Examination of Witnesses(Questions 240-259)
MR PETER
LEDERER OBE AND
MR PHILIP
RIDDLE
TUESDAY 26 NOVEMBER 2002
John Thurso
240. Can I go back first of all to something
that you were talking about, which was basically strategy. I think
it could be described as the long term nature of the investment
necessary to build a brand over a number of years. It has been
said here that one of the reasons why the Treasury will not give
any more money to market England is that they have looked at the
cost of Wales and Scotland and seen the results and decided it
is not worth the investment. In your submission you said that
the latest market information shows the decline of visitors to
Scotland being slowly addressed. Could I ask you to talk about
the long term nature of the investment that you are making and
the point at which you will be able to demonstrate to the Treasury
that the investment is paying off?
(Mr Lederer) It is long term. There is no question
that since 1997 there has been a decline; there is no question
in my mind that that can be arrested and turned around, and there
is no question that we can do a lot better than we have done in
the past, but that must be done in a different way than we have
been doing it in the past. Part of this discussion that we are
having is about the fact that we recognise the importance of the
industry and what it can return. Secondly, in a way we have not
been marketing it correctly. In our case marketing Dumfries and
Galloway versus Caithness versus Angus does not make a lot of
sense when most consumers cannot put them on a map. Thinking about
how the consumer thinks and thinking about how they make their
decisions and what they are looking for on holiday or a business
trip, understanding that decision process before they make the
decision is key. The way we have turned the organisation around
and restructured the organisation and focused it means that we
will be able to demonstrate success quite quickly. I would hope
certainly that we will be back to the 1999-2000 levels and can
demonstrate that in the next couple of years and then take it
from there. There is no question in my mind that we had to make
the huge changes that we made in VisitScotland. VisitScotland
is a totally new, different organisation than it was two years
ago. The thinking is different and I think the political will
is starting to change as well, that this is an industry that,
if we invest in it, will give a good return.
(Mr Riddle) There is sometimes perhaps slight confusion
about brand marketing and product marketing, both of which we
do, but they are different. It is very much the public sector's
responsibility to take the lead on brand marketing. That is creating
the desire to come to the country. That is not an easy one to
measure just in straight numbers because you are creating that
desire and then on top of that you need a good product to deliver
and you need ease of access to get to the country and that has
to come from the industry. The measurement ultimately must take
in the broad picture. That is not a public sector thing. It is
primarily an industry thing. We must be delivering into an industry
that is then enabled to generate increased wealth for the economy
and, as Peter said, we believe that is happening now and it will
continue to happen.
241. Clearly you have talked about coming at
it from the consumer end. I assume that means undertaking research
to find out what the consumer thinks. How much have you spent—just
give me a rough idea—in terms of research over the last
year or two?
(Mr Riddle) £400,000.
242. So you have a budget of £400,000 purely
for consumer research?
(Mr Riddle) It covers all the research we do, which
is primarily consumer research and marketing.
243. What is that research telling you? What
are the main lessons you are getting out of that?
(Mr Riddle) The nature of the market, simple things.
It has been proven by the research that it is a growing market
with growing potential. For Scotland it is changing, increasingly
going towards short breaks, increasingly going towards people
who want a different sort of experience from a holiday. They do
not just want to go to seasides or sit somewhere rather passively.
They want to be involved in something, they want to learn something,
they want culture, something like that. The increasing size of
what we call the grey market, the more mature market, people who
are active longer, who have more income to spend on additional
holidays, is again very attracted to Scotland as a destination.
There is an increasing significance of the business tourist market
which is one that I do not think we have given enough emphasis
to in the past. These trends are also becoming increasingly short
term. Markets can change very quickly. People book late, people
use the latest technology for information and for booking. Once
upon a time people ordered their brochures in January and pored
over them on the dining room table for a couple of weeks and chose
their two-week holiday. That is not a core market for Scotland
any more. It is about people thinking perhaps on Thursday night,
"I deserve a treat. I think I will go for a short break to
Skye", and hopefully they can get there by Friday night,
have a nice weekend and come back again fresh for work on Monday
morning. That is the way we are moving.
244. Can I take you to a different subject which
is back to the question of structure? I believe a body was created
called Tourism UK which was the chairmen of the four nations'
tourist boards who came together to a certain extent out of concern
for what the BTA might or might not be doing. Can you amplify
that for me?
