Enterprise and Lifelong Learning Committee, 17 Jun 2002

Meeting date: Monday, June 17, 2002

Official Report 242KB pdf

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Tourism Inquiry

Item 3 is the first evidence session in our tourism inquiry. Unfortunately, Barbara Foulkes could not get a plane in order to attend today, so she sends her apologies. Robert Smith, the chair of Shetland Islands Tourism was also unable to make it, but the chief executive, Maurice Mullay, is with us.

Given that people are taking a break, however, and because we have been sitting for two hours, I will formally suspend the meeting, with Maurice Mullay's agreement, for five minutes.

Meeting suspended.

On resuming—

I offer Maurice Mullay my apologies—it has already been quite a long day, given the various flights that we have taken. I ask you to introduce your evidence, after which we will ask you questions.

Thank you very much and a warm welcome to Shetland—or Hjaltland, as we were known by the distinguished earls and kings whose stained-glass likenesses surround us this afternoon. We are pleased that you could make it here. It was rather misty this morning, as the very fine weather that we have been having recently temporarily deserted us. I understand that those who came here on the flight from Glasgow will now know what we mean by an island adventure.

I regret the absence of my colleague from Orkney, which is due to the fact that the flights from there were fully booked. However, many of the issues that obtain in Orkney, including transport policy, are often simply magnified in Shetland.

Tourism is an important local industry, which reaches every part of the islands, from the national nature reserve at Herma ness—the most northerly point of Britain—to Sumburgh head in the south of the islands, which I hope many of you will visit tomorrow, and Fair Isle, which lies between Orkney and Shetland and which plays an important part in the local tourism scene. At present, tourism contributes about £12 million a year to the Shetland economy. Tourism is a dynamic industry that has considerable growth potential for Shetland and can benefit local communities socially and especially economically. It also supports the external transport services to a large degree.

Many changes have taken place in tourism in recent years. There have been reviews of structures, new strategies and changes in direction. Combined with foot-and-mouth disease, 11 September, fear of flying, higher travel costs, adverse exchange rates and perceived high holiday costs, those changes have required a fast response mechanism, which the area tourist board network has provided.

Shetland's place in the context of Scottish tourism is distinctive and different as a result of our northern location, our Scandinavian heritage, our unique culture and our wealth of nature and wildlife. Because of its location, Shetland has a highly attractive image as a desirable holiday destination, but it has a correspondingly high cost of travel. It is therefore a one-off holiday destination for many people and the marketing of the islands has to be carefully directed at those who seek the unique island experience and who can afford the travel costs.

Travel costs are the major handicap to the expansion of the tourism industry in Shetland. The cost of air travel for an individual from our main United Kingdom market in the south of England is approximately £600. As members know, the cost of air travel from Edinburgh and Glasgow is in excess of £400, so the cost of a family visit to Shetland starts at more than £1,000 even before accommodation, car hire and associated expenses are taken into account. In effect, that takes the islands out of the family and short-breaks markets.

Although air travel by the low-cost carriers is expanding rapidly and costs are reducing spectacularly, the cost of flights to Shetland has continued to rise. An intensive campaign to reduce the cost of flights and the introduction of a public service obligation on the route are of paramount importance to the tourism industry and the economic well-being of the islands generally.

At our crossroads in the north Atlantic, sea services are fundamental. We look forward to the new vessels and enhanced service that will be introduced on the UK route from 1 October this year and the larger Scandinavian vessel, the Norrona, which is expected to be introduced in May 2003. Shetland and Orkney are the top Scottish ports for cruise ships and each receives approximately 40 ships and 12,000 to 14,000 passengers a year. Fair Isle, which is between Orkney and Shetland and has a population of about 70 people, attracts about 20 cruise ships a year with 1,000 to 2,000 passengers.

Many of Shetland's visitors are attracted by the special interests of the islands. Consequently, Shetland Islands Tourism is committed to niche marketing to reach our potential visitors. The importance of those interests and activities to the tourism markets means that there must be additional and concentrated effort if our tourism industry is to achieve its full potential.

