PP No 2020/0212

PP 2020/0212

ECONOMIC POLICY REVIEW COMMITTEE

FIRST REPORT FOR THE SESSION 2020-21

VISITOR ACCOMMODATION

ECONOMIC POLICY REVIEW COMMITTEE FIRST REPORT FOR THE SESSION 2020-21 VISITOR ACCOMMODATION

There shall be three Policy Review Committees which shall be Standing Committees of the Court. Subject to Standing Order 5.6(3) they may scrutinise the established (but not emergent) policies, as deemed necessary by each Committee, of the Departments and Offices indicated in this paragraph together with the associated Statutory Boards and other bodies:

Economic Committee: Treasury; the Department for Enterprise; and the Cabinet Office (including constitutional matters).

Each Policy Review Committee shall in addition be entitled to take evidence from witnesses, whether representing a Department, Office, Statutory Board or other organisation within its remit or not, in cases where the subject matter cuts across different areas of responsibility of different Departments, Offices, Statutory Boards or other organisations. The Policy Review Committees may also hold joint sittings for deliberative purposes or to take evidence. The Chairmen of the Policy Review Committees shall agree on the scope of a Policy Review Committee’s inquiry where the subject cuts across the respective boundaries of the Policy Review Committees’ remits.

Each Policy Review Committee shall have –

(a) a Chairman elected by Tynwald,

(b) two other Members.

Members of Tynwald shall not be eligible for membership of the Committee, if, for the time being, they hold any of the following offices: President of Tynwald, member of the Council of Ministers, member of the Treasury Department referred to in section 1(2)(b) of the Government Departments Act 1987.

The Policy Review Committees shall be authorised to require the attendance of Ministers for the purpose of assisting the Committee (or Committees, if sitting jointly).

Should the need arise in relation to a particular matter, such as a conflict of interest, Tynwald may elect an alternate member for the purpose and duration of a Policy Review Committee’s consideration of that matter. A conflicted member so replaced shall continue to serve as a member of the Committee for all other purposes.

Resolved on 20th May 2014 –

That the remit of the Economic Policy Review Committee should include the work of the Financial Supervision Commission, Insurance and Pensions Authority and Gambling Supervision Commission, this remit to include the requirement for the Chief Executive to give evidence in public.

The powers, privileges and immunities relating to the work of a committee of Tynwald include those conferred by the Tynwald Proceedings Act 1876, the Privileges of Tynwald (Publications) Act 1973, the Tynwald Proceedings Act 1984, and by the Standing Orders of Tynwald Court.

Committee Membership

Mr C R Robertshaw MHK (Douglas East) (Chairman)

Mr J R Moorhouse MHK (Arbory, Castletown and Malew)

Mrs K Sharpe MLC

Copies of this report may be obtained from the Tynwald Library, Legislative Buildings, Finch Road, Douglas, IM1 3PW (Tel: 01624 685520) or may be consulted at www.tynwald.org.im

All correspondence with regard to this report should be addressed to the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW.

Table of Contents

I. THE WORK OF THE COMMITTEE...... 1

II. HOTEL SOLUTIONS REPORT 2016: HOTEL FUTURES ...... 1

III. HOTEL SOLUTIONS REPORT 2017: NON-SERVICED ACCOMMODATION ...... 2

IV. IMPLEMENTATION OF HOTEL SOLUTIONS’ RECOMMENDATIONS...... 3

V. FINANCIAL SUPPORT FOR THE DEVELOPMENT OF HOTELS ...... 3

VI. THE PLANNING SYSTEM...... 5

VII. SECTOR LEADERSHIP...... 6

VIII. ACHIEVING FULL POTENTIAL...... 8

ANNEX 1: LETTER FROM HON LAURENCE SKELLY MHK, MINISTER FOR ENTERPRISE ...... 11

ANNEX 2: PAPER FROM ANDREW KEELING, HOTEL SOLUTIONS: PUBLIC SECTOR FUNDING OF HOTEL DEVELOPMENT SCHEMES IN THE UK...... 17

ANNEX 3: CIS RESEARCH PAPER: STAYCATIONING IN THE UK...... 35

ORAL EVIDENCE ...... 47

21ST SEPTEMBER 2018 EVIDENCE OF HON LAURENCE SKELLY MHK, MINISTER, AND MR MARK LEWIN, CHIEF EXECUTIVE, DEPARTMENT FOR ENTERPRISE 49

10TH SEPTEMBER 2020 EVIDENCE OF MR ANDREW KEELING, HOTEL SOLUTIONS AND HON LAURENCE SKELLY MHK, MINISTER, AND MR MARK LEWIN, CHIEF EXECUTIVE, DEPARTMENT FOR ENTERPRISE; MR RANALD CALDWELL, CHAIR, AND MRS ANGELA BYRNE, HEAD OF AGENCY, VISIT ISLE OF MAN 73

To: The Hon Stephen C Rodan OBE MLC, President of Tynwald, and the Hon Council and Keys in Tynwald assembled

ECONOMIC POLICY REVIEW COMMITTEE FIRST REPORT FOR THE SESSION 2020-21 VISITOR ACCOMMODATION

I. THE WORK OF THE COMMITTEE

1. In July 2020 we decided to undertake an inquiry into the future of the visitor accommodation sector. Our inquiry seeks to understand the state of the sector, with a view to attracting visitors back to the Island once travel restrictions have been lifted.

2. In September 2020 we held a public oral evidence hearing during which we heard in the morning from Mr Andrew Keeling of Hotel Solutions Limited and in the afternoon from the Minister for Enterprise, the Chair of the Visit Agency, and officers. The transcription is published as part of this Report.

3. In this report we have also drawn on public oral evidence which we have heard in previous years from the Minister and Chief Executive of the Department for Enterprise. II. HOTEL SOLUTIONS REPORT 2016: HOTEL FUTURES

4. The ‘Isle of Man Hotel Futures’ study was completed in January 2016.1 Its cost to the Department was £21,000.2 This report identified that the Island needed a more

1 https://www.tynwald.org.im/business/committee/EPRC/Public%20Evidence/DfE%20Report.pdf 2 Annex 1

1 contemporary standard of hotel offering, suggesting that the priority of the sector should be renewing the Island’s hotel sector rather than significantly increasing the number of hotels. The report also suggested that the Island needed to better meet the needs of a range of visitor types, and said that in order to do so an integrated approach across the public and private sectors was required.

5. The report drew attention to the planning system, making several recommendations about how planning policy could be improved to support the sector.

6. The main recommendation made from a Government support perspective was that a hotel investment fund should be established to accelerate investment in existing hotels and the development of new ones. The report said a marketing programme should also be launched using specialist commercial property agents in a final attempt to find buyers for hotels on Douglas Promenade before their prospects of refurbishment become significantly diminished. III. HOTEL SOLUTIONS REPORT 2017: NON-SERVICED ACCOMMODATION

7. Hotel Solutions’ second report ‘Isle of Man Non-Serviced Accommodation Futures’ was completed in March 2017.3 Its cost to the Department was £20,000.4 Hotel Solutions concluded in this report that the Island did not have a sufficiently developed non-serviced accommodation sector to attract and compete for business in the market.

8. Hotel Solutions found that the Isle of Man had very few all-weather facilities, very little family-friendly accommodation and very little activity-focused accommodation. The Island did however have a good stock of high-quality self-catering accommodation. Three barriers to investment in non-serviced accommodation were identified: the cost of getting to the Island, the short season and planning policy restrictions.

9. The report highlighted the potential for more accommodation with enhanced facilities and scope for a few sizeable holiday resorts, potential for at least one forest centre and additional glamping sites. It was also suggested that some campsites should upgrade their facilities to four or five stars to be able to compete for this business. Caravans could be attracted to the Island if restrictions on towing them were lifted. The Island was also missing out on groups such as walkers who would like to use hostel/bunkhouse accommodation.

3https://www.tynwald.org.im/business/committee/EPRC/Public%20Evidence/DfE%20Report%202.pdf 4 Annex 1

2 10. Hotel Solutions recommended the development of planning policy to facilitate an increased non-serviced accommodation offering, particularly on developments in the countryside. IV. IMPLEMENTATION OF HOTEL SOLUTIONS’ RECOMMENDATIONS

11. When asked on a scale of one to ten how many of the recommendations he thought had been actioned by the Department, Mr Keeling replied:

I do not know the answer to that, because obviously as a consultant you parachute in and then you go off. So I do not know exactly … I would say it is probably three or four out of 10.5

We conclude that the Department for Enterprise has failed to act on the recommendations of the consultancy advice commissioned by its predecessor, the Department of Economic Development.

V. FINANCIAL SUPPORT FOR THE DEVELOPMENT OF HOTELS

12. One of the principal recommendations made by Hotel Solutions in 2016 was the setting up of a hotel investment fund. When we drew this to the Minister’s attention two years later, he said on 21st September 2018:

So it comes into our review of all our schemes, ultimately, whether it is the Enterprise Development Scheme or our Financial Assistance Scheme or any other business support scheme, or any of the other schemes. We were looking at those all to see are they fit for purpose, are they fit for each sector of our economy? And I will take away that we will specifically look at that particular point and consider it within all our schemes.6

After another two years it became clear that this recommendation still had not been implemented. The Minister told us on 10th September 2020:

We had worked up a proposal with regard to a fund and we are progressing that through the Agency and about to go to Treasury again. That had just happened pre- the strategy that was literally delivered in February of this year. Here we are now, what happened in March has happened in March, and whilst we could construct all kinds of funds, what we now have to focus in on is the survival of this industry.7

5 Oral Evidence 10th September 2020 Q12 6 Oral Evidence 21st September 2018 Q24 7 Oral Evidence 10th September 2020 Q53

3 13. In the four years from January 2016 to the onset of the pandemic in March 2020 the Department did not implement this recommendation.

14. Although three hotels have opened since 2016 without the use of public funds, we believe that a lack of funding is still one of the significant barriers to entry into the sector. Many developers will not invest for fear of being unable to realise a return.

15. In oral evidence to us in September 2020, Mr Mark Lewin, Chief Executive of the Department, outlined some of the matters the Department wished to take into consideration. He said:

If, for example, we use substantial public funds … every time a new product comes to the market it has the potential to displace other providers and we have recognised that some of the £20-plus million that was mentioned before, investment has happened over the last few years that has not required any public funds and any public assistance as such. So there is a balance to be had just in terms of how much Government interferes in the marketplace: what is needed to stimulate new activity versus what actually could displace that … When we have talked to industry about that, it is fair to say that there is some concern that if we use a substantial amount of Government support to create something like that – that big destination attraction – then it could displace some of the providers that invested their own funds over the last number of years to provide stock.8

While we acknowledge that the Department may be cautious about interfering in the market, the Department must conversely have an eye to competition from other destinations. Mr Andrew Keeling provided us with a paper, appended to this Report, listing examples of visitor accommodation initiatives that have successfully used public sector funding to improve local visitor economies. We consider this further evidence that the Isle of Man should be investing public money into visitor accommodation, as is happening elsewhere. The Island’s visitor accommodation sector will continue to lose out if our own Government does not act as an investment partner.9

We conclude that the establishment of a hotel investment fund should remain a high priority for the Government.

8 Oral Evidence 10th September 2020 Q49 9 Annex 2

4 VI. THE PLANNING SYSTEM

16. Hotel Solutions highlighted issues with planning as a substantial barrier to the development of accommodation on the Isle of Man. The Hotel Solutions Non-Serviced Accommodation Report suggests than an important area of planning policy which must be developed is the concept of ‘overriding national need’. The report made the following recommendation on the issue:

A clear articulation of what is meant by ‘overriding national need’.10

Overriding national need is a concept discussed in the Isle of Man Strategic Plan and is given as a potential justification for permitting developments outside of areas zoned for development.11

17. Hotel Solutions suggest that countryside developments are something that the Isle of Man needs. As countryside areas are outside of zones identified for development in the area plans, Hotel Solutions point out that overriding national need could be used as a justification for allowing such countryside projects to go ahead. However, they recommend that the concept should be properly defined in order for it to be used effectively, and offer suggestions for considerations for a potential definition.

We conclude that the lack of a definition of the concept of overriding national need within the planning system is hindering the necessary development of accommodation in the countryside.

18. Section 2A of the Town and Country Planning Act 1999 gives the Council of Ministers the power to issue a ‘national policy directive’ under the following wording, which was inserted by the Town and Country Planning (Amendment) Act 2019:

2(1) The Council of Ministers may, whenever it is satisfied that it is in the national interest, by order, issue a national planning policy directive.

…

(5) A national policy directive shall — (a) be for a strategic and defined purpose; (b) include reasons for the policy set out in the directive; (c) include a statement of the anticipated impact and consequences of the policy set out in the directive; and (d) for the purposes of section 10(4) (determination of planning applications), include

10 Page xiv 11https://www.gov.im/media/1350906/the-isle-of-man-strategic-plan-2016-approved-plan- 15_03_16.pdf

5 justification for the policy set out in the directive having greater weight than the matters referred to in paragraphs (a), (b) or (c) of that subsection.

We conclude that the Council of Ministers’ new power to make national policy directives could be used to facilitate the development of holiday accommodation. Since being added to the statute book in 2019, the power has so far been under- utilised. VII. SECTOR LEADERSHIP

19. The Visit Isle of Man Agency was established in 2017 alongside three other agencies as part of the relaunch and rebranding of the Department of Economic Development as the Department for Enterprise. In its Strategic Plan to 2023 the Visit agency quotes Price Waterhouse Cooper as saying of it:

Visit Isle of Man has successfully brought together politicians, civil servants and members of the private sector better than any organisation of its type on the Island for some time.12

20. The strategy sets out an ambitious target to achieve 340,000 visitors per year by 2023 and 500,000 visitors per year by 2030. It includes the following statements of the Agency’s vision and mission:

Vision: to establish and promote the Isle of Man as a quality, year round, visitor destination for our target audiences.

Mission: To ensure the provision of a first class visitor offering through enhanced partnerships, innovative products and dynamic marketing strategies which boost the Island’s proposition and image, while building on our UNESCO Biosphere status and drive for sustainable tourism.

21. It identifies six strategic actions as:

exceptional visitor experience

partnerships

product and event innovation

promotion and marketing

12 https://www.visitisleofman.com/dbimgs/1630%20Visit%20IoM%20Strategy%20A4%20JAN20- WEB.pdf

6 policy development

enhanced research and measurement.

22. The strategic plan containing the vision, mission, actions and targets quoted above was published on 25th February 2020.

23. The agencies set up in 2017, of which the Visit Agency is one, are a part of the Department for Enterprise and have power delegated to them from the Minister with the aim of encouraging and facilitating public-private sector partnership. The Visit Isle of Man Agency has the specific goal of developing the Isle of Man’s tourism industry and to advise and assist the Department in putting in place any measures necessary to develop the industry.

24. Within the ‘public’ side of that public-private partnership, it appears to us that effective coordination across Government Departments involved in tourism is lacking and that this is acting as a barrier to the effective improvement of the tourism industry. This is most clearly illustrated by the failure of the Government as a whole to deliver:

 a hotel investment fund (which would require the support of both the Department for Enterprise and the Treasury);

 a planning system which is an enabler for hotel development and not a blocker (which would require the support of both the Department of Enterprise and the Cabinet Office); and

 a fully coordinated cross-departmental approach to product delivery.

25. When, in May 2018, Mr Ranald Caldwell was appointed Chair of the Visit Agency his impression was that in Government circles:

we all wanted to win but we were wearing different coloured shirts and we were not passing the ball to each other and we were not in the same team.13

Two and a half years later he told us:

One of the challenges we have faced when we have been trying to get investment or get support for the Visit Agency and for our plans, is the question I think that

13 Oral Evidence 10th September 2020 Q78

7 Government has to ask itself which is: why invest in tourism in the first place? Why invest in any of the sectors? Will it give us a return? What will it do for the Island? 14

While we would expect the Treasury and other Departments to consider carefully any proposals emanating from the Department for Enterprise, from an Agency or from any other source, we do not think that a Visit Agency set up by the Government itself should have been expected to justify investment in tourism sector from first principles.

We conclude that in its first two and a half years of operation the Visit Agency has demonstrated the potential value of bringing private sector expertise and drive into Government. However, the formation of the Agency has not resolved the need for Government itself to be more joined up.

The Agency needs tobeable to act as an advisory body tothe whole of Government. This has proved difficult because the Agency has been set up within the legal structure of the Department for Enterprise. The Agency needs to be cross- Departmental and not linked to any individual Department.

The Island is falling behind its competitors. This will continue unless the Island invests in the visitor sector and specifically in visitor accommodation in line with the expert advice which has been received.

The Visit Agency has made some progress towards being an effective body for the improvement of the visitor economy in the Island; but we note that there is a considerable way to go before this body reaches its full potential. VIII. ACHIEVING FULL POTENTIAL

26. Clearly, since March 2020 the focus of the Department for Enterprise and the Visit Agency has rightly been on the immediate survival of accommodation providers and other businesses in the visitor sector. While this is to be commended, it should not prevent the Government and the Agency from investing now in the sector’s long-term future.

27. Mr Andrew Keeling of Hotel Solutions told us in his oral evidence:

there is significant potential for tourism growth which I think, if anything, COVID-19 has accelerated.15

14 Oral Evidence 10th September 2020 Q48 15 Oral Evidence 10th September 2020 Q3

8 28. The pandemic saw an increase of interest in staycationing within the Island and also within the UK. Considerable research evidence is available on the factors which are attractive to staycation customers within the UK. Some of this research may be of relevance in marketing the Isle of Man to UK-based customers once border restrictions are eased.16

We conclude that, as long as the Island’s visitor industry can be kept alive in the short and medium term, now is a time of opportunity to review and strengthen it for the long term. The present pause in visitor arrivals presents a once-in-a-lifetime opportunity to reset our visitor offering and to implement much-needed change.

29. The potential for growth is clearly evident given the size and value of the UK and Irish staycation markets. We expect growth in these markets to be even more rapid post- COVID-19. Compared to the UK and Ireland, the visitor accommodation sector in the Isle of Man has underperformed over the past decade, through a demonstrable lack of ambition, creativity and investment, illustrated by the fact that only one element of the previous Destination Management Plan (marketing) was actually delivered.

We conclude that if the Island’s visitor economy is to survive and capture a representative share of the visitor market as it develops throughout the UK and Ireland, we have to act now before the opportunity passes us by for good.

30. There is an urgent need for decision makers to understand the crucial importance of yield management in maximising the potential of the visitor accommodation sector. The Island’s visitor season has not been significantly developed towards the eight- month period required for accommodation businesses to generate a reasonable return on investment. Instead the Island has relied too much on the TT and Festival of Motorcycling. These have disrupted the season by having events in June and August with premium rates for accommodation and travel. At the same time they have allowed accounting practices to develop where accommodation deposits for next year support cash flow in the current year, allowing businesses to survive the winter; this has led to a lack of investment, with the list of accommodation businesses for sale on the rise. Expanding the season is a priority with creativity and leadership needed to achieve it.

We conclude that it is of critical importance for yield management to be adopted as akeymeasure. Withoutafocuson yield management therewillnotbethenecessary focus on extending the season; and without an extended season, businesses in the visitor accommodation sector cannot flourish.

16 Annex 3

9 C R Robertshaw

K Sharpe

J R Moorhouse

November 2020

10 ANNEX 1: LETTER FROM HON LAURENCE SKELLY MHK, MINISTER FOR ENTERPRISE

11 12

Minister Laurence Skelly MHK

[Contact details redacted]

28 September 2020

Mr Kieran Skehan BA(Hons) Parliamentary Intern & Assistant Clerk to the Economic Policy Review Committee The Office of the Clerk of Tynwald Legislative Buildings Finch Road Douglas Isle of Man IM1 3PW

Dear Economic Policy Review Committee Members

Further to the Economic Policy Review Committee held on 10th September 2020 to review Tourism Future and the further questions raised, please find the responses below.

1. What has been the cost to the taxpayer of the Visit Agency since it was established?

The Visit Isle of Man revenue budget as per the pink book has remained the same since the Agency was established.

Visit Agency 1 - Income (25,000)

2 - Payroll 409,878

5 - Supplies & Services 1,128,770

7 - Loan Charges, Grants etc 20,000

Visit Agency Total 1,533,648

Department for Enterprise • 1st Floor, St George’s Court • Upper Church13 Street • Douglas • Isle of Man • IM1 1EX

The only annual additional costs since the Visit Agency was established is the salary for the Non Executive Chair

Year Amount Contracted hours

2018 £7,500 Up to 24 days per year

2019 £7,500 Up to 24 days per year

2020 £15,000 Up to 48 days per year

The Visit Agency is able to apply for additional funds via the Marketing Initiative Fund and since the formation of the Agency this currently stands at:

Year End 18/19 Fund Reclaims

Department Project Available as Drawdown Remaining at Requested Balance 01/04/2018 Tourism 22,885.00 15,128.03 7,756.97 Budget

Year End 19/20 Fund Reclaims

DfE Project Available as Drawdown Remaining at Requested Balance 01/04/2018 2019-20 MIF 900,00000 277,580.67 622,419.33 for Visit Isle of Man Visit Staffing 45,000.00 19,621.91 25,378.09 Extraordinary 50,000.00 49,382.92 617.08 Story Assets

Year To Date 20/21 Fund Reclaims

Division Title Carry Expenditure Balance Forward or to Approval 31/08/2020 Amount Visit Staffing 25,378.09 11,831.25 13,546,84 Additional 622,419.33 69,204.59 553,214.74 Funding for Visit Isle of Man Champion 45,000.00 45,000.00 Posts for Cycling, Walking and Golf

2. What was the cost of the reports produced for the department by Hotel Solutions in 2016 and 2017?

The costs for the two studies were as follows:

 Hotel Futures Study - £21,000  Non-Serviced Accommodation Futures Study - £20,000

3. What is the estimated spend per visitor to the Isle of Man broken down into the following categories of visitor: PVPA, Business Visitors and VFR?

The table below is taken from the Passenger Survey 2018 and the full report can be found here at https://www.gov.im/media/1365787/2019-02-22-passenger-survey-annual-report- 2018.pdf

I hope the above is of assistance. However, should the Committee have any further questions, please do not hesitate to contact the Department.

Yours sincerely

[Signature: Laurence Skelly]

Hon. Laurence Skelly MHK Minister for Enterprise

15 16 ANNEX 2: PAPER FROM ANDREW KEELING, HOTEL SOLUTIONS: PUBLIC SECTOR FUNDING OF HOTEL DEVELOPMENT SCHEMES IN THE UK

17 18 PUBLIC SECTOR FUNDING OF HOTEL DEVELOPMENT SCHEMES IN THE UK

1. Introduction

Public sector funding in one form or other is increasingly being used to support hotel development schemes across the UK in terms of:

 Local authority borrowing at preferential rates;  National and regional government grants;  Local authority equity funding/direct investment;  Local authority loans;  Heritage grants for the conversion of historic buildings to hotels;  Local authority freehold purchase of a building for hotel conversion;  The contribution of local authority owned land or properties for hotel development;  Public sector pension funding of hotel schemes;  Local authority taking an income strip lease to secure forward funding;  Local authority development companies investing in and leasing hotels.

Such public sector investment in hotel schemes is being justified in terms of:

 Finding a new use for a redundant building;  Enabling a strategically important hotel that cannot secure commercial finance to proceed;  Place-making - kick starting and enabling key regeneration schemes that include a hotel as a component;  Generating an income stream for a local authority at no cost to the tax payer;  Helping to boost tourism growth;  Job creation.

Examples of these types of public sector funding of hotel projects are given in the following paragraphs.

19 2. Local Authority Borrowing at Preferential Interest Rates

A number of local authorities across England have used their prudential borrowing powers to take our preferential rate loans to help fund hotel schemes, typically entering into a lease arrangement with a hotel operating company to generate a rental income to repay the loan and in some cases generate a surplus profit for the authority. This has enabled hotel schemes that have been unable to secure commercial funding to go ahead, at no cost to Council tax payers and in some cases giving an investment return to the council. Councils can borrow money from the Government’s Public Works Loan Board at a much cheaper rate than available to private sector borrowers from commercial lenders, typically 2.5%, with schemes typically providing a return of up to 8%. They can also keep the business rates generated by the investment. Examples are as follows:

Pullman Hotel, Liverpool

Liverpool City Council funded the £66m Exhibition Centre Liverpool and Pullman Hotel adjacent to the Liverpool Arena and Convention Centre (ACC Liverpool) on Liverpool's waterfront, through borrowing that is being supported directly from the revenue generated by the expanded ACC Liverpool campus. The scheme was funded at no cost to tax payers. The hotel opened in 2016, following the opening of the exhibition centre in September 2015. It has 216 bedrooms and is an upscale 4-star standard. It acts as the headquarters hotel for conferences and exhibitions taking place at the convention and exhibition centres. Exhibition Centre Liverpool was one of Mayor Anderson's priority projects. Having an on-site 4-star hotel was seen as critical to its success. After initial investigations to find a private sector partner to fund and develop the hotel failed the City Council decided to fund the hotel directly itself alongside its funding of the exhibition centre. The hotel is wholly owned by the City Council and operated under management contract by Branded Hotel Management through a franchise agreement with Accor Hotels.

Crowne Plaza Newcastle

Newcastle City Council borrowed £30m to help fund the development of the 250-bedroom, 4- star Crowne Plaza hotel as part of the first phase of the Stephenson Quarter business district scheme in Newcastle city centre. This is a key regeneration project that the City Council sees as being of vital importance to the future development of Newcastle. The developers, Silverlink Holdings (now renamed as the Coulston Group) had secured commercial backing for other elements of the scheme but were unable to secure a loan for the hotel as the banks were reluctant to fund this type of use. With the hotel being a key element of the scheme, the City Council stepped in to borrow the money to help progress the hotel. It has lent a large slice of

20 the money that it has borrowed to the developer to fund the construction of the hotel. The Council will use the rest of the money to buy plots of land near the hotel and kick-start work on buildings that will be sold on at commercial rates. The hotel opened in September 2015. It is being operated under management contract by the InterContinental Hotels Group (IHG). The hotel has added a major new business conferencing and banqueting facility to the city. Its main conferencing suite seats and caters for around 400 people. The hotel also offers eight adaptable meeting rooms that can accommodate small seminars of 12 people up to large private meetings of 32 and delegate meetings of 100. Combining the large conference suites and meeting rooms, the hotel can provide more space to become an ideal venue for exhibitions.

Hilton Ageas Bowl, Hampshire

Eastleigh Borough Council purchased the completed 175-bedroom, 4-star Hilton hotel at the Ageas Bowl cricket ground near Southampton, home of Hampshire County Cricket Club. In a deal signed in 2012, the Council agreed to pay £27.5m for the completed hotel to enable it to go ahead. Its construction was funded by Omni Capital. The investment has required the Council to take out a loan, which will be repaid with the revenue from the hotel. The Leader of the Borough Council, Cllr Keith House, has consistently said that the surplus income, particularly in the longer-term once the loan has been cleared, will be used to keep Council Tax down.