(Mr Lederer) Suddenly we realised, sitting down at
breakfast one morning, that the three then chairmen, Chairman
of the BTB, the Chairman of the Wales Tourist Board and the Chairman
of the Scottish Tourist Board, had never met, had never discussed
anything and did we not think there were areas of common interest
that we should be talking about, so that is actually how it started.
Some of the things we started talking about were compulsory registration,
the changing market place and so on, and as we all sit as ex-officio
members on the BTA board the question of BTA does come up in conversation.
It came up in that group and the frustration sometimes was that
people heard a lot from industry about where was the input from
the three organisations that were charged by government to bring
this forward, to be advisers, if you like. The remit was to say,
where are the areas of common interest in which we can help each
other and move the agenda forward?
Mr Doran
245. Still on the BTA, you heard the Forum earlier
and we have been listening to what you have been saying about
the BTA. It seems that you are very pragmatic, that there is not
any enthusiasm at all for the changes. Would that be a fair assessment
of your position?
(Mr Lederer) Our position is that we want the BTA
to continue to do a better and better job. We have a good relationship
with the BTA. We think they can be doing more and we would like
to work with them to do that. If they are going to be distracted
for any period of time, which these things tend to do, we are
worried. Equally, we are worried about what is the expectation
in England of the BTA and how is that going to affect us? We have
not seen the detail yet but we have got certain measures in place.
We are concerned, I would say, and we are keeping a very watchful
eye on it.
246. One of the issues is obviously the perceptions
of this, and certainly we have heard worries expressed about the
conflict of interest and the fact that the BTA has clearly an
enormous job to do to get English tourism into a similar shape
that Scottish tourism is in, so that is a distraction in itself.
The perceptions in Scotland are at the moment as I see it fairly
negative.
(Mr Lederer) The perceptions in Scotland are "wait
and see". Yes, there is concern. It is unfortunate that the
BTA has got a new chief executive, there is a new strategy. There
has been a lot of excitement around that strategy; it is different
thinking, it is thoughtful and it is well done. You are just about
to launch into that and get it rolling and suddenly that chief
executive and his senior team, which is very limited—it
is a small team and this is not a big organisation—has suddenly
got this enormous thing landed on his desk that they have now
got to worry about. They will do a good job worrying about it
but at what expense? That "at what expense" is obviously
a worry for us.
247. Can I move on to the issue of quality and
skills? Clearly that is a priority in an industry which has a
fairly poor track record, I think it is fair to say, on the skills
side with among the lowest paid and least well trained workers
in the country. Can you spell out how you see that strategy developing
over the next few years?
(Mr Lederer) We have had a strategy going in Scotland
for some time. I was the initial Chairman for something called
Tourism Training in Scotland which did a lot of work on developing
skills at what I call the lower end of the industry with people
starting out in the industry and for a lot of the service jobs.
We made quite a lot of progress with that, with things like Welcome
Host and Scotland's Best which were very good initiatives and
worked well. Something like 70,000 people have been through Welcome
Host, for example. The mistake we made and the mission I am on
at the moment is that it is not them; it is the management and
the leaders in the industry we need to get to, because if you
train these very willing young people to try to do the job and
you uprate their expectations and then you put them back into
a poorly managed business, you have got a double negative in a
way. You raise their expectations and they get hit when they get
back. We have got to look at the management skills, the leadership
skills of businesses in our industry because if you ask most people
in our industry, "When was the last time you uprated your
skills?", I think you would get some pretty frightening responses.
That is an area I would like to focus on because that is the mistake
we have made in the past, concentrating on the sharp end if you
like, because it is the people running the businesses that we
need to support and help and uprate their skills.
248. One of the issues there is obviously the
way these people are rewarded for developing their skills. Is
there a strategy there?
(Mr Lederer) There is quite a lot of work going on
about it. It is about getting the message across to the right
people. It is frustrating in a way that the industry will say
every time that their most important strategic asset is their
people, and then when you ask them, "How much do you invest
in your most important strategic asset?", they cannot tell
you. They can tell you how much they spend on marketing and how
much they spend on maintenance down to the last penny, but ask
them how much they spend on training and development and a lot
of them cannot tell you. On the other hand a lot of them are very
small businesses so they cannot just take a month out to go to
INCEAD, as I was fortunate enough to do, and uprate their skills
that way. We have got to manage those. It is horses for courses;
probably small businesses can do some and larger businesses can
do others, and is there any support for larger companies—I
do not think there is—or is there any way that the large
companies can help the smaller businesses?
