APPENDIX 3
Memorandum from the Wales Tourist Board
1. INTRODUCTION
The Wales Tourist Board (WTB) is the national
lead agency for tourism in Wales. Established under the Development
of Tourism Act 1969, WTB is an independent statutory body with
specific responsibility
— to encourage people to visit Wales
and people living in Wales to holiday there;
— to encourage the provision and improvement
of tourist amenities and facilities in Wales.
The Tourism (Overseas Promotion) (Wales) Act
1992 subsequently gave WTB the power to market Wales overseas.
2. THE POLICY
CONTEXT
One of the principal activities of WTB is to
provide leadership and strategic direction to a diverse and fragmented
industry. Left to market forces alone, the dynamic influences
which affect tourism are unlikely to create the conditions needed
to optimise its potential contribution to the economy of Wales.
Consequently, in consultation with the industry and other tourism
interests, WTB has prepared a succession of medium-term strategies
which provide a framework to guide tourism development and marketing
activities for the industry over a prescribed timescale.
The current strategy, Tourism 2000—A Strategy
for Wales, was launched in 1994 and sets out a range of strategic
priorities that provide an essential reference point for the industry
in Wales. The strategy has the following mission statement:
The Wales Tourist Board seeks to develop
and market tourism in ways which will yield the optimum economic
and social benefit to the people of Wales. Implicit within this
objective is the need:
— to offer high standards of product
quality and of service;
— to sustain and promote the culture
of Wales and the Welsh language;
— to safeguard the natural and the
built environment.
In order to achieve its aims, the Board works
in partnership with statutory agencies, local authorities, the
private sector and other bodies.
Inherent within this mission statement are three
essential themes which are fundamental to WTB's wider policy framework:
Sustainable tourism
WTB's policies recognise that the resources upon
which tourism depends are finite and can be fragile. The strategy
acknowledges that the scale, pace and character of development
must be carefully controlled to safeguard the country's environmental
and cultural assets, but it also seeks to invigorate tourism and
optimise its contribution to the economy of Wales.
Partnership
Tourism is predominantly a commercial activity
although a diverse range of public sector organisations have an
important role to play in marketing and development related initiatives.
The need for improved co-ordination between the private and public
sectors to reduce wasteful duplication of effort is of central
interest to WTB.
Targets for growth
Tourism 2000 defined medium term growth targets
for the industry based on past performance, forecast tourism and
wider economic influences. WTB regularly reviews progress in achieving
these targets which have been revised to more appropriately reflect
emerging trends.
TABLE 1
Tourism 2000 Growth Targets—Performance
to Date
| 1992 | 1996 | 1996 | 2000 | 2000 |
| Actual | Projected | Achieved | Original Target | Revised Target |
| UK Tourism Trips (million) | 8.3 | 8.8 | 11.0 | 9.3 | 11.7 |
| UK Tourism Spend (£ million) | 930 | 1,130 | 1,178 | 1,375 | 1,430 |
| Overseas Visits (million) | 0.67 | 0.84 | 0.83 | 1.1 | 1.1 |
| Overseas Spend (£ million) | 132 | 179 | 217 | 244 | 320 |
| Day Visitors (million) | 30 | 45 | 48 | 50 | 55 |
| Day Visitor Spend (£ million) | 252 | 3061 | 550 | 390 | 630 |
1 Changes in survey
methodology and definitions prevent a consistent analysis of trends.
A range of estimates are possible for day visitor spend—the
figure shown is at the lower end of the scale.
3. TOURISM TRENDS
IN CONTEXT
Global Trends
International tourism reached an all time high
in 1996 according to the World Tourism Organisation. Although
there is some evidence that the global market is maturing and
will not be able to sustain the rapid growth rates experienced
in earlier decades, the WTO predicts that world tourism will continue
to grow by an average of 4 per cent a year for the foreseeable
future. By the year 2010, WTO forecasts that international tourist
revenues will reach US $1.550 billion—nearly four times
current earnings with most growth expected to occur in the rapidly
maturing Asia-Pacific region.
UK Trends
Tourism is one of the UK's most important industries
generating annual revenue of £40 billion, including £15
billion from overseas visitors. In recent years, the UK's growth
rates in international tourism receipts have compared poorly with
those achieved by other mature destinations and its overall market
share of the global international visitor market has declined.