We look forward to playing an important role in the streamlined ATB structure, which will receive greater political understanding and financial resources to bring greater visitor numbers and tourism revenue to Scotland and to Shetland.

The big issue is the cost of travel to and from Shetland. If the Ryanair deal for flights to and from Inverness went ahead, would that have any impact on your situation in Shetland?

It would have an impact, but two factors are involved—not only the cost of travel from the mainland, which mainly starts in Aberdeen or Inverness, but capacity on the route, which is of some concern to us. It is a sad coincidence that lack of capacity is the reason why Barbara Foulkes is not at the meeting. Flights can be fully booked and sometimes it is days before a seat becomes available. The airlines have reduced service frequency, which means high occupancy levels on flights. Visitors must book considerably in advance to obtain their preferred dates. Transport costs are of fundamental importance to us.

I am intrigued by the deal that was recently signed to create the private company Viking Island Holidays. Will you talk about that?

Viking Island Holidays is a tripartite arrangement between Orkney Tourist Board, Shetland Tourist Board and NorthLink Ferries. The purpose of Viking Island Holidays is to offer more economical and comprehensive packages in a range of accommodation in the islands and to a wider market. The arrangement provides the opportunity to reduce fares with the introduction of the new ferry service and to make it easier for visitors to book. At present, visitors must book their ferry, accommodation and car hire or other facilities separately. We want people to make a single telephone call and to be able to confirm all their arrangements at the same time. As far as providing a better service and better value for money are concerned, that tripartite arrangement is a major step forward.

What are your target markets?

Shetland's main market is the ABC1 socioeconomic category. The fact that 78 per cent of the people who come to Shetland are in the professions is related to the cost of travel to the islands. We have to do careful target marketing not only of people who have a special interest in the islands and what we have to offer, but of people who can afford to come to Shetland. We tend to aim at the upper end of the market.

What sort of relationship do you have with VisitScotland?

We have a good relationship with VisitScotland. We are part of the area tourist board network, so we work closely with VisitScotland on the services that we provide in the office, on new developments such as e-tourism, which is coming along, and on VisitScotland's marketing schemes.

Areas that are not VisitScotland's prime focus sometimes complain that they feel a bit left out. You have described how you are pursuing a focused approach. Does VisitScotland support that approach, which may be inconsistent with its more general approach?

Shetland's prime markets are not necessarily the same as Scotland's prime markets. Scotland as a whole is interested in the touring market, in which people tour around Scotland in their cars and stop off at bed and breakfasts, guest houses or hotels. That is not strictly our primary market. The average duration of stay in Scotland is just over four nights, but in Shetland it is well over seven nights. Given the costs of coming here, people amortise those costs over a longer stay.

Scotland may also be more interested than Shetland is in specific markets. For example, prior to 11 September, Americans made up 25 per cent of the Scottish market, but they represented only 8 per cent of the Shetland market. Our marketing effort tends to be directed at Scandinavia. Until the middle of May, we had Scotland's only international ferry connection, which was from Norway, the Faroe Islands and Iceland. That ferry service is important to us, because it provides the circuit that allows people to do North sea tours or to stop off in Shetland on their way to the Faroe Islands and, increasingly, to Iceland. However, those markets are not necessarily of prime importance to Scotland.

We have niche markets that are really quite specialist, particularly in bird watching, nature and wildlife. We have been taking a lead in the eco-tourism market and genealogy is another specialist market for us. Those markets are now recognised, but we would like much more emphasis to be placed on niche markets and on the periphery of Scotland—people cannot reach Shetland without travelling through Scotland.

Do you feel that VisitScotland is quite happy for you to do your own thing?

We would be happier if VisitScotland were to take a more proactive role in the niche marketing areas that are of specific interest to us. We combine resources with other area tourist boards that have similar interests in order to promote special interests. For example, we have worked with the Highlands of Scotland Tourist Board and other island authorities on the walking wild project and the escape to the edge project. Those projects have been beneficial because they are targeted campaigns that can reach people whom, individually, the organisations that are involved would not be able to reach.

What role does the local enterprise company play in supporting tourism activity?

