Gaining support for destination management and tourism levy update.

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I attended several events last week.  I few observations arising on (1) making the case for destination management and (2) on further developments towards the introduction potential local tourism levy:

1. At a Combined Authority event in Liverpool and the TMI conference Chester I was struck by the urgently need to retune the language we are all use around the case for greater support for destination management.

We already have a long-standing issue around the use of the term “DMO” as an interchangeable acronym for both wider destination management and for purely destination marketing focused organisations. When making the case for moral, policy or financial support for destination management it is all too easy to slip into talking in terms of the need to “promote” the interests of the destination and ultimately the need to market our destinations, without necessarily making it clear that marketing is but one part of what a full service destination management body does.

We need to make it crystal clear that the marketing; the bit we can most easily get the private sector to contribute towards, is merely the end product and final phase of a complex ongoing management processes; a management process and necessary administration which the private sector is markedly more reluctant to fund.  Management involves a multitude of mix and match activities that combined produce, by voluntary agreement and cooperative working, a quality of place, a set of products, major events, conferences and business tourism activities, an agreed brand and promotional platforms, that combined are then fit to be promote at a scale, reach and in a tone that benefits the destination as a whole and the majority of its businesses and its resident community.

Without that management, most destinations aren’t destinations as such, or at least are not destinations worthy of proactive regional, national and, where appropriate, international, promotion as destinations. Moreover, many businesses are happy to freeload off the back of these managed activity including destination marketing.  If anything, developments like online travel agents and, latterly, sharing accommodation platforms are simply serving to make freeloading an even bigger market failure issue.

Westminster Government, or more specifically Treasury, are wedded to the belief that any destination promotion is a displacement activity and not simply in terms of displacement of tourism spend within the UK but of consumer spending, per say. If you don’t go to Bognor, you may buy a fridge, or spend the money in your local visitor economy instead. The economic activity isn’t lost to the UK PLC and there is therefore no case to use public money to deflect spending from one place or sector to another. Whether you agree or disagree with their view, there is no sign that ongoing efforts to change it will be effective anytime soon.

Therefore, in England at least, where Treasury’s view holds absolute sway, any arguments made around the pressing need to support “destination management” will continue to fall on deaf ears, if as we continue to allow the debate to be presented as one mostly about, more or better destination marketing alone and, especially, if as it inevitably will, discussion turns to the use of either local or national public funding to pump prime or support it.

When making the case for destination management we all need to be far clearer about what destination management actually involves and those parts of the wider management process we individually and jointly need help underpinning. Just assuming that everyone, including many in the wider industry, already get it hasn’t and isn’t going to prompt the attitudinal changes necessary.   It may sound overly simplistic but do please give the suggested presentational changes some thought. When tackling barriers, the simplest things can often have the biggest impacts, especially when they start being done by everyone involved.

2. At the Tourism Alliance “. Tourism tax seminar” there were 5 presentation, 3 broadly supportive of the principle of a levy, 2 broadly or strongly against. Representatives from Manchester and Liverpool gave excellent presentations on the rational for and development work around, options for an accommodation-based levy, both initially in their City Centres rather than the larger City region. Both had concluded that the primary legislation required to allow some form of new levy was unlikely to be forthcoming in the time scale they needed to work to, I.e. to generate the additional  revenue necessary to maintain and build on their outwardly vibrant visitor economies.

In conjunction with their larger hotels they were therefore looking at options to use existing Business Improvement District (BID) legislation to introduce a BID levy based on the amount of accommodation occupied.  A great deal of work was still needed before a new or revised Tourism BID could be introduced in either City.  Nonetheless, the prospects looked reasonably good, because the proposals were being developed in partnership with those likely to have to pay/collect the charge and, as a BID, those asked to paying have direct influence over what the money raised would be used for. It is hard to criticise a levy if it’s the businesses that agree to it.  There was a lot very interesting detail given around what they have in mind and what the local industry saw as acceptable, but too much to go into here.

Of immediate note: the BID model and the approaches outlined did appear to directly address many of the fundamental concerns expressed about the principles of a tourism tax or levy previously raised or aired during the meeting.  The Liverpool and Manchester BIDs, if introduced, wouldn’t be in place much before 2021/22 at the earliest and may well then be viewed as pilots for both their own wider City regions and, by default, for other areas within the UK. That timeframe means that any new BID based model might not be proven soon enough to be of immediate assistance to those many DMO’s that are struggling to find sustainable new revenue sources?

Both proposed approaches generated significant revenue but not necessarily enough to cover every potential call from conference subvention, through marketing, to culture support.  Both by necessity were focused on specific critical shortfalls in their own localities and ones that their selected accommodation businesses appeared willing to see supported.  Whether, other demands on the revenue would emerge as the proposals developed remained to be seen?

In addition, the models proposed generally looked to support from larger properties, a minimum of 25 plus rooms or 5 plus letting units, in City centres areas with a concentration of accommodation, much of it branded.  Whether that general model would generate worthwhile revenue in smaller Cities and towns or across dispersed rural destinations with a generally smaller sized, smaller scale accommodation and greater seasonality issues needs to be investigated.

The impact of replacing or overwriting existing retail and/or destination BIDs also needs to be better understood.  Those without BIDs of any type may be better placed to start to include a new accommodation focus levy, than those already engaged and charging a range of businesses, including hotels usually on a fixed additional percentage of business rates basis?

We will watch these and the ongoing developments in Scotland closely and keep you updated with the key matter arising. If you need access to the presentations on the BID approach please email me.


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