 Fawr,wr oedd gwaith ar y treidi clwr yng Nghymru, Ryżymu, Wyfyddiant Rwyfiddoriaeth. Fawr,rifodd o fynd i ddweud hwnnw i ddechrau i gyd inniol permits i gael ein fawr, ac roedd gweithiau gyd gyda ein gwaith iaeth i gaelfaith cymunedau ei ddweud ar y chefnod i gweithio rhaglion ei ddweud. Fawr, rwyf iaith agaf, gyda Jackson Carlaw ac Stuart McMillan, a fawr, gweithio Kate Forbes i Stuart Cylliddydiol ac Margaret Mitchell i Jackson Cylliddydd. I would like to invite members who are substituting to declare any relevant interests. No relevant interest, convener. Same for me, no relevant interest. Our first item of business today is a decision on taking agenda item 3 in private. Our members are content. Our second item of business today is around table evidence session to obtain an overview of the current state of the Scottish tourism sector. I would like to welcome the witnesses who have come along today, and I would like to invite them to introduce themselves and members as well as we go round the table. I'll start and we can move to the right. I'm Joan McAlpine, committee convener and MSP for South Scotland. Lewis MacDonald, deputy convener of the committee and North East Scotland MSP. I'm David Smith, chairman of the Association of Scotland's self-caterers. I'm Mary Evans, MSP for Angus North and Mearns. David Weston, chairman of the Scottish B&B Association. Richard Lochhead, MSP for Murray. Riddle Graham, director of partnerships with Visit Scotland. I'm Caroline Walton from the Scottish Tourism Alliance, and I'm the national tourism co-ordinator. Margaret Mitchell, MSP Central Scotland. Tom Campbell, managing director of North Coast 500. Kate Forbes, MSP for Skyloghaber and Badnoch. William McLeod from the British Hospitality Association. Ross Greer, MSP for the West of Scotland. Eva McDermid from the Association of Scottish Visitor Attractions. Thank you very much. As I said, the session is intended as an overview of the sector to inform the committee's scrutiny work going forward. In many ways, it would seem to be a good time for Scottish tourism statistics out this morning, show that the number of overseas visitors last year grew by 6 per cent. Of course, there's a great deal of ambition for the sector. There's a tourism 2020 strategy with a very ambitious aim of growing revenue from the industry by a billion by 2020. That's part of the Scottish Government strategy. My opening question would be in the light of that continuing success, but also the ambition for further success. Where is the industry at the moment and what do you see as the main challenges and opportunities? From the VisitScotland perspective, we're delighted to hear the figures that were just announced this morning, particularly in terms of the overseas visitor increase, and the spend that goes with it, 9 per cent increase in visitor spend. We've seen over the past several years a significant increase in direct flights coming into Scotland, which has hugely improved our international competitiveness. The industry, Brian, larges in really good health. We've got some forward figures for the year ahead that suggest that bookings are looking very strong, based on a good year last year. Some of the flight details came out from FlyB last week, showing a significant increase in forward bookings with them as well, particularly to the Highlands and Islands airports. In general, in terms of the activity and visitor throughput, it's really positive. We published our visitor survey just a couple of weeks ago at our expo event, and the figures there were very encouraging. Indeed, those are people who had been in Scotland and experienced it, and we're talking very positively about their experience right across the piece, both in terms of geography and the experience that they've had. From a VisitScotland perspective, our marketing is going very well. We launched Scott Spirit last year to get greater acclaim and support from the industry, and that has been hugely successful and much more digital marketing than we ever did before, which enables us to measure the impact that we're having much more effectively than before. In general terms, the figures are encouraging. We're not complacent, but we also recognise that there are significant challenges facing the industry. I suspect that my colleagues around the table will be able to articulate more clearly than I can the particular challenges facing their parts of the industry. If I can just respond both from the Scottish Tourism Alliance perspective but also in our role as co-ordinators of the national tourism strategy, which is my role specifically. The strategy was launched in 2012 up to 2020, and we did a mid-term review last year. The levels of collaboration within what is quite a broad and disparate sector are quite extraordinary, and we've seen a massive step change over the last few years. In terms of the figures, we still have quite a long way to go if we're to get our £1 billion target, and certainly with the successes of campaigns such as Scott Spirit and the huge amount of work that's being done by the industry in terms of aligning and collaborating, we're getting real clarity over what the priorities from a strategic level need to be, and these came through very strongly in the mid-term review around leadership, digital, influencing investment, making sure that the country is ready and fit to grow tourism into the future, and also around the quality of the visitor experience and the evidence that came through from the visitor survey last week, two weeks ago, really showed that the quality is, we are seeing that quality, to rising. In terms of some of the key issues, Riddle is correct, there is real optimism looking forwards, and last year seems to have been a successful year. However, there is growing concern amongst the industry about the rising costs level, although visitor spend may be increasing at the STA, we're hearing more and more from businesses that feel that their profits or margins are being squeezed by rising regulation but also by rising costs, and I'm sure that my colleagues around the table will have more examples on that. It is a good news story, tourism is in a strong and is in rude health, however we can't be complacent as Riddle says, we need to be mindful of the challenges that may be coming around the corner. Could you flash out when you're talking about rising costs? There's been a number of added increases through regulation and legislation recently, so obviously, charges or increasing costs through things like national living wage, auto-enrolment, apprenticeship levy, we already have a very high VAT level. In Scotland, APD again makes Scotland an expensive destination, but on top of that, we are, with the exchange rate that we have at the moment, although it's become cheaper for visitors from overseas to visit Scotland, it's also meant that a number of produce that the industry will be buying is also going up in costs. There's not one issue that would solve it, it's a basket of issues that we need to look at in the round. The STA, we're currently undertaking a piece of work investigating that around what are these, are we seeing a rising cost within the businesses across the sector, or is it just anecdotal? I think we suspect that there will be significant rising costs for businesses over the last five years, but we'll have more information in October. I was just going to echo what Caroline and Riddle said and agree with those and just add to the list of cost items, the business rates issue, which of course has been looked at in detail, but that's another issue that our members have found additional costs, and cost inflation will be rising in general, so we're worried that we're looking forward at the costs creeping up. I'd also mention, as a challenge—it's not a cost issue, but as a challenge issue—the recent, very huge rise in growth of peer-to-peer websites like Airbnb, which accommodation on which is effectively unregulated and undercuts businesses that are paying taxes and complying with regulations and find themselves undercut by similar businesses that have been allowed to trade without complying with those regulations. That's what we feel is an issue of unfairness and where a level playing field is required for the future, so we're happy that that's being looked at by the Scottish Government and happy to help to take part in the inquiries that are held if that's held to be helpful. Thank