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TUESDAY 17 DECEMBER 2002 __________ Members present: Mr Gerald Kaufman, in the Chair __________ Memorandum submitted by The Wales Tourist Board Examination of Witnesses MR PHILIP EVANS, Chairman, MR JONATHAN JONES, Chief Executive, MR STEVE WEBB, Director of Strategy, Wales Tourist Board, examined Chairman
(Mr Evans) Thank you, Chairman. I welcome this opportunity to be before you and thank you for your courtesy in extending us the time. We are probably a slightly different organisation to those that have stood before you previously as a national tourism organisation. We do differ in that we are probably more commercially driven because tourism in Wales is more important to us than it is in any other region of the UK - ie, it gives 7 per cent of GDP which in Wales is more than agriculture and construction put together. We generate about , 2 billion a year, which is , 5 million a day, through our industry. However, probably the most important aspect of difference is that we do have grant-giving powers, so we do get very involved in the development of the tourism product as well. I would, at the outset, like to introduce on my right Jonathan Jones, Chief Executive of the Wales Tourist Board, and Steve Webb, Director of Strategy. They are my intellectual minders, so I am delighted to have them along with me today. We do also have a different board structure in Wales, in that we are very different to the quangos of old. We do have a specialist skill board where we actually recruit board members because of their specialist skills, and not just making up numbers. Where we do have the various departments within the organisation we have a board member allocated almost in a vice-chair capacity to actually drive economic regeneration through strategy, or development, or finance or marketing, so it is very important that we understand that we are a very commercially driven organisation. We work to a ten-year strategy, which is a bit - I must admit - like buying a computer from Dixons, because by the time you take it out of the door it is probably obsolete. So we revisit our strategy continually and everything we do is strategy-compliant. Therefore we justify it. I think probably that we are very target driven and performance ambitious because we are very well aware that we have had the huge benefit of Objective 1 funds - European funding - which gives us some , 39 million worth of budget. Our grant-in-aid really has not changed; we are currently running at about , 22 million. I know there are lots of fictitious stories about this incredible budget that Wales has, but we actually have a grant-in-aid core budget of , 22 million. We build that by bidding for European funds, pathway to prosperity funds through our own Assembly, but we are very aware that by 2006 we will be back down to a budget of about , 24 million from , 39 million. So within our strategy we are attacking this by, obviously, appealing to our own Assembly but looking at more commercial strains of partnership issues, with local authorities and with the private sector. So that is probably what makes us very different to other tourist boards. We are just about to appoint a commercial director (which, again, will be a new, innovative post for a national tourism organisation) whose sole job or priority will be to look at revenue streams from other sectors. In a nutshell, Chairman, that is the Wales Tourist Board, and we welcome your comments. Chairman: Thank you very much, Mr Evans Derek Wyatt (Mr Jones) Chairman, we do not have any of our own offices, we work very closely with our colleagues in the British Tourist Authority who have, I believe, 26 offices overseas. We have two members of staff working out of the BTA office in New York and actually paid for by the BTA, and we reimburse them in London. If we were to expand our operations overseas that is indeed what we would like to do - have more Wales Tourist Board people working out of BTA offices overseas. (Mr Jones) Our main overseas market is the United States - some 200,000 people a year - but our main market is the United Kingdom, generating some 10 million visits a year as opposed to 1 million visits from all our overseas= markets. Bricks and mortar are very, very expensive, and if we were spending money overseas we would rather spend on marketing campaigns than on expensive bricks and mortar. (Mr Evans) We are fairly mercenary in our outlook, to be perfectly honest. We look at what gives us best value - the biggest bang for the buck. If we can piggy-back on the BTA we will piggy-back on the BTA. It is really where we are market strong - ie, in the States. This year, above the line, in open marketing terms we will spend more in America promoting Wales than the BTA will spend promoting Great Britain. (Mr Evans) I think it is very important, as I say, where we are market strong. Where we are market weak - and there are quite a few areas where we are market weak - we would use the umbrella of the BTA. Where we are market strong and we feel we can use a Welsh presence - because there are various areas around the world where the Celtic brand is stronger than the British brand, as far as identify is concerned - we will use the Welsh presence offices (we are not allowed to say A embassies@ ). For example, the Assembly have pushed us, on certain issues, to join in five strategic overseas markets. On four of them, I think, we have refused to do so because we do not think it is best value. We actually control our budgets and we say what is best value and we take that from our strategy. That is the direction we drive it in. (Mr Evans) Thank you for that Pandora= s Box! I do not think we set ourselves out to make comment on that sort of issue. The imbalance of VAT is very relevant, where in Europe it is 11.4 per cent