 Rwyf i gael, mae rydych chi yn g étéch Therefore welcome to this the 29th meeting in 2015 of the Economy, Energy and Tourism Committee.Can I welcome members, welcome our witnesses and welcome visitors in the gallery and can I remind everyone please to turn off or at least turn to silent all mobile phones and other electronic devices, so they don't interfere with the sound equipment. We've apologized this morning from Denys Robertson and we are joined by Bruce Crawford as a substitute. Item 1 on the agenda, can I ask if members are content that we take item 4, a discussion on our future work programme in private. It is agreed, thank you. Item 2 on the agenda, we are continuing to take evidence in relation to our pre-budget scrutiny of the Scottish Government's 2016-17 budget, and we are focusing this morning on tourism, and I'd like to welcome joining us from Visit Scotland, Dr Mike Cantley, Chairman and Malcolm Ruffhead, Chief Executive, and from the Scottish Tourism Alliance, Mark Crothall, who is the Chief Executive. Welcome to you all. Before we get into questions, I think, Dr Cantley, you want to say something by way of a brief opening statement? Yeah, I was going to give you just the latest update, as it were, on where we are in 2015. Clearly, 2014 was the big year, and you've been through the success of 2014 in terms of the results, et cetera. So, I thought I would just update you where we are as we head towards the end of 2015, and information is coming in as to how we performed in 2015. In many senses, 2014 was the big year, but 2014 wasn't so much about 2014. 2014 was a catalyst, along with the winning years 12, 13 and 14 to kick Scottish tourism into the second part of the decade. But 2015 was always going to be interesting because the reality is that many countries that host major sporting events do incur an immediate draft after they've hosted them, media attention moves on, et cetera. So, 2015 was always going to be interesting and interesting to see if we maintain the momentum. In particular, as we started into 2015, the environment looked particularly difficult. It was a period where international visitors into the UK were taking a dip, in particular London. And in particular, the big issue was exchange rates. So, as we head into 2015, we saw some profound shifts in exchange rates. The euro in particular moved about 15% in the early part of the year. That kind of selling period for us as well. So, suddenly, Scotland became 15% more expensive for our European visitors. And of course, it works both ways. Europe became 15% cheaper for UK visitors considering whether just to holiday with us or abroad. And I see some of the other currencies were more difficult. And then as we got into the year, we had weather, which I don't need to tell you about because you all remember, in spring and summer. So, we had all the constituencies that were what you'd expect to be quite a difficult time. And of course, tourism goes in these cycles. And in a sense, our objective was, yes, to get growth. That's what the winning years was all about. But to get the cycle moving so that instead of flatlining, it was going up even in the context of the peaks and troughs that we have. So, 2015 was going to be a fascinating year. Now, we only have the official statistics for the first six months and you have those. And actually, they were very encouraging. I would anticipate the second half being slightly softer. Primarily, apart from anything else, we were comparing against the big events in 2014. But as we head to the end of the year, by and large, it's been a much better year than many had anticipated. And in a sense, perhaps a better year than we might have deserved, given the movements and exchange rates in particular. So, here we are. It looks as though we've, the industry who have really gone about 2015, trying to capitalise on 14 and look to the future, better organised than ever before with, of course, the TS 2020 vision. It would appear we're in good shape to march on. And I'm sure that will be part of the debate this morning. In particular, as exchange rates look to be a little easier for us in the next period. So, we're in good shape as we sit and looking forward to the second part of the decade. Okay, starter for 10. Thank you very much. I don't know Mark Ruffer if you want to add anything to that or just happy to go into questions. No, I think I'd echo what Mike said. The mood from the industry has been very positive. And I think surprised some perhaps. So, there's a lot of confidence out there, but there's no complacency, I think. Okay, okay, thank you. Okay, we've got about an hour and maybe 15 minutes or so for this session. Can I ask members if they would keep their questions short and to the point? And answers as short and to the point as possible would be helpful. And perhaps members could initially direct their questions to one panel member. And then, if you want to come in in response to a question directed to somebody else, just catch my eye and I'll bring you in as best I can as time allows. I wonder if I could just start off asking about the Scottish Government's budget. We're in a slightly unusual position this year in terms of budget scrutiny because the budget has not been published. It's not published until only 16 December. So, we are taking evidence in anticipation of the budget. And with that in mind, I wonder if I could ask you to ask both organisations, maybe start with you, Mark Rothal, from SDA. What is it that your members would like to see in the budget if you were making an ask to the finance secretary today? What are the top lines that you want to see addressed in the Government's budget? Sorry, can I just say you don't need to touch the button, so it's all controlled remotely. It's great, it's automatic, we like digital. And on that note, we've set out in our policy agenda, actually, which we issued on 30 September, really some sort of key headlines. One of which, I suppose, is the main piece around continued investment in the digital infrastructure. And I think taking on board the future approach by Visit Scotland around the marketing strategies, it's absolutely essential we're able to get more of our industry online connected and capable of using digital. Tomorrow there's the launch of a £1.2 million training programme to assist the industry in getting better skilled in that process. So certainly we can't stop there and that needs to continue. We're absolutely all behind a much needed strong budget for Visit Scotland to continue to market. And although we've enjoyed the benefits of 14 and a good year in 15, again, the complacency piece can't be there, so we have to continue to be aggressive in the marketplace and therefore the funds need to be made available to do that. We had some good discussion and have ongoing discussion around the roles of destination organisations in terms of a funding support scheme for DMOs, for key DMOs that provide a good support network, not just to do the marketing aspect of that particular destination, but also to deliver on a number of other initiatives in the local community for the benefit of the wider economy. So again, continued investment for scaling the workforce, et cetera, those I would say are the headlines that we've identified. We're going through a mid-term review of the strategy at the moment and again they seem to be the same themes to address what are being identified as the big game change challenges. Okay, thank you. And maybe a simple question to Visit Scotland. Let Malcolm answer the question other than to just highlight what is a significant issue with the CSR, which is of course, in terms of marketing, we work closely with Visit Britain and they don't know their budget yet either. They will know next week, so we understand which is a key feature considering we do rely on them in certain markets. But Malcolm, in terms of Visit Scotland? Certainly from our perspective, what we would like to do is actually build on the momentum that's been highlighted. So that would mean that we're continuing the marketing activity and Mark has alluded to the changes that are about to come through the system. It's also about looking at channel shift efficiencies, which we've been moving, as you'd be aware, from a pure broadcast approach to much more usage of digital channels. And that allows us to increase the reach and get out there to a global audience, albeit that Visit Britain is a key component of that. So we'll watch what happens next week in terms of their own budget and have to realign accordingly. You'll be aware that we've relaunched the Scotland the perfect stage strategy, in fact, a little plug for the conference on 3 December, if anyone would like to come along. You'll be most welcome. But again, I think that that's about building on the capability and the credibility that Scotland has in terms of hosting world events, and we'd like to continue that. But we're realistic and we're pragmatic, and certainly over the last sort of five years, we've been trying to become as efficient as possible. And that should get us into a place where we're able to respond to whatever comes our way. Okay, thank you for that. I'm sure that a number of the issues that you've touched on, we want to explore in terms of the session. You touched Mark Rathall on the issue of digital infrastructure. I think that Joan McAlpine wanted to ask some questions around that. Yes, particularly in terms of digital connectivity, I wondered what problems the tourism industry faced in the areas where there isn't good digital connectivity. And if you could address maybe the issues of broadband and mobile separately. Consumer trend is that people are choosing to search and buy by using tablet. More people own a toothbrush than they own a mobile phone, and there will be more mobile phones in the world than there will be population, so that in itself tells a story. And to be competitive, you have to be able to place your product online and market that through thevisitscotland.com sites, have online booking facilities, and where you're restricted in doing that, then clearly you are missing out. We have also made clear in our position statement in our policy agenda that from a price competitiveness perspective, the UK is currently ranked 140 out of 141, albeit there is a strong skew towards the London cost base or cost centre. However, a quality of experience, high quality value for money memorable experience is what the tourism strategy is saying as our ambition ensuring that we deliver that. And what is now a basic requirement or acceptance is not there. And Scotland has the worst 3G coverage in the UK. 46% of visitors were unsatisfied with Wi-Fi availability. And we have to respond to that to live up to and deliver on the expectations of the modern traveller. And business tourism in particular, where you take on a sector that itself delivers 1.9 billion to the bigger picture and attracting some of those big international conferences and conventions, which the country is now very equipped to do when you don't have what is basic broadband or a reasonable pace of broadband and mobile connectivity, that in itself puts us on the back foot to be competitive. I suppose these major conferences in big cities wouldn't be affected. It would be out with the big cities. She would be talking about it. Well, I've driven from Glasgow today. I lost the phone signal three times. Stephen Leckie, who is our chair up in Creeford, I think the best thing that came out of the rider cup for him was having 4G from being one to none and not being able to be connected. But it is the rural parts, you know, business tourism. I'm up in Inverness tonight to promote the business tourism for Scotland, I think Scotland through a conference initiative. And there you have infrastructure and properties who are very capable of attracting large-scale conferences. And they need to have, you know, the technology and the connectivity to do that. Has any conculation been made in terms of cost terms? How much we're losing out financially because of this? Not that I'm aware of in this, if you've got anything. If you want me to, I'll just come back on some of those points. I've been going around the country for the last six to nine months talking to groups from South and Mundells up in Shetland. And the one topic that comes up at every group is digital connectivity and competitiveness. I think it's more in that framework. And I guess that there's sort of five elements to that. There's the hardware, then there's the capacity, then there's the capability, then there's