Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses(Question Numbers 300-319)

MR PHILIP EVANS, MR JONATHAN JONES AND MR STEVE WEBB

TUESDAY 17 DECEMBER 2002

  300. Presumably the other people that you talk to, Steve, in the other areas, must envy you, surely.
  (Mr Webb) I am sure they do, because by having that investment support facility we can do exactly what you suggest; we can actually identify what the market needs and try to proactively ensure that investment takes place to improve the product, so that it matches market needs. So from that point of view we are in a very favourable position. We are not suggesting that that favourable position should be extended to either England or Scotland because we quite like the competitive advantage that it gives us.
  (Mr Evans) The outputs are quite interesting as well because last year 74% of our stock was 3, 4 and 5-star. We were then tasked to create 76%, and at the half-year, this year, it is now 85%. So 85% of all our accommodation products are now 3, 4 or 5-star. In relation to our return on investment, for every pound that we put in we leverage £5.60 back out. So it is a very commercial attitude that we have got to develop.

  301. It sounds impressive. As someone who is married to a Welsh woman (not that I want to send her there), Argentina has a lot of Welsh people. Is that one of the areas that you have targeted? Just out of interest.
  (Mr Jones) In 1865, I think, 165 Welsh people—God bless them—went out to Patagonia and survived and are still there. We are far better off aiming at rich New York lawyers and dentists than we are at the Patagonian expatriate Welsh society. We have a problem in Wales that we do not have the large diaspora that England, Scotland and Ireland have and, therefore, we have a bigger job to do to raise the profile of Wales overseas. In many overseas' countries, and this is no reflection on the excellent work that the BTA has done over many years, you have a big job to try and explain to people that Wales is not part of England or, indeed, stuck somewhere between Kensington and Bayswater.

  302. Let me ask a separate question. I cannot continue on this line because I do not know what diaspora means. What about the Millennium Stadium? You are going to lose some revenue, are you not, when the new Wembley is completed? Does that contribute quite a bit—in beer sales I know it does!
  (Mr Evans) It does. When an event is on at the stadium, literally, accommodation is full from the Bridge—ie Newport—down to Swansea. It has that sort of impact. It is a huge icon and tourism issue for us.

  303. Will you be able to maintain that condition when the new Wembley comes? You have got plans for that. I bet you have.
  (Mr Evans) Yes. It is a strange paradox, really, because we have an organisation called the Welsh Rugby Union, which is a second religion, you know. That has commercial control over the stadium. We are encouraged through the Assembly to get involved as much as we can. We do get involved in some marketing issues there, but it is a vital tourism attraction for us because it is, without doubt, one of the greatest stadia in the world.
  (Mr Webb) If I can just add some facts and figures to that, we did some research for the Rugby World Cup and we estimated the impact of the Rugby World Cup on the economy of Wales was something like £80 million. Every time a Six Nations game takes place at the Millennium Stadium it brings in about £10-12 million to the economy.
  (Mr Evans) It makes sound sense not to rebuild Wembley, to be perfectly honest. And if you have any authority on those issues . . .

Ms Shipley

  304. Does Wales need an international airport?
  (Mr Evans) Yes.

  305. Are you aware of the plans for the expansion of the airport at Halfpenny Green, which is in England, which is a tiny, tiny business airport, at the moment, to become an international airport?
  (Mr Evans) I think, in Wales, I can only comment on our own structure.

  306. So you are not aware of it? It is okay if you are not aware of it.
  (Mr Evans) The gateway airport is critical to Wales. In fact, this is a very good example of the team Wales issue, where we have just had British Midland, a BMI baby, who are our first real budget airline, running to nine destinations out of Wales, but that was a situation where the Welsh Development Agency, the Wales Tourist Board and the Assembly actually put together a commercial team and went and sought out a budget airline. We are now doing the same in the States with a long-haul airline. We are looking for our own incentives, because we have got to have it. If, in our strategy we say we need an international airport, by hook or by crook we will get one.

  307. The one at Halfpenny Green, which is opposed by a large number of my constituents, is going to be called Wolverhampton Airport. It is actually near Bridgnorth and will service the Welsh borders, Staffordshire, Shropshire and the Birmingham and Wolverhampton urban conurbation. What it will do is offer cheap flights out of those areas to nice, warm, dry places—ie exporting your holiday-makers. So those traditional, West Midlands people that normally come into Wales for holidays will be flying out of England. Do you find that a problem?
  (Mr Evans) If I can address your comment in two parts? First of all, if you will excuse me, I will not answer on the airport structure because, to my cost, I have learnt not to mention anything that has huge environmental tails coming at me. I am not an expert.

  308. I am actually being specific, that it will export your holiday-makers.
  (Mr Evans) I think if you took that to the nth degree you would close all the ferry ports.

