Heart of the South West LEP Tourism and Visitor Economy Recovery Plan 1

03 Jun 2020

Heart of the South West LEP Tourism and Visitor Economy Recovery Plan 1
  1. Summary
  • The visitor economy across Devon and Somerset employs 65,000 people (84,500 if supply chain is included: food supply chain and agricultural/fishing sectors) totalling a further 7,345 businesses generating £3.35bn visitor spend annually. In some rural areas, over 60% of the population work in the sector.
  • Early estimates indicate that if the summer season is lost, over £1.6bn will be lost to the local economy (roughly 20% by end May, 40% by end July, over 60% by end Sept).
  • Today, nearly a third of all businesses do not believe they will survive the crisis; 70% of businesses expect to die if the summer season is lost.
  • Extension to furlough, small grant scheme, PAYE scheme, VAT deferral and business rates holiday is needed to support the survival of this seasonal sector. Relax the rules on furloughing to allow businesses to carry out essential maintenance and plan and prepare for re-opening.
  • A Great South West Tourism Zone could provide long term strategic support and direction to help revitalise the sector over three to five years
  • The future of DMO’s, (Destination Management/Marketing Organisations) who currently support and represent over 7,000 businesses across the HotSW LEP, are at risk. Some public funding is needed to ensure their survival.
  1. Overview of the Visitor Economy
The visitor economy is a key sector of the UK economy. In 2018, the UK attracted 38 million international visitors, who added £23bn to the economy, making tourism one of the country’s most important industries and the third largest service export. Prior to Covid-19, forecasts predicted the sector would deliver a 23% increase in inbound visitors by 2025. Domestic tourism was also set to increase by an estimated 3% per annum until 2025.
The visitor economy is an extremely important sector to the region but also a key driver of GVA nationally. There are 7,345 businesses employing 65,000 people generating £3.35bn revenue. 67% of all businesses are micros. If the supply chain is included, the number employed rises to approximately 84,500. In rural areas the proportion of the working population employed in the visitor economy is over 60%.
Visitor spend contributes £3.35bn to the local economy and comprises of 43.6 million-day visits, 7.1 million domestic overnight visits and 642,000 overseas visits. Of this spend approx. 31% is on food and drink and 28% on retail purchases when they visit.
The South West of England is one of the leading tourism destinations in the UK representing the second highest GVA in the sector outside of London. As a proportion of national visits, the SW region (including Devon, Somerset, Cornwall, Dorset and Wiltshire) is the most significant region for domestic overnight visits representing 16.1% of all trips and 18.1% of spend. 6% of all international visits coming to UK visit the South West and 8.7% of all UK day visits.
The Government’s Industrial strategy highlights the visitor economy as one of 10 key industrial sectors. The Tourism Sector Deal and recent Visit Britain Tourism Strategy set clear strategic aims and objectives to drive the sector forward for national as well as regional benefits. The sector has a clear plan to drive tourism forward and the collaboration between the DMO’s across HotSW has started to forge a local plan aligned to these national plans, building resilience and growth across the industry.
The unforeseen impact of Covid-19 has hit the sector really hard with all businesses involved in tourism and hospitality being asked to close and at the time of writing this report, there is no clear plan from government to enable the sector to re-open safely and rebuild lost business.
  1. Impact of Covid-19
Given the importance of the visitor economy to the region, the impact of Covid 19 should not be under estimated. Across Devon and Somerset, 65,000 people are employed across 7,345 businesses in the sector. Research[1] has indicated that if the summer season is lost, the area will lose £1.6bn in revenue. Government has acknowledged that not all businesses will survive; just under a third of business do not believe they will survive the crisis[2] as of today, however should the summer season be lost to the sector, nearly 70% of tourism businesses believe they will close!
Furthermore, a quarter of all businesses generate over 50% of their revenue across July and August[3], therefore should the business closure extend further into the summer season, the region can expect significant number of business closures and job losses as there will be no route for many of these businesses to build their business and their revenue as we move into autumn and winter. This is further compounded by consumer intelligence[4] which is showing that consumers are not considering overnight travel for at least 5 months, effectively writing off the summer season from the higher spending overnight market.
