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Title    : Scottish Parliament: Research Briefings: RN 99-22 Tourism in
Scotland
Author(s): Scottish Parliamentary Corporate Body

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Research Note 99/22
10 August 1999

TOURISM IN SCOTLAND

This research note provides an overview of the nature and performance of
the tourism sector. It describes the broad framework of support for the
Scottish tourism industry, highlights a number of key issues and the policy
reviews which have helped shape the industry in Scotland. 

A definition of tourism

Though there is no single definition of the tourist industry, it is
generally taken to include a proportion of the activity/employment in
hotels, catering, retail, and other services (1). The tourism industry
therefore does not fit in neatly to a single Standard Industrial
Classification (SIC) category, as it is defined more by the source of
demand for services (from tourists), than by the activity itself. Within
some areas the proportions of the above sectors related to tourism (for
example public houses) will be much higher than in others. The Scottish
Tourist Board (STB) defines a tourist as someone who spends one night in
Scotland away from home regardless of the purpose of the trip. This
obviously excludes day trips for leisure purposes, though information on
these is picked up in other STB research. These issues help make a
definitive measurement of tourism activity difficult.

THE ECONOMIC SIGNIFICANCE OF TOURISM

Scottish Tourism Spending 1990 - 1997

[NOTE: Table here in original]

The table above indicates a fluctuating rise in tourism expenditure in
Scotland between 1990 and 1997. The Scottish Tourist Board estimates that
spending by tourists in Scotland (both leisure and business) amounted to
nearly £2.5billion in 1998, a fall from £2.7billion in 1997 (2), and that
tourism employed 8% of the Scottish workforce (3) (some 177,000 jobs).
Initial reports for 1999 are mixed, with for example Highlands of Scotland
Tourist Board reporting figures down 20% from 1998 (4). However results for
the first quarter of 1999 for the whole of Scotland indicated a rise of 11%
in spending from UK visitors and a rise of 7% from overseas visitors (5).

Scotland ranks eighth in the world in terms of visitor spend per head of
population, and for example, contributes proportionately more to the
Scottish economy than English economy. In 1995 tourism receipts account for
$539 per head of population in Scotland compared to $358 for England(6). 

Within Scotland there is significant variation in dependence on tourism (7)
as is illustrated in the table below. Approximately 8% of Scottish
employees are associated with tourism, but for Highlands and for Perthshire
the figure is over 14%. Similar evidence is available for tourism receipts
per head of population in 1996. With a Scottish average of £470 per
capita, the Highlands secures over £1,600 per capita whilst Glasgow and
Clyde Valley secures just over £205 per capita 

[NOTE: Table here in original]

Source; UKTS, IPS, Census of Employment. (Employment excludes selfemployed)
(8).

Sources of Tourist Income

Over 60% of Scottish tourism revenue comes from within the UK. Between 1990
and 1997 domestic visitor expenditure rose in real terms from £1.3billion
to £1.7billion, an increase of 26%. However from 1997 to 1998 there was a
fall in income from UK tourists. This was composed of a small rise of 4% in
spending from English tourists, but a decline of 38% from Scottish
residents. 

The USA provides the largest element of the overseas market accounting for
£200million of spend, with other large markets including Germany
(£89million), France (£42million), and Holland (£39million). In real
terms spend by overseas visitors rose from £710million in 1990 to
£965million in 1997, an increase of 36%. 

Since the 1980s spending by visitors from Europe has overtaken spending by
visitors from the USA.

Some 20% of Scottish tourism revenue in 1998 (£500million) was generated
by business tourism. 80% of this related to UK business tourism and 20%
from overseas. Business tourism has the advantage of generating a higher
than average per capita spend and being less seasonal. 

Progress has been made in reducing the seasonality of tourism in Scotland.
For example the proportion of UK tourism expenditure taking place outwith
the July to September period has increased from 55% in 1986 to 62% in 1996
(9). There appears to have been less success in the dispersal of visitors
into rural areas. The proportion of spending outwith Edinburgh and Glasgow
was taken as an indicator of dispersal in the 1994 Scottish Tourism
Strategy (10). Between 1986 and 1996 there was an increase in the
proportion of spend by UK visitors to Edinburgh and Glasgow from 16% to
24%. However for overseas tourists the proportion has changed little.

