth holders and there a number passenger/trip boats and charter vessels working on the Caledonian. Presently, there is no arrival marina facility at Corpach and space is limited, BSCLLP consider that this is a missed opportunity but are unaware of land ownership and therefore the potential for developing a marina in this area. Fort Augustus on the mid-point of the canal is extremely popular and offers no long-term berthing, as a focal hub on the canal BSC LLP considers this is a missed opportunity and suggest there may be an opportunity to approach the developers of the Highland Club to sound out the 8

67 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) possibilities of developing a marina within their site. The highly popular tourism focal points at Urquhart Castle and The Loch Ness Monster Visitors Centre at Drumnadrochit have potential as stopping off points. Plans for development at Banavie/ Neptune s Staircase suggest that there may be a future requirement for more berthing in this this area. 3.2 Crinan Canal Name Max. Craft Length Beam Draft Crinan Canal 9 miles 26.82m (88ft) 6.09m (20ft) 2.2m (7.3ft) The Crinan Canal is Scotland s most scenic short cut allowing vessels to move from the Clyde to the West Coast, without having to round the Mull of Kintyre. Whilst there are long term leisure berth opportunities at Ardrishaig Basin, Bellanoch Marina and Crinan Basin the canal is generally perceived as a transit canal and as such most vessels will only remain for a day or so. The locks are not powered and therefore the transiting vessels need to be fully crewed if they are to enjoy the passage. Scottish Canals has instigated an assisted passage scheme to help short-handed vessels pass through the network more easily and this has proved extremely popular with customers who have also benefitted from the knowledge shared by Scottish Canals staff. The ability to moor additional craft on the canal is limited but more moorings and stopping points would be very popular. There is room for expansion at Bellanoch Marina (but this has possible planning and community issues to consider), whilst the basins at Ardrishaig and Crinan are currently operating at capacity. In the longer term there is the realistic opportunity to create a coastal marina to the west of Ardrishaig Sea Lock and there are also plans to convert buildings at Ardrishaig, adjacent to the Sea Lock, to provide a chandlery and café. A new facilities block has been constructed at Crinan which will undoubtedly prove popular and may encourage more people to stay overnight in the basin when berths are available. There is also scope for it to encourage vessels to anchor off the hotel in good weather. Around the villages of Crinan, Ardrishaig and Cairnbaan there are popular cafes and restaurants and in the winter boats are hauled out ashore at Cairnbaan. Crinan also has a good boatyard and chandlery. 9

68 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Forth & Clyde Canal Name Max. Craft Length Beam Draft Forth & Clyde Canal 35 miles (63ft) 6.00m (19ft 8in) 1.83m (6ft) / Air. 3.00m (9ft 10in) Whilst lesser known than the Caledonian and Crinan in coastal leisure boating, the Forth and Clyde Canal still provides a popular, valuable and interesting lowland passage between the East and West Coast of Scotland and has a vibrant community all of its own. Opened up as a result of the Millennium Link Project the canal is restricted not only by draft, but also by a number of low bridges, for this reason yachts have to dismast at Grangemouth or at Bowling. Many modern motor boats (even up to 40 ), which do not have flybridges may be able to transit the canal, with the exception of the Glasgow Branch which is both shallower and narrower. There are a number of boats which enjoy the canal life of the Forth and Clyde Canal and the Union and rarely leave their confines. The Forth and Clyde canal has seen many interesting developments over the years with the Falkirk Wheel - connecting it to the smaller and narrower Union Canal - the Helix Park and the amazing thirty metre high Kelpie Horse Sculptures (recently opened) on its banks. The Paddle Sports Centre at Pinkston in the centre of Glasgow on the Glasgow branch opens in early 2014 and will provide a unique facility in the heart of the city. Also in the early part of 2014 the new 1km canal extension will open at Grangemouth making the eastern most access to the canal far easier, ensuring that the transit of the canal will appeal to even more boats from both the east and west and making it even easier for boats based on the canal to access the Firth of Forth. Passing through a mix of scenery, communities, heritage and nature the Forth and Clyde is a fascinating trip and one that should become increasingly popular with the number of upgrades that have been recently completed, or are planned for completion in the very near future. The canal has a number of marinas on it, ranging from small modern basins housing twenty plus boats to the larger facilities at Grangemouth Sea Lock and Auchinstarry. Southbank is a modern marina and is about to undergo pontoon improvements and the two main marinas require some modernisation and upgrade. Plans are already afoot to extend and modernise the marina at Grangemouth. The linear moorings along the canal are of varying ages and fit-out but are all very popular and there is very little vacant berthing for annual vessels. Being in the heart of Scotland the canal is popular with boaters, anglers, paddlers, rowers, walkers and cyclists and as such is, in places, busy and vibrant; this can lead to conflict and for certain mooring areas to be busy and potentially less popular. Scottish Canals are aware of potential conflicts and work with all the interest groups to ensure the Canal can be enjoyed by all and that the varied uses coexist and indeed benefit from each other. 10

