House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Minutes of Evidence

Submission by the Scottish Tourism Forum to the Scottish Parliament Enterprise and Lifelong Learning Committee Tourism Inquiry

INTRODUCTION

1. The Scottish Tourism Forum welcomes the opportunity to give evidence to the Enterprise and Lifelong Learning Committee in its Tourism Inquiry into the level and effectiveness of government support for tourism.

2. Tourism's impact on our society and economy is better understood, but Scotland's ability to maintain competitive global positioning and to sustain jobs and communities is less certain. Tourism is dominated by the value and contribution of the private sector, yet is dependent upon government and public agencies to help deliver the customer to the product. Government influences tourism through fiscal and regulatory policy and through funding of statutory bodies—British Tourist Authority, VisitScotland, area tourist boards, enterprise networks, local authorities and other national agencies (eg forestry, the built and natural environment, arts and sport).

3. The Scottish Tourism Forum represents operators and the private sector in tourism, comprising trade associations, companies, marketing groups and other bodies dependent upon tourism for income (our membership list is appended).

TOURISM CONTEXT

4. The Committee has asked a number of specific questions to which we will respond in our submission and in an annex. Government and commercial decisions and actions in tourism must be taken in a market context. We know that:

— New and rebranded destinations compete for customers on a world scale, with well resourced, highly effective marketing, new budget air routes and rapid changes or developments in their product in response to the market (as affirmed by the Committee's study by Stevens & Associates).

5. Against this background, Scotland (and the UK) is considered an expensive destination, difficult to get to and get around. The products that Scotland offer vary greatly—from business tourism, city breaks, cultural tourism, activity breaks, romantic breaks etc. This has led to confusion about what the customer experience in Scotland is and will be, with sometimes indifferent service and quality and high costs jeopardising the quality of visitors' experiences.

6. Crucially, domestic markets are also at risk within this context—as more people travel overseas, high quality service and positive experiences provide a baseline for comparisons of quality and value for money at home.

7. There are however many positives—Scotland does have strong brand awareness, products and businesses with world recognition; many businesses excel at customer service and value for money; recent investment and product development have resulted in dynamic opportunities for eg cities, business tourism, activity breaks. Seasonality issues have been addressed in certain markets (although still a huge constraint for many areas and operators). Importantly, there is growing recognition and understanding of the importance of tourism to the economy, as well as an increasingly dynamic public and private sector motivated to develop solutions to Scotland's loss of competitive positioning in world markets.

INDUSTRY PRIORITIES

8. The tourism industry's top priorities are:

— Marketing of Scotland—more resources to sustain a presence in very competitive markets; targeted, effective, delivered in partnership with the private sector, looking at new opportunities and new markets.

— Transport—efficient and cost-effective direct access to Scotland and the ability to travel around Scotland once here.

9. The next priorities are also crucial to Scotland's international competitiveness:

— Innovation and product development—new products and services to "modernise" the product offer to visitors and compete more effectively in international markets, enhanced packaging and marketing.

— People and skills—to address current skill shortages in the industry and the selection of tourism and hospitality as a career choice.

— Quality—to further improve quality in line with customer expectations and offering value for money.

— Enhanced status for tourism—we need to improve understanding of the importance of tourism and how it integrates into so many aspects of our economy and community.

10. The current "Tourism Framework for Action", to which the Scottish Tourism Forum contributed, addresses some of these priorities[4]. It does not however articulate fully the importance of more resources for marketing, integrated transport and direct access[5] skills issues[6] and the tax and regulatory regime as priorities for Scotland's tourism competitiveness. The focus on actions to be undertaken by public agencies, the Executive and the industry is welcome. The Minister's management arrangements for overseeing implementation will be crucial—a Ministerial Steering Group is being put in place with, we understand, a 50:50 public: private membership.

THE ROLE OF THE PRIVATE SECTOR

11. The private sector accounts for well over 90% of tourism. There is no single estimate of public funds in Scottish tourism, considered to be between £80 and £100 million per annum. Additionally, local authority investment in tourism[7] together with government agencies (arts, sports etc), still only represents investment of less than £300 million per annum compared to tourism revenues of £4.1 billion in 2001.

12. The private sector is obliged to run viable businesses—to deliver commercial products, customer service, quality, value for money, employment and taxes. Increasingly, the private sector is beginning to influence strategy, policy and programmes. Partnership working is increasingly accepted, both by the industry and by Government and public agencies, to ensure the focus and commercial relevance of public policy, marketing and investment decisions. There are still opportunities for accelerating this process. Ultimately, VisitScotland's re-organisation was prompted by STB's slow response to industry needs. [8]

13. Tourism industry leaders, and all businesses across the sector, are more demanding about what they want from Government and public agencies. Sometimes this is prompted by difficult trading conditions—as with Foot and Mouth, September 11—but also by the need for better accountability to the trade. There are still frustrations in the industry that agencies established by statute do not listen to and act enough to meet industry needs. But we also acknowledge the point made by Steven & Associates from overseas comparison[9]: ". . . avoid the pitfalls of trying to satisfy all interests." There is still of course a need for membership organisations to be accountable to members.

