Wales Tourism Alliance (WTA) Policy - August 2018
It is important in light of the loss of a dedicated Ministerial Tourism Advisory Group that the industry is heard. First and foremost the WTA is the voice of the local tourism industry, the micro and SME businesses that are the fabric of our unique Tourism product. The WTA will continue to stand shoulder to shoulder with the members and other key interests in our industry. The following are our priorities for the remainder of this term of Government:
The Tourism Industry in Wales post Brexit
Brexit presents challenges for the tourism industry for growth in business and employment, both the Welsh Government and Industry need to be proactive if any emerging opportunities are to be seized. We are all aware that the business environment will be tough, however if Sterling weakens after March 2019, a further increase in international visitors can be expected and the so called number of ‘Staycations’ may also increase, although we also recognise neither is a given. We all need to be ready, government and industry alike.
This can be achieved as long as individual tourism businesses respond to the challenge and this action is supported by the right government policies and finance for the industry commensurate with its needs and potential. The reconsideration which will have to be given post Brexit to all government support across the spectrum of economic activity is an opportunity for a fresh look at the needs of the tourism industry and the returns which will be obtained from a more realistic level of Government support, akin to and aligned to that found in the agricultural sector.
It is a time when the rules are being re-written. Let it be done in a way which realises the potential of our industry and wider visitor economy.
Against that background the Wales Tourism Alliance will request the Welsh Government consider the following:
A ‘new’ Strategic Development Plan for the Industry
The Welsh Government and the representative organisations of the industry should consult and agree a Development Plan for the industry to succeed the existing Tourism Strategy – ‘A Partnership for Growth’ including a review of destination partnerships. Without a new Development Plan the industry is in danger of losing a sense of direction as various interests start to pursue their own divergent agenda and place in peril the cohesiveness of the sector. The fragmented nature of tourism within Wales needs any mechanism that promotes "togetherness". An annual progress report on progress and targets should be a given, even if it is simply in respect of Governmental financial support for the industry, so that adjustments can be made as necessary.
Appropriate Land and Coastal Management Policies.
Arguably the main attraction of Wales to its visitors, aside from Heritage, is the perceived quality of the natural environment, the countryside and coast. It is essential that policies are followed that protects and enhances these assets. Coast is a key tourism asset, but coastal communities continue to suffer economic decline highlighting a need for regeneration. Coastal destinations need to become more competitive; trade more sustainably throughout the year and be able to meet the needs of our key target markets. The ‘Year of the Coast’ is a great start, but it needs to be sustained if we are to see real benefits.
Taxation Policies which promote the Competiveness of the Industry
In common with the rest of the UK, the industry in Wales is penalised in comparison with near European countries by the current rate of VAT. The WTA calls upon the Welsh Government to continue to press the UK Government to reduce the rate to a more competitive level for the industry and to increase the level at which thresholds are set.
In addition we call for a review of the principles and practice underlying the present system of Business Rates; there is evidence that the last revaluation has had a disproportionately adverse effect on tourism businesses and has penalised firms that have invested in improvements to the point of threatening their viability. There needs to be greater creativity with regard to encouraging new business activity through local tax breaks, particularly for wet weather activity.
Post the gaining of ‘Taxation Competency’ from Westminster by the Welsh Government, the WTA urges the avoidance of any further taxation measures which would affect the competitiveness of the industry. For example, fees and duties associated with entry and exit at air and sea ports should only be set so as to achieve international competitiveness.
Financial Support for Capital Investment and Product Improvement by Business. The industry contributes around £2.7 billion to the Welsh economy. The current level of Welsh Government support for capital investment in the industry from all its various support schemes has been running at around £10 million annually. The industry’s capital investment is overwhelmingly supported from its own retained profits and bank borrowing, but innovative new tourism businesses will not get off the ground without some government support. There have been good examples in recent years of such support, modest in scale, being crucial to the success of the development of new tourism businesses. We therefore propose that post Brexit the industry should have a specific allocation of funding linked to the Development Framework to support capital investment and product development in tourism businesses.
The scheme rules should reflect the fact that the industry is mainly composed of micro businesses and SMEs, mostly owner managed. An earmarked, easy to access development tourism fund of double the existing annual spend would not be out of place bearing in mind the £2.7 billion contribution of the industry to GDP and its further growth potential.
A Meaningful Marketing Budget
The fall in the value of the pound makes us a more attractive destination to overseas visitors while the increase in the cost of overseas holidays may persuade more UK residents to holiday at home. We are wary that ‘Staycation’ could simply become ‘Stay at home’ if Brexit is not carefully managed. To avoid this those who can buy our holidays need the knowledge of what we offer in the market place. The small scale nature of tourism businesses in Wales means that Government support is vital for the effective marketing of Wales as a tourism destination. The IPS final figures for 2017 over 2016 show zero growth and -17% in spend. This in contrast to Scotland showing a 35% increase in spend alongside a much larger marketing budget.