Lancashire County Cricket Club 4 Star Hotel

The Greater Manchester Combined Authority and Trafford Metropolitan Borough Council stepped in to help bridge the funding gap for a 150-bedroom 4-star Hilton hotel at Lancashire County Cricket Club's Emirates Old Trafford ground after the club failed to secure a bank loan for the project. A meeting of the Combined Authority in February 2015 agreed a loan of £5m towards the £12m hotel from the Greater Manchester Growth and Growing Places Funds, while Trafford Metropolitan Borough Council agreed to a loan of £4m. The Cricket Club turned to these public sector bodies after being turned down for funding by its bank. The Club had also rejected an offer of a loan from the Greater Manchester Pension Fund because the level of fees and proposed interest rate of 9% could not be supported by the hotel scheme. Trafford Council borrowed the £4m from the Public Works Loan Board resulting in an annual interest cost of £106,000. The Cricket Club will pay the Council £221,000 over the loan period, leading to a net profit for the Council of £115,000. The hotel opened in 2017, and has been part of a £60m investment to position the ground as a major events venue.

21 Stockport Exchange

Stockport Council used its prudential borrowing powers to access an £18.5m preferential rate loan to forward fund the construction of a 115-bedroom hotel and 50,000 sq ft office building as the second phase of the Stockport Exchange mixed-use development scheme in Stockport town centre in conjunction with its development partner Muse Developments. The Council bought the 10.4-acre site in January 2011. The first phase of the development, which included highways improvements and a 1,000-space multi-storey car park was completed in 2014. The Council saw the scheme as being crucial to the success of Stockport town centre. It took the decision to use its preferential rates of borrowing to kick start phase 2 and attract further investment at a time when commercial funding has proved difficult to secure. The income generated will cover the cost of the loan. The Council did extensive research and financial modelling to ensure its financing of the hotel and office development will be at no extra cost to the Council Tax payer.

Hampton by Hilton Hotel, Stockton

Stockton Borough Council is borrowing £17m to fund the development of a 125 bed Hampton by Hilton hotel on Stockton Riverside. The site is an important part of the town’s North Shore regeneration scheme, and the hotel is seen as helping expedite its delivery and provides an opportunity for the Council to use it as leverage to bring external finance into the borough. The investment will also generate revenue for the authority, with projections forecasting that the Council will receive net operating profits of £1.2m per year, more than covering the estimated £830,000 per year needed to pay back the borrowing over 35 years. A hotel of this quality was also seen as a benefit in terms of attracting visitors to stay in the area.

Holiday Inn Express, Middlesbrough

Middlesbrough Council provided £6m of senior debt funding at commercial interest rates (under low prudential borrowing rates) for the development of the Holiday Inn Express in the town centre. The total project cost was £12.4m. A traditional lender couldn’t be secured because the debt servicing ratio was considered too risky by mainstream banks. The justifications were that the hotel supported the on-going regeneration of the town centre, particularly as situated in a gateway location, and brought back into use vacant commercial property.

22 Hilton Hotel, Victoria Square, Woking

Woking Council has borrowed £400m of low interest public funds from the Public Works Loans Board to invest in its Victoria Square regeneration scheme. The scheme is being delivered by Bandstand Square Developments, a joint venture between Moyallen, Woking Council and Surrey County Council. Key objectives have been to secure the long-term future of the town, alongside generating an income and devolved business rates. The development includes a 196-bedroom 4-star Hilton hotel in a 21-storey tower, 120,000 sq ft of shops anchored by Marks & Spencer, 392 build to rent flats, public plazas, and relocation of the fire station. The hotel is due to open in 2021.

Hilton Garden Inn, Hanley

A Hilton Garden Inn 3-star hotel is currently under construction by developer Genr8 in the Smithfield area of Hanley, the emerging city centre for Stoke-on-Trent. £7m of public funding has been committed to the scheme, a combination of a £4.55m loan from Stoke-on-Trent City Council, and a £2.95m grant from the Stoke-on-Trent and Staffordshire Local Enterprise Partnership. The 140-room hotel is projected to generate £150,000 a year in business rates and add £4m to the local economy through visitor spending. Other reasons behind the investment were job creation, the additional footfall it would create to the city centre, the confidence it will create to other investors, and the new markets it can help attract.

Travelodge Partnerships with Local Authorities

Travelodge has been working in partnership with local authorities to develop new hotels with funding from low interest government loans from the Treasury through the Public Works Loans Board. The hotels are built on local authority land and leased to Travelodge on a 25-year term, with the councils repaying the debt using the rental income from Travelodge and any other tenants. Travelodges have so far been developed using this mechanism in Eastleigh, Aylesbury, Bicester, Thetford and Redhill. When complete the local authority can choose whether to retain ownership of the hotel or to sell it with Travelodge as the operator.

Lincoln City Council entered into a similar arrangement with Travelodge, selling the site to developers Harrisons for £1.025m and buying the completed hotel development back at a cost of £13m with a lease in place for 25 years to Travelodge. The loan is secured by the value of the asset and the return will not only cover the cost of the loan but make a surplus to contribute to Council services. The 127-bedroom hotel opened at the end of 2018, and features a number of Superooms which are classed as ‘premium economy’ with additional services and features. 40 jobs have been created. The development also contributes to the regeneration of the city centre, sitting in close proximity to the recently opened transport hub, Cornhill Quarter and new East-West relief road.

23 Leicester City Council is also investing in a regeneration scheme in Leicester city centre that includes a 67-bedroom Travelodge hotel. The Council is investing £10m to secure a 125-year lease on a prominent vacant commercial property, Haymarket House, above the Haymarket shopping centre, which will be refurbished and let to Travelodge on an initial 25-year lease. The funding package includes £8.4m from funds set aside to repay the Council’s long-term debt and £1.6m of capital and revenue resources. The scheme will also fund improvements to the Haymarket car park and pay for new lifts to serve the hotel, car park and recently refurbished Haymarket Theatre. The increased revenue from the car park combined with rental payments from the hotel will generate over £200,000 of revenue a year, giving a better return than banks as well as helping boost Leicester’s economy through attracting more visitors and encouraging more investment in the city centre.

Telford & Wrekin Council have funded the development of a 68-bedroom Travelodge as part of Phase 2 of the Southwater development, which is a key element of the Council’s wider plans to create a modern and vibrant town centre. The Council has used its Growth Fund to build the hotel of which it is now landlord, generating extra income to protect frontline services as well as attracting business and leisure visitors and helping develop the evening economy. The Council estimates the new hotel will boost the local economy by £2m from overnight visitor spend.

Denbighshire County Council and its development partner Neptune Developments are progressing a £25m scheme to regenerate Rhyl Seafront, which includes a 73-bedroom Travelodge hotel alongside a Marston’s pub restaurant; the refurbishment of the Pavilion Theatre; the redevelopment of the redundant Sky Tower ride as a static light beacon; the development of an indoor waterpark; new restaurants; and commercial outdoor activity operations. Construction of the Travelodge started in January 2018, and the hotel opened in February 2019. Denbighshire County Council has been instrumental in securing the Travelodge as part of the waterfront regeneration scheme. The Council disposed of the site to Neptune Developments on the condition that a hotel was built. It has then taken a 25-year head lease on the site, which it is sub-letting to Travelodge. At the end of the lease the Council will drop out and the developer and Travelodge will deal direct. This arrangement has allowed the hotel to go ahead at a commercially viable rental level for Travelodge, and will generate an income stream for the Council

24 3. Grants for Hotel Projects

Grants from the European Regional Development Fund (ERDF), UK Government Growing Places Fund and Regional Growth Fund, Welsh Government, Scottish enterprise agencies and individual local authorities have helped to fund a number of hotel schemes across the UK. Heritage Lottery Fund grants have also been secured to support the conversion of a number of historic buildings into hotels. Examples of grant schemes and grant assisted hotel projects are as follows

Welsh Government Micro and Small Business Fund

The Welsh Government’s Micro and Small Business Fund (MSBF) is an investment fund targeting eligible capital investment projects in the tourism sector in Wales. It is supported through the Welsh Government Rural Communities Rural Development Programme 2014-2020, which is funded by the European Agricultural Fund for Rural Development (EFRD) and the Welsh Government. The Fund provides capital support to both upgrade existing and create new high-quality product. Support of between £25,000 and £500,000 will be considered, in order to:

 Create and safeguard jobs;  Realise economic benefit and growth;  Deliver quality, innovation and a sense of place.

Following the award of additional Welsh Government capital funding the scheme will continue until 2021. Funding priorities are:

 High quality, innovative, reputation changing tourism products;  Luxury hotels (existing expansions, upgrades and new hotels);  All weather, all year, attractions;  Flagship attractions;  Innovative activity experiences;  Distinctively Welsh visitor focussed food experiences;  Top end and innovative glamping and camping experiences;  Spa and high-quality leisure facilities;  Innovative cultural or heritage related projects;  Distinctive and high-quality inns, B&B’s, guest accommodation products;  Unusual places to stay.

25 Wales Tourism Investment Fund

The Welsh Government, in partnership with the Development Bank of Wales, launched a new £50m fund, the Wales Tourism Investment Fund (WTIF), in January 2020 as a key part of its 5-year plan to grow the Welsh visitor economy – Welcome to Wales: Priorities for the Visitor Economy 2020-2025. The Fund brings together both commercial and grant funding into one combined package of financial support to provide capital investment for the sector. The key objective of the Fund is to help finance capital investment in tourism projects which have the opportunity to create positive impact on growing the sector and the Welsh economy. Key purposes are to:

 Provide continued access to finance for tourism projects in Wales  Support the transition of the tourism sector from grant reliance to commercial loan serviceability  Allow public funding to be mobilised in an area that can create significant impact on the economy  Support potentially substantial strategic investments as required.

The Fund will provide capital to tourism businesses of between £100,000 and £5,000,000 for qualifying projects. Repayment terms are between 10-15 years, and can include seasonality payment breaks. Funding will be made available from the outset of a project and staged through the development phase. Commercial loan and qualifying grant payments will be blended in order to reduce the overall cost of the finance.

Welsh Government Tourism Investment Support Scheme (TISS)

The Welsh Government previously operated a discretionary capital grant scheme between 2011 and 2018, which was available to both existing and new tourism businesses of all sizes (SMEs and large companies) that wanted to undertake capital investment. Support was available for the purpose of upgrading the quality of existing tourism business premises and increasing capacity where there are clear gaps in the market. The scheme had two elements offering grants of up to £75,000 and £500,000. Grants were non-repayable up to £25k, but could be repayable over £25k, subject to appraisal. The guideline intervention rate was 25% but up to 50% could be considered. A wide range of hotel projects was supported, including a grant of £500k to support the upgrading of the Ruthin Castle Hotel to 4 stars and a £1.1m investment in the St Brides Hotel at Saundersfoot.

26 Highlands & Islands Enterprise

Highlands & Islands Enterprise offers a range of financial assistance to support capital investment projects, including grants, loans and direct equity investment, and works with Scottish Development International to develop investment propositions to take to market. The agency has funded a number of hotel projects including investments in 2015 of £217,500 to support a £1.4million expansion of the Isle of Eriska Hotel near Oban, and a £200,000 investment to support the expansion of the Kylesku Hotel in the Highlands.

Titanic Hotel, Liverpool

Liverpool City Council provided a £5.5m grant from the Regional Growth Fund to enable developers Harcourt to progress the conversion of the North Warehouse at Stanley Dock in north Liverpool into a 150-suite 4-star hotel at a cost of £30m. The project is part of the first phase of a £130m plan to regenerate the entire Stanley Dock site. The regeneration of north Liverpool is a key priority for the city's Mayor. The City Council decided that investment in the hotel was justified as a statement of confidence in the area, a means of finding a new use for a building that had been derelict for many years, and in terms of the new jobs that it has created. The hotel has also benefitted from BPRA (Business Premises Renewal Allowances) tax allowances. It opened in June 2014.

Premier Inn Blackburn

A 60-bedroom Premier Inn budget hotel has been built as part of the £25 million Blackburn Cathedral Quarter development in Blackburn town centre, Lancashire. The scheme also includes an office block, restaurants, shops, a new bus interchange and housing for Cathedral staff. It was funded by the Homes and Communities Agency (£4.75m), European Regional Development Fund (£3.6m), Blackburn with Darwen Council (£3.8m), Blackburn Cathedral (£1.7m), Lancashire LEP's Growing Places Fund (£3.9m) and commercial developer Maple Grove (£7.8m). The hotel has been let to Premier Inn, and opened at the end of 2015. The hotel and restaurant have been bought for £4.8m by Lancashire County Pension Fund from Maple Grove Developers, representing a net yield of 5.8%.

27 Hampton by Hilton Humberside Airport

North Lincolnshire Council has part funded the development of a £7m, 103-bedroom Hampton by Hilton hotel at Humberside Airport through a Regional Growth Fund grant. The hotel has been developed by regional hotel operator Nightel, who operate it under a franchise agreement with Hilton Worldwide. It opened in July 2017. The Council has supported the development of the hotel on the basis of the contribution it will make to the development of the airport, the continuing expansion of the offshore oil, gas and renewable energy sectors and the new jobs that it will create.

Buxton Crescent Hotel

The £46m redevelopment of the former St Ann's Hotel in Buxton's Grade I listed Georgian Crescent into a 79-bedroom, 5 star hotel incorporating the neighbouring natural baths into a state-of-the-art thermal natural mineral water spa, is currently being progressed with funding support from a variety of public sector sources, including the Heritage Lottery Fund (£23.8m), English Heritage (£0.5m), Derbyshire County Council (£2.7m), High Peak Borough Council (£2m) and D2N2 LEP (£2m). The developers, the Trevor Osborne Property Group, are contributing £15m. The project first commenced 10 years ago, but stalled after £5m of funding from the East Midlands Development Agency (EMDA) was withdrawn with the demise of the agency in 2011. The delay caused by losing the EMDA funding meant that because of the financial climate at the time the developers were unable to borrow the amount that they needed from the banks. Given the importance of the project to Buxton and the rest of Derbyshire the County Council stepped in with a loan to help bridge the funding gap. Further funding was also secured from the D2N2 LEP and HLF awarded an additional £11.3 m for the completion of the project in November 2014. Construction restarted with the hotel due to open in 2019. It is projected to generate an additional annual contribution of £4m into Buxton's visitor economy.

The Gresham, Leicester

The Leicester and Leicestershire Local Enterprise Partnership has agreed an investment loan of up to £4m from its Growing Places Fund to support Aimrok Holdings’ £17m redevelopment of Leicester’s former Fenwick building into a 121-bedroom aparthotel, with a bar, restaurant and gym to be known as The Gresham. The development will also include four ground floor and basement commercial units and 12,000 sq ft of flexible business workspace, for which Leicester City Council is investing £450,000 to cover the fit-out costs.

28 Cruise Terminal Hotel, Liverpool

Liverpool City Council is developing a cruise liner terminal as part of its vision to create a world class experience for cruise companies and passengers, and see the delivery of an upscale 200- bedroom hotel as a vital ingredient to the overall offer. The hotel will be funded, developed and managed by the Council with a 25-year operator agreement in place to run the hotel on a franchise basis. The facilities have been supported by a £20m grant from the Local Growth Fund, awarded to the Liverpool City Region LEP and invested through the Liverpool City Region Combined Authority’s Strategic Investment Fund. The site at Princes Jetty where the terminal and hotel will be built has been gifted to the City Council by Peel Land & Property. The project is seen as a core part of the transformation of Liverpool’s waterfront which will represent a step- change in the city’s tourism industry as well as positively impacting its economy.

Travelodge, Gainsborough

West Lindsey District Council are working in partnership with developer Dransfield properties to regenerate Gainsborough town centre, involving a series of initiatives to improve public realm, refurbish shopfronts, up-grade car parking, create a new Independent Quarter in the town, and attract new businesses. As part of this regeneration scheme, which focuses on the Market Street/Market Place/Church Street/North street gateway to the town, the Council has supported the development of the former Sun Inn site to deliver a 56-bedroom Travelodge hotel with a grant of £1.4m. The hotel opened in November 2018.

Belfast Titanic Hotel

The derelict office building in which RMS Titanic was designed has been developed into an 84-bedroom 4-star hotel as a result of a £4.9m grant from the Heritage Lottery Fund. The Titanic Foundation used the grant to restore the B+ listed Harland and Wolff headquarters building on Queen's Island, Belfast, which has been vacant since 1989. The grant was awarded through HLF's Heritage Enterprise programme. It is designed to help when the cost of repairing an historic building is so high that restoration is not commercially viable. Grants of £100k to £5million bridge the financial gap, funding the vital repairs and conservation work needed to convert derelict, vacant buildings into new, usable commercial spaces that can have a positive impact on local economies. The hotel opened in 2017.

29 4. Local Authority Direct Investment in Hotel Projects

Holiday Inn Blackpool

Blackpool Council is currently fully funding the development of a £17m, 144-bedroom, 4-star Holiday Inn hotel on the site of the town’s former Wilko store, as a key part of the £100m Talbot Gateway regeneration project, alongside a new tramway interchange at Blackpool North Station, a new underpass, and new retail and leisure facilities. The Council has entered into a franchise agreement with International Hotel Group (IHG) for the hotel, which will include a bar, restaurant, conference facilities and retail units on the lower ground floor. Construction started in June 2020, with the hotel scheduled to open in April 2022. It will create 50 full-time jobs. The scheme marks Phase Two of the Talbot Gateway project in Blackpool’s Central Business District. The first phase saw the opening of a Sainsbury’s supermarket and the development of offices which now accommodate more than 1,000 public and private sector employees. Future phases will include further offices and residential apartments. Blackpool Council and its development partner Muse Developments have been working in partnership to develop the Central Business District since entering into a Development Agreement in March 2009.

5. Local Authority Loans to Hotel Projects

Hampton by Hilton Blackpool

Blackpool Council provided a £4.5m loan to Create Developments to plug a shortfall in its funding for a £20m 130-bedroom Hampton by Hilton on the site of the former Palm Beach Hotel. The hotel opened in May 2018. Other finance came from Create Construction and a PLC pension fund. Create Developments secured planning permission in September 2020 for a 74-bedroom extension to the hotel, which will open in 2022.

30 6. Local Authority Freehold Purchase of Hotel Sites & Properties

Aloft Liverpool

Liverpool City Council facilitated the conversion of the historic Royal Insurance building in Liverpool city centre into a 116-bedroom Aloft budget boutique hotel by purchasing the freehold of the building for £1.95 million. This unlocked £18million of private sector investment in the project, which has been progressed by Runcorn-based developer Ashall Property. The City Council was keen to bring this landmark building back into use. It had been unoccupied for 20 years and was on the National Buildings at Risk Register. English Heritage also supported the scheme with a grant of £297,500. The hotel opened in November 2014. It is operated by BDL Management under a franchise agreement with Starwood Hotels & Resorts Worldwide.

Coombe Abbey Hotel, Warwickshire

Coventry City Council has bought the leasehold of the Coombe Abbey Hotel, a Grade 1 listed property and estate Binley in Warwickshire. The Council already owned the freehold of the 119-bedroom hotel. The leasehold was owned by Coombe Abbey Park and No Ordinary Hotels. The Council is to set up a company to run the hotel on its behalf.

Croydon Park Hotel, Croydon

Croydon Council has bought the freehold of the Croydon Park Hotel from private equity company Evans Randall for £25m. The 4-star 211-bedroom hotel is to continue to be operated by Kasterlee Ltd.

31 7. Local Authority Property Contributions to Hotel Development

Park Hotel/East Cliff, Preston

Lancashire County Council is bringing forward a mixed-use scheme to include a 4-star hotel in the centre of Preston in association with Lancashire County Pension Fund. The Pension Fund will finance the development following a deal with the County Council to transfer the asset, which was formerly council offices, and part of it previously the Park Hotel. The hotel will have a total of 154 bedrooms, a mix of converted buildings and new build, together with a spa, meeting and conference facilities. A pavilion will be built to the east of the Park Hotel building to be used as a banqueting suite for up to 500 guests. The rationale for the development was to bring a vacant heritage asset back into use securing its long-term viability, alongside the opportunity to expand the city’s hospitality offer and build an ambitious, forward-looking city.

Premier Inn, Rhyl

Premier Inn opened a 70-bedroom hotel and Brewers Fayre restaurant on the site of the former Honey Club nightclub on Rhyl’s promenade in January 2018. Denbighshire County Council played a key role in bringing this hotel forward. It owned the site and sold it directly to Whitbread for the Premier Inn and Brewers Fayre development.

8. Public Sector Pension Funding of Hotel Development

Radisson Red, Liverpool

The Grade II listed North Western Hall next to Lime Street station in Liverpool is to be converted by developer Marcus Worthington into a 202 bedroom up-scale hotel. Originally a hotel it has been used as office space and student accommodation and was sold by John Moore’s University to the developer in 2018. A £20m loan has been secured from the Merseyside Pension Fund under its Catalyst Fund, which is the Local Government Pension Scheme for the Liverpool City Region. Whilst securing a commercial return from the deal, other benefits were identified as stimulating economic growth in the Liverpool City region and regenerating an iconic building in Liverpool. The hotel is due to open at the end of 2022.

32 9. Local Authority Underwriting Hotel Development

Hilton Hotel, The Event Complex Aberdeen (TECA)

The strength of a local authority covenant means that there is a role that Councils can play that doesn’t involve them in any capital outlay or borrowing. The hotel developer can secure forward funding if the hotel is operated by a third party under an income strip lease to the local authority. By committing to the lease, the Council underwrites the development and operational risk, with the right to purchase the development for £1 at the end of the lease. In this scenario cashflows generated by the business should exceed the rent payable. In Aberdeen, the City Council entered into a 35-year income strip lease agreement for TECA which includes the Hilton hotel with Henry Boot Developments who successfully forward funded it. This scheme was seen by the Council as critical to the economy of the region in its ability to attract major conferences and events. Whilst there is an anticipated shortfall between annual income and rent, this is less than the subsidy the Council would have had to pay to operate the conference centre alone.

10. Local Authority Development Companies Funding Hotel Development

Arch, Northumberland

Arch Corporate Holdings, the development company of Northumberland County Council, has developed a new-build 40-bedroom hotel in Blyth as part of its Commissioners Quay mixed-use development on Blyth waterfront. The £4.5m Commissioners Quay Inn opened in August 2016, and is being operated by expanding North East pub company The Inn Collection Group on a 30-year lease. It has created 35 jobs. The investment by Arch is in line with the County Council’s investment programme for Blyth to boost the town’s economy and tourism potential.

Following on from the success of the Commissioners Quay Inn, Arch has subsequently developed a 30-bedroom new-build hotel and 150 seat restaurant and pub on the Coquet Enterprise Park in the Northumberland seaside town of Amble. The Amble Inn, which opened in January 2019, is also being operated by the Inn Collection Group under a 30-year lease. Arch see this hotel as the catalyst for the wider regeneration of the enterprise park, and a key element in its strategy to increase tourism and employment in Amble, and its role as the southern gateway to the Northumberland Coast Area of Outstanding Natural Beauty.

18/09/2020

33 34 ANNEX 3: CIS RESEARCH PAPER: STAYCATIONING IN THE UK

35 36 TYNWALD CHAMBER AND INFORMATION SERVICE

Staycationing in the UK

ISSUED 30/09/2020

Request: The Committee would like an academic-style selective analysis of what motivates people in the UK to take staycations, and how UK staycations can therefore be sold to customers in the UK – not “front-of-house” material from the English Tourist Board. The Committee’s ultimate aim is to identify ways in which Isle of Man holidays can be sold to UK customers as soon as the easing of public health restrictions makes this possible.

CONTENTS

Summary ...... 3

Introduction ...... 3

Terminology ...... 3

Reasons Why Tourists Take a Staycation ...... 3

Short vs Long Breaks ...... 3

Home Nation vs Rest of UK ...... 4

Top Reasons for Scots to Holiday in Scotland ...... 4

Top Reasons for Visitors from the Rest of the UK to Holiday in Scotland ...... 5

Reasons to Take a Staycation in Norfolk ...... 5

People Who are More Likely to Take a Staycation ...... 5

Young People ...... 5

Microgapping ...... 6

Groups Which Include a Member With a Disability ...... 6

Demographic Variation ...... 6

Factors Influencing a Decision to Book a Staycation ...... 6

Digitally Enabled Breaks ...... 6

Special Offers ...... 7

Current Events ...... 7

Brexit ...... 7

[email protected] 37 Staycationing in the UK Page 2

Weather ...... 7

COVID-19 ...... 7

State-Incentivised Breaks ...... 8

Marketing and Communications ...... 8

Sources and Further Reading ...... 8

Sources ...... 8

FURTHER READING

Favourite UK Staycation Destinations: https://www.travelbulletin.co.uk/news-mainmenu/uk-s- favourite-staycations-revealed-in-new-research

Staycations Favoured by Drivers: https://media.rac.co.uk/pressreleases/uk-summer-staycations- favoured-by-drivers-as-further-easing-of-lockdown-restrictions-mooted-3014438

Wales Staycations: https://www.barclayscorporate.com/content/dam/barclayscorporate- com/documents/insights/industry-expertise/tourism-report-wales.pdf

CONTACT

Author: Kieran Skehan

The research team in the Chamber and Information Service can be contacted by email [email protected]

Disclaimer All research information is provided to Members of Tynwald in support of their parliamentary duties. Tynwald or the author(s) shall not be liable for any errors or omissions, or for any loss or damage of any kind arising from its use, and may remove, vary or amend any information at any time without prior notice. Tynwald accepts no responsibility for any references or links to, or [email protected] content of, information maintained by third parties. Date issued 30/09/2020 45 46

ORAL EVIDENCE

47 48

21st September 2018 Evidence of Hon Laurence Skelly MHK, Minister, and Mr Mark Lewin, Chief Executive, Department for Enterprise

49 50

S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

ECONOMIC POLICY REVIEW COMMITTEE

Department for Enterprise

HANSARD

Douglas, Friday, 21st September 2018

PP2018/0131 EPRC-E, No. 1/2017-18

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2018 51 STANDING COMMITTEE, FRIDAY, 21st SEPTEMBER 2018

Members Present:

Chairman: Mr C R Robertshaw MHK Mr T Baker MHK Mr J Moorhouse MHK

Clerk: Mr J D C King

Contents Procedural ...... 3 EVIDENCE OF Hon. L D Skelly, Minister, and Mr M Lewin, Chief Executive Officer, Department for Enterprise ...... 3 The Committee adjourned at 4.38 p.m...... 22

______2 EPRC-E/17-18 52 STANDING COMMITTEE, FRIDAY, 21st SEPTEMBER 2018

Standing Committee of Tynwald on Economic Policy Review

Department for Enterprise

The Committee sat in public at 3.17 p.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MR ROBERTSHAW in the Chair]

Procedural

The Chairman (Mr Robertshaw): I will not go through that formal introduction business; I think everybody knows everybody here and Hansard is content – just that your phones are off.

Mr Lewin: Yes.

EVIDENCE OF Hon. L D Skelly, Minister, and Mr M Lewin, Chief Executive Officer, Department for Enterprise

5 Q1. The Chairman: Thank you very much indeed for your attendance this afternoon, I appreciate it. If I could just, though, start with a few introductory remarks from my own perspective as reasonably recently appointed Chair of this Committee. It is clear that your Department is doing an awful lot of work with regard to the introduction of executive agencies and I think there is so much going on in that area for you that it is beyond 10 us to capture it all in one session, and this supposedly is the annual session. We have therefore discussed this matter and feel that it would be helpful for us if we could see you a few times over the year and try to deal with matters in bite-sized chunks rather than try to run all over the show. So with that, apart from the other issues we want to address this afternoon, we would like to 15 advise you that the area we would like to look at and examine this afternoon with you, is your development of the executive agency for the visitor side of your responsibilities and work. So that is where we will go this afternoon. But I hope that later in the year you will be able to talk to us again when we have had a chance to examine those other areas and talk to businesses involved in those areas, so we can have a really good session in each case. 20 So I think the obvious place to start really has to be your notice today about SPARK. Could you talk us through that please, Minister?