Its main role as far as the area tourist board is concerned is training, but it also provides support for businesses in the community, ensuring that we have the necessary infrastructure and business acumen.

I am sure that when you made your opening remarks, Mr Mullay, you encouraged the members to look at the price of their tickets.

I would like you to elaborate on two areas: food and music. It has always struck me as ironic that, every morning in our fish market, we land some of the finest produce available but do not make enough of that fact. Would you like to elaborate on the industry's difficulties in attracting the right calibre of people to produce the food that would enhance our restaurants and our hotel trade?

Music has the potential to be a huge growth area for the islands, economically as well as socially and culturally. How far and wide do you think that that area could spread? Do you think that it has the capacity to become worldwide?

Our natural produce is high quality, fresh and the type of product that visitors are looking for. Shetland differs from other areas in that our produce tends to be produced en masse as a commodity rather than pre-packaged for the specialist hotel trade. However, although we have good-quality materials, we face a shortage of staff who can produce the high-quality products that the visitor is looking for. We have a low rate of unemployment at the moment—it is perhaps between 1.2 per cent and 1.7 per cent—and it is hard to recruit chefs of the quality that we desire. We need to concentrate on that area and ensure that we can provide the standard of food that people want. As I indicated, people pay a lot of money to come to Shetland and it is important that we can provide a top-quality experience.

Two years ago, Shetland won the Scottish cultural tourism award for music. Shetland is brimful of music. At the moment, we have a project called "Simmer'n Sessions", which has been arranged by Shetland Islands Tourism and the local art trust and features arranged musical sessions five nights a week, including Sunday night, throughout the islands. Those sessions have been extremely popular and have brought lots of people to Shetland, who leave with tapes and compact discs.

We have a good folk festival as a shoulder-season attraction and we have an accordion and fiddle festival in October, which is also an out-of-season attraction. Many people now come to Shetland to hear the unique style of Shetland music. Music is important to the islands and we see a lot of potential for growth in that area. We are trying to keep ahead of Scotland and develop that area before other areas catch up with us.

We, too, have experienced issues relating to flight capacity and the other adventurous ways of getting to Shetland. However, my question is: what is the current rate of bed occupancy in the islands?

Lower than we would wish, particularly because we have a short season—we have a short weather window on account of our northern location. During the peak season, which tends to be from May to the beginning of September, we can be quite busy and certain sectors can get close to capacity. However, the rate drops dramatically in the winter months.

That is not the case across the board. Shetland has a considerable business tourism element and it is important that that continues, because it supports our establishments. Hardly a hotel in Shetland closes during the winter months, which is different from the situation in the Highlands.

I notice that almost half the holiday-making visitors to Shetland come from furth the UK. Apart from the recognition that Shetland has unique characteristics in terms of who comes, what is needed at a national level to keep the throughput coming?

We have placed a great deal of emphasis on marketing in recent years. Shetland is a distinctive product. When people come to Shetland, they are almost booking an overseas holiday—I know that everyone is overseas from Shetland. Outwith the UK, generally speaking people book through a travel agent, a tour operator or a carrier that can provide a package arrangement. We tend to be looked at as an overseas destination.

We work closely with the travel trade—probably more closely than most other areas of Scotland outwith the cities do. It is important that Shetland is featured in tour operator programmes. Sometimes they are general interest programmes, but increasingly they are special interest ones. We ensure that Shetland has a high profile in our market areas through study tours, press trips and bringing the trade here to let people see what Shetland has to offer. A great deal of our achievement in getting such a high turnover is due to our own efforts.

Did your most recent visitors survey disclose how much information access was web based?

Yes, although the survey was carried out in 2000. I think that we were talking about less than 8 per cent web interest. The interesting point, which is not just applicable to Shetland, is that people use the web to access information but tend to telephone to make bookings—sometimes they write or e-mail. They tend not to book directly from the website, but that will happen. The number of bookings through the web is increasing. On Friday, I had occasion to examine that matter and I was pleased to note that Shetland has had more electronic bookings than the Borders and many other areas of Scotland, because we appreciate the importance of the internet and stress it strongly.

