This review is timely and much needed in light of the challenges posed to the visitor economy by the pandemic, which has exacerbated pre-existing weaknesses as well as creating significant new issues.
About the Local Government Association (LGA)
1. The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross-party membership organisation, representing councils from England and Wales.
1.2 Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver solutions to national problems.
1.3 As leaders of place, our member councils have a strong stake in the visitor economy. They are direct providers, running destination management organisations (DMOs) and tourism attractions themselves, including castles and historic buildings, parks, piers, amusement parks, and destination management organisations. They run over 350 museums, public archives numerous theatres and galleries, and are responsible for many monuments.
- This review is timely and much needed in light of the challenges posed to the visitor economy by the pandemic, which has exacerbated pre-existing weaknesses as well as creating significant new issues. Our member councils recognise the importance of the visitor economy, and the benefits from having a strong local support organisation working to strengthen their place as a destination, and are pleased to contribute their views and insight to this review.
- However, council finances have been badly affected by the pandemic – with an estimated funding gap of at least £2.6 billion. This means that council-run DMOs which have to some extent been protected by existing budgets, are likely to struggle from April onwards as councils have to make difficult decisions.
- Over time, and as a result of fluctuating national policy and unstable funding, the network of DMOs has become patchy, ill-resourced, and uncoordinated with some high performers and many weaker ones. VisitEngland has a key role in addressing these issues and fulfilling a leadership and coordination role.
- The pandemic has thrown this into sharp relief; and some of the most entrepreneurial DMO’s have been most negatively affected by the loss of earned income, hampering their ability to provide support to businesses during this challenging period.
- We are seeing structural change as councils aim to support local DMOs, with some coming back in house, and others being commissioned out, but this will not equate to the strong network working towards clear objectives that is required.
- However, stronger coordination and direction at a national level is needed, while local funding should be stabilised through putting council finances on a stable footing and giving them powers to reinvest the money generated by tourism back in the local area, rather than going into a central pot.
6. What do you feel works well overall about the current ways in which DMOs are structured and operate in England?
The strongest DMOs are developing visions for their local area and identifying ways to help businesses contribute to that vision, in partnership with local authorities and combined authorities where they exist. Examples of DMOs that have developed strong place narratives are be Gottoplaces and Cumbria Tourism, and we think an approach that supported other DMOs to develop their local equivalents would add significant strength to the visitor economy.
The majority of DMOs are embedded in place and understand that unique characteristics, opportunities and challenges of that place, although not all are able to effectively deliver against those opportunities and challenges. This connection to place is critical for DMOs and will need to be retained in any restructure proposed by the Review. While there are benefits to working at some degree of scale, the appropriate geography must be decided locally. Boundaries aside, close collaboration with councils at both district and upper tier level is essential and a universal feature of high performing DMOs, as it allows the council’s core business support, highways and planning services to align with the vision for the place.
Both before and as a result of the pandemic, we have seen some strong collaborations between councils and businesses to deliver DMO structures that bring the best of the public sector and the private sector together with one goal for the visitor economy. While there is anecdotal evidence of positive impact, and some interesting developing practice in places like Coventry and Gloucestershire, there has been limited evaluation of different models to identify what genuinely has made a difference to place, and an evaluation commissioned by VisitEngland would be a helpful contribution to confirm these perceived strengths are delivering for areas and can be considered by other areas considering their approaches.
7. And what do you think could work differently or could be improved about how DMOs are structured and operate in England?
There is a lack of clarity over role of DMOs, with little guidance from either DCMS or VisitBritain. Some DMOs have developed as purely marketing and visitor information services, while others provide more wide-ranging support services, and work towards a long-term vision for the sector. This leads to significantly different levels of support available for tourism businesses in different areas. A clear purpose and strategy should be developed by Government working with DMOs, tourism businesses and councils, with local areas determining the most appropriate local ways to meet those objectives. The Tourism Sector Deal, although no longer current, identifies many of the key issues that remain important to the tourism sector.
There is patchy coordination with local government by some DMOs, particularly on the place-making agendas. Failing to strengthen this will impede the levelling up agenda and prevent developing destinations from competing effectively with established destinations. This is predominantly due to the lack of clear direction as to their functions, and challenges around the funding model.
