Local Communities and Management of Cultural Heritage of the Inner Areas. An Application of Break-Even Analysis

Abstract

This paper describes an application of Break-Even Analysis (BEA) as an instrument to support public decision-makers in identifying the type of entity to be entrusted with the management of architectural heritage, in the case of absence of public resources for this purpose. The case study is localized in Gerace, a Calabrian small town, in the South of Italy. In particular, in this case, the BEA verifies the economic sustainability of the management of such assets; BEA compares the implications of the entrusting to two different types of entity, private for-profit and private not-for-profit, which have different structures of operating costs. The application of BEA allows us to understand how the expected levels of demand generate sufficient revenue to allow a balanced budget, when the management entity is a private not-for-profit; but they are not sufficient to ensure the profitability needed when the management will be entrusted to a private for profit entity. This implies the need to involve the local community in the management of cultural heritage, through a direct commitment: this role is crucial, for example, in the Inner Areas, when the tourist’s flows are insufficient to guarantee the profitability for private for profit subjects. However, if the heritage is a relevant tourist attractor, profits are not directly generated by the management of the asset, but significant impacts are still produced on the local economy. This is the reason because the local community have to guarantee anyway the enjoyment of its heritage.