With local government being squeezed by financial pressures Welsh Government marketing support for the marketing undertaken by Visit Wales at just over £10 million is simply not enough by comparison with competitor destinations. The current marketing budget is inadequate to maintain sufficient voice in the market alongside competitors and to realise the potential of the industry in Wales.
The Visit Scotland budget, by example, at around £55 million which includes provision for a staff complement of around 600, itself an indicator of the competition we are up against. The WTA therefore urges the Welsh Government post Brexit to afford a more internationally competitive marketing budget for Visit Wales to run generic all Wales campaigns and to leverage joint campaigns with industry partners.
The national campaigns, as well as supporting the marketing of new tourism products, also need to maintain Wales’ profile in traditional market sectors.
The WTA looks to Visit Britain to work with Visit Wales to develop key markets for Wales overseas including those markets now served by international airlines using airports in close proximity to Wales. Visit Britain and Visit Wales should coordinate their marketing campaigns and support for trade missions in key markets for Wales.
Maintaining and Improving the Skills needed by the Industry
EU nationals play an important part in some sectors of the industry in Wales, as elsewhere in the UK, and they will continue to be needed. The WTA supports their continued right to remain, punitive barriers to arrest this should not be put in place.
Our colleges and universities are playing a vital role in training for the needs of the industry. There should be closer liaison with tourism businesses to maintain the relevance of the courses on offer and to develop programmes specifically tailored for the needs of the owner/managers of tourism businesses. More funding support is needed for training programmes to fund widening gaps in the industry. The post Brexit implications of EU funded programmes like Erasmus need careful consideration and consultation with the industry.
Ensuring Key Tourism Infrastructure
We want to see Wales stay abreast of the latest technological advancements, starting with completion of the superfast broadband programme and ensuring its reliability. There is a danger that key tourism infrastructure and services provided by local authorities are disappearing because of financial pressures. The WTA proposes that the Welsh Government and the Welsh Local Government Association should continue to discuss the situation with the industry and seek ways in which the impact of public expenditure reductions might be ameliorated. In addition the WTA looks to the Welsh Government and local authorities to take steps to facilitate the speedier introduction of tourism signposting in support of both individual tourism businesses and clusters.
What individual Tourism Businesses might consider doing pre and post Brexit
Be active and continuous in pressing your Government representatives (Cardiff Bay and Westminster) and local authority on the above points.
Support the Wales Tourism Alliance, your trade and local tourism association and your regional tourism company in their work for your business.
Support the EU nationals you employ in this time of uncertainty about their future and do what you can to ensure they have the right to remain.
To the extent that it supports your business, align your marketing with the generic Wales and UK marketing being undertaken by Government.
Maximise your marketing clout through participating in joint marketing schemes including greater use of digital platforms.
Work with your local Higher and Further education training providers to ensure they provide the courses which enhance your and your employees’ skill levels. In return businesses should provide opportunities for students to gain work experience and ‘career tasting’ opportunities.
Be alert to the possibility of Government support for new capital and product investment.
Work within your local community to explain the importance of the industry so that the community as a whole is a ‘welcoming host’.
Wales Tourism Alliance
One in every seven jobs in Wales is in tourism or dependent on it. In some areas tourism is the mainstay of the economy.
There are 18,000 businesses in the industry spread throughout Wales, mostly small and medium size, family run.
We host 10 million overnight stays and 89 million day visitors. 80% of earnings are from the UK market, mostly traditional family holidays.
Welsh Government support through Visit Wales is vital if the industry is to realise its growth potential as is its responsibility to maintain a business friendly climate.
Productive working relations with the Westminster Government are important, if we are to realise the growth potential of the industry particularly in overseas markets.
Apart from its contribution to jobs and earnings, tourism helps define us as a nation and to preserve our distinctiveness.
Working in partnership with Government, the industry can make an even greater contribution to the wellbeing of Wales.
The Wales Tourism Alliance (WTA) was formed when the National Assembly for Wales was established and the responsibility for tourism was devolved. The WTA has evolved over the years and is now widely recognised as the voice of the industry in Wales. It covers all sectors of the industry including representative organisations of serviced accommodation, self catering, holiday parks, touring caravan and camping, visitor attractions, activity holidays, small businesses, tourist associations, regionally based tourism companies and professional tourist guides.
Our role is to inform, to contribute to the debate and to forward the views of the tourism community to the Welsh Government and to Westminster in respect of matters relevant to the industry which are not devolved. We do this in a variety of ways including liaising with local authorities, which play an important role in the industry, and with our counterpart organisations in the other countries of the UK and through meetings with Assembly Members and Members of Parliament.