69 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Union Canal Name Max. Craft Length Beam Draft Union Canal 31 miles 20.5 (67ft 6in) 3.50m (11ft 6in) 1.07m (3ft 6in) / Air. 2.70m (8ft 11in) The Union Canal runs from the centre of Edinburgh, at Edinburgh Quay to the Falkirk Wheel and is the most like a traditional English canal that is to be found in Scotland. It does not benefit from the vast network that is available to Canal Boats in England and Wales, but is none the less well populated by traditional narrow boats. Being a contour canal the Union benefits from not having numerous locks to navigate and as such is an easy and relaxed canal to use. The scenery is spectacular and again history, heritage and nature abound. Hire boats and trip boats operate along its length which can access the Forth and Clyde via the Falkirk Wheel. The size restrictions require a differing style of mooring facility when compared to the other Scottish Canals and they are predominantly linear in nature. 3.5 The Nature of Berthing Facilities on the Canals Scottish Canals has a diverse portfolio of marinas and moorings that have, in many cases, evolved rather than been developed through a strategic plan. Rightly, Scottish Canals have taken opportunities to leverage new marina basins from waterside developments and adopt basins where they have become available through commercial opportunities. Many of the mooring facilities have grown organically and therefore do not fit the mould of recognised moorings and marinas. For this reason, among others, the pricing levels across the canal network vary substantially and in many instances bear little relation to general marina/ mooring tariffs across Scotland. The Scottish Canals product ranges from simple un-serviced linear berths on the bankside, through serviced jetty/ pontoon berths, to simple canal basins with pontoons and ultimately to comprehensive leisure marinas, with food/ beverage, modern facility blocks and support staff. The network has a number of well-regarded marinas with Seaport (Inverness, Caledonian Canal), Auchinstarry Marina and Bellanoch Marina but none of these have the level of services or a boatyard that is required to put them on a par with the leading Clyde and West Coast marinas. It is not practical within this report to detail each individual mooring facility, however the work done in arriving at the Charging Matrix has necessitated BSC LLP to study each mooring classification and define what it offers to the client in terms of facility and location. During the course of our research it became very evident that within each 11

70 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) classification there was a variation in the offer in terms of physical quality and in terms of location and that this had an impact on the value a customer may perceive and what they may therefore pay for any given mooring/ location. In speaking to users it is clear that they generally share a view that the majority of moorings are well maintained but they would, generally, prefer to see more serviced locations and more modern low maintenance (and non-slip) materials to give a more uniform quality to the mooring provision. Many users have, during general conversation, stated a preference for seeing more linear and marina berths, but equally others were concerned that an over provision may spoil the natural beauty of the rural sections of the canals. The product on offer within the Scottish Canals Network is generally acknowledged to be of a reasonable standard and well managed, and in particular the service provided by the staff has been regularly praised, however the level of supply and general provision does not necessarily meet the modern expectations of customers or meet demand in certain areas. In general terms the marine leisure industry is maturing and it can be expected that demands on quality, service and facilities will increase possibly requiring an upgrade of moorings in some locations over time. When attracting vessels from outside of the canal network to berth on the canals it is vital that the Scottish Canals team have an understanding of the quality and service levels offered elsewhere and develop the mooring product in line with expectations. If investment in marinas and moorings on the Canals is to be increased to meet demand it stands to reason that it must be financially sustainable to justify investment by Scottish Canals and encourage private sector investment. 4.0 Pricing Our pricing study considers a list of selected comparables covering leisure berthing rates from the following list of locations: Location 1 Scotland: West Coast & Clyde, East Coast & Morayshire 2 England: North East of England, North of England and Midlands 3 Northern Ireland: Coastal and Inland 4 Ireland: Coastal and Inland 5 Holland: Coastal 6 France: Inland 7 Sweden: Coastal and Inland 12

71 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) In order to prepare the Charging Matrix it was necessary to review comparative leisure marina berthing charges. To work within the scope of this instruction an overview of the UK market was carried with a focus on the Scottish market. Further comparable pricing was sought from selected coastal and inland marina locations in Europe. From our research it is evident that generally inland leisure berthing prices differ considerably between locations, more so than in comparison to their coastal counterparts. A comprehensive list of pricing is provided in Section 5.0 below and illustrates the variance in prices at a local level. At a national level, Section 4.1 highlights a clear North / South divide in coastal marinas with Scotland and Ireland charging some of the lowest average annual rates in the UK. There are, however, isolated pockets within Scotland where premium rates are achieved. These are predominately on the Clyde and West Coast and are dominated by around a dozen established facilities in prime sailing locations. Those facilities on the East Coast and Moray Firth offer a comparatively cheaper option as the marine leisure product remains rather less developed and the sailing waters are more difficult. Whilst there are development opportunities on the East Coast it generally offers fewer opportunities for recreational boating and has yet to see the rise in berthing tariffs achieved in the west; this influences (east to west) the pricing levels Scottish Canals are likely to achieve at the margins of their ownership. 4.1 UK Pricing - Coastal Marina Comparisons UK Pricing Average /m (Single Payment, 2013) UK Pricing Highest & Lowest /m (Single Payment, 2013) Location Avg. 1 South Coast South West Channel Islands Wales South East East Coast North East Ireland North West Scotland Northern Ireland Location Highest Lowest 1 South West South Coast South East Wales Scotland Channel Islands Ireland East Coast North West North East Northern Ireland

72 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) The comparison of average prices and highest lowest prices charged in the eleven UK geographic regions studied produces some interesting anomalies where Scottish tariffs are concerned: Scotland has the second lowest average charge, ranking 10 th, despite the fairly high charges achieved on the Clyde. The average pricing is pulled down by local authority and harbour trust marinas. It would be interesting to study the trading figures of the marinas charging such low figures as they are extremely unlikely to be making profits, or breaking even if all relevant costs were applied to the operations. Scotland ranks 5 th in the highest tariffs achieved, mainly due to the premium status of Kip and Largs Marinas The South Coast is ranked 1 st in terms of highest average charges, but 2 nd in highest charges achieved. Naturally one would assume the South Coast would achieve the highest average charges, having the wealthiest and most densely populated population The South West ranks 2 nd in average charges, despite have the 6 th lowest price. The stats are distorted by the fact that Dart Haven and Salterns are the most expensive marinas in the UK in an area with a lowest density of marinas. Dart Haven, Dartmouth, and Salterns, Poole Harbour, achieve these premium tariffs due to being in scenic locations, superior to the likes of the Solent, but still access wealthy population centres. 4.2 Research & Comparable Pricing All prices are per metre and relate to 2013 season unless stated otherwise. Refer to Appendix A for location and Appendix B for full list and details. West Coast & Scotland Annual Summer Monthly Weekly Daily Kerrera, Oban Ardfern, Argyll Dunstaffnage, Oban Croabh, Argyll Portavadie, Loch Fyne Tarbert, Loch Fyne Rothesay, Clyde Largs, Clyde Kip, Clyde Holy Loch, Clyde Rhu, Clyde