Framework of Support for the Scottish Tourist Sector

A wide range of organisations are involved in the promotion and development
of Scottish tourism. Recent estimates indicate that well in excess of
£80million per annum of public money is spent on tourism in Scotland (11).
A review of all the support arrangements for tourism was carried out in
1992-93, and this is discussed in more detail later in then paper. As a
result of the review, from 1st April 1994 the Scottish Tourist Board was
given responsibility for tourism marketing and sponsorship of the Area
Tourist Boards (ATBs). Responsibility for business development and training
was consolidated within the Enterprise Network (Scottish Enterprise,
Highlands and Islands Enterprise and the Local Enterprise Companies).

• The Scottish Tourist Board (STB)(12) – the STB’s main aim is to
“help maximise the economic benefit of tourism to Scotland” (13). The
STB has five main corporate objectives:
1. Leading the Industry and Providing Strategic Guidance
2. Increasing Visitor Expenditure
3. Increasing the Seasonal Spread of Tourism
4. Developing Tourism Outwith the Main Tourism Areas
5. Increasing Competitiveness by Providing Quality and Value For Money

The STB has an annual budget of approximately £25million (made up for
1998-99 of £19.5million from Government Grant-in Aid and £5million from
revenue earning activities, including funding provided to the Area Tourist
Boards (14). For the 1999/2000 financial year some 48% is allocated to
marketing activity, 22% is expected to be spent on the running costs of the
organisation, and 19% is for the support of the Area Tourist Boards. The
remaining funding covers “competitiveness” projects such as the Ossian
tourist information management system, and ”external communications”.
(15)


The STB and the BTA Concern was expressed at the Scottish Affairs Select
Committee Inquiry into Tourism that BTA has not been promoting Scotland
adequately (paragraph 852). However Tom Buncle Chief Executive of the
Scottish Tourist Board reported that he met with the BTA immediately after
the devolution referendum for Scotland and stated; 

“I would suggest that we turned the relationship with BTA on its head,
which had been characterised perhaps more like a father/son relationship in
the past to a client/agency relationship with us being the client, thereby
giving us much greater control over the image of Scotland and input into
BTA’s marketing” (paragraph 190).

It has been estimated that of the £35million spent by BTA in 1998/99 “in
the order of some £5million went to Scotland, which would be a proportion
higher of course than our population ratio”(paragraph 852).


• British Tourist Authority (BTA) – also established by the 1969 Act
the BTA has prime responsibility for undertaking the co-ordinated marketing
of Britain overseas. BTA provides representation in 38 countries overseas.


• Area Tourist Boards - there are currently 14 Area Tourist Boards (ATBs)
in Scotland with a membership of over 16,000 businesses. Core funding for
the ATBs comes from local authorities (typically 30% - 40% of core ATB
income (16)), the Scottish Tourist Board (typically 15% - 20% of funding
(17)), and commercial income and membership subscriptions providing the
remainder of funding. 

• Scottish Enterprise (SE) and Highlands and Islands Enterprise (HIE) –
SE and HIE and their networks of local enterprise companies are responsible
for support for business activities and training in the tourism sector. The
Scottish Enterprise Network action plan includes objectives for 1999/00
relating to the information flows across the industry, the effective use of
information and communication technology, promoting innovation in tourism
business, developing skills in the industry, developing transport and other
infrastructure, and developing a vision for the industry (18). The SE
Network spent an estimated £15million on tourism strategy, research,
business development, training and property in 1996-97 (19).

Highlands and Islands Enterprise states its tourism priorities as being to
(20);
• boost private-sector leadership and integrated trade development
• develop indigenous strengths in balance with environment and resources
• extend the season through development of new niches eg wildlife
• foster skills and career structures appropriate to the future needs of
the industry
• encourage tourist friendly culture.

• Scottish Executive – The Scottish Executive tourism function is
described as “sponsorship of the Scottish Tourist Board. That essentially
means we are responsible for advising ministers on issues of tourism policy
on resource allocation to the Scottish Tourist Board, on appointments to it
and on matters of strategic guidance as well as broader tourism matters
which may be without the remit of the tourist board” (21).