14. Industry frustration about the slow speed of involvement of the private sector is exemplified by the fact that the former Ministerial Steering Group, the Scottish Tourism Co-ordinating Group, did not meet after 1999, despite commitment in the February 2000 New Tourism Strategy to an implementation group[10] to oversee the strategy. Even during Foot and Mouth, when Westminster invited industry representatives to join Ministerial task forces, no Ministerial task force with private sector tourism interests was formed in Scotland.

15. We acknowledge that VisitScotland's re-organisation has made the agency far more effective, and we anticipate even more collaboration with the industry as the cultural changes within the organisation take full hold.

16. The growing role of the private sector in influencing policy, and in self-help must be acknowledged. Businesses are now realising that they can and must collaborate to target and attract the market, as well as influence policy and investment decisions, and only compete for business when it is here.

17. The "critical success factor"[11] of a "central role for the private sector with private sector leadership" in tourism is to be emphasised. We are unable to be more eloquent than Steven & Associates in their report to the Committee on International Comparisons, when reviewing the role of the private sector and the need for public agencies and government to respond to it: [12]

— "The importance of strong strategic leadership based upon working with a limited number of stakeholders and key private sector leaders and influencers." (i)

— "Controlled, limited and focused consultation that is designed to "work with winners" . . . and adhere to the advice of industry leaders." (iii)

— "Fully engaging the private sector in guiding strategy and especially with those leading investment programmes and strategic thinking." (v)

— "A real willingness to engage in new ways of doing business in a manner that is capable of responding to market needs and industry demands." (viii)

18. We re-emphasise the role of the Scottish Tourism Forum working in partnership with national agencies and the Executive on tourism policy—the Forum provides a representative mechanism for engaging businesses, through trade associations, area tourist boards (those in membership of the Forum) and marketing groups. The Forum also partners public agencies to support business leaders to adopt and deliver the innovation agenda in tourism.

ROLE OF THE PUBLIC SECTOR

19. Market failure, in our opinion, results from the structure of the tourism industry. A small number of large companies of international or national stature market their facilities without the need to link to destination marketing priorities. The large number of small companies in the sector cannot afford to market Scotland as a destination. There is thus a need for a national destination marketing focus by government and the public sector. The BTA One Million Visitor Campaign[13] generated 50:50 public and private sector funding. This model will be difficult to fund in Scotland, with fewer large operators and where revenues do not compare with the London and South East of England focus, although we do believe that partnership funding in marketing is important and its role should be enhanced.

20. The number one priority for tourism and for government intervention in tourism is to bring more visitors to Scotland. BTA and VisitScotland's priorities and focus should not be diverted from this task, with a focus on overseas markets first and UK markets second. We are of the view that public resources must be prioritised to marketing and promotion of Scotland. There is no ambiguity that the capability of Scotland to attract overseas visitors is linked to budgets for overseas marketing. Overseas visitors must be the first target[14]. We recommend:

— that the positive relationship of BTA and VisitScotland must be exploited. We also believe that the BTA should be made more accountable for delivering Scottish, Welsh and English regional targets.

21. The very positive branding work being undertaken by VisitScotland is supported by the industry and the Forum. It is essential that this framework, with associated "product groups", set the context for all destination, niche and product marketing—a framework area tourist boards and the private sector must conform to in order to maximise the potential for Scottish brand(s) and products to reach the market place. The product portfolio work of VisitScotland and the private sector must be accelerated to assist with the generation of innovative products.

22. The following hierarchy or structure sets the context for destination marketing:

British Tourist Authority Getting visitors to the UK and Scotland

VisitScotland Getting visitors to Scotland

Area tourist boards Dispersal of visitors to local destinations

Private marketing groups Marketing and sales of areas and products.

23. There is a wide range of views in the industry about the future of area tourist boards. The Scottish Tourism Forum's views on ATBs will be made in our submission to the Minister's review. Scotland must perform on a world stage; any geographic fragmentation dissipates effort and confuses the market. An ATB network should remain in place, with a reduced number of ATBs. The network must work to targets, strategies and integrated marketing linked to the national marketing plan agreed with and determined by VisitScotland. There needs to be sustained funding to allow a focus on strategic issues. There also must be consistent quality standards, membership benefits and pricing and accountability to members. An ATB network comparable to the enterprise networks should be developed, with mechanisms for maintaining the involvement of local authorities and the private sector (through membership). Tourism should be made a statutory function of local authorities to increase and better co-ordinate LA commitment. TICs should be franchised or the partnership model extended; gateway or national TICs should be supported with a stronger role in dispersal of visitors. Cost savings should be directed to national marketing.

