Tourism body criticised over handling of e-tourism venture

14/05/2009

VisitScotland could have achieved better value for the public purse by using a different business model to develop the VisitScotland.com website, according to a report published today by the Scottish Parliament’s Public Audit Committee.

The report follows the publication of the Auditor General for Scotland’s report, The 2007/2008 Audit of VisitScotland, which examined the events leading to VisitScotland’s purchase of all shares in eTourism Limited, the public-private partnership established to operate the website.

The committee found that eTourism Limited initially adopted a business model which was unachievable and based on a failed understanding of the demand within the tourism industry for online booking.

Committee Convener Hugh Henry MSP said: “It is a matter of regret to the committee that the venture failed so significantly in relation to predicted revenue generation. The committee believes VisitScotland should develop a robust business plan for the future operation of the VisitScotland.com website.

"That plan should set out clearly the objectives, financial forecasts and how progress will be monitored. We also recommend that VisitScotland seeks the views of private sector providers to ensure that accurate knowledge of the market feeds into the future business model for eTourism Limited.”

Following the failure of the eTourism business model, VisitScotland was faced with two options: to purchase all shares in eTourism Ltd or attempt to purchase the website as an asset. In its findings the committee has criticised the decision by VisitScotland to purchase the shares without seeking any external advice.

Mr Henry said: “We recognise the value of the VisitScotland.com website to VisitScotland and to Scotland’s tourist industry as a whole but we believe that it might have been possible for VisitScotland to secure its initial aims at a smaller cost to the public purse. Given the failure of eTourism to deliver its financial objectives, VisitScotland was faced with the decision of either buying out the other shareholders or purchasing the asset. It would appear that the option of buying out the shareholders was possibly the better option but we are disappointed that external advice was not sought to inform this decision.”

Further information

Read the Auditor General for Scotland's report – The 2007/2008 Audit of VisitScotland (16 KB pdf).

eTourism Limited was established in 2001 as a joint public-private venture for the purposes of operating the VisitScotland.com website.

VisitScotland’s total investment in eTourism Limited is in the region of £4 million. According to PricewaterhouseCoopers the value of the company, now wholly owned by VisitScotland, is between £4m and £7m.

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