• Local Authorities – local authorities contribute to tourism through
the part funding of Area Tourist Boards and specific tourism projects often
as part of local tourism partnerships. Additionally local authorities are
direct providers of tourist facilities (eg leisure facilities), and
indirectly exert a major influence through the planning system and
provision of infrastructure and services. 

• Other bodies – a number of public agencies contribute to tourism
including the Forestry Commission (visitor access to forests), Historic
Scotland (operation of historic properties), Scottish Arts Council
(development of cultural tourism), Scottish Museums Council (development of
member museums), Scottish Natural heritage (development of natural heritage
as a visitor resource), Scottish Sports Council (development of sports
facilities for use by visitors), and other private/voluntary organisations
including National Trust for Scotland and Scottish Conference Association.

• Scottish Tourism Co-ordinating Group (STCG) – The STCG, chaired by
the Scottish Executive, was set up in 1987 to help avoid duplication of
effort among the public bodies involved in developing Scottish tourism. Its
role was expanded following the 1992-93 review, and it published a
Strategic Plan for Scottish Tourism in 1994. This has been followed by
annual reviews of progress, the latest published in Spring 1999. 

A number of working groups take forward specific action plans under the
strategy. These include Tourism Training Scotland, Arts and Tourism
Scotland, the Tourism and Environment Task Force and the Seasonality
Working Group. 

• Scottish Tourism Forum (STF) – set up in 1994 the STF co-ordinates
views of the trade interests in the tourism industry. Members include
representatives from a range of organisations representing different
sectors of the tourism industry. The STF chair represents the private
sector on the STCG. 

• European Commission – has exerted a significant influence among other
things through the availability of Structural Funds, (particularly
Objective 1 and Objective 2 funding). Under the new Structural Funds Regime
“the scope of the programmes will be unchanged so that tourism will be
capable of benefiting from the new programmes” (22)

Issues for Scottish tourism

The Scottish tourism industry has been characterised as being diffuse,
containing a high number of small businesses, and having a lack of vertical
integration (23). This has a number of implications for the development of
policy in terms of coordination and development of policy, and work towards
development and marketing of an integrated "tourism product”. A number of
key issues and questions were raised by the Scottish Tourism Co-ordinating
Group in its recent Scottish Tourism Strategy Interim Review report. (24) 

• Understanding and communicating with existing and potential customers?
- Who are the customers of the future? Eg what are the key market segments
- How to communicate with customers? Eg use of information technology (25)
- What will customers want? Adapting to changing expectations

• How should Scottish tourism be supported?
- What will be the effect of a Scottish Parliament?
- Can a clusters approach benefit tourism? applying the Scottish Enterprise
“clusters” approach to economic development (26)
- How should tourism support be organised locally? The issue of funding
Area Tourist Boards is raised, and is discussed in some more detail below.
- What is the future of European funding? Post 2000

• How will the tourism brand fit in with the branding of Scotland?
Ensuring consistency in Scotland’s brand positioning across all Scottish
export sectors?
• How to make sure all of Scotland benefits from tourism
• Can Scotland develop Year Round Tourism?
• How to make Scotland more accessible? By air road, rail, and ferry?
• How to ensure high standards in the tourism workforce? Increasing
Investors in People, and tackling recruitment and retention, and improving
the image of the industry? (27)
• How can Scotland make its tourism industry sustainable? Green tourism,
cultural tourism and community involvement in tourism.

One particular issue currently being raised in the debate on tourism has
been the funding and structure of ATBs. Concern for greater stability and
certainty in the funding of the Area Tourist Boards has been expressed a
number of times. It has been suggested that all core funding could be
channelled through the Scottish Tourist Board as opposed the current
situation where a significant proportion comes annually from local
authorities (28). Other debate has focused on the need to ensure efficient
working relations with the Local enterprise Companies and Local Authorities
through for example ensuring where possible that there are co-existent
boundaries with the Area Tourist Board (29).

It has also been suggested that there are opportunities for the national
marketing of tourism to be carried out more closely with Locate in
Scotland, and the SNP have proposed the setting up of a Welcome to Scotland
agency (30) 

Pathfinders to the Parliament - Tourism As part of the Pathfinders to the
Parliament consultation exercise with Scottish business Lord Gordon of
Strathblane, Chairman of the Scottish Tourist Board, was invited to suggest
the priorities for the tourism sector. These were based on discussions then
ongoing in the Scottish Tourism Co-ordinating Group (STCG) and work on the
Strategic Plan for Scottish Tourism for the period 2000-2005, and reflect
the issues identified above.

