Wednesday, 31 March 2010

Do Tourism Businesses Deserve the Public Sector Spend?

“Isn’t it time businesses asked themselves if they deserve support? Why should they get help when the butcher down the road does not.”
Peter Lederer
We have to say, "Well said Mr Lederer", but there’s more than a few of us who wish you hadn’t waited until a week before leaving your post as Chairman of VisitScotland to say it so publicly and with such clarity. Many will have been well aware of your feelings and how you fundamentally believe that tourism, perhaps the most free of free markets, needs to be driven by the private sector.

Many of us also fundamentally believe that over the past ten years it has been VisitScotland’s interventionism (in areas of product promotion, micro destination and micro-product marketing and most horrendously in the role Visitscotland decided to play in becoming a travel trade player with it’s disastrous VisitScotland.com strategy) that has impacted upon the dynamism of the private sector.

In intervening in these and other areas the smaller non VAT registered businesses have been spoon fed a diet of local, regional and destination marketing support that has become the staple, even sole, part of their promotional menu.

Unsustainable Tourism Information Centres still abound for no more than political purposes; an administrative heavy centralised national tourism organisation still exists with far too much involvement in far too many, too specific areas such as product promotions and, still, online selling.

As long as the public sector continue to carry on with these activities, the entrepreneurial tourism operator will have less opportunity to develop. They cannot compete with the public sector purse and therefore they do not innovate nearly as effectively as they would if the playing field was level.

In his interview as outgoing chairman interview Peter Lederer, “issued a stark warning to the Scottish tourism industry to rise above an ingrained “dependency culture” and learn to rely on its own resources and initiative rather than rely on public-sector support.”

It is clearly the right thing to say but why oh why did VisitScotland continue to oversee a growth in activities that were clearly counter to this ethos?

Peter Lederer continued, “I have been frustrated by sections of the industry not taking a lead and taking things forward themselves. It still feels like a large part of the tourism industry is living in a dependency culture. In fact it is one of the best-supported industries in Scotland at national and local level, and yet Government agencies can never do enough to please. Isn’t it time businesses asked themselves if they deserve support? Why should they get help when the butcher down the road does not. Are they doing their bit to support growth in tourism by investing in quality, and ensuring they understand and meet their customers’ needs?”

In short, the clear answer to the questions that he asks, is that businesses do not deserve the support. My local record shop is struggling away competing for business against online, off shore, non VAT liable, music giants and he doesn’t have a 120 page full colour brochure printed with his picture and contact details on it. Nor does he sit there expecting the local council to send him 50 CD buying customers to justify their existence. Why should a non VAT registered lifestyle business expect any different? Indeed why should any tourism business expect any different.

That probably sounds brutal but unfortunately life for many small businesses is brutal just now and Lederer is absolutely right; businesses must take the lead in developing their own products and services and understand the strength of good collaborations. They should not however expect these collaborations to be underpinned for a three year period by public sector funding “until they can become self sustainable”. I’m not sure that any more than a tiny percentage of government, VS, enterprise or council funded or supported tourism initiatives or organisations have ever become “sustainable”. We all can list a dozen organisations that have taken the money set up and vanished just as quickly.

That profligacy continues even today and somewhere in the country there will be another public sector funder pouring money down another three year hole.

The public sector role in tourism spending must be curtailed and curtailed sharply. I am pretty sure I must have written about this before but much of the expenditure is geographically protectionist and ultimately aimed at displacing visitors from one area of Scotland to another, to become Scotland’s 'must visit' destination. This puts Highlands against Fife, Aberdeenshire against the Borders and taking it to its most ridiculous East Ayrshire against North and South.

The counter to a diminishing role by the public sector therefore has to be a more mature and proactive private sector that has to build in realistic joint ventures and marketing plans – and expenditure – into attracting the business it needs to grow, reinvest and grow further. The responsibility for marketing Scotland therefore must shift.

But not everyone sees it in the same way and in an interview in The Scotsman today (31st of March) George Kerevan, former chair of Edinburgh Tourist Board, appears to argue that more needs to be spent [by the public sector?]. He rightly in my opinion states that “tourism remains a Cinderella industry at a UK level – with limited political support, a limited skills base and poor productivity” but then ruins it by saying that “Yes, it needs a bigger marketing budget but that is only part of the answer.”

When politicians come out and say tourism needs a bigger marketing budget the assumption is that they mean more expenditure by the public sector. Mr Kerevan hits out at cuts in VisitBritain budgets; yet many, perhaps most in the industry didn’t shed a tear at those reductions. Does he really mean that we should be spending more marketing money at VisitScotland level? Or council level? Or just “in general”?

Banging the same drum can become repetitive but it’s not that we’re not spending enough on tourism in and to Scotland; it’s that we’re not spending it efficiently nor effectively.

The VisitScotland shift to “buy in” opportunities where the businesses have to pay for what they get is undoubtedly correct but it has to be implemented with a system that allows that same private sector buyer to input to the strategy. Same drum again but a lack of appropriate structures will inevitably lead to lack of engagement.

In the same Herald interview David Smythe, chairman of the Association of Scotland’s Self-Caterers, said: “ “The fact is that the good people are taking a lead themselves and getting on with their business, just as the designation management organizations have taken advantage of the funding. There will always be some businesses who ask ‘What has VisitScotland done for us?’, and that’s just not fair. The organisation does the big picture stuff very well and I give Peter Lederer high marks in a very difficult job where you can’t please everyone.”

I would probably tend to agree. On the big picture stuff VisitScotland has turned itself around under Peter Lederer’s tenure, and in such challenging circumstances, they have actually done the “Big Picture” stuff increasingly well; international profile, destination marketing, effective branding have all been major plusses in the last decade. Surely therefore “concentrating on the knitting” should be the strategy going forward. Concentrate on the destination marketing development that is required and reduce the expenditure on the detail and leave the private sector to pick up the proverbial baton.

Perhaps it is time for government, at all levels, to recognise its role is to facilitate the development of tourism; it is time for the private sector to accept the detailed responsibility and the financial commitment required to make it happen.

PS.

And all the very best to Peter Lederer!
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