as an average across the board, where we are paying 17.5 per cent. So it is very much a braking mechanism as far as that is concerned. We would be delighted to be involved in the disbursement of tax revenue but we have not been given that courtesy yet. Alan Keen (Mr Evans) No, we are not. We have just pump-primed the industry because in Wales we believe that the industry has got to grow up. The Wales Tourist Board, probably, over the last 20 years has been very much Mothercare to the industry and we do not do that any more. We believe for any industry, like the motor industry or the metal bashing industry, they have to handle their own fortune. We consider that our role is to get the best budgets we possibly can and that our role is to market the great product that we have got internationally. We have now set up four regional partnerships which we are devolving our funds into, which again is quite innovative, in that for the first time we have local authorities and the industries working together on regional partnerships; we are actually devolving some , 3.5 million a year down to the regional partnerships for regional marketing issues. We are looking now to devolve grant-giving issues, up to , 100,000, down to the regions. I think it is a very socially inclusive policy, which is what I personally believe in. I am a commercial company chairman and I bring those views to the board. We work very closely with our Assembly. We do have the huge benefit of access to our First Minister and our Minister for Economic Development - literally at the end of the telephone. Great on a Sunday morning! But we do have those sorts of access points. Consequently, when we are talking strategy and we want to change issues - for example, when the foot-and-mouth impact hit us, we were out with rescue packages within four or five weeks and we were on television with major advertising campaigns within four or five weeks of foot-and-mouth coming up. So very proactive, but our Government allows us to do that. That integration is very important. (Mr Jones) May I add, Chairman, on the grant-giving side as well, the area of flexibility that you mentioned is the ability that the Wales Tourist Board still retains, which our colleagues in VisitScotland and the ETC either gave up or had taken from them. We can still offer capital grants of up to 50 per cent of eligible capital cost to businesses who wish either to come into Wales or wish to develop. We do that proactively. We sit down with the Assembly and our colleagues in the Welsh Development Agency and agree investment strategies. So if we want a large hotel somewhere or a large self-catering development or a large leisure attraction, we can actively go out after those private sector people and pave the way for them to come into Wales. (Mr Evans) If I can involve Steve Webb, my Director of Strategy on that, he has cross-conversations with all the other bodies. (Mr Webb) I think you have got to look to history. At one stage the English Tourist Board in those days (now the ETC) and VisitScotland (in those days Scottish Tourist Board) did have grant-aiding powers. For one reason or another the government of the day decided that those grant-aiding powers either should be taken away from those bodies or moved into other government agencies. In Scotland, for example, those grant-aiding powers, I think, are still made available through the Scottish Enterprise network. We are the only tourist board within the UK to maintain that dual role, not just a marketing agency but a development agency, in terms of the investment grants that we can make available. (Mr Evans) That is right. (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 per cent of our stock was 3, 4 and 5-star. We were then tasked to create 76 per cent, and at the half-year, this year, it is now 85 per cent. So 85 per cent 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. (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. (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. (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 (Mr Evans) Yes. (Mr Evans) I think, in Wales, I can only comment on our own structure. (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. (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. (Mr Evans) I think if you took that to the nth degree you would close all the ferry ports. (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 A Transport free from Milan@ because it is only , 25 each 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 (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. (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 A 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. (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 per cent of our GDP in Wales as opposed to 6 per cent in Scotland and 5 per cent 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. (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. (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 per cent. So we do not deal with spurious figures. (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. (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. (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 per cent 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 (Mr Jones) Absolutely. (Mr Evans) I would think about 40 per cent 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. (Mr Evans) We were slightly disadvantaged originally under the criteria for Objective 1 in that tourism was not given a priority status, so consequently we had to go through measures of seeing how we could raise the funds through various avenues. All the funding, and there was some , 10 million which we have achieved this year, we have already spent. There is no shortage of projects because it is strategy-driven. We look at our strategy, we say, A How do we invest this money?