The UK will face intense competitive pressures in the future as
new destinations emerge and established destinations invest
to improve the quality of their facilities. It will become even
more important for Britain to promote itself effectively in those
overseas markets which offer most potential for growth. In this
respect, more sophisticated market segmentation and distinctive
promotion of a modern image through research-led brand marketing
will assume greater significance.
Most tourism trips by the British, however,
are still to destinations within the UK. Domestic tourism contrasts
sharply with international tourism out of the UK, involving on
average fewer nights away and a lower level of spending. Although
UK domestic tourism is of great importance, some trends are disappointing:
TABLE 2
Summary of holidays taken by the British 1990-96
| | All holidays | UK holidays | UK as percentage of all holidays | All holiday spend | UK holiday spend | UK as of all holiday spend
| | | Million | Million | Per cent | £ million | £ million | Per cent |
| 1990 | 74.5 | 58.4 | 78.4 | 16,745 | 7,350 | 43.9 |
| 1996 | 86.7 | 64.8 | 74.7 | 24,945 | 9,365 | 37.5 |
Domestic holidays now account for less than
38 per cent of UK consumer spending on holidays despite their
74.7 per cent market share. There are, however, important differences
in the trends affecting short (1-3 nights) and long (4+ night)
holidays. The short breaks market continues to increase in importance
whereas the number of long holidays remains static. Short breaks
now account for over half of all UK holidays but only a 28 per
cent share of holiday spending, although total spend in this sector
has increased by an average annual rate of 9 per cent since 1990.
Tourism in Wales
1996 was a record year for tourism in Wales
and turnover associated with the industry totalled an estimated
£1.9 billion, the equivalent of £5 million a day.
The UK market remains the most important source
of business for Welsh tourism. Almost £1.2 billion or more
than 80 per cent of all spending from overnight visitors to Wales
in 1996 was from UK residents. In turn, 83 per cent of this spending
was generated by holiday visitors to Wales, a third successive
year of growth in this sector. Similar trends which are occurring
at the UK level are also evident in Wales and in recent years,
short holiday traffic has become relatively more important for
Wales accounting for 22 per cent of all holiday spend in 1996
compared to 18 per cent in 1991.
The overseas market, which is relatively high
spending with a wide seasonal spread, is one in which Wales has
been traditionally under represented compared to its share of
domestic UK traffic. Since being granted overseas marketing powers
in 1992, however, WTB has been successful in working alongside
the British Tourist Authority to promote a more distinctive image
for Wales in primary overseas markets and this has been reflected
in a steady growth in traffic. During 1996 Wales benefited from
a fourth successive year of growth in overseas visitor spending
which has increased by an average annual rate of 16 per cent since
1992.
The awareness of Wales, however, in many overseas
markets remains variable and the lack of strong, identifiable
icon images compared to competitor destinations puts Wales at
a disadvantage, particularly in new, emerging growth markets for
the UK. There is an "awareness gap" which must be filled
if Wales is to successfully compete for overseas traffic. WTB
research has helped to develop a distinctive, believable and attractive
brand image which WTB, with partnership support will promote to
primary overseas markets. As hosts to the European Summit in 1998
and Rugby World Cup in 1999, Wales has opportunities, given adequate
resources, to boost awareness and establish a stronger national
identity based on its unique historical, scenic and cultural attributes.
4. TOURISM IN
THE WELSH
ECONOMY
The £1.9 billion which tourism contributed
to the Welsh economy in 1996 was derived from staying visitors
from the UK and overseas, and from people on day trips. It accounts
for approximately 7 per cent of GDP in Wales, contributing more
to the economy than agriculture and forestry (2.4 per cent) and
the construction industry (5.3 per cent). In many rural areas
it has displaced agriculture as the mainstay of the local economy.
In terms of expenditure by staying visitors alone, it contributes
5 per cent to GDP, a significantly higher proportion than any
other UK country.
Over the last three decades, the decline of
many traditional industries has seen the Welsh economy shift progressively
towards the service sector which has become the main provider
of new jobs. By 1995 the service sector accounted for 70 per cent
(75 per cent in UK) of all employment in Wales. In this context,
the tourism industry has a crucial role to play, offering real
and long term growth potential. Employment in tourism is not enumerated
adequately in official statistics. Tourism is not a discrete activity
which can be defined in terms of goods and services produced.
