PAPER B

 

 

                                                                                                                Purpose : for Decision

                        REPORT TO THE EXECUTIVE

 

Date :              5 NOVEMBER 2003

 

Title :               THE FUTURE OF TOURISM SERVICES

                       

REPORT OF THE PORTFOLIO HOLDER FOR TOURISM AND LEISURE

IMPLEMENTATION DATE :  17 November 2003

 

 


SUMMARY/PURPOSE

 

1.                  Members are asked to reconsider the decision to externalise Isle of Wight Tourism in the light of the wide range of factors which are driving change within it.  Approval is also sought to recruit a Head of Tourism.

 

BACKGROUND

 

2.                  Isle of Wight Tourism is a department of the Council which seeks to work in partnership with the tourist industry (principally the Island Tourist Industry Association; ITIA) to develop and promote the Isle of Wight as a leading UK tourist destination.

 

3.                  The department undertakes the following principal roles which contribute to its overall operation.

 

·        Marketing, press and production

·        Sales and membership

·        Call Centre and distribution (of printed material e.g. guides)

·        Tourist Information Centres (TICs)

·        Accounts

·        Strategic Management

 

4.                  In June 2002 the Economic Development, Planning, Tourism and Leisure Services Select Committee was joined by the six commercial directors of the Tourism Partnership and representatives of Southern Vectis and Hovertravel to discuss the future direction of Isle of Wight Tourism.  This discussion took place in the context of the recently completed Best Value Review of Tourism Services. This had been received by the Executive in May 2002, and had identified three options for the future delivery of the service:-

 

(a)               No change – the services to remain as part of the then Directorate of Finance and Information.

 

(b)               Closer integration with related services – effectively linking the tourism department with the delivery of related services such as leisure, parks,  gardens, beaches and attractions, under a single manager.  (The review suggested a new directorate).

 

(c)               Externalisation – to a newly formed independent organisation operating through a service level agreement with the Council.

 

5.                  At its May meeting the Executive was also advised of the resignation of the then Head of Tourism Services and agreed to move the tourism service into the Community Development branch of the Education and Community Development directorate.  This effectively linked the management of leisure, parks, gardens, beaches, attractions and tourism under a single Head of Service.

 

6.                  The outcome of the Select Committee’s deliberations in June 2002 was to recommend that Isle of Wight Tourism be externalised to a trust or limited company which would be linked to the Council via a service level agreement.  The Council retaining the strategic/policy responsibility for tourism but with the new organisation having operational and marketing responsibility.

 

7.                  The Executive considered this proposal in July 2002 and resolved to recommend to Council that “Tourism Services be externalised to a trust or limited company”.  Furthermore, it also resolved to proceed with the appointment of a new Head of Tourism once the Council decision was known.

 

8.                  The Council endorsed the recommendations of the Executive at its meeting of July 2002.

 

9.                  At a meeting held in October 2002 between representatives of the Council and ITIA to discuss how best to progress the issue, it was agreed to establish a sub group of the Tourism Partnership.  That meeting also agreed that it would be inappropriate to appoint a new Head of Tourism until such time as the shape and form of any externalisation was known.

 

10.             The sub group has met on many occasions and ultimately settled upon an externalisation model that is shown in Annex 1.  The main driver behind the model was to create a new body with responsibility for the strategic development of tourism on the Island.  This body would encompass the 3 main players in Island tourism, the Council, the industry and the regional tourist board.  This new body would replace the existing Tourism Partnership and would have the responsibility for directing (but not managing) the work of a newly formed company (delivery arm).  This company would discharge some or all of the existing functions of Isle of Wight Tourism.  Discussions as to which functions have not yet taken place, nor has the final “make up” of the new strategic body been settled, although some proposals have been prepared.

 

11.             One of the major concerns of officers in progressing the externalisation was and indeed still is, to ensure that the Council can demonstrate that it will receive best value and can achieve continuous improvement in the services following their externalisation.

 

Regional Tourist Board Issues

 

12.             One of the issues that has had a significant influence on the debates in respect of externalisation has been the amalgamation of the Southern and South Eastern Tourist Boards and the declared intention of the interim committee of the new board to develop sub regional management arrangements.  The Council vigorously lobbied, through its Portfolio holders for Economic Development, UK and EU Regional Issues, and Tourism and Leisure, for the Island to be recognised as a sub region in the new structures to ensure the benefits that would accrue as a result.

 

13.             The Island’s status as a sub region of the regional tourist board – Tourism South East (TSE) was confirmed in April 2003.  It is thought that this is the only time that any Government funded quango has recognised the Island in its own right when it has been reorganised  along Regional Development Agency boundaries.  The Isle of Wight can now be assured of a “place at the table” when regional matters in relation to tourism are discussed.