73 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) James Watt Dock, Clyde Ardrossan, Clyde Troon, Clyde Stranraer, Dumfries Campbeltown, Argyll Ardlui, Loch Lomond Loch Lomond Marina Eyemouth, South East Dunbar, East Coast North Berwick, East Coast Port Edgar, East Coast Anstruther, East Coast Tayport, East Coast Peterhead, North East Banff, North East Whitehills, North East Lossiemouth, North East Inverness Marina, North East England (North & Midlands) Annual Summer Monthly Weekly Daily Royal Quays St. Peters Basin, Coastal

74 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Brinklow Marina, Inland Chirk Marina, Inland Barton Marina, Inland Aquaduct Marina, Inland Bill Fen Marina, Inland Buckden Marina, Inland Evesham (Narrow), Inland Evesham (wide), Inland Fallwood Marina Ripon (Narrow), Inland Ripon (Wide), Inland Whitebear, Inland Selected European Countries Amsterdam Marina, Coastal Marina Scheveningen, Coastal Port de L'Arsenal, France, Inland Port De Roanne, France, Inland Le Port de Pleasance d'auxerre, France, Inland Marina Alabodarna, Sweden, Coastal Annual Summer Monthly Weekly Daily , Karlsborg, Sweden, Inland Sjotorp, Sweden, Inland

75 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) *Fixed rate per boat Northern Ireland & Republic of Ireland Carrickfergus Marina, Coastal 5.0 Charging Matrix Description Annual Summer Monthly Weekly Daily Bangor Marina, Coastal Dun Laighoire Marina, Coastal Dun Laighoire Marina (West Bight), Coastal Ballycastle Marina, Coastal Lough Derg Marina, Inland Lakeside Marina, Inland* 1, Poolbeg Yacht Club, Coastal The following section sets out the rationale behind the utilisation of a charging matrix and the parameters which we have used to inform our pricing review. 5.1 Why use a Charging Matrix? Marinas, berthing facilities and moorings play a major role in providing service and activity on the canal network, however, if the charging is set at a level where the individual facility loses money it is natural that: Money lost in these ventures will need to be charged elsewhere to the company running costs, possibly making other ventures less viable. The losses consume valuable revenue/ expenditure that could be invested in the canal network/ assets The facility may fail to provide sufficient levels of service and repair ultimately leading to a poor quality experience The Matrix should provide a useful tool when assessing the returns that can be expected from new developments or investments by providing a ready reckoner. If Scottish Canals charge below the Economic Mooring Rate it is conceivable that they could inadvertently be competing with private sector businesses thereby discouraging private sector investment in existing and new projects. However, in certain locations berthing may have to be provided by Scottish Canals as a catalyst for growth, 17

76 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) regeneration or community development and in these cases, in the short to medium term, a view may have to be taken on charging levels for sound economic benefit reasons. In these cases it should ultimately be the intention to charge the economic rate as soon as practically possible in order to ensure that the facility has a sustainable future. In any of these situations the matrix should at the very minimum provide a good comparable basis on which to set charging levels and inform business planning. BSC LLP has suggested that Scottish Canals pricing structure should have an element of consistency to ensure that: Scottish Canal s charges relate to those charges levied in the private sector in any given region The charges consistently reflect the level of service and facilities provided and the location in which they are situated As a public sector organisation Scottish Canal s charging mechanism should be transparent and therefore simple for the management to set/assess charging levels. In the event of a challenge to any given tariff the Matrix should assist in providing explanations for any defence Scottish Canals portfolio of marinas and moorings is mixed with a range of facilities from well equipped, but not full service marinas, to un-serviced bankside linear moorings. The facilities are located in a variety of locations varying from; prime town centres to difficult urban location through scenic tourist destinations to isolated remote locations. BSC LLP believes that a Charging Matrix that considers facilities and locations could be used to guide the Scottish Canals to a consistent charging regime, whilst at the same time providing clarity for the clients and stakeholders. By using a thorough pricing comparison to arrive at a benchmark price clients can see that Scottish Canals are not attempting to profiteer but to set a realistic pricing structure that is fair, business-like and that should encourage private sector investment in the medium term, whilst still permitting Scottish Canals to offer a high quality product and maintain it in a manner that provides a strong legacy for the future. 5.2 Defining the Matrix Parameters As with any system that attempts to standardise a varied product mix the matrix could be open to criticism, however BSC LLP believe that the core design is sound and that it could be amended to suit the outcomes of consultations and still remain a robust mechanism. We would suggest that the Matrix should still be considered, at this stage, a work in progress. In designing the matrix we have looked at the current Scottish Canals berthing assets and reviewed the general marina market and have set parameters that BSC LLP believe most affect the desirability (and hence value) of the moorings/ marinas on offer. When using the matrix it may be necessary to apply a discount to bring it in line with regional pricing e.g. A marina located on the Clyde benefits from excellent sailing waters, little tidal influence, deep water, a chain of marinas and mooring facilities to visit, numerous events, excellent communications and easy links to wider cruising locations. When compared to say the Forth, where the waters are shallow, with few cruising destinations, less events, the marinas are less well located and have less links to wider cruising locations - charges reflect a lesser rate on the East coast compared to the West and it can be seen that a geographic differential in charges exists. As outlined in Section 4 there is an established benchmark of higher pricing for Clyde and West Coast marinas in comparison to North and East Coast locations. 18