the ability to convert business that's generated, which I think is the point that you're making. And then there's also about using digital in terms of communications. So in terms of the hardware, obviously the broadband rollout is happening. That's being managed by high on behalf of everybody. But you really need that in place before you can actually address the mobile issue, which is absolutely fundamental because more and more people are using mobile. And part of the problem that you have is that we're actually building on a legacy system. It's not like some of the old Eastern European countries like Estonia where they didn't have the lines in place. They just went straight to mobile. And you also see that in India, which is actually probably one of the most advanced mobile business-enabled countries in the world. So we're dealing with that and getting that in place. Capacity is also not just about download, it's about being able to upload. So businesses actually raise the issue that it's the upload capacity issue that they're concerned about. Capability is very much about skills. And a lot of the programmes that are out there are actually aimed at what I would call the digitally included. So it's about enhancing your skills. But what's coming through more and more is that there's a vast amount of people out there who are digitally excluded. And I think, you know, we need to actually look at how do we address that? How do we make those businesses competitive? And you asked about is there any stats? Well, we have 9,000 businesses listed on visitscotland.com. 30 per cent of those businesses are able to transact online. That means that somewhere like 6,300 businesses are missing out on the opportunity that's provided to them because they can't transact online. And as Mark says, you know, people who come online want to book online. It's as simple as that. That's 64 per cent of all bookings globally are made online. So it's a huge opportunity, but it's a challenge as well because we've actually got to make sure that the programmes that are in place are bespoke and allow people A to overcome some of the technical issues. But also there's a certain amount of a fear factor. And I would guess the analogy is if you're sitting next to a geek and you're an absolute beginner, you're going to be slightly intimidated. Likewise, if you're a geek sitting next to a beginner, you're not actually going to advance your own skills the way that you would want. So there's a lot of work that needs to be done in making sure that the amount of activity that is generated out there and there's a lot of good activity, but it is actually focused in the right areas. And then you get to the slightly more esoteric area which is about communications and how do you use search engine optimisation? How do you maximise the listings? How do you use dynamic content? But that's slightly further down the line in terms of capability. Financially, for smaller tourism businesses, is there a challenge in terms of obviously setting up the website and that kind of thing? And I take it that that's quite a major investment and what support is available for those kind of businesses? There's a lot of business support through people like Business Gateway and others and the enterprise companies. The actual cost of investment nowadays in that type of technology has come down significantly. There are many, many web booking engine providers out there. I won't name any for them obviously because there's plenty available. But also if you look at the software packages that are available, the cost of those, like everything over time, actually starts to diminish. So they have to look at it as an investment. And that investment will be repaid time and time again. Can I just go back to Mark, the point that you made earlier about the visitor experience and the expectations of visitors to be able to go online and use mobile phones? In particular, I'm talking about mobile phones. Is the poor visitor experience around digital connectivity affecting our returners? I would say when you look at the future generation of traveller and it's the young traveller, I've got young kids and I know that a choice of going somewhere if there isn't a connection makes my life a bit of a challenge and we might not go back to that place again. And I think this is about the future and how we look to the millennial traveller as well. And we're a trip advisor. We had a speaker at our conference back in October and things like searching for the best restaurants. You want to spend your money wisely and you want to make the best considered choice and using technology and being able to access those applications and get online and make a considered choice. There and then is really important. If you're not able to do that, then I think people may not return. If I can just pick up on another couple of things Malcolm was just saying, the £1.2 million training programme that's being launched tomorrow does address the three tiers of capability. We've been conscious of the working group of making sure that it's not all targeted to those who are already engaged. So the ones who are perhaps scared and maybe a bit more mature and we do have a lot of slightly more mature operators in the rural parts lifestyle providers who technology wasn't around. And interestingly enough, in our own tourism strategy when it was first scripted in 2011 the word digital was only written into it three times. So when you look at the pace of change it's quite significant. And as far as the cost for businesses to set up, as STA, one of our key objectives is to try and make access or easier cost benefits for our membership and for the wider industry. And we've been working very closely with Microsoft and other partners to bring a product to the membership at a very warehouse rate which will enable businesses to equip themselves and get themselves set up. And it's distilling that myth that it is expensive because it's not. And I believe I think when we met with Bruce Crawford a couple of weeks ago there's funds that can be accessed as well. So to assist the small business around the digital piece but it's portraying and getting that message out there that you have to get online, don't be afraid of it and it's not expensive and there is a support in place to enable you to get going. I can say that you're able to do that kind of thing invest in training and invest in encouraging companies to get online. When it comes to 3G coverage for the user, for mobile phones there's not a great deal you can do if it's not there. It's really up to the mobile operators and off-gem. What would you like to see happen given that it's regulated at a UK level to improve that for Scotland? What do you think needs to change? Well, there needs to be more collective working and collaborative working between the providers to get them to recognise that this is the way forward and I think licensing and all the other things that go with that have to be considered. There is obviously an ability to access and create applications without coverage and technology is being developed there but the pace of change needs to accelerate further. Do you think that the licensing regime needs to change? Without being fully aware of the detail behind that I think the conversations of getting the providers more on the page and quicker is important. I'm following up on some of that question about joining up. I've raised with the Scottish Government a question around the broadband discount voucher scheme that the UK Government ran and which I think 3,000 businesses in Scotland have benefited from. It has ceased. It was clearly a good scheme for assisting businesses to upgrade to better and faster broadband. It's not been clear to me from the responses that I've had from ministers that there's a particular joining up between Scottish and UK initiatives. Is that something that is apparent from the tourism industry point of view? Do you have a sense that there's good schemes running but they're not particularly connected with each other? I think that there's lots of good things out there. I think that trying to find some of them and get through lots of detail to access whether it be funding support for anything is at times difficult. But also getting through it and using technology to get through it makes it a lot easier and it comes back to time as well. So trying to again, one of the key sort of objectives of working very much collaboratively with the enterprise agencies and the government around the table is how can we cut some of this multitude of mess, not mess but pages out of the system to be able to give them more direct access and create a greater awareness of what's on offer because I think there is plenty out there. So would it be fair to say that one of the things you'd like to see going forward is a better joining up between, or a better clarity for... I think anything that makes it clearer to industry and easier for industry to access to gain the support is always going to be beneficial. Time is of the essence. We'll work much harder. So clearing the reams of pages and things before you get to that is something that is key and probably a better spent and better money spent for everybody. Okay, we'll move on. I'll bring in Gordon MacDonald. I wanted to move on to the Scotland's national tourism strategy, Scotland Tourism 2020. And it says that it's got a target of generating an annual overnight visitor, spend equating to an additional £1 billion or more by 2020. Scottish Tourism's alliance's written submission says that we're currently not on track to meet this target. Looking back on the corporate plan of Visit Scotland 2011-2014, it said that tourism is an £11 billion sector. Your 2013-2016 corporate plan said that the visitor economy is estimated at £11.6 billion and that was a Deloitte report in 2013 prior to the bumper year of 2014. So if we're not on target to achieve this additional £1 billion in 2020, why are we not on target and what do we need to do in order to get back on target? Firstly, I just need to differentiate the figure that you're talking about there in terms of the £6 billion or so is actually overnight expenditure as opposed to the visitor economy, which is the gross economic activity generated by visitor expenditure. But presumably part of that growth would have been overnight visitor expenditure. Yeah, and I'll answer that in just a second. But just to throw in another figure, the Scottish Government's latest figure actually on the visitor economy is £12 billion. So there has been even more progress since that £11.6 billion that Deloitte's came out with. They might have talked about the numbers this year in 2015 and the positive underlying trend that's been there. And certainly the UK visitor expenditure overnight visitor expenditure to the end of July shows 27% growth year on year by value. So, if you extrapolate that forward, then the likelihood is that we will come to a point of about £5 billion by the end of this year for overnight expenditure. That then means to get to the bottom end of the scale that's in the 2020 document, you need to grow roughly 1.6% compound annually. I'm not that pessimistic actually, I think we can do that. My question to follow on from that was about occupancy rates, room occupancy rates. And I understand that 2014 was a bumper year, but looking at the occupancy rates for say the last three years, it was 65% in 2012, 68% in 2013, 70% in 2014, which is substantially higher than where we were in 2000 or 2001. So, in terms of occupancy rates, if we want to hit this level of spend, what percentage of occupancy rate are we needing to try and hit, and therefore is it a realistic target? Yeah, unfortunately it's not quite as binary as that. Because of the fluctuation in terms of the type of accommodation offer, so you've got a proliferation of travel lodges and premier ins, etc, which are coming on to the market. For me actually it's not about the number of rooms, it's about the value of those rooms. So there'll be some areas of Scotland where actually you're looking at yield maximisation rather than occupancy. There'll be other areas where quite clearly we're looking at getting volume in before that you can then move up in terms of premiumisation, use that horrible term. So it is a mix, it's not quite as clear cut. And do we have enough capacity in exact capacity in the right places? Two questions. Do we have enough capacity currently? Yes, in the future probably not, in terms of the right type of capacity. Good example of that is we have 2,855 star bedrooms. If