Policy Reviews Relating to Scottish Tourism

It is perhaps indicative of the widespread recognition of the importance of
tourism and the desire to maximise the benefits that there have been
numerous policy and strategy reviews relating to Scottish tourism over
recent years. It is useful to try and identify the key policy statements. 

In 1992-93 there was “widespread concern that the support arrangements
then in place had become fragmented and were no longer fully effective”
(31). A review was therefore instigated by the then Secretary of State for
Scotland into the public sector’s support for the tourist industry at
both a local and national level. The key action points to come from the
review were as follows:

- the composition of the Scottish Tourism Co-ordinating Group was reviewed
and strengthened;

- an industry representative body, the Scottish Tourism Forum, was
established to bring together a wide range of interests to contribute to
strategic thinking at the national level; 

- a strategic plan for the industry was devised, published and implemented
and has been the subject of regular review;

- STB was given overall national responsibility for tourism marketing and
ATB sponsorship with effect from 1 April 1994;

- also from 1 April 1994, responsibility for business development was
consolidated within Scottish Enterprise (SE) and Highlands and Islands
Enterprise (HIE) with STB's scheme of assistance for tourism projects
(operated under section 4 of the 1969 Act) suspended with effect from 29
June 1993;

- the Area Tourist Board (ATB) network was reduced from 31 to 14 local
boards with effect from 1 April 1996;

- with effect from 1 April 1995, a significant number of STB staff and
functions were transferred from Edinburgh to Inverness; and 

- co-ordination arrangements between STB, SE and HIE were improved by means
of cross-board appointments 

• Scottish Tourism, Strategic Plan (32) -published in 1994 by the
Scottish Tourism Co-ordinating Group the overall aim was “to enhance
Scotland’s established reputation as a high quality tourism destination
by building on its history, culture, environment and the hospitality of its
people”. Three objectives were as follows;

• To create new facilities and improve existing ones
• To promote tourism in a more effective and co-ordinated way
• To enhance skills, especially management skills

Subsequently annual reviews of the Strategic Plan have been carried out.
The latest Interim Review (33) (March 1999) evaluated progress on the seven
targets for the year 2000 identified in the 1994 strategy (see table
below).

The National plan provides the analysis, vision, actions, and targets for
the Scottish tourism industry. It therefore aims to provide a framework
for, and influences the development of, Area Tourism Strategies. The area
strategy should be the single document that directs tourism development
involving a partnership of agencies within an ATB area. In turn the Area
strategies will lead to local Action Plans.


Progress on Targets in the 1994 Scottish Tourism Strategy (34)
[NOTE: Table here in original, including reference to footnote (35)]

A New Strategy for Tourism - Consultation Document – On 3rd August 1999
Henry McLeish MSP, Minister for Enterprise and Lifelong Learning, issued a
consultation document regarding the preparation of a new strategy for
Scottish tourism. It was stated that the strategy should be action
oriented, and should identify the opportunities and constraints. It should
specify what needs to be done, how it is to be done, and who needs to do
it. It is suggested that a strategy should address the following issues;

• identifying our future markets, both domestic and overseas
• addressing the decline in the Scottish market
• improving and maintaining quality
• maximising Information Technology
• boosting tourism in the remoter areas
• extending the season
• improving training and skills standards
• providing the products to meet market expectation and demand
• making Scotland more accessible
• making sure our tourism industry is environmentally sustainable
• the method of funding Area Tourist Boards.

The consultation process will involve a number of focus groups, meetings
with the Minister and Ministerial team, and through written submissions.
Views have been requested by 31st August 1999.

Following the consultation, the period to November 1999 will see a process
of analysis, target setting and preparation of the new Strategic Plan, with
the publication scheduled for December 1999 (36). Feeding into the
development of the strategy will be the work of the STCG’s Tourism
Futures Sub Group. Under the chairmanship of Lord Gordon the group,
established in March 1998, looked at long-term trends and developed a
“vision” for Scottish tourism. Included in this vision were a Scottish
tourism industry with high skills, high standards, excellent market
intelligence, effective use of information technology for marketing and
skills development, a high quality infrastructure, and a collaborative,
pro-active public/private industry support relationship. 