The future of the DMO’s, whose role it is to support and represent local tourism businesses and co-ordinate and align strategic plans is now in doubt. All are funded through either Member contributions or through Business Improvement District (BID) models or a combination of both, whilst one DMO receives part public funding, leaving all DMO’s at risk. The DMO’s in the HotSWLEP area are Visit Devon, Destination Plymouth, English Riviera BID Co and Visit Somerset. VisitEngland has provided short term funding support for three months for DMO’s, however the likelihood is that given many are commercially funded they too will not survive post three months unless a longer term solution is found. Crucially DMO’s are needed most at this stage to develop recovery planning with local authorities, public health and stakeholders and will provide direction and expertise when markets re-open for visitors.
Whilst furloughing and the small grant scheme has provided short-term relief for some businesses, if the sector is to remain closed beyond the current period, the furlough scheme needs to be extended otherwise the economy will see significant redundancies across the sector. Further support needs to be given through extending the small grant scheme, the PAYE scheme and VAT deferral as well. Furthermore, the restrictions on furloughed staff not being able to work means many businesses are not able to plan and prepare for re-opening so relaxing the rules here to allow for flexible working would benefit the industry.
Business rates relief is welcomed however those businesses that are able to survive are unlikely to be able to revitalise their business until summer 2021 so extending the business rate relief to this time would provide added relief and support for the sector.
  1. Next Steps
During early 2020, DMO’s across HotSW with support from the HotSWLEP commissioned some research into building the resilience in the visitor economy (Appendix 1 sets out the vision, key challenges, opportunities and productivity drivers that will shape the future of the sector).
The recommendations in this report (still in draft format) form the framework from which to build the sector and to work with neighbouring LEP’s to bid for a South West Tourism Zone. However, the immediate impact of Covid-19 on the visitor economy has accelerated a large number of issues which need addressing in order to save the visitor economy, its businesses, employees and the wider supply chain. These immediate actions need to be addressed before more sector development actions can be taken to revitalise and grow the visitor economy.
The joint recovery plan below sets out the immediate/short, medium and long-term actions to react to the current crisis and support the sector to restart and revitalise.

Tourism and Visitor Economy Recovery Plan
React (immediate) Restart and Recover (short-term) Stabilise and revitalise (medium to long term)
  1. Lobby government/LEPs to:
  • Extend Furlough/small business grant scheme/VAT/PAYE scheme for as long as businesses remain closed.
  • Relax the rules on furloughing to accommodate seasonal workers and enable businesses to work with their staff to plan and prepare for re-opening.
  • Extend business rates holiday until summer 2021.
  • Clarify national plan to relax restrictions and re-open the economy (understating where the tourism sector fits in).
  • Issue guidance on managing social distancing (certificated scheme) to enable businesses to open safely and reassure public/communities that places are safe to visit. Clarity will be needed on how this is managed.
  • Secure the future of DMOs and provide financial support to enable them to fulfil their critical role in tourism recovery.
  1. Undertake research into consumer/business trends to:
  • Understand who the customers will be when businesses start to re-open to enable a focussed marketing campaign
  • Understand residents feeling about visitors and what needs to be done to make them feel comfortable and welcoming and dilute any tensions
  • Track business impact and issues
  1. Collate examples of best practice and innovation across the sector so other can learn through case studies, peer to peer learning (link to Be the Business training programme).
  2. Continue to gather intelligence from the sector to feed into LEPs, DCMS etc.
  1. Work with neighbouring LEPs/DMO’s to develop the detail around what a Tourism Zone for the Great South West will look like.
  2. Appoint South West region as pilot area for Tourism Zone.
  3. Build upon the consumer research to develop a targeted marketing plan for the region.
  4. Develop both the key messages and the communications plan to reassure communities that businesses are safe/compliant to visit and visitors are welcome.