The Minister for Economic Development (Mr Skelly): Yes, gura mie eu, Caairliagh, and Committee members. I appreciate the opportunity to be here and I would also concur that it 25 might be more opportune to actually do this in bite sizes and that way we can obviously go into the detail and the depth in each particular area, which I am sure you would like to do. (The Chairman: Yes.) The agencies will certainly welcome that opportunity because of course we

______3 EPRC-E/17-18 53 STANDING COMMITTEE, FRIDAY, 21st SEPTEMBER 2018

have reached quite a milestone now in them being constituted and established, and now meeting regularly and starting to get into the detail of what their responsibilities are. 30 But in terms of the first topic that you would like to raise, with regard to the Enterprise Development Scheme, we felt that we would issue a press release today because of course you had already raised this as a topic that you wished to discuss, so that we could be open and transparent to you – the Committee – our colleagues and obviously the public. This is actually a particular phase in terms of the full review of all our schemes that we are reviewing, and we 35 have committed of course within the Programme for Government to review all our schemes. We have conducted the Micro-Business Review already, we have made amendments to that, we have increased the amounts to be applied for and that is already completed. The Enterprise Development Scheme was the next area that was under review. It has been under discussion for some time and today is the first phase of that, and that is the 40 announcement that we have determined on a mutual basis between the Department, with Treasury concurrence, and SPARK Impact to mutually terminate that contract.

Q2. The Chairman: So for clarity then, what you have done is come to an agreement to cease the arrangement with SPARK, but that you have the fund itself under review for reappraisal. Is 45 that a reasonable assessment?

The Minister: Yes, it is. It is putting under notice – we have a notice period there – that we have now terminated. I think that comes into effect in January and that allows us then to review with Treasury and the agencies, as to what would actually potentially replace that, so that we 50 can ensure that we provide the appropriate level of support.

Q3. Mr Moorhouse: Was there an actual break in the contract, or have we had to buy ourselves out of it?

55 The Minister: No, this was the contract.

Q4. Mr Moorhouse: So there have been no payments?

Mr Lewin: No, the contract allowed for an exit process, so we have determined that in 60 consultation with SPARK. And as the Minister said, there has been lots of feedback over the three years since the concept came out – two and a half years now, so we are half way through the actual contract. I think it is fair to say there have been some good successes, it has certainly raised the profile and it drew a lot of attention, we have had a lot of interest in supporters from businesses. But from a Department perspective it was not bringing the deals in terms of 65 conclusion that was originally expected. There has been a lot of commentary around that. And from SPARK’s perspective as well they would say that it was more difficult, more challenging than they perhaps first thought. And also from the perspective … you have mentioned the agencies and we are in a different place now, perhaps our needs are different; our economy, our labour market is much tighter; debt and equity funding is more available than 70 it perhaps was three years ago. And if it is not working as expected on both sides then the right thing to do as part of that review is to say, ‘Let's take a breath; let's stop’. We are in an exit process, we have bought some time to then look at and work with people as to what might follow that. So there are a range of options that could follow from the scheme going forward. But the 75 scheme is still there and will be until and unless obviously Tynwald repeals it, or we do something else.

Q5. Mr Baker: Thank you, Mark.

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So, for clarity, the decision that has been made is purely around the responsibilities for 80 managing the scheme, and effectively you have agreed that with effect from, I think it is 18th January, SPARK will no longer do that. What is your anticipation in terms of beyond 18th January? Is it that it is all still for determination, or have you got a clear plan beyond that date?

85 Mr Lewin: You are right. When the scheme came forward from Tynwald, there was then an open procurement process and SPARK was the successful party who won that on an exclusive basis as a scheme manager, and it is that contract that has been determined. So it is business as usual between now and 18th January. Beyond 18th January we have a range of options, the Department has a range of powers, and it has the powers to provide debt, provide equity 90 support, again with Treasury concurrence. It has the powers to provide grants. There are a range of options we could use going forward, whether it is in the scheme or whether it is outside that. For example, over the last two years, in parallel to the Enterprise Development Scheme, the Department supported around 700 businesses through the other schemes that it has. This is one of 11. We have offered over £10 million of assistance in different 95 forms. So there are already a variety of things we may do without the scheme, or without another scheme manager. One of the ideas that certainly we would like to pursue and seek feedback on is the idea of a non-exclusive arrangement. So if other people want to bring deals then we have an ability to do that. Again, it could be SPARK that brings a deal to the table or there are a number of other local 100 bodies that in the past have expressed interest in being part of the deal structures. So if it is right for Government to take participation in terms of venture capital as part of that, then we have the power to do that. So that is an option to look at as well.

The Minister: Yes, making this decision I think was the first step and then the next stage here 105 – because obviously we have got this 120 days – is to determine as to what schemes or range of schemes are available to us to actually fulfil what we believe is the right support for the economy. I think one of the important points here is that when we started and introduced this particular scheme, the economy was in a very different place. There were two main issues there: 110 (1) there was a real strangulation with regard to finance for business that we were hearing very clearly they were struggling to gain access to funds; and (2) obviously employment was a lot higher than it is today. So what has happened is in that interim period now unemployment has obviously gone down and we have actually filled a lot of roles. We are in a different place in terms of the economy. We have seen, as Mark has already indicated, the introduction of other 115 private equity funds here on the Isle of Man that are actually filling that particular gap. So one of the options there, as Mark has also highlighted, is the possibility of making it non-exclusive. But what we want to do is to have discussions with Treasury, with our agencies, to determine what would be the right level of support going forward.

120 Q6. The Chairman: You have both mentioned this increased availability of debt and equity funding. Could you evidence that a little bit, Mark, in terms of where that is coming from, without being specific about a particular organisation?

Mr Lewin: There are a number of organisations now that were not available in 2015 who 125 specifically sit in this place to source investment, to look at co-investment, to look at equity and other loan participation. I think it is also fair to say from a bank perspective, many of the banks have made a number of statements over the last couple of years about re-entering certain markets that perhaps three years ago they were not in. Certainly we see that, and we know there is still a challenging climate in banking in certain areas but actually there are also a lot of

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130 areas where it is not as challenging as it was back in 2005 when it was first envisaged and first created. I should also emphasise obviously what we are talking about, and as we go through this dialogue process, ultimately if there is a fundamental change then it will need to come back to Tynwald anyway. So that is very much part of our thinking. 135 Q7. The Chairman: I asked that question particularly because, as a Committee, we have not yet seen that availability, so perhaps at a future date we can come back to you in an email note advising us further as to where that sort of financial support is coming from. And I do hope as well that you would be kind enough to bear in mind the FISP Select Committee Report on 140 various funding schemes.

Q8. Mr Moorhouse: Yes, one of my issues is that Minister Skelly in the press statement makes reference to the strength of the economy. If you actually look at the raw data, potentially now we are in a no better position – with Brexit overhanging it is quite a risky position we are in. 145 If you go back to October 2013, three years before this scheme started, unemployment was 1,065. When the scheme went before Tynwald in October 2015 it was 765, so unemployment had dropped by 300 – a massive drop. Things were looking much more positive. Unemployment has continued to drop but it is still 350 potentially, by next month. So the trend is going down but not dramatically down, and in itself that could be an issue. 150 But also with inflation: in terms of August 2012, inflation RPI was 2.1%. It had gone up to 2.6% in August 2015 just before it went to Tynwald, but not an issue in terms of 2.1% or 2.6% – quite a healthy issue. The RPI in August 2018 is 4.9%, which is a lot more concerning. Adding in too the Brexit situation and those basic background issues, I cannot see how the economy can be classified as being much stronger than it was three years ago. 155 The Minister: Well, thanks for the question and there are a number of issues in there. Just looking at the unemployment issue as it stands right now the trend, as you rightly say, is going down and I would suggest that it has dramatically gone down, particularly over these last couple of years. We are now at a 15-year low. Whilst that is good news in one respect we are 160 also conscious that we have a vast number of jobs that are unfilled, which is why within the Programme for Government we have our Department's number one aim, and that is to grow our economically active. This is why we have obviously made changes and reformed the work permit system to make it easier to fill those roles. What has happened is whilst the unemployment is going down jobs have actually gone up as well. So we were doing some measurement in terms 165 of – not in these figures that were just published – but just by comparison to, when we started ISLEXPO, 1,400 jobs more are in the economy than there were when we launched ISLEEXPO. So the unemployment issue has been going down and it continues to go down and that was an issue when we launched this particular fund. And as I say that, in connection with the fact that funding was a problem for business as well, that was what we were hearing very 170 consistently across the whole host of other different sectors. What is encouraging though is, with the figures that have come out this week, the personal income figure. That personal income figure has demonstrated a 4.4% increase in real terms. And that should be welcomed, I would have thought, by our working population here on the Isle of Man. I think with regard to the inflation issue, Mark, you wanted to add to that. 175 Mr Lewin: Just before I come back to that though, in terms of economic health if we look at any economy there is going to be a level of unemployment and even within that number on a week-by-week basis, we see a real number coming on and coming off. So in terms of long-term unemployed it is a fraction of what it was and across Government we work to try and help those 180 people find opportunities. As the Minister said, there are more opportunities than ever before in our economy.

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Building on the personal income – but if we look at the national income more generally – to see that positive growth, and growth across the majority of our sectors for us that is a real sign of a good strong economy. It is also about confidence though. We have seen the Cabinet Office’s 185 second business confidence survey and on average all sectors saying they are more optimistic in terms of growth over the next six months. So there are lots of indicators from our perspective out there. The ultimate measures of course are what is happening in terms of tax receipts, so to see the announcements from the Treasury Minister that tax receipts, driven significantly by national income and ITIP, are ahead of 190 expectations. If we look at the Programme for Government metrics around the economically active population and if we look at the number of businesses registered to pay ITIP, all are up year-on-year on the measures. So if we go back to when this was envisaged in 2015 and launched in 2016 that was not the case.

195 The Minister: But if I may just add one extra point here. It is not just about investing in business. I come back to that growing the economically active – filling those jobs that are vacant. If there are a thousand jobs out there, there is nearly £10 million that is a benefit to the exchequer that we are potentially losing. So is it investing in business or is it investing in jobs? We have had a relocation scheme in play 200 now for I think 18 months and seen over 250 jobs actually filled as a result of that – it is a self- funding scheme – and that has demonstrated to us that there are other ways to actually benefit the economy than just simple, straightforward investments. That is why when we stop and make this decision that is announced today, we want to review what are the mechanisms, what are the levers and where is the support that we need to provide as a Department and a Government 205 to grow our economy.

Q9. Mr Baker: Listening to the answers from both of you, it is very clear to me that the change in manager is not the end game on this. You clearly do envisage something different going forward. You talk in the press release about, ‘Any proposed changes in the Enterprise 210 Development Scheme will be presented to and require Tynwald approval’. I would interpret from your comments that that is a likely thing. When do you envisage that to take place?

The Minister: I would hope that we would be in a position well before the final date that the 215 contract is concluded. So before the end of the year I would hope that we would be able to conclude that.

Q10. Mr Baker: Okay, which means that given the way timescales work towards Tynwald you are probably fairly close to working out what you are intending to do. 220 The Minister: Yes, we have not set a date but that is I would say our aim and intention.

Q11. The Chairman: Okay, we have much to cover so we had better move on – thank you for that. 225 Before we move on to the Executive Tourism Agency I just wanted to touch on your current position with regard to minimum wage, living wage and your views – minimum wage, living wage and zero-hours contracts. Where does your Department stand, Minister, on those items?

The Minister: Thank you. 230 Yes, I think inevitably we have obviously had this raised several times on the floor. Minimum wage and living wage are two different things (The Chairman: Yes.) and I think we probably know that, but it always merges into the same debate whether we like it or not. The Government made a commitment first and foremost with regard to the living wage in terms of

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the voluntary statement that was made some time ago. As a Department, our responsibility of 235 course, with Treasury, has been control of really bringing the recommendation forward for the minimum wage. What we have seen over the last three to four years are significant increases which would probably result in over 20% increase in the minimum wage from four years ago. That is to be welcomed, I would expect, but we are looking at trying to get that closer to a living wage. 240 But there is a very fine balance here about pushing the living wage and the minimum wage together. Why? Because particularly our domestic economy, which we are going to get into here in a second, is still fragile in certain sectors and quite frankly you could push a living wage but you could push businesses out. You could create unemployment as a result. And you have just alluded there to the zero-hours issue. This is something I know, with other colleagues, is an issue 245 that we have not addressed at this particular stage and I would welcome an opportunity and a debate around this. But I think some data is needed, first and foremost, in this particular area. One of the things that we have done in our Department with the restructuring is we have obviously created this agency model, and the idea of the Department being slimmed down now is to focus in on strategy and policy. We have taken on our own economist to actually help us 250 with that work in creating the data that is necessary to make well-informed decisions, and zero- hours would be an area I would very much welcome a body of work to come forward on. So our aim is to increase the minimum wage whilst business has been able to bear it. We have listened to the Minimum Wage Committee, who do a valuable job in terms of collating a lot of information before they come forward with their recommendation. Whilst we accepted their 255 headline figure this time we did actually remove of course the age bands. I know that was not accepted by all quarters but we felt it was appropriate in terms of recognising our young people, particularly with regard to the Employment Act now being in place.

Q12. The Chairman: Thanks. I welcome your comments about zero hours and perhaps a 260 higher degree of focus. I fear – and I am speaking for myself here – I am well aware of anecdotal information and commentary in various areas but we have not captured it, I do not think, yet (The Minister: No.) as whether executive or parliamentary process. We are trying to decide whether this Committee should look at it or whether in fact we should seek Tynwald to set up a select committee to look at the whole matter and report back with some significant data as to 265 where we stand. The concerns are obvious, the ones that no doubt you share, and that is as we migrate towards a single-tier pension we have not yet got workplace pensions and the cost of that in certain sensitive areas. It is an area of real concern both for business in certain areas and for employees in certain areas. So we are agreed that we need to get our heads around that, then? 270 The Minister: Yes, and I would absolutely welcome it and I know there are other colleagues, including the Chief Minister, who has raised it with us as a point that should be investigated.

Q13. The Chairman: Have you got a preferred route as to how we get to the bottom of this? 275 The Minister: I think that should be open for discussion and at this particular stage I would just say there should now be an agenda item for discussion both for Government and for Tynwald.

280 Mr Lewin: We should just add that certainly we talked about finding a balance and having a debate. We hear the comments that you said there in terms of the pensions and also employer rights and employee rights, but we also do have some businesses that have made representation around the flexibility it can provide. We are also aware of some of the individuals … and part of that drive-down in unemployment has allowed some people who choose to, to 285 come back to the workplace and have some flexibility on their own. So there are clearly some

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areas where this is a choice between an employee and an employer but it also, as you say, has social implications. So there are comments on both sides of the debate that we have heard.

Q14. The Chairman: There is; but you would agree there is just not enough clear data, is 290 there, and clear understanding? That is the anxiety from my perspective.

Mr Lewin: I think we also recognise as a potential trend, this is going to get bigger in terms of a gig economy and multiple participation. It is something we do need to have that debate on and gather that evidence. 295 Q15. The Chairman: Yes, because you would agree surely that in the long run as responsible politicians and officers of Government that we cannot place individuals in our society in a position in later life where they just have not got adequate pension provision? It is a biggie, really, that we have got to look at. 300 The Minister: It is, yes. There is a lot of anecdotal out there and equally you do hear that it does work for other parties, but I think data is the key in that particular case. But a drive from a political sense I think would be very much welcomed.

305 Q16. The Chairman: Good, fine. So if we can then move on to the main meat of our meeting this afternoon, our session, and that is the Tourism Executive Agency and matters appertaining to tourism. I would like to preface my remarks with the point that I welcome the introduction of the executive agencies and wish your Department well in their delivery. But being somewhat aged, 310 and having been around the block so many times and seen so many well-intentioned initiatives in this area over so many years that have time, after time, after time fallen down; not through a wish that they should not succeed but because they were perhaps not formed correctly or there were misunderstandings, whatever. I do not want to see this go the same way. We as a Committee want this to work, but I want to examine with you the words ‘Executive 315 Agency’. Looking at the detail that is available in terms of the responsibilities of the executive agency there are a lot of good words in there that I have seen the likes of time and time again, but it is going to be delivering an interpretation. I wonder whether you could outline to us why you think this is going to be different and whether or not the agency is going to be, shall we say, given the legs, given the welly to deliver? It is not that long ago – I do not even know the name 320 of the last set-up that existed between the accommodation, or the tourism sector and the Department – then the DED. That did not last very long and fell down because the people who entered into it in good faith had to walk away because it was – and perhaps this is subjective and unfair – but it ended up more of a talking shop than an executive agency. So with that, can you persuade me, can you persuade the Committee that this is different? 325 The Minister: Persuade you? Now, there is a big ask! I am not as long in the tooth, but you just said two words there that I stated to each of these executive agencies at the first induction: ‘talk’ and ‘shop’. I raised it and Mark knows it, and Carl knows it and everyone, political Members, know it. I said, ‘These are not to be talking shops’. 330 But first and foremost I might want to go back to why we believe that the executive agency model was appropriate. We did a considerable amount of research. We had an external body of work where we looked into a lot of other jurisdictions where the executive agency model was already operating – some of them extremely mature, some very new. What we tried to do was to try and take the best of that to try and find a way of constituting these to have the 335 appropriate level of responsibility. And what we did there is we settled on creating an executive agency that would have three principal responsibilities – the ‘Three Ps’ as we call it. The first thing would be which agencies we wanted to focus in on.

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The economy of the Isle of Man is changing dramatically and that was highlighted of course in the most recent report, the economic report that demonstrated that e-gaming is now our 340 largest sector on the Island. It has changed in a rapid fashion. So what we wanted to do was to accept four different sectors and focus in on those four sectors. There are 24 sectors on this Island and we obviously had to have finance, because they are still the backbone of our economy; digital, the fastest growing and now largest part of our economy; then we also had business which covered all the other areas, which were construction, retail and manufacturing, 345 etc. Then we separated – and this is really important – we put ‘Visit’ i.e. ‘Tourism’ because we wanted to recognise their value to the economy. If we were to simply look at GDP for tourism we know that is a very low figure, but it really helps the local economy massively. Supply chain: it is imported revenue and the number of people who are employed in that industry and also very importantly it also affects … If we have a 350 good tourism industry, we have a good quality of life. So we identified tourism had to be separated and it had to have its own identity because we felt it was that important. To go back to the ‘talking shop’ issue: I made that very clear to the Chairs and I made that very clear to the boards that these were not to be talking shops. They had all sat on boards and various different organisations with Government in the past. What we wanted to do was to 355 ensure that they set up key performance indicators, dashboards and action points. Now, some of them have already met four times and they are already getting their teeth stuck into major issues. So as I say the three responsibilities I mentioned there, one of them is the promotion of their industry, their sector; the other is product development, so they would be responsible for the product development in their sector; and last, but not least, it would be policy input, so that 360 would come into the centre, i.e. to the Department. As I said earlier, the Department's now core function responsibility is policy and strategy. So that is why we have constituted them in this way where they have their own budgets, they have got their own resource to actually bring forward what will be policies, products and promotion in their sectors, that therefore fits with an overarching economic strategy for the 365 Island. As I say, the feedback so far has been very strong and very positive. We have over 50 different individuals, mostly donating their time to contribute to these executive agencies. We believe we have a model that is fit for purpose and fit for our economy. The other point I come back to is because the economy is so dynamic – more than it has ever been – we have got to be agile, we have got to be nimble and we have got to be able to react 370 very quickly.

The Chairman: Thank you very much –

Mr Lewin: If I could just add to that, in terms of what makes it different? That is a critical 375 part: this is different; we have not done it before. Take Visit: whilst I attend I have no voting rights as such, they will operate as a board. They will consider issues and they will make decisions. And on those decisions that board will ultimately hold the executive to account: that includes me and that includes Carl, it includes Angela and the team; and we are the ones who will support the delivery of those actions. So we are spending a lot of time at the moment, led by 380 Ranald, looking at making sure we have got our foundations in place around our metrics. What does this area look like today? What are the key metrics we want sight of? Are we capturing the right information? And then, how do we grow that? All the agencies have a relatively similar purpose to support long-term, sustainable economic growth in their area. But what you already then see is when you start talking about the metrics 385 and what is happening, you then lead into these ‘Three Ps’, as the Minister says. So that Visit Agency will have a real discussion and will decide on how to spend our promotion budget in promoting the activities: what markets? What channels? What are our key messages? When are we doing it and in what way? And what are we expecting to get from it?

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That agency will also then be having conversations and considering whether to look at: ‘But is 390 our product offering sufficient?’ Do we have gaps? And already Ranald and the team are identifying a number of product areas they want to look at, that perhaps is not as clear as it should be and can be promoted in a different way. And then, as the Minister said, behind that, if we have not got our products in place, what are the key policies we need to change and help us do some empirical evidence and some gathering to get a consensus about this is what we need 395 to do? So, if we give examples: on the policy side we are looking at non-serviced accommodation, holiday villages. If we recognise there is a gap in the market, how do we balance that between planning? How do we balance it between financial assistance to fill that gap? In terms of product development: a number of products around packages, package holidays, different types of 400 visitors that are not perhaps being appealed to at the moment. Then in each of those segments whether it be groups, whether it be heritage, whether it be motor sports: how do we grow what we have got today? How do we expand the seasons? It is not just about visitors, it is not just about spend, it is not just about the timing – it is the whole breadth of that. So if we go back, from my reading of what has happened in the past there have been some 405 good intentions and a lot of people have given good time, and I really do appreciate the amount of time people are giving to it already. But they are going to make some decisions, they are going to task and we are going to be held accountable coming back. So if, in the room, eight of them want to spend £25,000 on a TV campaign in a particular area, they have the power to do that and we will make sure that happens. 410 Q17. The Chairman: So for that group, as the Minister has said, generally, almost entirely unpaid voluntary support, it is very necessary to have behind that a capacity to feed into that group, quality data. And forgive me for being quite sharp here, and it is that I am absolutely convinced the quality of data measurement that has gone on in this sector has been thoroughly 415 and completely inadequate, insofar as we get very clumsy headline issues about how many arrivals were, when in fact we all know that yield management issues related to investment and quality of staff circumstances and training are all massively important. But they are not measured or available. I just want you to comment on that. 420 The Minister: Thank you. One of the first items that came up I think in the first meeting was data, which is great really because this is how business makes decisions, on well-informed data. And again when you have got a collective, you have got a board, they need that accurate data; and I very much highlight 425 that point. I said to them right from the get-go, ‘How do you want to measure success for your industry’? You can measure it in many different ways and passenger numbers is one thing. You could actually do it by visitor spend; you could actually do it as you just highlighted, by yield. You could actually do it in occupancy; you can do it in confidence, even. There are many different ways to actually measure success. 430 I said, ‘That is one of the things you need to think about on your dashboard’, and what we need to do is to look at how we reach that particular point. But we were very keen and that is what I said earlier with regard to having the appropriate resource available, and why we have taken our own economist on staff, to help us gather that particular data. But in the past, it has been a passenger survey which of course is a sampling, and I think that 435 is the point you were making, really.

Q18. Mr Baker: Can I just ask? I mean, I welcome the principles behind the agencies and I think, from my point of view, it is an interesting approach. But as the Chairman said, those people around the board table are primarily volunteers I think, so the secret to that is having a 440 good executive team behind that. Obviously Mark has referenced himself and Carl there, but in

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the tourism area how strong is the team? Have we got the strength and depth that we need? Obviously Angela's name is one that is quite prominent, but what is there behind her in that area?

445 Mr Lewin: I think it is a small team. Angela is very good, she has been in the business and working both in industry and then in Government for a long time, so I really respect that. There is a small team of two on product development and there is a vacancy in there as well; and there is a small team of two on events. Again, the agency at one of its first meetings talked about whether we should grow our events team, maybe another person. The events team we support 450 directly, and indirectly we were involved with over 31 events this year – nearly 10,000 visitors. So, could we do more? We were involved in bowls, darts, sports, all sorts of motor sports as well, and that is aside from the TT and the Festival. But could we do more? Are there opportunities to create more events? The agency is already talking about, ‘What kind of events can we create that would actually bring people here that would be attractive?’ 455 So it is a relatively small team, and we have a small team of three on quality and assurance that look after our grading and accommodation and the registration process. It is probably a fraction … and one of the constant things we get fed back is what other jurisdictions perhaps spend in this space, both in terms of people and in terms of money. But we talked about pensions before and we recognise as a public service some of the challenges we face now and in 460 the future … And if we have a case for more funding or for more people we have to make that with evidence, we have to make it with commitment. And that is very much again one of the jobs of the agency. We have a Marketing Initiatives Fund which is available for promotional activities and things that will create economic value as one-offs. So all the agencies, including the Visit Agency have access to that and if they can develop a 465 case … So they are working on a number of ideas at the moment, they will go and try something and then come back, prove the case and then we will have a conversation about how do we scale that. So as I say, I think it is a really good team, I am really proud of what they do. But it is a challenge. We all recognise this is an area that, as you said before, long in the tooth in terms of a 470 number of attempts to try and turn it around. It has been an area that has been in decline over many decades, over the last 10 years or so that trough has stabilised and we have seen some growth again, which is great. But we do have to work hard at it and we can never be complacent. We have got to go out and fight and win that business to come to our Island.

475 The Minister: It does actually bring us back to the original topic there, with regard to the Enterprise Development Scheme, because now we are going to engage here with the agency boards to say what resource do they need? So Mark has just referenced the Marketing Initiative Fund which is decreasing, and we need to look to see do we have the appropriate support, and that would be one of the questions: ‘What do you need in your sector in terms of support?’ So it 480 comes all the way around to that same point.

Q19. The Chairman: Thank you very much for that. Is there any possibility that you can tighten up further in coming months the terms of reference for the agency, so there is absolute clarity rather than the slightly more wishful 485 approach that is described in the document that I have seen? It means well, it speaks well, it says the right things but it is the delivery of that that needs – I would put it to you – it could do with tightening up. Would you take that point on board?

Mr Lewin: I think it is probably one for Ranald. The agency knows. One of the first meetings 490 we had was around governance and we went through the terms of reference. It is in their gift to recommend change. Ultimately it is the Department, the Minister here that signed that off. But if we think it needs tightening or changing, it is in their gift.

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I think a lot of the conversation now is about, as you say: let's execute, let's have some decisions, let’s have some work. We have got volunteers going off on various different things – 495 activities, events, some of our products. If we find that the terms of reference is not clear enough and is not allowing something to happen that we want to happen, then we will look at it. But the terms of reference, it is fair to say, were also prepared including input from many stakeholders: we did a number of workshops, we involved the likes of the Chamber of Commerce, we did some workshops in the Barrool Suite and we went through multiple 500 iterations. So they were not just plucked from the air by the Department, they went through a process of iteration. But it would not be genuine if we did not let the agencies and the boards themselves have a look at those terms of reference as part of their world.