249. Mentoring—is that the sort thing
you had in mind?
(Mr Riddle) We do have a strategy on the theme that
tourism is everyone's business in Scotland. One of the things
that holds back the development of skill is the status of the
industry. It is not given the regard that it should have. This
is the country's most important industry. It needs to have that
recognition in government and in the community at large, and that
in turn attracts more people into the industry, attracts better
people, attracts better investment into the industry and it raises
the pride in being in the industry which I believe is one of the
main things that will lead to better service and to people seeking
to improve their skills. That is something that is everybody's
responsibility and that we have to get across.
250. I was interested in the points that Mr
Riddle was making earlier about the branding and the kilts and
tartan approach. I speak as a Scot who grew up in a Scotland where
the kilt and the granny's healing home type of culture was so
alien to everything that I was interested in as a child that I
must confess I have never worn a kilt and it is very unlikely
that I will ever wear a kilt. Do you feel that you have a problem
with the curmudgeons like me who feel an antipathy to that sort
of Scottish culture?
(Mr Riddle) Not at all. One of the challenges we saw
early on when we started talking about the Scottish brand was
that we recognised that tourism in Scotland needs a very strong
brand to differentiate itself in the market. Scotland is a very
diverse country. It has fantastic things which are often quite
diametrically opposed. We have very vibrant, strong cities, great
night life, great modern culture, great history, very isolated
places, people who want to go to islands where there is nothing
else but birds. That is all part of that rich heritage of Scotland.
We said, can we actually put on brand on that? We believe we can.
We did a lot of research on that. It is about not focusing on
the type of business, not focusing on pictures of a castle and
the tartan. That is about the product marketing. It is about focusing
on the underlying markets. What we found about Scotland was that
the perceptions were that it is very enduring, it is very dramatic,
and that is across everything, not just the scenery. The people
are quite dramatic, the cities are quite dramatic, and it is very
human. The people are interesting. If you put these elements together
into brand positioning it is a very strong statement in the market
that I think can embrace everybody's interests in Scotland but,
more importantly for us, a very wide range of consumer interests.
Mr Fabricant
251. Earlier on the Scottish Tourism Forum were
talking about the vast number of people who use London as a gateway
for coming up to Scotland. How do you feel about that and is there
anything you can do as an organisation, or indeed the Scottish
Executive, to try and get, as I was calling them earlier on, distant
visitors to visit Scotland, or maybe use Scotland as a gateway
to visit England?
(Mr Riddle) As we mentioned, direct access is very
high on our list of priorities. As Mr Taylor mentioned from the
Tourism Forum, of course the first thing is direct access from
our main market, which is England, and better access to Skye and
better budget airline flights coming north, but beyond that we
are definitely looking first of all at the most immediate countries
around us. It is important to differentiate the routes because
some routes are obviously likely to be a lot better for us in
terms of net benefit to the economy than others, but we would
certainly like to develop much stronger links with Scandinavia,
with Germany, with Italy and with Spain. These are potentially
very good markets for us. We like direct access because that is
the only way we are going to get the short break.
252. Why did you pick on Italy and Spain? I
can imagine Scandinavian countries but why Italy and Spain particularly?
(Mr Riddle) There is a great deal of interest in Spain
in other cultures. The Italians and the Spaniards do not go on
holiday for the weather; they get that a lot of the year round,
so a lot of the Italians and Spaniards like to come to a rather
cooler environment and enjoy the culture, the heritage and the
events of the country. They are particularly strong, they are
growing markets. There is more disposable income in these countries
being spent on touring holidays. As regards the hub of London,
it is difficult to imagine replacing London as a hub for long
haul and that will still be very important for us. The important
market is the United States in terms of overseas visitors; it
is still our biggest source of visitors. That is a longer trip
usually. It is not a short break market. We would like more flights
directly from the United States but we recognise that visitors
would still be coming through the London hub from, as we hopefully
develop other markets, for example, the Far East, the Middle East,
and certainly at this stage it is primarily through the hub. These
people are coming for longer periods at times. It is a different
market segment.
253. Just out of curiosity, the Chairman was
asking you earlier on about the perceptions of overseas visitors
about Scotland and should we not be building on those perceptions.