@ There would be a fairly long queue at Brunel House if you started talking about grants; there is no shortage of applicants. (Mr Jones) I would just add that it is not giving out money willy-nilly. Those projects are analysed in some fair degree of detail and we have to meet our objectives. So for every , 12,500 we spend on capital grant aid for an Objective 1 area, we create the equivalent of one full-time job, and for every , 7,500 we spend in a non-Objective 1 area, we create a full-time job. Those figures are our own targets and they are monitored very closely by the National Assembly. If we do not hit those targets, they will not give us any more money. (Mr Webb) The scheme we operate with the support of Objective 1 money means that money is finding its way into the hands of businesses. We are one of the few scheme-driven funds through European grant aid, which allows us to target small businesses, so we are actually putting the money where it is supposed to be going, and that is into the tourism industry. (Mr Evans) You are very correct in what you are saying, because there is a parochial nature in Wales which says, A This is my boundary, this is my patch, this is my manor, we will organise tourism from within it.@ One of our major tasks which we are now achieving is actually breaking down those boundaries. As was said, when a visitor gets off the plane at Heathrow and comes to Wales, he is not aware where Powys starts or Gwynedd finishes, and we have now got all the local authorities in the valleys on a Valley Marketing Initiative and the valleys are now being promoted through heritage and culture as a product from east to west. With the Regional Tourist Partnerships, if you take the south east, we have ten local authorities for the first time ever sitting down round a table talking about a joint marketing strategy. We will not devolve our funds to the regions unless they have these global issues. (Mr Jones) We are confident. As Philip said, we have kick-started this initiative to bring all the local authorities, the Welsh Development Agency, the National Museums and Galleries of Wales, CADW, the National Trust, the Industrial Trust together by the Wales Tourist Board to look at the whole of the south west, not just the Valley areas to try and say we have got to do something about our wonderful industrial heritage and take it to the world and link it in with education and link it in with trying to raise people's standards in the Valleys and their self- respect. The people of South Wales Valleys, like many other parts of industrial Britain, have had a pretty tough time over the years and it is quite understandable that they lack a bit of self-respect and self-confidence and we firmly believe in this way we can raise their standards and raise their self-confidence because they are wonderful people and they need that support. (Mr Jones) We have to have exemplar products. In your own constituency of Taff you have an industrial heritage park there which is an excellent example, then you have a UNESCO World Heritage site in Blaenavon and you have a wonderful museum of an old working mine. Those are exemplars and I think if we can find people who are prepared to come forward because the public sector cannot do this alone - the local authority or the Wales Tourist Board or the Welsh Development Agency. You really need some private finance coming forward. If we can find those people prepared to invest we can certainly support them with capital grants schemes. (Mr Evans) I think it is important we do have this incredible commitment. We are a strategic delivery mechanism. We take the money from the taxpayer and we deliver, but our major stakeholder is the people of Wales. We do not get involved in political comment and heated discussion on what we are; we know what we are. We are given our budget and I firmly believe, so do my colleagues, that our principal stakeholder is the people of Wales and to raise their prosperity is our ambition. We do it through the vehicle of tourism, it is as simple as that. There is no confused ambition. (Mr Jones) As Philip has just said, we had BMI Baby coming into Cardiff. I have to say that the road infrastructure was not a major consideration of theirs in deciding whether or not to base their operations out of Cardiff. They were looking at more commercial aspects in terms of the number of people that could fly from a two hour radius from Cardiff and indeed looking at the inward possibilities of flying people back into Cardiff. All airports require good road infrastructure like you have to Manchester, like you have in Birmingham, like you have in Heathrow and Gatwick, and certainly if we had better roads and better public transport in and out of Cardiff Airport it would make it easier to encourage other aircraft to come in. I have to say that BMI were not put off. We are confident they will make money out of flying people out of Cardiff and flying people back into Cardiff. Chairman (Mr Webb) Only for Celtic supporters I think. Mr Bryant (Mr Jones) Certainly as far as the States is concerned to call it one market is just too silly. It is made up of a vast number of markets and we tend to concentrate our work on the North East border and the West Coast, so you will probably find a lot of people in Arizona and Kansas and Missouri who have never seen anything from the Wales Tourist Board. You could say that is good use of public funds because the market is not there for them. We know that only 18 per cent of Americans hold a passport and there is no point in marketing to people who do not have passports. We portray an image of Wales as a land of mystery and legend, talking about the Arthurian legends, talking about the history and the heritage and we find that goes down well with those Americans whom we get to. Yes, of