The Scottish Government

Tourism Statement

Scottish Tourism - Going for Growth

Tourism Minister Frank McAveety

Statement to the Scottish Parliament

Thursday, March 11, 2004

Since the new Executive was established, the Deputy First Minister has chaired a group of Ministers considering the current state of the Scottish tourism industry, and the funding and support available to it from the public sector. This has been time well spent as we believe the package of measures I am announcing today will provide the basis for an even more vibrant tourism sector over the next decade.

Tourism is important toScotland. It is important to the 215,000 people who work in the industry and in related sectors. It is important to the Scottish economy. Gross tourism revenues, which had been falling for several years until 2001, grew by 6.5% in 2002 to £4.5 billion, with further strong growth experienced last year.

An industry which was shaken by the events of 2001 has shown, through the sheer hard work of its people at every level, just how resilient it is.

And last but by no means least, tourism is important in shaping our visitors' perceptions of Scotland, perceptions which can influence not only their decision to make a return visit, but perhaps even to come to live and work in Scotland.

The potential of Tourism is clear, world tourism is forecast to continue growing at over 4% per annum until 2020. New markets, higher disposable income, cheaper travel and much easier access to information via the internet are powering this growth. But it is also an increasingly competitive market, with some 180 countries fighting for market share.

For those which succeed, there are great rewards in terms of earnings, employment and economic activity. But consumers are also becoming more sophisticated and more powerful. The growing accessibility of destinations, for example in the EU Accession Countries, is increasing the competitive pressures on Scotlandas a destination, particularly in the fast-expanding short break market.

The strong performance of our tourism sector over the last two years has to be seen against that increasingly competitive background. But the sector is well placed to take advantage of current market trends. We are well positioned geographically, with a huge domestic market in the rest of the UKright on our doorstep. Helped by our Route Development Fund, direct access from Europeand further afield is improving all the time. And people across Scotland, in tourism and related businesses small and large, and in the organisations which support them, are working hard to build on the revenue and employment growth of the last 2 years.

If we are to capitalise on this, we need more good marketing, with a strong brand identity which matches the products whichScotlandhas to offer its visitors with the demands of an increasingly sophisticated market. We need consistently high quality across every aspect of our visitors' experiences while here, including higher levels of staff skills and training.

But most of all we need integrated support for tourism, so that everyone pulls in the same direction.

The public sector already makes a huge contribution. The Executive already invest £80 million a year in tourism across the board, through VisitScotland, the Enterprise Networks, and other bodies such as local authorities and Historic Scotland. A further £10m a year for tourism projects comes from European funding.

All of that funding is being put to good use. VisitScotland's marketing is working well, focussing on branding Scotlandas a single world-class destination. Beneath that level, VisitScotland supports the brand by marketing locations and themes in which Scotlandhas clear strengths, such as city breaks, active holidays and heritage and culture.

And as an integral part of this marketing effort, visitscotland.com is now established as an effective route to market for thousands of tourism businesses acrossScotland.

Over £10 million worth of bookings have been placed through visitscotland.com. For some businesses, it is now the main way in which they get bookings. In addition, the website received 420 million hits last year, and visitscotland.com is building up a very extensive client base, which is being used by VisitScotland to support its more conventional forms of marketing. All of this increasingly effective marketing is reaping dividends for Scottish tourism.

Alongside these developments, the VisitScotland quality accreditation scheme continues to prove its worth. It is highly valued both by the 80% of accommodation businesses which are registered within it, and by their customers. In addition, other bodies such as the Enterprise Networks and Historic Scotland continue to invest in quality visitor attractions, and in staff skills and training, while area tourist boards and local authorities play their part at local level.

Despite all of this good work, however, we cannot afford to be complacent. The private and public sectors, working closely together, need to find new ways of attracting more and more people to visit Scotland. Then by meeting and exceeding our visitors' expectations, we need to persuade them to return - to visit or to live. Only by being among the best in the world will Scottish tourism continue to grow in the face of strengthening international competition.

That means that we must all get behind the work being done by VisitScotland to marketScotland. To build on what has already been achieved, I am glad to be able to announce today that the Executive will increase the marketing budget of VisitScotland. We have added £5 million to this year's marketing budget of £20 million, £5 million to next year's and £7m in 2005/06. This is a 28% increase in the VS marketing budget. Most of the new money will go on marketing Scotlandin parts of theUKand overseas tourism markets that have yet to be fully exploited.

This investment will help attract more visitors toScotland. It will contribute to Scotland's economic growth, our top priority in our Partnership Agreement for a Better Scotland. And it will deliver more jobs, both urban and rural.

But this additional marketing funding for VisitScotland comes with a challenge to the private sector. We want tourism and related businesses across Scotlandto match it pound for pound with their own contributions to joint marketing opportunities with VisitScotland. Many businesses, and not just in the tourism sector, already do this very successfully; it is a classic win-win situation. We want many more to do so, in order to capitalise on the strong revenue growth that will result.

The role of the innovators, the businesses to drive forward to create new markets, new products, new opportunities - to develop a genuine Public Private Partnership to enhance one of out essential industries.

We believe that our investment, matched by the private sector, will help sustain over the next 2-3 years the growth in gross tourism revenues experienced since 2001, so that they continue to grow on a par with expected global growth rates.

If the sector can achieve that, and then sustain it in the long-term, gross revenues inScotlandwould grow 50% by 2015 to well over £6 billion a year.

The number of people presently employed in tourism and related sectors would also grow very significantly from the present level of 215,000. These are long term goals which are achievable, and which the Executive strongly supports.

More effective marketing of course is only one part of the equation.The quality of what we offer our visitors while they are here needs to be world class, so that their expectations are met and indeed exceeded by the facilities that they use and the people who look after them.