we are actually going to make a success in the international markets, the demand is going to grow in that particular area, they're currently running somewhere in the region at the moment of over 90%. So it's not about volume in that respect, it's actually about growing that overall segment and that means we need to encourage inward investment but in the places where the demand is. And how would we go about generating international hotel chains to actually start investing in parts of Scotland that need that investment? Well, two sides to that. Firstly, we work very closely with Scottish Development International which is, that relationship's a very positive one and you've seen a number of projects whether they go through or not. The point is those projects have come to almost fruition. Secondly, you have the National Tourism Development Framework which brought together all 32 local authorities to look at where are the gaps in terms of provision and also where is the investment being made. What I'd like to see is that it's become a bit more of a dynamic planning tool so that actually we can overlay the trends and we can look at where estimated demand will come from which actually means that we can focus our efforts because we're going to have to go on forward in a much more productive manner which means that we get the investors on board that are going to make the difference. Okay, thanks very much. Okay, thank you. Thank you. Thank you, brilliant. Thank you, good morning. I wonder if I can just follow on the question one of the questions that Gordon raised and your particular reference too. I understand the explanation that Malcolm made in terms of day trips and what have you. But also the concession that STA raised in terms of not being on track to achieve their twos of numbers. How do you relate to each other? Is it Scotland and STA? Is there any overlap? Is there any overlap of spending? Is there any overlap of objectives? Well, we're all absolutely around the same page and we have the same... That's what concerns me in terms of duplication. I mean, are you on the same page in terms of operations or are the lines of strategic lines... We are not a marketing agency. We do no consumer-faced marketing at all. We are there to support and help cascade the Visit Scotland initiatives, particularly around the focus years, and try and encourage the industry to get on board the various campaigns. We work very closely with the Visit Scotland on the Growth Fund application piece, the various steering groups, and when it comes to dovetailing into the strategic thinking for the future planning around tourism 2020 and where we want to go, the marketing element of the tourism 2020 strategy is driven by the Visit Scotland agenda, as is the events and festivals workstream, and Malcolm and Mike alluded to the perfect stage document. So that becomes the agenda. Can I just ask, Mark? Because one of the draft priorities in your strategy is internationalisation, and I just wonder how you're capitalising on the priorities that may or may not have been set in terms of internationalisation from Visit Scotland. I mean, 85% of our visitors still come from south of the border. Yep, and the tourism strategy. Unhappily, no, unhappily. I'm glad they come. But I mean, in terms of our internationalisation inquiry that we carried out, our objectives internationally, and all the good things have happened, but how is that dovetailing? We are not, you know, the tourism strategy itself spells out very clearly that 80% of that marketplace is still the domestic market. So nobody is sort of saying that, you know, the international market is the be all and end all. Yes, we need to prepare ourselves to go and get it. There's a lot of reference to China, particularly in and around Edinburgh. So part of the strategic work plan that's being developed by the work streams out of the strategy is about how do we equip ourselves best to be able to service those international visitors as and when they come. So, and again, you know, the future marketing focus around specific key audiences. Again, all of the activity that we sort of drive forward and through whether it be the skills investment plan or looking at the actual work streams within the various asset groups will be concentrated on those particular markets that have been identified by VisitScotland and will be targeted as the ones that will provide the focus. Let me ask Mike and Malcolm. Last year there was an additional £5 million funding put in the budget for air-root marketing and golf legacy. Air-root marketing clearly is important in terms of the internationalisation aspect. So I wonder if we can tell us what is actually how that has developed at £5 million spent. And also, if you've qualified what might happen, or what will happen, when APD is reduced and eventually vanquished forever. Right. There's about eight things to do there. So let's just go back a bit because what I find reassuring is thinking back to my early appearances the committee in 2010-11, which were characterised by two things, really. Number one was growth because there wasn't any. There wasn't how much growth. There isn't growth, so how do we get it going? But secondly, one of the key features and one of the reasons I was keen to get involved in 2010 was there was huge friction around as to who does what, what role Visit Scotland has, where the industry was, we were dealing with the aftermath of the area tourist boards being amalgamated in Visit Scotland, etc. One of the things that I remember we went out to make very clear at that point is that in the end of the day Visit Scotland is here as a government agency, as an economic development agency, to deliver for industry, to deliver in particular bits industry can't. That's why we're here. If industry can do it for themselves, then our role is diminished or nil. And the difficulty we had at that point was we didn't have co-ordination in the industry to express that viewpoint. And what we have today and why industry is so much more comfortable with progress, and I'm not saying that of VS or other government agencies or even STA, but just so much clearer as to where we are is because we have an STA who has a clear vision and ambition and industry can speak for itself without in a sense Visit Scotland and other government agencies can get on with answering these points. And I think the question you didn't ask Mark, but I can't remember this myself. How many staff do you have? We're a core team of four. There we go. So we're four staff. So in the end of the day, as an organisation, STA is limited in terms of what they're going to actually physically do in terms of what is a relatively small organisation, but in terms of its role as a catalyst, pulling together industry and defining that vision, it's hugely important and it's made life so much easier. If I go on and answer your specific questions, I'll do air and Malcolm couldn't do golf because he's a better golfer than me. In terms of air and lift, as it's called in the industry, it's absolutely crucial. We've made huge progress over the last few years. We have almost 100 international air routes, new air routes into Scotland that have come to one airport or another along the way. And that has been very significant in helping Scottish tourism. One of the biggest issues, in fact, if you were to say to me, come on, what is the real big issue in this area? Good question, is surrounds London. You'll say, oh, here we go, we're going on the runways and all the rest of it. Well, actually, it's a shorter term issue in terms of the movement in the marketplace in terms of the use of London because there are many markets that are used to using London to get to Scotland and the market is changing dramatically. And in particular, the recent period, of course, we've just lost virgins connecting service to London. And that was something the region of 300 international connecting seats a day between Edinburgh and Aberdeen. That's a lot of seats, a lot of seats. And in particular, it's not just about the access, it's about the networks and alliances and how the airlines work together. And also it's about the pricing models because whenever there's a capacity restriction it tends to push pricing up. So pricing and value in air travel at particular medium and long haul has become a big issue for us and Scotland rates is being quite expensive from some markets to access from medium and long haul markets. Not all, but some. And it's an issue that we're working very hard on and in a sense, I suppose the kind of route development initiative is working more towards broader themes of connectivity where it's about not just point to point, it's about ensuring that we're properly plugged into the airline networks and alliances to ensure that customers can get here easily and affordably from wherever they are in the world. Have you assessed the impact of APD? Forgot to mention APD. Well, clearly on the value issue, APD reduction would help hugely supportive or of anything that makes Scotland more competitive. And value in particular with the issues that I explained in terms of exchange rate is a core issue at the moment, as I say. So a reduction in APD would be very welcome and the airlines and the travelling public would be very clear, that would be very welcome to them too. On the golf front, obviously the legacy around the Ryder Cup continues in terms of investment in major events, and those are secured all the way through to 2020 and beyond. The biggest challenge for us is to make sure that the activity that we run in conjunction with the likes of NBC and others is maximised here in this country, not just in terms of visitors, but also in terms of making sure that that trickles down into clubs, that the clubs become more proficient, shall I say, in business practices. And the Solime Cup, I think, will give an extra Philip to that. We're absolutely delighted that we've managed to secure that for Scotland. It's also about in terms of how do we position those events and you'll be aware there's been a lot of conversations around the tour in terms of taking the Scottish Open as one of the beacon events on the programme which would attract obviously the major players that are on the European tour and those based in the States who perhaps don't come to Europe as much as we'd like them to. And again, that's not just about the immediate economic benefit, it's also about the knock-on effect and trying to get kids out there and into golf, which then feeds its way back through the system and hopefully we end up with an inclusive sport that is affordable for everybody. You and I had a conversation just last week about opening up the Scandinavian route to the RSF press week, but also going on to Ireland, creating that Western European. I mean, will you consider that and take that forward in terms of... I know you've talked to Ryanair before, but it doesn't just have to be Ryanair. No, that's right, and there's a couple of elements to it. There's the tour operators themselves to make sure that they have the programmes in place to get the support that they're looking for and then there's obviously how do we get them here. Again, you look at the success going back to aviation of the landing, to forgive the pun, of the Aberdeen-Recuvic route, and I think that that in itself will help. We're able to take people not just into the central belt, but also and again with BA now flying to Inverness so we can take them further afield, and that's got to be a good thing for the rural economies, which are pretty fragile. Okay, thank you. Okay, I've got three members who want to come in with supplementaries. I'm assuming it's on the air passenger duty initially. Start with Patrick Harvie. Thanks very much. Good morning. You didn't mention APD in your written evidence, but it's come up in discussion here. Your written evidence, though, does make clear that aviation levels have continued to increase. It's clear, isn't it, that APD doesn't act to prevent aviation levels from increasing? Well, I think it's a factor, but we've been obviously successful in attracting more people to come in serious with aviation of that year. APD hasn't stopped that from happening? No, APD hasn't stopped it, but it's well known in the entire trade, and I don't just mean the airline industry, I mean the travel and leisure industry, the issue of APD in the UK, and it's deemed to be a barrier, for sure. It's widely spoken of in those terms, but the figures do show that aviation levels have increased. That's perfectly fair. Given that we are