92 NORSEMENS ROAD, CORONET BAY - PRELIMINARY ECONOMIC BENEFITS ASSESSMENT - cloudfront.net

92 NORSEMENS ROAD,
    CORONET BAY
    PRELIMINARY ECONOMIC BENEFITS
    ASSESSMENT

14 FEBRUARY 2017
PREPARED FOR AUSCO INVESTMENT GROUP

URBIS STAFF RESPONSIBLE FOR THIS REPORT WERE:
Director                    Rhys Quick
Senior Consultant           Mike Zhang
Project Code                PER0151

© Urbis Pty Ltd
ABN 50 105 256 228

All Rights Reserved. No material may be reproduced without prior permission.

You must read the important disclaimer appearing within the body of this report.

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CONTENTS

TABLE OF CONTENTS
Introduction .......................................................................................................................................................... i
Summary of Benefits ........................................................................................................................................... i
1.      Development Summary ........................................................................................................................ 2
2.      Economic Benefits ................................................................................................................................ 5
2.1.    Methodology ......................................................................................................................................... 5
2.2.    Construction Phase............................................................................................................................... 6
2.3.    Operation Phase ................................................................................................................................... 7
2.4.    Form of Benefits .................................................................................................................................... 8
Disclaimer .......................................................................................................................................................... 9

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC
BENEFITS ASSESSMENT

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

INTRODUCTION
This report summarises the economic benefits anticipated to be derived from the development proposed at
92 Norsemens Road, Coronet Bay. The development is intended to include a tourist hotel and function
centre.

   Section 1 presents a summary of the components of the proposed development.

   Section 2 presents an introduction to the methodology for estimating the economic benefits, and
    quantifies the direct and indirect benefits anticipated from the development during construction and on
    an ongoing basis at capacity, at both the local Bass Coast Shire and the state levels.

   Section 3 provides a brief description of practically how the economic benefits that may brought about
    by the development will manifest.

SUMMARY OF BENEFITS
The economic benefits of the development can be summarised as:

   Private sector investment in the development will be $41.8 million including GST.

   A total of 190 jobs created during the construction phase for the equivalent of one year of employment:
    35 direct jobs and a further 155 indirect jobs per annum over the construction period.

   A total of $28.6 million in Gross Value Added (GVA) during the construction period on an annual basis:
    $6.2 million direct and $22.4 million indirect.

   Around 42-43% of employment and GVA benefits are likely to flow to the Bass Coast Shire during the
    construction phase, with an estimated 74% of on-going jobs and 60% of on-going GVA benefits accruing
    to the local Shire during the operation phase.

   Creation of 311 on-going jobs from the operation of the development: 173 direct jobs within the facility
    and 138 indirect jobs, some within the Shire and the rest across the remainder of the state.

   A total of $33.7 million in GVA annually from the onsite employment at capacity: $12.8 million direct
    (local) and $20.9 million indirect (both local and rest of Victoria).

   The development of tourism infrastructure and supporting the balanced growth of local tourism sector
    through the provision of new accommodation and function facilities at a decentralised location within the
    Shire is an economic benefit deriving from this development.
The economic benefits flowing from the private sector development of a new tourist facility at Coronet Bay
will be significant. Many of the benefits will be delivering an enduring legacy for the Shire of Bass Coast.

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT                                          INTRODUCTION   i

1.          DEVELOPMENT SUMMARY
The subject site at 92 Norsemens Road, Coronet Bay is situated in the north of Bass Coast Shire, around
1.5-2 hours drive from central Melbourne. Coronet Bay is along the route to the Phillip Island region, one of
Victoria’s top tourist destinations, along with other coastal areas of the Shire (see Map 1.1 overleaf).
The proposed development at the subject site is intended to promote local tourism and cater to Victoria’s
growing tourism sector, in particular Chinese tour groups. Initial plans indicate that the development will
include a new resort-style hotel, along with function facilities, car park and potentially a further ‘tourism
residential’ area in later stages (see Picture 1 overleaf). The site provides direct access to Coronet Bay
beach and is serviced by Bass Highway via Corinella Road.
The floorspace details of the proposed development at 92 Norsemens Road, Coronet Bay are summarised
in Table 1.1 below:

     The proposed development is likely to comprise a hotel of around 178 rooms with a total floorspace of
      17,500 sq.m, as well as function centre totalling some 3,500 sq.m.

     At grade car park with a capacity of approximately 354 spaces.

