Full steam ahead for Red Funnel
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Red Funnel Isle of Wight Ferries reported a record-breaking year in 2014 in terms of vehicles carried, which amounted to more than 800,000 coaches, cars and freight carriers.
The ferry operator also increased its share of the car market across the Solent to 39.6% and its foot passenger share to 38.5%.
With plans to up the market share stakes further, the company recently invested £4.4 million in the refurbishment of two vessels in its fleet – a move designed to significantly enhance the passenger experience.
Red Funnel initially ploughed £2.2 million into the refurbishment and re-launch of the Red Falcon ferry to include new seating areas, a promenade deck, screens showing real-time travel information plus an improved food and beverage offering.
It proved so successful that the firm immediately reinvested a further £2.2 million in the refurbishment of the Red Osprey this year.
Looking ahead, the operator plans to invest in new terminals and expand its holiday package offering, which is proving increasingly popular with the domestic tourism market. Here, Red Funnel CEO Kevin George outlines the company’s 2014 success and his plans for building on this performance in 2015.
Q: Tell us more about your record-breaking year in 2014
We had a really good year in 2014 and carried just over 800,000 vehicles (a combination of coaches, cars and freight), representing an increase of nearly 10% year on year. Cars saw the most significant growth – up 9.7% compared to 2013 – and the number of freight vehicles carried increased 9.6%, which shows both tourism and industry are starting to pick up on the island. The net effect of the increase in the number of vehicles carried was that our market share improved by four percentage points, so we went from commanding 37% of the market to 41%. As well as improving against our main competitor (Wightlink Ferries) the cross-Solent market improved in general with growth of around 1.5%.
Q: What about your financial performance?
Revenues increased by 12.5% and profit by around 16%. This year we expect to see similar strong growth.
Q: What factors led to your improved 2014 performance?
We are very much focused on delivering the best experience across the Solent and the best value for money. We have made significant investments in the customer experience, particularly on board, and we plan to improve the terminal experience too.
Q: What will the terminal improvements involve?
Both our terminals – in Southampton and Cowes – will be relocated. In Southampton we have two separate terminals, one for vehicles and the other for our high-speed catamaran. By early 2017 we will move to a new terminal that will combine both services and give us extra capacity too. In East Cowes we have outgrown the vehicle ferry terminal. By 2018 we will have built a new terminal linked with the regeneration of East Cowes project.
Q: What factors are helping drive more tourism business to the Isle of Wight?
Our focus is cross-Solent traffic, which in general grew 0.7% in 2014. This year we expect to see 1.5% growth because campaigns launched by the island’s destination management company have started to get good traction, promoting the island as a fantastic place for outdoor pursuits. This year the theme is ‘Adventure Island’, pitching the Isle of Wight as a destination for activities including walking, cycling and sailing. The focus is very much on the domestic market because that’s where the real growth is. The island is competing with the West Country and also, in terms of short leisure breaks, short-haul European destinations.
Q: What is Red Funnel doing to improve the Isle of Wight’s tourism appeal?
We are promoting the ferry journey as a mini cruise or a holiday experience in its own right, rather than a means of getting from A to B. For people that don’t travel on the water very often, the ferry ride is part of the holiday, which is what led us to recently refurbish two of our car ferries to the tune of £2.2 million each. Improvements included revamping our food and catering offering to include restaurants serving full meals through to coffee shops. We have also increased seating capacity on board by 55% and created a new sundeck area with full restricted-mobility access. The interiors are also fully revamped.
Q: How will you develop your holiday package offering going forward?
This is a growth area for us. For a number of years we have offered a dynamic passenger arrangement whereby people booked their ferry and then came to us to book the accommodation component, but what we are seeing is demand for the full holiday package. Last year we saw a 5% growth in holiday bookings. Where we are going with this is to create a one-stop-shop for ferry travel, accommodation, activities and events, etc, so that people come to us for everything. In fact we are one of the few operators that has an ABTA bond. We then need to create this in a live availability environment, which is something we are investing in. The reservation system we use has the capacity to provide live availability and we are now building in the connection to link the travel trade to this system.
Q: How important is the trade to Red Funnel?
About 12% of bookings come from the travel trade and we see this relationship as key. We think our trade business will grow as we develop more online packages. We have been a ferry operator to the island for 150 years and we have a very strong brand but I don’t know if customers will always make that link to us as a tour operator. By going through the trade it allows that image to be promoted and developed, plus when travel agents realise we are a bonded tour operator it will give them more confidence to sell us. We plan more trade awareness campaigns in the future once we have all the technology systems in place to allow them to book dynamic and fixed package holidays.
Q: What prospects are there for the Isle of Wight as a destination?
It’s exciting to see the island flourish again because during the recession it had a tough time. The combination of the investment that has been made in its infrastructure and the improved marketing of the destination are fantastic to see, and tourism to the island is starting to grow. We have a role to play in generating business for the island, not just for the tourism industry, which is obviously a massive part of the Isle of Wight economy, but for trade too.
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