  5. Implement a national certificated scheme on opening safely (e.g. fact sheets, training etc).
  6. Enable and encourage virtual peer to peer learning to share innovation and best practice across the sector.
  7. Work with the LEP to appoint a sector representative to the Board recognising the importance of the sector and to ensure strategic oversight and support of the recovery plan.
  8. Establish the Be the Business training programme to help business plan, rebuild and learn from the impact of C19.
  9. Implement a community wealth building approach across the sector to drive local purchasing and buy local campaigns.
  1. Implement the recommendations from the Building Resilience in the Visitor Economy’ including:
  • address the issue of seasonality
  • build upon our green and accessibility credentials
  • develop digital solutions to better use of real-time data
  • develop a skills and employment plan
  • build the partnership
  1. Establish the Great South West Tourism Zone.
  2. Consider infrastructure challenges across the area – public transport to rural areas to enable more visitors to easily get there.

Appendix 1: Strengths, challenges and opportunities and productivity drivers
Vision for the sector
In helping to shape the Great South West prospectus, the sector set a clear vision that is shared across Cornwall and Isles of Scilly, Devon, Somerset and Dorset:
The (Heart of the South West and wider) Great South West region to be one of the first carbon neutral destinations in the UK. Recognised as a globally significant year-round tourism destination, renowned for its world class natural capital, heritage and authentic culture. We will make this transformation through embracing digital and creative technologies, leading on sustainable tourism and significantly increasing our productivity through clean growth and innovative partnership working to shape our future.
As a region, increasing the productivity and growth in the sector can be achieved largely through the actions in the Sector Deal. In addition, there are also more locally focussed opportunities and ambitions that can be realised.
Over the next 5 years, the key DMOs in the Heart of South West area want to engage with the industry and LEP to deliver (post-Covid, some of these may well be medium to long term ambitions to be addresses):
  • Growth in visitor spend - converting day visitors to overnight stays
  • Increase productivity by at least 1%
  • Transition 10% of business into shoulder months
  • Grow business and events tourism by 20%
  • Grow international visitors by 5%
  • Increase number of green tourism businesses by 50%
  • Become recognised as the number one destination for accessible tourism in the UK
Realising the vision
Realising the vision for the HotSW visitor economy requires the industry to build upon its strengths, address the challenges and capitalise on future trends and opportunities. Research undertaken by National Coastal Tourism Academy (NCTA) on behalf of the region’s tourism sector is helping to set out the strengths, challenges and opportunities in readiness for developing a Tourism Zone prospectus. Some of the findings to date are highlighted below:
  1. Strengths
  • Our natural assets – UNESCO World Heritage Site, UNESCO Biosphere, UNESCO Geopark, 2 National Parks, 8 Areas of Outstanding Natural Beauty, world class national walking trail, a National Marine Park and 484 miles of stunning coastline.
  • Two vibrant regional cities with great shopping, cultural and leisure activities
  • Good range and mix off accommodation however more 4* plus grade accommodation needed in certain areas
  • Good range and mix of indoor and outdoor attractions appealing to those looking for culture, family fun, heritage, nature and activity
  • Excellent food and drink offer with local specialities including fresh fish and seafood
  1. Challenges
  • Seasonality is a key challenge to address. 25% of businesses surveyed generated more than 50% of their business turnover during July and August and a further 48% of businesses generated 25-49% of turnover in July and August.   Yet 74% of tourism businesses are already open all year, so the focus must be on driving visitors and occupancy in these leaner periods, with a particular focus on January to March.
  • Access to real time, consistent data is lacking across the industry meaning businesses are not able to track trends and make effective business decisions relating to marketing spend, growing new markets and responding to market changes in a timely manner.
  • A large number of micro businesses makes co-ordination across the area difficult and the pace of change slow.
  • Recruitment and retention of staff in a sector that is not seen as a viable career option for many.
  • Climate change resulting in a change in travel behaviour as well as a need to invest in infrastructure whether this be buildings or modes of transport. With a strong reputation for outstanding natural assets, weather has a significant impact on businesses, with 59% of businesses identifying it as a key challenge.