Official estimates of employment in tourism do not reflect the
unique characteristics of the industry. Jobs in tourism for example,
serve not only tourists but other markets, such as local residents;
tourism has a significant impact through the "multiplier"
in supply industries and official figures do not include self-employed
people—an important element in tourism.
Official statistics confirm that employees in
tourism related employment in Wales rose from 56,900 to 79,300
during the 10 years to 1991. On this evidence, Tourism 2000 set
a target for 10,000 new jobs (direct and indirect) in the industry.
A changed definition for "tourism related employment"
in 1993 prevents consistent comparison with previous figures.
According to official statistics derived from the new Annual Employment
Survey, tourism related employment in Wales has remained static
between 1993 and 1996 at around 70,000. Tourism's share of total
employees in employment in Wales is approximately 7.2 per cent
(7.0 per cent in G.B.) and it comprises 10.2 per cent (9.2 per
cent in G.B.) of the numbers employed in service industries. Tourism,
therefore, accounts for a higher share of total employment in
Wales than in Great Britain as a whole. It is relatively more
important to the transitional Welsh economy than to the more diversified
UK economy and there is promising potential for further sustainable
growth. The Henley Centre forecasts that an additional 400,000
jobs will be created in the leisure/tourism and hospitality sectors
in the UK over the next 10 years from its present base of 2.5
million jobs. There can be little doubt that Wales is well positioned
to enjoy its fair share of this growth.
The diverse nature of the tourism industry means
that it can support employment in a wide spread of occupations
for men and women, young and old, managerial, skilled and unskilled,
self-employed and part-time which fits in well with new lifestyle
patterns.
Tourism supports the economy in many more indirect
ways. Visitors to Wales spend more in places like shops, garages
and pubs than on accommodation. Recipients of this income spend
the money elsewhere benefiting a wide range of activities throughout
the economy. It is probable that the actual contribution to the
economy is almost double the direct visitors' spending through
this "trickle-down" multiplier effect.
Tourism also helps to support the retention
of many rural services which could not be supported by the community
alone and it can also boost the image of Wales. A strong image
of Wales worldwide, generated by effective tourism and brand promotion
can bring wider commercial benefits and improve opportunities
for inward investment. In this context, WTB welcomes the Welsh
Office recent consultation document "An Economic Strategy
for Wales" and specifically its proposal to ask WTB and the
WDA jointly to consult and submit proposals for a concerted long-term
approach to promoting positive international recognition for Wales
and what it offers. It has long been recognised by WTB that there
is a need to identify and promote a clear and distinctive brand
or identity for Wales in UK and overseas markets.
5. INVESTMENT IN
TOURISM
The key mechanism available to WTB for stimulating
capital investment in new and improved facilities for tourists
is the scheme of financial assistance administered under Section
4 of the Development of Tourism Act 1969. This discretionary scheme
operates throughout Wales and provides financial assistance (grants
and/or loans) to eligible capital investment schemes.
Through the administration of its scheme of
financial assistance, WTB seeks to hasten quality improvements
in the industry to meet current and forecast consumer needs, and
to improve Wales' competitive position. It is a particularly powerful
mechanism for reaching rural areas and for fostering indigenous
business.
Although good progress has been achieved in
upgrading the tourism product in Wales, there is still much to
be done and many businesses remain financially fragile owing to
their small scale and relative remoteness from key markets. WTB
continues to give emphasis to upgrading existing tourism facilities.
New development is only encouraged where it can be demonstrated
that it will fill a market gap or attract new and additional markets.
The availability of financial assistance is
of crucial importance in meeting the development priorities set
out in Tourism 2000. Central to WTB's strategic development priorities
has been the selection of six coastal resorts and seven historic
towns under its Integrated Development Programme, where the intention
is to co-ordinate the activities and funding of willing partners
to upgrade the quality and increase the competitiveness of the
existing tourism product through comprehensive action within an
agreed timescale. This approach has proved successful in accelerating
tourism investment and during 1996, the first full year of activity
in this partnership regeneration initiative, WTB grant support
of £1.9 million in IDP areas generated total investment of
£13.3 million and created 244 full-time equivalent jobs.
