Pathfinders to the Parliament

TOURISM SECTOR PATHFINDER

Introduction

Lord Gordon of Strathblane, Chairman of the Scottish Tourist Board, was invited to suggest the priorities for the tourism sector based on discussions currently ongoing in the Scottish Tourism Co-ordinating Group (STCG) and current work on the Strategic Plan for Scottish Tourism for the period 2000-2005.

What issues will affect tourism in Scotland 2000/05?

A number of key issues, identified by the STCG partners (see Appendix 2), will affect tourism as we move into the new Millennium. These, together with the Tourism Futures work outlined in Appendix 1, will influence the development of the new Strategic Plan, to be published later this year.

How can we get to know our customer and potential customer better?

Who are our customers of the future?

Keeping a focus on the customer is crucial of any successful business and tourism is no exception. We must continue to gather and interpret the market intelligence, which exists from many sources, and use this to:

Confirm Scotland's major markets and the segments within these markets. Identify emerging markets and segments which will be interested in the Scottish product (for example, how do we exploit the opportunities of the interest in Celtic heritage, eg Scotland and Ireland, without losing competitive advantage?). Develop strategies to reach these customers.

How do we communicate with our customers?

Communication channels will change radically over the next five years. The advent of digital television and radio will see a proliferation in channels available; the growth of direct marketing continues; new opportunities for advertising appear constantly; interactive systems will become the norm. It is in this environment that we have to choose the best methods to talk to our customers.

Technology is changing the nature of the interaction we will have with our customers at an incredible speed. No sooner does something seem to be cutting edge than it becomes old hat. And yet tourism - because it depends heavily on the provision of information to consumers - is ideally placed to use new technology and consumers are highly motivated to make the effort to seek that information out. The same cannot be said for many other products. The challenge for us is therefore to think creatively about how we can use technology both to get our message across, to provide information and to make it easy for our customers to access our product. www.holiday.scotland is at the forefront of this backed up by the bookable product database that Project Ossian provides. But this is just the beginning.

What will our customers want?

We know that people visit Scotland for the unique blend of outstanding scenery, culture and heritage. Which is just as well as these are things we cannot change. But they need more - transport, accommodation, places to eat, and entertainment. These are all subject to changing tastes and expectations. We have to be sure that these live up to international standards. Identifying these and ensuring we deliver them will be crucial in a competitive world environment where all destinations are becoming accessible. We must always think - why would anyone come here if they have their choice of anywhere in the world?

How should Scottish tourism be supported?

What will be the effect of a Scottish Parliament?

In May 1999 Scotland will undergo radical constitutional change with the advent of a Scottish Parliament. This will have widespread implications for many areas of Scottish life.

Tourism and related powers such as transport, the environment, the arts and local government, already devolved administratively, will become the responsibility of the Scottish Parliament. The Parliament will have full legislative and budgetary powers in these. The Parliament will also have an impact on the fiscal environment in which tourism business operate. The structure of ministerial responsibilities and, therefore, the location of the tourism portfolio, will be a matter for the Scottish Parliament to decide.

STCG partners and the industry will need to embrace these changes and ensure that tourism is given priority by a Scottish Parliament so that the right operating conditions are created.

Can a clusters approach benefit tourism?

The Scottish Enterprise Network Strategy includes the adoption of a "Clusters" approach to the development of key areas of the economy. This involves looking at all the organisations and related industries that can help to promote innovation and improve competitiveness in a particular area. The potential application of a clusters approach to tourism is currently being investigated.

How should tourism support be organised locally?

One of the strengths of Scottish tourism is its formal structure, embracing as it does national and area level interests, the industry and public sector: the ATBs are key components of this structure. Since reorganisation in 1996 the ATB network has delivered substantial successes, including: leading local partnerships in developing area strategies to deliver National Strategic Plan objectives; providing affordable co-ordinated marketing for the 16,000 businesses in ATB membership; improving the quality of local information services across 150 Tourism Information Centres; and working in partnership to bring Project Ossian to fruition. However, nearly three years after reorganisation some ATBs have encountered problems with funding which have restricted their effectiveness.

Resolving this situation in order to achieve a stable and effective ATB network is fundamentally important to the future effectiveness of the tourism structure in Scotland and its ability to develop tourism, in the longer term, at local and national level.

What is the future of European funding?

The current European Structural and Cohesion Funding Programmes expire at the end of 1999. The importance of such funding is underlined by the fact that £75 million was available for tourism infrastructure, marketing and promotion under the existing 7 programmes - Objective 1, 2 and 5b.

From year 2000 new arrangements will operate and it is as yet unclear which areas will qualify for future funding under the different objectives. Every indication is that less of Scotland will be eligible, however, transitional funding arrangements will apply to all areas losing eligibility for at least 4 years.

Planning has started to establish proposals on eligibility on the new arrangements. It will be important to ensure that tourism development and particularly support for tourism marketing remain eligible measures in the new programmes post 2000. It would also be beneficial if bids for them could be made on a pan-Scotland basis.