you very much. David, sorry. Tom, no? Yes, I'm Tom. Just perhaps back to your first question about the numbers. I think that international figures present a real opportunity for us in the north coast 500 when we carried a survey of some consumers. The 2,000 of them, 90 per cent came from the UK and 50 per cent came from Scotland. So there is a huge opportunity in that international market that I think is untapped, although Visit Scotland is targeting that and targeting it well, but it's a huge opportunity for us. Certainly for us, seeing 50 per cent of those who have been going round the north coast 500 and experiencing the north islands, being from Scotland for them has been an awakening that this was on their doorstep and they didn't realise it. I think that that actually feeds into our whole socioeconomic and cultural confidence as well, that we have something that is being classed externally as being world class. I think that in terms of the challenges, I haven't likened it to the golden, the goose is laying the golden eggs, and we have to be careful about the sustainability and looking at infrastructure and key infrastructure, not just about roads, but about training and for hospitality and for the tourism sector. Infrastructure around visitor, places to stop, places to eat, viewing points, toilets, harbours, all of those things. People will focus on infrastructure as just being potholes, and we need to look at it much wider than that to include training and upskilling of staff. Thank you very much, Tom. I represent the self-caching industry. Visit Scotland figures 23 per cent of all visitors to Scotland stay in self-caching properties, so we are a good chunk of the market. Traditionally, we are doing very well. We have done a survey volume of value of our sector and we are worth £723 million spent to the Scottish economy. We have done 3.4 million visits to bed nights, equivalent to 15,000 jobs across Scotland, so it is a major sector. As far as the big tourism landscape goes in the Scottish Government, I think that we are very grateful, for instance, that Visit Scotland's budget has been maintained and that Visit Scotland is doing the big marketing for Scotland. It is important that the budget is maintained and that the themed years are continuing. That is good news, because that focuses everybody's marketing in the one place and points everyone in the right direction. We welcome that. Our survey that we have done recently, most members are buoyant at the moment and ambitious for this year coming. I think that figures are looking reasonably good, but we do have a few concerns. We have touched on Airbnb and the sharing economy. We are really worried about regulations coming in, which will impact on people who are not in the sharing economy particularly. It is a grey area. We talked about Airbnb. We have some traditional businesses that will be using the Airbnb as one of their routes to market. Airbnb will be filling some of their bed nights, but not all. That is a traditional route to market. We are just worried that the inquiry that is taking place from now til Christmas will impact heavily on our sector. How do you rein in a sector that is growing and growing the sharing economy, whether it should be reined in? Massachusetts in America, for instance, sits in the news today. They are looking at imposing a 12 per cent tax on Airbnb-type properties, Berlin's banned short-term letting. There are worldwide concerns about this. We are just worried about a robust sector that is valuable to the Scottish economy, and we are really worried that we will be impacted by the legislation if it comes in. I have presented the committee with a small background briefing document that I think is the most relevant in that. On growth, I would not disagree that we are growing. My sector has had nearly 16 per cent growth over the past three years, which is pretty good, given that we are a mature destination and a mature sector. Edinburgh is growing exponentially, and I think that that is worth taking into consideration. Edinburgh is probably 50 per cent ahead of the rest of the country. If you were to ask some of the leading operators, they would say that they almost just have to look at a new flight coming in from Berlin, let's say, and that they can start to see their numbers grow. I would say that, according to our research, it is probably not causing any great displacement. What it is meaning is that the growth in Edinburgh is becoming like London. I echo a lot of what is said around the table by way of opening remarks that the tourism sector is buoyant. We are very fortunate that we have a strategy tourism Scotland 2020. We are very fortunate that we have a national tourism organisation that is far sighted and innovative as Visit Scotland. However, I think that there is a reality that businesses are suffering. Turnovers are growing modestly or are static, and margins are certainly being eroded. As others have alluded to, we are seeing very significant increased costs. The devaluation of sterling has brought about increased costs in imported foodstuffs, for example, in our sector, spare parts for equipment. That may be short-term, because sterling may rise again. We shall wait and see. However, there are rather more fundamental costs that we are seeing impacting on businesses. David has alluded to business rates. In our view, there is a fundamental flaw with the way that hospitality and licensed businesses are rated. The system is arcane and it is not transparent. We hope that the Barclay review will do something permanent about it. The Scottish Government has listened to us and something temporary has been done. However, if we do not have a permanent solution by April next year, we will find ourselves in the same position that we were in the spring of this year, where businesses, because of business rates revaluation, were extremely concerned about their ability to stay open, their ability to meet their obligations to banks, their ability to continue employing people. We have seen average increases in rateable values of around about 75 per cent. We have seen individual rateable values increasing between 10 and 259 per cent, and increases of three, four and five hundred per cent were not uncommon in individual basis. Something has to be done about the burden of business rates. There are other costs. We regard tourism as being a devolved industry. Tourism and hospitality are well recognised and supported by the Scottish Government, and there are a lot of Scottish Government policies that support our sector. Without making a political point, I am making a statement of reality. There are factors that affect our businesses that are decided in Westminster. We have to ensure that our organisation, the BHA and the run-up to the general election, our focus will be on having evidence-based immigration targets. Our businesses in Scotland are dependent to quite a significant degree on continued free access to EU labour. We think that the national living wage has to be depoliticised in the same way that the national minimum wage has been, in other words, giving more power to the low pay commission. We are not a competitive country, and Scotland lies within the UK. Our rate of VAT on tourism is double that of our European competitors. We constantly hear local authorities and others calling for the imposition of a tourism tax on our visitors, which our businesses would have to collect, and that would simply add to the price of the services that we deliver. There has to be some reality that we do not regard tourism as the golden goose that keeps delivering. The sector is buoyant, but there are pressures on our businesses. If our businesses do not remain profitable, we will start to lose employment. In our sector, 35 per cent of our turnover goes on payroll, so the first thing that managers look at if there is pressure on turnover or profit is looking at the number of people that they employ. Employment is vulnerable, re-investment is vulnerable and businesses are vulnerable if they do not generate the right levels of profit. On that particular point, I note from some of the briefings that we have today that, although employment is rising in the sector, the sector is low in terms of accommodation and hospitality. It is the lowest-paid sector of any major sector. I wonder if you would like to respond to that. I know that there are issues that you have raised