77 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) The Matrix Parameters - Location The location matrix parameters we have identified are: Urban & Coastal Rural Inland Location Heading Location Heading A Attractive Town Centre Location (Direct Access to Sea) RA Attractive Village Location B Town Centre Location (<45 minutes to the Sea) RB Walking Distance to Village Facilities C Within Walking Distance of Town (<1km) RC Attractive Rural Location D Isolated but Attractive Location RD Rural Busy Location E Disadvantaged Location RE Disadvantaged Location Urban & Coastal Location A - Attractive Town Centre Location (direct sea access) Marinas that are town centre located generally benefit from good retail and leisure opportunities; this in combination with good communications, full service support and direct access to the sea means these facilities generally command a high level of berthing fee. Currently Scottish Canals would not be seen to have a marina in this category, but if a marina was to be developed at Ardrishaig, as part of regeneration project it is likely it would qualify in this category. Seaport Marina, Inverness, cannot be considered A, but has an excellent location. It does also however have a boatyard, chandlery and service facilities within 1000m, plus a supermarket and other retail offerings, which could take it to a level between A & B and 1 & 2. Having good access to the sea, but being restricted by lock movements it could not make category A, but could be considered being above B. This makes Seaport a location that will require discussion when applying the Matrix. It can be seen that the Matrix headings will still provoke discussion around pre-determined definitions Location B - Town Centre Location (within <45 minutes of sea) 19

78 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Marinas located in attractive towns and cities tend to have additional appeal, especially to families, in that they benefit from a higher level of social and retail activity. Towns/ Cities with historic interest and locations of outstanding natural beauty are favoured by the older generation of boat owner, cruising yachtsmen and marine tourists and therefore also command a premium. Good communications by air and rail are particularly attractive Location C Within Walking Distance of Town (<1km) Given that most towns have a varied food and beverage offer, reasonable retail and supermarket offers in addition to some leisure elements, a marina on the edge of a town or city will command a premium over a more remote facility. Boat owners can arrive by public transport or car and purchase supplies on arrival, visitors can replenish their store and both visitors and regular marinas users dwell longer in any given marina if they have the variety a town offers on their doorstep. To some, being on the outskirts of a town is preferable as it can be quieter and more secure (this appeals to non-family crews in particular) Location D Isolated but Attractive Location Marinas in such areas are very popular with cruising boats, visitors and charter operations, but slightly less popular for long term berthing as a familiarity factor creeps in. As such the headline berthing fees are reduced, but can to a degree be offset against healthy short term charging Location E Disadvantaged Location Generally smaller and more remote these berthing facilities have an appeal to the more traditional boating fraternity, who appreciate some nearby facilities but enjoy the less frantic ambience. The general appeal is reduced, but they can enjoy typically loyal client bases. Rural Inland Location RA Attractive Village Location These locations and berthing facilities are always popular on the inland waterways but tend to be small. In comparison to similar coastal facilities these locations are price sensitive, but occupation levels high Location RB Walking Distance to Village Facilities 20

79 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Edge of village locations are popular in that they are often quieter appealing to those customers who are willing to exchange facilities for privacy. Not all of these locations have power and water but those that do command a reasonable premium over non-service locations Location RC Attractive Rural If a user is choosing to moor in a rural location with the incumbent disadvantages of poorer communications and services they will normally be trading these elements, willingly, in order to enjoy peaceful isolation Location RD - Rural Busy Location If the moorings are at a confluence of routes (paths/ roads) or located on particularly popular stretches of towpath (enjoying numerous users cycling, walking, fishing, running etc) then their peaceful mooring is disadvantaged and therefore less appealing to that profile of customer and unlikely to prove advantageous to other sectors, this influences the charging regime accordingly. Whilst towpath/ bankside, linear moorings have an appeal to certain sectors of the market, the sector is small and very price sensitive Location RE - Disadvantaged This banding has been placed in the Matrix to account for the moorings to be found in more difficult areas; those located in areas where they are disadvantaged by locality (maybe industrial, run-down, yet to be regenerated) and issues such as traffic or industrial impact. 5.4 The Matrix Parameters Facilities Boat owners, and especially the family sector and busy professionals, are influenced in their chosen location not only by what the area around the facility has to offer but also by the facilities that are on offer on-site to make their boating simpler and more convenient. It will be seen that when applying the Charging Matrix to various berthing facilities and locations boating clients look for numerous differing elements when choosing the preferred mooring for their boat. Price is often a key point but customers often rate service and location in different proportion, such that the traditional canal boater often appreciates tranquillity and setting over service and facilities and the family/ professional sector often rate services over setting. It is understood that Scottish Canals is trying to increase traffic through the canals and the number of owners choosing to berth their leisure vessels permanently on the canal based moorings. According to the British Marine Federation the family and professional sectors are the fastest growing sector in leisure boating, with the over 50 s market also being robust. Often referred to as the grey pound the latter sector often chooses location and setting over ultimate service and is often more mobile, having more time 21

80 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) to spend on their hobby and less restrictions. In many ways Scottish Canals provides much of what the grey pound market is looking for, however it is not as well serviced with full facility locations which would attract the families and professionals. The vertical axis on the Matrix, provides a balance between full facility at one end of the spectrum to the most basic facility at the other. The facilities matrix parameters we have identified are: Location Heading 1 Full Facility, Full Service with Boatyard 2 Full Facility, Full Service no Boatyard 3 Basic Marina Berthing Facility 4 Basic Berthing with Limited or Old Pontoons 5 Bankside with Power, Water and Toilet/Shower 6 Bankside with Power & Water 7 Bankside no Services with Jetty 8 Bankside no Services Once a score has been arrived at on the matrix a degree of subjective adjustment may still need to be applied to marinas and moorings. A brand new marina with all new facilities will attract the optimum charge within any given matrix score, whereas a marina that is 50% through its 25yr life cycle may be looking slightly tired, in terms of standards, design, buildings and infrastructure appearance and inevitably a slight price adjustment to reflect this may need to be applied (in reality if demand remains high this factor can be ignored). Inevitably there will also be some debate over where any given development fits within the matrix, but it is BSC LLP s view that this very process will lead to a healthy and more logical approach to pricing and development. In general this debate does not currently take place in the marine leisure industry, where price selection is based purely on competitor analysis. In general terms all the marina facilities should reach the minimum standards of TYHA Code of Practice for Design, Installation and Operation of Coastal and Inland Marinas and Yacht Harbours. 22