The Minister: It is fair to say we actually have a reasonable amount of flexibility in there to 505 allow each of the agencies to find their balance. It goes back to the words ‘talking shop’ again because one of the first things is who goes on that board. So there was a process there that needed to be fair, open and transparent as to who actually would be selected to represent different sectors within that industry. Each agency is quite different in that respect and we have had some major roomfuls of 510 people representing industries, which is very difficult of course to manage and focus. So what we wanted to do is to give them some flexibility, let them find their balance and then also look at opportunities beyond there because you could easily, getting into the product development stage, create subgroups to say, ‘Go out and research this particular product’. But I would come back to resource again because that is the other thing we are not sure 515 about. We have slimmed down the Department in readiness for this and we have become cost neutral, because that was one of our aims when we entered on to this particular journey – to ensure that we became cost neutral. If we do need to gain extra resource, perhaps looking at other funding models will be where we go.

520 Q20. The Chairman: Thank you. Perhaps we can close that section of our discussion on that upbeat comment. I would like now to move on to the last three, and the major part of the afternoon really, which is looking at the current Destination Management Plan and behind that at the two excellent reports that you commissioned, Minister, the Hotel Solutions for Serviced 525 Accommodation and the Hotel Solutions for Non-Serviced Accommodation. Excellent reports. But if we could start with quite a short section on the Destination Management Plan which I printed off. It was rather peculiar really, because as I printed it off my colour printer ran out and I ended up with something I could read, but with a lot of pink. And I smiled to myself at that stage because having read the document it was again well-intentioned, but having correlated it 530 with the two Hotel Solutions reports it looked a little bit too – as my printer decided – it was a little bit pink and fluffy. It means well and it is bulked up quite a lot, and there is some good stuff in there. But a simple question: where do you see the Destination Management Plan going in the future?

535 The Minister: Well, with the agency to actually review and update it. I would regard, as stated in our first induction meeting, that this is a foundation. It is several years old already and this is probably an industry which is seeing quite dramatic change – you have only got to look at the level of investment that is actually happening and the confidence in this industry, which is very reassuring after decades of decline. We believe both what has been accomplished of recent 540 and in the pipeline, there is over £50 million worth of investment coming into this industry which demonstrates a high level of confidence. So that is encouraging, but what we need is a real firm strategy here. It is fair to say that the Destination Management Plan was intended to be reviewed but it was set here by the Department prior to the executive agencies being set up. But now the executive agency is set up

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545 – it is fully fledged and it is fully constituted – one of their primary focuses will be to review this and consider this and see if it is fit for purpose, and whether it needs to be changed or updated.

Mr Lewin: Yes, I think it was a guide. We should not lose sight that it was built with a lot of input. So we go back to the Visitor Economy Steering Group which was the thing we were 550 looking for three or four years ago, that the Chairman was referring to. A number of people gave up time and input into it. So at the time, 2016, a number of people were happy with that. We had five clear objectives and the Department, in the absence of anything else, has been working through those. Number one was about ‘Strengthening collaboration and partnership working’ – and the 555 agency is a direct result of that. ‘Promoting the Isle of Man’s image and distinctive strengths’: we have seen the Extraordinary Story Campaign, the new three-year journey that can help bind some of our key messages and take us out to market – a great amount of views, and take-up and participation around that. ‘Creating an exceptional visitor experience’: the Minister has just mentioned there that we 560 are seeing a significant amount of investment at the moment. We think that will, in the long term, lead to more job growth as well and an improved product offering. But clearly there are some challenges in doing that, that we need to manage through carefully. The fourth objective was ‘Championing new investment and product development’, and again there have been a number of things we have been looking at around those, around 565 product development. Cruise – and I know we will probably talk about that as well, as part of that story. And ‘Market Intelligence’: we have just talked about metrics but we have been doing some work to try and improve it. For example, on the gap in metrics the Department has powers under the likes of the Tourist Act to insist on statistics from businesses but we have not used it, 570 we have been reluctant to use that as a big stick. But those are the kinds of things now that the agency can pick up and discuss and figure out what is right. When we look at then – you say about ‘pink and fluffy’ – I think the general view from those who got around the table as an agency is that we want to be a bit more precise about what the next six months is going to look like: tied to some metrics, tied to some promotion targets, tied 575 to some product development and tied to some policies we want to really get under the covers of and have real input into. So I would suspect – and I am not speaking for Ranald, who I think you have already met and had a conversation with as well. Yes? And he is really interested in having your input. I suspect that we are going to have a lot more discussions around the DMP and what the next 12 months 580 might look like, and indeed the next two years or three years on the back of that. But it came from a particular moment in time, it had a lot of input at the time, and it has acted as a guide whilst the Department has been going along until we get to the next stage in that journey.

Q21. The Chairman: Thanks. 585 We will not be discussing cruise particularly this afternoon, because the Environment and Infrastructure Policy Review Committee, of which I am a member, has restructured its membership in order that it can look at that aspect of it – and we have got enough to do anyway in other areas. I am encouraged by ... We ask these questions because we want you to succeed. We want us 590 all to succeed. But interestingly, this issue about data collection: I mean in the excellent report that you commissioned – the Hotel Futures Report – right at the get-go it said in 2014 that the occupancy levels being performed both in average achieved room rate and yield were all on the Isle of Man significantly lower than the UK elements. On that, on yield, hangs the capacity for investment, the ability to keep staff, the quality of the service – everything.

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595 I would put it to you that we cannot function; we cannot construct a tourism policy of significance unless we capture that sort of information and understand it pretty intimately. Would you agree with that principle?

The Minister: Yes, absolutely. That is all about gaining the appropriate data, I think. And it 600 gets back to the importance of tourism. I think if there is one thing the Destination Management Plan did do, it brought tourism to the fore in understanding why we need to get behind this as a Government, not just as a Department, because of what it means to us as an Island and a community. One of the things we are looking at here says: ‘The agency brings forward an update here’, and I am very keen to populate that further politically so that the Island ... 605 We represent different parts of the Island, so what does it mean to each part of our Island in terms of tourism? We have got this wonderful UNESCO accolade here and we must capitalise on that. For me, all that is doing is actually going back to where we started with tourism over 100 years ago. What the Victorians did, they came here for the beauty of our Island and to be somewhere different, and they gave us some fantastic infrastructure in terms of the railways 610 which are still there, the Glens that are obviously there and we have got great heritage sites. So we know we have got a very good product and a very good offer. What we need to do is understand – and this is why it comes all the way back to data – who do we need to market to and how do we promote it as a destination more than anything else? So we are very keen, as I say, and it is a priority work for the agency to look at the Destination Management Plan and 615 bring that back.

Q22. Mr Moorhouse: Can I just go back, please, quickly, to the Destination Management Plan, in terms of that in the foreword two things come to mind when I look at it? One of them is you have got three aims/objectives, and one of them is to raise the amount of jobs being 620 created, which just seems a strange one given the situation we are in and we have been moving towards. The other is the overlooking of this Biosphere status we have got, and you mentioned it there which was positive in terms of that report, possibly in terms of going forward as an Island. Those were two things that were important that did not gel as they should have done, in my opinion. 625 The Minister: Yes, it is interesting, as you say: ‘Encouraging stakeholders to work together’ – that is obviously the agency, that fits very well in terms of that objective. And that complements ‘Increasing job opportunities’ – that is obviously important too. We have obviously had some new stock come online just very recently and that has been a 630 mixture of local and imported labour, and that gets back to the point of the number one thing that we are trying to do as a Department, which is grow our economically active, and that can be at that particular level too. We have helped the industry by relaxing the work permit before we did the reform, you may recall, from a seasonal perspective, which was very welcome. And that is why we are trying to react to what the industry really needs effectively. And last but not least 635 ‘Developing facilities, infrastructure, services and events’ – that is something that is ongoing, and again it lands right at the agency's doorstep because that is about product development. What do they believe is the right product and what do they think we need to develop and invest in, particularly as a Government?

640 Q23. Mr Baker: Can I just pick up … ? You made what I thought was a very clear statement a couple of moments ago, Minister, where you referred to the Biosphere and you referred to heritage as being the two things that really ... So the beauty of the natural landscape and the heritage aspects have been the two things that underpin the tourism offering apart from motorsports, which I think is separate – TT, etc. 645 Is the proposition that we communicate both within the Island and more widely, as clear as I think you just spoke about there? I think those two are the key building blocks but, for example,

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if heritage is a key building block then we need to be investing in it, not for any other purpose than to make sure we promote and support the tourism sector. We need to be joined up in that sort of thinking, but it has to start from that overall vision of what we are trying to be. 650 The Minister: Yes, absolutely. The UNESCO point is really an endorsement of what we already know, effectively. But it is very important with regard to UNESCO because, yes, it is about our environment, it is about education and it is about sustainability but it is also about development too. So it is the balance of those principles that actually sit alongside. 655 Tourism, therefore, is part of that development aspect really. So you have to look at the balance effectively and that is the fine tuning, and that is the difficulty when proposals come forward.

Q24. The Chairman: Going back to the Hotel Solutions reports in the executive summary on 660 page four, top paragraph, it talks about the importance of new hotel investment but it also talks about the impact on existing stock some of which it says should exit, some of it which should be subject to effectively increased support. One of the key recommendations is available on page 5 of the executive summary and it says:

An easy to access Hotel Investment Fund to accelerate investment in existing hotels and the development of new hotels …

I am having difficulty, in my experience, to understand the correlation between the 665 experience that existing hoteliers have with that aspiration as it stands at the moment insofar as – and again it is an aged experience – and that is, I found the construct around the proposals for financial support, for capital investment, just to be so bureaucratic we never went anywhere near them, and that was from a company that was competent and capable. Could I suggest to you that there is work to do to have a look at implementing that 670 recommendation that your report proposes? That will help to ensure the sustainability of the necessary level of bed spaces that we need to maintain the sort of industry that can both meet its main summer needs, but also be viable in the shoulder months as well. And I am again coming back to your point, Minister, about the reference back to the reviewing of the Enterprise Development Fund and how that locks in to agency work. 675 But all of this will be linked to much more sophisticated data and a belief that there will be a need to support, in a more embracing way, those operators now struggling on the periphery – where their year levels are thoroughly inadequate for too much of the year – that do not have the capacity to deliver within the existing schemes.

680 The Minister: No, and that would be one of the points that would come under review and it has been already discussed: should there be some sort of a fund? The hotel study report identified very clearly that there should be some kind of fund in this particular space. I think they very clearly identified a fund that is available, not just for new builds but also for existing stock to upgrade. I think that is the point because when it said they recognised the decline that it had, 685 it also recognised that we have been falling behind in standards in certain areas, which is one of the issues that I think came out very clearly. So it comes into our review of all our schemes, ultimately, whether it is the Enterprise Development Scheme or our Financial Assistance Scheme or any other business support scheme, or any of the other schemes. We were looking at those all to see are they fit for purpose, are 690 they fit for each sector of our economy? And I will take away that we will specifically look at that particular point and consider it within all our schemes.

Mr Lewin: If I could just add as a follow-on? Pre-agency, in the early part of this year, we did an extra piece of work with a number of the hotels and with a number of the financiers as well,

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695 to better understand what some of the funding issues were. So there is another report there which perhaps we can share with you. Whilst you might not have in the past accessed, there are hotels and leisure facilities that have accessed financial assistance, and we have others that are still talking to us about that. So the Department does play a part in that space already today. There is one bit about the fund itself for access to finance, and there is one about a process in 700 simplifying it. We do welcome your Committee asking for evidence from existing applicants and your comments around some areas and simplification, and some of the thresholds and limits. We have already made a number of changes to some of our other schemes on the back of your comments, so we thank you for those. That will be part of what we announce in October by way of a review of all the 11. We talked before about the EDS, but also we are constantly looking at 705 how we can make it easier, make it simplified, but also recognising that where it is public funds there has to be a balance to that.

Q25. The Chairman: Thank you. Because your report, Minister, links the concept of having lower yield levels on page 16 of the serviced accommodation element, of its final report, at 710 paragraph 2.3.7 it says:

On the basis of our research we believe that there are at least 8 hotels and guest houses that could be at risk of closure and abandonment, with a total of 266 letting bedrooms.

So I am putting it to you that there is a challenge for us here, not just to simply look at those who are moving forward and making big investments, but that to capture appropriate capacity we have got to look at those now on the periphery and under stress. So if you could just bear that – ? 715 Q26. Mr Moorhouse: Could I just ask: in terms of 266 rooms facing abandonment, what sort of numbers of new hotel rooms are you seeing going forward in the best case scenario?

The Minister: The number of hotels that are in the pipeline? 720 Mr Moorhouse: Yes, just in terms of this turnaround that could happen if the fund came in and if there was this positive change. What sort of vision have you got?

The Minister: Well, without the fund, we are already seeing significant investment in new 725 stock and upgrading. Only just this week, of course, you know we have seen the former Mount Murray open again. So it has been happening for some time and there is considerable interest for other hotels and tourism accommodation at different levels – and not just the hotels but even the non-serviced accommodation as well, at the same time. So the growth and investment, as I say, is already happening without a new specific fund in place. 730 I think what the Caairliagh, the Chair, is highlighting there is: is the fund – or, rather, our current schemes in place – actually fit for purpose in terms of all the stock that may be available for support, whether that be existing stock to upgrade as well as new stock that is coming online that wants support? So we are, as I said previously, reviewing all our financial assistance schemes and I will take up a specific point here at this particular industry to see if we have the 735 right support mechanisms in place now.

Q27. Mr Moorhouse: Going forward, is the best we can hope for to say the 266 are creating real growth in terms of the future opportunities?

740 Mr Lewin: That is a really tough question. As the Chair said before, it is not just about numbers of rooms. There are different rooms for different segments of the market and at different times of the year. I think we have about 1,900 rooms in graded hotels at the moment,

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but some of those are seasonal so that in itself takes over the non-seasonal areas – we have some real peaks, we have some real troughs. There is a balance. 745 So it is not a simple formula, it will depend where some are coming back to the market or coming into a new market, they will bring work and will have their own marketing and their own promotional support around bringing new customers to the Island, which is great. But there are others if it is a pure displacement, then clearly that is something we would wish to try and avoid. But it is a complex area and we also have to recognise that business itself, industries and 750 economies do go in cycles so there are some natural cycles that also will happen around this. But overall our aim is to boost yield, boost occupancy at the simplistic level, boost spend and also spread it out – where we are getting it for longer to lengthen the season. That has been a stated aim for a long time. And we think, as we said before, we have got some fantastic propositions here in terms of beauty and heritage in particular that are open all year round. But we need to 755 reach out to some new markets.

Q28. Mr Baker: The key point for me, and you touched on it there, Mark, was actually creating hotels and bed space per se does not actually fundamentally change the game: what changes the game is getting people to want to come to the Island. It is not as though we are 760 turning people away because there is nowhere for them to sleep other than, arguably, around TT. So I think developing good quality accommodation for people is part of the story, but it has got to be more about selling the proposition of what the Island is all about. And we have not touched on transport links to the Island, but clearly that is a fundamental part of the proposition of getting here, because one way or another you have got to get across that stretch of water. 765 Personally, I fully understand the desire for Government not to get too enmeshed in the Steam Packet, but clearly we have a very strategic opportunity, in terms of setting the User Agreement with the Steam Packet, to potentially move the needle on getting people to and from the Island both physically and in financial terms.

770 The Chairman: That is an important question.

The Minister: Oh, absolutely, I do get it. We are focusing a lot on tourism but we should not forget the business traveller too: in many ways that is different, and it goes back to data and understanding what your market is and who you should actually promote to. So certain hotels 775 will suit different markets and the business travel is one area which we know has had concerns for quite some time, particularly with regard to stock. But it is not just the hotels; it is the transport links as well. There is an impact there that we would not want to take in isolation about just hotels and accommodation, it is transport links too.

780 Mr Lewin: And, as a Department, we have been involved and are involved with the Department for Infrastructure as it goes through some of the stakeholder workshops in terms of what the requirements going forward could be. Only in the last couple of weeks we have had a session with the Visit Isle of Man Agency at the Department of Infrastructure and Thames Head who are working with the Department of Infrastructure looking at, in an ideal situation, what 785 would we look for by way of any changes to that agreement; but also trying to then put some economics around it and say, ‘But what would that mean? Can we evidence it?’ So now is a great time to have those conversations.

Q29. The Chairman: It is great to hear that, because sitting on the outside of this there is an 790 impression that DOI are leading the operational side in terms of the User Agreement, that Treasury will be driving it from a purely financial perspective and you guys sit in the middle with a perfectly legitimate requirement to say, ‘Look, this is really, really important’. Tim asked a very good question and I was going to raise this later on, but I am glad it has come up now, because you have to go at half past four, don’t you?

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795 It is a very strong message that comes through, particularly in the non-serviced accommodation sector, this cost of travel issue. To what degree is there going to be a sophisticated analysis of the economic value of adjusting the User Agreement so that you can meet the needs of the visitor sector, whilst at the same time balancing it off the perfectly healthy requirements that Treasury have to achieve certain margins? 800 In other words, where is the balance of opportunity going to end up in all this? And are you satisfied that you have access to a sophisticated enough analysis of the economic side to present a case cross-departmentally, to make sure that we do not miss this when it comes to assembling the User Agreement?

805 The Minister: Very eloquently put, I think you highlighted it there exactly. In the Programme for Government of course we state here we want to:

Ensure the future security, sustainability and reliability of our sea … routes

We have made that decision and I think that is covered. The one thing that is not in there is the affordability, in other words the economic benefit. And very clearly, we are very keen to be involved with that and we are engaging with the Department of Infrastructure and Treasury on 810 this particular matter because we need to ensure, not just from a tourism basis, but there are also other sectors that rely upon these sea routes as well at the same time. So, yes, we are going to be active in putting up that particular statement and argument to say, ‘Where is the economic value in this particular deal?’ So that is the next stage and it is in train as we speak, I think we are on at least one Committee – Are there two? 815 Mr Lewin: Yes, we have had stakeholder workshops, and at this point it is just gathering ‘what if?’ – some high-level requirements. There is a piece of work then beyond that, and ultimately we recognise it will come back to Tynwald so it will be in your hands in terms of understanding some of the choices around this. 820 So part of that is also discovering things like … and there is already a great deal in terms of offers. But I go back to the conversations already and the Visit Agency’s understanding of how we promote those and how we tie them up together. So if somebody is perhaps … [Inaudible] and it is not just by sea or air, but somewhere there is a cost of travel to get to the Isle of Man, but we have got some capacity in our hotel stock or non-serviced, how do we blend that? Can 825 we package together accommodation, travel and some of our other attractions – where again we are in control and able to do that at a cost basis and give a much better blended headline rate for a particular period? So that is very much one of the products that the agency is already starting to look at, getting people in a room and saying, ‘Could we put this together that would look completely different to 830 the way it currently looks?’ And that is aside from the User Agreement.

Q30. The Chairman: Okay. I still think there is a question there to be answered in terms of the capacity to provide a sufficiently sophisticated economic modelling process to show the value of expanding the tourism visitor sector, linked to an appropriate element within the User 835 Agreement. But again, jumping to the non-serviced sector, one of the conclusions on – if I can read Latin – page xviii in Latin numbers:

The analysis has shown that the Isle of Man has already fallen considerably behind other Island and rural UK destinations in terms of the supply of high quality, distinctive, contemporary non-serviced accommodation …

And they say very strongly that one of the close-out issues for them is the cost of access. So linking the concept of providing an element within the User Agreement that meets these 840 needs, where do you stand on Planning understanding development in rural circumstances? Are

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you hopeful that the latest key national priority issues will recognise tourism development options? I am thinking here about what has happened recently in the Island and the negative impact of that.

845 The Minister: Yes, I guess it comes down to the strength of the strategy plan, but this really is about the strength of a policy and the weight that might have with regard to Planning. I think the Non-Serviced report was quite detailed inasmuch that it highlights a whole host of areas where we could expand into, a whole host of areas that would be a real benefit, that would fit quite comfortably with the balance, I believe – coming back to the UNESCO point there – that 850 would fit very well. But planning is clearly another issue and it was picked up more I think in the Hotel study where it called for Government to give more support for planning, but not necessarily in the Non-Serviced. But I think it is applicable in both sides. So when the agency comes back after reviewing this and makes a statement on this … And that is why I would suggest that we need to consider populating that in terms of support across 855 a wider political forum – because if we are to support this as a Department or an agency, I would like to know that we have got further support of Government across the piece. What we do not want is proposals to come forward, investment to come forward and to go all the way down the garden path and then to say, ‘No, that's not what we want’. But then again if it is not strong enough in a policy document we have really got to be able to answer that. 860 So it is a difficult issue as it currently stands and it will come back down to the strength of the policy that is reviewed.

Q31. The Chairman: And the capacity for Government and all its Departments to come together with a central strategy on its future profile for boats and their capacity, it cannot come 865 from one agency or one Department can it? It has to be a combined effort that is … You know where I am going. (Laughter) You know where I am going!

Mr Lewin: I think on boats, as I say, with DOI and with industry we are working together and Treasury are aware of that, as the stakeholder. In terms of just the Non-Serviced and this 870 statement in the document that talks about an opportunity, or we have fallen behind, I absolutely recognise that there is a market missing here in terms of some of those accommodation units of the village-type style. We know that there is a market there ready for it; we know that there are investors ready for it; and it could be done in a way that would not cannibalise other sectors of accommodation. 875 But you are right, in terms of things like planning it is an area we have to be very careful with. (Interjection by the Chairman) So one of the things we are working at is … Take that by way of a high level statement of intent to attract, how could we build on that by way of a more detailed policy statement – something that would talk about scale, talk about location, talk about facilities, talk about access, talk about impact on the visibility aspects? Wrapping that up. So 880 again we are working around: we have a draft at the moment, we are going to syndicate that, we are going to take it through the agency, take it through the Department, take it ultimately up to Council and maybe take this, as the Minister said, and syndicate it more politically – for example, Tynwald. It will not talk about specific schemes but it will talk about, as a general rule of principles: are 885 these the kinds of things that we would like to see? That will then add weight in terms of a planning determination that would say, ‘These are the principles that it should be checked against’. At the moment we do not have that and that is what is causing some of the problems where we have some things being approved and other things that have not been approved.

890 Q32. Mr Baker: It is that attention to detail and definition isn't it, that is essential to be able to take a concept into something that is known to be the right thing, in the right place, at the right time? That is what it is about.

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It is not a very good time for me to leave the session, it sounds as though I am reacting to what has just been talked about, given my Chair of Planning role. As the Chairman mentioned 895 earlier, I have a 4.30 p.m. commitment – this was scheduled to 4.30 p.m. so I have quite an important thing that I need to deal with, with one of my other responsibilities. So if you would excuse me I would like to leave you in the capable hands of the Chairman and Mr Moorhouse.

The Minister: Yes; and the opportunity will be for us to come back on a regular basis, so we 900 will look forward to that.

Mr Baker: Thank you.

Q33. The Chairman: Thanks, Tim. 905 I just wanted to highlight a comment on page 54 of your report, the serviced side, the Hotel one, where it says:

The island’s highly competitive hotel and guest house market suggests limited scope for growth in hotel and guest house room rates. Indeed, average achieved room rates may decline as future growth is likely to be in lower-rated leisure business …

I bring you to that point again about the importance of the access to that sort of data to help you and the agency construct the right sort of thinking and approach. So I would hope you would take that point on board anyway. 910 Mr Lewin: It is right in the middle of the dashboard as it stands, yes.

Q34. The Chairman: Good. Right, let's move on. One of the messages I hope that you are willing to get out is the 915 importance of – and we have covered this to some extent – not only to welcome and recognise the significant investment that is going in at the moment, but that also we have to reinforce our sustainability by making sure that we capture enough of those hotels that are now, as it were, in the margins. On page 70 of the report's ‘Conclusions and Recommendations’ at paragraph 6.1.2 it says – and this is your report:

On balance we believe that the priority going forward is about renewing the island’s hotel offer, rather than significantly increasing its hotel stock.

920 In other words, getting the industry to the right yield point at its various component parts. If you could emphasise the importance or ensure that is on the dashboard, if you like, that would be terrific. Do you want to comment on that or shall I move on?

925 The Minister: No, that is a fair point.

Mr Lewin: Yes.

Q35. The Chairman: We have covered the significant emphasis in both of your reports on 930 planning, but we have sort of gone there and done that. Consistent recommendations with regard to the special hotel investment fund, which again we have touched on and wants to be in the mix. And again in the Non-Serviced sector as in the Serviced sector, it listed a whole range of products which we have not got here, partly linked to capacity for investment and support, partly to planning. Can I be reassured that all of that is on your dashboard as well?

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935 The Minister: It is, and it is fair to say some of those are actually already in Planning; some of those are in construction even as we speak. So we are seeing some of those actually being realised already.

Q36. The Chairman: Yes, because if you look at the list of what we have not got compared to 940 some of the other destinations, it is a bit worrying, isn’t it? We have already touched on the cross-departmental issue which Tim wrote down as the ‘single legal entity’ – (Laughter) (The Minister: Did he?) That was a surprise. But perhaps a better phrase, because a lot of people do not get that phrase, so a better one perhaps is a ‘unified Government approach’ that we have got to progress towards. 945 We have dealt with costs of travel, cost of getting here, and I am encouraged by that. And I think with that – unless Jason has any further comments, or you want to conclude with any closing remarks?

The Minister: No, but just once more thank you for the opportunity and I think it is worthy of 950 us actually doing these in bite sizes because then you would be very generalistic and you do not delve into some of the finer detail, which is the purpose I think of this really – getting into the policy scrutiny points. But what I would conclude on is that if we stay on the point with regard to the visitor economy and the tourism industry, our Department has recognised and does recognise and will continue to work with industry to make sure it stays an important part of our 955 economy. On a more general point, I just wanted to point to the Business Confidence Survey – because of the report that came out with regard to GDP this week, which is very welcome – confidence is really important, there is no doubt about it. We have had two business confidence surveys recently and across all sectors we are seeing real buoyancy in that confidence. Our focus is very 960 much around growing the economically active, because right now we have got so many jobs available on this Island we are having a tough time actually filling them. So we have got to work very hard to ensure we can drive that forward. But our economy stays strong, our economy is diverse. But our economy is also dynamic and that is why we do need to be able to make changes as quickly and nimbly as possible. So I thank you for the opportunity and I look forward 965 to the next session.

The Chairman: Thank you for your attendance this afternoon and your contribution, and we look forward to it as well. I think perhaps next time we will approach two of the agencies and try and spend the whole afternoon looking at each one of the next two, and then perhaps – 970 The Minister: If you wish, Caairliagh, we would also like to give the opportunity for the Chair to sit in this arena if that is okay, if you wish?

The Chairman: We would welcome that. 975 The Minister: I will be introducing them to Tynwald Members, I have got a scheduled date coming up in the next month, so after that would be fine.

The Chairman: I look forward to that. Thank you for your time.

The Committee adjourned at 4.38 p.m.