about costs, but clearly the issue of low pay is something that has been highlighted as an issue in the sector. I do not think that that is altogether true. I do not think that our sector is generally low-paid. There are undeniably entry-level and elementary jobs that are at the lower level of the pay scale that are paid either at the national minimum or the national living wage. I was looking at that demand for staff figures for our industry. About 15 per cent of the demand is for entry-level or elementary jobs. About 38 per cent is demand for skilled jobs in our sector that are paid at much higher levels than the entry level would be. There is also rapid advancement in our sector for good people who show the right attitude and aptitude. Most responsible employers invest in upskilling and training their staff. I think that we are often focused—there is a focus on our entry-level and elementary jobs, yet all of our businesses employ all of the normal skills and pay the market rates for the people who fulfil those jobs. We employ accountants, we employ HR specialists, we employ managers, supervisors and marketing specialists. To suggest that overall, we are a low-paid sector is wrong. The statistics that I was quoting were from the Office of National Statistics, which were reproduced in the spice briefing earning in Scotland in 2016. It said that accommodation and food services had the lowest hourly rate of the six key growth sectors that were identified by the Scottish Government, but you have obviously explained there that that is— I think that that was a median figure of £7. I have to say that my sector cannot recognise where that median figure of £7 comes from. A point, not a statistical point, but a perception one that Willie is very well articulated that this is not just a low-skilled sector, and there are great career opportunities in that. A bit like retail that is seen as a bit of a Cinderella, or it can be at times, as Willie said, focusing on the entry-level posts. It is something that you do on your summer holidays, before you go into university, and there is that perception that this is not a sector where you have career opportunities and potential growth. Speaking with someone from UHI in the last month, adventure tourism jam-packed the course. Put golf before the word tourism and it will be jam-packed. Put anything before the word tourism and it will be jam-packed. Tourism, low uptake. I think that that is a perception that the industry and the Government really need to tackle in the same way that retail is often seen as that low entry, and you are just doing it before you go into your real job. Just to—well, this is an issue that many of us have discussed for many years. We have a skills investment plan for tourism. We have a tourism skills group, which is led by Robert Allen, who is the HR director of Apex Hotels, and has a number or many industry and agency partners around the table. Certainly, the attractiveness of tourism as a career is one of the four priorities that are identified, along with the importance of management and leadership skills and enterprise skills. Enabling many of these businesses that may initially start off as lifestyle businesses to really flourish and to grow into something that is really a significant employer in the regions. There are many examples of that. I think that the difference between or the importance of tourism jobs in the rural economy is particularly important and is often overlooked. Tourism is probably the only—together with food and drink is the only—of the key growth sectors that is found in every local authority area. Therefore, its reach and its ability to be able to provide employment in areas that are often witnessing deep population, for example, should not be understated. I think that it is really around talking up tourism. The range of jobs that you are correct is considerable. I came through the adventure tourism side of things. We have skills gaps. There are people that we are looking for. We are looking for chefs. We are looking for people with languages. We are looking for people with digital marketing skills. It may be that people do not come traditionally through a tourism course, but they come through a different course and end up in tourism. As a slightly flippant comment, we are helping people to enjoy their holidays. It is a great sector to work in. It is about everybody talking up tourism rather than talking it down. I think that there is a collective responsibility on all of us involved in tourism to talk up the industry and the opportunities that it provides. If we find that we come up against a cliff edge in the availability of EU labour on which our industry is dependent throughout the UK, in Scotland the hospitality industry has 18 per cent non-UK employees. That is much higher in some of the city businesses. If we find that we encounter a cliff edge where freedom of movement of people for work reasons is in any way hindered, we are all of a responsibility to make our collective industries more attractive to the indigenous labour market. Indeed, we have submitted to the UK Government analysis done for us by KPMG looking at how we address that. We think that it needs a 10-year strategy to make our industry more attractive to the local labour market, to people who are not currently economically active to the new generation of workers. That would have to be accompanied by some sort of transition period if tourism generally in the UK and in Scotland is not going to suffer and growth is not going to be hampered by a lack of employees. I am grateful to the submissions that others around the table made to our on-going inquiry into the implications of the EU referendum for Scotland. That was very useful evidence. I would like to bring in Lewis MacDonald now. Thank you very much. It has been an interesting set of issues that have come up in the opening comments. I guess that I will go back to the visitor service that Riddle Graham mentioned in relation to the visitor experience. Of course, we all want to and should celebrate the positive aspects of that, but it is part of our job as a committee to scrutinise the list encouraging aspects. Two things stood out for me in looking at the findings. One was the phrase that a gap exists between expectation and experience of the quality of food in Scotland, particularly for international visitors, and the other was that satisfaction with digital connectivity is lower than all other aspects of the trip. I would be interested on difficult areas in relative terms to hear views about where we are, what needs to be done to meet those challenges and how we are getting on with doing that. I will respond on both, and then I suspect that others will follow suit. We will obviously work closely with Scotland Food and Drink in terms of the whole provenance piece and the way that we want to promote the very best of Scottish produce. We have a taste of the best scheme that has been adopted by over 1200 businesses throughout the country, so we have strong links with other parts of Scottish Government in terms of that whole agenda. Although there is a gap, it is quite interesting that, if you look at the data, the expectation before people came and their actual expectation after they had been quite interesting. I think that a lot of people came with the perception that the food was not going to be so good and that it has been much better. There has been significant improvement over the past three or four years in terms of that. The interesting one that you have picked up on is that whole digital connectivity piece. When we did visitor surveys even four or five years ago, it was never on the agenda. It was never mentioned, but now it is the single most significant factor that visitors mention—either mobile signal or not being able to get access to Wi-Fi or being able to use the piece of plastic that they hold in their hand. I think that that is very important indeed. Now, there is a huge number of initiatives going on to try and improve the situation throughout Government and throughout the whole of the country, but I think that it would be folly for us to ignore that. Our information strategy is based almost entirely on that. People being able to access information when they want it, where they want it and how they want it, and if people are struggling to get a signal in some way, then that curtails that significantly. I think