course you can find Americans who do not where Wales is, but, with respect, you can find Americans who do not know where Cornwall or Devon or the Lake District or even bits of London are. (Mr Evans) If somebody is going to spend $10,000 or $, 15,000 to A do Europe@ it is very important you get them at the decision-making process, consequently a lot of our money is spent below the line, ie talking to journalists, bringing journalists over. We pitched for the business against Nice and won it and brought 400 American travel writers from the Society of American Travel Writers into Wales last year and had them for a week and two weeks on various schemes. It was of huge benefit to us. It is guerilla marketing, if you like. We will look at various ways of getting into the homes and getting into the lifestyles of Americans to create an ambition to want to come and see Wales. One of the great things that is now emerging is that Wales is seen as a safe destination. We are probably not looked at as a terrorist prospect. It is a hard fact but it is one that is very important for Wales. We are seen as a very safe destination. (Mr Jones) You have got to put yourself into the position of the consumer here as well. If you were to go to New York or Paris for a week, when you get there, what is the first thing on your mind, is it to enjoy your time in Paris or New York or to try and get out of the city? With respect, I suggest you have got there and you want to enjoy it and you are not going to leave that place until you have exhausted all the possibilities. You have got to hit people with your marketing messages where they take the decisions which is in their homes. (Mr Evans) I do not think the message got overseas. (Mr Evans) There were border land issues that we had to answer that we addressed quite successfully. It was taken as an off-the-cuff comment, it was not taken as a serious comment from the Wales Tourist Board. The ten million that always come from Britain, predominantly from England, have not responded to that message. (Mr Jones) It is going up. (Mr Evans) Tourist figures are 11 per cent up this year. Miss Kirkbride (Mr Evans) It is amazing because there are differences of opinion. People love Wales because of the shortage of motorways, people love the meandering country roads. (Mr Evans) We have now got passing bays and things like that! A lot of people come to Wales purely because of the lack of infrastructure. I agree with you totally, the biggest problem you have got is going from south to north and north to south. One of the most successful campaigns - and our new campaign is A The Big Country@ which is a very bold campaign - we have been running is A Two hours and a Million Miles Away@ . That was a successful campaign because it got into the lifestyle of people saying that it is two hours and a million miles away and it worked. (Mr Jones) We certainly work with the public transport sector. It is wrong to say that you cannot get around Wales with public transport, you just have to be a little more organised and planned about it, and we work very hard in putting information out which links train times with bus times. You can do it. A lot of overseas visitors do it, because they do not like driving on the A wrong@ side of the road. 90 per cent of all our tourists, UK and overseas, are car-borne and therefore we have to ensure they have appropriate road facilities. As Philip said, we have the M4 coming into South Wales and of course it goes a lot further than Cardiff, and we have the A55 which is a dual carriageway now all the way to North Wales. Access to mid-Wales could certainly be improved but the view is, once you are there, it is God= s own country, and the roads are brilliant and, dare I say, not too full of tourists. It is a balance we have to maintain to keep it full and empty at the same time. (Mr Jones) The majority of our overseas visitors from mainland Europe are car-borne, they would come via ferries. (Mr Jones) Europeans drive a long way anyway. Chairman (Mr Jones) I beg your pardon. I meant Europeans on the other side of the English Channel. Miss Kirkbride (Mr Jones) That is where we are trying to put the private sector on to this and putting packages together so they can pick up a car, get discount vouchers for hotels not just in Cardiff but go-as-you-please vouchers throughout the whole of Wales. But that is the job of the private sector. We, in the public sector, have done our job introducing BMI into Cardiff, the private sector should be able to pick that up and make money from it. (Mr Jones) We are waiting now for BMI to tell us what their consumer destinations are. Their winter destinations are Malaga, Milan. We are looking probably for somewhere in France and Germany to come up in the summer and then we will be selling incoming fly-drive packages from there. (Mr Evans) We would probably be the embryonic mechanism within the industry. We will probably try and do marketing campaigns on a 50-50 basis with the industry, and we will invest, and once it is robust enough we will pull out. (Mr Evans) Thank you very much. Chairman: Thank you very much indeed, gentlemen. That is most interesting. Memorandum submitted by GLA and LDA Examination of Witnesses MR TONY WINTERBOTTOM, Director of Strategy Implementation and Project Development, London Development Agency and MR PERRY PHILLIPS, Senior Economist, GLA Economics Unit, Greater London Authority, examined. Chairman: Good morning, gentlemen. Does London need any more tourists? I cannot get into this building for the huge crowds of people --- Mr Bryant: Mobbing you! Chairman (Mr Phillips) I was doing some Christmas shopping last Saturday in Oxford Street and it was unbelievably crowded so I can understand that as a human reaction. Tourists can be rather a nuisance but one as to bear two things in