Would it be fair to say that visitors from North America are looking
for tartan and kilts and shortbread or whatever?
(Mr Riddle) In the main, yes. Visitors from North
America tend to fall into two, perhaps three, categories. There
are visitors seeking to look at culture, the heritage, the history
and the associations there tend rather to be with tartan and castles.
We also have a strong market, for example, in golf where that
is less relevant. They are looking for the best golf courses in
the world, which we undoubtedly have, and they are looking to
enjoy that. The other market which is developing, which is one
we have not completely defined yet, is this one about genealogy
and looking for one's ancestors. That is not one that one easily
pigeonholes with tartan and heather either. It is people who normally
want to come and see the docks on the Clyde and they are rather
disappointed if they are not there, or people who want to come
and see the croft on Skye or even to come and see a graveyard,
so it is a slightly new tourism need that we are addressing there.
(Mr Lederer) I spent the other half of my working
life on the other side of the Atlantic where I remember discussions
when I was in Ontario, where we would look at Scotland or the
UK and we would kill for half the icons that we have here, and
yet we seem to spend all our time apologising for them, thinking
we should not use them. We should use them where appropriate.
That is about understanding consumers. What is it that is going
to make them visit? If you go to Germany it is a totally different
discussion. If you got to France it is another different discussion.
There are different things we use, but are we not fortunate that
we have got all the things that we have to use because a lot of
our competitors do not have those? They have got sandy beaches
and nice weather and that is it.
254. Which shows what a stupid bit of marketing
Cool Britannia was, because if you can have Cool Britannia you
can have Cool New York City. It is something different that people
were looking for. VisitScotland has been rather lucky in that
its budget has doubled over the last ten years and yet visits
have fallen off steadily. Is it solely due to September 11 and
Foot and Mouth?
(Mr Lederer) It has not doubled. It has gone up nine
million in six years.
255. It has doubled in ten years is what I have
got.
(Mr Lederer) It has gone from 22% in 1997 to 33 this
year. The answer is no. There is another point I can quickly make
about when you were comparing budgets earlier on, that somehow
ours was £90 million and something and England was £12
million, from memory. That is not the case because of course included
in the £90 million is everything that Historic Scotland spends,
everything that the National Trust and all these bodies spend.
If you are going to make a fair comparison, if you add those to
England it is a lot more. We should get the comparison right.
It is not only about September 11. In fact, a lot of excuses have
been made and a lot of people have used September 11 as an excuse
and we must not do that. Yes, it was a terrible thing and it knocked
us backwards but the long term trend was already there that we
were in decline, which was exactly why we had to re-invent the
organisation, look at the budget again, look at how we spent the
money and really come up with the strategy I talked about earlier
and say, "What is the goal?". I still do not think that
goal is necessarily ambitious enough but the reason we made all
those changes is that we can move it forward in a completely different
way not only to arrest that decline but start to grow.
256. To what extent, with the changes that happened
with the restructuring of the BTA, were you consulted as an organisation
by the Department of Culture, Media and Sport?
(Mr Lederer) As far as I am aware we were not.
257. Would you like to have been consulted?
(Mr Lederer) Yes.
258. If you had been consulted would you have
approved of the changes that have now come about?
(Mr Lederer) I think we would have had some serious
questions about what the implications would be of that decision
and in my training with all decisions you have got to ask the
"what if" questions and what are the implications of
that decision. We would have had questions about that. I am not
saying we were right or wrong but we certainly would have had
questions.
259. Would one of the questions have been this?
I have been asking questions so far today about overseas visitors
but in the domestic market do you not think that it could be argued
that there is now going to be some waste of public money because
of competition between the three national tourist boards competing
for the same market to get people within the United Kingdom to
go to their particular regions or nations?
(Mr Lederer) There is some of that but it is more
that the emphasis mainly, if you talk to the English regions and
if you talk to Scotland and you talk to Wales, that what they
are trying to do is arrest this negative balance we have got about
the British being one of the largest outgoing markets in the world
and how can we address that. We have a huge outflow. How can we
make more of those people who have one holiday in the UK a year,
preferably in Scotland? How can we address that balance? It is
not just about "Come to the Lake District" versus "Come
to Dumfries". I think we are past that. If we could change
this balance and have a few more holidays made more attractive
for people in the UK to spend time in the UK and have one less
holiday abroad as well as bringing more visitors in, it would
make a huge difference to our balance of payments.
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