Enclosed is our initial response to the questions to be raised by the Scottish Affairs Committee inquiry into tourism in Scotland. Please note that because of the short notice, we have been unable to put this matter before our elected members. However, the comments (particularly 1-4 and 8) broadly refelect the views expressed by the Council's Economic Development Committee when they were asked to contribute to the policy review of the Scottish Tourist Board in October 1997.

   As tourism is very important to the economy of the Highlands, we would like to give our elected members the opportunity to debate this issue further and I would be grateful if you could advise me if it would be possible to submit further comments to the Committee and, if so, what the deadline would be.

1.  VALUE OF TOURISM

   The value of tourism to the Highland economy is currently estimated at some £370 million per year, approximately 20 per cent of the gross domestic product of the area supporting approximately 13,300 jobs. Tourism is of vital importance to the Highland economy. However, the industry suffers from the problems of seasonality and a perceived low status in terms of the jobs it supports. This in turn leads to the problem of short-term, often casual, employment, a high turnover of staff and, often a low skills base.

2.  STRUCTURE

   Within Highland, the Highlands of Scotland Tourist Board has the statutory responsibility for toursim marketing and visitor servicing. Highland Council has a clear role to play in the ongoing development of a quality tourism infrastruture in the area. Highlands and Islands Enterprise is the lead agency for the development of tourism which includes product and business development support including financial assistance where appropriate. HIE is also responsible for enchancing skills at all levels. Local Enterprise Companies are the delivery mechanism for the HIE network's programmes.

  The above agencies were signatories to the Highlands of Scotland Tourism Strategy which was launched in August 1997 and which forms a strategic framework for the development and promotion of tourism in the Highlands. The strategy should help co-ordinate the activities of the public sector agencies and the private sector, and a strategic approach is vital to ensure the best targeting of resources and avoidance of duplication or "Gaps".

   The Highland Council is one of the major funders of HOST—along with STB—and a Minute of Agreement exists between the two bodies effectively setting out performances targets.

   Internally, HOST has developed a series of Area Management Committees with devolved budgets, allowing a considerable amount of local input to policy formulation.

3.  INVESTMENT

  Reductions in the Highland Council`s overall budget have necessitated a 10 per cent reduction in the Council's contribution to HOST for 1998/99. Councils elsewhere in Scotland have also been obliged to make reductions in their funding of ATBs. HOST has already succeeded in generating additional revenue from trade members but in an industry which is dominated by small business, a realistic view must be taked on how much can be raised from the private sector. This is a particular issue in the Highlands where there is a high proportion of small businesses in peripheral areas operating at the margins of viability.

  As long as ATB membership remains voluntary and the current funding arrangements continue, ATBs are likely to have to expend considerable energy generating income from their members. This inevitably reduces their capacity to devote time and effort on marketing and visitor services.

  One area which seems particularly weak at present is product development and niche marketing. Market research, which should be the backbone of product development and, indeed, all marketing activities, is patchy at best and lacks strategic planning, co-ordination and evaluation at both local and national level.

4.  MARKETING

(a)  UK Marketing

  One particular area of concern is the effectiveness of ATB marketing policies. There are very few apparent differences between the marketing methods of the new boards and those of the former local ATBs, with emphasis still very much on producing accommodation guides rather than the development and promotion of products. Likewise, there needs to be a review of the marketing role of STB in relation to ATBS—at present, there are instances both of duplicaiton and gaps. As mentioned above, product development and niche marketing activities, based on thorough and ongoing market research, need to increase.

(b)  Overseas Marketing

  Scottish Tourist Board currently has power to market Scotland overseas, although this is largely done in partnership with the British Tourist Authority. Given that Scotland has a distinctive brand image, there may be merit in undertaking more independent marketing and possibly establishing a network of overseas offices. The existing system of overseas representation through the BTA network of offices clearly offers cost advantages but on the down side there are regular complaints that BTA does not properly represent Scotland, information on Scotland is not readily available and BTA staff do not have adequate knowledge of the Scottish product. The question of how Scotland is marketed as a visitor destination overseas is perhaps one of the first which the Scottish Parliament needs to consider.

5.  IMPLICATIONS OF THE SCOTTISH PARLIAMENT

  The questions of funding the marketing (including product development and market research) are probably the first two areas which the Parliament should look at. At a more general level, reinforcing a strategic approach among the many public, private and voluntary sector players in tourism is vital.

6.  QUALITY OF SERVICE/TRAINING

  This is steadily improving as a result of the various Quality Assurance Schemes and the training initiatives undertaken by Tourism Training Scotland. However, much remains to be done and there is certianly no room for complacency. Problems of seasonality and high staff turnover pose particular problems for taining and customer care standards.

7.  VALUE FOR MONEY

  It is important to monitor customer perceptions through ongoing research and to pursue a strategic approach based on the findings of this research.

8.  CRAFTS AND SOUVENIRS

  Income from visitors is important to Scottish crafts businesses and retailers. Moreover, as items purchased convey an image of Scotland to both the purchaser and their friends, family etc, quality is a key issue. It can be difficult for small-scale crafts producers to establish themselves in the visitor market because of problems of design, packaging distribution or, simply, production capacity. Although there are already some initiatives to help crafts businesses develop their products and access retial outlets, there is scope for further work in this area. The potiential benefits are not only more choice and quality for customers but also an enhanced image of the Scottish "product" and an increased economic spin-off for small, Scottish-owned businesses. ATBs, through their TIC networks, have particular potential for "showcasing" local crafts.