APPENDIX 10
Memorandum submitted by Hilton Group Plc
TOURISM AFTER SEPTEMBER 11
Hilton is a major international company with
two operating divisions—the Hotel division, which owns the
rights to the Hilton name worldwide (with the exception of the
USA) and Ladbrokes the largest sports betting business in the
world—employing together more than 85,000 staff. Although
the hotel division operates in over 70 countries, in the UK with
a total of 77 hotels we employ over 15,000 staff.
We have been involved in a number of government
initiatives to boost tourism in the UK over many years including
the recent Million Visitor Campaign run by the British Tourist
Authority.
We are currently involved in advising the Government
on the most effective way for it to support and promote the industry
through our participation in a ministerial working group, and
would be keen to expand on the views set out in our written submission
by appearing before the Committee when it starts its oral evidence
sessions.
EXECUTIVE SUMMARY
Hilton UK welcomes the opportunity to submit
evidence to the House of Commons Culture, Media and Sport Select
Committee inquiry into tourism. A year on from September 11 is
an opportune time to consider the position of the UK tourism industry
and the mechanisms we need to ensure the most effective degree
of support from government throughout the UK.
We believe that September 11 and the outbreak
of Foot and Mouth Disease in the UK served to focus the minds
of the Government and the devolved administrations of the need
to support the tourism industry. However, this review is long
overdue. The industry has been calling for greater government
support for many years and we believe that the revenue it creates
for the UK Exchequer, both directly and indirectly, has never
attracted the same degree of political support that has been enjoyed
by other sectors, particularly manufacturing. We hope that the
current focus on tourism policy and the way in which the Government
supports the industry will lead to a more efficient, cost-effective
and results-driven relationship between the industry and the Government.
We would like to see:
— additional funding directed at fewer
but more effective campaigns;
— greater clarity in marketing Britain
and an end to wasteful duplication;
— a range of measures to address the
industry's skills shortages;
— a reduction in the industry's comparative
VAT burden;
— an increased prominence given to
tourism within the education system; and
— a Cabinet level Tourism Minister,
and better cross-departmental co-ordination.
INTRODUCTION—BACKGROUND
TO HILTON
GROUP
Hilton Group is a major international company
with two operating divisions; Hilton International owns the rights
to the Hilton name outside the USA and currently operates over
380 hotels in almost 70 countries worldwide and Ladbrokes Betting
and Gaming is one of the world's largest commercial off-track
betting and gaming organisations.
The group is one of the largest companies listed
on the London Stock Exchange and a constituent of the FTSE 100
index. It has a market value of approximately £3.5 billion,
a turnover of over £4 billion and employs more than 53,000
people worldwide.
Within the UK the Group employs over 14,000
in the hotel division throughout 77 hotels with a turnover of
nearly £600 million.
THE CURRENT
AND FUTURE
PERFORMANCE OF
THE BRITISH
TOURIST INDUSTRY
Current assessment of Hilton UK business
Hilton's business is beginning to recover from
the immediate aftermath of September 11, but it is still not nearly
at the levels that it was before the attacks.
Hilton UK has witnessed a reduction in our international
business but our share of the domestic market is increasing—following
a refocused marketing effort in the UK. Though the domestic market
is mature we are constantly seeking ways of stimulating new business
in what remains a growing market.
Our London hotels have seen a reduction in custom
though the regional picture has not been as bad as we had feared.
In Scotland in particular the hospitality sector has held up well.
We have been encouraged by the beginnings of
a gradual return of business travel from the US market and were
supportive of the BA "It's Better to Be There" advertising
campaign designed to identify business benefits of face-to-face
meetings. Business tourism is big business for Britain and we
are concerned that the UK risks losing global market share in
this growing international market.
We remain concerned about the impact of any
future hostility in the Middle East and the uncertainty that the
current situation is causing. Our marketing efforts are concentrating
on emerging markets including the Eastern bloc, the Far East and
South America.
DOES THE
GOVERNMENT HAVE
A ROLE
IN PROMOTING
AND SUPPORTING
THE INDUSTRY
AND WHAT
SHOULD THAT
ROLE BE?
We do believe that the Government has a role
in promoting and supporting the industry.
We have been happy to support government initiatives
like the Million Visitor Campaign but recognise that these
may not always need to take the form of arrangements agreed as
public-private partnerships.
Whilst we welcome the increased focus and investment
in tourism which has resulted from the creation of the devolved
administrations, there is no doubt that this disparate situation
has created duplication of effort internationally and at home.
We consider the British Tourist Authority to
be the most effective government agency we work with and we feel
it is important that the momentum built up around the Million
Visitors Campaign is sustained through a greater alignment of
tourism strategies across the UK.
It is our view that the industry needs a one-stop-shop
with a strong voice, the power and influence to market the country—a
body which allows the private sector to invest with greater clarity
in pursuit of agreed strategic objectives for the industry.
At the same time we feel that the Government
needs to present a much more joined-up approach to the industry
and we remain of the view that tourism should command a Cabinet
level ministry as it does in other Western democracies such as
New Zealand, Ireland and Spain.