    Development Assumptions
    92 Norsemens Road, Coronet Bay                                                                           Table 1.1
Land Uses                                           No. of Units                 Floorspace (Sq.m)

Accommodation Hotel                                  178                                 17,500
Function Centre                                        -                                  3,504
Car Park (At Grade)                                  354                                 11,570
Source: Ausco Investment Group

2 DEVELOPMENT SUMMARY                                                                                               URBIS
                                                               92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

Local Context                                                          Map 1.1

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT   DEVELOPMENT SUMMARY   3

Picture 1 – Artist’s Impression of 92 Norsemens Road, Coronet Bay Development

Source: Bruce Henderson Architects

4 DEVELOPMENT SUMMARY                                                                                                                URBIS
                                                                                92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

2.         ECONOMIC BENEFITS
In this section, the quantifiable benefits of the proposed development are derived.

2.1.       METHODOLOGY
Analysis presented in this summary report uses REMPLAN economic modelling to assess current and
potential economic impacts. REMPLAN is an Input-Output model that captures inter-industry relationships
within an economy. It can assess the area-specific direct and flow-on implications across industry sectors in
terms of employment, wages and salaries, output and value-added, allowing for analysis of impact at the
Bass Coast Shire municipality level in this case, as well as at the state level.
Key points regarding the workings or terminology of the model are as follows:

    REMPLAN uses either the value of investment or employment generation as the primary input. For this
     analysis, the value of total upfront investment has been used as the key input to assess the benefits of
     the construction phase, whereas future employment at the hotel and the function centre is the input to
     assessing the on-going economic benefits of the operation phase.

    Outputs from the model include employment generated through the project and economic Gross Value
     Added at both the local and the state level.

    Employment generated includes all full-time and part-time jobs created over the life of the construction
     phase; or in terms of the on-going operations, total on-going jobs generated.

    Gross Value Added or GVA is a measure of the value of goods and services produced in an area,
     industry or sector of an economy during a certain period of time. In this case, GVA represents the total
     economic contribution of the project.

    Both the direct and indirect benefits are modelled for employment and value added:

        Direct refers to the effect felt within the industry where the investment is being made. For example,
         during the construction phase, new direct jobs are created within the construction industry.

        Indirect effects are 1) those felt within industries that supply goods to the industries directly affected
         and 2) to industries that benefit from the wages that are earned and spent by those employed within
         the industries directly affected.

    Economic benefits are modelled for the construction and the on-going operation phases. For both
     phases, the employment and value added numbers are presented on an annualised basis. Construction
     phase benefits accrue each year when the project is under construction (or a pro-rata basis for any part
     year construction period). On-going benefits accrue each year of operation.
The following sub-sections present a summary of benefits for these two phases.

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT                                         ECONOMIC BENEFITS   5

2.2.       CONSTRUCTION PHASE
The proposed development is estimated to have a total construction cost of around $41.8 million inclusive of
GST over an anticipated construction timeframe of approximately 1.5 years. This equates to an annualised
construction cost of some $27.87 million.
As shown in Table 2.1 below, construction of the proposed development is estimated to be able to generate
35 direct jobs for the equivalent of one year as a result of construction, and 155 jobs indirectly created.
Around 42% of the jobs (80 of 190) will accrue to the Shire of Bass Coast. There would be approximately
$6.2 million in direct Gross Value Added (GVA) per year during the construction period, and $22.4 million in
indirect GVA annually in constant 2016 dollar terms inclusive of GST. Over the 1.5-year construction period,
total GVA would be around $43 million. All the direct benefits are expected to be felt within the Bass Coast
Shire municipality, with the spin-off effect benefiting both the Shire and the rest of the State.

 Construction Phase Benefits
 92 Norsemens Road, Coronet Bay                                                                                            Table 2.1
                                                                      Bass Coast Shire        Victoria - Other         Victoria
              1
Employment
  Direct Employment                                                            35                    0                    35
  Indirect Employment                                                          45                   110                  155
Total Employment                                                               80                   110                  190

Gross Value Added ($M, Constant 2016 Dollar Value)
  Direct Value Added                                                           6.2                  0.0                   6.2
  Indirect Value Added                                                         6.1                  16.4                 22.4
Annual Gross Value Added                                                      12.3                  16.4                 28.6
1. Total part-time and full-time jobs for the equivalent of one year during construction.
Source: REMPLAN

6 ECONOMIC BENEFITS                                                                                                               URBIS
                                                                             92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

2.3.       OPERATION PHASE
Potential annual economic benefits (in jobs and GVA) as a result of the development are estimated here.
The number of direct jobs for the proposed development was estimated by referring to industry benchmarks
and Urbis’ experience in staffing requirements for different land uses, based on the floorspace of each of
these proposed uses. Direct jobs are entered into REMPLAN to produce an estimate for indirect jobs and
direct and indirect GVA.
It is estimated that the proposed development would have the capacity to generate 173 direct jobs (full-time,
part-time and casual) during the on-going operation period, all of which are obviously within Bass Coast
Shire, given the location of the development. These direct jobs are estimated to induce a further 138 indirect
jobs (full-time, part-time and casual) both within and beyond the Shire as a result of flow-on effects.
Resulting from the economic activity on site, there would be an estimated $33.7 million per annum in direct
and indirect GVA contribution generated from the daily operation and management of the development to the
Victorian economy. This includes $12.8 million direct GVA benefit at the local level and $20.9 million indirect
GVA benefit for both the Shire ($7.3 million) and elsewhere across the State ($13.6 million) (see Table 2.2
below).

