8 Mar 2011

UK Government Tourism Policy 2011

There would not have been many but I was certainly one of them. If you're reading this (which you must be) then you were too probably. Or maybe it was just me - someone who was actually looking forward to the governments new tourism strategy and what it would reveal!

On March 3rd I casually forecast in a tweet what I thought would happen:

As it turns out I wasn't far off!

There was no Bank Holiday move - but we will get to talk about it [in fact it was the main talking point in the press] NB my prediction is that it will move to October.

No change in clocks - but we will get to talk about it. My prediction is that it won't happen - not until Scotland say aye!

No change in APD or VAT but we will not get to talk about it! This is a Treasury decision only.

There will be money for more marketing but this will be done by VisitBritain and VisitEngland - and not by existing DMOs but by the 'new' DMOs.

I also tweeted that there would be no action on market failure and as this is my main area of concern I'd now like to canvas opinion as to whether or not I was right.

I only ask because whilst the document refers to Market Failure it seems to me that they have applied a new definition to the problem. The original VisitBritain Deloitte report explained the problem as follows:
'Despite being a large industry with significant potential to grow further on the back of investment, there are market failures that need to be addressed with that investment - these failures could prevent the Visitor Economy from optimising its potential. With respect to market failures, these issues include:
  • Information Gaps [Asymmetries] - Information is imperfect, and there are significant failures where both consumers and businesses in the Visitor Economy suffer from information gaps and potential visitors (both overseas and domestic) do not have the relevant information to use in their decisions.
  • Free Rider Problem - A major market failure within the Visitor Economy is that there is likely to be no equivalent provision of marketing and coordination by the private sector due to the free rider problem. Due to the fragmented nature of the industry, individual business or group of businesses are unlikely to market a place (country, city or region) to international or domestic tourists. In addition, many tourism providers perceive themselves in direct competition with the immediate neighbour rather than with other destinations and products.'
So basically the Market Failure is that Tourism Providers do not either have access to the Visitor Information that a consumer needs in order to be able to make a decision, or they are unable to create this Information for themselves. Furthermore they are reluctant to promote any business other than their own or fund/engage in collective marketing that also promotes their competitors.

In the new tourism strategy they only talk about the "market failure of investment in collective destination marketing." And I don't think that this is the same thing at all. It is more likely to be a definition that better suits where government feel comfortable to intervene rather than addressing the root cause of the problem. Collective marketing is not the problem. It is the inability of tourism businesses to market the destination themselves, on their own websites, that is the problem. Quite different things.

Research shows that 80% of consumers spend their time searching, and making decisions on where to visit, and then booking on tourism provider websites. Over 99% of people do not go to regional tourist board websites! So to say that by funding a regional tourist board website you are remedying Market Failure is massively incorrect. The intervention is, in real terms, so small that its contribution to remedying the problem is not worth evaluating.

I'm not saying that destination websites are not needed but the justification for their existence should not be that they remedy Market Failure. If tourism strategy is focussed on how destination websites / collective marketing is funded then the new DMOs need to focus on how they can help tourism businesses become much more effective at marketing the destination themselves, via their own websites.

When very few tourism businesses could take on-line bookings the public sector played an important role in educating and up-skilling these businesses. Every tourist board nowadays seems to be promoting social media and why tourism businesses should get involved. How many teach businesses the benefits of providing quality visitor information and give them the tools? Our regional tourist boards have become highly skilled at destination marketing - now we must transfer these skills to the private sector. Tourism businesses are basically very bad at marketing their own destinations and the Market Failure remedy is to give them the tools to be able to do this.

These are familiar problems and issues that were recognised by iVisitorGuide at least 3 years ago. The initial pilot project (funded by the NWDA under the tourism leadership of James Berresford) proved that these Market Failures are not insurmountable and nor do they require massive public sector intervention if managed in the right way.

With iVisitorGuide we negated both of these Market Failure issues through a combination of best use of existing technology, regional tourist board support and the basis of a service that can be run as a viable commercial model i.e. the private sector will fund this!

We address the Information Gaps issue through the unique way that we tailor DMS data entirely around the needs of the Tourism Provider. Information Gaps as a description is misleading because the Information does exist [EnglandNet/Ntop] – the issue is more to do with how this Information is distributed. At present there is no regional/national strategy for a distribution channel that will resolve this issue for the greatest mutual benefit. However at a local level the iVisitorGuide approach ensures that Tourism Providers do now have the ability to access the relevant information that consumers need to use in their decisions.

We also overcome the Free Rider Problem because an iVisitorGuide will promote an individual Tourism Provider as a great place to visit because of the wider tourism offering. Tourism Providers promote the destination and other Tourism Providers by default because of the way the service is delivered and supports this. We also now have the evidence that Tourism Providers now realise the real benefit of doing so and that there is a commercial value to them - and, I repeat, the private sector will pay for this! (are you listening Mr Penrose?)

George Osborne stated that "The 200,000 businesses in the tourism industry are vital to our economy and key contributors to the recovery." These 200,000 businesses have collective access to a far greater on-line audience than any DMO. They can sell Britain as a great place to visit far more effectively than anyone else.

There is already a proven solution to this problem. And the solution is not about massive investment in new technology or throwing away what already exists. It is about an approach, an attitudinal change, more effective use of existing technology and the delivery of commercial services that the private sector will value because it makes them more competitive, more relevant to consumers and more profitable. Which ultimately makes UK Tourism Plc more competitive, more relevant to consumers and more profitable.

The Tourism Policy states that it will "Repair market failure by modifying the existing, long-established Tourist Boards to become smaller, highly focused, industry-led partnerships between tourism firms and government. They will be funded through long-term partnership marketing campaigns."

I just hope that the industry-led partnership is one that gives tourism firms the services they need to "sell Britain to the tourists".