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5.11 Operating costs and profitability
Of particular relevance to this study is the additional net income generated by the additional
investment in boat-based whale watching. Very few operators have started from scratch with a view
to opening a business whose primary attraction is whale watching since (or due to) the availability of
permits. These would include business models 1a and 2. In model 1a, the investment in a boat is
key, whereas in model 2, a boat is leased from a company that does not make use of it in the whale
season. Note that these models are only found in the Western Cape, where the main fishing (e.g.
crayfish) and whale watching seasons do not overlap. Apart from models 1a and 2, most of the
existing business models are similar to numerous existing marine tourism models, and have
expanded on this to include boat-based whale watching. In other words, the equipment and staff are
largely in place for general marine tourism. In these models, the main additional investment is the
permit, plus the training of staff, but some larger operators may have increased the numbers of boats
and vehicles to accommodate the addition of boat-based whale watching. Thus the level of
investment made would have varied considerably from one operator to the next, ranging from training
staff to custom-building boats.
Attributing the business costs to the boat-based whale watching component of the business was fairly
complicated, because of the variety of business models involved, some of which were quite complex.
Respondents were asked to attribute the amounts that could be attributed to the boat-based whale
watching side of the business. This was done on the basis of the extent to which the various
business elements were involved.
Based on estimates of costs attributed to the boat-based whale watching aspect of permit holders’
businesses, boat-based whale watching was estimated to be a profitable activity for 66% of permit
holders. The non-profitable businesses included two that had not been active or only minimally active
in 2004, either because of insufficient demand or logistical problems. Of the fully operational permit
holders for which full cost estimates were supplied (n = 12), about half of the overall turnover was
profit (Figure 5.13).
Overheads
23%
Net income
50%
Salaries
19%
Operating costs
8%
Figure 5.13. Aggregate distribution of the sales rand for fully-operational boat-based whale watching enterprises.
This excludes permit fees.
In reality, estimating the profitability of boat-based whale watching is not simple. For marine tourism
businesses that offer other cruises with multiple attractions, it would be more informative to analyse
the increase in turnover due to the boat-based whale watching element made possible by the
acquisition of a permit. This is the increase in turnover due to increased demand and the price
premium charged for whale watching. Ultimately, this will be revealed by the demand for boat-based
whale watching permits. All but one of the operators interviewed felt that boat-based whale watching
made a positive contribution to their businesses.
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