 Operation Phase Benefits
 92 Norsemens Road, Coronet Bay                                                                          Table 2.2
                                                            Bass Coast Shire   Victoria - Other       Victoria
Employment (Total Full-time and Part-time Jobs)
  Direct Employment                                               173                 0                 173
  Indirect Employment                                             56                 82                 138
Total Employment                                                  229                82                 311

Gross Value Added ($M, Constant 2016 Dollar Value)
  Direct Value Added                                              12.8               0.0                12.8
  Indirect Value Added                                            7.3               13.6                20.9
Annual Gross Value Added                                          20.1              13.6                33.7
Source: REMPLAN; Urbis

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT                                         ECONOMIC BENEFITS   7

3.        FORM OF BENEFITS
The analysis in the previous section quantified the economic benefits of the proposed development.
However, it is important to recognise how those benefits may manifest, particularly within the local area
around Coronet Bay. Examples of how the development may benefit the area economically are summarised
below:
Greater Employment Opportunities
This is an obvious outcome of development. During construction and operation, jobs will be created that
local residents will have the opportunity to fill. Particularly during the operation phase, jobs will be available
to those without formal qualifications, including large number of young workers.
Support for Local Business
The increased number of visitors staying longer, combined with the increased income and therefore
spending capacity of workers, will enhance the size of the captive market for both surrounding and local
businesses.
Contribution to Local Tourism Infrastructure
Compared to Philip Island, San Remo and other coastal areas to the south such as Inverloch which are the
key focus of Bass Coast tourism, Coronet Bay has been considered as more of a peripheral location and is
in need of investment. The proposed development, located central to the Coronet Bay/Corinella area, will
provide local tourism infrastructure that can attract and retain visitors locally.
Generation of New Tourism Activities
As a local economy heavily dependent on the tourism sector, Bass Coast Shire Council is committed to
promoting the Shire as an all-year tourism and events destination. This has been identified as a strategic
focus in various local and state level policy documents and is enshrined in the Council’s Economic
Development Strategy 2016-2021:

       Bass Coast Shire Council will promote Bass Coast as an all year tourism destination by:

               …

               working collaboratively with event organisers to hold sustainable events and activities
                through education, training, streamlined processing of applications and joint promotion

               attracting new and off peak events and continuing to facilitate community events such
                as festivals and holiday celebrations

               promoting Bass Coast Shire to domestic and international visitors as an all year round
                destination

               advocating for more extensive pathway infrastructure, viewing towers and recreational
                infrastructure including leisure centres to attract a wider variety of visitors year round

                P.25, Economic Development Strategy 2016-2021.

To this end, the proposed development at 92 Norsemens Road, Coronet Bay would have the capacity to
capture new tourism activities as the Victorian tourism market continues to grow; the new function centre
would also be able to attract new and potentially off peak events, contributing to the more balanced growth of
the tourism sector within the Shire. The intention to cater to Chinese tour groups may promote the region to
a wider market and lengthen the stay of visitors, many of whom only come for a day trip currently.

8 FORM OF BENEFITS                                                                                                   URBIS
                                                                92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT

DISCLAIMER
This report is dated 14 February 2017 and incorporates information and events up to that date only and
excludes any information arising, or event occurring, after that date which may affect the validity of Urbis Pty
Ltd’s (Urbis) opinion in this report. Urbis prepared this report on the instructions, and for the benefit only, of
Ausco Investment Group (Instructing Party) for the purpose of Preliminary Economic Benefits Assessment
(Purpose) and not for any other purpose or use. To the extent permitted by applicable law, Urbis expressly
disclaims all liability, whether direct or indirect, to the Instructing Party which relies or purports to rely on this
report for any purpose other than the Purpose, and to any other person which relies or purports to rely on this
report for any purpose whatsoever (including the Purpose).
In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future
events, the likelihood and effects of which are not capable of precise assessment.
All surveys, forecasts, projections and recommendations contained in or associated with this report are made
in good faith and on the basis of information supplied to Urbis at the date of this report, and upon which Urbis
relied. Achievement of the projections and budgets set out in this report will depend, among other things, on
the actions of others over which Urbis has no control.
In preparing this report, Urbis may rely on or refer to documents in a language other than English, which Urbis
may arrange to be translated. Urbis is not responsible for the accuracy or completeness of such translations
and disclaims any liability for any statement or opinion made in this report being inaccurate or incomplete
arising from such translations.
Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this report, it is not
responsible for determining the completeness or accuracy of information provided to it. Urbis (including its
officers and personnel) is not liable for any errors or omissions, including in information provided by the
Instructing Party or another person or upon which Urbis relies, provided that such errors or omissions are not
made by Urbis recklessly or in bad faith.
This report has been prepared with due care and diligence by Urbis and the statements and opinions given by
Urbis in this report are given in good faith and in the reasonable belief that they are correct and not misleading,
subject to the limitations above.

URBIS
92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT                                                 DISCLAIMER   9

10 DISCLAIMER                                                        URBIS
                92 NORSMENS ROAD CORONET BAY ECONOMIC BENEFITS ASSESSMENT