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10th September 2020 Evidence of Mr Andrew Keeling, Hotel Solutions and Hon Laurence Skelly MHK, Minister, and Mr Mark Lewin, Chief Executive, Department for Enterprise; Mr Ranald Caldwell, Chair, and Mrs Angela Byrne, Head of Agency, Visit Isle of Man

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S T A N D I N G C O M M I T T E E O F T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L B I N G V E A Y N T I N V A A L

P R O C E E D I N G S D A A L T Y N

ECONOMIC POLICY REVIEW COMMITTEE

Future of Tourism

HANSARD

Douglas, Thursday, 10th September 2020

PP2020/0168 EPRC-FoT, No. 1/2020

All published Official Reports can be found on the Tynwald website:

www.tynwald.org.im/business/hansard

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW © High Court of Tynwald, 2020 75 STANDING COMMITTEE, THURSDAY, 10th SEPTEMBER 2020

Members Present:

Chairman: Mr C R Robertshaw MHK Mr J Moorhouse MHK Mrs K Sharpe

Clerk: Mr J D C King

Clerk: Mr K Skehan

Contents Procedural ...... 3 EVIDENCE OF Mr Andrew Keeling, Hotel Solutions ...... 3 The Committee sat in private at 12.54 p.m. and resumed its hearing at 2.34 p.m...... 19 Procedural ...... 19 EVIDENCE OF Hon. Laurence Skelly MHK, Minister and Mr Mark Lewin, Chief Executive, (via Zoom), Department for Enterprise; Mr Ranald Caldwell, Chair and Mrs Angela Byrne, Head of Agency, Visit Isle of Man ...... 20 The Committee sat in private at 4.03 p.m...... 40

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Standing Committee of Tynwald on Economic Policy Review

Future of Tourism

The Committee sat in public at 11.41 a.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MR ROBERTSHAW in the Chair]

Procedural

The Chairman (Mr Robertshaw): Good morning, welcome to this public meeting of the Economic Policy Review Committee. I am Chris Robertshaw MHK and I chair the Committee. With 5 me are Jason Moorhouse MHK and Kerry Sharpe MLC. Please ensure your mobile phone is off, or on silent, so that we do not have any interruptions. For the purposes of Hansard I will be ensuring that we do not have two people speaking at once. The Economic Policy Review Committee is one of the four Standing Committees of Tynwald Court which scrutinise different areas of Government. Our role is to scrutinise the established 10 policies of the Cabinet Office, Treasury and the Department for Enterprise. We have recently decided to undertake an inquiry on the subject of Tourism. To that end we welcome this morning, Mr Andrew Keeling.

EVIDENCE OF Mr Andrew Keeling, Hotel Solutions

Q1. The Chairman: Mr Keeling, may I ask you, before we commence, are you speaking as an element of Hotel Solutions or do you represent yourself; or do you have a different company now? 15 Also, what is your relationship with the Department for Enterprise?

Mr Keeling: I am talking as Hotel Solutions which is an independent consultancy partnership. The relationship with the Department is that we have been commissioned to undertake five pieces of work over the last five years, so my evidence is based on the work that we have done for the 20 Department over the last five years.

Q2. The Chairman: Thank you very much indeed. You have requested that you have the opportunity for a 15 to 20 minute presentation to, as it were, get things going. Can I invite you to begin now, Mr Keeling? 25 Mr Keeling: Yes, okay. I am going to try to share my screen, I hope this will work. Ah, it says, ‘You have disabled screen sharing’. Can you enable screen sharing at your end? ______3 EPRC-FoT/2020 77 STANDING COMMITTEE, THURSDAY, 10th SEPTEMBER 2020

The Clerk: Let’s hope so. I did not see this coming, sorry … 30 Does anybody know where ‘Enable screen sharing’ is? ‘Allow participants to share screen’, I have found it … Has that done it?

Mr Keeling: Can you all see that slide?

35 Q3. The Chairman: Yes, thank you.

Mr Keeling: First of all, thank you very much for giving me the opportunity to submit evidence to your Committee this morning. I am really pleased to have the opportunity to do so. Just quickly to explain who Hotel Solutions are in case anybody is not familiar with us. As I said, 40 we are a consultancy partnership. We specialise in undertaking work for British destinations to help them to understand and realise the potential for hotel and visitor accommodation development in their area. We have been doing this work for over 20 years. We work all over the British Isles. I think we have probably covered about 150-160 different destinations including rural, coastal and island destinations. 45 As I mentioned, we have completed five pieces of work on the Isle of Man for the Department and Visit Isle of Man since 2015 – so, over the last five years. The first was the Isle of Man Hotel Futures Study which was undertaken in 2015 for January 2016 which looked at the future for the hotel and guest house sector on the Island. That was followed up by the Non-Serviced Accommodation Futures Study in March 2017 which looked at the opportunities for non-serviced 50 accommodation development. We did a follow-up piece of work to the Hotel Futures work in December 2017 which was looking more specifically at the case for Government financial assistance to support hotel and guest house modernisation and development. Then I did a piece of work earlier this year looking at the Accommodation Registration and Grading scheme on the Island, so we were revisiting this quality agenda. Then, as I think some of 55 you will be aware, I have just been doing some work looking at the case for further Government support for the tourist accommodation sector whilst the Island’s borders remain closed due to COVID-19, and that has just been reported on. The first thing I want to say is just to emphasise the importance of the accommodation sector to the Isle of Man. Your hotel and visitor accommodation sector in 2019 helped to generate about 60 £140 million of visitor spending on the Island. That was not just in the accommodation section itself it was in a whole range of other sectors from retail, food and beverage, restaurants, transport and other sectors, as well as a supply chain of businesses that support the hotel and visitor accommodation sector. I think it is quite clear – to me, anyway – that the accommodation sector is vital to future 65 economic growth on the Island and really important for the Steam Packet in terms of its viability, because without the visitor traffic the finances of the ferry would not look as they do. It is also important in terms of re-establishing the airlinks to the Island and making the case to airlines to establish new routes to service the visitor market, not just the residents and the business market. Also it plays a role in the quality of life of the Island’s residents in terms of providing a wide range 70 of facilities and services that would not otherwise be available to the people that live on the Island. The next point I just want to make is the potential for growth. This is evidence that was produced back in 2014-15 for the previous Destination Management Plan for the Island, the piece of work that was done by the strategic marketing and research company. That showed there are huge numbers of people in the UK and Ireland that are interested in coming to the Isle of Man for 75 a whole range of things, whether that is for a family holiday, or to experience your fantastic wildlife and nature, or your food and heritage attractions, or to come walking – and for other outdoor activities. Whilst COVID-19 has interrupted the growth trajectory that the Island was on, I think it has strengthened it because all of these people are still there and, if anything, they are more 80 interested in holidays closer to home. I think they are probably going to be even more interested

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in coming to the Isle of Man once your borders have reopened, so that potential for growth is still there. Just in terms of all of the work that I have done, there are three key findings that I just want to focus on. The first is the need to accelerate the modernisation of the hotel and guest house offer 85 on the Island. There has been some improvement in recent years since we did the Hotel Futures Study, and you do have some decent hotels and guest houses; but you also have some fairly poor quality and dated stock, and I think we consistently felt that the Isle of Man lags behind competitor destinations in terms of the quality of its hotel and guest house offer. So you are constantly playing catch-up with the competition. 90 The second key finding is that we have consistently identified I think a huge range of opportunities for different types of non-serviced accommodation. You do have some very high- quality holiday cottages and holiday apartments and a little bit of glamping, but not much else really. You are not seeing the other non-serviced accommodation offers that other competitor destinations have seen develop – and I will touch on those in a couple of slides in a moment. 95 Then the third point that I want to make in terms of key findings is the need for Government financial incentives to accelerate change. Yes, you are getting some accommodation development, things are happening, but they are happening relatively slowly; and in order to make things happen more quickly there is a need I think for Government financial intervention, in the way that other governments in the rest of the British Isles provide support, to accelerate 100 accommodation improvement and development. It is the challenge that you have being an Island destination and a seasonal destination. It is quite difficult to make accommodation developments stack up from a purely commercial perspective. Although I am sure that there are accommodation developers and investors that would want to come to the Isle of Man, there are probably easier places for them to make money and for them to put their money with far less risk. So in order to 105 accelerate change I think there is that case for Government financial intervention. I said you have made some recent progress, so the Premier Inn opened in Douglas in July last year and that was fully funded by the private sector – no Government money going into that. The Comis, the former Mount Murray reopened, I think last year, and that did have some Government money, as did the Ramsey Park extension. Then the former Gresham Hotel was converted to the 110 Hotel Halvard, a very nice boutique hotel. The Mannin Hotel, a 4-star hotel, opened a few years ago entirely funded by the private sector. So things are improving, but you do still have quite a lot of dated accommodation. Not all, but these are some examples of some of the places that visitors will end up staying in on the Isle of Man. I think you can see that it is quite dated and old-fashioned; and it is not just me saying it, 115 these are some of the comments that you can pick up if you look at TripAdvisor reviews of some of your accommodation. But there are some establishments that do attract negative comments. I do want to emphasise not all, and they are not all the time. There are some good-quality hotels and guest houses that customers are enjoying and coming back to time and time again. But there are some poorer quality establishments that are attracting these negative comments. 120 So there is an issue for you on the Island in terms of the quality of some of your hotels and guest houses. That is not peculiar to Douglas or to the Isle of Man, we see this issue in any seaside resort. But I think it is fair to say that we are seeing other resorts making change faster than we are seeing on the Isle of Man. I think that is the key issue I just want to make and people want to make … 125 What you are not seeing is this more contemporary hotel and guest house accommodation coming through, that we are seeing in other seaside resort destinations. It is not just swanky boutique hotels, I am also seeing investment into much fresher and more contemporary interior design going into B&B guest houses and resorts. You are not seeing much in terms of luxury accommodation on the Island in the way that particularly Jersey and Guernsey have quite a bit of 130 a luxury hotel stock, as do some of the Scottish Islands. This is just an example of a more contemporary, quirky establishment which is called the Bike & Boot, which has just opened in Scarborough targeting the walking and cycling market with a much more funky, contemporary

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accommodation offer. I think it would be interesting to see if you could get them interested in Douglas. I think there could be an opportunity. 135 I think it is worth just thinking about the comparison to Jersey – I do not know how much you feel it is valid to compare the Isle of Man with Jersey, but this is just in comparison of your hotel stock. You can see Jersey has got about three times the number of hotel rooms than the Isle of Man. It has two 5-star hotels and more than double the number of 4-star hotels that you have on the Isle of Man. Still quite a bit of 3-star stock and some 2-star stock, so it is not all high-quality 140 accommodation on Jersey, though there is poorer quality accommodation there too. But I think it is worth just noting that comparison with Jersey. The other comparison I just wanted to pull out is Blackpool. You probably think Blackpool is not necessarily a fair comparison as it is a much larger resort, but it has been on a downward spiral for many years, particularly in terms of the quality of its accommodation stock. Blackpool Council 145 is just embarking on a £1 billion 10-year Renaissance Masterplan. It has benefited from quite a lot of UK-government funding to progress that scheme but they are looking at major investments in a new conference and exhibition centre, museum, theatre, entertainment centre and tramway extension. Also, that investment is bringing forward eight new hotels, two of which are supported by the Council and six of which are coming forward purely from the private sector. Then I just 150 wanted to highlight that Blackpool Council is fully funding a £17 million, 144-bedroom 4-star Holiday Inn Hotel. I think it is that sort of investment that … I know you have had an aspiration on the Island to have a branded 4-star hotel coming in, and I think if you want to achieve that then you do need to think about a fairly significant Government investment to make that happen. 155 So just to finish off on hotels and guest houses’ required action, I think there are two key things. One is that we recommended back in 2016 a hotel and guest house improvement programme. I think the key here is a package of grants and loans to help attract buyers to the hotels and guest houses that are on the market. I think you have got about 12, maybe more, that are currently on the market. Some of those have been on the market for some time, they are mainly retirement 160 sales. I think most of them do require quite a lot of investment, but actually there is a real opportunity at the moment because of COVID-19. I think that has pushed down some of the prices of these properties, but also there are investors and lifestyle buyers that are currently quite interested in hotels and guest houses in coastal and resort locations and island locations. So there is an opportunity there, but I think in order to capitalise on that Government financial support 165 would really help to make the difference there. The second point is that I think you have to recognise there will be some of these properties that cannot be saved, but you do need to try and find a way of managing their exit into alternative uses. You do not want to leave them there as boarded-up properties on the seafront. The third point is I think there is a case, if you wanted to pursue it, for significant Government 170 investment into perhaps two or maybe three transformative hotel projects. I am not going to say what I think that they are, and there are various things floating around, but I think there is that potential if you wanted to bring forward major hotel schemes. Moving then to non-serviced accommodation, I think the key message from the Non-Serviced Accommodation Study is that the real opportunity is to go beyond just your holiday cottages and 175 holiday apartments and to look at some of the other types of non-serviced accommodation that there are in other destinations, particularly focusing on developments to a scale that can support on-site facilities – whether that is leisure, catering, restaurants, swimming pools and different things like that – in order to make them attractive; but also to help them to operate over a longer season when perhaps other elements of the Island’s visitor economy close. 180 These establishments can still operate because they are self-contained and they have those on-site facilities. So they need to be weatherproofed and family-friendly, and attracting that family market that the earlier slide shows is quite significant for the island. Linked into activities, I think there is a real opportunity for you to think of something very distinctive and authentic, almost a Manx accommodation offer that people would have to come to the Isle of Man for. Certainly

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185 things of scale and also eco-friendly – I think there is a real opportunity, particularly to capitalise on your UNESCO Biosphere status, with more eco-friendly accommodation, eco-resorts and so forth which there is quite a lot of interest in at the moment. I am just going to show you a few images of what I am thinking, to try and illustrate these points. The first is holiday resorts. These are three holiday resorts on other islands; so other islands 190 are able to attract these types of development. The top left is the Auchrannie Resort on Arran. It started off as a 16-bedroom guest house and it now has two 4-star hotels, 30x5-star holiday lodges, three restaurants, a leisure club, a spa and a children’s activity park. Top right is the Les Ormes Resort in Jersey, it opened in 2012. It has got 62 holiday apartments and then an indoor and outdoor swimming pool, indoor tennis, five-a-side football, it has got a 195 riding centre, so a whole range of holiday activities The bottom picture is the Isle of Tresco Resort, which was a hotel that is now holiday apartments, and it has on-site public rooms, a restaurant, a spa, a gym, a sailing club, tennis courts and a whole range of different facilities. These are very much self-contained resorts that are finding a market and able to trade over a longer period. So they are attracting good occupancy 200 across an extended season. Forest holiday centres is another opportunity and I know you have been looking at this for South Barrule. This is just an image of Forest Holidays, which is a UK company that have got nine Forest Holiday sites across England, Wales and Scotland. They normally have 50 lodges, they all have hot tubs and generally achieve a very high occupancy of about 90% year round. So I think 205 that is something that is certainly worth progressing. A similar example is the Holiday Lodge Parks with luxury holiday lodges either for sale, for ownership or for rental. This is an example up at Kielder Water in Northumberland, the Kielder Waterside site. They have got 50 holiday lodges all with hot tubs, and then a central pool, gym, on-site restaurant, bar and a range of facilities with a birds of prey centre and a cycle hire centre. 210 They are achieving occupancy of 85% year round. This is quite an interesting example from a company called Zoobox, an Irish company. They only have one site, currently in Canada, but they are looking for new opportunities. They have developed these eco-shelters and as you can see in the top left picture they have these bi-folding doors and the whole accommodation opens out to the forest setting, to the woodlands setting. 215 They have a range of off-grid electricity generation options; and they have got the bed there that comes down from the ceiling, which is a space-saving idea. At the bottom you can see the solar- power generation – they have this human hamster wheel which is part of the electricity generation and also for the fitness of the guest. Actually you can see in the top left-hand picture there is a static bike in the right-hand corner which is hooked up to a power-generation unit. So, 220 really interesting stuff. This is just one example, there are lots of other examples of eco-resorts and eco-glamping coming forward. I think you could have some real opportunity there. Camping pod parks are another opportunity. This is the Atlantic Surf Pods in Cornwall. Then just a final point I wanted to make about this idea of developing a unique Manx Glamping 225 offer. That is just a general image, I am not suggesting that is what the Manx glamping offer needs to look like, but a couple of initiatives I just wanted to highlight. This is a project that the Welsh government have progressed, called Epic Retreats. They invited a series of architects to design a number of Welsh-themed glamping units – there is a slate one, the top right is supposed to be a dragon’s eye; bottom right is supposed to be the artist’s cave; and then you have got this sky pod 230 with the retractable roof. So that is an interesting concept that I think you might want to consider for a Manx glamping offer. Then this is just another example, these are called Hebridean Huts. They have these glamping huts that overlook the sea, and then internally they feature everything – lots of local produce, and you can see in the middle picture the Harris Tweed bed runners and cushions. The toiletries are 235 locally produced, they have a fridge stocked with local beer and they use local pottery. As again,

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that concept of just perhaps having something that is much more themed and much more distinctive I think is certainly worth considering. So just in terms of required action for transforming the non-serviced accommodation offer, I think the first thing is to do with Planning. Planning seems to be a real barrier on the Island, 240 particularly for the development of anything in the countryside and certainly anything of scale. We recommended, in the non-serviced accommodation before, a couple of approaches. One is to take a sites-led approach to try and identify sites that would be acceptable in planning terms for accommodation development. The second was, there is a phrase in the planning policy document that allows ‘development in the countryside that meets an overriding national need’, but that 245 phrase is not defined. We made some recommendations about how you might define that phrase in terms of accommodation development. We think there is a case for pulling together a sites portfolio that can be taken to market once you have identified those that can meet Planning. I come back to the case for Government incentives really to accelerate investment and get some of these major developments coming 250 across to the Island. The fourth point there is about making contact with these developers and getting them to the Island and seeing all the opportunities that there are for them to bring forward schemes. Then, just finally, I think there is the case for some Government or Visit Isle of Man-led initiatives. We have talked about the Forest Holiday Centres and the Manx glamping. 255 Just a couple of concluding comments: I wanted to reiterate the point that there is significant potential for tourism growth which I think, if anything, COVID-19 has accelerated. I hope I have given you a flavour of the sorts of opportunities there are for accommodation development and improvement. There are more that I have not covered but they are covered in the reports. I think the Island’s accommodation offer is improving, but the key point is that it is improving slowly. You 260 are, if anything, still playing catch-up and you really need to get ahead of the competition. I think the private sector is prepared to invest. There are developers out there that you could attract to the Island and Government incentives could really make the difference to accelerate that development. So I think there is a clear case for Government leadership in order for this. That finishes the presentation, so I will stop the share and then hopefully I am back with you. 265 Q4. The Chairman: You will be in a minute, if you just bear with us. Thanks Andrew. Well, thank you very much indeed, that was most informative, we appreciate that introduction. Effectively what you have done is you have updated your reports of 2016 and 2017, but these things were being said by you in 2016 and 2017 and the feeling the Committee has is that we have 270 not moved on at anything like the appropriate rate. But one report we are missing is the one I think you brought out more recently about Registration and Grading. Could we possibly have a copy of that, please?

Mr Keeling: Yes, I am sure – it got caught up with COVID-19, so it was only reported on in 275 March, but I know I finished it. I think it is still in draft, but it is not for me to give you that. That would have been addressed to Visit Isle of Man and I cannot see any reason why they would not share that with you. But it has not been adopted, it has not been taken to the Visit Isle of Man Board yet.

280 Q5. The Chairman: Right, I can understand why we have not got it then. But it would be good to see a draft version of it.

Mr Keeling: Yes.

285 Q6. The Chairman: Could we also, please, if you would be kind enough to send to our Secretary a copy of that presentation that you have just made? That would be terrific.

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Mr Keeling: Yes, of course, no problem.

Q7. The Chairman: Are you aware yet of any increased capacity that the new ship will provide 290 when it comes on-stream in 2023 – the Steam Packet boat?

Mr Keeling: I was not aware of the increased capacity. I am aware of the ship and certainly that is another factor that will help to boost demand coming over to the Island and it will improve that experience of actually travelling to the Island, together with the ferry terminal at Liverpool. 295 Do not forget, that is a positive and it will be great to capitalise on that investment that the Government has made for you. I was not aware that it was increasing capacity but, yes, clearly that would be good.

Q8. The Chairman: Are you able to make the Committee aware of some of the financial support 300 schemes that are occurring in other jurisdictions? You have talked of really quite considerable things happening in Blackpool and elsewhere. But it would be great to begin to understand the type of schemes and incentives actually being developed in other areas. Your report in 2016 clearly says that although at the time there were financial support schemes available, effectively – and I am paraphrasing you, forgive me, it is shall we say ‘a colloquial 305 interpretation’. Are you saying that the hotels have not touched it with a barge pole? They have not, in general terms, thus far. I go back a long way and I adopted the same attitude to the support schemes that existed at the time as not being readily accessible, being over-bureaucratic and therefore unhelpful. So it would be good to see what other go-ahead jurisdictions are doing to make sure that they get the 310 appropriate delivery in place. So if you have got some examples that would be terrific.

Mr Keeling: Yes. I cannot give you chapter and verse of that now, I am not up to speed with all of the schemes, but I think Wales is a good example. The Welsh government has had a grant scheme in place for tourism for many years. It has 315 changed its guise and its name, but it has always been there and the last iteration was the Tourism Investment Support Scheme. They have had grants and as I understand it they have recently launched a £50 million Tourism Transformation Fund, which I think is giving preferential loans. It may be still giving grants. In Scotland there is the Highlands and Islands Enterprise. They have had financial support over 320 many years and I think again that was largely grants, but there probably could be loans as well. I would need to do a bit more work just to give you the update on what is happening, but I know there are themed schemes around. The other thing that we are seeing in terms of England … There has been no financial assistance in England since the early 1990s, though there used to be, and under the old Tourism Act 1969 325 there was funding under section 4 in England, and Wales and Scotland. But what has been happening in England is that a lot of local councils have been investing directly into hotel schemes. There are probably a number of reasons, partly to help bring forward a hotel where it has been seen as being a key part of a regeneration initiative; but also as a means of generating income back to the council. For example, quite a number of councils have been working with Travelodge 330 and they have been using their own resources and their own covenants to be able to take out low- interest finance to fund the hotel scheme that they then lease to Travelodge, and then the rental that Travelodge pays back actually repays the loan as well. So it is actually generating surplus income to the council. English councils in particular have been using that route as part of the measures to counteract 335 austerity. So it has been a means of generating a new income stream to the council. I do have a paper that I could send you with various examples of different things councils have been doing. There are lots of different ways of doing it and it gets quite technical, but I can send you the paper if that is helpful.

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Q9. The Chairman: I would appreciate that. We would all appreciate that. 340 Another area where things have been snagging-up badly – you clearly articulated this both today and in your original report – and that is the whole matter of Planning. You mentioned the need to ensure that the recent introduction of the concept of overriding national need be interpreted in connection with tourism developments on the Isle of Man. Are you aware whether that concept has been accepted by the Department? Or is it still just a 345 recommendation from you at this stage?

Mr Keeling: I think the concept of overriding national need is in the policy. I cannot remember the plan exactly, but I think it is actually in the relevant planning policy. Is it the Strategic Plan for the Island? 350 Q10. The Chairman: Oh no, forgive me, I have not asked you the question clearly enough. Yes it is, but the determination to relate it to specific tourism developments is not yet bonded, that I am aware of.

355 Mr Keeling: Yes, as far as I am aware the recommendation was suggestions that we put forward in the report, but I do not think they have been taken forward in any way. I do not know that for definite but my understanding is that they have not been taken forward. I might be wrong on that, I am not up to speed on what is happening on the Planning side.

360 Q11. The Chairman: Okay. I wanted to explore with you a little bit, if I may, the point that your reports in 2016 and 2017 came over to me as sound. The disappointment is that here we are in 2020 looking at reports which effectively have remained, in the main, words on paper rather than delivered actions. Now, I want to look at that a little bit. 365 What has continued throughout the period since your reports came out is a continued determination to focus on total arrivals rather than yield and appropriate length of season and the appropriate quality which then, as it were, delivers the ability to reinvest. That is what we have lost, quite seriously, to the point where in our interpretation of it unless we, again colloquially, get a grip we could lose the whole thing. Yet our Department still seems to say, ‘Oh 370 well, our arrivals are up’. There is something of a preoccupation with what is left rather than what we need to have. I constantly hear Government talking about the importance of TT; but in yield circumstances, whether we like it or not, the TT is just simply one week of 52, and the yield issue across, say, an eight-month period is absolutely crucial. 375 Are you trying to tackle that in your engagement with the Department? Because they have got to change their ability to understand the key and most important factors.

Mr Keeling: Yes. I think the key message that I keep trying to give is that you are a seasonal destination and you cannot change that, and actually the way forward needs to be a strategy 380 which is based on making hay while the sun shines and maximising yield when you can – ideally, pushing that out to maybe an eight-month season. But you need to have quality businesses that are making as much money as possible in that eight-month season to compensate for probably losses in the winter. It is quite difficult to make money in the winter in the accommodation sector. So I think that priority is about driving up quality to maximise yield and make hay while the sun 385 shines; and then you have the ability to reinvest, so it becomes a self-fulfilling prophecy. I think you are right. It is not just about numbers, it is about revenue and it is about quality. If you do not address that then you are really stuck in a downward cycle of not being able to break out of that cycle and improve the quality and therefore improve the yield and generate more income. I think that is where Government needs to have a stronger role to accelerate that process 390 of change.

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I think it would be wrong to say that nothing has happened since we produced the report – things have happened and things have begun to change, particularly in the self-catering sector. You have got quite a lot more high-quality holiday cottages and there has been a big improvement in that area – much less so in terms of serviced, but some progress. So I think it is about the speed 395 of change. Another thing I just want to say is that it is also about getting ahead of the competition. You are so far behind really, and it is not a case of just playing catch-up, this is a real opportunity to actually get ahead, particularly on some of the things I have talked about within the non-serviced. To do something different and innovative and distinctive, to actually create an accommodation 400 offer where people have to come to the Isle of Man if they want to experience it. I think that is where the opportunity is and those are the opportunities that have not really been taken up. I do not know why, you will have to ask the Department why they were not taken up. But I think all of that stuff I talked about in terms of the new and non-serviced accommodation, as far as I can see, that has not really come forward in any significant, meaningful way. 405 The Chairman: Kerry.

Q12. Mrs Sharpe: Mr Keeling, I just wanted to ask then on a scale of one to 10 how many of your recommendations do you think have been actually actioned by the Department – just roughly 410 speaking? (Laughter)

The Chairman: I dare you!

Mr Keeling: I do not know the answer to that, because obviously as a consultant you parachute 415 in and then you go off. So I do not know exactly … I would say it is probably three or four out of 10.

Mrs Sharpe: Okay, thank you.

420 Q13. The Chairman: That is very generous of you, Andrew. Very generous indeed. You are a good man! So out of interest, just one little tiny anecdote I think is worthy of comment. Last night the Committee received an email – I think it was last night or yesterday evening – from a provider of non-serviced accommodation who explained in a very articulate way that they needed, in order 425 to maintain viability, the capacity from time-to-time to have stays of over 30 days. She had heard today that we were engaged with you and with the Department, and would we please take into account the fact that she desperately tried to get permission but could not get it – insofar as she had written to the Department, the Minister for DEFA, who then simply passed it to the Planning Committee. The planning officers came back and said if they want to extend beyond 30 days they 430 have got to reapply and have a different application. Yet you identified this very thing in your report in 2016 and nothing – I repeat, nothing – has happened since then. So I think you have been incredibly generous over four out of 10 – and I see you smiling. We cannot record your smile (Interjection by Mr Keeling) but I think the inference is certainly absolutely there. 435 One of the things that the Committee will want to address is the coherence of the overall strategy, and you could build a strategy from your 2016-17 documents. It did not happen. Have you got any examples that you can think of – if not now, then a note to us later – on areas where councils or others have worked more collaboratively across the various specialisms? For example, planning and finance, and these things working more closely together in a more coherent sense? 440 It seems to me that we are full of good intentions, so often. We are a jurisdiction which is very good at producing reports and then filing them and then picking them up a number of years later and finding we have done nothing about them. Have you got any examples where bold initiatives,

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in tourism terminology, have actually been successfully delivered cross-specialisms, so that there is a team working behind the project in a more coherent sense than thus far we have been able 445 to achieve? We have not been able to deliver financial packages that the sector wanted to pick up; we have not been able to deliver on flexible planning to the extent that we need to – and there are other areas that have to come into this. We, the Committee, will be addressing what we need to do to make sure that what is a fairly coherent story in your 2016-2017 report actually gets delivered. So 450 if you have got any examples that you can think of to show where that is happening better than it is here, we would be most grateful to receive them, if you can think about it …?