mind. First of all, the importance of tourism for the London economy, we are talking about a very substantial contribution to employment and economic activity and one which clearly has a potential for long-term expansion. The kind of things you are talking about are in part the result of a past failure to invest in infrastructure, things like the tube, it is not the tourists= fault, it is a general problem. Tourism managed in the right way has the potential to contribute a great deal of the growth of London. (Mr Winterbottom) I think your remarks are value judgments, Chairman. That is an impressionistic view. We are starting to look at the facts around the tourism industry in London and it does have, I agree, crowded parts but it also has other areas where perhaps with effort from the public sector, particularly the LDA, we could get some of the benefits which flow from tourism, and some of our strategies are trying to do that. There are two other points I would like to raise in relation to this. London has this role which we are only just beginning to understand; it is quite complex. We have only really been involved in tourism in the past two years. It is a destination for people who want to visit the UK, so its role is an opening place for people who come. This is quite important for other regions. This is something we have to focus on. But there are also components of tourism which just do not relate to numbers. For example, business tourism is down since foot and mouth and 11 September; the proportion of people coming with spouses to conferences and so on, is a sector of the market which is down. Perhaps my final point in relation to the crowded nature of this area, is that really we have been looking at the whole tourism and hospitality sector in a silo, and the research which has been carried out in the Mayor= s office has shown if you truly link tourism and hospitality together, which in London makes a great deal of sense, we have under-estimated the importance of this sector in terms of employment, and it has been said that it is the second-largest employment sector in London. That throws up all sorts of problems about how you get people involved in that sector, how do you train people, how do you get them involved in the business. So I understand your personal concerns and I am sorry about that, but actually we think it is quite important that we keep a healthy flow of visitors to London. Mr Bryant (Mr Winterbottom) So we understand, yes. (Mr Winterbottom) No, we are, but I do not think we are doing quite the right thing. What we said in our evidence was that when the Mayor took responsibility for tourism about two years ago he delegated that to the London Development Agency, and what we are trying to do is understand the remarks that we are a gateway destination and therefore how we handle that gateway. We are also a tourism agency in our own right and how do we handle that. I understand we are a gateway; Perry will tell you all the figures show we are a gateway, I am just not quite sure how we handle that. I am a bit bewildered that you are saying, A We do not know what we are doing about this.@ (Mr Winterbottom) I did not say we do not know what we are doing. We are looking at what we should be doing. We have been told about the role and we understand the funding flows that have gone previously into the London Tourist Board which do relate to that gateway role. The London Tourist Board have played a part in that gateway role but we do not think it is adequate and we are looking into how we can improve it because it is important for the nation. (Mr Winterbottom) We are looking at the whole function and the way that the LTB operates right across the piece. We are conducting a full review. (Mr Winterbottom) I think we are expecting it will be finished by the end of April but we expect the first evidence of changes to take place before the end of January. (Mr Winterbottom) In part it is, but the market could sort that out if we could get more business involved and get better quality standards and so on. Then I think the market will sort out the rip-off merchants. (Mr Phillips) Can I put a slightly different perspective on that. I do not see how London can possibly be a rip-off in general given its huge popularity. There are specific sectors where things could be done, for example the quality of some of the hotels is not as good as it might be and there is clearly an exchange rate problem. You have only got to talk to the majority of continental Europeans to see they find London a very expensive place. There is no doubt about that but that is largely an effect of the weakness of the euro at the moment. (Mr Winterbottom) But is it value for money, I would say. (Mr Winterbottom) Yes, but the issue is what do we do about that? I agree with that. (Mr Winterbottom) We do not know the answer to that question and those are some of the things we are looking at. If you look at the amount of resource that has been put from the public sector into tourism in London over the past few years it is pitifully small and yet we have had an expectation on our Tourist Board - and I have nothing to do with the Tourist Board except we give them money now - to have a whole range of things that they should take responsibility for, such as the quality of hotels, such as having tourist information centres and a whole range of other things but I really think the level of resource that has been put into that has been totally inadequate. We understand the aspirations, we agree with your aspirations. We are trying to do something about it, but we have not done and the resources are not very large. Chairman: I have never been anywhere in the world as a tourist where attempts have not been made to rip me off. Indeed, both in Naples and Buenos Aires attempts were made to rob me and only my