talking about the most environmentally destructive form of travel that's available, and Scotland has long-term, fairly ambitious targets to reduce CO2 emissions, every extra unit of emissions that come from the aviation sector mean that the rest of the economy needs to work much harder to counteract those emissions and keep us on track. How much aviation increase do you think is affordable within our carbon budgets? Well, I think one of the interesting features of your point is well made. In terms of the international travelling consumer and the airline industry, the biggest issue in the airline industry is greening the industry. There have been huge steps made if you look at the fuel use per passenger today versus 10 years back and all the rest of it. There has been great progress made. I am sure that we could debate to what extent that is enough, et cetera. The same thing is true of road traffic, but the overall emissions have increased because the level increases. We cannot rely on that as a way of... I am asking how much do you think we can afford to increase emissions and have the rest of the economy carry the extra weight from the aviation sector? I think that what I would say is that at this pace of change in the aviation industry, I think of all the transport industries, they really are working very hard to green their product. In terms of the international consumer, I think that the international consumer is showing all the signs that they are pleased with the progress and worrying a little less about that as they travel. In the end of the day, I think that it makes a different switch market we are talking about. When you have to travel over water as opposed to the UK market where obviously there are different alternatives, I think it makes it. I think it does make a difference. You can't put a figure on it then? I don't think I can put a figure on it. In which case isn't it a little reckless to take away a restraining factor if that's what you think APD is until we know what the consequences are going to be? Well, in the end of the day, for many of the markets, and as I say, it depends the specific market, but for medium and long-haul markets, frankly, people are going to be flying and we want to encourage people to come and to come and see us. So regardless of how much harder the rest of the economy is to walk to counter out those emissions? Well, that is appreciated, but our job is to try to encourage people to come and to come from around the world and appreciate there is that issue, but we do want people to come and see us. That is the game that we are in. That is our job. Well, maybe at least the Scottish Government should be able to answer the question before we approve the policy change. Also on air travel, I think that Gordon MacDonald. Just before I go on to my question, just on Patrick's point, would more direct flights, rather than going through the London hub, not resolve part of the problem that Patrick is raising? Yeah, it depends the market, obviously. I mean, you notice I'm talking medium and long haul markets. The short haul situation in terms of European in particular is very competitive and works well and capacity is strong, you know, Ryanair and EasyJet, as an example, work very hard to work at full capacity, which helps as well. So it is market against market, but the one of the key trends that we're seeing this now, we would, it links to the digital debate. It actually links to the transport debate as well, is the consequence of alliances and networks. And as digital continues to develop, we will see, you know, in the end of the day, big business follows big money. And a bigger issue for Scottish tourism will continue to be how the big business community, be the airlines or hotels, etc., work in teams and alliances and networks to their own advantage, but potentially to our advantage too, if we are well plugged into them. My question was about your point that you raised earlier about the importance of the London airports to the tourism market. Obviously, over the last 10, 15 years, Edinburgh and Glasgow airport have developed links with other hubs, thinking about Istanbul, Skipool, Dubai, Doha, Charles de Gaulle, etc. Are those equal importance to the London hubs and do they provide a greater opportunity for growth? Well, yeah, I mean, we work very hard. Malcolm could talk for the next eight hours on how we're working up our hub strategy, etc. You're exactly right. It's probably more profound than that though. I mean, if I was to tell you to Australia, and if you were to take the Australian market and look at it 15 years ago, if you were travelling from Australia to Scotland, you were flying to London, basically. Whereas today, if you're flying from Australia to Scotland, you're very unlikely to go anywhere near London. There's one airline flying one flight a day being British Airways. Whichever other routing you're going to take, you're not going to go through London. And we're seeing that kind of profound shift as we work around the world. But if you go to Australia, you'll still speak to people and they will, and they'll tell you, well, obviously, if I'm going to Scotland, I'm going to London. So, I mean, we're talking about profound shift. We need to ensure that not just the links are in place, but the communication is in place to ensure that people know how to get to us easily and at best value. One last documentary on air travel, and then we need to move on. I'm losing my phone. Simple question. You talked about the importance of the London hub and clearly there are decisions in relation to that that will be taken elsewhere. Is there anything that the Scottish Government should be doing or that this Scotland would want to see being done about those links? Well, to be fair, we work very closely with the Scottish Government team who are excellent. I know, as soon as we talk about London, that immediately you think we're opening the runway debate. And actually, it is broader in terms of competition and airline movements. I mean, if you take Virgin as an example, they've now withdrawn from Scotland when they came. They were half owned by Singapore Airlines, which is a Star Alliance partner, and Singapore Airlines sold that shareholding to Delta, and that was a shift in their strategy. In a sense, we play in a game where aviation with very large companies, multinational companies, in large airline networks, and we need to be flexible. If you go back and I've told you, I'm sure here before, when we lost the BMI link into the Star Alliance network in London, that was a profound situation. There's 20 million people using that terminal today, and there isn't now an airline flying out of terminal 2 to Scotland. So, these are market shifts that we need to take into account, but they are very important for Scotland, both in terms of the actual physical links and also in terms of the pricing models. Just for the record, what is VisitScotland's view if it has one on the runway issue? We obviously are looking to encourage as much access to Scotland as best possible. There is an issue in London, and if the capacity issues ease, we would be delighted to see that. We don't favour any specific runway, but there is a clear issue in London, which we have articulated this morning, which in the short term is our greatest anxiousness. Clearly, a lot of people do, when they come to the UK, want to visit other parts of the UK, and London in particular, and come to Scotland, and their ease of access to that is important. We will move on to Bruce Crawford. The House is a bit, for good reason, but can I just bring us back to the issue of hard cash and value for money? At the end of the day, how you are spending Scotland's purse will make the decision on how much budget you get and how successful you are. With all accounts, we are heading into a very tight settlement period again. Your figures tell us, and I know that you have spoken with us before, Mike, that £20 you get back in the Scottish economy. Can you just tell us about the methodology that you use for that purpose and how that compares with Visit Britain? I think that would be helpful. I would then like to ask a very quick question about budget numbers. The current way of measuring the return on that investment is that we measure the additionality. Simply put, that is money that was spent by visitors to the country when they have been influenced by Visit Scotland's activity. So, if they are coming anyway or thought they were coming, we discount that. So, those are people who have actually been convinced by the activity that they have seen to come to the country. That gives us an additionality figure. There are other ways of doing it, and I know that we have been working with the Scottish Government to look at that in terms of GVA and what the impact of that would be on jobs. The methodology around that has been agreed, so we will be able to report in another fashion as well in terms of the amount of gross economic activity generated, how that translates then into what they would call new new money and what that means in terms of GVA and the number of jobs that are dependent. So, the methodology is robust. It is used by Visit Britain, used the same methodology in terms of getting to additionality in GVA. The London and Partners used the same methodology and Visit Wales likewise. So, we are doing exactly what the others do for comparable purposes. And I think, if we may be correct, that Visit Britain report generally about eight to one, I think, return on their activity. Well, it depends. I mean, the answer to your question in some sense is it depends on the targeting of the market. Are you going for low-hanging fruit or are you going for emerging markets? And it depends on the competency of the campaign. A 20-to-1 average is very much the kind of market average for a national tourism organisation doing a well-researched campaign. I think that the point that is perhaps more pertinent is, of course, that Scottish tourism is minuscule in global terms. And if you're thinking, well, okay, so we give you a pound and you can get 20 pounds back into the economy even in VAT, as, of course, Scotland's going to be receiving some of this VAT directly, well, that's great. We'll just give you more money, give us more money back. The issue is that every national tourism organisation has a good product and puts together a good campaign can perform at this kind of level. And so the competition is becoming far greater. If you take America, America didn't have a formalised marketing national tourism organisation approach. They now have discovered America with vast resources who are extremely competent. And when you have an America coming into the marketplace, as an example, then you're up against some serious competition. So the difficulty with having such great returns is that everyone is now chasing them in times that Government money is tight. So we're going to have to continue to fight harder, frankly, with the resources that we have. Taking that as a ride in terms of numbers, I think it says that the public force is getting good return based on the methodology that's used. The year to June was very good in terms of the figures. Obviously it had Commonwealth Games ride or cup on it, 15s better than we expected in the circumstances. But the challenges out there, whether that's the continuing issue of the strength of the pound, the issues around the general sluggishness in western economies, and I said some of this yesterday, another meeting I was at. There also now the impact of the tragic and terrible events in places like Egypt and Paris and the impact that might have in the industry and we don't know the outcome of that yet. And the fact that actually if you look at your budget and take the £5 million out, of that budget which is now stripped out for this year and if you get the same, that's 15, 16, your £9 million down in when you were previously, is that really enough to be doing the job you need to do? I think that's the hard question I've got in my head and what this committee at the end of the day needs to recommend to the Government. Well, you're... It might be difficult for a government agency to reflect on that, but I'd like to try anyway. Well, you're asking me to ask if we would like more money and we would like more money. But I think one of the things that perhaps is significant that we maybe haven't explored fully is that we are judged to be a national tourism organisation like Visit This, Visit That and Visit The Other around the world and it's true. The... If you take Visit