How will the tourism brand fit in with the branding of Scotland?

We must ensure a consistency in Scotland's brand positioning across all Scottish export sectors. Scotland the Brand are seeking to establish a branding of Scotland that will enhance the marketing of a wide range of Scottish products from electronics and finance through to culture and the arts. As the government's tourism marketing agency, STB has the prime responsibility for, and guardianship of, the Scotland brand in the tourism sector. We must ensure that this brand is consistent with other sector branding whilst maintaining a focus on the 'holiday-buying' customer.

Tourism is one of the few industries that can create employment and investment opportunities throughout Scotland. We must ensure that the economic benefits of tourism are enjoyed as much in the Highlands and Islands as in the Borders or in Edinburgh and Glasgow.

In relative terms, however, tourism is more important to the economy of remoter rural areas than in our larger cities. In the Highlands of Scotland tourism accounts for 14.6% of all employment (1995) and tourism receipts are £1661 per head of population (1996). This compares with 7.7% and £589 for Edinburgh & Lothian and 7.2% and £205 for Greater Glasgow & Clyde Valley.

The challenge then is to grow tourism throughout Scotland while meeting customer demand, managing over demand and highlighting lesser known areas, especially for repeat visitors. We must play to our strengths and what our customers want - be it our cities and their culture, or the peace and quiet of our remoter destinations. Identifying and specifically targeting appropriate markets is the key.

Can we develop year round tourism?

Despite recent progress Scottish tourism remains highly seasonal with 39% of holiday trips taking place between July and September. We need to maintain our efforts in attracting business outwith July to September. Without this additional business, operators will find it increasingly difficult to reinvest to meet the increasing standards expected by our customers.

The Seasonality Working Group of industry representatives has recently reported, endorsing the current approach, concentrating on the consumer campaigns 'Autumn Gold' and 'Spring into Summer', is appropriate. There is growing evidence that they are working. They provide a focus for activity and are a clear and tangible way for businesses to reach their market. But we need to raise our sights. We need to provide more of the products and packages that the consumer wants. We need to ensure that more businesses see and take advantage of the opportunities. We want to position these brands in such a way that they become the market leaders in UK short break tourism.

How do we make Scotland more accessible?

The last five years have seen important improvements in Scotland's accessibility, not least as a result of increased competition on the air routes between Scotland and England and the aggressive marketing of the rail companies. We must capitalise on this and continue to influence transport policy to reflect the needs of tourism.

Transport issues which could affect Scottish tourism in the future include:

New direct air routes- scheduled and charter- to Europe/North America. Landing slots at London Heathrow. Quality air access to the Highlands and Islands. Further competition on the Scotland/England air route. Road pricing and other measures to reduce car usage. Direct ferry services to the European mainland. Maintaining and developing internal ferry services. Rail franchising and investment in rail network and rolling stock.

In addition the provision of quality travel information through Project Ossian and the proposed Integrated Scottish Transport Timetable will be another major challenge.

How do we ensure high standards in workforce?

If Scotland is to achieve and sustain a tourism industry of world class status, a lot will depend on the quality and skills of its workforce. Much has been done in recent years by Tourism Training Scotland, an STCG initiative to raise awareness of training needs and develop tourism specific programmes and materials. However, with rising customer expectations and increasing competition, the following 'people' issues will continue to dominate the industry as we look to the next millennium:

The Scottish labour market: the Scottish labour force is expected to fall by about 0.5% from 1998-2002. The workforce is likely to be increasingly female, older and part time. Investing in People: although there has been improvement over the last five years, recent work indicates there are still varying levels of awareness in the tourism industry of the need to train and the business benefits of investing in staff. Recruitment and retention: turnover rates are high in the tourism industry. The seasonal nature of the industry means that employers have difficulty in retaining staff from year to year. There is a predicted shortage for the future of skilled staff with chefs highlighted as a specific need. Management development: managers need to be equipped with the skills to be innovative in meeting the challenges and opportunities facing the industry, eg IT. Image: the tourism industry still has a poor image with many potential new employees/returners. Competitive pay and conditions, clear career paths and closer links between industry, education and the careers service are required.

How do we make our tourism industry sustainable?

Scotland is already a leader in the field of sustainable tourism. Our work on tourism management, Green Tourism Business Scheme, cultural tourism and community involvement in tourism are examples of good practice. The work of the Tourism & Environment Task Force, an STCG initiative, has helped advance the concept of sustainable tourism. But this now requires a wider awareness within the industry, and there is still much we can do to promote and support action towards this goal. We need to consider the following questions:

How do we balance the needs of economic, environmental, and social sustainability? Does the industry consider it has a responsibility in the management of our environmental assets? Do we know enough about visitor attitudes to our environment and culture, and the implications for product development? How do we fund programmes to ensure that tourism does not impact negatively on the environment? How do we maximise the potential of our rich culture without spoiling it? How can tourism underpin the economic and social fabric of fragile rural communities? How can we ensure that local communities have a say in, and contribute to, the way tourism is developed? How do we secure a commitment to sustainable tourism within Scotland's first National Parks as they evolve? How can we develop environmental and social indicators to measure our progress towards a sustainable industry to complement traditional measures of value and volume?