that you are right in highlighting it. We are working with a number of bodies to improve that. The other side of that, of course, is getting the industry to be smarter in terms of using digital connectivity in their day-to-day work in terms of their business operations. We are being online bookable, encouraging user-generated contact, and we are also improving the whole presence on the internet. Working through digital tourism Scotland and our partners in the public and private sector, we see that as a huge opportunity. On the digital connectivity, we did our membership survey satisfaction with our members last year, every two years. What were the big issues? One of the top three was the lack of digital connectivity. It is coming from the industry as well as visitors. I heard something interesting on the radio last week, and it was someone in London saying that they had problems in certain areas of London getting a mobile signal. It is a big problem, and it is an issue. I know that the Government speaks to the big telecoms companies and so on, but it certainly is a problem. I would endorse what Riddell said. We are working with Scotland Food and Drink, and I feel passionately about purchasing local food and drink. I really feel passionately about it. We should be pushing an open door, and we are not. I do not know why. The taste our best is stuck where it was maybe a year ago. We are not much further forward in terms of people who are buying into it or actually marketing it internally to industry and enabling them. As I say, I speak with Fiona Richmond at Food and Drink on a very regular basis. They say that they do not have any money to help support to put on events that would showcase. There is one happening in Edinburgh next month, where they have managed to get funding from private sponsors. We are a membership organisation and we are quite poor. We certainly do not have big money to put in behind large-scale events to help at a local level in Ayrshire, for example, to bring people along and find out what local producers have. There is an issue about matching up small people with other small people, because that is what we are talking about. I will maybe take one more contributor, but I am anxious to make sure that the members get the opportunity to ask their questions. Just on the gap in the expectations, North Coast 500 has the reverse problem. Over the past 18 months or two years, we have been ranked by national geographic traveller, the number two reason to travel out of 101 reasons to travel. Condon asked to rank it as the number one touring route in the world. People come with expectations way up here for us. The worry is that it lives up to the hype, and it does, because people are still saying that this is the number one in the world. We cannot be complacent about that, either. Looking at the food and drink is a key component of visitors' experiences. My own anecdotal evidence is bringing four American friends last year to do the North Coast 500, which was a bit of a bustman's holiday for me. We went round at the end of the day trip. I said to them, what was the stand-out thing for you? Unprompted by me, they were there last north of Inverness in 2000. They said that the food from 16 years ago to now was just worlds apart. Sometimes we can beat ourselves up about our offering, and sometimes we do not see what is in front of us. It is a very small sample of four people, and unreliable people, too. Sometimes we are too close to seeing how good we are, and there are exceptional producers and suppliers in Scotland. Digital connectivity does not have to be in the North Islands for that to be a challenge for you, but what we need to do is look at what are the opportunities around those challenges for us. Thank you very much. It is great to hear that sort of positivity. On the back of that, I have a question about the North Coast 500 model. Obviously, there is a question about how we bring everything together, the food and drink, how we together meet some of the challenges, whether that is digital, whether it is infrastructure, of other kinds, roads, et cetera, and how we bring it together. I know that there are several community organisations or business organisations that are local, such as Giles and the Isles Tourism Cooperative, for example, and Rennes Lochnes. What is the North Coast 500 model, and are you aware of any other models where they have brought together locally solutions to meet some of the challenges? Caroline? Do you want to answer first, Tom? The North Coast 500 model. When we established this, and we are looking at establishing this, I have a view that this had to be different. Traditionally, destination management organisations, if that is what you want to call us, are publicly funded, and funding tends to be for short bursts and tends to then just die away. A bit like fireworks in the sky, you get this burst of activity. Everyone is hugely excited. One or two, three, four, a half dozen projects are created. Everyone thinks that it is fantastic, and then it goes because the funding has gone. We knew that the model had to be different. For us, this was about monetising the brand. The way of making this sustainable was not having the core costs publicly funded, but having it as a private sector invested model. The key for us is how we monetise the brand. Professor John Lennon carried out our scoping study and proof of concept. He said that the golden key that you need to find is how you monetise the brand. In monetising the brand, you then create an income stream that creates longevity. I think that Richard Lochhead wanted to come in on that issue. I'll let others answer first, so I'll come in and back for Kate's question. In terms of the destinations, we've done a bit of work looking at the destinations, obviously a key strand of the tourism strategy. We use a number of between 20 and 25 destination groups in Scotland and every single one of them is different. There is no one model that we have successfully worked in Scotland, I think. People may say, well, that means that it's not right. It's quite the opposite. It shows how innovative and creative the sector is to capitalise on the resources and skills that are available within their destinations. Every one is different. The two examples that I would pull out one is Argyll and the Isles tourism, which you mentioned. This is a really creative way of looking at the destinations, all of which have the issue of financial sustainability. That is probably one of the key issues for these destination groups. We ask them to deliver a lot for very, very little and often quite transitory resources. Argyll and the Isles tourism brought together the local tourism groups, the 11 local tourism associations, as they call them, into a co-operative model. They have 11, I think they have slightly more than that now, members, and as a result of that, they've managed to secure significant funding from the local authority, from Hynes and Hynes Enterprise, and they're now doing really creative marketing with Glasgow. They've just done their Wild About Argyll campaign, which is really having traction and it's all around collaboration, is really collaboration and leadership, are the two words. The other one is Visit Inverness Loch Ness, and they are one of the few associations, or not associations, destination groups that have got a significant contribution of private sector funding. That is on the simple reason that they went down the bid model, and therefore there is a levy which is being paid by businesses across the region. It's a five-year business plan, they're starting to come towards the second half of that, so they will be looking for that re-election of that business plan and that model. If businesses are being squeezed in other ways, such as business rates and other costs, then it may be that businesses decide not to vote for this. It's a completely democratic process. There have been other destinations in Scotland that have looked at this model and have tried to adopt the similar model, and the local industry has said it's not for us. There is no single model that has been adopted throughout. It is something that I would welcome the opportunity for us to look at in considerably more detail, because, as I say, we rely on our destinations and there is millions of pounds worth of in-kind time per in from businesses, all of whom are running their own businesses, in addition