  309. No you would not, because that is definitely a two-way one. This is very much targeting the British holiday maker who wants cheap flights from Britain out, and will go backwards and forwards. It is not the international airport that you want, going to America for your mass market, it is flying people out to Spain, Italy, and cheaply.
  (Mr Evans) I agree with your concerns and I understand where you are coming from. I think it is something that we have got to accept. In this country, the UK, at the moment, we have a £14 billion trade deficit as far as tourism is concerned. The only way we are going to correct that is to make access easier by budget airlines coming in. As far as the Wales Tourist Board is concerned, we are now actually badging one of the BMI baby planes, so we will have a Wales Tourist Board plane bringing people in from Barcelona, Madrid and Milan, next year. That is our attack strategy. We accept, of course, we cannot affect the major commercial organisations; if it is profitable they are going to do that. What we can do is actually look at our strategy and how we attack that and get the best benefit. So now we are setting up destination marketing modules into those destinations to draw people back in. In Wales we are now creating a portfolio of products, of 3, 4 and 5-star products that will be commissionable overseas, tying in with the ticket prices. Ticket prices will actually be marketed as free transport, so you can actually do a four-day break in Wales and say "Transport free from Milan" because it is only £25 each way.

  310. That is not what I am talking about. What I am talking about is the English market; the traditional West Midlands market, who are going to hop on a plane and go the other way.
  (Mr Jones) Can I respond to that? You are absolutely right. West Midlands is one of our three most important markets in the UK. We do not ever want to put any barriers in front of anyone wishing to go anywhere for their holidays—whether that be within Britain or overseas. What we have to do is to develop a product, and market it to the people of the West Midlands—and, indeed, anywhere else in England—and give them very good reasons for coming to Wales. We are realistic. If somebody wants guaranteed sunshine then they do not stay anywhere in Britain, and you have to be realistic about that. What we have to do is to develop products, and that is what we are doing with the grant-aid system that we have, that meet people's expectations twelve months of the year. People do not always want sun the whole time, and the market in Britain is very much for people like us who, dare I say, are cash rich and time poor. We want more short-break, easily accessible holiday destinations, and those are the kinds of products we are developing in Wales.

Mr Doran

  311. There are two areas I want to look at. One is your overall strategy—and you have already explained to us the distinction that you have as compared to the other tourist authorities. I wonder if you could spell out, really, what your priorities are? I think we have just heard from Mr Jones that you market a product, you distribute grants, you try to improve the quality of the product that we experience, but what about marketing—particularly marketing overseas? What part does that play in your strategy?
  (Mr Jones) It is very much one of the growth markets. As I said before, we get one million visitors, roughly, from all overseas markets by comparison with 10 million visitors from the UK. The overseas markets are areas where we, working closely with the BTA, feel that we can increase the amount of business into Wales. Those overseas visitors tend to come throughout the year, they tend not to be interested in sun (because if they are they would stay at home) and they tend to be higher spenders per head and they are very interested in Welsh history, culture, and the language—elements that we can use to differentiate ourselves from England and Scotland. What we do is target. We break down all our overseas markets into primary, secondary and tertiary. In the primary markets we spend the limited amount of money that we have, and that would be in America, Ireland, Holland, Belgium and Germany. The secondary markets are where we would be looking to work closely with the British Tourist Authority, and then tertiary markets are all those other markets where we would rely totally on the British Tourist Authority to carry out their statutory responsibility of selling England, Scotland and Wales.

  312. Do you find that the fact that you are a funding body dealing directly with the local bed-and-breakfasts, for example, detracts from the efforts that you make to market abroad? We have had other bodies recently and, for example, VisitScotland are totally focused on attracting visitors to Scotland from all parts of the UK and the rest of the world. They do not have that distraction to cope with. As Mr Evans said earlier, that is dealt with by Scottish Enterprise. Do you feel that holding a dual responsibility limits your capacity?
  (Mr Jones) No. Far from being a distraction, if you look at any commercial company, if you are going to market a product, you spend half your time developing it in relation to the market needs. That is what we do. We look very carefully at the research that Steve and his colleagues produce, and if we find there is a gap in the product we actively go out there and try to change the product. That is what we have done with our B&Bs. We have gone to our B&Bs—and we certainly do not look at them as a distraction, they are a major strength of our product—and we say to them "You must up-grade. It is no longer the right thing to expect people to queue at the bottom of the landing in their dressing gown for a toilet. Put in bathrooms. Put in showers en-suite. We can help you with grant-aid." In so doing we make our product a lot more saleable, not only in the UK but overseas as well.