We remain concerned at the seemingly endless
array of initiatives from the UK Government and devolved administrations,
which are demanding significant resources from the leading UK
hotel chains. We feel that the SMEs within the sector should play
their part in contributing to industry initiatives. Given that
many of these campaigns stand to disproportionately benefit the
smaller hotelier we feel this issue should be addressed in the
interests of equity.
We have been concerned at the apparent lack
of business acumen and commercial awareness within some of the
tourism promotional bodies. We were supportive of moves to change
the tourism governance arrangements in London. We would support
an increase in the number of secondments to and from our industry
across the country to increase the mutual understanding between
the private and public sector.
It is vital that the Treasury looks at the tax
efficiency of the UK fiscal regime as it applies to the tourist
industry and revisits its policy on VAT. With the second highest
VAT rate in Europe this has a significant adverse effect on the
UK hospitality sector.
We want to see tourism policy in practice adding
value to the proposition brand that is the UK. An example of how
this can be achieved is the Irish tourist industry's successful
marketing campaigns. In contrast, UK campaigns are often disparate
with confused messages. Devolution has exacerbated this process.
Given that London is the Gateway for 80 per
cent of visitors to the UK, we should recognise that our nations
and regions must work to complement London's tourism strategy.
This is in order to stimulate growth in those regional markets,
acknowledging that it is likely that first time visitors in particular
will access the UK through the capital. This should be recognised
through joint ticketing strategies, marketing initiatives, and
full co-ordination between London and regional tourist boards.
At the same time we would want to see London working with other
bodies across the country in a co-ordinated effort.
We feel strongly that low-cost airlines should
be doing more to bring people to the UK as well as offering affordable
alternatives for UK passengers. At present, low cost carriers
take people out of Britain and do not bring overseas visitors
in. It is in effect a substantial invisible import. It is our
view that travellers seeking low-cost travel may be prepared to
pay a premium for higher grade accommodation in stimulating city
environments served by low-cost carriers. It is essential that
these carriers prioritise their inbound tourism initiatives in
the same way that they do their outbound.
Tourism is everyone's business
We would like to see the other sectors of the
economy which increasingly stand to benefit from the tourist industry—such
as airlines, transport operators, and other sectors such as London
retailers—demonstrating their collateral marketing support
to our sector. In particular we believe the retail sector and
major shopping centres/famous names could be doing more to support
our industry.
Quality and Productivity
We are fully supportive of the DCMS' work in
addressing these challenges to our industry. We are directly involved
through our participation in the DCMS Working Group on Marketing
England—giving England a marketing role and ensuring a strong
focus on domestic marketing. We welcome this as a long-overdue
effort to rationalise and focus the work of all those involved
in promoting the British brand and growing the UK visitor market.
This allows the BTA to focus on its international marketing role
which it does so well.
We would hope to see the recommendations of
the Working Group followed through effectively across the UK and
would want the devolved administrations to properly address the
issues raised. Our preference would be for the BTA model to be
used throughout Britain to minimise duplication internationally.
It is vital that the industry speaks with one
effective voice on the issues that matter. The plethora of bodies
representing the industry and the duplication of marketing effort
hold back the potential of British tourism.
We remain concerned to see an adequate infrastructure
in place to support our industry, through enhancing the quality
of the visitor experience—in terms of better transport planning,
higher standards in the public realm, cleaner streets, and adequate
business parking in city centres. These remain as important factors
to potential visitors as the quality of accommodation offered.
Skills Shortages
Despite the wide range of employment opportunities
offered by our sector, we remain concerned at the adverse effect—particularly
in London and the South East—that skills shortages are having
on our industry. As a company we have initiated a range of strategies
to tackle this issue—including the creation of the Hilton
University (on-line learning centre) chefs apprentice scheme—collaborative
working between our Glasgow Hotel and local colleges, and the
installation of a working kitchen in a north London school—all
designed to raise awareness of the wide range of career options
available within our sector and address misconceptions about our
industry. With pay levels improving and the range of flexible
employment packages available to our potential workforce increasing,
we would like to see our education and training system give stronger
emphasis on marketing hospitality as a sound career option.
Language Barriers
With the growing internationalisation of our
major cities (with, for example, the Mayor for London predicting
that 80 per cent of the population growth in London will come
from overseas) we are concerned that more attention should be
placed on the acquisition of key language skills—including
a command of the English language—for those migrant workers
who might benefit from the employment opportunities available.
Education
We welcome the Chancellor's commitment to expand
the promotion of enterprise in our schools. We would like to see
more focus on the range of career options on offer within the
tourism sector to increase awareness of the industry, encourage
a higher take-up of key language skills, and promote tourism as
a dynamic industry.
Additionality
As a company we would be prepared to match £1
for £1 any funding agreed by the Government over and above
the minimum level needed to support the sector, ensuring the industry
has the level of support it deserves. We do support the principle
of industry matching government funding.
SUMMARY
We are happy to expand on any of the points
raised in our response and would also welcome the opportunity
for our Chief Executive, David Michels, to give oral evidence
to the Committee. We are encouraged both by the Committee's decision
to carry out another inquiry into the tourism sector, and by the
Government's apparent determination to ensure that its support
for the industry becomes more focused, cost-effective and consistent.
We are committed to putting our own resources into ensuring the
success of the industry but believe that fundamental changes still
need to be made if the industry is to start achieving its true
potential.
4 October 2002
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