The lack of a clear funding model is the second main challenge for DMOs. Tourism businesses tend towards the micro and small business scale, limiting the ability of DMOs to earn significant levels of income directly from their member businesses. The benefits of the DMO will also accrue to the local destination, rather than to individual businesses, creating a limited incentive to invest in the DMO as opposed to directly in the business. For DMOs earning large proportions of their own income, this is often although not always accompanied by a reduction in connection with the council and a decrease in expertise within the council as they look to the DMO to provide that expert knowledge.
However, while it is critical the DMOs focus on the needs of local tourism businesses, their role is broader than simple business support. Nationally, we need to find a way to return income generated by destinations to those destinations for reinvestment in that industry. It is disappointing that there are almost no business improvement districts with a focus on tourism for instance, and there is also limited recognition of the visitor economy in delivery plans for Local Enterprise Partnerships (LEPs). This is one of the reasons why the LGA has favoured exploring a tourism levy option as a mean of securing this local investment in destinations.
There is a particular weakness across nearly all DMOs in relation to engagement with higher and further education providers to ensure that there is a pipeline of talent to maintain, develop and grow the visitor economy. In 2019, the LGA published research into the role of local government in supporting this pipeline of talent, and identified a clear supporting role for DMOs in terms of collecting employment data, which was previously collected by VisitBritain but has now been discontinued, and acting as champions for the visitor economy with training providers. An example of where this works well, contained in our publication, is Blackpool where the council and tourism businesses have directly established a training academy to provide the skills needed by the local visitor economy.
8. Why, in your view, should there be DMOs?
DMOs offer the opportunity to:
- Create a single landing point for visitors who want to understand more about the area and identify accommodation and attractions
- Provide an expert and authoritative voice on the visitor economy and fulfil a coordinating role across a destination, acting as an interface between tourism businesses and local public sector bodies
- Develop bespoke support for visitor economy businesses in the area, addressing particular skills gaps eg digital marketing
- Liaise with local skills and education providers to ensure that they are training local residents and students in the skills needed to maintain and grow the visitor economy
- Collate key local data to help inform investment decisions to support the visitor economy at both the local and national level.
9. What, in your view, should DMOs do to be at their best?
The best DMOs perform all the functions set out in our response to question 8, ensuring that the delivery of these objectives is tailored to local context and need.
10. Who and/or what do you think benefits from the work DMOs carry out?
When at their best, DMOs provide valued support to local businesses, helping them to develop their offer to visitors, enable local residents to benefit from the investment and job opportunities that a strong visitor economy can bring, and support local councils and national government to target their investments and services to maximise their impact.
11. What examples do you have of DMOs demonstrating their value and/or Returns on Investment to stakeholders?
There is a lack of information on this at both a local and aggregated level. While the Review will identify some key areas, more regular research into performance should be commissioned by VisitBritain.
12. What views do you have about the ways in which DMOs are funded currently, and how this could change?
Funding is both one of the biggest challenges for DMOs, as outlined earlier, and the biggest lever to drive improvement and change. The Reviews recommendations around funding will be crucial to achieving an improved network of DMOs.
We have made the point earlier that the benefits of destination management and marketing fall to the destination rather than to individual businesses. This makes a strong case for investment to be delivered through the public sector, and is the role that upper tier councils have taken on, with some district councils also making significant contributions. However, council budgets have fallen by around 60 per cent since 2010 and the pandemic has created an extra financial gap of about £2.6 billion. As tourism development and promotion is a discretionary service, this has led to a squeeze and reduction in the amount of funding local authorities are able to dedicate to this work, with a reduction from £122 million in 2008 to only £57 million in 2020.
While all councils recognise the value of the visitor economy to their place and local economies, much of the financial benefit of this is collected at a national level rather than the local level. The return of business rates to councils will provide an additional incentive to invest in the sector, but the pandemic has shown that this is not a reliable source while national exemptions to the hospitality sector exist, although it is entirely appropriate for them to have been introduced during the pandemic period.