  • Whilst travelling to the region is relatively good, travel around part of the region, especially the rural areas can be improved.
  • Stakeholders interviewed identified improving connectivity from public transport hubs to key ‘attractions’ and increasing access to electric vehicle charging points as priorities to deliver growth.
  • Digital Infrastructure is not consistent across the area and has become an essential requirement for many travellers and businesses.
  1. Future Trend and Opportunities (further research may be needed to evaluate the impact of Covid on these opportunities)
  • Changing demographics – solo travel is becoming one of the fastest growing segments. And, as people are increasingly living longer and more active lives, thinking must be more in line with interests rather than age.
  • Accessibility – over a quarter of all consumers have a long term disability need and a fifth have a family member with such a condition. Businesses are now seeing an increase in demand for disabled facilities and this is an area the Sector Deal sees as important.
  • Sustainability – tourism accounts for 5% of global carbon emissions[5]. Travel is a significant part of these emissions and according to the LGA, Local Authorities and Public Bodies are well placed to lead sustainable tourism. In addition, the private sector can help through improving practices, investing in green infrastructure and making it easier for visitors to be green when they’re on holiday. This is one area where the sector can help the LEP deliver against the clean growth agenda.
  • Experience and authenticity – there is a growing trend for travellers to be more active and engage in experiences rather than to simply visit an area. Tourist are becoming increasingly interested in ‘living like a local’ and engaging in authentic local experiences.
  • Adventure and activity – nearly a half of all holiday makers to England have come on an active holiday in the past 2 years. Walking and cycling remain the most popular but coastal activities such as coasteering, stand up paddle boarding and surfing are on the rise.
  • Well-being – health and well-being has become extremely popular in recent years and research shows that 1 in 5 British adults going on a wellness break each year. This is broader that just physical health and incorporates mental, spiritual, emotional and social health. These tend to be short breaks with two thirds of breaks taking place between November and April over the winter period so presents a good market to target to extend the season.
  • Technology – this plays a significant role in the sector from customers’ expectations to being able to book on-line, to the importance of reviews and impressions from websites, to communication through the managing data and trends. Embracing digital technology is an essential component of the Industrial Strategy (Ideas strand). 72% of businesses in the Heart of SW are keen to embrace new technology as long as it doesn’t compromise personal contact with customers.
  • Business tourism – business travellers spend 72% more than leisure travellers and is a key segment for attracting visitors out of season. Ease of access is cited as the key reason for choosing a location meaning some areas will need improved infrastructure if they are to capitalise on this market.
  • City breaks are a growing market especially for younger ‘cultural couples’.  Given how big the visitor impacts of Exeter and Plymouth/Torbay are, considering how to raise the profile of our cities is an opportunity for new product and new target markets
  • Business Support – a new pilot project with Be the Business which includes a series of masterclasses and action learning sets will be developed and introduced from Oct/Nov 2020 to support the productive growth of the sector.
Productivity Drivers
Emerging recommendations from the research point to a number of areas where the visitor economy can drive productivity:
  1. Seasonality – focus on building new markets willing to travel off peak and investment in product development
    1. Key opportunities are raising profile of natural environment & assets, and local authenticity of product
    2. New markets - accessibility, sustainability, adventure and activity, cultural cities/culture coast and focus on niche markets like dogs and walking have proved successful for many businesses.
    3. Focus on developing business events aligned to the Heart of SW region key sectors e.g. marine, nuclear, agriculture will underpin the wider LEP strategy for growth
    4. Sharing best practice and insights or inspiration sessions for businesses
  2. Digital – making better use of real time data to inform decision making; ensure the region is fully digitally connected and the sector capitalises on the productivity benefits through automation.
  3. Skills – Develop a skills plan for the sector which aligns with the national programme of activity being delivered through the Tourism Sector Deal and addresses the skills issues across the Heart of SW region. 
  4. Partnership and networking – bringing together all key stakeholders and agreeing future priorities and direction is key, not just as requirement for potential tourism zone.
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