81 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Facility 1 Full Facility, Full Service with Boatyard To score 1 on the Matrix a marina must have an equal level of facilities as those possessed by the leading marinas in Scotland, which may also mean a commitment to on-going development and investment to keep pace with the market. As a minimum a marina will need should provide the following; A high quality facilities building Incorporating at least a customer reception and administration office, berth holder toilets and showers, a laundry, disabled facility with shower. Ideally there would also be family facilities with a bath. Food and Beverage, Contractors and Retail To encourage community development within the marina confines the marina should have a suitably sized Bar/ Restaurant or Café capable of creating a social focal point. Further, as a minimum there should be a chandlery and a brokerage boat sales operation and ideally other contractors and operators with a site presence.. Information Point Internal to the office at least one notice board and shelf display with relevant tourist information, customer information and general safety information. In addition a good quality external information board with health and safety information, opening hours, weather and tides (updated daily), general boating information and a marina plan should be installed. Ample and convenient parking this should allow easy access to berthing and be zoned to coincide with bridge head access. There should also be convenient customer parking at any retail, bar/ restaurant and service building. Bridgeheads should have security control and lighting should be comprehensive. Refuse Points at each bridgehead and at one point in the boat yard there should be a tidy and concealed refuse collection/ sorting points. In the boatyard there should be additional facilities for the environmental disposal of paints, fuel/ oil, anodes, wood and contaminated materials Service Pontoon A pontoon with pumps for fuel, black water pump-out and water. It should be equipped to complete transactions and sell gas. It should meet relevant safety regulations for fire and oil spill Marina pontoons - should be of a high quality and made of low maintenance materials, preferably with hard wearing non-slip deck materials. The decking should be well maintained and free from algae and detritus. Pontoon Services as a minimum there should be a water point for every second boat and a 16a/ 32a power point for every boat contained in robust and lit service modules. The walkways and bridges should be well lit and high visibility safety ladders and SOS modules should be located conveniently. There should be luggage caddies/ trolleys conveniently located at each bridgehead. Boatyard there should be a secure and well equipped boat yard capable of storing at least 20% of the marina s capacity. This should be well surfaced and dry under foot. For lifting and servicing vessels it should have either a slipway or straddle hoist with capacity to lift the majority of the boats berthed in the marina (by weight). The Lifting area should have environmental wash down control. There should be a workshop and storage compound. The yard should be well lit, fenced and have water and power to directly service a minimum of 50% of the boats stored. 23

82 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Facility 2 Full Facility, Full Service no Boatyard To score 2 on the Matrix a marina must also have an equal level of facilities as those possessed by the leading marinas in Scotland, which may also mean a commitment to on-going development and investment to keep pace with the market. As a minimum a marina will need to have the following; A high quality facilities building Incorporating at least a customer reception and administration office, berth holder toilets and showers, a laundry, disabled facility with shower. Ideally there would also be family facilities with a bath. Food and Beverage, Contractors and Retail To encourage community development within the marina confines the marina should have a suitably sized Bar/ Restaurant or Café capable of creating a marina hub. Further, as a minimum there should a chandlery and a brokerage boat sales operation and ideally other contractors and operators would have on site offices. Information Point a. Internal to the office at least one notice board and shelf display with relevant tourist information, customer information and general safety information. b. Good quality external information board, with health and safety information, opening hours, weather and tides (updated daily), general boating information and a marina plan Ample and convenient parking this should allow easy access to berthing and be zoned to coincide with bridge head access. There should also be convenient customer parking at any retail, bar/ restaurant and service building. Bridgeheads should have security control and lighting should be comprehensive. Refuse Points at each bridgehead there should be tidy and concealed refuse collection/ sorting points. Service Pontoon A pontoon with pumps for fuel, black water pump-out and water. It should be equipped to complete transactions and sell gas. It should meet relevant safety regulations for fire and oil spill Marina pontoons - should be of a high quality and made of low maintenance materials, preferably with hard wearing non-slip deck materials. The decking should be well maintained and free from algae and detritus. Pontoon Services as a minimum there should be a water point for every second boat and a 16a/ 32a power point for every boat contained in robust and lit service modules. The walkways and bridges should be well lit and high visibility safety ladders and SOS modules should be located conveniently. There should be luggage caddies/ trolleys conveniently located at each bridgehead Facility 3 Basic Marina Berthing Facility To score 3 on the Matrix a marina must have modern facilities and quality pontoons. It should be well maintained and have a modern, easy manoeuvring, layout to suit the sizes of vessels likely to berthed in it. As a minimum a marina will need to have the following; A high quality facilities building Incorporating berth holder toilets and showers and disabled facility with shower. Information Point Internal notice board and shelf display with relevant tourist information, customer information and general safety information. A good quality external information board, with health and safety information, payment details and charges, general boating information and a marina plan with service and emergency contact numbers. 24