In fact, the increased costs associated with the visitor economy can place significant pressures and costs on local services such as waste collection, parking and road maintenance, as well as implications for air quality from coaches running their engines while idle. Until a way can be found of at least a proportion of the income generated from the visitor economy to the place that generated it, there will exist a disincentive to invest in the sector, even if the funding challenge from being required to invest a finite budget in statutory services is resolved.
Fiscal devolution in the form of local tourism levies is a recognised way of resolving this, in light of the lack of tourism-related BIDs. However, other mechanisms could be explored and the planned introduction of tourism zones offers an ideal opportunity to explore all new models of funding.
Provision of national funding delivered through VisitBritain to councils would unlock additional investment and/or in-kind resources from those councils for the visitor economy.
13. What views do you have about the ways in which individual DMOs are structured currently, and how this could change?
There are a variety of existing models, some of which seem to work well, and others which are viewed as achieving less. It should remain down to individual DMOs and their stakeholders as to how they are structured, but defining a clear role for them, as set out in question 7, and providing core funding for key activities would ensure increased consistency of delivery. Research into the effectiveness of different models, commissioned by VisitEngland, would be helpful, as outlined in our response to question 6.
It is crucial that any recommendations around restructuring do not force geographies onto places, but provides scope to explore where destinations are defined beyond council boundaries. A ‘one size fits all’ model in terms of geography or activities will not be appropriate.
14. What do you think works well about how DMOs work with:
a) other DMOs;
b) local/regional tourism businesses; and
c) other relevant sectors currently, and what could work better?
The majority of DMOs operate independently and, while they may have good local connections, are far more limited in their regional and national networks. Our members strongly support a role for VisitEngland in providing increased coordination based on a region or destination area, which could cross council boundaries, and helping DMOs to realise economies of scale through at least a partnership and commissioning approach. VisitEngland’s role would not be to impose a central or standardised approach to DMOs, but to facilitate the sharing of best practice, an understanding of national strategies and opportunities to connect to wider investment funds such as the UK Shared Prosperity Fund.
Our members have highlighted the role that the Regional Development Agencies played in this agenda and which has in part been taken up by Combined Authorities and LEPs, although on a smaller scale. A current example of a Government body operating in this space is Arts Council England’s regional councils, which provide regional visibility and provide a two-way dialogue between local and national organisations. Another model, which we explore in more detail in question 16, is Sport England’s coordination role for Active Partnerships.
We explore the importance of improving engagement with further and higher education providers in our response to question 7.
15. What do you think works well about how DMOs work with other local structures (e.g. local authorities, local enterprise partnerships, mayoral combined authorities, universities, etc), and what could work better?
There is a mixed picture on this, as we have outlined elsewhere in our response. However, in each area there is room for improvement, which increased coordination and strategic funding would help achieve.
16. What do you think works well about how DMOs currently work with the British Tourist Authority (VisitBritain/VisitEngland), and how could this work better?
There is limited visibility of any engagement between DMOs and VisitBritain, with a greater emphasis on individual relationships than through a coordinated approach. We believe that there is a stronger role for VisitEngland in engaging with DMOs and, through them, more effectively with local and regional areas. VisitEngland would need to be resourced to do this as part of the Government’s forthcoming Spending Review.
Our suggestions for enhancing this engagement include:
- Developing strategic funding based on themes and/or audiences – this could take the form of a national portfolio approach for areas, comparable to Arts Council England’s funding of key arts and culture organisations. This should be based not on destinations, but on services/skills such as business support, digital expertise, and programming activities, resulting in an offer to strengthen all DMOs. This approach would also contribute to Government’s wider objectives, helping with levelling up, while supporting those who already have tourism as a significant part of their local economy.
- Exploring Sport England’s coordination of Active Partnerships as a possible model for developing national engagement/influence – this relationship has recently undergone a fundamental and transformative shift, with Sport England providing a clearer definition of the role expected from Active Partnerships and moving them clearly into the strategic space at a local level and also fulfilling an insight and intelligence gathering role. We believe this function is very close to how DMOs perform at their best, and the perception is that this changed approach to Active Partnership has significantly strengthened the sector.
- VisitEngland should also take on the development agency responsibilities for DMOs, in the same way that Arts Council England is the development body for libraries and museums. This role should encompass commissioning research into the most effective delivery models, and sharing best practice across DMOs. VisitEngland would require appropriate funding from Government to do this.