to trying to lead our destinations for us. Thank you. It's just on the theme that Kate Forbes picked up on. Clearly, the stats there are very positive. To me, as I'm sure everyone else on the table, there's massive untapped potential throughout Scotland, even starting from this good point where we are at the moment. There's clearly a national approach and then there's a local approach, and we've heard of some good examples of local approaches. My two questions are, firstly, when you look at some of the national approaches, like attracting events to Scotland, and apparently, according to this briefing, the Scottish Government is going to devote up to £63 million on the 2018 European Championships, plus there are various other examples that are going to receive substantial funding. Then, locally, we have our local destination organisations, and our constituencies are scrambling around for £15,000, £20,000 to do some good work. In my case, in my constituency, of course, we've got the Murray Space Site Tourism Initiative, which is doing some really good work but is struggling for funds. Our witnesses comment on how we strike that national local balance. Secondly, picking up on Tom's partial answer to that, the private sector. If I was to use my constituency as an example, we've struggled for many, many years to engage the chief executives of the whisky companies. With exceptions, local-owned companies like Gordon Macphail are very supportive of local initiatives, but the pernial re-hards of the Agios shall we serve much more challenging in terms of engaging the chief executives in promoting regional tourism. What better advert can you have for Space Site than the hundreds of millions of bottles that have that word on it that are exported every year from Scotland? Can people comment on how we get the private sector on board to promote local initiatives? Specifically, on the second point, I can advise Richard that a meeting that we've been trying to get with senior officials of the Agios this afternoon with my chief executive. We'll reassure you that we're taking that very seriously indeed, and we'll certainly raise the issues that you've been very vocal on in terms of that opportunity. Is it chief executive? No, it's not. It will be a senior official that we will try and make sure that we engage. We're very aware that, particularly with the whisky industry, I was in Islay a couple of weeks ago, and working there with the distilleries to enhance that whole collaborative approach through the distilleries working together is something that we want to encourage because they have a huge international visitation, as you've already highlighted. You make a really good point about the national local piece. We, within Visit Scotland, have been looking at our whole approach to engaging with local organisations, destination groups, whatever they may be called. Caroline has covered that point really well. Sometimes it's not always about money. Sometimes it's about identifying where they can make the biggest difference. We engage on a collaborative basis through our growth fund, and a number of destinations throughout Scotland have tapped into that and have been hugely successful in terms of the marketing. I think that their role is absolutely about bringing people together, bringing businesses together, and they do that really well on a collaborative basis. It's also about identifying where we can add value, and sometimes it's about the data and the information and the insights that we can bring to enhance their marketing. I'll give you a good example. We've been working over the past year with Fort William and Lochaber and the local tourism group there to the extent that all the data on our website is drawn through to theirs so that they have saved a lot of money in having to duplicate services. We're looking to enhance that project throughout the whole of the country, where we provide a lot of the central marketing on behalf of local destinations. We're encouraging each destination rather than spending a lot of money on duplicating, but rather identifying the content that they can provide us with, the rich content. A great example of that is NC500, where it has worked with us really closely in terms of the marketing to enhance that. I think that you're right, there's more that can be done. When we speak to destination organisations, that sustainable funding model is one that really does challenge. One of the challenges is, of course, the lack of large players in the tourism industry that are able to contribute financially throughout the country. I think that that's something that Tom's managed to work really well in NC500 and we can learn from. I actually think that we need to turn this completely on its head and stop thinking about giving out 15,000 here and 20,000 there and asking corporates for effectively CSR donations and doing good. We're not talking a business language to corporates. They would find it much easier to listen to a language that says, you know, this is going to have a financial impact and longevity. Your contribution and your involvement means that in five years' time we will still have an impact and in 10 years' time we will continue to have an impact because we've created a model that will create financial sustainability. I think that we absolutely need to put this on its head and stop thinking about throwing 15,000 here and 15,000 there. It is not, in my opinion, creating sustainability in so many ways. What we're doing is raising expectations and then we're just dropping folk off the cliff again. In terms of our business model, we have to be sustainable. We have to break even and make a profit. If we don't, we're out of a job and it's as hard and as brutal as that. That's how it has to be. If North Coast 500 is going to be here in 10 years' time, that's the business model that we've put together. Willie Macleod? I think that there's an invisible contribution from the private sector that is often unrecognised. I think that every single business involved in tourism in Scotland is investing in marketing its own business. It's investing in traditional marketing, it's investing in websites, it's investing in reservation systems. All of that activity is directly promoting Scotland and the destinations in which the businesses are located. I think that it's very difficult to quantify that and put a figure on it, but every business that has a website that is marketing and promoting the business is also promoting the area and what the area has to offer. I don't think that we recognise that enough as a contribution that businesses are making. I've taken loads of notes throughout and I think that I've got quite a few questions. I might just fire them all out and see what everyone comes back with. I think that that was vitally important. In my constituency, we have a lot of big events. We have Mofes, which is happening next weekend, and just a little advert in case anybody wants to make it along. We have international acts attended. I think that it's in the Beach Boys this time around Brian Adams last year. I'm Harley Davidson in the city. There's some big connections there in Breachan where I live and the Fireballs event in Stonehaven at New Year. There's massive things going on that, when you see, like Richard pointed out, some of the sums of money that are being invested in some of those events, it is in terms of what kind of support can be given to those if that's in terms of marketing. I'd be interested to hear from Visit Scotland about whether you weigh in on the events and the people that organise them coming to you. Is that done through local authorities as well? In terms of some of those events, particularly in Angus, that's something that we've struggled with is accommodation and having accommodation to put people up when they come and visit. Following on from that, we have the VNA, which is the buildings coming on in Dundee. It's how we are able to, I think that that will be a massive visitor attraction for the north-east of Scotland, but it's then how we draw people out of that into the likes of Angus and other local authority areas around there, too, and how they're able to reap the benefits from that. In terms of agritourism as well, there's an organisation, Go Rural, which has been working with lots of rural businesses as it ties into the whole food and drink thing, too, because it's about people coming and visiting, learning