Month: March 2023
Quick up date and one substantive issue
Yesterday I attended the Tourism Alliance Insight Conference, followed by the English Tourism Week Parliamentary reception. It was an excellent data and tourism intelligence focused conference and a useful subsequent networking event, both attended by a small number of destination managers and few representatives from a couple of the larger destination area marketing partnership, plus a much larger number from a broad cross-section of industry players and tourism and leisure industry representative bodies.
I am hoping that the level of attendance from the “DMOs” was more reflective of the time of year and budget cycle (very last gasps of the financial year for many), rather than reflective of the pressures on limited discretionary budgets or just budgets full stop. Selfishly I keen to seen a good levels of destination management and marketing representation at the Tourism Alliance, Tourism Society British Destination Annual conference to be held later this year, post season being my recommendation. The detail and specifically the date of which is yet to be agreed by the triumvirate. Please ink the event in to the 2023/24 budget now and the diary it as soon as we can confirm the date.
Having said that I hope budgets for 2023/24 aren’t a major issue, or at least no more than normal, I am acutely aware that a couple of destination management and/or destination marketing organisations are between a rock and a very hard place with regard to this coming financial year. What I am not aware of is whether its only a couple and whether those that I am aware of now, or might become aware as a result of this note, wish me to represent concern about continuing funding difficulties too openly or at what level. I am a tuned to the fact that from a local perspective making difficulties too obvious or too public, too soon to local partners and businesses can precipitate the very things you seek to avoid. If you are having a particularly hard time, please let me know and also let me know if you are happy for that to be flag up just as a generality or as a named specific case.
As to the insights conference itself, it genuinely contained many timely insights, some of more significance than others. As you would expect of me by now, when I do get the slide pack (still awaited) rather than just sending it out, as is, I will do a bit of a synopsis, point out the highlight and any short cuts to getting to the meat of the matters at hand. That might take a day or two but it will hopefully be worth the extra wait. Highlights for me already, included a seemingly open ended offers from both TripAdvisor and Barclays to share their always very current tourism and visitor economy data and intelligence with the wider industry. That I think is more significant than it might at first sound. I will certainly be telling you how to sign up for that and/or making sure it is embedded somehow into our research and statistic library. More on the statistics piece next week.
There were a number of big-ticket items aired at the fringes and nuggets dropped in conversation. Most will wait for a while longer or need more work doing on them. The one issue I do want to address and do so now is the one nobody else seems, probably for good reason, to want to raise anywhere too publicly. So, I guess if no one else will, it falls to me to air the tourism impacts of asylum seekers and hotel usage. It was not addressed by anyone officially but was discussed without prompting by a good half dozen plus individual with me at the fringes over the course of the full day, including a very senior national tourist board representative.
Stripping away all the rightly difficult and emotive issue and concerns, and looking purely from a tourism perspective, I think it safe to say everyone who needs to understand within the immediate upper sphere of tourism already recognises that placing non-economically active asylum seekers in to hotels isn’t necessarily a very good idea. But not everyone has the same broad understand of why that might be or the specifics of the impact of seemingly similar usage in differing locations. With that in mind, we can’t be sure that the Home Office, and No 10, the ones who really do need to understand and be persuaded, do either.
For the avoidance of doubt let me rehearse tourism arguments as I understand them:
While filling a hotel with a guaranteed 100% occupancy for a guaranteed period at good rates, with minimal, if any staffing requirement (and guaranteed post contract refurbishment?) might be very good news for a potentially struggling hotel owner or operator, it seldom if ever equates to “good news for tourism” as the uninitiated might very easily erroneously assume. The notion that what is good for an individual hotelier must by default always be good for tourism still needs to be challenged. Indeed, for tourism and the wider visitor economy prospective there will almost certainly be some harm ranging from very little to significant harm, dependent largely on the nature of the usual target market for the hotel and critically the nature of its locality.
Replacing economically active visitor who have discretionary disposable income, directly with economically inactive individuals who have little or no disposable income and no legal means of generating any, may well have little wider impact on the visitor economy adjacent to, for example, a ubiquitous “bed shed” on the fringe of an industrial estate by the ring road at the edge of a town or city. Doing seemingly much the same thing, in or near the centre of a historic, heritage or market town or city, or in a major seaside resort destination is a very different matter.