83 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Ample and convenient parking this should allow easy access to berthing and be zoned to coincide with bridge head access. Bridgeheads, where relevant should have security control and lighting should be comprehensive. Refuse Points at each bridgehead there should be tidy and concealed refuse collection/ sorting points. Marina jetties/ pontoons - should be of a high quality and made of low maintenance materials, preferably with hard wearing non-slip deck materials. The decking should be well maintained and free from algae and detritus. Pontoon/ Jetty Services as a minimum there should be a water point for every second boat and a 16a/ 32a power point for every boat contained in robust and lit service modules. The walkways and bridges should be well lit and high visibility safety ladders and SOS modules should be located conveniently. There should be luggage caddies/ trolleys conveniently located at each bridgehead Facility 4 Basic Berthing Facility with Limited or Old Pontoons To score 4 on the Matrix a facility must be well maintained and have a layout to suit the sizes of vessels likely to berthed in it. As a minimum a marina will need to have the following; A serviceable and clean facilities building Incorporating berth holder toilets and showers and disabled facility with shower. Information Point - Internal notice board and shelf display with relevant tourist information, customer information and general safety information. A good quality external information board, with health and safety information, payment details and charges, general boating information and a marina plan with service and emergency contact numbers. Ample and convenient parking this should allow easy access to berthing and be zoned to coincide with bridge head access. Bridgeheads, where relevant should have security control and lighting should be comprehensive. Refuse Points at each bridgehead there should be tidy and concealed refuse collection/ sorting points. Marina pontoons/jetties Whilst not to the very latest designs the pontoons should be stable and of suitable dimensions to suit the vessels likely to be berthed on them. The decking should be well maintained and free from algae and detritus. Pontoon/ Jetty Services as a minimum there should be a water point for every second boat and a 16a power point for every boat contained in robust and lit service modules. The walkways and bridges should be well lit and high visibility safety ladders and SOS modules should be located conveniently. There should be luggage caddies/ trolleys conveniently located at each bridgehead Facility 5 Bankside with Power, Water and Toilet/Shower Facilities To score 5 on the Matrix the mooring facility should have safe access and good serviceable jetties or pontoons, although they may not be to the latest design. It should have a layout to suit the sizes of vessels likely to berth and there should be room to carry out berthing manoeuvres safely. As a minimum the facility will need to have the following: A serviceable and clean facilities building Incorporating berth holder toilets and showers and disabled facility with shower. 25

84 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Information Point Internal notice board and shelf display with relevant tourist information, customer information and general safety information. A good quality external information board, with health and safety information, payment details and charges, general boating with service and emergency contact numbers. Convenient parking this should allow easy access to berthing and be zoned to coincide with bridge head access. Approaches should be lit to a level commensurate with the location. Refuse Points There should be tidy and concealed refuse collection points. Marina pontoons/ jetties Whilst not necessarily to the very latest designs the pontoons should be in good repair and of suitable dimensions to suit the vessels likely to be berthed on them. The decking should be well maintained and free from algae and detritus. Pontoon/ Jetty Services as a minimum there should be a water point for every second boat and a 16a power point for every boat contained in robust and lit service modules. The walkways and bridges should be lit and have high visibility safety ladders Facility 6 Bankside with Power & Water To score 6 on the Matrix the mooring facility should have safe access and good serviceable jetties or pontoons, although they may not be to the latest design. It should have a layout to suit the sizes of vessels likely to berth and there should be room to carry out berthing manoeuvres safely. As a minimum the facility will need to have the following: Information Point Good quality external information board, with health and safety information, payment details and charges, general boating information and service and emergency contact numbers. Parking Parking should be available within 250m. Approaches should be lit to a level commensurate with the location on arrival at the entry point to the jetty/ pontoon. Refuse Points There should be tidy and concealed refuse collection points. Marina pontoons/ jetties Whilst not necessarily to the very latest designs the pontoons should be in good repair and of suitable dimensions to suit the vessels likely to be berthed on them. The decking should be well maintained and free from algae and detritus. Pontoon/ Jetty Services as a minimum there should be a water point for every second boat and a 16a power point for every boat contained in robust and lit service modules. The walkways should be lit and have high visibility safety ladders Facility 7 Bankside no Services with Jetty To score 7 on the Matrix the mooring facility should have safe access and good serviceable jetties or pontoons, although they may not be to the latest design. It should have a layout to suit the sizes of vessels likely to berth and there should be room to carry out berthing manoeuvres safely. As a minimum the facility will need to have the following: 26

85 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Information Point Good quality external information board, with health and safety information, payment details and charges, general boating information and service and emergency contact numbers. Parking Parking should be available within 250m. Approaches should be lit to a level commensurate with the location on arrival at the entry point to the jetty/ pontoon. Refuse Points There should be tidy and concealed refuse collection points. Marina pontoons/ jetties Whilst not necessarily to the very latest designs the pontoons should be in good repair and of suitable dimensions to suit the vessels likely to be berthed on them. The decking should be well maintained and free from algae and detritus Facility 8 Bankside no Services To score 8 on the Matrix the mooring facility should have safe access via well maintained banks and towpath. The canal walls should be suitable for safe berthing. It should have a layout to suit the sizes of vessels likely to berth and there should be room to carry out berthing manoeuvres safely. As a minimum the facility will need to have the following Information Point Good quality external information board, with health and safety information, payment details and charges, general boating information and service and emergency contact numbers. Parking Parking should be available within 250m. Refuse Points There should be tidy and concealed refuse collection 27

86 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Price Matrix Proposed Pricing The standard charge in the Matrix has been set at 350/m, being the rounded average of the leisure mooring rates (per metre annual single payment rate) of Ardfern and Dunstaffnage marinas. The justification for basing the Matrix (100%) reference on this is that they represent full service marinas enjoying robust berthing occupancies and have rates that ultimately a coastal marina at any of the coastal entrances to the Scottish Canals network could achieve. Reflecting the lower charges charged inland, a lower headline charging rate has been applied to Rural Inland. The basis for /m standard charge relates to the maximum price which is likely to be supported giving cognisance to inland, East Coast and North East pricing rates. Urban & Coastal Rural Inland PRICING MATRIX (per m) LOCATION ATTRACTIVE TOWN CENTRE LOCATION Direct Access to the Sea TOWN CENTRE LOCATION up to 45 mins to Sea WITHIN WALKING DIST OF TOWN (1,000m) ISOLATED BUT ATTRACTIVE LOCATION DISADVANTAGED LOCATION ATTRACTIVE VILLAGE LOCATION WALKING DISTANCE TO VILLAGE FACILITIES ATTRACTIVE RURAL RURAL BUSY LOCATION DISADVANTAGED Marina Bankside FACILITY MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD A B C D E R A R B R C R D R E MARINA - FULL FACILITY - FULL SERVICE BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY BANKSIDE NO SERVICES From our review of the Scottish Canals network we have undertaken an assessment of each location following the criteria set out in Section 5.0 to generate a Current rating from the Matrix. In assessing the possible development opportunities for each location we have generated a Potential rating. 28