about the food and getting the most local experiences there. Is that something that's on the agenda and something that you're looking to develop as well? One last point. It was Caroline that said earlier that tourism has significantly hide importance to the economy of many rural and coastal communities disproportionately. For example, in Aberdeenshire in the north-east, one of the key European markets is Germany, and there's the increased connectivity that we've had to Frankfurt to try and develop those connections, too. It would just be the impact of Brexit on that element. We've already covered Brexit in terms of what that means for migrant labour and how important that is, but also in terms of those connections that we've been trying to build up and how we keep those going. David Westin, do you want to come back in? I'm aware that there are issues around infrastructure that a number of people have raised as a challenge. Yes, thank you. I was going to echo points that were made a couple of times about the importance of rural and coastal tourism. B&Bs and guest houses can help to capture that tourist pound and make it filter into those economies, which are often fragile economies. B&Bs and guest houses are often the only accommodation in rural areas for small villages. Perhaps, if there's a problem with specific large events in areas, B&Bs and guest houses can help to accommodate some of those visitors. I know that we're a fragmented sector, but we as an association may be able to help sometimes with liaising with the planners of events and festivals on that kind of accommodation. I'm sure that self-catering people would say the same. We're all happy to sit down when these things are being planned ahead to see how our members can help with the accommodation of festivals and events. It's a combination of both. Event organisers come to us for advice. We have a separate events directorate, and we provide advice on best practice on how to run an event more successfully and more sustainably and how to mark it. We often find that, with small events, event organisers are hugely passionate about the subject, but they may not be so good about the marketing and the promotion. We have a role in helping. We have an events fund, which is often linked to our theme years, where we provide funding to help to promote. On our main consumer-facing website, visitscotland.com, we have a big section on events, and we rely on local event organisers to provide content for that. You make a good point about accommodation. Some of the big events come under a lot of pressure. I'm thinking about the open golf championship as an example. I mentioned it in the presence of David, but Airbnb provides a particularly significant facility at a local level. I hear Airbnb being maligned in many cases, but we need to learn from them. They do an awful lot of good. They have 16,000 hosts in Scotland, and they have a marketing model that is the envy of a lot of others. Although I recognise that there is an issue around regulation, they are also very keen to work with event organisers. I know that they sponsored the Edinburgh fringe a couple of years ago, so there is an opportunity there. I have a good point about the V&A. We are looking at a different approach to how we measure quality. We recognise and we have identified days in example where we can look at quality in the round and look at the whole visitor experience. When people arrive, how do they get there? What is that experience like? What is the accommodation like? In addition to the attraction, what other things can be done in the area, not just in the city? What is the eating and drinking facilities like? What is the retail? Looking at that in the round rather than just in separate sections and trying to identify areas where we can do better, because we firmly believe that the V&A will bring additional and new visitors that would never have come to Scotland before. How do we enhance that experience? It has spread it absolutely beyond the city, so that is part of the overall strategy, working with the local authorities in that area and linked to the city deal. I know that Caroline Miller very well, so I am very aware of Go Rural and David does as well. She is constantly bending out here, and I think that Richard will note that as well in his previous role as minister. She is hugely passionate and quite rightly, because agritourism is hugely important to the economy of Scotland, the rural parts in particular. She has argued the case really well and we have recognised that and we have been working with her particularly on the marketing side. You point to the Brexit issue and I suspect others will have a view on that, but we recognise that Europe and Germany are our second most important international market, and we want to grow that even further. We are obviously concerned about the potential negative impacts that Brexit might have. Caroline Miller is very brief. I was just going to pick up on two quick points. The first is about agritourism and Go Rural, and we all know Caroline Miller very well, but the good news is that Scotland Food and Drink is the early stages of developing a food tourism programme as a result of the launch of its new strategy, which is going to be significant. Our visits to Scotland and many of the other partners will be involved. Food tourism is both in terms of its quality but the links to agriculture and the expectation issue that you raised. We will see that starting to come together a bit more coherently over the next year, so I think that there is a watch this space for that, so that is really good news. With respect to the events, I have been to Mofest for the last three years. It is excellent, thoroughly recommend it. In terms of the accommodation challenge, it is really about using the local businesses. My knowledge of Angus is that I do not think that there is an industry destination group for Angus, and what has been very effective in other areas is using that network as a destination to move people away from Montrose or wherever the event is, if the accommodation is full. I would encourage the local council and the industry to come together to see whether there is some structure or network that would help to mitigate some of the bottlenecks, which will only occur at certain times of the year. Did you want to commend David? Just for the quick point on Brexit, if that is all right, it has to do with rural funding. At the moment, you guys deal with Europe in this committee, there is the rural leader programme that goes ahead. Lots of many projects right across Scotland in rural areas, a good proportion of which are tourism. The new boats on Lotte, for instance, are leader funded, and we are very worried that this section of funding will just disappear when we leave Europe and it will not be replaced. It is something that needs to be kept an eye on, needs to be watched. It is certainly something that came up a lot in the evidence that we gathered in our inquiry, and the parliamentary committees will be taking it forward. I was interested in some of the contributions, the sustainability aspect, not relying on perhaps just a themed initiative to give a spin-off or even some of the Brexit funding, also the local national balance, and the challenges that were mentioned, which bring us full circle, where business rates were mentioned as a key challenge. Wille gave some examples of just how they are impinging on businesses' ability to be sustainable. I wondered if we could go round the table and see, given that the Barclay review group is due to report in July, just what in the sector you think could be done to improve the business rates system. On the national local thing, I will put a suggestion. Would it be welcomed, for example, for local authorities to have control of business rates and to be able to retain the money from business rates? If you have tourism as a very big part of your local authority, a very big industry employer, the business rates system could reflect that. Just one idea, I hope, that people around the panel would have others. We have made several suggestions to Barclay, both in writing and orally. I think that one main suggestion would be that, regardless of what else Barclay may say, I think that the assessor needs to get round the table with the industry and with the industry's professional advisers and really look at the way they approach our sector. There