Mr Keeling: My immediate reaction to that question is, sadly, the examples are very few and far between. Working collaboratively and in a joined-up way in my experience is something that 455 the public sector simply does not do at whatever level, whether that is at a government level or a regional level or a local level. It certainly does not do it in relation to tourism. I do not know, I cannot talk about other sectors, it may well have a much more joined-up approach in other sectors, but my experience of over 30 years of working in tourism is that collaborative working is something that the public sector basically pays lip service to and never 460 actually gets its act together. So the fact that you have not achieved that on the Isle of Man is nothing different to anywhere else in the British Isles, as far as I am aware. I think perhaps Scotland and Wales are probably a bit more joined-up there. The other example that immediately springs to mind is County Durham, where they do have quite a joined-up approach where Visit County Durham works almost hand- 465 in-glove with the local council, particularly on the development front. So that is quite a joined-up approach. I will try and think of other examples, but I must admit I am struggling.

Q14. The Chairman: In a perverse sort of way I am pleased you are. Let me explain why. 470 It seems to me, bearing in mind what you said earlier, that it was not just a question of us catching up but having to leap ahead if we were going to be a real player in a competitive sense. It seems to me because we are such a small jurisdiction that if we somehow could achieve that joined-up, cross-departmental approach that would be a very important key to ensure we could start to drive forward in an impressive way. 475 Mr Keeling: Yes, I totally agree with that. As an island jurisdiction I would have thought you have more opportunity than many other places, where you do not have multiple layers of government to contend with – you do not have that. So I would have thought it is easier for you to try and achieve that joined-up approach in an island location than elsewhere. 480 I do not know what happens in Jersey and Guernsey, whether they are more joined up, but I suspect not.

Q15. The Chairman: Yes, quite. When you produced your reports in 2016 and 2017 and you referred to, yes, a Destination 485 Management Plan will do this, that and the other. We have read the Destination Management Plan 2016-20, but we cannot quite correlate it with your report. It sort of jars. If I can give you one example: you clearly state that the family market is an opportunity, but you then qualify it very carefully by saying – and you have done it again today – what you need to do if you want to achieve success is you are going to have to invest in product, and you are very 490 clear about that. We did not do that. We did not invest appropriately and yet, heigh-ho, the Destination Management Plan 2016-20 highlighted the family market as being a real opportunity, but completely ignored the fact that behind it there would have to be a very significant investment

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programme which again could only occur if Planning was locked into it. So we ended up declaring 495 an interest in something on paper and then were not able to deliver it. I was confused, because looking at the Destination Management Plan it shows the degree of seasonality that exists on the Isle of Man and it identifies a weakening in the spread of revenue because of a reduction in business traffic, which has been pretty consistent for a number of years. It shows a fairly short season where occupancy, or yield, is achieving a reasonable level – that is 500 the only word I can use. Yet in order to spread the season out to eight months, which I agree is absolutely necessary at a decent yield level, we were concentrating on the centre of the season where occupancy levels were reasonable – the family market – because of the fact that children cannot go on holiday these days outside of holiday time, on the threat of death by the head teacher. So what we did in the Destination Management Plan was focus more business that we 505 could not achieve, at a time when we actually did not need it. And I thought: I cannot tie these two documents up. Did this Destination Management Plan come out after your reports, Andrew?

Mr Keeling: No, it was the other way round. The Destination Management Plan was already 510 written before my report, I think, because we referred to the Destination Management Plan in our report. (The Chairman: You did.) So it was pretty much written. I am not sure quite the point you were making about the family market. The family market, yes, I agree it is not necessarily going to help you greatly with seasonality, but I think it comes back to the reason to go for the family market which is because currently there is a big family market 515 there that wants to come to the Isle of Man. It is not coming at the moment because you have not got the right combination; and it comes back to that making hay while the sun shines approach. So actually if you have got the right accommodation that can achieve good business out of the family market for eight months of the year, then actually you are going to create a lot of benefit in terms of the wider visitor economy. 520 I think one of the problems perhaps with the Destination Management Plan thinking is that the emphasis tends to be always about extending the season and not necessarily about growing the peak season, and the benefits of doing that. The other thing I did say about the Destination Management Plan, and again this goes back to 30 years of working in tourism, is that the public sector’s approach to tourism and destination 525 management nearly always just focuses on marketing, and there is never any … I have always worked on the development side and we have always been the poor relation. I constantly have this uphill battle to say there is no point in spending money on marketing if you have not got the right product. (The Chairman: Well, exactly.) There is never that focus on developing a product and all of my career has been about trying to achieve that product development – and some of it 530 has worked and some of it has not. But I think that very often is the problem with what people understand about tourism and destination management, they just see it as marketing and they miss the product development bit and the management bit as well. I think that is the big problem, always, in the public sector.

535 The Chairman: Thank you very much. You have said what I hoped you would say. Thank you.

Q16. The Clerk: Could I just ask a supplementary as a non-specialist? What do you mean by the ‘visitor management’ bit?

540 Mr Keeling: There are certainly three key element to destination management: there is Destination Marketing – that is getting the visitors across in the first place; and there is Destination Development, that is developing the product; and then there is Destination Management or Visitor Management which is about the experience that people have – making sure that everything works in the destination. That then brings in things like making sure the bins are empty,

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545 the promenade looks good and the visitors can get the information they need to enjoy their stay. So it is those three pillars, really; but all too often people only just think about marketing.

The Clerk: Thank you.

550 Q17. Mrs Sharpe: Thank you, Mr Keeling. Just to go back to product development. Am I right in thinking, on reading your reports, that you recommended there was not so much point in the Department focusing on encouraging families with young children because there would need first to be more investment put into activities etc. for these young children to do once they are on the Island, and that the Department 555 should concentrate more on families with older children? Was I right in that interpretation?

Mr Keeling: Yes. Again I cannot remember exactly, but from the analysis of the market potential I think the greater attention to the family market was for families with older children that want to get out and about and do active things, rather than necessarily small children. I think 560 that is a fair comment. But I think there is an element of thinking about, again, it comes particularly down to developing some of the resort-type of options that I talked about because actually the pre-school family market is quite important for those shoulder season months. So I think it is important to think about that pre-school market, but I do not think you necessarily need to think about lots of 565 children’s attractions that could be achieved with a nice family resort where they have got on-site children’s play facilities and those sorts of things that would attract that market. But again I think the opportunity for you on the Island in the family markets is more about an active family market, people that want to get out in the countryside with the kids experiencing nature, looking at the wildlife, going walking and getting active. That is the real opportunity, I 570 think.

Q18. Mrs Sharpe: Okay, thanks. Just talking about different markets, in your Hotel Solutions Report of March 2017 on the hotel sector you discovered that there was a lack of disabled access in general in the Isle of Man. We 575 have all heard about the pink pound and the silver pound and I was just wondering, from your experience, to what extent you think Isle of Man Government should perhaps think about concentrating on the disability pound?

Mr Keeling: Yes, sometimes it is called the ‘purple pound’. (Mrs Sharpe: The purple pound.) 580 I think again there is opportunity there and really that is where you need more modern accommodation. One of the biggest problems … You are right, there is an issue in terms of accessibility, particularly to some of the older Victorian properties. The hotels and guesthouses in Douglas are actually very difficult to even get into because you have got stairs and steps into the properties and they do not necessarily have lifts. I think that is where something like the Premier 585 Inn is coming into its own because it is designed to be fully accessible. So I think there is an element of needing that more modern accommodation to open up the disabled market. But in terms of the product, you do have things like the heritage transport that would be very interesting to that disabled market, but equally some of the holiday resort ideas that I talked about, the non-serviced accommodation, those could be designed to be more accessible. So, yes, 590 I think there is a big opportunity there that you are missing out on.

Q19. The Chairman: I think it is also probably very true in terms of what I understand, that the new boat will be much more disabled-friendly obviously than previous boats have been.

595 Mr Keeling: Yes, and the other point I want to make about disability is it was really interesting when I did the Accommodation Registration and Grading Study because one of things I asked

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about was the low participation in the National Accessible Scheme. There are only 19 accommodation businesses on the Island that have taken part in that. When I asked the question why, the consistent response that I got back was, ‘We can’t take wheelchairs’. 600 Disability is about much more than wheelchairs. In fact, wheelchairs are only a small proportion and I think it is very important to get that across. It is also about people with other lesser mobility difficulties, but also sensory impairments as well. So I think there is a need perhaps for more education about exactly what disability is: it is not just about people in wheelchairs.

605 Q20. Mrs Sharpe: Yes, and I think it also ties into the fact that we are going to have an increasing number of people over the age of 65 over the next 10 or 20 years, and if you can make your product accessible to a disability market then you are also at the same time catering for those more elderly tourists as well.

610 Mr Keeling: Yes, definitely.

Q21. The Chairman: We are asking questions blindly, because we have not seen your paper on grading and registration, but could you could you summarise your views in that area with regard to what others do elsewhere and what we are doing here? 615 Mr Keeling: I think in essence a key recommendation that we made was that … It is interesting really because you have got two issues. You have got the issue of registration and controlling minimum quality, and that is a real issue in the UK particularly because of Airbnb. You have not mentioned Airbnb, so I will. (Laughter) But 620 there was a real concern about where the Airbnb properties are in safety and legality and how to address that. It is interesting in the UK that there are lots of calls for compulsory registration. So when I started that piece of work, I thought this will not be a problem on the Isle of Man because you have already got compulsory registration. But actually what I found was that it is still a problem because it is actually very difficult to identify quite a number of Airbnb properties. The 625 Isle of Man does a lot of work, using up quite a lot of resource, to try and identify these properties, but even if you can address them you do not have … If Airbnb wants to operate unsafely it is very difficult for Visit Isle of Man to take any action against them, because you have actually got to have evidence that that business is operating; and that is quite difficult to prove. So one of the recommendations that we have made – it is a simple recommendation but very 630 difficult to implement – is actually to have some legislation which makes it illegal to advertise these properties. At the moment the legislation is that you have to show they are occupied, but it is much easier to show that they are being advertised. That was one recommendation. The other thing I would say – and I do emphasise none of this has been accepted by the Isle of Man Board, so this is purely me reporting back. I think the other thing we felt was that actually 635 you need to get tougher on the Island and you should really be focusing on the accommodation of 3-star and above. That is not to say that 1- and 2-star accommodation cannot operate, as long as it is safe, clean and legal and you address that through registration. But if you are an Island that wants to focus on quality then you should not really be promoting 1- and 2-star accommodation. I know there were some views and some people thought you should, and that the Isle of Man 640 should be promoting everything. But my message – and I think it is quite strong, really – is that you should not be doing that. If you want to drive up quality you have got to focus on quality. Actually, your accommodation industry – and I do not think they really appreciate this – gets a lot of support from the Government. Their grading is free, they do not pay for grading, and this is the only place in the whole of the British Isles where that happens; and they also get free marketing 645 through the Visit Isle of Man website. So the Government, through Visit Isle of Man is supporting a lower quality accommodation offering and I am not sure you should really be doing that if your agenda is about quality.

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Q22. The Chairman: Okay. Can we move to – and I am asking out of ignorance, because I have been out of the sector now for some time – the concept of booking online: what is the margin 650 that Booking.com on average takes now?

Mr Keeling: I do not know that for definite, I am going to say 18% but that might be wrong. It is probably about 15% to 20%, it is something like that.

655 Q23. The Chairman: So is it 15% to 18% on special offers or the standard tariff?

Mr Keeling: I think it is the standard tariff. I think that is the standard rate. Do not quote me, I do not know that for definite, I would have to double check that. But I think it can vary as well …

660 Q24. The Chairman: It is quite high, isn’t it? This is a difficult one, but are there any destinations that have constructed their own integrated booking system that required less than 15% to 18% that you could send us to?

Mr Keeling: Yes, but I would advise you I would not go down that route. 665 Q25. The Chairman: Why?

Mr Keeling: Cornwall tried it, theirs was the Fair Booking rate. But it has not really worked. If I am honest with you, I would say you are on a hiding to nothing in terms of why you want to fire 670 the OTAs. The OTAs play a really important role … It is wrong to think about it as the cost, because actually the reach and the business that you can get through Booking.com, there is no way that any individual accommodation business could do that for the same price that they are paying for Boooking.com to get those bookings for them. They are not perfect, there are some issues with OTAs in terms of how they control the market 675 and how they restrict what hotels and accommodation businesses can do themselves. But for destinations to think about trying to develop their own direct booking systems, I would say forget it. It is the market that wants to go through OTAs; the market does not come through destinations. The market wants to come through Airbnb as well. I think their rates are about 6%, they are a much lower commission. I think you would be on a hiding to nothing to try and fight the market; 680 I cannot see any reason why you would do that.

Q26. The Chairman: Okay, thanks for that guidance. Elsewhere you talk about the difficulty of stacking up a major new investment for a developer on the basis that they can get in but they cannot necessarily get out, other than at break-even. As 685 such, outside of grants and that sort of support there needs to be a willingness to recognise that, for example, an upscale hotel might very well need to sit within a broader development. You raised that point and I raise this … It is perhaps wrong to talk about a specific site, but you raised it in your 2016 report that it is mind-numbing to think that we still have not got a new high-quality development at Castletown 690 Golf Links – which is absolutely a site to die for. Yet years and years on we still have a derelict property slowly rotting away and a lack of determination on our part to actually make it happen. Will you continue to advise the Department on the importance of recognising the need to see the only way to get true viability for a high-quality product with additional facilities is to set it, in certain circumstances, both within the context of grants and a broader development? Because 695 you made a good point …

Mr Keeling: Yes. I think it would be wrong of me to comment on the Castletown Golf Links Hotel, again because it is live. I am fully aware of it, but it is not right for me to comment because that is a live application.

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700 I think the principle of what we said in the report of enabling development is a valid one, and that because it is difficult to get schemes to stack up commercially purely on their own merits, then linking them in to a development, particular residential, I think is certainly something worth thinking about. Not just for that particular site, but for other opportunities. There is a logic to doing that, because having linked residential accommodation actually can 705 help extend the season into the winter market. If you have got people living on-site throughout the year that is generating income perhaps through the restaurant or the leisure club, or it might be that the hotel could be providing services into those residential units whether that is cleaning or room service. So I think the link between an accommodation development and a residential development is actually quite a sensible one to look at. 710 Q27. The Chairman: Thank you, Andrew. Really, I am trying to update one or two of the comments in your 2016 Report. In terms of the business traffic forecast, in broad terms: do you expect and anticipate that to continue to be under a degree of stress and diminishing because of, for example, the methodology we are using to have 715 a conversation with you today?

Mr Keeling: Yes. I think the signs are that we will see the corporate market will not come back in the way that it was and, because of what has happened with COVID-19, companies have got used to doing business online using this type of technology that we are using. I think particularly 720 when you think of the cost and the time to get to the Island to come and do business, it is much easier if you can do a Zoom call like this. So yes, I think the corporate market is one that will struggle to come back.

Q28. The Chairman: Thank you. 725 A question which is hardly touched on, because it is difficult: would you like to give us a commentary on small-conference business, as you see it related to the Isle of Man?

Mr Keeling: I am not sure of that really, but I struggle to see the Island being a competitive conference destination unless it is something that is very specific to the Island. There are things 730 like the Cold Water Islands Tourism conference, or if there was a Gaming conference, or Aerospace, or something to do with ferries, and I know you have had a heritage railway conference. It would have to be something very specific. As a conference destination you are really not competitive because of the time and cost to get the Island. Conferences generally want somewhere that is more central and easier to get to. 735 I think also COVID-19 is going to hit the conference market for exactly the same reason that was talked about for the corporate market: the ability to do more meetings online.

Q29. The Chairman: On page 2 of your 2016 Report, paragraph 1.3.1, you say:

[The need to] ensure that Isle of Man Government politicians and officers and other stakeholders are better informed about the future prospects for the island’s hotel sector.

Did you see that happening through your report or did you anticipate or expect that we needed 740 to do a lot more work in that area?

Mr Keeling: I think it is the way of consultancy reports that at the time when we produced the report it was followed up with a whole series of presentations to Ministers, and also I did a presentation to Tynwald. Yes, everybody was very interested and hopefully well informed at time. 745 A lot of those Ministers have changed, so they are no longer … That is one of the problems with the political system, the degree of change, and so the new Ministers may not have seen the reports or had the benefits of a presentation. But also I think it is just the nature of things that

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people move on to the next thing, so it is quite difficult to keep the momentum going. I am sure, as Ministers, you have to deal with so many things – it might be hotels and accommodation today 750 and it might be something completely different tomorrow. I think it is difficult to keep that knowledge going, really. So it is great that you are reigniting and putting the attention back on to the work that we have done, and it is a good time to be doing that because of COVID-19.

755 Q30. The Chairman: Well, exactly, because we have a particularly difficult situation as you well know on the Isle of Man, where a significant proportion of the hotel accommodation is in dire stress at the moment. I mean, particular and specific for a number of reasons, which we will not dwell on …

760 Mr Keeling: But it is also important because it is an opportunity to see the opportunities. (The Chairman: Exactly.) Yes, you are in crisis at the moment but the opportunities when we come out of this terrible period are all still there. So all that growth potential is still there and, if anything, it is strengthened. That is why I feel now is the time to really be revisiting all of this and actually getting ready for the 765 re-opening and the bounce back and the recovery, and using this time. I have seen lots of hotels across the UK using this period to really reflect and adjust, to refresh their strategies. That is what I think you should be doing as an Island and as a destination.

Q31. The Chairman: Yes, well, of course that is a bit difficult when the borders are closed to 770 hotels and, in terms of Douglas, that the road itself has been closed! But the Committee sees that we have got two roles: one is to do everything we reasonably can to ensure the hotels are still there next year; and thereafter to create and to re-instigate a sense of hope and anticipation of what can be achieved as long as everybody pulls together.

775 Mr Keeling: Yes.

Q32. Mr Moorhouse: Just one question: in terms of the past, the emphasis was looking towards the coach markets and cruise ships, and they helped with cash flow but not really with investment. The impact of COVID on both areas has been quite huge. 780 Do you actually see those customers coming back to the Island?

The Chairman: Good question.

Mr Keeling: Yes. It is interesting, just talking to some of the hotels that are in that coach holiday 785 market recently, in terms of the latest piece of work I have been doing. What those hotels are saying is actually yes, they are confident that market will bounce back. It will change and, if anything, the lower end, the cheaper end of the coach holiday market has gone. There have been two very high-profile failures of coach holiday companies that were those high-volume, low-rate operators. Those hotels are saying that they think the market will come back as short breaks but 790 with higher yield and a higher rate. That is quite interesting. I think the other thing that was interesting is they were saying they think that market will feel very comfortable coming to the Isle of Man because they perceive you to be a safe place because you have been free of COVID for so long. So I think that market will continue and those hotels that are in that market are not intending to change from that any time soon. 795 Q33. The Chairman: I think this is almost my last question – the interrogation is nearly over! On page 38, you list a number of things that need to be achieved – this is the 2016 Report. Frankly, we have achieved very little of those things in the last four or five years. Is any of your

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advice to the Department in any way trying to indicate as to how they might better deliver or 800 convert words into action? Have you entered into that arena at all or is that beyond your remit?

Mr Keeling: Yes, with the work I have been doing recently on the survival support, I think my feeling very strongly from the outset was you should not just be looking at your survival, you need to be looking at regrowth and future growth. Actually, now is the time to think about going back 805 to those recommendations in 2016 and 2017 and actually revisiting them and moving forward. I know you have got this Economic Recovery Fund – is it £100 million that Government has set aside? I think particularly, my hope would be that this is the opportunity for the tourist accommodation sector to get its share of the money in recognition of its growth potential. I have brought forward various papers to Visit Isle of Man providing that context to the survival 810 funding, and to say it is not just about survival it is about making sure you are bouncing back strongly and everything is growing, and seeing that. So I am hoping that works and it helps to move you forward, but obviously that is outside of my control.

815 The Chairman: Well, that is a good point to finish on, unless any of my colleagues have any more questions?

Q34. The Clerk: Can I, just for the record? You used the acronym OTA, Mr Keeling. What is an OTA? 820 Mr Keeling: Online travel agent.

The Clerk: Right, thank you.

825 The Chairman: Thank you very much for your patience at the beginning while we sorted ourselves out at this end.

Mr Keeling: I am glad we got the technology working!

830 The Chairman: And thank you very much for your contribution, we appreciate it very much.

Mr Keeling: I will send those things through.

The Chairman: Thanks Andrew. Have a good day. 835 The Committee will now sit in private.

The Committee sat in private at 12.54 p.m. and resumed its hearing at 2.34 p.m.

Procedural

The Chairman (Mr Robertshaw): Good afternoon and welcome to this public meeting of the Economic Policy Review Committee. I am Chris Robertshaw MHK and I chair this Committee. With me are Jason Moorhouse MHK and Kerry Sharpe MLC. Please ensure your mobiles are off, or on silent, so that we do not have any interruptions. For 840 the purposes of Hansard, I will be ensuring that we do not have two people speaking at once.

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The Economic Policy Review Committee is one of the four Standing Committees of Tynwald Court which scrutinise different areas of Government. Our role is to scrutinise the established policies of the Cabinet Office, Treasury and the Department for Enterprise. We have recently decided to undertake an inquiry on the subject of Tourism.

EVIDENCE OF Hon. Laurence Skelly MHK, Minister and Mr Mark Lewin, Chief Executive, (via Zoom), Department for Enterprise; Mr Ranald Caldwell, Chair and Mrs Angela Byrne, Head of Agency, Visit Isle of Man

845 Q35. The Chairman: Today we welcome a number of esteemed visitors from the Department and the Visit Agency; but perhaps you would be kind enough in turn to introduce yourselves one by one. Angela?

850 Mrs Byrne: Angela Byrne, Head of Visit Isle of Man.

The Minister for Enterprise (Mr Skelly): Fastyr mie. Laurence Skelly, Minister for Enterprise.

Mr Caldwell: Ranald Caldwell, non-executive Chair of the Visit Agency. 855 The Chairman: We also have Mark Lewin, Chief Executive, who is on Zoom this afternoon.

Mr Lewin: Good afternoon.

860 Q36. The Chairman: Good afternoon, Mark. I wonder if I could just open proceedings, Minister, if you could just explain: why now, and why what we are doing? I think we are all aware that for the visitor sector it has been absolute agony, particularly over the last summer, particularly for those actually on the promenade. There are clearly two tasks 865 ahead: one is to get the sector through this winter and as far as possible fit and ready for next year. But there is a deeper one because the impact that COVID has had on the sector has been incredibly serious. It has damaged morale in a quite profound way and yet – and this is the conundrum – the opportunities for the sector in the future are significant. Therefore the Committee sees its duty as doing everything it possibly can to assist and support 870 the re-visioning of the sector so that there is a recognition that there is a future and that we know how to effectively achieve it. So today we will be concerned more about the latter subject rather than the former, about actually how we get through the winter. What I would say, as a single comment, is that it is terribly important that the proposals to offer support this winter become available to the sector as soon as is possible. 875 Could we just have a couple of words on that, Minister?

The Minister: Yes. If I may first and foremost, Caairliagh, thank the Committee for having this opportunity to discuss what the Department has always regarded as a very important sector for our Island. You will recall I think back two years ago when we restructured the Department, we 880 very purposefully created the Visit Agency to have a specific focus and support and direction for the tourism sector of the Isle of Man. That is when we have over 24 different business sectors here on the Isle of Man which is wonderful for our diversity and our stability and our resilience; however, the tourism sector has always been regarded as sometimes measured wrongly by just

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its GDP. It means so much more to our Island – our well-being, our quality of life – and I think we 885 wanted to recognise that, and that is why we created the Visit Agency to focus just on that. So in June of that year, 2018, we created the Agency model and actually in February of this year they produced their strategy and their vision going forward for this particular sector. The purpose of the Agencies was threefold: to actually give the policy and the promotion and also product development; and driven by the sector itself, not Government. The Chairs will all recall 890 my very first meeting when I said they are not to be talking shops because there have been far too many of those – and you have been part of those I think in the past, Caairliagh – and we wanted action. I will let the Chair speak for himself in a moment, because he will demonstrate how this Agency in particular has been taken to task and had a lot of decisions and actions since their formation back in June 2018. 895 What we have seen is steady growth, positive curve growth for this sector these last few years, and 2019 was a very positive growth area inasmuch as we were looking at 3% growth year-on- year, and that was building on previous growth throughout previous years. We were encouraged by that and we were also seeing visitor spend growing at the same time as well, and being a lot more diversified in terms of our visitors. So the trajectory was positive. I have termed it as a 900 renaissance in our industry and what we wanted to do was to capitalise on that and on that basis there was the strategy launch; and it can be evidenced that there was significant investment in the industry occurring as well at the same time. So it is fair to say that we were in a positive position come February – but of course COVID arrived and has changed that. But prior to that, I am delighted you recognise particularly the promenade which was 905 experiencing severe disruption due to the works that are ongoing there; and on the back of that we also had the collapse of Flybe just before COVID arrived and that impacted on over 70% of our hotel bed space that exists on the promenade. So we were very acutely aware that the impact on this industry was going to be felt first, and quite likely be felt the longest, in terms of economic impact going forward. 910 So we introduced the Strategic Capacity Scheme right from the get-go and we have issued now two payments of that and in fact tomorrow, in our Department meeting, we will be reviewing the findings from the KPMG and the Hotel Solutions Reports to determine what we do for what has now been termed the ‘third winter’ for this sector. So we are very conscious, we have been trying to get as much data as we possibly can for this sector so that we can provide appropriate support 915 for what will not just be survival, but fit for the future when we do come out of this.

Q37. The Chairman: Thank you. Just a couple of points. Have you any idea how soon you think Government will be able to indicate to the sector what the support in the winter is going to be, which was actually the question? You will appreciate that 920 by now accommodation providers are starting to lose their key staff as they perceive the degree of uncertainty going forward, and have rents to pay and families to look after and mortgages to deal with, and they cannot hang around endlessly waiting for hope to emerge; and if the sector loses many more of their senior staff they are not going to be able to open next year. So how long, do you think? 925 The Minister: I will just let the Chair respond there. We are working very closely with Treasury, which is part of the Economic Recovery Group, and we have already gained an extension with regard to the salary support in the first instance, which was important, before we can actually determine what the Strategic Capacity 3 would actually 930 look like. We are very keen that we do actually put something on the table as quickly as possible, so tomorrow in our Department meeting we will, as I say, discuss the findings, come up with a recommendation and be meeting with Treasury directly afterwards so that we will be following on from that very quickly.