24. The Forum has strong and positive links with Highlands and Islands Enterprise and Scottish Enterprise. The enterprise networks already provide an essential and valuable role in supporting tourism—by tackling skills issues, product development and innovation, identifying and developing new market opportunities and transport infrastructure (with the Rosyth ferry for instance). Partnership working between enterprise agencies, the private sector, ATBs and LAs are improving all the time. There are concerns about the Business Gateway's capability to respond to the needs of tourism businesses. There are also concerns that the business opportunities in transport, leisure, tourism and hospitality are not given a high enough priority by Scottish Enterprise in comparisons to perceived high technology, high specification sectors.

THE ROLE OF GOVERNMENT

25. One of the rewarding consequences of the Devolution Settlement has been the increased priority given to tourism. We would argue that this is still not high enough, but we recognise and applaud the work of the Executive in bringing tourism into the debate about the economy[16], in responding to industry demands for a dedicated Minister[17] and in increasing funds for VisitScotland.

26. Holyrood, Westminster and Brussels' policies and actions all impact upon Scottish tourism's competitiveness. Strong Ministerial and Executive links are needed with London, not only to ensure that BTA's contribution to Scotland is overseen, but also to represent Scottish tourism interests to UK Government and ensure no disadvantage from Westminster legislation and regulation.

27. There are a number of actions that the Committee, Parliament and the Executive can undertake to support jobs and business in tourism in Scotland:

— Recognise the importance of tourism to the economy and to communities across Scotland and provide a minimum of £50 million per annum of funds for VisitScotland for marketing in competition with other overseas destinations.

— Support the setting of Scottish targets for the BTA.

Framework for Action

— Support the acceleration of an integrated transport system and timetable to support the dispersal of visitors and spend across Scotland to the benefit of local communities. Particularly important is the need for A74 upgrading, integrated transport links with Edinburgh and Glasgow airports and a review of the role of Highlands and Islands Airport, and the Executive's funding contribution, to attracting and sustaining routes to the Highlands and Islands.

— Ensure that other cross-cutting policy issues which impact tourism—rural affairs, finance and local government, enterprise and lifelong learning, arts and sport—acknowledge tourism's links and evaluate the impacts of policy, regulation and investment on Scotland's ability to compete in world markets.

— Review the consistent interpretation and implementation of health and safety, food safety, licensing, building warrant, planning fire and other regulations across all local authority areas.

— Reinforce and support the role of the private sector in determining strategy and policy in tourism, both at a national and at a local level.

— Ensure that decisions are taken to develop a coherent and effective area tourist board network resulting from the Minister's review and that this should include making tourism a statutory function for local authorities.

— Support the development of a more coherent and effective research base.

— Urge the Minister for Finance and Public Services to re-introduce the Uniform Business Rate linkage with England.

— Ensure that regulation and fiscal policy derived from Westminster is also evaluated for its impact on tourism in the UK and Scotland; and specifically

CONCLUSION

28. There is already support for the conclusions and critical success factors in Stevens & Associates' report. Whilst gleaned by evaluation of successful overseas destinations, they affirm many actions and trends developing in Scotland. We now need to accelerate these. Central is the role of the private sector and the emphasis on partnership working and funding for marketing. These actions will support the challenge for Scotland to remain in international markets and ensure our competitive capability.