are some lessons to be had from the way the valuation office agency deals with things in England and Wales. On the second point of local authorities being responsible for or retaining business rates, I think that we probably would have to see a much better worked-up proposition before we responded to that. I think that the principal concern would be one of inconsistency in rates and creation of a less-than-competitive playing field across the country if different businesses and different local authority areas were applying different rates. You could turn that on its head and say that it could make one area more competitive against another, and that's why I say that we need to look at that a lot more carefully. I think that our principal concern would be the setting of poundages based on local political preferences as distinct from a national business or economic overview based on looking at poundages that way. Inevitably, any increase in anything particularly around about rates is just seen as a tax and no one in the businesses perhaps don't see any benefit from that. Perhaps they don't see a benefit from the tax sale and don't see a benefit from the increase. I think that one of the challenges that we have is the bid model. The bid model for tourism bid was mentioned at Loch Ness. I think that there is a real challenge to the bid model now as we see business rates increasing. Perhaps combining those two together, a fanciful idea might be making the benefits of that increased visible to those who have to pay them by taking a percentage of that increase and effectively putting it into a bid type of model. There is real visibility about the fact that we are getting a real benefit out of that for the tourism sector. Just to agree with Willie, I think that it probably needs to be brought up to date now in terms of a meeting with Scottish assessors. Their methodology is completely robust—it is probably just a bit out of date—and they set themselves up as being independent and that their thing is transparent. However, it is so transparent that there are spaghettys such as that underneath it. You look at the practice notes about how they come to get a rateable value. It is mind-blowing. In my sector, where you have historic buildings and different kinds of buildings, it is so difficult that they cannot get their head round it. Maybe we are an example of what tourism is like generally. It is not a big high-rise office block that is owned by a multinational where it is easy to take the measurements and apply the maths to it. I think that it is probably overdue that we need a proper high-level meeting with the Scottish assessors to see whether there is another way to look at re-rating. The other thing is that my sector is different from most other sectors, but we are a mix of private sector, public sector, charities and trusts. As we know, charities and trusts do not pay at any commercial rates or do not pay business rates at all. Effectively, the private sector is almost cross-subsidising those areas. Anyone who has any interest in education can apply for charitable or trust status. They do not always get it. It is a very uneven playing field. I would suggest that some of the maths probably relates back to things that were practices that were happening 50 years ago, or maybe not today. David, do you want to come in? Our sector had one of the highest increases at 68 per cent average. Like Willie's members, it is over 200 per cent for some businesses. We have a good relationship with our assessors that we deal with. We know the spaghetti quite well, but even so we did not get a good result that everybody could understand. The seven-year gap that we have had between the last revaluation is far too far apart. We think that Barclay should consider a three-year revaluation, because even five years, it starts to get very historical. I think that anything shorter than three years, the assessors would not cope with it. I have to say that many of our members benefit from the small business bonus scheme, which is what Government can give and what Government can take away, so you can have to put that to one side. You have to look around. My understanding is that the small business bonus scheme has been expanded? Yes, it has been expanded. We are very grateful, but Barclay might come in and change that, or he might say, right, you instead of getting 100 per cent relief, you only get 75 per cent relief for whatever it is. It is a landscape that may change. It is political. We are looking at rateable valuations in the round. We are grateful for the cap that the Government gave us, which was at 12.5 per cent plus inflation, which was very helpful to some of our members who have suffered big increases. The cap is only until next year. There is a bit of hard talking that has to happen between now and then to see what happens for 2018-19 going forward, because we are just going to be in the same black hole again. It will be compounded business costs with Brexit and wages not meeting inflation. There is a squeeze in terms of people's spending ability, which I think is going to come round to bite us maybe by this time next year. David Westin, do you want to come in? Just to echo what people have said on this, I hope that Barclay review will take a step back and look widely at the whole thing and particularly where the definition of a business starts and how you define a business, particularly in this new world of sharing economy, where a lot of our members maybe only have one or two or three letting bedrooms in their own home. Is that a business? When is that defined as a business? Why do they pay a charge, a tax when a competitor the same size next door is not paying that? It is a level playing field and it is just looking at where that starts and how you treat very small businesses at the beginning of that chain. How do you define a micro-business to encourage the sector and to encourage the growth in tourism across the country? Thanks very much. I would like to get Ross Greer in next place, if I could. Come in and ask about short-term lets. Both David Westin got in straight away with your first comments on it but you said slightly different things around it and how we regulate that sector because it is growing massively. I think that the estimate is that there are over 6,000 in Edinburgh already and it is essentially unregulated. What is it that you would like to see come out of this move towards regulation? Thank you for the question. What we have been saying is just very simple that we think that there should be level playing field and similar-sized businesses or micro-businesses should just comply with the similar regulations. It is as simple as that. We are not asking for a whole lot of new regulations to be lumped on to Airbnb, that would not be right either. It is not right that a business has to comply with a list of rules and regulations whereas the same-sized business next door, because it simply has chosen a different business model, should effectively not comply with anything. Either deregulation to make micro-businesses to take them out of those regulations or to apply the regulations that there are consistently to all businesses. We welcome competition with our whole lives. I think that everyone around this table from the industry would say the same. There is a very competitive industry. We are all competitive with each other. We are all competitive. B&Bs are competitive with hotels, with self-catering. Our whole life and with other B&Bs, of course. We are used to competition, but it has to be fair by being on the same basis. That is all we have been asking for. We have issued a code of practice for city self-catering, which we have given to Edinburgh Council, Glasgow Council and Airbnb. It has been quite well received. Obviously, like B&Bs, we would like to see a level playing field, but there are existing rules that can be enforced. The fire regulations are existing rules that can be enforced. Rather than coming in with great heavy boots, there is a lot to be said for seeing what we can do. At the end of the day, cities have to find a balance. The concerns are between loss of residential immunity, housing stock being taken up by holidays and party flats. There are ways of dealing with that. There is existing legislation to deal with that. At the end of the day, we have to find a balance between residents and economic growth and tourism. If