The challenge is considerable - the Government has made a major commitment to sustainable development in the new Scottish Parliament and tourism will be expected to play its part in achieving this goal.

Priority Actions for the Scottish Parliament

There must be a clear recognition of the importance of tourism to the Scottish economy, society and the environment. It is one of Scotland's key industries, contributing £2.6 billion to the Scottish economy and is likely to be the principal generator of new sustainable jobs throughout Scotland. In ensuring that tourism is given the appropriate support to enable it to continue to thrive the Parliament should: recognise its importance in placing it in the political executive structure; ensure adequate public funding; create an environment in which tourism can flourish by ensuring a level playing field in all fiscal and regulatory policy relating to tourism and by ensuring that the transport infrastructure encourages the growth of tourism. This is particularly true of links to Scotland by air, sea or land, but also calls for better integration of different modes of transport within Scotland; ensure that there is an accurate statistical Scottish database on all matters affecting tourism to provide a prompt, accurate benchmark against which future performance can be measured; remove artificially restrictive boundaries between different public sector expenditure blocks (eg running costs vs programmes) so that NDPBs can operate more effectively. Action is required to stabilise the funding for the area tourist network. This can best be done by channelling ring-fenced public funding through STB. This would allow ATBs to plan ahead with confidence about funding levels and enable STB to set consistent targets and conduct appropriate performance monitoring. In particular, Project Ossian will deliver a competitive advantage to Scottish tourism and its development and introduction should not be hindered by any temporary funding difficulties. The Parliament should have the tourism dimension fully in mind when negotiating the successor initiatives to current European funding. It would also be beneficial if bids for these could be made on a pan-Scottish basis. The Parliament needs to ensure improved and effective application of resources designed to develop tourism and administered by varying bodies so that there is a strong strategic link between marketing, transport infrastructure, product development and training in tourism. Tourism is above all a customer driven industry and must be led by a market focused body with clear linkages to other public agencies. Mechanisms must be available to ensure that priorities identified by the work of the Tourism Futures Group can be addressed promptly by the Parliament and where appropriate acted on quickly. An early review by the Parliament of preliminary thinking on STB's new Strategic Plan is essential if it is to be carried into effect promptly and capitalise on the momentum created by the Parliament itself.

APPENDIX 1

Tourism Futures - what does the future hold?

In March 1998 STCG established a "Tourism Futures" sub group, under the chairmanship of Lord Gordon, Chairman of STB, to identify trends and developments likely to impact on the long term development of tourism in Scotland over the next decade.

The group undertook a scenario planning exercise, facilitated by Scottish Enterprise, from which emerged a vision of the kind of industry which Scotland will need if we are to remain competitive.

A Vision for Scottish Tourism

The vision for Scottish Tourism is of an industry that is internationally competitive, sustainable and valued for the economic, social and environmental benefits it brings to Scotland. It will:

have excellent market intelligence and understand the customer; be forward looking and international in perspective; be innovative, entrepreneurial and responsive to change; effectively exploit developments in technology; be committed to continuously developing skills at all levels in the industry; be a first choice career; have all the necessary infrastructure, especially transport infrastructure, in place; demonstrate effective collaboration between individuals, businesses, industry groups and the public sector; consistently deliver the high standards expected by the customer.

This vision provided a framework for the group to identify a number of key actions necessary to realise Scotland's potential as a leading tourism destination. These are:

gathering and disseminating market information, taking advantage of developments in information and communications technology; developing new marketing tools and approaches to reflect changing customer requirements and new information and reservations systems; achieving a significant increase in the level of skills in the industry, especially management skills in relation to managing change, the use of technology, and innovation in the industry's products and processes; ensuring the provision of the infrastructure the industry needs, especially transport, information and communications technology, and local visitor facilities; getting business itself to take the lead in promoting industry dialogue, sharing knowledge, promotion of best practice and effective articulation of industry's views; redesigning public sector/industry roles and re-assessing how resources can be used most effectively; raising the profile of the industry in Scotland and encouraging the Scottish Parliament and the wider community to value it as a source of economic and social benefit.

It has been agreed how we take these ideas forward. STB will lead on information technology issues relating to the consumer and on marketing communications; Scottish Enterprise on IT support for businesses and infrastructure issues; and the Scottish Tourism Forum will lead on business issues and industry communications. All other STCG members will be involved as this work develops.

APPENDIX 2

Bodies represented on the Scottish Tourism Co-ordinating Group

Scottish Office Education and Industry Department

Scottish Tourist Board

Scottish Enterprise

Highlands and Islands Enterprise

British Tourist Authority

Confederation of Scottish Local Authorities

Historic Scotland

The Scottish Arts Council

Scottish Museums Council

Scottish Natural Heritage

The Scottish Sports Council

The Scottish Tourism Forum