Britain, Visit Britain does international marketing. They really don't do an awful lot else. If you take Visit Scotland, we do an awful lot else in terms of information provision and quality assurance, et cetera, et cetera. But in the end of the day, it is the hardcore marketing of Scotland in particular across the UK and internationally that these guys consistently tell us we need to be doing first and foremost. And I think that that is going to continue to be the thrust and I think that's right and proper. So we're doing everything we possibly can to find every penny of resource to market Scotland as hard as we can. And as a competition, I think becomes ever stiffer. We will continue to have that as our mantra. Yeah, I would just sort of support Mike in saying I think the world is a much smaller place and the competition is that much more tough to get. So you have to be out there. And yes, the international markets do prove greater spend and that's where the prize is and it costs money to get there. So stepping back and or even staying still, I mean certainly the industry's view would be the wrong thing to do. And you know put more into it and actually try and maximise your return, but at least just you know fend off the competition. No, these words are issues and you need to get out there. And the £1 for every 20 pounds back for a pound spent suggests that we go out there a bit more with a bit more leverage. We would actually get more money coming back into the economy to create more jobs. So I know nobody said yes, give it, you can put a figure on this. But I think what the general tone I'm getting is that if there was at least a standstill and hopefully an uplift in your budget, that would help us get more jobs in the economy because that's what really this is all about. Well, I think that's right. You noted that I mentioned Visit Britain pretty quick in the CSR discussion. Well, it's a complicated situation in terms of Visit Burton's role, but I mean you note in the papers that we focus our international marketing as best we can in the United States, in France and Germany, a bit in Australia. And for the rest of the world, we heavily depend on Visit Britain. And Visit Britain's network of offices, for instance, came down from about 36 to about 21, if I remember rightly, when the last major restructure came, and if there's great anxiousness in the industry that they're going to face some tough choices post the CSR settlement next week. And in turn, that will bring some tough issues and questions for us. I mean, we have one single member of staff based abroad in Toronto as it happens and that gent focuses in business tourism. We're heavily dependent on the Visit Britain network of 21 officers and that itself may bring something of a refocusing if those challenges come to bear. I've got other members who want to come in. I just wanted to ask a follow-up about something that you mentioned that, to the moment I go, Dr Cantley about quality assurance, I think you said that the Visit Britain were not involved in that. If budgets are going to be tighter, does Visit Scotland still need to be in quality assurance, particularly now we're in an era of Tripadvisor and a whole range of other private sector competitors in that market? Is that something you still need to be in? Well, I'll let Malcolm answer that, but beforehand, I will remind Mark that I came to... One of the benefits of having the STA well connected into the industry as it is was I came to speak to them and said, look, you guys need to be clearer not about what you want, but about what you don't want, because the immediate answer to your question is the industry. See, we must have a quality assurance scheme and we must and we must and we must. And actually we're going to go through a period where we are going to have to make some choices and that's inevitable. Yeah, no, that's absolutely true. And I think protecting the brand and protecting the reputation is key and the quality assurance scheme does provide that channel. And whatever you say, the consumer will still look for a badge of appeal and we will have seen varying reviews on TripAdvisor and you can choose to believe what you want to believe, but it reaffirms, I think, a commitment to professionalism and without a scheme, I think we're very exposed and we haven't... Nobody's mentioned Airbnb yet, but there is the largest growing hotel company in the world with no quality assurance, with no regulation, with no contribution being paid to the tax, but that's the consumer choice, admittedly, but can we be assured that their experience of Scotland in an Airbnb site or in a non-quality-assured property will deliver against the actual aspirations of our strategy? I'll come back to your original question. In budgetary terms, it washes its face. I mean, it costs 1.3 million to deliver this 1.2 million that we bring in in terms of revenue. I think that the wider question is more about what does quality actually mean and what will it mean in five years' time or in 10 years' time, particularly because you have real-time assessments taking place, as you mentioned, with the likes of TripAdvisor. We know from research, not just our research, but the European Tourism Council research and UNWTO as well, that at the moment, people still use the two. So they will look at the comments posted, but they also want to reassure that there is an independent, authentic assessment that is out there so that they can balance, if you like, the extremes in terms of the postings. For me, what might be quite interesting, though, and what I've asked my team to look at, is how do you combine in a digital age the requirement for quality? Is it only about attractions and only about accommodation, or is it actually about a destination? If it's about a destination, do you look around a net promoter score? So it's the whole total holistic experience that someone gets. It's not just about the accommodation side. So that's work that we're going to be looking at and taking forward. Okay, thank you. All right, I think that Louie MacDonald was next. Yeah, just going back to Mark Russell's points at the beginning about looking for support for destination management and destination development and my county recounting where we were five years ago and how that has changed in terms of who's responsible for what. I wonder how both SDA and VisitScotland see that rolling out going forward, and given that Governments have to make choices about priorities and there are clearly, we've already had some discussion around that, how significant is destination management in the bigger picture and what is the right relationship between central government as opposed to local government and destination management organisations? It's a good question. I think there is a survey and a bit of work that was done by a working group, as you know within the industry across looking at the destinations and the disparity around support funding for the cities and the rural communities and you have Glasgow local authority putting five million into the tourism project, Edinburgh one million, Aberdeen a lot less but the rural DMOs and particularly the islands as well where they do a lot more than just the marketing are very dependent on having some form of assured stability to enable and I think give better confidence to the industry then to put the hand in their pocket and actually fund it. I mean nobody is saying that the industry couldn't be doing more to contribute towards the funding of a DMO but there are some really great examples where there has been some support funding where it has actually accelerated industry commitment if you look at the Argyll and Ars tourism partnership that model is superb and they're really being very progressive in not just the marketing activity but developing the local economy by really bringing other businesses not just pure tourism businesses into the mix and you know the further more rural you go of course the greater the working the percentage of population are in our industry so when the STA first sort of came to the fore although we are only four we have a council of 40 sectoral groups many of which are destination bodies and they're active and they're voluntary and every one of those has managed to grow their own organisation in size and scale because there's a common framework that's been adopted and there is aspiration to do that but there is a need to be able to provide at least a baseline support to what we identify as probably being 35 to 40 destinations not what originally were perhaps 300 tourism groups that we believed there were or led to believe there were at the two, three years ago so shrunken down and they're key pockets there St Andrews and as I say the Hebrides Argyll Oben outdoor capital I think it's often said in government if you wait long enough you end up back where you started and in a sense of where we've been in tourism is a good example of that if you look back to the kind of late 70s early 80s we had many many many many organisations all over the country destination groups and trade organisations that needed some form of co-ordination then we had area of tourist boards 35 or so and it was decided there's too many we'd have 14 and then it was decided we wouldn't have any and then suddenly we ended up with literally hundreds of little groups all over the country and that was the environment that certainly I remember coming into in 2010 and a lot of debate about who does the marketing who's responsible for what etc and how we try to help was to explain in the end of the day these groups are the product in that location and the stronger they can as a group of businesses can define the product be clear what they are and what they want then the easier it is for Visit Scotland in particular to take that product to market because in many senses we're the customer and we've got all the research and data on the customer be that in London or Paris or New York or whatever and that made things much easier that everyone understands where we are and what we're doing and how destinations have evolved you know you can actually draw a flowchart as to how a new destination organisation works its way through they're there to do marketing and then they do something they realise this works and that doesn't and they very often tend to spend more time I'd say focusing on getting stronger in terms of defining their product and where they need help going forward and they've all evolved in different ways but I think it's going well and I think there's far more comfort as to who does what these days and I think that will evolve further I think we'll see a bit more consolidation and I think the groups will be better able to define where they need government help and where they don't I mean I think you know specifically we have a national framework national tourism 2020 strategy as the national framework that that framework has now been adopted across 25 to 30 different destination groups and in some of the sectoral groups which gives us a huge amount of strength and going back to trying to refine and make efficiencies that much better and where we can choose or where we identify the need for investment that much simpler so there's not lots of reinvention of the wheel but localising those strategies is a key and actually you know that's where a key role key part of a destination group remit is to actually bring those businesses who aren't yet connected who aren't the 7000 plus who are yet to get on thevisitscotland.com site and get them online and get them joined up that the DMO and the role of the destination group is that's by far probably the most important role that we see them doing and in addition to a bit of support to the marketing efforts of Visit Scotland as well but anyway they're key but not everywhere Yeah I think that's the point I think I hear from both of you you both think DMOs should have able have the ability to access public funding but neither of you is looking for a formalised comprehensive structure of public support We've been especially with the themed use et cetera we have this concept of the growth fund there to help where it works both ways in a sense I mean we are encouraging these destinations to partake in the campaign so we can bolster our activity but it is a route for them to access marketing funds as it were or event funding et cetera and I think that's worked well Yeah and we have a paper in which looks at the Sport Scotland model which obviously allows a pot of money to be drawn down against for those destinations that can basically deliver