The IDP initiative requires high level and continued
commitment from WTB, and although essential in fulfilling strategic
priorities, is limiting its ability to stimulate investment elsewhere
in Wales.
Independent studies have shown that the scheme
of financial assistance operated by WTB is an extremely effective
and efficient incentive mechanism which can stimulate high levels
of private sector leverage and create new and safeguard existing
jobs. Since 1990 over 3,599 full-time equivalent jobs have been
created at a cost per job of £7,466 by this scheme. Every
pound of WTB grant levers on average £5.8 from other sources
with WTB financial assistance of £31 million generating total
capital investment of £180 million. Major inward investment
projects received 5.1 per cent of WTB assistance over this period
and accounted for £18.8 million (or 10 per cent) of total
investment and 11 per cent of the full time equivalent jobs created
at an average cost per job of £3,946. Leverage of inward
invested projects was 1:11.
WTB is keen to encourage inward investment in
the tourism sector, working in partnership with other bodies such
as WDA and local authorities. In recent years, WTB has had an
active role in encouraging the following major inward investment
projects:
— the opening of a 135 bedroom hotel
in Cardiff by Copthorne Hotels Ltd;
— Harry Ramsden's on an untested site,
to add to the special features of Cardiff Bay. This restaurant
has subsequently developed into the most successful in the chain;
— the development of a Sea Life Centre
on the promenade in Rhyl;
— the opening by Rank Holidays and
Hotels Developments Ltd of a new hotel at Bodelwydden Castle in
Clwyd;
— the major refurbishment of the Royal
Celtic Hotel, Caernarfon by an Irish hotel consortium;
— the extensive upgrading and investment
in new facilities by First Leisure at Trecco Bay;
— the development of Wales' first 5
star hotel by Rocco Forte in Cardiff Bay;
Early in 1998, WTB will be launching a new investment
brochure, targeted primarily at potential inward investors, tourism
operators currently unrepresented in Wales and opinion formers
influential in the financial and trade press. The aim is to improve
perceptions of Wales as an investment opportunity and to stimulate
inward investment in the tourism/leisure sectors. As a secondary
target, the brochure will also be directed at potential investors
within Wales.
WTB is also currently preparing an investment
strategy which will identify investment priorities and potential
corporate/individual investors to target. In accordance with Secretary
of State guidance, WTB has, in recent years, ring-fenced £300k
annually from its Section 4 budget specifically for the stimulation
of inward investment. Attracting investment from outside Wales
is likely to be given a higher priority in the future in order
to increase the representation of national and international branded
products in Wales to improve our competitive position.
Major events such as the European Summit and
the Rugby World Cup and large capital investments such as those
funded by the Millennium Commission will help raise Wales' profile
and encourage further investment. The tourism industry in Wales,
however, is dominated by small and medium sized enterprise (c.10,000)
which are mainly small scale, independent, family concerns. The
development of these indigenous enterprises, will continue to
be a priority for WTB, because of their significant important
to the economies of fragile rural areas.
John French
Chief Executive
16 January 1998
Supplementary Memorandum from the Wales
Tourist Board
This memorandum is intended to supplement that
given under cover of our letter of 16 January 1998. The Wales
Tourist Board is proud of its recent development investments.
While WTB has successfully contributed to the attraction of a
number of large scale investments to Wales, the majority of our
investment has gone to small and medium sized indigenous enterprises
which comprise the vast majority of the Welsh tourism industry.
The number of grants given in the last five years, as shown below,
indicates that most are at the lower end of the scale.
Tourism contributes £1.9 billion to the
economy of Wales. The job creation and cost per job figures, respectively
566 and £5,750 for 1996/97, compare very favourably with
some other public sector statistics. Because of the nature of
tourism in Wales, these figures have an immediate impact on local
economies. Tourists spend their money directly, on local goods
and services, as well as indirectly through tourism businesses
themselves, benefiting and sustaining local communities with little
of it contributing to corporate profits in far away boardrooms.
The tourism product in Wales is intrinsically
stronger than that in Ireland 10 or 15 years ago. It is a product
whose time has come. We have an abundance of environmental wealth,
heritage and activity within easy reach of the ports and airports
from overseas as well as the major domestic centres of population.
In 1996 and 1997 we significantly outperformed the rest of UK
in terms of our percentage increase in overseas visitors.