More and more destinations now understand that investment in quality means more business. So we will work with the tourism sector on how best to upgrade the VisitScotland Quality Accreditation scheme, and extend its scope. One important aspect of this, which VisitScotland is currently piloting, is to integrate skills and staff development provision into the QA scheme. An additional £3 million will be made available to upgrade quality accreditation over the next 2 years.

But the quality of the experience enjoyed by our visitors while they are inScotlanddepends crucially on the professionalism of the staff at every level who welcome them and then look after them while they are here. There are many exemplars of good practice in recruitment, training and skills development right across the tourism and hospitality sector in Scotland, but several long standing factors impact adversely in these important areas.

The sector has a high proportion of part-time workers, and a labour turnover rate roughly double that of other industries. A high proportion of businesses report skills gaps - 36% compared with an average of 22% for other sectors. And while tourism employers do provide staff training at a level similar to that for other industries, over a third provide none at all, and of these, over half say that no training is needed or that their staff are fully proficient.

So the challenge here is to convince tourism employers of the benefits of investing in their own skills and those of their staff. The Enterprise Networks already do a great deal of successful work to help the recruitment, training and skills development of people in tourism. This includes an extensive and varied programme of events to help the managers of businesses improve performance on issues such as service quality, innovation and recruitment and retention of staff.

The provision and funding of these training opportunities by the Enterprise Networks is in general adequate. But we need to find new ways of persuading smaller companies that training reaps dividends, using more private sector examples of best practice.

We need to encourage successful tourism champions to demonstrate to their colleagues the real benefits of having well trained staff.

We need to use enthusiastic tourism people as ambassadors to sell the attractions of a career in tourism and hospitality to potential recruits, young and not so young. And we need to ensure that all of this is done in an integrated way. In that way, the tourism training and development support already being provided by the Enterprise Networks and other training organisations can be enhanced.

The process of integration of the Networks' business support activities with VisitScotland's strategies and plans has already commenced, and this process will now be intensified to achieve more effective joined up support to the tourism industry in the ways I have outlined.

ROLE OF INTEGRATION

Within the overall context of stimulating economic growth across the tourism sector, we have also been considering very carefully the structure of the Area Tourist Boards. The Ministerial Group fully recognised the strong contribution made to Scottish tourism by the staff of the 14 ATBs, and by the local authorities, enterprise companies and businesses which support the ATBs financially. We want to build on these contributions, while developing the network to meet the changing demands of today's tourism marketplace.

A consultation exercise carried out as part of last year's ATB Review revealed a wide spectrum of opinion on what changes were needed, ranging from retention of the present structure to outright abolition. These responses are being published today. However, a consistent and very strong theme in almost all of these responses was the need for much better integration of tourism support activities at area level with national strategies and priorities for the generic marketing Scotland.

Ministers have concluded that Scottish tourism will be best served in the years ahead by an integrated network, similar to the Enterprise Networks, which can deliver for the whole ofScotland. We have decided that this should be done by replacing the ATBs with an integrated VisitScotland network.

This Scotland-wide network will consist of local tourism hubs and will have responsibility for the delivery of the national tourism strategy in its area. But the hubs will also have the ability to respond to circumstances in their areas, and will link with the growing number of private sector tourism action groups acrossScotland. Unlike the ATBs, the new VisitScotland tourism network will not be a membership organisation, but will charge for all services to tourism businesses, as indeed VisitScotland does at present for membership of its QA scheme.

The new network will work closely with the Enterprise Networks and LECs to integrate tourism business support at area level. We wish to see a continuation of the strong link between the tourism network and local authorities, whose support for tourism at area level is invaluable. We want to reinforce the vital link between local authorities and local service delivery.

To do that, we propose that the system of local authority grants to ATBs should be replaced by service level agreements which each local authority would negotiate with VisitScotland for the tourism services they require in their areas. This will enable authorities to see exactly what they are receiving for their money.

The Partnership Agreement wants our cities to thrive and rural areas to prosper, VisitScotland and its new network will be given specific targets to increase jobs and the value of rural tourism, in line with our Partnership Agreement, and will pro-actively use the major cities as gateways to the rest of the country. It will also step up its work on developing new products and services in conjunction with businesses large and small. We must play to our strengths and deliver on giving our visitors exactly what they want and expect in terms of welcome, service, quality and depth of experience.

The proposed new network will require primary legislation and we will bring this forward as soon as the Parliamentary timetable allows. However, to minimise the time of uncertainty we intend to introduce transitional arrangements from April 2005 which would allow for an integrated approach to be introduced.

We intend to replace the 14 ATB's with 14 Local Tourism hubs liked to VisitScotland. This will be a two stage process. In first instance we will need to set up two new ATB's. The two ATBs would act as something of a stepping stone to enable the new network to be up and running by April 2005. We would hope that most of the present staff of the ATBs will move to this new structure on that date.

We anticipate that there will be a further year of development work needed after April 2005 to refine the operation of the new network, with some rationalisation of support functions. The Executive will lead this transition project.

As a second stage we will then bring forward primary legislation to formalise the VisitScotland network and abolish the ATBs. I stress that we are very anxious to harness the expertise and enthusiasm of those who work in the present ATB structure, and to retain all of the good work currently being done by them, in their respective areas.

We are confident that what we have announced today will, with a matching commitment from the private sector and continuing support from local authorities, help Scottish tourism to go from strength to strength. The Executive shares the vision of many across Scottish tourism, the vision of an industry capable of generating 50% revenue growth over the next decade.

Achieving that goal will need a lot of hard work, it will need the private and public sectors to work closely together, and it will need a determination to succeed in today's ever more competitive marketplace. I for one am confident that we can and will succeed, and that tourism will be one of the leading growth sectors of the Scottish economy in the years ahead.