 

14.             In the model shown in Annex 1 the new strategic organisation was seen as also functioning as the sub regional body of TSE.  However, legal advice taken by TSE in May has indicated that this is not possible, nor can TSE be as closely involved with the strategic body as envisaged.  In order to progress with the development of the sub region, TSE held, at the beginning of July, an interim committee meeting to develop proposals for the new committee.  This new committee will contain the same partners as originally envisaged in the strategic organisation; the Council, the Industry and Tourism South East but it will not function as was initially intended for the strategic organisation.

 

15.             Clearly it would be unwise to have two bodies on the Island both made up from the same partners and both attempting to deliver a strategic framework to ensure that the Island remains a leading UK tourist destination.  The role of the sub regional committee will clearly evolve over a period of time as it positions itself to deal with local issues in a national and regional context.  Its existence, its importance and the time it will need to establish if it is to work for the benefit of the Island provides the first of a number of reasons as to why Members are asked to review the decision to externalise Isle of Wight Tourism.

 

Destination Management System

 

16.             In April 2003 the Executive agreed to contribute £120,000 of the Council’s ICT budget towards the £277,000 capital cost of purchasing an electronic Destination Management System (DMS).  This will contribute to the Council’s e-government strategy and is intended to give the Island a competitive advantage in attracting visitors to it.  Other funding for the project being obtained from SEEDA (£30,000) and also from within Isle of Wight Tourism’s existing budgets.  The annual revenue costs of £112,000 will be met from within Isle of Wight Tourism existing cash limited revenue budget.

 

17.             The electronic DMS is essential to enable the Island to be part of a national scheme to promote England as a tourist destination both at home and abroad.  Visit Britain is leading on the development of the Englandnet project which aims to help tourist destinations be more successful by enabling customers to get easier access to better information, enabling more informed choices about taking holidays and short breaks in England.  This important link with the national tourist agenda has helped attract £30,000 of funding towards the project from SEEDA.

 

18.             The new system is currently being implemented and when complete, this will have a significant effect on how Isle of Wight Tourism functions.  Indeed it will be the catalyst for change throughout the whole organisation.  Whilst much of this change has been built into the business planning for the system, its effect on efficiency and effectiveness is likely to be understated with its true value only becoming clear when fully operational.

 

19.             It would be extremely difficult to encapsulate the likely effect of the system on the operation of Isle of Wight Tourism in any agreement with an externalised organisation.  It would also be difficult to ensure that the Council (and Industry) receives all of the benefits in terms of effectiveness and efficiency.

 

Great Access to Great Services

 

20.             Isle of Wight Tourism already operates a “call centre” for the purposes of handling visitor and potential visitor enquiries about the Island.  It also provides an accommodation and ferry booking service.  The work of the centre will be greatly assisted by the installation of the electronic DMS.

 

21.             Discussions are ongoing about how the staff of this call centre can become involved in the early stages of the delivery of the GAGS programme.  It would be difficult to bring these staff back within the Council following any externalisation, equally as they are closely linked to the successful installation of the DMS system, it would at present be difficult to retain these staff within the Council (front office) whilst externalising the back office function.  The same is also true of the Tourist Information Centres which have the potential to be or become part of future ‘one stop shop’ developments.

 

Recent Findings of the Ombudsman

 

22.             An investigation recently undertaken by the Ombudsman was critical of:-

 

·        The lack of clarity/transparency in the structure of the tourism services and the membership scheme of ITIA.

 

·        The ability of non-members of ITIA to have a voice when tourism issues affecting them are considered.

 

23.             The Ombudsman was however comforted by the fact that work was already in progress to deal with these issues.  This work would need to be completed and reported on such that its outcomes were embodied within the externalisation model.

 

Current Levels of Outsourcing

 

24.             Isle of Wight Tourism outsources a substantial element of its marketing budget at present.  A review of the potential to outsource a major element of the Press and PR function is ongoing following the resignation of the Press and PR Manager.

 

STRATEGIC CONTEXT

 

25.             In 1999 the Department of Culture, Media and Sport (DCMS) published “Tomorrow’s Tourism”, a strategy for the development of the British Tourism Industry.  The key objective of the strategy being for the industry to, “match and exceed the rate of global growth in the industry by the end of 2010”.  The strategy suggested that it was important for the Government to be involved with the development of British tourism because it:-

 

·        Is an industry of growing economic importance.

 

·        Can be a driving force bringing about sustainable development and has enormous potential for helping to regenerate towns, cities and the countryside.

 

·        Can help to create a more inclusive society by enabling more people to enjoy the benefits of a break or a holiday.

