British Airways i360 loses £3.8million in a year

The seafront observation tower sponsored by British Airways saw a 31 per cent fall in customers in its second year of trading, down from 503,000 to 344,853.

Its revenues fell from about £7.1million to just over £6million for the year ending June 30, 2018.

And the company made an overall loss of more than £3.8million, compared to a loss of more than £2.7million the year before.

Bosses at the attraction pointed out that this figure includes loan repayments and business rates, plus the fact that the i360 tower depreciates in value by £1.2million a year.

They said the company made an operating profit of £600,000 over the year.

As previously reported, the i360’s revenue shortfall meant it was unable to pay the full amounts owed to Brighton and Hove City Council in June and December 2018.

In December the council agreed to a “temporary deferral” of the unpaid debts to allow the attraction to continue operating.

Independent advisors appointed by the council found that the “lack of a strong and properly funded sales and marketing strategy” was a major reason behind the fall in visitor numbers, according to the report published this week.

The company has appointed a new executive director, David Sharpe, formerly managing director of the London Eye, in a bid to boost the attraction’s performance.

A new general manager, Ian Hart, and a new sales and marketing manager have also been appointed.

The new management team is “undertaking a full review” of the business to find where savings can be made and revenues increased, the report says.

A “major risk” facing the company, according to the report, is that it will prove “unable to increase revenues to the degree required to make possible a financial restructure of its loans”.

In this case the city council would, at some point, be compelled to take enforcement action, the report states.

But the directors believe visitor numbers and revenues can be sufficiently increased with improved marketing.

The report also said that British Airways may decide to withdraw its sponsorship of the i360 in view of the low visitor numbers - but added "there has been no indication that it intends to do so".

The report says “cash flow is often difficult to manage in off peak periods” because business is seasonal.

Bad weather can also hit visitor numbers, especially at peak times, the report states.

And the tower has experienced some “technical breakdowns” due to using “new technology” in an “exposed location” the report says.

This has affected revenues and damaged the i360’s reputation, according to the report.

The report adds that it is “uncertain” whether Brexit will have a positive or a negative effect on visitor numbers.

Julia Barfield, chairwoman of Brighton i360 Ltd, said: “The accounts in question are for the period July 2017 to June 2018, and during this period Brighton i360 Ltd made an operating profit of almost £600,000.

“The profit and loss figure reflects the fact that during the year, the company paid almost £3m in loan repayments and business rates to Brighton and Hove City Council.

“The figure is also calculated after charging depreciation of £1.2m and accrued but unpaid interest on shareholder and other loans.

“Effectively, what this means is, if we’d been gifted the business without shouldering any of the major set-up loans; we took the money from the tills each month and then paid the wages and other operating costs, we made a profit.

“As the accounts show, the loan costs were challenging for a new company, so we have since been in discussion with the council about a payment restructure.

“While these discussions take place and the company’s performance is reviewed, our lenders have agreed that unpaid amounts may be temporarily deferred.

“A new sales and marketing strategy is now in place at the attraction, bolstered by increased investment and a strengthened board of directors.

“We’ve had a positive start to the year and on many days have been ahead of visitor projections.

“We are confident we will see an increase in visitor numbers this year, which will set the company on a path towards meeting its long-term financial commitments.

“In the meantime, British Airways i360 continues to offer inspiration and delight to thousands of visitors every year.

“It welcomed its one millionth visitor in March and has created more than 100 local jobs paying the Living Wage.

“In addition, it has given more than 45,000 free tickets to the city’s school children, provided the council with the funds to landscape the area around the attraction and improve other civic amenities, and delivered an economic boost for numerous Sussex-based suppliers.”

General manager Ian Hart said: "We understand the business and have a clear plan which should deliver some significant growth over the next few years.

"Our investors are supporting our plans and working with us to help build what is a great attraction and something that contributes to the Brighton tourist market and the wider Brighton community.”

In the original financial arrangement Brighton and Hove City Council was to receive £570,000 in interest repayments each June and December after securing the £36.2 million Government loan that made the creation of the seafront viewing tower possible.

But as visitor numbers were not as high as predicted when the Public Works Loan Board application was made, last June the tower asked the council to reduce those £570,000 repayments to £25,000 until 2024 while they build the business.

Bosses were keen to assure residents that the £900,000 payments being made twice a year to pay off the loan would continue and only the interest repayments would be affected. But they stated this could represent a delay in payments totalling £6 million up until 2024, when bosses would restore full payments and repay the deferred amount.

They stressed that the council would receive the full amount within the same 25-year agreed period and that they will try to increase repayments before 2024.

The council then recruited two consultants to support its decision-making – one financial expert and one attractions expert, to be paid for by the i360. 

At the policy resources and growth committee meeting on December 6, the committee agreed to postpone a formal restructuring of the i360 loan for one year, to allow it time to continue building the business.