An obvious route to access information is through the websites of Scottish Natural Heritage or RSPB Scotland. Are people easily gaining access through other bodies' websites?

Yes. The whole concept of the internet is based on links. We are aware of the importance of getting the information through to people, but also of retaining them on our site. We do not want to lose them from our site. Other agencies, such as SNH, RSPB Scotland and Historic Scotland, provide a wealth of information on Shetland in addition to the information on our site. We work closely with them.

I return to the point that Tavish Scott made about the quality of the product. He talked about the supply of food. In general terms, what have you done to identify training needs across the tourism industry? Clearly, given what you said about niche marketing, the quality of the tourism product is important. You need people either to come back—if they can—or to spread the word about Shetland. What is being done through Shetland Enterprise and other agencies to address training needs and skills gaps by upskilling the work force?

We work closely with Shetland Enterprise and Shetland Islands Council on training needs. Earlier, I mentioned the shortage of chefs. That has been particularly evident only in the past year. A shortage of chefs is not unique to Shetland: throughout Scotland and Britain, there is high demand for high-quality chefs. We are addressing the issue as a priority.

Do you have regular contact with your tourism businesses? Do you monitor how they are doing?

Yes. A shortage of chefs is one of the problems that our membership officer has identified on his visits to members.

What proportion of tourism businesses in Shetland are members of the area tourist board?

I do not want to boast, but I estimate that 95 or 96 per cent of tourism businesses are members of the board.

Having people come to Shetland is very different from having them come to Scotland. Unlike people living on a main road in the Highlands of Scotland, people in Shetland cannot be successful simply by putting up a bed and breakfast vacancy sign outside their houses. Shetland is different. When people are coming to Shetland, we encourage them to book accommodation in advance. We do not want them to arrive here to find that they cannot get the type of accommodation that they seek. When people book in advance, we can provide them with accommodation that is tailored precisely to their needs. The situation in Shetland is different from the situation in the rest of Scotland.

I am interested in the international marketing of Shetland. I was on the first Ryanair flight from Prestwick to Belgium. I was shocked that at the Belgian end there was no promotional material from VisitScotland or the Scottish Tourist Board, but lots of material from Tourism Ireland. What help do you receive from VisitScotland in producing promotional material? Does it go to the Scandinavian countries that provide the cruise ships and tourists who visit the north Atlantic corridor?

The fact that the material at the Belgian end of the flight was Irish rather than Scottish may have something to do with the fact that Tourism Ireland spends twice as much on marketing as the Scottish Tourist Board spends. I admire much of what Tourism Ireland does, which can be very effective and productive.

We are responsible for supplying material to agencies, particularly in Scandinavia. We believe that we know which agencies are productive and we liaise closely with Oslo, Stockholm, Helsinki and all the other major Scandinavian centres. Within our resources, we ensure that material on Shetland is available to visitors there.

Do you receive extra resources?

No.

You mentioned cruise ships, which are a growing market with considerable potential. The point is not just to get cruise ships to Shetland. We receive a large number of visitors, but most of them arrive in the morning and depart mid-afternoon. We are in a good location for cruise ships around Britain or up to Norway, Faroe and Iceland. We wanted to get our act together to ensure that we relieved cruise ship passengers of as many euros or dollars as possible. In the past, we showed them all our natural delights but did not try to reach deep enough into their pockets and wallets.

What are your views on the e-tourism initiative, to which Shetland Islands Tourism has signed up?

We have signed up to the initiative and await the outcome with bated breath. We are confident that the initiative will provide what is required. This is one of our last opportunities in that area. As members are aware, a previous high-profile campaign did not work. The e-tourism initiative is much more focused and has private investment. I believe that it can be made to work. Because we get a high percentage of overseas business, e-tourism is probably more important for Shetland than for the touring areas of Scotland. We support the initiative as much as we can.

Your evidence has been very helpful. I wish you all the best in your efforts.

That brings us to the end of the meeting. I thank Shetland Islands Council and Tavish Scott for their assistance and hospitality.

Meeting closed.