on key projects and initiatives but ultimately you want the industry to contribute and support when we entered into the spirit of the Tourism Scotland 2020 a key message to the industry this isn't about there's a strategy public public purse pay for it you know it's it's a two-way thing but I come back to getting the support from the industry will come if they know that there is an assured continuity of resource et cetera to enable that destination to you know be sustainable in the long term and a lot of it at the moment is fairly up and down and I think you know deciding on where any sort of support award of funding gets made should be measured by a criteria of do you actually deliver and actually are you giving us return on that investment so rather than just a blanket approach of saying well you know there's 10,000 pounds or 50,000 pounds to 35, 40 destinations across the piece because it doesn't work that way okay about two members have been extremely patient but I want to take a very brief supplementary from Gordon MacDonald to us thank you very much it was just the point you made Mike about visit Britain's offices being reduced across the world and I'm just wondering if there was an alternative in the Scottish Enterprise Network of 30 odd offices that they've got in some key markets and you know I realise there might be budget implications for doing that but would that be an alternative given that both the use of want to grow the Scottish economy? Well let me be clear the drop from 36 to 21 happened some time back so it's potentially the next whether there need to be further cuts in the light of the CSR and we don't know that we take every opportunity to use will anyone at our we can we can utilise when we're abroad and that would be visit Britain but it's certainly the STI offices abroad it's also the best auspices of FCO and basically anyone who can help I suppose the best way to differentiate it is that where visit Britain is very important to us is their link to the specific trade partners but particularly the consumer in that marketplace so in a sense Visit Scotland's focus is very much the consumer STI's focus is more what we would call B2B business to business than B2C which is which is what we do so in a sense the two organisations out in the international field do different jobs but I can assure you whenever we are whatever we do we work very closely together okay okay thank you Richard Lyle okay thank you good to hear that good morning the first question I want is really a quick question I've got two questions but I just want to come into my head if you go to most European countries now the charge of tourist tax we have a situation where local government is complaining of the very little funding so would we encourage in Scotland a tourist tax that local councils could get that funding? Yes or no? No okay I'll move on to my second question very quickly yes I knew that one I knew that one wouldn't fly maybe I will maybe I'll try and interpret that a little I suppose the issues whatever you call it rates commercially a tourist retailer or a hotel will tell you the average tourist tax is called their commercial rates bill the issue for me that I'm particularly anxious about in particular when we've seen the exchange rates moving as they are is we talk a lot about quality in Scotland and that's entirely appropriate but we must always bear in mind value and value against our competition and in the end of the day it's a hotel bill as far or whatever as far as the customer is concerned so we must think about we're thinking about where we are and how we're trying to fund things we need to think about the consumer and how Scotland continuously how Scotland rates in terms of value make sure Scotland is always good value to the to our visiting customer yeah I'd agree with you the best value right I'll move on to how you do your marketing advertising and campaigning you have 20 million people are on your website you're looking to working with trip advisor to reach 500 million people you are currently doing a campaign of value of 360 000 in the borders in order to promote the borders railway you're doing international campaigns in North America Germany, France and Australia but the one I like is you're targeting your campaigns at the best prospects what are the best prospects China you know if you come on to the look at you know on the television lot of Chinese are now visiting other countries massive market how do you do you sit down the room one day and decide where your campaign money is going to be spent that year or do you do it month layer week layer or just look at and also I realise that you also have attracting conferences throughout the world so how do you decide how you campaign or target your campaigns sounds like one of our board meetings I'll come along one day please do and bring the answers with you I think the easiest thing to say is the easiest prospects are those who've been to Scotland already that's the first thing because you've already gone through the difficulty of selling to them and they've been able to experience the product and and hopefully have gone away with a great experience we have Visit Scotland we have a database of about eight and a half million people which we utilise and that's very much about the returning market and that's across numerous countries it's not just the UK it will be international markets as well the other markets so those who've never been to Scotland what we do is we go through a market prioritisation exercise which is based on expenditure by visitor propensity or likelihood to come and visit Scotland so you can benchmark yourself against some of our competition the most notable one is about an hour away by flight so I don't have to mention them and we then look at what they're looking for do we have the product fit to meet those requirements that then takes us into what's the size of the market so in Germany for example it could be about young travellers but we are interested in culture and events etc so we were able to break that down we build that up a picture of what they look like and how the sort of things that they're interested in how close are they to airport destinations so things like you know, in Northern Rhine-Westfalen we'd have 27 million people so we don't go after Germany we go after specific regions or in North America we'd go after the Eastern Seaboard because we know the propensity to fly in Scotland is greater when we talk about China I don't talk about China I talk about Shanghai as an area because we don't have the resources to do big countries no one has and even in my previous days with Guinness took us 10 years before we rolled out of Atlanta in places like that because it's such a big inexpensive market to get into so it's a very focused way of doing it it takes quite a lot of work and effort and we just went through a repeat of the exercise in the last nine months and the market priorities for us are as you articulated you know, it's Europe near Europe it's North America there's some tactical opportunities out in Australia and Canada UK by far and away the biggest market and then there's some sort of team Scotland activity in the brick markets and I think you know that that's about focus there and we looked at what will 10 years time look like in terms of trends and you know what the top 10 we're still going to be the same top 10 so yes there will be changes you know and someone mentioned earlier events that's happened in Europe just recently but we have to prepare for all of that you know the one thing about tourism there's always something happens and certainly in my time I mean the very first year I joined 9-11 took place and then you had all sorts of crises year on year so you kind of prepare for moving and being agile enough to switch your resources into areas where they have to go and it's a bit like I always refer to it as having a balance portfolio of shares some will go up some will go down and never you know are they all at the same level at the same time and I think there's another feature which is if we're blunt about it is just reality in terms of many other competing destinations we don't have the hardcore marketing resource to compete in the same way so if you take an America as an example from time to time and say well why Ireland do a great job in America well why doesn't Scotland do you know why it's not Scotland not so obvious well the truth is Ireland have many many many times more money to spend in that market than we do but we're cute at how we do things and we focus on opportunities like Scotland week as a classic example and in particular we focus on our USPs and this is so crucial for Scottish tourism going forward because we have unique features be it golf or whiskey to explain but the one thing that we haven't discussed this morning and it's so important to appreciate is that we have in a sense if not a new USP a more widely appreciated USP which has become very prominent and clear over the last couple of years in particular through the Commonwealth Games particular Commonwealth Games Rydercap and the Homecoming programme and that is the Scottish people because out of all the features that attract people to come to a destination the people bit is absolutely crucial and you know we've talked for long enough about Scottish tourism being everybody's business in Scotland and we've never been closer to that when it comes to these big events everybody gets out to be part of that experience and to help to provide that ultimate welcome to our visitors and that has rocked right across the world and is one of our strongest assets so we play to our strengths and I think we're very good at doing that and we have some unique strengths to play to Thank you Cyddiw I notice from the the written evidence that you visit Scotland speak specifically about delivering the growth agenda and you will of course know that the Scottish Government now talks not just about growth but sustainable growth in particular emphasis on the importance of fair works so can I ask what meetings you've had with John Swinney and Rosanna Cunningham to address these questions inside your sector? Yeah Yeah, I suppose probably definition firstly of how we see inclusive growth I mean for us we've talked about digital inclusion I think that's absolutely fundamental also geographic inclusion you know Scotland is you know the tourism industry stretches all the way from Shetland all the way down to the borders it's absolutely vital and fragile communities in rural areas and in the islands so it's something that we've been doing for quite some time perhaps not under that banner and you know and perhaps not as avert as it is at the moment but that to me is very important it's also about the skills agenda and young people trying to get them into into the industry and seeing it as a career that they can develop and progress with and not just you know as a kind of last gasp attempt to find in some employment I mean it's much more than that and all of these skills that they'll learn are transferable they can take them whether it's within Scotland or overseas and I think it's also about how do we work with the communities as well that's quite important to us because just going back to your DMO discussion that you were having the one thing about the local communities and the people in them is that they bring the knowledge and the energy and the passion and that's what we need when we talk about the content that we're marketing with the likes of TripAdvisor or Google or whoever it happens to be so we have to work with people in those communities and give them a sense of ownership and I think that's been the biggest change over the last few years is people can see that they actually own this industry they're part of this industry and we're actually only there to help support them and help out their communities in terms of specifically around the living wage we ourselves have applied for accreditation and I think it is important you know to show leadership in that area I don't think morally or ethically anyone has a problem with the living wage or the business pledge but I think we all recognise that in this particular industry you know there are one or two sort of issues that we need to address to be able to get some of the smaller businesses on board So in terms of specific meetings with Cabinet secretaries to establish targets for you have there been any meetings and what demands have been placed on you in terms of addressing the question of fair pay? Well they're not being addressed we haven't