87 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Whilst in some locations there is limited improvement possibilities at others the scope for further development is significant. Through the application of the Charging Matrix the difference between the rates can be converted to a potential per m leisure charging rate and therefore assist in identifying and scoping investment. The charging matrix for the Lowland Canals (Forth & Clyde and Union) is shown below. We have created a separate matrix for these canals following consultation and feedback from the managers of the Lowland Canals. Whilst there have been significant improvements across the Lowland Canal network in recent years, generally, the offer here is less developed (both in terms of facilities and pricing) in comparison to the more established locations found on the Crinan and Caledonian Canals. In time as the Lowland Canal network develops it will be necessary to incorporate pricing into the standard matrix. LOCATION 250 LOCATION Coastal <45 minutes CITY LOCATION TOWN / VILLAGE LOCATION RURAL ATTRACTIVE RURAL UNATTRACTIVE PRICING MATRIX (per m) Marina Bankside FACILITY MARINA - FULL FACILITY - FULL SERVICE WITH BOATYARD A B C D E MARINA - FULL FACILITY - FULL SERVICE BASIC MARINA BERTHING FACILITY BERTHING BASIN/ LIMITED OR OLD PONTOONS BANKSIDE POWER, WATER AND TOILET/ SHOWER BANKSIDE POWER AND WATER BANKSIDE NO SERVICES / WITH JETTY BANKSIDE NO SERVICES

88 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) The tables in the following section provide our assessment of each location using the relevant pricing matrix and 2014 pricing was provided by Scottish Canals which has been compared by BSC LLP against current and potential assessment of price using the matrix. Our assessment of potential rating and pricing is based on potential improvements to facilities. In some locations there is huge potential for facility improvements whilst in others there is very little. No review of costs to carry out these improvements has been incorporated into this report. 6.1 The Caledonian Canal Caledonian Canal Location No. Caledonian Canal 2013 () 2014 () BSC LLP Current Rating BSC LLP Potential Rating BSC LLP Current Price BSC LLP Potential Price BSC LLP Change v BSC LLP Change v % Change 2013 % Change Banavie RB5 RB % 23.26% 2 Corpach Reach RB7 RB % 4.00% 3 Corpach RB5 RB % 12.05% 4 Dochgarroch East RB6 RB % 5.93% 5 Dochgarroch West RB5 RB % 10.20% 6 Fort Augutus (Top) RA5 RA % 33.60% 7 Gairlochy RC5 RC % 18.08% 8 Kytra RC7 RC % 0.57% 9 Laggan Avenue RC7 RC % 8.22% 10 Laggan Top RD5 RD % 1.05% 11 Seaport Marina B3 B % 48.69% 6.2 The Crinan Canal Please see following page 30

89 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Crinan Canal Location No. Crinan Canal 2013 () 2014 () BSC LLP Current Rating BSC LLP Potential Rating BSC LLP Current Price BSC LLP Potential Price BSC LLP Change v BSC LLP Change v % Change 2013 % Change Ardrishaig Basin C4 B % 11.31% 13 Ardrishaig Dummy B4 B % 8.66% 14 Bellanoch Bridge RC5 RC % 13.14% 15 Bellanoch Marina RB3 RB % 9.14% 16 Bellanoch Mooring RB8 RB % 3.35% 17 Cairnbaan Lock RC4 RC % 9.37% 18 Crinan Basin D4 D % 1.88% 19 Crinan Basin Dummy D3 D % 4.48% 20 Crinan Rings RD RC % 1.05% 21 Lock 14 Crinan RB6 RB % -1.38% 22 Lock 4 Top RB6 RB % -1.38% 23 Oakfield Bridge RB6 RB % 19.67% 6.3 The Forth & Clyde Canal Forth & Clyde Canal Location No. Forth & Clyde 2013 () 2014 () BSC LLP Current Rating BSC LLP Potential Rating BSC LLP Current Price BSC LLP Potential Price BSC LLP Change v BSC LLP Change v % Change 2013 % Change Auchinstarry D3 D % 56.25% 25 Bowling Lower A3 A % 21.11% 26 Bowling Upper A5 A % 6.64% 27 Bowling Helenslea C3 C % 0.35% 28 Camelon Lock B8 B % 40.63% 29 Glasgow Spiers Wharf B6 B % -0.57% 30 Grangemouth C4 C % 66.67% 31 Falkirk Wheel Canal D6 D % 30.43% 32 Falkirk Wheel Basin D4 D % 13.64% 33 The Stables C7 C % 71.88% 34 Southbank C4 C % 12.50% 35 Other Sites various various % 50.00% 31