 

26.             The relative importance of tourism to the Isle of Wight and its economy is reflected in Annex 2.  Comparisons can clearly be drawn between the benefits of national Government supporting national tourism and local government supporting local tourism.

 

27.             The Local Government Association (LGA) in a recent position statement concluded that it, “is the job of a local authority to strategically manage tourism to ensure that its net benefits outweigh its disadvantages”.

 

28.             The LGA came to this conclusion on the basis that only local Councils can ensure that the needs of a whole destination, including residents, businesses and the environment are represented and considered in the management of tourism.  Only Local Councils can also:-

 

·        Provide a strategic and operational role in maintaining a high quality physical environment.

 

·        Provide links and continuity of policy across services which underpin a tourist destination, (planning, highways, environmental health and leisure).

 

29.             The European Union has also recently come to recognise the importance of tourism to it.  In May 2002 the Council of Ministers unanimously adopted a resolution which called for closer monitoring of the impact of EU legislation on the tourism sector and suggested further examination of promoting Europe as a destination.  This was the first time the Council had adopted a resolution specifically on tourism.

 

30.             Tourism is estimated to be worth £312 million to the Island’s economy and to support 1 in 3 jobs (directly and indirectly).

 

31.             In March 2002 Council debated the strategic importance of tourism to the Island and recognised that tourism was the “Island’s major industry” and is the future key to prosperity”.

 

32.             Developing tourism is one of the seven themes of the Community Strategy, to be achieved through, in the main, the development of a tourism development plan.

 

33.             Tourism is encapsulated in the Council’s Corporate Plan Objective of “encouraging job creation and economic prosperity”.  This identifies that the industry has great potential to expand on the Island and that the Council seeks to work with partners to “support development of the Island as one of the UK’s leading tourist and leisure destinations”.

 

34.             The recently produced draft Island Cultural Strategy recognised the importance of the links between cultural services and tourism.  One of its six themes relates to the development of all-year round tourism and part of its overall aim is to use cultural services to “assist” in underpinning the Island’s tourism industry”.

 

CONSULTATION

 

35.             Much consultation and joint working has been undertaken with ITIA in the main and also TSE in respect of the model for externalisation, shown in Annex 1.

 

36.             ITIA continues to favour externalisation as a way ahead for tourism on the Island.

 

FINANCIAL/BUDGET IMPLICATIONS

 

37.             As much of the debate and discussion in respect of externalisation has centred around a model and structure, a cost benefit analysis has not yet been undertaken.

 

38.             The services can continue to be provided by the Council within the existing cash limited budget.  Minimum savings of £200,000 on this budget will be achievable by the end of 2006/07 from the increased effectiveness of the organisation which will flow from the DMS development.

 

39.             A detailed breakdown of the budget for Isle of Wight Tourism is shown in Annexes 3 – 7 inclusive.

 

40.             The costs associated with the appointment of a Head of Tourism are already allocated within existing budgets.

 

LEGAL IMPLICATIONS

 

41.             Part 1 of the Local Government Act 2000 provides the Council with the power to do anything which it considers likely to promote the economic, social and/or environmental well-being of its area.  The Council must have regard to the Community Strategy in exercising this power.

 

42.             Part 1 of the Local Government Act 2000 extends the power in S144 Local Government Act 1972 which enables the local authority to “encourage by advertisement or otherwise” recreational visitors.  That power subsists.

 

43.             Before making any final decision in respect of the externalisation of the services, the Council must be assured that the new arrangements offer Best Value, can deliver continuous improvement and comply with all EC Procurement Regulations.

 

OPTIONS

 

1.         Not to proceed with the externalisation of Isle of Wight Tourism, to enable the service to positively respond to the challenges facing it for the wider benefit of tourism on the Island.

 

2.         To conduct an appropriate procurement exercise, applying the emerging national procurement strategy and locally emerging good practice, and identify:

 

(i)                 The specification for the service for a 3-5 year period.

(ii)               The best value delivery mechanism for delivery of that specification,

 

and to also adopt a Tourism Development Plan  to deliver the specification through the preferred mechanism.   A draft Tourism Development Plan is to be delivered within 6 months of a new Head of Tourism taking up their post.

 

3.         Given the significance of the tourism industry to the Island, and the Tourism Development Plan to the development of that industry to recommend to Full Council:

 

“That the Tourism Development Plan be added to the Policy Framework in Article 4 of the Constitution in order that Full Council can determine the strategic development of support and leadership to the Tourism industry through the application of the Budget and Policy Framework Procedure Rules.”

 

4.                  To recruit a new Head of Tourism reporting to an existing strategic director

 

5.         All the options must be subject to ongoing medium term budget planning currently under way and no ongoing spending commitments (including salary) are to be made.