In the latter examples the very act of replacing individual who are there often with the express purpose of spending within the local destination economy, with those who can’t spend anything, is tantamount to Government acting to close the hotels concerned and arbitrarily reducing the destinations staying visitor capacity by edict. And that is before any other considerations and indirect impacts on tourism and the visitor economy are taken into account. Doing so during the off season is questionable, doing so now in the run up to, during or throughout the fast-approaching main season is deplorable and is little short of government funded and directed, economic sabotage.
While it is fully accepted that the Home Office and Government more generally, have little practical alternative but to seek hotel accommodation in the current circumstance, in doing so they, or their contractors must carefully consider and take due regard to where those hotels are situated, the nature of the normal trade and most importantly of all the likely impact on any significant established visitor economy within the locality. Those place to avoid should be utterly obvious: the well-established inland and coastal visitor destinations, of which there are many. Those places to target may be less obvious and harder to easily identify but they do number in their thousands. The process of identifying hotels with no significant associated local economy, could be greatly assisted by the creation of some basic but clear criteria, if indeed these do not already exist. Something we do need to establish as a mater of some urgency is by what criteria do the Home Office currently select hotels and critically their locations? I can’t help thinking tourism and visitor economy probably don’t feature.
If Government does not take steps to avoid further use of accommodation in “popular destinations” the absurdity of most of Government working to support the recovery within the visitor economy, post-covid and investing significant sums to drive new growth in many established destinations, while the Home Office beavers away independently undermining both recovery and growth in other destinations and on occasions concurrently in the self-same destinations. Highlighting the lack of joined up policy, involving a sensitive and contentious subject like asylum seekers, is not a route down which any destination individually or jointly would willingly wish to go. Nonetheless, it remains an option of last resort in the resorts and destination’s lobbying tool box.
Any views on the above subject are welcome. If there is sufficient demand, I am happy to call an informal discussion on the mattes raised and to help bottom out individual destination’s views.
New Minister, new opportunities for domestic tourism?
1. If you have not already heard the good news, Julia Lopez MP was appointed on 7 March as Minister of State for Media, Tourism and Creative Industries within the recently (7 Feb 23) restructured Department for Culture, Media and Sport (DCMS). MP for Hornchurch and Upminster in Greater London since 2017, Julia first joined DCMS in 2021 as Minister of State for Media, Data and Digital Infrastructure. With the exception of a brief break in 2022, this was a post and portfolio she held until this week. The Minister of State’s revised portfolio, and tourism’s inclusion now within it, in practice means an increase in tourism’s profile within DCMS and Government in general. Tourism has traditionally sat within the portfolio of one of the Parliamentary Under Secretaries and not with the Minister of State who as you will appreciate is second only in the Department to the Secretary of State.
You may have also noticed that Julia was appointed as a Minister of State at the newly created Department for Science, Innovation and Technology (DSIT) on the same day. Dual departmental appointments are not unusual. The responsibilities for the newly created role have yet been publicly announced but it is a reasonable assumption that these are likely to relate to some or all of the Minister’s previous responsibilities for data and digital, recently spun off out of DCMS and into the new DSIT. If that is the case, then it is an eminently sensible approach, ensuring continuity in the areas of digital infrastructure and data within DSIT, as DSIT finds it feet as a separate department with greatly expanded roles beyond those elements of data and digital previously managed within DCMS.
It also has the coincidental advantage of putting an experienced Minister of State in to the newly created DSIT, who will soon also have rather more intimate knowledge of all matter’s tourism than the average Minister and Under Secretaries of State in most departments outside DCMS. In that respect we are also very fortunate that rather than slipping sideway, or out of Government, as can often be the case, several of our more recent former Ministers for Tourism have gone upwards and hopefully will go onwards. This too can only serve to help broaden government’s communal understanding of the roles and functions of tourism and the wider visitor economy.
Any recent natural concerns about the apparent absence of any reference to tourism, visits or visitors in the restructured DCMS new mission statement are, it would now seem, without foundation. Press reports at the time made it very clear that, the major reorganisation was being done at pace, behind closed doors at No 10 and, thus, unusually without the benefit or any considered advise or comment from any of the Departments impacted. Its a guess but it seems to me that it is entirely possible that the omission of the word visit/visitors in the latest version of the mission statement, in itself something and nothing, was no more than a slip of the pen.
I would wager that it was something done without the sage advice from anyone in DCMS. A department only too well aware of our industry’s hyper sensitivity about, names, titles and referencing, all born in large part out of the now historic struggle for recognition and appropriate levels of departmental and Ministerial representation. Things we have actually enjoyed now for many years, even if it isn’t explicitly spelled out in the departmental title, is not the sole responsibility of a dedicated tourism Minister, or that there is currently no “nod and a wink” to it in the mission statement, or indeed any one of a half a dozen past or present, residually perceived slights upon “tourism” that have been aired in the past and doubtless will be aired again in the future.