Tourism has the potential to do for Wales what
it has done for Ireland, to underpin economic revival in a rural
environment. The focus by WTB on SME investment is market led.
Our countryside, farmhouses, B&Bs and country house hotels
are the most enticing part of the accommodation product for our
visitors. The amount of investment available reflects the historically
low political priority in tourism. At a time of political and
economic change in Wales, it may be time to revisit that priority.
John French
Chief Executive
19 May 1998
Projects approved from 1 January 1993 to present
| | Project cost
| Grant amount |
| | £
| £ |
| | |
|
| Year 1993 | |
| |
| Grants less than 5,000 | 255
| 1,397,327.00 | 371,309.00 |
| Grants between 5,000 and 10,000 | 63
| 2,510,632.00 | 437,823.00 |
| Grants between 9,999 and 25,000 | 59
| 3,800,616.00 | 971,259.00 |
| Grants between 24,999 and 50,000 | 24
| 4,045,563.00 | 962,678.00 |
| Grants over 50,000 | 20 |
23,479,326.00 | 2,077,217.00 |
| | |
|
| Sub total | 421 | 35,233,464.00
| 4,820,286.00 |
| Year 1994 | |
| |
| Grants less than 5,000 | 148
| 908,354.00 | 247,682.00 |
| Grants between 5,000 and 10,000 | 37
| 1,170,548.00 | 278,541.00 |
| Grants between 9,999 and 25,000 | 46
| 3,552,367.00 | 786,624.00 |
| Grants between 24,999 and 50,000 | 14
| 2,903,988.00 | 576,840.00 |
| Grants over 50,000 | 10 |
7,858,287.00 | 1,073,500.00 |
| | |
|
| Sub total | 255 | 16,393,544.00
| 2,963,187.00 |
| Year 1995 | |
| |
| Grants less than 5,000 | 146
| 2,595,726.00 | 206,025.00 |
| Grants between 5,000 and 10,000 | 40
| 1,415,757.00 | 289,598.00 |
| Grants between 9,999 and 25,000 | 63
| 6,722,445.00 | 1,113,474.00
|
| Grants between 24,999 and 50,000 | 12
| 2,883,357.00 | 482,484.00 |
| Grants over 50,000 | 12 |
6,144,921.00 | 1,261,988.00 |
| | |
|
| Sub total | 273 | 19,762,206.00
| 3,353,569.00 |
| Year 1996 | |
| |
| Grants less than 5,000 | 35
| 432,474.00 | 98,757.00 |
| Grants between 5,000 and 10,000 | 51
| 1,981,143.00 | 384,289.00 |
| Grants between 9,999 and 25,000 | 36
| 2,601,615.00 | 596,545.00 |
| Grants between 24,999 and 50,000 | 14
| 2,701,209.63 | 518,683.00 |
| Grants over 50,000 | 9 |
8,135,696.00 | 1,188,393.00 |
| | |
|
| Sub total | 145 | 15,852,137.63
| 2,786,667.00 |
| | |
|
| Year 1997 | |
| |
| Grants less than 5,000 | 43
| 547,742.85 | 139,209.00 |
| Grants between 5,000 and 10,000 | 28
| 948,198.79 | 211,238.00 |
| Grants between 9,999 and 25,000 | 39
| 3,619,626.00 | 711,174.00 |
| Grants between 24,999 and 50,000 | 15
| 2,960,033.00 | 550,318.00 |
| Grants over 50,000 | 17 |
15,401,378.00 | 2,377,034.00 |
| | |
|
| Sub total | 142 | 23,476,978.64
| 3,988,973.00 |
| | |
|
| Year 1998 | |
| |
| Grants less than 5,000 | 21
| 296,992.00 | 63,764.00 |
| Grants between 5,000 and 10,000 | 10
| 388,928.00 | 67,345.00 |
| Grants between 9,999 and 25,000 | 22
| 1,538,623.00 | 393,010.00 |
| Grants between 24,999 and 50,000 | 9
| 2,029,156.00 | 411,192.00 |
| | |
|
| Sub total | 62 | 4,253,699.00
| 935,311.00 |
| | |
|
| Grand total | 1,298 | 114,972,029.27
| 18,847,993.00 |
| | |
|
|