Policy and Financial Management Review (PFMR) – Along with other Non
Departmental Public Bodies the STB is required to be subject to a out every
five years. The first stage is the Prior Options Review which is intended
to “examine rigorously whether STB’s functions are required at all and,
if so whether there is scope for privatising, contracting out, or
transferring to another body some or all of its functions”. The most
recent Prior Options Review was carried out in 1998 and concluded amongst
other things that “consideration of STB’s operational results reveal a
generally satisfactory performance” (37), and that “the Board’s
performance is generally effective and its activities are of positive
benefit to the Scottish tourist industry” (38).

Scottish Affairs Committee Inquiry into Tourism - the main conclusions and
recommendations of the House of Commons Scottish Affairs Committee Inquiry
into tourism, which reported in July 1999, were as follows

• There should be a Minister with sole responsibility for tourism in the
Scottish Executive or at the very least the Minister responsible for
tourism should have this made clear in his or her job title.
• The concept of a bed tax should be rejected as a way of funding public
support for tourism.
• The Scottish Tourist Board should core fund the Area Tourist Boards
directly.
• The Government should consult again with the national tourist boards
with the aim of producing a unified classification and grading system for
Great Britain.
• Small businesses must be encouraged to realise that the training of
their staff is an increasingly vital ingredient to the long-term viability
of their industry.
• A system of compulsory registration which requires all accommodation
providers to meet basic safety, hygiene and public insurance liability
standards was recommended
• The Committee wished to see the STB and ATBs put pressure on businesses
to develop products, which offer greater value for money, as well as
setting fairer rates and encouraging more transparency in rates quoted.
• While recognising the right of the STB to market Scotland abroad, it
was recommended that it continue to maximise the services of the British
Tourist Authority overseas.
• The Committee recommended that the STB monitor the situation of cross
border marketing closely and, if required, use its influence to encourage
ATBs to co-operate.
• The Committee welcomed the investment of public money in Project Ossian
and believes that the web offers a huge marketing potential which the
tourist industry must be in a position to take advantage of.
• The Committee stressed the need for better direct air access with
overseas hub airports and sought the support of the Scottish Parliament for
those working to improve air access into Scotland. 
• The Committee recommended that an objective to make Scotland the most
accessible and welcoming tourist destinations in Europe for disabled people
be included in the 2000-2005 Strategic Plan for Tourism.
• The Committee recommended that a speedier process for obtaining consent
as well as a more consistent approach to signposting be achieved.
• The Committee recommended that the Scottish Tourist Board and the area
tourist boards examine the provision of lay-bys and viewing sites with a
view to increasing their number as well as providing them with the
necessary hardware such as tables and litterbins.