courage prevented it. Alan Keen (Mr Phillips) Can I just return a little to the gateway problem or the gateway opportunities. One of the general problems that we have is inadequate statistical material relating both to the London tourism market and the linkages between London tourism and the rest. In order to counter that we have recently set up a major review of data sources and statistics just doing an audit on what is available, trying to find gaps, and part of what we would be looking at is this relationship between the broader United Kingdom picture and London. It probably does strike you as rather feeble that we do not know the answers to all these questions but we realised that in general there were a lot of gaps so we are trying to approach things in a very methodical way. Let's's get the database and market intelligence so we know what we are dealing with and then out of that a whole series of recommendations for future action can be made. (Mr Winterbottom) Perhaps I can just explain what we are doing. It is early days and actually we do appreciate the problems and I think we know some of the solutions. In relation to how economic development is going to be delivered in London or is being delivered at the moment, the LDA is working through sub-regional partnerships because you cannot drive tourism or any of the other business support services from the centre. I am sure you agree with that. One of the things that we are doing with our sub-regional partnerships is we are from 1 April next year putting a requirement on them that apart from looking after businesses in their area, working with the boroughs and other people to ensure that businesses get support, and any investment is brought into the area, we are specifically asking them to start working with our new London Tourist Board to ensure that we have a mechanism in place to draw people away from the centre into places like Syon Park, and there are other places as well. There are many other places in London where we think that that sort of support can be given. We are quite bullish about that. Our baptism of fire started on 11 September when we were asked by the Mayor to try and set up an emergency fund to help London and really that taught us all about the importance of places that were not in the centre and one of the strategies of the London Development Agency will be to try to encourage development of ventures and visitor attractions in the outer boroughs. (Mr Winterbottom) We have not but perhaps we should and we will take note of that. We have not done. Alan Keen: In Hounslow rather than Hillingdon, if we can be really parochial. I cannot ask any more. Chairman: You are so satisfied, Alan. Derek Wyatt? Derek Wyatt (Mr Winterbottom) We have not, as far as I know, started direct conversations with the 3G operators. Can I just explain what we are trying to do in terms of marketing London. (Mr Winterbottom) It is because we think it is a package. This sounds negative but it is positive. When you know you have got a problem and you tackle it, it is quite positive. We do not think London is best served on the internet. We think the two things are connected. What that really means is we have got to have joined-up activity with an organisation which is much broader and wider than the existing tourist board so that we can focus and do the type of thing that you are suggesting. Under our A L@ tag events scheduled last year we supported the very ideas that you are talking about and indeed we are doing it again. We have a Salt campaign which is supporting theatres in January and February trying to get people to come when it is quiet. We are also working with all the train operating companies and they have got a whole range of offers. The next stage is we have got to make sure that is well covered on the internet and well covered through the mobile phone system. I agree with you, we must take that on board. (Mr Phillips) It is splendidly accessible by the Heathrow Express. (Mr Phillips) I find it is, I must say. Mr Bryant (Mr Winterbottom) I cannot argue with you, I am afraid. I will answer the question about BAA. Derek Wyatt (Mr Winterbottom) Ove Arup have not put anything to the Cabinet --- (Mr Winterbottom) --- if they have, they will be in serious trouble because I am the Director in the LDA responsible for the Olympic bid, and in fact we commissioned Ove Arup to do that work, and their job was to actually do a matter of fact investigation about the efficacy and feasibility of bidding for the Olympic Games. Chairman: Excuse me, I am going to stop any discussion about the Olympic bid because we will come back to that on another occasion. Derek Wyatt (Mr Winterbottom) Yes. (Mr Winterbottom) We are at one, because one of the things when we did our research and looked into London, and it was comprehensive research, was we came up with exactly that view, that we needed to bring people together in a focused way, so they could own the way this great city was being promoted. We have a concept called Team London. One of the LDA directors, who is the chief executive of McCann-Erickson, Tamara Ingram, who has great expertise in this area, was appointed as head of the London Tourist Board, and she is as we speak working on what the campaign should be, what should be the brand, what should be the image. The idea behind that is so that will have buy-in not only from the public sector but also from the private sector. So we agree with you completely. From that we hope we will get a real focus, and all the other issues about marketing London which you are talking about with the 3G operators is much easier then to play in. (Mr Winterbottom) I do not work directly with the Mayor but I work closely with him and I can assure you the Mayor= s intention is to build on what we have and he has given considerably more resources to