Given the latest Ministerial appointments we can rest assured about our current levels of recognition. Even if some might still hope perhaps for a token mention in any future mission statement update to help further salve any unintended injury to sometimes, all too fragile feelings. Personally, if it were ever to happen I would favour, as in some past iterations, the use of the device of referencing tourism, or visits/visitor as a unifying purpose; words to the effect that DCMS looks after things like culture, media and sport in order to help make the UK a better place to visit and enjoy. I favourite because I think the approach neatly encapsulate the fact that tourism isn’t a single entity and that what it does is bring many things and many people together for mutual benefit. If the mission statement ever changes, then hurrah! If it doesn’t no real problem.
Like you I look forward to working with the new Minister and existing team at DCMS to further our shared interests in driving more social and economic value out of tourism. Or more accurately, to drive more value out of the broader visitor economy which is increasingly what destination do and what destination mangers actually manage.
2. To that end and with our many destination members core interests in the domestic market in mind, we might be well advised to use the appointment of a new Minister for Tourism as a fresh trigger to yet again think long and hard about new ways for Government, at all levels, to support domestic tourism, in order ultimately to help improve both domestic tourism and the domestic tourism v domestic outbound balance of payment deficit. It is becoming increasingly clear that the fundamental barrier to this isn’t weaknesses in domestic tourism as such, or the strength of the outbound domestic market but challenging the status quo, without accidentally butting head-on into Treasury rules or doctrine. In particular, the brick wall of internal UK economic displacement theory, which dictates that public resource expended encouraging spending in one part of the UK economy, that might otherwise just have been spent in some other part of the UK economy, on whatever, is always a waste of public resource and should be avoided at all cost.
I remain convinced that in the case of domestic tourism, the spending choices aren’t just between Bournemouth or Blackpool or between Bournemouth, Blackpool or a new bed, more beans, a few more beers in the local, or any other domestic financial transaction you might care to mention. More often than not now, it is a direct choice between Britain or abroad for the average UK resident’s primary holiday and leisure activities.
I also remain convinced that between us the domestic focused part of the industry can evidence, that domestic tourism is no longer just a domestic economic displacement activity. Things in our industry have radically changed and continue to do so. For example, whatever economists might think, the “main holiday”, now all too often taken abroad, is no longer regarded by many that actual take them, as “a discretionary activity” and spending choices are adjusted accordingly. That is a fundamental shift and one with fundamental implications for other leisure and visitor economy activities that aren’t “main holidays” and therefore remain discretionary and subject to the vagaries of economic conditions, influenced by fiscal policy direction.
If the old rules that govern tourism have changed then it is not too unreasonable to suggest some of the rules of national governance and fiscal policies might need to be adjusted too to reflect the new realities. I am just not absolutely certain yet how or when this can all be achieved, other than to know that it isn’t simply a case of articulating the arguments but of evidencing then beyond all reasonable doubt. The domestic v domestic outbound arguments have been doing the rounds for decades, starting I believe not too long after the advent of the popular overseas holiday itself in the mid-1970s. What has never been assembled, or certainly not in the 30 years I have now been involved, is any attitudinal, qualitive or quantitative evidence to prove what many of us might still naturally believe should be all too plainly obvious. I.E.: that domestic market is often in direct competition with domestic outbound market. There are things which could be done to significantly improve the domestic market’s performance and redress the balance of domestic to domestic outbound. Due in large part to market failure issues, some of those things (most?) are in the gift of government and not just the industry itself.
This feels like a topic for a destination manager’s meeting, if only to scope out the core issues and some of the possible options. Given the looming main season, this is preferably something to try and squeeze in before or in the short lull post Easter? More detail to follow. Meanwhile views on any or all of the above would be welcomed.
Nudge, nudge say no more, the taxman may be looking.
There has been a number of media reports and financial services comment on HMRC “nudge letters”, including reports on a recent batch of at least 1,000 such letters targeted at owners of short-term holiday lets or “Airbnbs” as they are often now popularly characterised.
The typical “nudge letter” gives taxpayers the opportunity to engage with HMRC to remedy any suspected errors in recent self-assessment returns, before an official enquiry into their tax affairs is launched. Those receiving the letters are given a 30-day opportunity to return a detailed and apparently fairly onerous statement of their tax affairs relating to alleged area of potential omission. Outstanding tax, interest and penalties may be payable but punitive penalties associated with deliberate or negligent evasion are usually avoided.