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Q38. The Chairman: You are aware, no doubt, the impact that we are all very much aware of 935 has been disproportionately heavy for on-promenade and just off-promenade properties in particular, and I hope that reflects somehow in how you decide you want to deal with the Strategic Capacity –

Mr Caldwell: If I could expand on what the Minister has said. In terms of the support schemes 940 which were largely the Strategic Capacity Scheme (SCS) and the Salary Support Scheme (SSS) we launched SCS 1 and 2 and they were very well received; and that we were one of the few Governments I suppose that took authoritative action right at the beginning of the pandemic and did something for the accommodation sector, which I think was very well received in the comments we got back. 945 We did not get it right, and we had to include some and we had to up some of the rates, but it was a bold and reasonable step forward. I think where we got it wrong probably in the next SCS 2 and SSS versions were that we were working frantically and trying to get a solution, but did not engage as well as we could have to get the message out. We were in our ivory tower working away quite furiously. So to try and make sure that we did not come up against the wire again, at the 950 end of the period we engaged with KPMG locally and Hotel Solutions, who you had this morning, to give us an independent view of what they saw, what support schemes had been put in place, how effective they had been and what were the recommendations that we should take forward. Those recommendations and considerations are being discussed at the DfE Department meeting tomorrow. 955 We have made those recommendations. We have booked the Villa Marina, or an establishment to communicate that message, and invitations will be going out to the sector for the end of September because we wish to deliver that message – good, bad or indifferent – and this is the support that will be available, and in what form. I think the most important thing for me was that both KPMG and Hotel Solutions engaged, not 960 only with the sector itself, and understood the pain that they were going through and the consequences of not supporting but, more importantly, we had the political aspect as well where about 40% of MHKs were actually consulted on the schemes that were being considered, and what we needed to take into consideration from the political perspective to gain the support. So we might be up against the wire on communication but hopefully a solution will be agreed and 965 approved by the end of this month.

Q39. The Chairman: Good, thank you very much for that; that is helpful guidance. The only comment I might make is that we all refer perhaps incorrectly to the third winter on the trot but actually it is worse than a winter, by a country mile, because a lot of the Christmas 970 business has been lost on the promenade, it has migrated elsewhere – just a thought for you. So thank you, that starts the ball rolling. First of all, a compliment – I know, do not be too shocked! In front of us we have two Hotel Solution Reports which we have considered – the 2016 and the 2017. I congratulate you, Minister, on your choice of consultant. Do not be too surprised about me being nice! (Laughter) (The 975 Minister: Well …!) Here it comes, yes! They are very good reports. But one MHK, a couple of days ago on their 4/5 year interview on Manxnet TV, whatever it is, Paul Moulton’s show – and it wasn’t me – when asked what they thought one of the problems was, he said – and I thought, spot on – our Government produces reports and does not act on them. Now, the point is that in 2016 you had before you an extremely 980 good report that articulated a whole range of areas – and we want to look at some of these this afternoon – but we still have not acted on them. That really is the nub of this afternoon because we are not going to go out trying to reinvent the wheel. The Committee is satisfied that these two documents that you commissioned are excellent. It is just that we have not acted upon them. We had Andrew before us this morning, who was effectively reiterating a great deal of what 985 he said four years ago. What he did say – if any of you heard it, or listened in this morning, I do

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not know. (Interjections) Thank you. You would have heard him say we are behind the curve, we need to get ahead of the curve and effectively we are acting too slowly. I think the nub of it, the essence of this is that we have got these excellent reports and we want to examine why we did not get on with the job before now; and why we are, even now, struggling 990 to move forward. So that is essentially what this afternoon is about and we hope to report and be very open about this. We want to report as soon as we possibly can because we want the sector to know that Tynwald, the political process, Government, is really interested in this subject and is determined to act. The Committee will not come forward in the first instance with recommendations because we will end up with a bun fight over detail. What we want to do is get 995 the story out that we believe is the case and get Tynwald to reflect on that debate through the General Debate, Minister. (The Minister: Good.) Then, if it is appropriate, come forward at a later date with our recommendations. So we are likely to come forward with our General Debate no later than December because the clock is ticking and we have to agree in part a sense of confidence in the future, because there is a future there to be had if we would just act and get on 1000 with the advice and knowledge that we have got. We will also be looking at very much how this delivery happens. Now, I want to pick you up, Minister, on one comment that you made during your opening remarks about it is ‘not Government’. But it is. I do not think Andrew at any stage said this is all about the private sector. If you read his 2016 report, and what he said to us this morning is he 1005 sees it as a symbiotic relationship between the private sector and Government to work together, but it is Government as a whole that has to work together. If you look at the key issues it is how we finance these significant improvements that are necessary, it is how Planning actually works and it is how amenities were delivered in other ways through DOI and DEFA. And right now we are deeply concerned about … I think the Department for Enterprise means well and wants to 1010 respond but actually because so many things sit outside in terms of delivery, outside of your particular Department, you have not got the capacity to actually create a cohesive, single Government that says, ‘This is the vision. This is the strategy. These are the financial issues. These are the planning issues. These are all the things we have got to do’. And the Council of Ministers, having had that vision and strategy delivered through NSG, then get on with the job. That is what 1015 we want to look at. So one of the areas is Planning, and it is clear from Andrew’s reports that Planning is holding us back. What are you doing about that?

The Minister: Well, Planning is always a political football, shall we say, not just in this industry 1020 or this sector. There are some live planning applications in place. I can confirm part of the Economic Recovery Group, of which we have a whole number of work streams in there, is that we have just agreed funding for additional resource in Planning. So not specifically for this sector but there is a significant backlog in Planning, and that will help our construction industry as well as other sectors at the same time. 1025 We do contribute to Planning where we are requested to. It is fair to say there are some planning applications already approved for significant investment in this industry, and we are aware of others that have not been lodged – significant developments that would have been lodged by now if it were not for COVID. So in terms of what we are doing, we have offered support to planning applications; and, as 1030 highlighted just now, with Treasury we have now been able to grant additional resource support financially to them to help them progress some of these applications.

Q40. The Chairman: I get that, but do you think that is enough?

1035 The Minister: Well, I think –

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Q41. The Chairman: Can I just interrupt …? Andrew does not think it is enough because he makes it clear in his commentary that the concept that is already in place – I do not know exactly the wording, but I recall his overarching national importance issues. Do you not think that in light of the history – I was going to say over the last 10 or 15 years, but actually it is 25 years – that we 1040 have not embraced the issue of saying, ‘Look, we believe tourism is a key player in terms of diversification and all the other issues that spin off it’? Do you not think your Department should be saying that there are certain aspects of the importance we attach to new developments that we need to attach to the overarching national importance criteria rather than – shall we say, quite reasonably – just offering support for a 1045 particular application? I will give you an example. When I came into politics, Lord Street was just a car park and it had been for years and years. The first discussion I had in Tynwald, many years ago now was, ‘Hang on, the scheme you’re trying to bring forward for Lord Street won’t work’. Here we are now and I am in my last year, 2020-21, and we have not made any progress. In fact we have actually gone backwards now and we cannot even have it as a car park. So, that is a 1050 glorious own goal that we have not been able to develop a scheme on Lord Street that has a number of important elements to it, including tourism. We have failed for a generation. We are messing about with detail and we still have not delivered. In terms of Castletown Golf Links, probably one of the finest and most beautiful possible sites you can imagine for an upmarket hotel with golfing dynamic, and yet there it is a miserable relic 1055 because, in Planning terms, we are arguing endlessly over detail. Minister, it is about time we put our foot down, surely, and said, ‘No. Tourism, in Planning terms, has overarching national importance’. Will you do that?

The Minister: As I said, I have supported, but I guess you pointed out too there, if you look at 1060 Lord Street – that has completed a planning process and that has planning approval. The issue around parking is a contractual matter between the owner and the Department of Infrastructure. But there are numerous developments that have happened over the last few years – in excess of £20 million has actually been invested in a number of hotels and non-serviced accommodation over these last few years, and have gone through Planning. So the question really is: is Planning a 1065 real problem here? I think you would need to look at the detail of what the backlog is. You have just mentioned a live case at the moment that has been ongoing for a couple of years. It is in process with our colleagues in DEFA and we would like nothing more than for that to be determined, so that we can hopefully get on with it. But what we have done politically and I think in the last administration we helped determine 1070 that that development will have tourism as part of its remit. So that was determined politically in the last administration, which you and I were part of.

The Chairman: I will come back to that in a second, but Jason wants to –

1075 Q42. Mr Moorhouse: Just to look at another example. There was the glamping site in Groudle last year and that was innovative and the sort of thing that Andrew spoke about this morning. But that hit a brick wall in Planning. Was it just Planning that was the stopper there, or were there other things that really got involved?

1080 The Minister: Well, I do not know the details but, yes, clearly planning was an issue. Why? Because it chose a greenfield site for it. But I would point to Glen Helen that has been through a planning process. It is a high-quality glamping offer, which is what Andrew had stated in one of his reports, that we needed something different, something in this particular space; and that has been approved. 1085 There is now another planning application in process in Ballafesson, just outside of Port Erin, another glamping prospect; there is one at South Barrule that has been mooted as well. There are others we know that are interested in that particular space. So I think resource, unless we want

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to overrule the planning and rule that anything goes with regard to tourism, then I think that would probably form part of the debate that Caairliagh has just mentioned there, in the General 1090 Debate. If you want to create that as part of a national importance issue then we would have to make decisions over greenfield sites.

Q43. The Chairman: I only raise it because the person you commissioned to advise you on planning says there is a problem. But you are telling me perhaps there is not because you are 1095 trying to give me examples where things have gone right. (Interjection by the Minister) But then, with respect, Minister, the alternative is not all things are let go, it is devising surely a way of Planning to work that is favourable to tourism so the sort of thing that needs to happen (a) can happen and (b) can happen within a reasonable timescale. So I am only coming in to you on the back of your consultant. 1100 The Minister: No, it is a fair comment. But I do think you have got to look at the overall aggregate of where we are with regard to Planning. Again, Planning always is a bit of a political football. But look at the percentages. I was chairman of Planning for a year and if you look at other developments on average over 90% get approved, but what we tend to hear about are the 10% 1105 that do not get approved. But usually there are legitimate reasons for that and I would suggest that the planning system is robust; however, Council of Ministers does have an opportunity to bring in developments of national importance. But as you highlighted, go back to Lord Street, planning has been approved. So the development is ready to go. It is a turnkey operation now.

1110 Q44. The Chairman: Yes, well you are moving into another area now, which is financial structures around developments that have a variety of different components in them. Your consultant says that if we are going to achieve the necessary standard of accommodation provision that the market wants now and in the future, then the entry route currently for a developer is not sufficiently viable to give them an exit route, and that actually in planning and in 1115 finance terms there has to be an arrangement around it to make it sufficiently attractive to happen. So it is not just a question in terms of Lord Street that the planning is there, it is a question of: are the structure and the support right? Now, thus far it has fallen down up to now four times – and at what stage is Government going to say, ‘Hang on a second …’? For example, whilst Jersey 1120 has extended itself into the sea and built a first-class four-star-plus hotel, we have sat arguing about an empty site that we cannot even use as a car park now. Surely that is time for us to say, ‘What the hell is it that we’re not doing right?’ Not just simply saying planning is okay, or we have got planning permission so our job is done. What I am trying to say to you is, it is bringing you back to your early comment that from what 1125 you said to me, when you introduced the concept of the Visit Agency, you were saying it is not Government. Well, it is Government; and again your consultant says it is the relationship between Government and the sector that is going to ensure success here. It is not just your Department it is the other areas as well. This Committee cannot yet see that there is sufficient integrated co- operation between the Departments all equally recognising that certain things have to happen in 1130 order to allow them to happen. That is the essence of it. In other words, that is the sort of area we will be bringing to the floor for discussion because it really, surely needs to happen. You are not really saying that the Government is going to distance itself arm’s length from the future, the vision and the delivery, surely, of the sector?

1135 The Minister: No, no, just to remind you: product development, promotion and also policy input. So therefore policy input comes to the politicians for that final policy decision, and what you are talking about is does that need to go beyond that in terms of just a single Department? There are decisions that cannot be made by a single Department and that is where sometimes the challenges arise.

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1140 Q45. The Chairman: So what are you going to do about it?

The Minister: Where we see that there is a problem then we will work together.

Q46. The Chairman: But there is a problem. Your consultant says there is a problem. 1145 The Minister: Well, we will have to wait to read the full report. I have not read it at this stage –

Q47. The Chairman: No, it is in this one! It states – four years ago – this is like your end-of-term report, Minister. Four years ago he told you what the problem was. It is because there are too 1150 many issues stretched across a number of Departments that are kept in isolation, and therefore when a tourism initiative comes forward it might very well enjoy your support but die somewhere else. Now, would you not agree that there needs to be a collaborative group that sits together, cross-departmentally, with the interest about the vision and delivery of the future strategy? Because your consultant says the Isle of Man is falling behind; and we need not only to catch up, 1155 but get ahead. So what is that thing that we are going to do that ensures we get ahead? I would put it to you, Minister, that it is about creating a collaborative cross-departmental group all dedicated to the vision and the strategy; and that we could do that better than anybody else. Because if you had listened – as Angela did this morning – to what Andrew said, he said not many jurisdictions, 1160 councils or whatever actually do this very well. Yet here we are on a small island with a Government that is close enough to talk to each other down the corridor and yet we still cannot get our act together. Would you not accept that is where our opportunity lies?

1165 The Minister: Yes, and I think what you are leaning towards is a Tynwald-endorsed strategy, effectively, and a policy that we would all support. So in bringing forward a General Debate that presents that opportunity I think to make that statement. So in essence I would come back to, it is not one single thing now. We have to work together, as you have just said there. What we have done here is created an Agency where those policy 1170 inputs and those promotions, those product developments come from the sector not via the Department. So we are facilitating it, not delivering it, effectively.

The Chairman: Okay. Kerry?

1175 Q48. Mrs Sharpe: Just carrying on from that, Minister: could you give us an idea in practical terms of how that works? So, for example, you have got these reports which were written in 2016 and 2017, they are full of recommendations. Your Department reads these recommendations, but what happens then? Does the Department then talk to the Visit Agency and then the Agency makes these recommendations active in real life? Is that how it works? Or what is the practical 1180 mechanism that translates a recommendation in a report into something that someone can see on the ground – for example, the glamping pod? How would you make it happen? (Interjection)

Mr Caldwell: Could I maybe answer that, please, if I may, Mrs Sharpe? 1185 To me I think we just have to draw back a little bit. I think when you asked the question about what sort of forum, I think the Economic Recovery Forum that we have got at the moment is probably the right vehicle to push that through. One of the challenges we have faced when we have been trying to get investment or get support for the Visit Agency and for our plans, is the question I think that Government has to ask itself which is: why invest in tourism in the first place? 1190 Why invest in any of the sectors? Will it give us a return? What will it do for the Island?

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We have asked for a piece of work. The board has approved that last month in terms of getting that value clearly articulated in terms of its economic value, whether that be exchequer benefit or beyond an economic benefit. I think we have clearly articulated that the opportunity is there both in terms of the surrounding jurisdictions, which we have played out within the economic 1195 sector quite well. Jersey, for example, you quoted 750,000 tourists, a million targeted by 2019. We have delivered the best year in 10 years at 318,000 we think this year, but that has to be confirmed. We believe that our growth is hampered by a lack of accommodation. We think our ceiling with the existing accommodation is 350,000 – to get to half a million we need to grow that. We are 1200 aware of the reports, I have looked at them and I have been working with Andrew. We certainly look and see that a transformation of tourism is required. So I understand the economic value, convincing Government that it is in a sector that needs investment, the benefit of investing in that not only to Government but to the sector themselves, and to inward investors. He referenced Planning: I have dealt with several investors who have looked at various sites. We are very good 1205 at saying no. We need to say yes. We have asked – and this was one of the earlier ideas, which was to create an investment portfolio – so instead of selling stock shares in the open market we have 20 sites where we, the Government, have obtained the outline planning permission, determined what is on the site, that it is complementary, etc., and then brought those propositions to market. That is the sort of area 1210 that we need to be in, but we have to prove why we should invest in it in the first place. The feedback I do get is that we are always the country cousins, or the poor relative; we are the last in the pecking order, I think. We have got a clear message to create value to deliver, and it is up to the Visit Agency to articulate what that is, and gain the support with the Department’s help, and others. I must admit this forum is the ideal opportunity to challenge us on that and help 1215 us get our priorities up the agenda.

Q49. Mrs Sharpe: Thank you. But just in terms of the practical mechanisms, what is the process that is in place in order to make a recommendation into something concrete that you can actually see with your own eyes? When we spoke to Mr Keeling this morning he felt that on a scale of 1 to 1220 10 he would say that the Department or Visit Isle of Man has only brought about say three or four out of 10 –

The Chairman: He was being kind!

1225 Mrs Sharpe: – of these recommendations. So, first of all would you agree with that? Then secondly, again, what is the process that you use in order to deliver?

Mr Lewin: Could I perhaps come in on this point, Mr Chair?

1230 The Chairman: Yes, please do.

Mr Lewin: Just to add a bit of clarity to the comment which was made before in terms of Government commissioned the reports and perhaps not them all being followed through, or all the components being followed through. I think we have to recognise that often when we ask for 1235 expert opinion, it is an opinion and then it has to go through a process. So, in terms of Mrs Sharpe’s questions there, the normal process would be when we take the report we would consider it and we would go through the political process through the Department, etc. We have set these Agencies up specifically to have a broader collection of views, and to take two big aspects of Andrew’s discussion that you had before about the investment fund 1240 to provide substantial public funds to bring new products on, and in terms of providing a completely new product set, such as in the non-serviced space. We have taken those and, through the Agency structure we now have, we have been having conversations about how that may work.

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But there is a balance here and we have to recognise if, for example, we use substantial public funds and as I say we can look at that, and some jurisdictions have got elements of it, and we have 1245 the Financial Assistance Scheme already, which has provided some funding for some of the developments, as the Minister has said. But every time a new product comes to the market it has the potential to displace other providers and we have recognised that some of the £20-plus million that was mentioned before, investment has happened over the last few years that has not required any public funds and any public assistance as such. So there is a balance to be had just in 1250 terms of how much Government interferes in the marketplace: what is needed to stimulate new activity versus what actually could displace that. In terms of the product and the idea of, for example, holiday lodges which I know you talked about before, which is in the report and it says we are lacking on that opportunity. There has been some development, for example, in the glamping and the lodges, but not at the scale that Hotel Solutions said. 1255 When we have talked to industry about that, it is fair to say that there is some concern that if we use a substantial amount of Government support to create something like that – that big destination attraction – then it could displace some of the providers that invested their own funds over the last number of years to provide stock. So it is not a case of just taking a report and saying, ‘Right, we are going to implement all these things’, it has to be taken through and each component 1260 looked at. There needs to be assessments on it and we need dialogue; and it is that dialogue really that the Visit Agency has been able to help us with and why we set that up, to bring a whole, strong set of private sector expertise and voices to understand the implications of the direction we wish to go in.

1265 Q50. The Chairman: Okay, I hear what you are saying, but Andrew’s report effectively says that – talking about the existing hotel accommodation stock – there is a very significant reticence on the part of operators to engage with support schemes because they are too complex and bureaucratic. Now, they are either there and are going to work or they are not. I would put it to you, Mark, that they are not working. 1270 So should we not look again at constructing schemes that are going to assist? You talk about displacement – Andrew says that the current quality of the stock compared to our competitors is not good enough. So are we just going to progressively drift until we fall off the end of the cliff, or are we actually going to do something really proactive to make it all happen? In everything that you say, I do not hear any discussion. I mean, for example, measuring 1275 growth: how do you measure growth in the hospitality sector? Is it just arrivals?

The Minister: No, visitor spend is obviously the other side of it. We obviously rely on our colleagues in the Cabinet Office to do some of that and clearly there is a fair amount of work that goes into the TT, obviously, and the Grand Prix and Classic TT. So we have had some of our work 1280 there –

Q51. The Chairman: So the TT and the Grand Prix, however important they are, and they are very important, they are only two weeks in the year. The hotel sector is absolutely dependent, like an airline, on yield; and it is not going to be just yield over five months because as the business 1285 sector diminishes it is going to have to go to eight months. That is the challenge that you have got. You need a substantial yield for eight months in the year with your existing stock, which will require investment, and currently you are failing to deliver that because the schemes are too complex and too bureaucratic. What would you say to that? 1290 The Minister: Well, I think we would have to have a look at the schemes that we have already supported. We have supported a number of ventures already that have demonstrated that things can be achieved. We have just talked about Planning. There have been extensions and there have

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been upgrades already that have happened, as well as new developments. So that has already 1295 occurred. Couldn’t we do – ?

Q52. The Chairman: No, no, Minister. Andrew said, and you have said today that the bulk of the new stock has come into play without the support of the system. So I do not think you can, with respect – 1300 The Minister: Not all. It is the choice of the company and the individual that –

Q53. The Chairman: No, it is not, Minister, because Andrew, your consultant, tells you very clearly – and let me be pedantic about this … He says that if you want a high-quality development 1305 to upscale, which is in your report, it cannot happen in isolation and still give the developer an exit route. He says there has to be a structure of either grant support or other structures around it that allow profit to be transferred from another sector of the development into a break-even facility for an upmarket facility. That is your consultant saying that. I am not sure you have yet taken on board the important statements that your consultant has 1310 made. Now, the areas where development has occurred, I cannot discuss them in an open public forum, but they have happened for a variety of different reasons where the investor is playing either a significant long-term play or they have external funds from a significant organisation. I am asking you to address the fact that your grants and support schemes are not working at the moment and it is clear that they are going to have to if we are going to recover some of the 1315 existing stock that we have currently got.

The Minister: Yes, I will. I do take it on board and I think one of the actions which we have not articulated here is the fund to do exactly what you just said, and that was one of the recommendations that came out of that report. We had worked up a proposal with regard to a 1320 fund and we are progressing that through the Agency and about to go to Treasury again. That had just happened pre- the strategy that was literally delivered in February of this year. Here we are now, what happened in March has happened in March, and whilst we could construct all kinds of funds, what we now have to focus in on is the survival of this industry. I know you know only too well what that is like, but we have got a number of other issues I 1325 think, not just funds that are in play here, but we have got capacity issues, we have got confidence issues, we have got uncertainty; and you have just mentioned a whole sector which we do not know where that is going to be, going forward. That is the business travel sector. You have only got to look here in Douglas at the number of people who are not even travelling into Douglas, let alone getting on a plane or going on a boat to go for business. That sector is going to take years. 1330 Q54. The Chairman: Well, you have made my point for me, because I agree. But I am just clear that there is no expected growth in that market which comes back to my earlier point that in order to sustain the investment, because you have to keep reinvesting in your product, you are going to have to have an eight-month season with significant yield. But you have no way of measuring that. 1335 When I asked you how do you know that there has been growth in the market, you said that there is some economic adviser’s comment about the size of spend. Would you not agree that we perhaps need much more accurate data collection to understand exactly what the yield is, what the length of the season is, what the occupancy is, what the average room rate is – so that we can get to a point where we know that we are achieving viability? Because, at the moment, hotels are 1340 going from year-to-year with a lower than necessary reinvestment level, and progressively will fall out of the market. As Andrew says, we are behind the curve. We have really got to do something quite dramatic now if we are going to be serious about tourism to get ahead –

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The Minister: We have, and I think this is one of the actions that have come out of the Agency. 1345 Each of the Agencies, I will say, have their own dashboard and key performance indicators and I know that they track the air passengers, the sea passengers, the occupancy and I know the service indicators … and the Chair might be able to expand a bit further with regard to that. But there are a whole host of key performance indicators that are linked to the Agency’s performance. So they meet on a monthly basis, as they are managing all this data. But clearly I agree with you, data is 1350 king and you can only react to that, and when you have got such a dramatic position that we are in right now with the fall-off as it is, the focus here is really around survival, in essence, and that is why we have been focused … That strategy was there in February and I hope you have actually seen that and reviewed that because looking at a report of two years ago, three years ago … You know what? That is great and 1355 that is why we have re-engaged with Andrew and Hotel Solutions, to see where we are in the current position. It is all right saying what we have not done in the past, but what are we going to do now and what are we going to do for the future? As I say, as a Department, as a Visit Agency we are fighting for this industry because we believed at the very start of this whole thing, that we think it is so important to it. But I think you are right 1360 inasmuch that we can talk about yield, but I also think we need to talk about the multiplier effect of this industry that it has on this Island. Where that spend goes around, for every pound that is spent there has been talk of a multiplier effect which is £1.80 that goes around – if they are using local suppliers which was, as you know, a very important aspect to the support that we gave through the Strategic Capacity Grant Scheme. 1365 Q55. The Chairman: Yes, that is fine. But we are specifically here – at least the Committee is – talking about how we achieve higher quality standards in the available accommodation stock. That is a very specific issue linked to planning, to investment, to identifying yield levels, ensuring that the season is long in a very clear, very specific set of issues the matter of additional spend; and 1370 also there is a broader economic issue and effectively a matter that has got to be politically interpreted. But I want to move on to a point that Andrew made this morning that sometimes there is a disconnect – and I just want to challenge you on this one – between the concept of marketing and the product itself. One of the things I would like to challenge you on – or either of you, or Mark, 1375 whatever, to give poor Laurence a rest, bless him – is the issue of the family market. Now, Andrew was very clear that there is an opportunity there, but he listed the things that we were not doing, that we needed to do. A great big, long list. Analysis of reading that list would tell you very quickly that it needs investment, it needs planning behind the investment, it needs business plans and it needs a lot of new product in order to achieve it. 1380 So that is what we have to do before we get to the family market; and yet this prioritises the family market. In other words we are selling a product we have not developed. How on earth did we do that? When you consider that the family market, in its purest sense, is dedicated to the high season – because children these days are not allowed to take their holidays outside of school holidays without the parents being fined. So right at the point that we should be considering 1385 having a much broader eight-month season with proper yield, what we are saying is actually the priority is a family market which is in the main the high season, and we have not invested in the product yet. How the hell did all that disconnect happen?

Mr Caldwell: Just a couple of points if I may. I think the document you are referring to is the 1390 Destination Management Plan. (The Chairman: Yes, this one.) This is not the recently launched 2023 strategy which built on that and redefined some of the segments that we were after and why. The family market is important and it is part of our ongoing study. Words are one thing but actually understanding what lies beneath is what we have been trying to get our head round. So 1395 we commissioned a piece of work recently to get the insights of consumers and visitors, not only

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pre-COVID but mostly importantly in a post-COVID world and it was asking: what did you want? What would you come to the Isle of Man for? Have your needs changed? What product would you buy – would it be cycling or walking? We might think you might know what you need, but they are going to tell us what that actually 1400 is. That will also pick up the accommodation piece as well and validate some of the comments that Andrew was making in 2015-16. What are the accommodation requirements and have they changed? Do we have sufficient stock? The strategic piece of work is based on we say largely six pillars, and I will not go into them. But it does need a deep dive into each one and each one is as important as the other. 1405 So we will look at the product set, what you physically come for, but equally the product of where you stay is probably just as important. We have to understand that and make sure that the mix is right if we are to deliver our strategic target. It is a big area, but one that we are actually drilling down to so we can come back and be quite clear it is what we need and I get back to that economic argument: we have to prove why you would want to invest in the sector itself, build 1410 from that and solicit support.