tourism than were previously put into tourism. His ambition is to make this a really great destination and he sees the tourism and hospitality sector as a major sector. Chairman (Mr Winterbottom) I know that, Chairman. Derek Wyatt: Thank you, Chairman. Rosemary McKenna (Mr Winterbottom) Yes. (Mr Winterbottom) No. The LTB have a website but we are overhauling what they have and we are trying, as I have just explained, to bring all that together so we have a interactive website with all the other people involved. (Mr Winterbottom) Yes. (Mr Winterbottom) That is the situation. In some mitigation, the private sector have run a lot of successful websites. They obviously work well together so it is not to say there are no destinations but a seriously well-prepared, well-organised, interactive website is one of the things we discovered was required. I apologise for that but that is the way it is. (Mr Winterbottom) First of all, can I say I agree with you, with the frustration. One of the advantages of having the London Development Agency looking after the strategic role of tourism and then making sure we have an organisation which delivers on the ground, is that given our wider brief, and this might relate to DCMS-DTI relationships, we also have skills which we have to tackle. We also have business development which we have to tackle. We are concerned about diversity and one of our objectives is to recognise the different ethnic mix in London, in jobs and businesses. What our plan is is that although we are putting a relatively small amount of our single pot resources into tourism directly, through our mainstream programmes we will use that to try and focus and encourage people into the tourism and hospitality sector through training schemes and brokering schemes. The only caveat is that this is quite a long-term job but we will tackle it. (Mr Winterbottom) We have not got any specific programmes in place for supporting tourist businesses or the tourism sector, but we are working on them at the present time. (Mr Winterbottom) Yes, but what we have to do is focus on it much more. There are other people with a direct responsibility for the skills and training in London, and another ministry which directs that funding, and we have the Learning and Skills ---- (Mr Winterbottom) Yes, and we are encouraging that and we are working in that direction but we have to encourage those people with the resources to deliver those programmes to recognise that this is a very important sector, which I think we have done, and now it is a question of making sure that they devote the necessary substantial resources to training people in that sector. By the way, tourism and hospitality relates to the NHS very well. There are massive job opportunities and yet we have got frustration for many, many people who do not have employment in London. This is one of our biggest challenges. It is not as simple as in Scotland. There are different ministries with different responsibilities and there are different agencies and one of our jobs, arguably our main job, is to pull everything together and make sure it works. Ms Shipley (Mr Winterbottom) Chairman, I would like to take away that particular point and try and see what we can do and I would like to report back because I share your frustration and I agree with your points. It is difficult because the market determines what land use should be. Maybe that is the way that we are going to have to start thinking, as to whether or not we can talk to the boroughs and say that in their UDPs, particularly in high tourist-dominated boroughs like this one, we should put a requirement on them to have certain space where proper eating establishments can be set up because otherwise the difficulty is it probably does not pay. That is the difficulty. (Mr Winterbottom) I think it is a good idea. I struggle personally, and I have to come here quite often to meet people and I slip into Boots for a sandwich. At least I know the area. Where else do you go? I am with you. I think we will look into what we can do to see if it is possible to get properly licensed mobile food into this country. (Mr Winterbottom) I agree. Obviously I just want to explain our limitations - and I would say this wouldn't I - different departments and different boroughs have different responsibilities. So again we will use all our influence, and I know the Mayor will agree with what you have said, and we will take that away and see what we can do. Ms Shipley: I am looking forward to spring. Mr Doran (Mr Winterbottom) If I could just explain what we have done. We conducted a strategic review of tourism in London. That review has been completed. We had public consultation on the key findings and we have produced a three-year plan for tourism in London. It is quite detailed, it tackles some of the issues which have been raised this morning, and that was launched on 20 September, so that is in the public domain and if you want us to we can arrange for copies of that to be sent. The question then is how do you implement the strategy and that is really what I was trying to explain before where we have employed KPMG. They are working with the London Tourist Board, they are working with the London Development Agency, they are working with the Mayor and we are negotiating as to how the London Tourist Board should be restructured so it can be put into such a shape that it tackles some of the issues we have talked about this morning, particularly the marketing issues. What the strategy also has pointed out, and I have taken steps to try and put resources behind this is to look at how we should tackle issues such as making sure that the skills and training and business agenda are plugged into tourism and hospitality and that the LDA will take responsibility for making sure that that happens. There is a whole range