90 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Union Canal Union Canal Location No. Union Canal 2013 () 2014 () BSC LLP Current Rating BSC LLP Potential Rating BSC LLP Current Price BSC LLP Potential Price BSC LLP Change v BSC LLP Change v % Change 2013 % Change Harrison Park B6 B % 49.57% 37 Leamington Wharf No Leisure B6 B % 0.00% 38 Edinburgh B4 B % -1.19% 39 Linlithgow D7 D % 65.66% 40 Ratho C7 C % 6.59% 40 Ratho C4 C % 74.42% 41 Other sites various various % 33.33% 7.0 Implementation 7.1 Consultation It is the intention of Scottish Canals to use the findings of this report, the Matrix and the observations to consult with stakeholders on the introduction of a revised pricing policy. BSCLLP have asked for basic facility costings at various locations, but Scottish Canals uses wider parameters on each canal network and it has not been possible to provide sufficiently detailed operational and return data to arrive at accurate ROC s and Profit/ Loss accounts for even the major locations. BSCLLP believe that given the sizes of some of these facilities, and the current charging regimes, it is likely that many of the berthing facilities are losing money and are therefore a tax on other Scottish Canal Operations. The basis for the upward revision of berthing tariffs can ensure that canal berthing at least breaks even and preferably provides contributions to reinvest in additional facilities and canal upgrades. If all berthing operations lose money private sector investment will not be forthcoming and development on the canals will not be forthcoming. In order to be well prepared and to test BSCLLP s arguments it is necessary that Scottish Canals produce operational profit and loss accounts (including depreciation and group overheads) for the following: At least one larger marina on each canal network (where it has marinas) South Bank Marina projected P&L 32

91 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Grouped mooring facilities (cost centres). BSC LLP suggest that Scottish Canals group three or four sets of linear moorings in differing sections of the canals, maintained by local teams, and apply costs and incomes to them. This will arrive at a profit or loss assessment for the relevant mooring groups allowing them to assess contributions. Having understood the contributions for one group these can be used for supporting debate on tariff adjustments along the network. Scottish Canals need also to consider the arguments supporting the higher charging regime, including the importance of private sector investment, the need for contributions from its own operations and the amount of investment required in berthing facilities to meet projected demand. In reality Scottish Canals should be attempting, through consultation, to produce a sustainable business model for the entire network that meets demand, maintains the assets and encourages private sector investment. In the process of developing the model, consultation plays an important role in managing expectations and hopefully avoiding bad publicity. In simple terms it is likely that: Scottish Canals cannot convince the boating market of the necessity for price increases to encourage growth, maintain facilities and meet demand on the canals and as a result the assets will deteriorate and there will minimal expansion or stagnation The enlightened members of the boating community see the benefits of future expansion on the canals for them and support Scottish Canals new strategy which will lead to an improved product and a network within which the private sector sees opportunities to grow business. 8.0 Conclusion Following publication of the draft report a further consultation meeting was held with the managers of each canal. Amendments to the format of the matrix were implemented and input from the managers regarding individual location pricing was instigated. We now consider that the pricing matrix is robust and with use will have the ability to rationalise any current and future pricing policies. Perhaps of most benefit will be its use in guiding future development and investment. Overall the range of price changes covers minor price reductions (the assumption therefore is that current prices should be maintained) to 74%. The average price changes for each canal are shown below: Location Lowest Change % Highest Change % Average% Change BSC LLP vs Caledonian Canal 0.57% 48.69% 15.06% 33

92 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Crinan Canal -1.38% 13.14% 6.61% Forth & Clyde Canal -0.57% 66.67% 30.79% Union Canal -1.19% 74.42% 32.63% It is evident that the largest percentage changes are located in the Forth & Clyde and Union Canal. These increases reflect the underdeveloped nature of the pricing structure in these locations in comparison to the more mature locations found on the Crinan and Caledonian Canal. Whilst some of these percentage changes may seem significant, closer review will show that the increases are being made from a very low charging base. In order to fairly price the Lowland Canals in comparison to the rest of the network, it has been necessary to create a separate Lowland Matrix. This matrix discounts from a lower headline rate against a simplified scale of variables to arrive at a suggested price. In time, as the Lowland network improves there will come a point when it can be incorporated into the standard pricing matrix. Both pricing matrixes are shown in Section 6.0 of the report. The implementation of any new pricing strategy will require careful management with a focus on clear, concise information. We understand that the leisure pricing strategy is likely to be implemented alongside changes to transit and licence charges. Accordingly, there is an opportunity to instigate comprehensive structured change which will enable Scottish Canals to work towards sustainable operation of its canal network. 9.0 Appendices Appended as separate documents End 34

93 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Appendices January

94 APPENDIX A: MARINA RESEARCH EAST COAST & MORAYSHIRE Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Map Reference Harbour/Marina 1 Royal Quays 2 St. Peter s Basin 3 Eyemouth 4 Dunbar 5 North Berwick 6 Port Edgar 7 Anstruther 8 Tayport 9 Peterhead 10 Banff 11 Whitehills 12 Lossiemouth 4 13 Inverness

95 CLYDE & WEST COAST SCOTLAND Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Map Reference Harbour/Marina 1 Kerrera (Oban) 2 Craobh 3 Portavadie Tarbert 5 Rothesay 6 Largs Kip 11 8 Holy Loch 9 Rhu 10 James Watt Dock Ardrossan 12 Troon 13 Stranraer 14 Campbeltown 15 Ardlui 16 Loch Lomond Marina Ardfern 18 Dunstaffnage

96 ENGLISH & WELSH 8 P 9 9 Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) P 5 P 6 P 7 7 Map Reference Harbour/Marina 1 Brinklow Marina 2 Chirk Marina 3 Barton Marina 4 Aquaduct Marina 5 Bill Fenn Marina 6 Buckden Marina 7 Evesham Marina 8 Fallwood Marina 9 Ripon Racecourse 10 Whitebear Marina

97 HOLLAND, FRANCE & SCANDINAVIA Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Map Reference Harbour/Marina 1 Amsterdam Marina 2 The Hague 3 Port de l Arsenal 4 Port De Roanne 5 Port D Auxerre 6 Sjötorp/Lake Vänern 7 Karlsborg 8 Alabodorna

98 NORTHERN IRELAND & IRELAND Blue Sea Consulting LLP The Sugar Warehouse, James Watt Dock Marina, Greenock PA15 2UT t: +44 (0) Map Reference Harbour/Marina 1 Carrick Fergus Marina 2 Bangor Marina 3 Dun Laoghaire 4 5 Ballycastle Marina Lough Derg Marina 6 Lakeside Marina 7 Poolbeg Marina

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