the inquiry can look at that sensibly rather than emotionally, we would be in a better place. On that point about the balance between the rights of residents versus economic growth, I would like to pick up on a point that Eva made at the start around the exponential growth in Edinburgh compared with other areas of the country. The most extreme example of that is in Barcelona, where the agenda is in essentially degrowth around tourism and reclaiming the city. The mood of the population has shifted so much that they feel that they have lost a lot. That is now the prevailing political wind. That is not a desirable place for us to get towards. How do we ensure that, for start, we are spreading that growth? Edinburgh is seen as a staging destination that tourists might arrive there and travel elsewhere in the country after having spent a few days. We are getting that balance right for the rights of residents. Residents don't feel as if they are being put upon and the hostility starts to build towards the industry. I think that Edinburgh is what it is. Edinburgh, if you look at Scotland, Edinburgh is one of the first destinations that gets searched for. The Highlands is the second. I think that we are the magic bullet to get everybody out of Edinburgh. The Go Rural initiative was originally around getting people out of Scotland cities. It was on a 60-mile travel time. If there was a magic bullet, I think that we would certainly do it. Edinburgh is what it is. It is a world heritage destination. Willie, do you want to come in there? I was going back to the regulatory point. I do not think that any of us object to any new form of competition coming along and there being and being the like are exactly that. I think that the issue has to be one of a level playing field of competitive environment certainly within the regulatory regime. However, there are difficulties with the current regulations in that there are different thresholds that apply. There are different thresholds for planning. There are different thresholds for fire. There are different thresholds for compliance with environmental health. There are different thresholds for whether you pay business rates or not. If you start looking at the regulatory regime, you have to look at the harmonisation of thresholds and beginning to define what is a small accommodation business and how that is better to define it. The other issue on the small business bonus scheme—I am not going to be terribly popular for saying this—is that it is paid for by other businesses who pay the large business supplement. I would argue very strongly that a business with a rateable value of £56,000 a year is not a large business by any of the defined definitions of small business. I think that we have to look carefully at every business that benefits from whatever benefit we get from rates. There is an argument that every business should be paying something into the pot and not being subsidised by larger businesses that are paying additional rates to meet the cost of those bonuses. I think that that is a point that is well made. We led on the creation of a tourism development framework, which identified areas of opportunity in investment. One of the challenges is not so much about the volume of visitors but the kind of visitors. There is a great example in Edinburgh where, if you now walk along Princess Street from one end to the other, there is a huge increase in the number of budget hotels. The question is not so much about whether it is great that there are new bed spaces and have nothing against budget hotels. However, if you are positioning Edinburgh for the future, should the planners, when making decisions, identify opportunities to upscale the accommodation? We have a great example in Glasgow about a month ago where we know of a fact that a major conference did not come to Glasgow because there was insufficient high-end accommodation to accommodate the VIPs. There were not enough suites yet. There are loads of accommodation, but it is of the right kind. What we are trying to do in the phase leading on from our creation of the tourism development framework is trying to match supply and demand, but supply of the right nature and demand of the right nature. I think that that point about Barcelona is exactly that. There are clearly pockets like Edinburgh and we have had this great growth in the north islands. However, Gailoch now has 100 less bed nights than it did 10 years ago in terms of availability. Although we are growing like this, if you look back at the statistics on the depopulation of available accommodation, we are actually way behind where we were before. Yes, there are pockets where there will be concern, but there are other areas where there are real opportunities for businesses to grow as well. For the visitor numbers to increase, we saw an increase of 29,000 new visitors last year. Who put £9 million of additional visitor spend into the highlands? However, there is room for growth there in terms of the accommodation sector. I agree with what Riddell said. It is about the type of accommodation that the planners give permission to build, because they had exactly the same or similar situation in Dublin 25 years ago, where they took in all the stag and hen parties that they could hold off because it was part of the Celtic Tiger. Six or seven years into that, complaints from other guests in hotels and other places led to them actually looking at it again and hotels saying, absolutely not, we are not doing it. I suggest that there is a growth that we are looking at here. If you are right at the beginning of your growth, you take in anybody, but if you are a very mature destination, then you have to be quite picky. Richard, you had a quick supplementary question. Yes, I can ask a supplementary question. This is a very familiar debate from Spacide, where, albeit that I am slightly critical of the whisky companies who could do more, they play a crucial role in tourism through the visitor centres and inviting overseas visitors who are sales teams or wherever they are. They are often looking for places to put these people up, 50 or 60 or 40 at a time. They have to use the hotels in the air and in Avymor, as opposed to in Spacide. I want to ask how that is joined up. If there is a lack of top quality hotel accommodation, or whatever it may be, how is that joined up with the planners, with the tourism bodies, entrepreneurs and companies who could build hotels and accommodation? If I can respond initially on that, clearly the tourism development framework was a major step forward there because it identified challenges and issues. All 32 local authorities, plus the two national parks, contributed to that, so I think that there was buy-in in a way that we have never seen before. I was told before I kicked off that that if you got a dozen or so local authorities to support you do really well, I am fairly competitive and so therefore we got 32. There is a buy-in from a local authority point of view. The bit that is missing is the supply and demand piece. To convince a private sector investor to come in, you have to show that there is real demand that can be met and that it is worth their while investing. We work closely with Scottish Development International, who are the inward investment part of Scottish Government, and they are clearly working with local authorities to try to make that bridge between investors and opportunities. It is up to the local authority to identify land and make it easy for the planners to approve and then the investors to come on board. However, if we can identify real demand from real data and bring that evidence to the table then that is going to make the biggest difference. From where I sit, it is much more joined up than it was before and I think that we could do a wee bit more to enhance that. Thank you very much. I am afraid that we are going to have to draw matters to a close because the Parliament is about to sit in a plenary session and the committee cannot sit at the same time as the plenary session of Parliament. However, you have certainly covered a lot in terms of what your priorities are for the sector. If there are areas that you feel that have not been covered that you would have liked to raise, you are of course at liberty to write to the committee. I would like to thank you all for coming here today and giving us your evidence. We will now go into private session.