 

EVALUATION/RISK MANAGEMENT

 

44.             As can be seen from the information contained within this report, the tourism service on the Island needs to and is going through a period of great change aside from the changes that externalisation will bring.  It is a real concern that without resolving all of the current issues affecting the service, then any benefits that may be available through externalisation could be missed.

 

45.             The regional tourism agenda and the installation of the electronic DMS are the two biggest challenges for the tourism service at this time.  Either or both could deliver improved productivity in the industry and improvements in the efficiency and effectiveness of the service.  Every attention must therefore be given to ensuring that the service rises to these challenges to deliver the best return for the Island.

 

46.             The lack of a full-time Head of Tourism has restricted and continues to restrict the service’s ability to rise to these and other challenges set for it in the Community Strategy and Corporate Plan.  The industry especially is keen to see the position filled at the earliest opportunity.

 

47.             Whether this position is to be a Head of Service or reporting to a Head of Service is dependent on the relative importance which the Council places on its role in the management and development of tourism in the Isle of Wight and how it would best ensure links and policy continuity of policy across all of its service areas that underpin the Island as a tourist destination.

 

48.             For the externalisation process to be continued successfully, the Council needs to articulate clearly its vision for the externalisation.  It is clear that there are different views on what externalisation means within the Council and the industry.  The Council is still able to outsource any of the individual services that go to make up the tourism service as a whole without it being done en bloc.  This may prove to be the route by which most parties’ objectives for tourism in general can be achieved.

 

CONCLUSIONS

 

49.             This paper has established that the Council is in a unique position to ensure that the competing needs of the Island’s residents, businesses and its environment from tourism are managed for the benefit of all and to the exclusion of none.  The approach of Central Government supports this view of a Council’s unique position and encourages them to fulfil this management role.  It is therefore entirely appropriate and indeed vital that the Council plays a strong role in leading the management of Island tourism. 

 

50.             Tourism is undergoing some significant changes on the Island.  The full impact of these changes will not be fully understood for some time.  Whatever their impact, however, the Council will still, given the importance of tourism to the social and

economic well-being of the Island, need to play a leading role in the management of Island tourism. 

 

RECOMMENDATIONS

 

51.             On the basis of the conclusions drawn in this report it is recommended that options 1, 2, 3, 4 and 5 be adopted.   

 

BACKGROUND PAPERS

 

“Best Value Review of Isle of Wight Council Tourism Services”, April 2002.

 

“Tomorrow’s Tourism” – A growth industry for the new Millennium” – Department of Culture, Media and Sport, 1999.

 

“The Role of Local Authorities in Tourism” – A position statement from the Local Government Association.

 

“Realising the potential of cultural services, the case for tourism”, Local Government Association 2001.

 

“Tourism Policy”, Local Government Information Board 2002.

 

“Priorities for Tourism – First Year Review”, Tourism Alliance 2003.

 

“Management of Tourism Services”, Executive, 21 May 2002.

 

“Best Value Review of Tourism”, Executive, 21 May 2002.

 

“The Future For Tourism”, Economic Development, Planning, Tourism and Leisure Services Select Committee, 13 June 2002.

 

“The Future of Tourism Services”, Executive, 29 January 2003.

 

“Externalisation of Isle of Wight Tourism”, Economic Development, Planning, Tourism and Leisure Services Select Committee, 23 September 2002.

 

“Great Access to Great Services”, Executive, 29 January 2003.

 

“Contractor for the Management of Tourism Services”, Economic Development, Planning, Tourism and Leisure Services Select Committee, 24 February 2003.

 

“Procurement of a Destination Management System for Isle of Wight Tourism”, Executive, 23 April 2003.

 

Contact Point :           John Metcalfe, Head of Community Development and Tourism

                                    ( 823825  e-mail: [email protected]

 

 

J METCALFE

Head of Community Development and Tourism

J FLEMING

Portfolio Holder for Tourism and Leisure

 

 

Annex 1

 

THE EXTERNALISATION OF ISLE OF WIGHT TOURISM

 

Basic Relationships between the partner organisations

 

 

 

Isle of Wight Council

 

 

 

 

 

 

Tourism Partnership

 

 

 

ITIA

 

 

 

 

 

 

 

 

 

 

Delivery Arm

 

 

 

 

Annex 2

 

THE IMPACT OF TOURISM ON THE ISLE OF WIGHT

 

 

 

 

 

*           accommodation providers                           647

*           attractions and leisure facilities                   380

*           food and drink outlets                                   848

 

            (In addition there are 1,430 private landlords)

 

 

 

 

 

 

 

 

 

 

 

 

Annex 3