17. What do you think works well about how DMOs currently work to support business visits and events, and how could this work better?
We recognise the importance of this work, but do not have a view on current performance.
18. How do you think DMOs can best support government priorities, both locally and nationally?
Given the visitor economy’s significance to overall GDP and it’s faster growth rate than many other sectors, there are clearly extensive opportunities for DMOs to contribute to government priorities. The levelling up and equality agenda, ensuring that areas outside London and the South East are equally supported to attract visitors and businesses, is the most obvious opportunity. This role is strengthened by the inclusion of cultural, heritage and leisure objectives in both the Levelling Up Fund and the UK Shared Prosperity Fund (UKSPF).
However, to achieve this, DMOs need to be able to access advice and support from VisitBritain to understand these objectives and the ways in which they can influence bids into the funds. The timescales for applying to the Levelling Up Fund will unfortunately mean that few DMOs are positioned to take advantage of the opportunity, but the longer term development of the UKSPF should be a focus for VisitBritain in the short to medium term.
19. What lessons do you think can be learned from other historical and/or international models for structuring and/or funding DMOs?
The more successful previous models ensured local funding and regional dialogue. However, our members do not feel that any previous model effectively delivered, or would now deliver, what is needed from DMOs today. Successful examples identified internationally focus on local fiscal devolution, often through tourism levies, returning ring-fenced funding to the area that generates the income.
20. How can DMOs best support the recovery and rebuilding of the tourism sector over the next year both in terms of leisure and business tourism, following the COVID-19 pandemic?
DMOs should be central to the recovery of the sector over the coming year. However, we have significant concerns that many of them will not be resourced to do so, following the impact of the pandemic on their own resources.
There is a once in a lifetime opportunity to promote less familiar domestic destinations to UK residents, as well as international visitors looking for destinations opening up early in the recovery period, which is expected to include the UK. This means that marketing will need to pivot away from some traditional offers that are likely to become overcrowded, as Bournemouth has done following last summer where it’s beach became a honeypot site – their marketing now emphasises their green spaces as an alternative destination. However, work also needs to be done with businesses to ensure they can offer visitors a Covid-secure experience, and equally reassure local residents that they will not be put at risk by an influx of visitors from elsewhere.
More strategically, as more funds are announced or repurposed to help areas recover from the pandemic, DMOs will need to connecting up with the inward investment offer developed by councils, saying why businesses and individuals should relocate to the place, as the things that benefit businesses and famillies are also attractive to visitors. DMOs with a developed evidence base for the contribution of existing tourism businesses will be best placed to do this.
21. What risks do you see for the potential for DMOs to support the recovery and rebuilding of the tourism sector, again both in terms of leisure and business tourism, over the next year?
We outline the biggest issue in our response to question 20. There is a significant challenge for those DMOs who are heavily reliant on income from member businesses, who will themselves have limited available funds over the next 18 to 24 months.
There a match funding opportunity for government to match business membership contributions for the period while the industry is struggling, which would support businesses and also help to get DMOs back on their feet.
22. What do you see as the biggest opportunities for DMOs over the next ten years?
There is an opportunity for a coordinated network of DMOs to drive growth in the visitor economy, transforming destinations to meet the needs of the modern visitor, ensuring that businesses have access to the skills and trained staff that they need, and position the UK at the forefront of the restarted visitor economy.
23. And what do you see as the biggest challenges for DMOs over the next ten years?
The current fragmentation of the network, alongside a limited strategic function for many DMOs, means that the UKs ability to compete for both domestic and international markets is under-performing. Unless and until a more strategic direction is outlined by Government, in consultation with DMOs and stakeholders and alongside the funding to sustain that work, it is likely that the current picture will not improve, and may worsen if council funding is further squeezed by demands from statutory services such as social care.
24. What one thing do you think could be done to ensure the financial and organisational sustainability of DMOs over the next ten years?
There needs to be development of a reinvestment model to return the income generated by the visitor economy in an area, to that area and to support the additional pressures and demands on the destination as a result of visitor numbers. We have outlined some initial funding options in this response, and have done additional research into the tourism levy as an option. Our members are keen to work with Government and tourism businesses to explore which option would work best to support the sector.