been given any specific targets what we've been asked to do is to work with the industry to make sure that that we're able to address some of the issues that the some of the players in the industry may well have and I know Mark and the STA have had quite a lot on BHA have had quite a bit of representation in meetings with Meetings with Cabinet Secretary to outline to you how they think their commitment to inclusive growth and fair work would be expressed through a growth industry like the tourism industry Well I think the strategic forum has been the specific I'm not going to explain the whole context of the strategic forum but with other enterprise agencies we've heard from all those relevant ministers as to their their hopes and aspirations in this field in terms of direct specific targets I'm not sure we've specifically There are no milestones I mean I think the issue is that we know that your sector is Labour intensive our figure shows that 72 per cent of employees in 2014 were being paid below the living wage we know that across United Kingdom 40 per cent of employers rely on or use zero hours contracts across all sectors that's only 11 per cent these are two areas which in terms of inclusive growth in a sector like yours is going to be critical making a difference in terms of fair work you have more people who are in jobs which may be defined as low paid and unstable so what specific things are you now planning to do in order to address how critical your sector is in terms of improving the fair work landscape across Scotland There are a number of key factors here for the industry nobody's I think from an industry's perspective nobody is actually saying that they don't see and endorse the principles of a living wage however it is well documented that the blend of the workforce is very varied and the challenge for many is to to balance the bottom line in some cases so we have made our sort of views felt on those issues around without having to go into the increasing price again and coming back to this competitiveness what can we do to maybe offset some of the incremental cost that a living wage will bring as Malcolm alluded to you know one of our key actions in the skills investment plan is to raise the profile of the sector to try and enhance it as a career of choice we need to remove some of the stigma of it being a default industry and it's a poorly paid industry we've got some very highly paid personnel in our industry and actually we accelerate career opportunities quite rapidly but for some of the big players out there a the impact of of the the new national wage coming will mean that there are there is risk to some of those players in terms of meeting their covenant they it could stifle investment for people who are actually genuinely looking to and capable of growing their business so there has to be a bit of give and take and certainly the the licensed trade association is the one that is probably suffering more more so than most and it needs volume to come through but there is you know a lot of with some work streams going on around productivity and how can we actually look to address the leadership piece in a in a stronger sense to maybe negate some of the issues around being dependent on a low paid workforce and readdress the balance of the of the workforce within the actual business itself but the principles of it we've we've gone on record as the industry is saying absolutely we support it because we are an industry that aspires to be seen to be you know an industry it has professionals and attracts the right people in I just wonder if there's a connection between something being regard I mean I agree with you as an issue around attitudes towards retail or to hospitality industry but part of that is informed by the fact that people are less likely to be reasonably paid jobs and are less likely to have job security surely and I accept that you recognise the principle of it but for Visit Scotland as an economic agent what are you doing what are you asking of government to support you moving towards that you know the industry is trying to manage it what what should we be asking the Scottish Government to make support to the sector conditional upon perhaps showing us progress around the living ways there's progress around the less use of zero hours contract and that's not a question in a sense for the industry is a is a set of questions for the agency and I was concerned earlier when you talked about you almost seem to define a cutting APD as by definition being more competitive surely there is an anxiety that if you have that concept of competitiveness what is to stop the competition then being round wages and conditions how does the government support the industry to actually shift from that being the competition to being round quality of delivering the nature of how people deal with the public or whatever yeah well you know I think it's a it's a huge issue your point is well made there is a huge amount of discussion in the industry I mean a huge amount of discussion as to how the industry responds to this and there this doesn't answer your question but it compounds it in a sense there is also the huge issue of encouraging young people to join the industry and you know in terms of what we're doing I was in a college last week speaking to about 100 100 students who are busy working in relevant courses and and there was a fundamental anxiousness that there aren't the jobs available despite the pay rates and all that there just aren't the jobs available and actually you know in the last couple of years we've seen 14 15,000 jobs created in the industry those messages aren't coming coming through so as an industry and indeed at government and ourselves and our other agencies we've got a huge job to do to encourage Scots and young Scots in particular that this is an industry with all kinds of opportunities we need to be better expressing them and giving good examples I think as to why it's an industry that they they will you know it's a good industry to go into and they will do well in so what in centres can we create then to encourage and support employers to offer a better standard of pay and more job security because that feels to me that is if government is saying they have a strategy for fair work which is connected to growth and you're a growth agency what are your responsibilities what could you write into your quality assurance assessments what incentives could we create around the benefits of being part of the Scottish business pledge so that the industry recognises that I mean what's the incentive just now to a business to say you know what I'm going to I'm going to buck the trend I'm not going to have 72% of employees in the living wage what conversations are taking place now to help the industry by the government otherwise it feels to me as the government has said they've got this importance of fair work but as far as the biggest sector where there's a problem there's not even a dialogue about how you could support people to move towards the government's agenda I think there's certainly the dialogue you should do with the quality assurance issue well firstly there's work going on across all the agencies to look at you know the what is the evidence base for the industry that they would like to see so is it things like reduced retention costs increased productivity so they're trying to build if you're like a business case around it now whether that's successful or not we'll see but that's what's being pulled together secondly the and that will go to government well I presume so at the moment it's being commissioned so you know it's not finalised yet but you know so they need to pull that evidence together the the second part is about the quality assurance scheme the quality assurance scheme is not a mandatory scheme it's actually a voluntary scheme and therefore one of the issues that you might well find is that actually to make something compulsory in that because there's no subsidy in the scheme so people are actually paying to be part of it you may well find that they decide they don't want to be part of the scheme and then you end up with an unintended consequence which is actually the whole focus around quality and value for money is actually eroded so you know we have to look through all of those things I mean I take on board you know your point about how do we get the industry to see that this is a good thing to do and how will it benefit their business and that I think is still very much in its infancy so in the budget would it be reasonable to say that Visit Scotland as a growth agency it would be useful to you to have an identified amount of money which is not about making the quality assurance thing move from voluntary to compulsory but it's creating incentive for people to be good employers if that's in the context of a government that says that's what they want I may not be Visit Scotland I mean I think I mean it does I suspect you that you are the growth agency for the sector but business support if there's a conditionality upon your support would it be reasonable to make that the condition and would it be reasonable for government to fund you to be able to do that if they want to match up not just growth but with sustainable growth in a sector where it's the best example of this whole issue of what might be defined as poor quality work because of low pay and job insecurity The point that I was going to make is I don't think it's whether it's Visit Scotland per se or whether it's the public sector in general so if it's about business support we need to make sure that the mechanisms are in place whether Visit Scotland is the agency that delivers that business support or it is just an agency that supports that and signposts to it you know at this stage you know I don't think that's the most important I think it is actually understanding what does business need to get over the barrier in terms of implementation but it would be reasonable to say that your industry is where this is most prevalent and that any government wants to address that prevalence of low pay job insecurity should be working with you as the growth agency otherwise one might suspect that actually we have a complete separation of the growth strategy from any concerns about fair work and I just want to know how you think you bring these two things together I suppose what I'm trying to do is avoid creating another agency that delivers business support we've already talked about simplification and making it easy for businesses to access where they can get support and that's the point I'm making is that if it's on a single portal it doesn't actually matter whether it's business gateway Scottish Enterprise Visit Scotland the fact is that it is there and it's easy to find and I guess that's what I'm saying One of the issues we have an industry that is well so many different players and so many small players is communication and there are growing examples of businesses that are responding to this well we're better able today to explain it and express it and I mean we're just about to go out into the winter programme of Visit Scotland and the STE we'll all be out going around the industry and I can assure you it's a key topic it's a key topic where we're linking well here's what this business has done and that business has done across this whole agenda and that's definitely working it's certainly catching the mood isn't it Yeah absolutely I mean I don't think it's here and actually the business has to respond to the minimum wage and changing the wage the pay scales so looking at productivity looking at what you have to do to to ensure that you attract it and there is you know going back to this aspiration of trying to profile and make sure that this industry is seen as a career of choice and more importantly offers real progression it's here to stay tourism is never going to go away it's here for good and it's also you know we use more and more often and draw out the if you're in the digital arena if you're an engineer you are in the tourism industry there are multiple of different career options and pathways that you could go down for me personally and I think a number of my colleagues would share the same view the issue and the challenge for her the change in perception of our industry starts in the primary schools it actually needs to be presented by the teaching workforce that actually tourism is more than just hotel keeping or working behind a bar it's a much broader opportunity and when you start to attract the skill you will invest in those people