The Importance of the Tourism Industry to Wales
The Office of National Statistic (ONS) reported that for the first time, since the GB Tourism Survey began in 2006, that Wales has topped over 10 million overnight stays per annum in 2014, with the number of actual bed nights reaching over 34 million. On top of this there were 89 million day visits.
The Gross Value Added annually is estimated to be £3.1bn billion per annum and the total contribution, including impacts through the supply chain, capital investment and government expenditure, is in the region of £6.9bn billion or 13.9% of the total economy. This exceeds the contribution to the economy in England (8.5%) and in Scotland (10.5%) and demonstrates how reliant we are in Wales on this important industry.
The industry employs in the region of 117,400 jobs and a further 88,600 indirectly. The overall figure in the region of 206,000 is almost 15% of the total employment in Wales (ONS, 2014). This compares with 10% of the jobs in Scotland engaged in tourism and just under 5% in England.
Even though the tourism industry has been at the forefront of the UK’s economic recovery, demonstrating consistent growth faster than almost all other industries, significant opportunities for further growth remain. Quite apart from its economic contribution, the industry through the visitor base it generates helps maintain a higher level of facilities than would otherwise be the case to the benefit of the local population. Tourism also enhances our identity as a Nation and helps maintain its cultural and built heritage by attracting visitors to its cultural facilities and events.
The Characteristics of the Industry
The industry is important throughout Wales but for some communities it is the mainstay of the economy and for others the industry is of recent development. The contribution it makes to our rural communities cannot be under estimated through self-employment, flexible working; and encouraging young people to stay and contribute to the reinforcement of local identity and culture.
It is multi-faceted including day and staying visitors, accommodation providers in hotels, b&bs, farmhouses, holiday parks, camping and self catering, tourist attractions, activity holidays, and cultural and sporting events and business tourism.
It has been a stable and resilient industry and, with the exception of a small amount of funding to support some new developments, not requiring subsidies for individual businesses. Its 18,000 businesses are mostly small and medium size family run, but with some larger national and international companies represented in city centre hotels and holiday parks. The National Museum of Wales, the National Trust and Cadw are also big players through their various branches and properties.
The holiday market predominates driven by the high regard of visitors for our land and seascapes; 25% is National Park or Area of Outstanding Natural Beauty. City based tourism is growing in importance with business visitors, sporting and other events driving the growth. Cardiff alone employs 17,200. While the infrastructure facilities to support large visitor events have improved, there is still a need for improvements to infrastructure to support festivals and events throughout Wales, including better rail service provision and connectivity with local bus services.
Over 40% of holiday bed nights and 70% of bed spaces are in caravan and camping parks. Together with the self catering sector, this volume is important of itself and because it supports the whole of our tourism economy.
Of the £3.1 billion contribution to GDP, 80% is from spending by visitors from the United Kingdom and 20% from overseas. The average spend per overseas staying visitor is circa £680 compared with £280 from the UK staying visitor.
Visitor Satisfaction Surveys continue to record high levels of visitor satisfaction and confidence in the Wales product, testimony to the continually improving skill base and professionalism of the industry.
The Challenges facing the Government and the Industry
In its Tourism Strategy – Partnership for Growth - for the industry the present Welsh Government has set out its vision to grow tourism earnings in Wales by 10% or more by 2020. The industry recognises the challenge this represents.
Within that framework new businesses will be seeking to establish themselves and existing businesses to increase their profits. However they will be trading in an economic climate determined by UK national and international factors to which they will have to respond and which the Welsh.
With the correct policy calls the tourism industry can make an even greater contribution to Welsh life than it does at present. As a service sector industry, tourism by definition tends to be labour intensive with accompanying constraints in many cases on the ability to automate. Its dispersal means it can offer employment opportunities across Wales with a wide variety of skilled and vocational jobs on offer. The preponderance of family run small and medium size enterprises gives the industry a structural base conducive to growth provided a climate of confidence can be established and its costs of operation, including wages, accommodated. The prize will be the growth of indigenous businesses throughout Wales contributing to greater community stability.
The existing large national and international hotel chains and holiday park companies and other large tourism businesses which may be attracted to Wales can offer both career employment opportunities and a range of vocationally skilled jobs. What is important for them is that Wales has a business friendly climate and the right legislative environment that supports and nurtures new businesses.
The opportunity created by the expansion of the tourism industry will bring greater prosperity across Wales. It will also provide more support for our historic heritage and natural environment through additional visitor spend at tourist attractions and towards the development of our cultural life.
Finally the development of the tourism industry will be an opportunity to raise the world profile of Wales enhancing its status as a nation on the global stage