Essentially it is an opportunity to prove innocence or come clean, rectify any genuine errors or omissions, whilst also avoiding the prospect of an in-depth examination of all tax affairs, potentially going back over any number of years; typical 4 to 6 but up to 20 years if HMRC deem it necessary. Even if there proves to have been no errors made, the in-depth investigations are apparently intrusive and expensive in terms of time and energy required to service them and should, if at all possible, therefore be avoided.
Nudge letters are now a commonly used HMRC tool across all business sectors and all areas of taxation. They are set to becoming more so, especially among the online sectors, as from 1 January 2024 the UK are due to bring OECD’s model rules for platform reporting in to force. By law these will oblige all trading platforms operating in the UK to report key information like earnings of all their UK tax paying users, to HMRC.
A couple of years ago, as part of their own settlement of their UK tax affairs, Airbnb “voluntarily” agreed to provide HMRC with this data for the 2017/18 and 2018/19 tax years, something that many hosts may be blissfully unaware of? In addition, the make tax digital programme is all but complete and HMRC have begun to employ sophisticated systems that can compare and contrast many millions of transactions across thousands of different digital systems, something that simply wasn’t possible to do manually as little as two or three years ago.
It is entirely possible that evidence from these earlier returns and from other similar agreements with other platforms, will have helped identify those hosts now in receipt of a nudge letter for subsequent tax years. What is absolutely certain is that we will see much more of it in future years driven by a mix of making tax digital, new automated and AI enabled investigative systems and critically the implementation of the OECD’s rules that will embrace everything from letting rooms, through eBay sales, Ubers and food deliveries income, to the earnings of online influences.
Beyond pursuing those that HMRC have good reason to suspect of having made (significant?) errors, the nudge campaigns have a clear role to play in demonstrating beyond any lingering historic doubt that HMRC now have, not just the will but also the means to crosscheck all actual earnings against those declared via tax returns or in some case, simply not declared at all because no return has been submitted. By doing so, they not only recover lost tax income from a minority but it also serves to scare the hell out of vast majority, who wouldn’t ordinarily dream of being careless, let alone deceitful, enough to try to defraud the taxman. In essence a highly efficient, high public profile but relatively low effort means of ensuring the vast majority continue to abide by the rules and that those that don’t are detected, punished and subsequently deterred from repeat the error.
All those using online platforms to let holiday accommodation need to be aware that HMRC already have new the means to check the detail of earnings voluntarily supplied by a number but not all platforms. Subject to the smooth passage of the necessary legislation that ability should become universal by the beginning of the of 2024, well ahead of the start of 2024-25 tax year and just after the final deadlines for the submission for most returns for the 2022-23 tax year. For those that have always assiduously reported their full earning this isn’t going to be an issue for others it may be a bit more of a problem, especially if they are not ware of rapidly changing circumstances.
Destination managers can help the nudge campaign and help local businesses by making sure that those short-term, holiday let owners they have dealings with are made aware of the changed and changing circumstance. That of course isn’t always as easily done as it sounds, because as we all know, only too well, this is a developing sector that now involve a multitude of new players, many of whom have tended to operate below the local (and national) radar, for various reasons, not least f which is that they can and there no “rules” to discourage it. Hence, in part the perceived and increasingly urgent need for, at the very bare minimum, a national registration scheme for England, if not a full statutory licencing scheme of the likes of that currently proposed for Wales.
If HMRC, the central players in the Westminster Government, can see the need for visibility and statutory oversight of areas like the short-term letting market, in order to enforce adherence to necessary rules on, in their case, necessary taxation, that surely adds significant weight to the current case for other statutory bodies to be given the most basic of means to reassert appropriate control over their necessary areas of statutory responsibility? Especially in this, case where those responsibility largely relate to the provision of clean, safe and legal guest accommodation. Accommodation which in current circumstance can be anything but clean, safe or legal because nobody is empowered or given the basic means to universally check adherence to regulations, let alone to physically check the premises themselves.
If nothing else the current nudge campaign illustrates one of the many potential associated benefits of local destinations being aware of and therefore communicating with all local businesses in the tourism accommodation sector and not just those who are either visible to or voluntarily engage with destination manage. Statutory registration/licencing would help reassert clear lines and routes of communication, that ironically modern means of communication have inadvertently served to complicate or cut entirely.