and you can drive your productivity then so you will want to reward and pay and there are a number of other of course of our businesses who you know we have a seasonal workforce and it's transient and it will move and that's the nature of the beast globally in the tourism world but the ones that you want to invest in there is absolute commitment to do that and I think you know the industry will continue to work through and look at the case studies and examples of where businesses have actually made that shift and retention of workforce is one and actually how does that sort of deliver on your bottom line? If there was one thing that government should do to support your aspiration for you know that the sector to be regarded more highly and I think we would accept surely that low pay and job insecurity adds to that sense that it's not a sector you want to go into what is the one thing that government could do to break that cycle because we can't wait around and hope that people will just take a risk for going to the sector which is devalued on low pay and job insecurity and hope that because they are there it will improve what how do you turn it round other way what can government do to help you? Well just answers you made a couple of comments there that you know it's perceived as low paid and devalued actually I personally think that the perception of the tourism industry is in a lot better place than it was many moons ago and I think you know going back to the likes of these major events and things that we we host and you see what actually the tourism sector delivers has actually raised the appeal of the industry in a in a big way I was 35 plus 40 years and as an operator peeling potatoes having knives thrown at me by a chef when I was 16 and I've worked in nine countries around the world in the industry so you know and I don't see the industry today in its in its being tarnished or considered as an industry not to go into I've already I've respect I already accepted that you said that there was an issue about how you retain people because of people's perception I agree with you if you look at the comments I think how we attain yes but even if there is a huge change people are more likely to go into it the fact of matter is 72% of employees were below the living wage and 40% of employers in this sector is supposed to live in percent across old sector all sectors use zero hours contracts we can understand why that's happened we want the sector to work I'm asking you if the Scottish Government's in favour of inclusive growth and fair pay what can they do to help you as an industry to make that shift well I think first and foremost you know we've spoken about business rates and things like that I think some of those those overheads and costs that they that the industry are actually having to incur at the moment need to be revisited and relaxed so we can go through a transient change to get to you know a more balanced approach and pay rate I think there are some some top line challenges license trade change in regulation around drink drive we've got to drive more volume into into the actual businesses to allow that bottom line to grow and gradually then move those up so it's looking at you know not just one particular thing I think the whole package of what of how a business in our industry actually operates at the moment is is something that's you know that conversation needs to continue and it has started in it and I think you know there is an acceptance that you know we are a sector that has a challenge but there is you know a genuine desire and I suppose a willingness on all sides to sit down and try and find those those solutions but in the short term for some in for some businesses it is going to be a very very big problem I think one of the other issues that we're trying to explain is in particular this year after 2015 this was a year that the industry should have taken one of its one of its traditional if not severe significant downturns it just is the way it goes and that hasn't happened and one of the core reasons that hasn't happened is because the government and the country got behind the events of 2014 to give us the kick to get through that now actually if I'm honest about it I can't remember in the industry going back in time when government involvement or public involvement to that extent and it's you know it was it goes beyond the specific government of the day with the old people of Scotland drove the machine through 2014 and it has had a profound effect in terms of protecting the industry through difficult period in 15 and hopefully set us up and in the end of the day when it comes to these businesses it is about bottom line profitability and all the different bits the bed tax and all the rest it all plugs in so in the conversations we're having around the industry through this winter we are trying to explain and we'll look how more confident you are now than you were at the start of the year look at the storm we've just weathered and now the weather's getting better we're in good shape to tackle the next period and to address these issues and we'll see how we do this winter but I'm confident we're making progress okay thank you okay I appreciate we're a bit behind the clock I promised a last question or two to Patrick Harvie thank you convener it's on a similar subject but I'll try to be brief I would have shared the expectation and the hope to hear more concrete actions being taken to drive up participation in the fair work agenda but you've talked about the large number of small businesses in this sector which I see as a strength you've talked about the need for young people to see this not just as any old employment but progression and something that that they can have a long-term future in there's a connection between the two because where are those next small businesses going to come from if young people don't feel that they've got a future in this industry particularly in communities where hospitality and tourism employers might be the only or amongst the only opportunities they've got the UK government though is taking a very different approach instead of promoting a living wage which is calculated to give people what they need to live with dignity they're cutting the the tax credits and they're imploding an additional upper age band on effectively the minimum wage now we've had in earlier sessions arguments that many many employers may be driven by that toward more use of zero hours contracts more use of casualisation of labour in order to make sure that they can keep employing people at the lower age bands and that they will close down the opportunities for younger people as they start to approach that 25-year threshold is there a danger that particularly those kinds of communities where hospitality and tourism are the major opportunities we're going to see over the next few years more incentive for those young people to get out while they can before they start seeing those opportunities closed down and what can the Scottish Government do to address that not necessarily in terms of your budgets but areas like tax and welfare which it is going to get some opportunity to make measures in over the next few years I said I would try to be brief but it wasn't yeah I'm afraid I've done other magic but I take on board exactly what you say is for the industry as a whole it is a potential barrier to growth and into employment and you know clearly it is not something that we would like to see because it's counter to everything that we've just been talking about in terms of trying to get young people into meaningful work and give them a career and a career path so I think it's actually related slightly to the previous discussion that we've had and rather than come up with some immediate needy response to that I quite like to take that away and think about it that once this 25-year age band on the minimum wage comes in we're going to be looking at an upper age band on the minimum wage which is getting on for double what the 16-17 year old age band is isn't that going to increase the incentive for very many employers who find that their bottom line is difficult to ease people out or get rid of people or shut people onto zero hours contracts so they're not employing them as much when they get into those older age categories and employ more people who are younger isn't there a real danger that we squeeze off the future of some of those communities? I'll give you my personal opinion I would be concerned that that was an outcome but I think that maybe... I share the view and I think you know knowing many of the 21,000 businesses is well and when we have the conversations we had 9,000 people through our tourism week program last year and I think there's a recognition that you have to have a mature work first balanced with a young workforce as well and if you squeeze out to pay the lower wage and then just rely on a younger generation coming through immediately your quality concern comes into play do you then actually you know end up with a reputation that isn't as good as you want it to be? So it swings and roundabouts I haven't come across anybody who have sort of said well that's it I'm removing the old and I'll just work with a 16, 17 year old workforce on zero hour contracts I think anybody who chooses to do that would be very foolish so I'm not convinced that that will happen by a long shot For me the interesting thing that I see in the industry from your point and actually Joanne's point as well is that I hear discussion in an industry appreciating these significant issues but actually as an industry we haven't actually addressed the issue before that which is the simple spark and inspiration to even look at it as a sector and it's people like you Mr Croff will mention pot rooms and whatever you know the I would like a job in the hospitality industry and you know I'm cooking and whatever and there's the what has happened over the course of the last few years is the industry has expanded so in terms of you know I have a run of slides as to the different types of jobs that are available available in the industry that people obviously just haven't thought well that's you know key so these issues are absolutely key and I accept that but as an industry we've got more to do I think fundamentally to catch the mood that it's a sector that's worthy of looking at and there are exciting jobs to do as well as the issues in terms of pay and remuneration as Mark quite rightly said this is an industry we've been doing it for 200 years we'll be doing it for the next 200 years it's a safe industry in terms of job employment but I take the points entirely it has to be properly remunerated and be seen to be so sorry I thought the reference that pot rooms was a call for changing drug policies there could be opportunities there in those days it's a whole different debate Mr Harvey I can assure you in some of the kitchens in Africa it was like that but no I think I mean we had this discussion around tourism as a badge you know the careers are a career in marketing a career in accountancy a career in carpentry those are all trades and skills that are actually make up the business that we run and it's positioning that the sector as providing those opportunities guiding adventure you know the adventure piece etc there is a whole raft of opportunities and for the younger generation you know it's opening up those doors and getting them to realise that what's presented to them is not just this you know you've failed your exams you're going to go into the still room and be shouted at or you're going to go and work behind a pub for the rest behind a bar and nothing against barmen because they do a great job and I hope they do a good job tonight As UK welfare changes push more of the people working in those jobs further into poverty that there is a real danger that they have to conclude getting out of this industry is their only option that's something that we really need to take seriously Thank you This has been a slightly longer session than we expected but we've covered a lot of ground Can I on behalf of the committee thank you all for coming along and I think Dr Cantley this might well be your last appearance before the committee before you'd omit office so can I say on behalf of the committee members how much we've appreciated your engagement as chair of the VisitScotland over the last number of years Thank you Thank you for your chairmanship It is the best job in the world so it's been a privilege and at that we will now suspend and go into private session