Annex 1

SCOTTISH TOURISM FORUM MEMBERS

Aberdeen Exhibition and Conference Centre	Lambie Gilchrist Consultancy
Activity Scotland	Lynne Jones Research Ltd
Ardnamurchan Tourist Association	Lochaber Business Group
Area Tourist Boards (12)	Lochaber Centre for Tourism Excellence
Association of Scotland's Self-Caterers	Mactours
Assoc. of Scottish Bed & Breakfast Operators	The Moffat Centre, Glasgow Caledonian University
Association of Scottish Visitor Attractions	Napier University Business School
Ayrshire & Arran Tourism Industry Forum	National Caravan Council
BMI	National Galleries of Scotland
British Airways	National Museums of Scotland
British Holiday and Home Parks Association	The National Trust for Scotland
British Horse Society Scotland	Perth College
British Hospitality Association	Queen Margaret University College
British Incoming Tour Operators Association	RAC
British Trust Hotels	The Robert Gordon University
Business Tourism Scotland	The Royal Yacht Britannia
Celtic Fringe Tourism Association	Scotland on Line
Confederation of British Industry	Scotland's Best B&Bs
Confederation of Passenger Transport	Scotland's Hotels of Distinction
Continental Airlines	Scotland the Brand
Easy Jet	Scottish Airports Ltd
EAE (Edinburgh Arts and Entertainment)	Scottish Council Development and Industry
Edinburgh Chamber of Commerce	Scottish Destination Management Association
Edinburgh Conference Centre (Heriot Watt)	Scottish Exhibition & Conference Centre
Edinburgh International Conference Centre	Scottish Hotel School, University of Strathclyde
Edinburgh Military Tattoo	Scottish Licensed Trade Association
Edinburgh Principal Hotels Association	Scottish Racing (Horse Racing)
Farmstay UK (Scottish Region)	Scottish Tourist Guides Association
Federation of Small Businesses in Scotland	Scottish Youth Hostels Association
Fife College	Sea Containers Ltd
Glasgow College of Food Technology	Segal Quince Wicksteed Ltd
Hedoin Associates	Springboard UK
Highland Hostels	St Andrews Bay Golf Resort and Spa
Historic Houses Association, Scotland	Stirling, University of
Historic Scotland	Taste of Scotland
Hospitality Training Foundation	Tourism and the Environment Forum
Independent Backpackers Hostels of Scotland	Tourism Resources Company
JAC Travel Scotland	Tourism Society, Scottish Chapter
Jarvis Hotels	Trekking and Riding Society Scotland
JBK Associates	Venuemasters Scotland
Kilmartin House	Virgin Trains

The Board of the Forum Representing

Paul Bean Marriott Dalmahoy Hotel and Country Club

Amanda Clark Taste of Scotland

James Coutts Activity Scotland

John Dickson Scottish Youth Hostels Association

Douglas Logan Chairman Scottish Destination Management Assoc.

Andrew Mathieson Perthshire Tourist Board

Paul Murray-Smith (Chair) Dreamhouse Limited

Peter Taylor British Hospitality Association

Marjory Rodger Confederation of Passenger Transport

Laurence Young Lochaber Centre for Excellence

Ivan Broussine (Chief Executive)

Annex 2

RESPONSES TO SPECIFIC COMMITTEE QUESTIONS

Enterprise and Lifelong Learning Committee Questions	Scottish Tourism Forum Responses
How effective is the current tourism strategy?	It is too early to tell how effective the strategy will be, but we are optimistic. The management and monitoring arrangements will be crucial for overseeing progress.
How effective is VisitScotland post-re-organisation?	The impact of the re-organisation can already be seen, especially in the field of branding, marketing and promotion. Partnership working has improved considerably. We are optimistic that further improvements will result from cultural change driven throughout the agency.
What has been the impact of, and the response to, Foot and Mouth Disease and September 11?	The negative impact in 2001 was significant, although recovery from Foot and Mouth has largely occurred throughout the industry, with domestic and European substitution also occurring post September 11. (The Royal Society of Edinburgh report on the impact of FMD published in July 2002 is an accurate reflection of its impact.) The continued loss of the US market is the biggest single impact in 2002, exacerbated by geopolitical uncertainties.
What are and should be the roles of VisitScotland, the Enterprise Agencies and the British Tourist Authority?	BTA and VisitScotland priorities—and the Forum's No.1 priority—are to bring more visitors to Scotland. The Enterprise Agencies should continue to support skills and product development, and transport infrastructure (cf. the support for the Rosyth/Zeebrugge ferry)
Is the current budget for tourism sufficient, and is the focus of investment appropriate?	More funds need to be committed to international and UK marketing, allocated to VisitScotland, to enable Scotland to compete with other international destinations. We acknowledge the opportunity to generate partnership funding. Investment priorities will be better served by stronger partnership with the private sector to identify commercial opportunities.
How effective is the Area Tourist Board (ATB) structure? What other possible structures are there?	We recommend the retention of an ATB network, pared down with strong direction from VisitScotland, following the HIE and SEn model. Consistent levels of service, membership benefits, outputs, targets etc should be linked to ATB funding.
What issues arise from the first year of the introduction of the Euro?	These appear to be limited, although the Forum believes that price transparency will be a positive benefit to the tourism industry in international markets.
How can niche marketing tourism be best promoted and developed?	With stronger public: private sector links to determine markets and targets, but within a national marketing and branding strategy established by VisitScotland.
How can potential for e-tourism be exploited most effectively? Is the development of eTourism Ltd the most effective way to exploit the potential of the web?	The PPP and eTourism Ltd are supported by the Forum as a crucial commercially-driven investment in our infrastructure. Other web operators offer choice to consumers. Broadband investment is essential for Scotland, as is encouraging take-up by tourism businesses.
September 2002