1 The Government provides a broad brush definition of “tourism related
industries” as incorporating Hotels and Other Accommodation Types (SIC
codes 551,552), Restaurants (SIC 553), Public Houses and Bars, Night
Clubs/Licensed Clubs (SIC 554), Travel Agencies/Tour Operators (SIC 633),
Libraries, Museums, Galleries etc (SIC 925), and Sport and other
Recreational Activities (SIC 926, 927) – quoted in recent Policy and
Financial Management Review of the Scottish Tourist Board 1998. 
2 Scottish Executive Enterprise and Lifelong Learning Department,
correspondence, July 1999
3 Annual Employment Survey/ Scottish Tourist Board Estimates
4 Scottish Affairs Committee, report on Tourism in Scotland, July 1999,
paragraph 8
5 Scottish Executive Press Release SEO206/99, 3rd August 1999
6 Scottish Affairs Committee, Inquiry into Scottish Tourism, memorandum
from the Scottish Tourist Board, 4th November 1998.
7 Policy and Financial Review of the Scottish Tourist Board: 1998, Scottish
Office Education and Industry Department, tables 5.2 and 5.3
8 Taken from Scottish Tourist Board, Minutes of Evidence to Scottish
Affairs Committee Inquiry into Tourism, 4th November 1998.
9 Scottish Tourist Board Minutes of Evidence, Appendix 1 “Trends in the
Scottish Tourist Industry”, Scottish Affairs Committee; November 1998
10 Scottish Tourism Strategic Plan, Scottish Tourism Co-ordinating Group,
November 1994.
11 Scottish Tourist Board Minutes of Evidence, Scottish Affairs Select
Committee, 17th June 1998, paragraphs 9-27, also para 179, Lord Gordon
12 The STB is a Non Departmental Public Body (NDPB) established by the
Development of Tourism Act 1969. The Tourism (Overseas Promotion)
(Scotland) Act 1984 subsequently allowed the STB to actively encourage
people to visit Scotland, subject to the approval of the Secretary of State
who is required to consult the BTA.
13 Scottish Tourist Board Corporate Plan – 1999/2000 – 2001/2002
14 Scottish Affairs Committee, Report on Tourism in Scotland, paragraph 17,
21st July 1999
15 Scottish Tourist Board Corporate Plan – 1999/2000 – 2001/2002
16 Scottish Affairs Committee, Report on Tourism in Scotland, paragraph 20;
21st July 1999
17 Lord Gordon, Scottish Tourist Board, Scottish Affairs Select Committee,
Evidence on Tourism in Scotland, paragraph 298, 4th November 1998
18 Scottish Enterprise Network, Tourism Priorities and Action Plan
1999/2000, June 1999 
19 Scottish Tourist Board Minutes of Evidence, Scottish Affairs Select
Committee, 17th June 1998
20 Draft Sectoral Policy Paper on Tourism, Highlands and Islands
Enterprise, July 1999
21 Alan Fraser, Head of Enterprise and Tourism Division, Scottish Office:
Scottish Affairs Committee Inquiry into Tourism, paragraph 4, 17th June
1998
22 Christie Smith, Head of Enterprise and Tourism, Scottish Office;
Scottish Affairs Committee Inquiry into Tourism, 9th June 1999, paragraph
847
23 Policy and Financial Management Review of STB, 14th June 1999
24 Scottish Tourism Strategic Plan Interim Review, STCG, March 1999
25 The “Ossian” project aims to provide a user friendly, Scotland wide
computer system with information on tourism establishments, and by the end
of 1999 the ability to make bookings, pay for holidays, and prepare a full
holiday itinerary online. Total cost is estimated at between £6million and
£7million, involving £3million of “public” money, £2.5million from
the Area Tourist Boards, and £1million from the private sector - Lord
Macdonald, Scottish Affairs Committee Inquiry into Tourism, 9th June 1999,
paragraph 856 
26 The “clusters” approach forms part of the Scottish Enterprise
strategy, and involves developing groupings of firms in the same industry,
each firm benefiting from the proximity of the others. 
27 Although not quoted in the report low pay has been cited as a key issue
for tourism. A study in 1998 by the Scottish Low Pay Unit indicated that in
the hotel and catering sector 96% of advertised vacancies paid less than
the Unit’s minimum wage target of £4.79 an hour. 
28 For example, Lord Gordon, Scottish Tourist Board, Evidence to Scottish
Affairs Committee Inquiry into Tourism, 4th November 1998, paragraph 301
29 Lord Gordon, Scottish Affairs Committee Inquiry into Tourism, 4th
November 1998, paragraph 180
30 SNP Manifesto for the Scottish Parliament, May 1999
31 Policy and Financial Review of the Scottish Tourist Board: 1998,
Scottish Office Education and Industry Department, paragraph 2.15
32 Scottish Tourism Strategic Plan, Scottish Tourism Co-ordinating Group,
November 1994
33 Scottish Tourism Strategic Plan Interim Review, March 1999; Scottish
Tourism Co-ordinating Group
34 Scottish Tourism Strategic Plan Interim Review, Scottish Tourism
Co-ordinating Group, March 1999
35 Scottish Tourist Board, personal conversation, 6th August 1999
36 Scottish Tourism Strategic Plan, Interim Review, STCG, March 1999
37 Policy and Financial Review of the Scottish Tourist Board: 1998,
Scottish Office Education and Industry Department, paragraph 3.24
38 Policy and Financial Review of the Scottish Tourist Board: 1998,
Scottish Office Education and Industry Department, paragraph 3.27


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