of other issues, such as there is a question mark should London have a convention centre and we think that that needs a serious piece of work and the London Development Agency will support that piece of work outwith the funding for tourism to look at that and appoint a team of people to look into that. So the London Development Agency will tackle those sorts of things that spin out of our strategy and the core marketing membership services - trying to improve the products in London, trying to improve communication - will be done by a restructured Tourist Board and we foresee substantial changes both to operations and to Board membership. (Mr Winterbottom) Yes. (Mr Winterbottom) We are. (Mr Winterbottom) I am sure it is a weakness, because I think that members of the Committee have raised some criticisms of London that I feel are justified. I do not think that I am able to argue with that. As to what we are doing about it, I think that is more interesting, because we are working with a whole range of projects and we have helped a wrong range of projects through our investment projects. We did help Tate Modern. We have helped the Globe Theatre. We are working with the Larden Centre. We are working with a whole range of other projects. We are looking at developing a world-class aquarium in the Royal Docks interlinked with the new DLR to the City Airport. We are the custodians of the Royal Arsenal in Woolwich where a new visitor centre has been opened. There are many positive things that we are doing to try to tackle issues. We are working all the time, trying to push and bring sense and order to some of the complex problems which have been raised today. I am sorry if I did not really look as though we were focussed on those problems. We are focussed on those problems, but I think it is important that you get the truth as to what has happened. (Mr Winterbottom) We are currently in discussions with DCMS about future funding, and indeed I think we are one of the pathfinder Regional Development Agencies in those discussions. I think they are watching what we are doing with interest. We have , 1.9 million allocated from DCMS, which we put into tourism. That is the government allocation for tourism in London. Of that, , 250,000 of that money is dedicated to the gateway activity. (Mr Winterbottom) Yes. (Mr Winterbottom) That is it, yes. (Mr Winterbottom) Yes, I think that is what I was trying to say, though I probably did not say it. If you look at the scale of the problem and the problems which you have and which you all identify, that is a very, very small amount of money. (Mr Winterbottom) Yes. (Mr Winterbottom) No, I think there are two issues. Regional Development Agency funding now comes through what is called the single pot, and we hope that the , 2 million or the , 1.9 million, or whatever the figure we negotiate, is added to that single pot. It is worth pointing out that the London Development Agency has, in addition to that, committed substantial sums, much more than that - we have committed , 7 million over the next two years - from our own single pot resources, because we recognise how important to tourism hospitality is. We are still in those negotiations with DCMS, though. They are very supportive, but it is a question where there is only a certain amount of money to go round, and England has to carve it up in an amicable way. Obviously if you look at the comparisons with our friends who were in here before, they have substantially more funds to go out. (Mr Winterbottom) We are in dialogue and discussions with them, and that is as far as it goes, but there is a commitment to identify and work through that gateway role with our colleagues in the other RDAs. (Mr Winterbottom) It has been DCMS. DCMS are very helpful and they are trying to bring this together, but it is a pitifully small amount of money for London to do that job satisfactorily, and that is still of concern to us. (Mr Winterbottom) No. (Mr Winterbottom) It will be. (Mr Winterbottom) They have not. (Mr Winterbottom) It will. (Mr Winterbottom) It will always be DCMS, but I think it is what we ask them, what we want to put on the table to discuss. (Mr Winterbottom) I think we should all work together. I think there is great teamwork. We should have great teamwork, and I think we do. Chairman, if I may, there is an issue, though, about ministerial responsibility. DCMS does not have a big budget for this, and of course in terms of the Regional Development Agencies their responsible ministries are the DTI. It is just something I would like to point out. (Mr Winterbottom) I do not know. What I feel is that we should have a joined-up approach to tourism and hospitality, and I do not care how that happens. We have to break down silence, and obviously when we start talking about recruitment and training and so forth, that brings in other ministries. Education is again the same thing. I think we need to focus on the tourism business and give it those resources. To me it does not matter which ministry is responsible, as long as the others work in with it. (Mr Winterbottom) Yes, they do, and I would like to pay great tribute to the airlines and BAA. When we did our tourism review they spent a lot of time and gave us quite a lot of personnel and fed into that. Clearly there are tremendous benefits from co-working, and that is exactly where we want to get to here. (Mr Winterbottom) They have not been asked to give us any money. They do give some money to the London Tourist Board at the moment, but they have given us time. Mr Doran: Thank you, Chairman. Chairman: Thank you very much indeed. That was a very snappy exchange. I am most grateful to you for coming here today. Since this is the last sitting of this Committee this year, I should like to wish everybody a Merry Christmas and a Happy New Year. Thank you. |