What is the value of the Eiffel Tower?



What is the value of the Eiffel Tower?


Lets tee off by valuing the Eiffel Tower purely from a business perspective. Constructing a probable income statement will help and we can start with revenue.


Revenue:

So, we need to start from calculating the average price per ticket.


If you have been to the Eiffel Tower you will know the approx


imate price per ticket but if you don't that's ok you will end up with a guess of anywhere between €10 to €40 at which point the interviewer should help you out. Taking into consideration the knowledge about the approximate prices for sightseeing, we can make an assumption of €20 per ticket.


The current the price for a ticket averages €17.5 - We have done a detailed table below for the types of tickets and the varied prices.


We assume approximately 10 ticket counters exist at the tower. We assume that for every one ticket sold at the counter the tower sells 1.5 tickets online.


Assuming that the time for issuing one ticket is approximately 1 minute (including families), we get 60 tickets per hour.


Given that the Eiffel To


wer is open to tourists from 9.30 am - 11.00 pm everyday, we calculate the revenue per year as 13.5 * (10+15 )* 60 * 360=7,290,000 - sold tickets per year. Well that is pretty good math as Paris sees approximately 7m visitors a year.


So, revenue per year for the 100% occupancy would be 7,290,000 * 17.5=127.6 m


Let's assume 80% occupancy, which gives us more realistic revenue per year €102,060,000.


Expenses:

Let's take a look at additional expenses and revenues.


€30,000 (€ per year) * 30 (# of employees) = €900,000


Repair and maintenance cost can be calculated as 2% of the value of the tangible asset (Assuming the total steel structure costs £100m). The repair & maintenance cost works out to £2m


Ancillary revenues:

Also adding ancillary revenue (gifts, souvenirs and other inside facilities such as shops, restaurants).


Assuming 1 out of 5 people visiting the Eiffel Tower pop into the restaurant and buy some souvenirs, we get 29,160,000.


So, total revenues would be 102,060,000+29,160,000 = 131,220,000


Cost margins for ancillary revenue would be 1% * 102,060,000 (tickets revenue per year) =1,020,600


Finally, we can calculated profit as 102,060,000 + 29,160,000 - 27,248,600 = 131,220,000.


The Eiffel Tower as a cultural monument with stable profitability would be valued at least 15x-25x its net income per year.


131,220,000 * 20= 2,662,628,000


So, the value of the Eiffel Tower would be 2,662,628,000.




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