Can tourism lead us out of recession?

This is the question of the moment according to Iain Herbert, Chief Executive of The Scottish Tourism Forum, who was the guest speaker at the recent forum event chaired by HIT Scotland. A group of leaders debated this point

Can the industry meet its target of 50% growth by 2015? It is a question that has been well debated in private over the past few months – especially given the growing effects of the credit crunch. The forum raised questions over industry leadership and potential investment, and emphasised the need to leverage the potential of the sector.

Iain Herbert has been at the forefront of lobbying and communicating with government and wider industry on this topic, among others. He has been Chief Executive of the Scottish Tourism Forum since 2007, having previously been Operations Director for Hadrian’s Wall Heritage. Iain has led several different premier Scottish tourism agencies including the Scotch Whisky Heritage Centre, and was also Operations Manager for The Royal Yacht Britannia.
He was also General Manager on the successful Falkirk Wheel project, and has been Head of Visitor Operations for National Museums Scotland. “Scottish tourism is one of the top five industry groups and it is moving up the pecking order. By its nature it is a non-transferable industry for Scotland. It is not all doom and gloom at the moment; although business tourism is reduced significantly, some rural tourism and attractions have had a more positive start. Some hotels are reporting good occupancy. One of the core questions is making sure we have the right products in place as we come out of recession – Germany looks to be one of the first European countries to come out of recession.”

The following section summarises the key points made by Iain:

  • The Tourism Framework For Change (TFFC) was established in 2005 with 14 key targets and five delivery units.
  • It initially became clear that there was some apathy  towards the Framework because of a perceived op-down strategy that had no teeth. This led to challenges over conversion from action into delivery.
  • A review of the TFFC has been carried out by the STF, suggesting a grass-roots industry-led approach.
  • Pre-recession, did the  50% target matter? Research confirmed that Scotland has enormous potential to grow tourism; however, this growth needs to be delivered by grass-roots and the industry needs to take the lead, with interventional support coming from the public sector. It was agreed that there was a need to reduce duplication, and focus  on the customer experience, marketing and investment as key drivers.

What are the areas of current focus?

  • Investment: Linkage across sectors is important. The percentage contribution made to the Scottish economy is increasing and has real long-term potential. Investment is needed to unlock the potential in the industry; however, this needs to be focused and realistic in its demands and returns. Closer linkage between the local authorities, Single Outcome Agreements and community planning is needed to reflect opportunities for investment.
  • Marketing: There is a disconnect  between marketing national objectives and the local area. The STF is carrying out a review of local engagement and is reporting in the next month. Industry concerns had been raised over the move of above-the-line marketing into operational costs.
  • The Framework: Can Scotland achieve its target of 50% growth in tourism revenues by 2015? According to Iain, the answer is: “What does it mean for you and your business?” Even in the current climate some businesses are doing well and it comes down to the individual business and area, not a strategy.

The Forum’s Discussion…

Investment

  • There was considerable debate among the forum delegates about the ongoing affordability of investment in Scotland generally, given significant budget reductions by the Scottish Executive that have been announced.
  • However, Iain raised the argument that there was ultimately a need to take leadership in the debate and that, while funding would be cut, there is an opportunity in working together and ensuring more joined-up, lateral thinking.
  • It was also confirmed that grants from an Innovation Fund, Growth Fund and potentially an investment bank may be available.

“My concern is that there will be an increasing aversion to risk resulting in a discouraging of investment. This means that by 2014 when the Commonwealth Games are held in Glasgow, hotels that look tired now will look more tired.”

“It’s about adding value without raising prices or taking away that service level. Renovations still need to happen.”

“Are the Single Outcome Agreements affordable in the current climate? £500 million is being taken out of the economy, which will mean reduced public spending. Perhaps there is a need to review these with tourism at the forefront of people’s minds.”

“There are very competitive hotel rates in Scotland; we could miss an opportunity through lack of investment in marketing and infrastructure.”

“It is often argued that the welcome in Scotland is world class; however, our regional airports are not always the best in class. Our biggest opportunity is in leveraging competitive rates to attract corporate business.”

Marketing

  • Hospitality often lags behind other industries  in terms of feeling the impact of an economic downturn. However, with a favourable exchange rate and the potential growth of the ‘staycation’, there is an opportunity to ensure tourism’s position as an industry of strength, and also to offset the dramatic reduction in corporate  travel.
  • Iain confirmed that VisitScotland was actively targeting the rest of the UK in terms of marketing and promotion for domestic tourism, and that a long-term strategy for more industry partnership working with VisitScotland was also being looked at. However, he highlighted that there was more potential for Scotland in the London market, particularly during the London Olympics.

“A global recession is a global opportunity to hit the reset button and to get the basic things right, versus just getting through it.”

“There is a danger that we are overly optimistic. Reduced interest rates mean that there is a greater threat to the top line.”

“VisitEngland is catching up through its network of Regional Development Authorities.”

“The Open Golf will be held in Scotland this year and these sporting projects do provide powerful marketing.”

“On one hand we need to leverage Scotland’s key attributes; however, the industry does need to work together to ensure pricing is fair and reasonable.”

Customer experience / skills

  • The development of standards to improve skills  levels is central to the Framework’s strategy. Customer service training and a leadership school were the main subjects of debate, with a requirement for standards to be implemented throughout the industry.

“We should not always work to the lowest common denominator. In contract-catering terms, the talent coming into the industry is far greater now and they are increasingly from the  hotel sector. I think we are getting there with the talent debate. The real question is what we are doing with reference to higher education to encourage positive attitudes and raise perception.”

“St. Andrews are developing their own standard,available as a short course.” 

“We have kept our market share which, when I compare with other European countries who are up to 25% down, is positive. What it has brought home to me is that, if we want more, the only way to deliver is through our staff. Customers want more of an experience than ever before. Is this our best form of marketing?”