Q56. Mrs Sharpe: Can I just ask? It seems like the questions that you are asking are the same ones that Mr Keeling was asking. Are you asking these questions again because we are now in a different economic situation? 1415 Mr Caldwell: No. The Agency was established in – I think the first board meeting was in June 2018 which was two years after Andrew’s report. We obviously got those reports. I have looked at a wide range of reports and information and really running it like a business; and so we are validating some of those questions and understanding why things have got stuck in the pipeline 1420 and why they have not been progressed.

Q57. Mrs Sharpe: So this time, then, you are actually going to address possibly why certain things have not happened and look for where the blockages are and try to unblock the blockages. Is that right? 1425 Mr Caldwell: I suppose if I could turn that around. We have set a very ambitious figure of 500,000 visitors by 2030. What do we need in place to deliver that? We will not leave any challenge behind in making sure we clearly understand what it is we need, and request it. But it is based on: why invest in tourism? 1430 But in the Visit Agency, I have done a reasonable job. I am not going to ask me to vote for myself as to how well we have done. (The Chairman: Go on!) Well, I was quite harsh with myself, but I think … (Laughter) I have learned patience. (Interjection) So we will get there. It is a little bit longer than we would expect. Obviously it is a marriage of the private sector and the public sector and it is a difficult marriage but we have to work together in partnership, and work and develop 1435 those relationships. I believe through this last two years that I need to prove the argument, or the Agency needs to prove the argument as to why we should be on the agenda for Government to invest in as a whole rather than just in part. I feel that the more we articulate the half-million challenge, the more support I am getting. We are not just ‘more of the same will do’, we are actually taking the next 1440 step to build something that will make a difference to the Isle of Man.

Q58. The Chairman: No, we are not trying to be here this afternoon being critical. We are an acerbic friend – shall we put it that way? We care hugely but we need it to happen and we have got to be surely extremely honest, brutally honest, about why certain things do not happen. It 1445 brings me on to the future of the Visit Agency. At the moment I see you as the child of a Department, when in fact I would put it to you that you need to be a grown-up with a strategy that everybody has bought into across Government.

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You do not have to necessarily sit under the Department for Enterprise at all. I see the Agency as being an important deliverer of the strategy to which the Council of Ministers – through NSG – 1450 have said, ‘Yes, that is what we are going to do’. I will give you a little anecdote, just for fun. Angela probably heard this, I do not know whether Mark did, if you were listening this morning, Mark – were you? No? Were you listening this morning, Mark? No? Okay.

1455 Mr Lewin: Yes.

Q59. The Chairman: You were? Were you listening this morning to Andrew?

Mr Lewin: Yes, I did hear it. 1460 Q60. The Chairman: Well, the point we made was this: that in 2016 Andrew said with regard to non-serviced accommodation there was a problem about stays over 30 days, and we needed to look at it. Last night the Committee got an email from somebody pretty despondent saying, ‘I am in all sorts of difficulty here, I need to be able to provide a stay of over 30 days’, and I wrote 1465 to the Minister for DEFA. The Minister for DEFA, Mr Boot, passed it over to Planning; Planning said, ‘Well, if they want to do that they’ve got to submit a different planning application’. So he then just passed it back to the person who made the comment in the first place. It is gone; it is dead; it has fallen down. We did not do anything about the comment that Andrew made four or five years ago that this 1470 needs addressing; and a Minister in another Department of Government is playing no part whatsoever in making sure that the delivery we need happens. Because the only person, the only organisation at the moment that owns responsibility for tourism is your Department, when in fact it needs to be the Council of Ministers as a whole that says: that is the agreed strategy and all Ministers will play their part in this and that and the other way. It is only when you do that that 1475 you are going to really turn this on in the way that you need to. Do you accept or disagree with that argument?

The Minister: No, I absolutely buy the whole principle. You know that I agree with regard to – I will say it, the single legal entity – where Government makes a decision and everyone follows 1480 through with that. No, I do absolutely buy that. But if I go back to new markets, you mentioned there about the family market. What you have got there is a document that is completely outdated. There is this strategy that was just published in February this year.

1485 Q61. The Chairman: Could you give us a copy of that?

The Minister: We will absolutely give you a copy. But through the Agency, this is part of the product development role and responsibility that they had, they had identified three markets where we are very strong and we could gain a lot more business in. They have targeted to create 1490 three champions in these fields and that is walking, golf and cycling – naturals for the Isle of Man, quite clearly. That was about to be launched and then, of course, COVID hit. So this is all ready and this is why the strategy as it stands now still stands up, we believe, as endorsed by the Agency – that has continued to meet through COVID, I might add, monthly they have been meeting and discussing the current situation. But they have also been looking to the future as well 1495 and that is why they have progressed the champions of these three different markets where we think there is a great opportunity. We have got a great product, we know that, and matched up with the accommodation let’s hope we have got the capacity. We know we have got the boats, but the air services are going to be another challenge going forward, as we well know.

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1500 Q62. The Chairman: Okay, but we know that we have not got the accommodation standard that we need for the future. So that has got to be dealt with, hasn’t it?

Mr Caldwell: Correct.

1505 The Chairman: Okay.

Mr Lewin: Could I perhaps just pick up on that Planning comment, Mr Chair? It is a good example of a comment that came out a number of years ago as an idea. So it is the let for longer-term stays occurring in tourism-registered accommodation. It has come up, but pre- 1510 COVID it did not come out much in terms of industry comment … Where we are at the moment, clearly any source of income could be helpful to an industry that has been in severe agony and crisis. So it is being looked that again but there are some real challenges to changing planning consent that was given to a property at many different points during the years. It could be to do with where it is located and the idea of having longer-term residents in that area is not particularly 1515 palatable; it could be that the quality of the accommodation is not suitable for longer term. There are all sorts of considerations and challenges in terms of a product potentially coming out to the tourism allocation and going into what could be seen as a residential allocation. But it is a good example. So there was an idea in the report and the report was taken, it was consulted and discussed 1520 with a number of people and it did not really get a lot of momentum. Where we are now in the current climate, it has come up again as a comment. It clearly could help some businesses generate income if they were able to take longer-term lettings. So there are live conversations on the go again at the moment about how can we do that. But we have to do it in a way that does not give a legal challenge from a planning perspective, does not give a resident challenge in terms 1525 of neighbours and issues around that, and also from an industry perspective it does not take stock out at a time where we are – and we were told before about the optimism that was there pre- this year in terms of being able to have that growth going back. So it is not the case that we can just turn on a light switch and say that tourism premises can have long-term stays. It is quite a complex topic. 1530 Q63. The Chairman: Thanks for that, Mark. Coming on to the issue of the yield and average income per room, per day. In 2016 Andrew said that we were behind the curve in terms of our income per room, per day. You were talking about growth in the market up to when that ‘C-word’ happened. What do you consider that the 1535 average achieved room rate was in the sector up to March of this year?

The Minister: If I may, I might just ask Mark to pick up on that because we did some work around seasonality comparisons with the Isle of Man versus other jurisdictions. So I am not sure, Mark, if you might want to expand upon that? 1540 Mr Lewin: I will talk in general although Angela has got the data that is closer to the detail, but generally – the Committee will recognise this, and Andrew said it as well – the Isle of Man has historically been a seasonal market. In terms of its audience profile we see a summer season, whereas if we compare it to the UK they have a much flatter all-year-round income stream; and 1545 also particularly the UK but in other destinations as well, large families in particular have a much higher density in terms of the visitor profile that comes domestically. We clearly do not have that in terms of all of our real visitors … Maybe we will talk about some of the staycation experiences subsequently but predominantly, clearly, our market has been all from off Island so we do not have that opportunity. 1550 So our ongoing challenge is quite profound in terms of the curve and, yes, we have charts and the Agencies have looked at this as part of the dashboard, but how do we extend – and you said

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before, Mr Chair, how do you really focus on the shoulders? How do you really get a whole eight- month period? How do you make sure you do not try and spend your efforts marketing at the peak, when actually the market is doing relatively reasonably well at that point, and where your 1555 challenge is to actually flatten that out and bring more activity into the shoulders, and ideally bring them in where we can in the off-season as well? Some of the stuff that the Agency has been looking at and some great examples of where they have taken a real, clear product from walking to cycling to golf, to working with sports clubs, and for wildlife – and taking it all the way through to who is the audience that we can go to, and then 1560 how would we promote it into the marketplace. So, again it is not something that at a high level just happens, it takes quite a lot of thought; but I think there are some great examples of what the Agency has been doing, that they have initiated and that they have taken forward as business cases and that they now have got funding for, to bring product champions on and to take them to market to actually bring new customers 1565 into the Island. Angela, do you want to perhaps talk a bit more about our typical yield versus the UK?

Mrs Byrne: Yes, first of all if I can go back to just expand on what Mark has said there? One of the things that came to the Agency Board was the car groups. So previously we used to have a 1570 very buoyant car-group market but then we lost the Mount Murray, as it was called then, and that was quite key because that was a product that that particular group wanted. The Ramsey Park opened up, which allowed us to go for the smaller groups but with the Mount Murray coming back on line and the Ramsey Park expanding, that allowed us then to go out and target those car groups again. So we did that through accessing the DVLA – 1575 Q64. The Chairman: Is that auto cars you are talking about?

Mrs Byrne: Yes, motor cars. (The Chairman: Motor cars, yes.) So we got hold of a database through the DVLA website which is in the public domain and we 1580 went out and approached the car groups, and we were really gathering quite a number of them who wanted to come to the Island. So we took it a stage further and we then were approached by a tour operator in the UK to develop a festival of motoring – not motorcycling, but motoring. That actually was due to happen this weekend, for the first year ever, and there were potentially 300 cars. Each car had two people in it; and it was going to be in conjunction with the Food and 1585 Drink Festival because the two products aligned, the type of market aligned and that was expanding our season. Those were just as an example of something that we took, because we had the product and we had the hotels that that particular market wanted. Obviously, they all come on the Steam Packet and each car would ordinarily bring two people with them and they would want guided 1590 tours, they would just want to drive around the Island themselves, they would visit the attractions and things, and obviously the spend is quite high on that. So that is just an idea of where you take something, where we have developed the product and we have taken it through from driving up the car groups coming to the Island, but also through to a five-day festival of motoring which, unfortunately, with the ‘C-word’, we have had to cancel. 1595 That was through a tour operator called Albatross, who have that motoring arm to them. That has also opened up a motorcycling opportunity for us which we were starting to make inroads into, not just in the UK but also further afield. That was not related to the TT; that was like-minded people who have got vintage motorbikes that want to come here because of our heritage. So it is taking those products and widening them out and developing them and we would 1600 support them through extending the season. So we are encouraging them to come in February right the way through to October, and this is how we are trying to flatten that ‘peaky’ nature to our season and looking to invest in these different ways in order to extend our season and improve the occupancy levels, and obviously the yield for the accommodation providers.

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Q65. The Chairman: Angela and Mark, thank you very much for that. 1605 This morning, one of the things we touched on was Booking.com. Bearing in mind that the instinct on this is that our average achieved room rate is still lower than equivalence in the UK, for some of the reasons Mark has just articulated there. One is concerned about the take thereafter of an organisation like Booking.com. I challenged Andrew about this and he, perhaps understandably, swatted it away and said, ‘Do not think for a 1610 second that we can set up our own show’ – as it were – ‘it is not going to work’. But with this particular subject in mind, last night I went on to Jersey’s visitor site and I found it much easier to navigate than ours. I just wondered, for you Ranald, whether there is any work being engaged on at the moment to look again at our website to see if we can make it work even better to get to a particular product 1615 and get that bookable, neo directive possible. Because one hotelier, after this morning, said to me: ‘Hi Chris, interesting session. For your information OTAs such as Booking.com and Expedia take a minimum of 15%, though you can increase visibility by paying more. Anyone who makes more than two bookings gets on to their loyalty scheme which is optional for hotels to recognise, which gives a further discount of 10%. They are also keen for you to offer mobile discount or early- 1620 payment discount and, yes, it all stacks up’. So I put it to you gently that powerful players like this can end up being damaging as well as advantageous, and that one of the things we should be considering is increasing the degree of sophistication in our websites and our delivery to particular types of products. Have you got that sort of thing in mind? 1625 Mr Caldwell: It is certainly in view and Angela will probably expand on it in a minute. It has been raised, not only about this sector in terms of how bookings are made, (The Chairman: Yes, exactly.) but also the barriers to purchase and how can we pull people through that chain service, a proper chain, to end up with the right product and the right yield from them? 1630 So I know Angela is particularly looking at this –

Q66. The Chairman: Can we hear from Angela then, please?

Mrs Byrne: The Visit Isle of Man website, that functionality for us to have our own OTA is there. 1635 The company that designs our website and builds it, that functionality is there if we want to have our own, whether it be commission based or whether it not be commission based. So we could do that. An example of that is if you go to Visit Liverpool, it is the same company that does their website as does us, and Visit Liverpool has their own online booking system for hotel rooms. 1640 Q67. The Chairman: Does it work for them, Angela?

Mrs Byrne: As far as I am aware it raises enough for them to … They are a slightly different organisation because they are a destination-marketing organisation and 70% of their income 1645 comes from commercial partners. I think they charge about 7.5% commission so some of the smaller hotels would go through there to cut the amount of commission and improve their yield. With Booking.com, LateRooms.com and any OTA website you will pay commission on bookings and that impacts on your yield that you mentioned earlier. However, they also have quite a big marketing power so the balance and weighing that up really sits with the individual businesses. 1650 But whether Visit Isle of Man goes down that route … Functionality, yes it can. It is whether the Agency wants to move down to take-off. I think at the moment the businesses decide which OTA comes up on our website, so you can choose from Expedia, LateRooms and Booking.com. As I say, the functionality is there. We can work with the industry on that if that is something they would like us to do.

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1655 Q68. The Chairman: We have got a local travel agent in the room this afternoon. Does the website go to them as well?

Mrs Byrne: Yes.

1660 The Minister: But if I may build upon that, going back to your point earlier about support and funding for this industry, I think marketing is absolutely critical because as alluded to there, these international global booking agents are double-edged. They do have a global audience but there are also significant liabilities, chargebacks, etc. to take into consideration. So, as Angela has just described there, if we can create our own local option that would be a 1665 great prospect. But I do think we now in terms of marketing need to be very digitally focused, if we were not before – mobile-friendly, for example, guest management technology. This is where, if we are going to need to invest, this is an area where I think we can help our accommodation sector and our industry in general.

1670 The Chairman: Okay, thank you.

Q69. Mrs Sharpe: Can I ask: this morning one of the challenges that Mr Keeling identified in his report was that in general people do not know that much about the Isle of Man. It reminded me of a few years ago when Sweden realised they had a problem in that people did not really 1675 know that much about the country and they devised a system called ‘Dial-a-Swede’, where you could just make a free phone call and it would go through to a volunteer in Sweden and they would tell you all about Sweden. So I was wondering, especially with the coronavirus pandemic and so many people in Britain being stuck at home, whether this might be something that the Agency might consider, because – 1680 The Chairman: ‘Dial-a-Swede’ – I like that!

Mrs Sharpe: You could ‘Dial-a-Manxie’ and you could find out about the Island; and it just might be something that would fit well with the current situation that a lot of people in the UK are going 1685 through.

The Minister: It is a great idea. (Interjections) I would say that there are a lot of people on the Isle of Man that did not know a lot about the Isle of Man until they did a staycation.

1690 The Chairman: That is very true.

The Minister: So, yes, there is, absolutely. Looking ahead, because whilst we are focused on what we could have done and what we want to do, we do have an eye very much on the future and the near market, which has always been 1695 strong for us – and if you go back to where tourism started, with the Victorians etc., we have cultural links, heritage links, business links … We think that will be our strongest market in the near future and being able to reach that audience, for which they will need to be mobile friendly, we will need to adapt to that. But I like your idea there, ‘Dial-a-Manxie’, that is a great idea! 1700 Q70. The Clerk: I am sorry, Mr Robertshaw, having sat through one of these committees a few years ago about online booking, if I am a hotel operator and I wish to market my hotel through Booking.com, that involves a certain amount of work for me. Presumably I have got to link the information that I hold about my bookings with the information that goes out through 1705 Booking.com.

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If you wanted to provide them with an option to market their hotel through Visit Isle of Man also, would that involve them in more work? Would it be an extra burden on them?

Mrs Byrne: No, because currently all of the businesses have a log-in and password to our 1710 website and have done for the last five years when we moved to our new platform. So they can upload their descriptions and their imagery. All of the information about each property on our website, the property owner or manager has uploaded that.

Q71. The Clerk: So that is already there? 1715 Mrs Byrne: It is already there, along with their prices, the dates they are open, all of that information is already in the back-end of our system and you can go on to visitisleofman.com and see on each property, and that is all being driven by the business owner or the managers.

1720 Q72. The Clerk: But the only thing you cannot do is book a room.

Mrs Byrne: They can book a room, but it takes them off to Booking.com or LateRooms or Expedia.

1725 The Clerk: Oh, I see. Thank you.

Q73. The Chairman: If we can just climb out of the current agony, for a minute, that the sector is in, and imagine a future where the passenger terminal in Liverpool is finished and the new boat has arrived – and we have absolute assurances from Lars that it is going to be immaculate. 1730 Can you give us assurance that the holiday in the future will start from the moment they arrive in the sea terminal in Liverpool, and that the promulgation of the product will be there so that they can start studying it before they arrive on the Island? It is then repeated on the boat, so they are almost really familiar with it before they even arrive here and wondering what on earth to do – so that they know. And then, dare I say it, it is almost a swear word, but when eventually the 1735 promenade is finished and we have structured a method to help hoteliers on the promenade reinvest, we are arriving closer and closer to the sort of thing we want – and then proper links to all product delivery and customer and visitor experiences thereafter. Are you yet clear as to what sort of capacity Lars has in mind for the boat; and are we going to try to engage in some economies of scale in terms of being able to get attractive access for visitors 1740 on that new boat and the new terminal and the new promenade?

The Minister: I will take it first; I know Angela has spoken too. But I, too, have met with the Chairman of the Steam Packet a couple of times in the last few months and am delighted with the news about the new ship, which is a very clear statement around the passenger experience to be 1745 greatly improved, which I think we would all welcome. But also with the landing stage in Liverpool, as we made a commitment as Government, that is all about arriving on the Isle of Man from when you start. So having that experience and that opportunity is really important and making it as pleasurable as it possibly can be, compared to what we currently have, will be very welcome. But I do think you have got to go beyond that because it is actually about selling the Isle of 1750 Man, which is what we have got to do here. When you stop and look at attractions and things to do on this Island – and again, the staycation, people are waking up to what you can actually do on this Island and the amount of activities that are available. So in other words, getting back to your question about yield, this is about yield and spend in our local economy. So there are a lot of other services that we could promote and sell as soon as they arrive at that landing stage and hopefully 1755 on the boat as well at the same time. Angela, if you want to expand on some of the specifics there?

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Mrs Byrne: In March this year both myself and Ann Reynolds had made plans to go across to look at the plans for the Liverpool landing stage for the very reason, and understanding what it is going to look like and how we can work together on making sure the Isle of Man is promoted both 1760 in the terminal and also in conjunction with the Steam Packet as well. So we are talking to the Steam Packet and in fact we had a conversation with Lars, and I am meeting Lars again next week to talk about how we make that terminal very much the focus of the visitor, and the visitor experience from arriving at that terminal, but also when they get on to the new ship. We have been in consultation with the Steam Packet over the facilities on the new ship. I 1765 believe the capacity for the new boat is around a 30% increase. If the Ben-my-Chree is still operational at the same time as the new ship, and obviously we do not quite know what is happening with that at the moment, the increase would be 250%. So obviously that opens up a much wider market for us in terms of passengers on both the new ship and if they use the Ben- my-Chree as well. So, yes we are in close dialogue. 1770 Ranald and I were actually due to go down and present the Ambition and the Vision of the Agency – again, in March this year. There were an awful lot of things planned after we launched the strategy at the end of February, but three weeks after that launch we went into lockdown and things changed, as we all know. There was an awful lot of traction in that respect and actually the Steam Packet have representation on our Visit Agency Board and have done since the 1775 beginning – since June 2018.

Q74. The Chairman: That is encouraging. Thank you, Angela. A leading question, I think, perhaps – and I do not know who wants to answer it. Have you any plans to further develop the Visit Agency beyond where it is now? 1780 The Minister: That is probably a political answer so I will take that! (Laughter) Yes, I always envisaged it as being a talking – not a talking shop. (Laughter) It was a leading question, wasn’t it? So it was all about evolving actually, and I think what they have proven … If I may go back to it 1785 again, this Agency has made more decisions actually than any of the other Agencies and I am constantly challenging them to not be talking shops but to actually make decisions. I think they have proven themselves, they have come into their own and I would look towards them to see how they could evolve further probably into the new administration. Right now, again, I will just come back to it. We are here to support this industry and we are 1790 here to make sure this industry survives but we want them to be fit for the future, and adapting to that is going to take considerable investment, there is no doubt about it. Right now what we want to do is to get through this next stage so we can plan for the future, and there are a few other nuggets out there as well that are worth noting. I know one of the areas that we got a report just recently about … The coach market, for example, which has been quite buoyant, shall we say, 1795 for the Island although it is low yield in many respects and you have seen the collapse of the coach operators. The ones that are coming out of the phoenix of that are more the higher-end market. So there is definitely a shift towards shorter stays at higher prices, which will hopefully demonstrate the opportunity of growing that all-important yield. We want to be with them to be able to support them again through this Agency model, which 1800 I think is proving to be successful. So rather than just being Government that is trying to deliver it, this is actually the industry.

Q75. The Chairman: Thank you for that, Laurence. Can I leave this thought with you? Would you please consider trying to construct methods, 1805 somehow or other, by hook or by crook, that will allow you to identify yield delivery in the sector? Because it is the measure. It is absolutely the measure that dictates so much and if you had that at your fingertips I would put it to you, with respect, that you would be much better informed than you currently are and that has historically been the case.

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It is coming up to four o’clock. I have finished my tirade and I thank you for your time this 1810 afternoon. Jason?

Q76. Mr Moorhouse: Just a quick question: in terms of the markets that have been identified – walking, golf and cycling – they sound good, but they are really competitive. We have also got an 1815 issue in terms of golfing in one of the documents has been identified as an area where we could be all right but there are still a lot of challenges. And when we look at things like cycling and walking, the Welsh and the Scottish have invested heavily in those areas. Can we actually get the investment to make our facilities attractive enough to get people on the boats and on the planes to come to the Island? 1820 Mr Caldwell: If I could maybe respond to that? Certainly in relation to the walking product, we have been working on that, I suppose, since the Agency’s inception, especially with the Department of Infrastructure – looking at not only the maintenance of the routes themselves, the Raad ny Foillan has up to three cuts a year. We have 1825 got working friends who are maintaining the Heritage Trail and the Millennium Way as well. So the maintenance is there, I think. The level of complaints that we had from residents has dropped significantly and in actual fact we are receiving compliments from walking groups. I think the biggest challenge that we have got in terms of supporting walking is that we have got an opportunity to deliver about 10,000 additional walkers by 2023. To put that into context 1830 the West Highland Way has about 85,000 a year for a similar path. But we need to look at the sort of infrastructure to support that. So it is baggage handlers and it is walking guides, because a lot of them want to be on an accompanied walk and we are looking at how we get people accredited to support those walking groups. The accommodation is also a challenge for the walking sector. If we take the Raad ny Foillan, 1835 for example, we operate a hub-and-spoke system at the moment where they have a hotel and they largely are bussed from where they have finished back to the start of that walk the next day. Generally walkers do not like that type of arrangement and prefer in many cases to hop round the Island. So we have done a catchment area analysis review of the accommodation on the Raad ny Foillan and we have looked at the hotspots where we do not have accommodation. We have 1840 challenged both the Department of Infrastructure and DEFA as to what accommodation is available that we can maybe upgrade that has been lying with farmers, to complement that. The one thing that we have to consider is it is a one-night stay, generally, so we have to look at what model would suit that. So we are looking at every aspect across each of the product areas as to what we need to 1845 support that product and its existence, and indeed growth – toilets, car parks, etc. Angela, I do not know if you wish to add to that?

Mrs Byrne: No, you have covered that well.

1850 Q77. Mr Moorhouse: So the cycling, in particular, sounds good because of the heritage of it. But in terms of BMX investments and things in Wales and other countries –?

Mr Caldwell: We have actually got several considerations under way. There are discussions looking at Sea-to-Summit from Snaefell to Laxey for mountain biking. We have also looked at the 1855 Welsh proposition to see if we can build one as well and we are dealing with the consultants on that at the moment. Certainly the growth in outdoor activities, even evidenced through COVID, cycling, walking etc. has grown exponentially – even I have got an electric bike and can be found in places that I should not be! (Laughter) We have to make it safe for the individuals – 70% of our mountain bike tracks are on the road 1860 and they join up. So we have to join those together and are working with DEFA on the mountain

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bike tracks. We are looking at the signage and everything else that goes along with that, even when it comes to a cycle – you cannot bring a cycle on a train, on a taxi, in a bus. So what do you do with your cycle when you get there? So we are looking at the ports: can you park your car and then bring your bike on to the boat and then cycle? 1865 It looks as if every aspect of the visitor journey from buying to experiences, we are measuring and we are thinking about before they come so we get it right as best we can. Everybody needs to join us on that journey and I do not think we are there yet in terms of everybody putting the visitor first. In future, the prom would not have happened if ‘Visitor First’ had been in place, and that is what we are hoping for. 1870 The Chairman: Kerry has got a question to close, I think.

Q78. Mrs Sharpe: Thank you. The Minister has asserted that the Agency is not a talking shop (The Chairman: Eventually!) (Laughter) and I think we have seen today from what you have had 1875 to say that the Agency is very busy carrying out research and analysis, and you have just given an example there of the kinds of challenges that you face. You want to encourage cycling holidays but first you have got to also look at how they get from A to B. So I am wondering if you could really just sum up what the main challenges are that the Agency has faced up to now? 1880 Mr Caldwell: I think it is the marriage between the private and public sector. The appetite for risk within Government is obviously a lot less than we would have within the business community. I think we want things quicker; we want them done our way. We do not want the constraints. When I first came in I summed it up through a football analogy where we all wanted to win but 1885 we were wearing different coloured shirts and we were not passing the ball to each other and we were not in the same team. Government, I suppose, at times you could say has three goalkeepers and seven defenders so we do not want to lose the game but we do not want to win it. But we have to get to the point where we get the balance right. I think we need to work closely with Government, and we are 1890 reaching out to other Departments – we are meeting Mr Baker, etc. – to start forcing the agenda with them and holding them to account that they need to join us in our journey. But I get back to the very start and it is not because I want to start there it is because I am being forced to start there: what is the value of tourism to this Island and why would you want to invest? Once I can articulate that I will be able to, I suppose, mobilise the 85,000 stakeholders we have 1895 got to help us in the delivery of half a million visitors, which not many people believed at the start when we said that, but it is now being played back. So it is important to have ambition but it is important to have the opportunities there; but we need to be accountable in the delivery of it. I think that is where I would finish.

1900 The Chairman: I think that is an excellent statement to close on, everybody. Thank you for your engagement this afternoon and, just for the record, I would like to say it is not normal to put a CEO in a little box like this, (Laughter) sitting and peering down at us – we will not, hopefully, do so in the future! But thank you again, everybody, for this afternoon. We will now sit in private and thank you to 1905 those who have attended this afternoon, we appreciate it.

The Committee sat in private at 4.03 p.m.

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