  313. Just moving on a bit, I am a bit of an amateur as far as tourism is concerned, it is not one of my specialist areas. When I first looked at the papers and the evidence that we were presented with, one thing seemed obvious to me, and it is that from the top of UK Government down there seemed to be an overall lack of strategy. There seems to be an effort now to put in place a strategy. In terms of where we are, as a country (and let us talk in UK terms), where do you see the Welsh Tourist Authority in terms of developing a strategy to improve our performance in what is, effectively, our fifth-largest employer?
  (Mr Webb) We have a national tourism strategy.
  (Mr Jones) This is called Achieving our Potential and was launched by our First Minister, Rhodri Morgan. It is the result of two years' consultation with the industry in Wales and with our colleagues in the BTA. As Philip says, strategy is a movable feast, and this needs looking at. You have to respond to the market the whole time. There is no point having a strategy; customers, unfortunately, worldwide do not receive or read any one strategy; customers vote with their feet and their pocket, and you have to research that market on a continual basis and amend your strategies. We feel that in Wales—and Steve, I am sure, Chairman, may want to comment on this—we have a clear, overriding strategy from our national Assembly called A Winning Wales, which lays down its cross-cutting themes and we, as the body charged with developing and marketing tourism, reflect that strategy in our tourism strategy, which is backed up by our Assembly Government. So we feel we have a fairly clear view and that the Welsh Assembly Government does take tourism extremely seriously because, as Philip said, it contributes 7% of our GDP in Wales as opposed to 6% in Scotland and 5% in England.
  (Mr Webb) You have obviously been questioning us on our strategy. Our primary role is a strategic body, because if did not set a strategy for the industry no one else would. The industry cannot do it for themselves; they are not a cohesive unit. That is where we can step in and understand what the major strategic challenges are facing tourism and try to identify the appropriate responses which we, alongside the industry and other parties, can put in place.

  314. That was a logical response to my last question, and this will probably sound a bit like nit-picking but I wonder what the strategy is based on. Looking at your paper to the Committee, I notice in paragraph 2.6 you say it is not possible to estimate the performance of overseas tourism in Wales during 2002. That strikes me as being a fairly fundamental question you need to answer.
  (Mr Webb) That statement was made because we are dependent on a national survey, the International Passenger Survey, to measure overseas tourism into and out of the UK. It just so happens the International Passenger Survey cannot provide figures for Wales for this part-year period.

  315. But the Scots were able to give us a fairly clear idea of tourism into Scotland from outside the UK.
  (Mr Webb) You may be able to interrogate the figures to a certain extent but it does not allow you to drill down too much to understand what is happening.
  (Mr Jones) This is the International Passenger Survey, it is the Government's survey, and when I last asked the gentleman running this what the statistical sampling error was if we interrogated that survey to find out the level of Japanese businessmen coming to Wales, the answer would be correct to plus or minus 40%. So we do not deal with spurious figures.

  316. One final area and that is the BTA and the recent changes in its constitution, or at least proposal for changes to its constitution. We heard from the Scottish Tourism Minister and VisitScotland, and it was quite clear from them and other bodies, including the British Tourism Association, there was not a lot of enthusiasm for the changes and the particular concern was the likely conflict, or possible conflict, of interest between the BTA, which represents all parts of the UK at the moment, becoming a marketing body for English Tourism. I would be interested in your comments on that.
  (Mr Evans) This is a very interesting move because it was one we found very strange, and whether there will be commercial efficiency is yet to be borne out. It is definitely not our favoured model. We had a different proposal and we thought a commercial PLC model should have been put in, which would have been politically acceptable to all stakeholders, far more strategic and far more efficient in devolvement of funds to Scotland and Wales and to England, and buying-back central services through the BTA would be very commercially efficient.

  317. Were you consulted?
  (Mr Evans) No, we were not. We were consulted at ministerial level but the Tourist Board were not brought into the loop, neither were the board members of the BTA, so it was a very strange situation.

  318. Have you given any thought to how things will work in practice? My colleague, John Thurso, who is not here today, thinks the English will suffer more than the Scots. Have you formed a view yet?
  (Mr Evans) There are budgetary issues which have to come into it. The first thing which would have to be done, as in any commercial organisation, is the definition of targets. We are set a target by our Assembly of 6% growth rolling per annum, and we are achieving that. But the BTA again has to be set targets for performance and once they have got those targets in place then they look at budgetary constraints and restraints and say which direction they are going to go in. I am not going to be Nostradamus on this issue and condemn it because it is a system in place, so logically we in Wales have to make the best of it and see how we get the best advantage from it.

Mr Bryant

  319. Can I clear up something about the figures, because when we have had previous organisations along there has been much moaning and groaning from English members of the Committee about how Wales gets more money per head than anywhere else. You are saying there are two reasons for that. One is that you have a development function which presumably takes up a significant amount of your £39 million a year. Secondly, out of that £39 million, a large chunk is coming from Objective 1 and other drawn-down finances. Is that right?
  (Mr Jones) Absolutely.
  (Mr Evans) I would think about 40% of our funding is funding that we aggressively seek ourselves.
  (Mr Webb) That is right. Our grant in aid figure from the Assembly is set at around £22 million and of that £22 million around about £8 million, £10 million goes towards development functions. So when you compare our marketing activities to England's and Scotland's, there would not be a great deal of difference in terms of funding.
  (Mr Jones) Objective 1 sums are not handed to you on a plate. Wales is given an allocation, we then have to fight against all the other bodies, public and private, and we have to prove we can deliver the objectives, which are job creation and raising GDP. We will only be given that money if we can prove we can deliver, and we are delivering at the moment.


 
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