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VisitScotland chief calls for Euro-style tourism loans

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Published Date: 17 April 2009
By PETER RANSCOMBE
Philip Riddle is urging the UK and Scottish governments to create a tourism investment bank to pump cash into the sector
VISITSCOTLAND'S chief executive has called for a government-backed investment bank to be set up to pump millions of pounds into recession-hit tourism businesses.

Philip Riddle urged the UK and Scottish governments to establish a special tourism investment bank – working with existing private sector lenders – to secure investment in the industry during the downturn.

Under the radical proposal, the two governments would underwrite the bank's business, allowing it to offer lower interest rates on loans to medium-sized tourism businesses.

It would also offer insurance for the loans, giving lenders confidence to part with cash.

Riddle suggested such a scheme could be modelled on the bank set up in Austria, a format now used in other European countries.

Making a powerful case for greater help for the industry, Riddle said France and Spain had both unveiled support schemes for tourism and warned that Scotland risked falling behind its rivals if it did not invest.

Riddle told The Scotsman: "We have the potential to come out of this recession with tourism as a thriving, leading industry, helping to pull the country out of the economic downturn."

He added: "We have that potential but we do have to get investment going. Although the government has a role, it has to be government, banks and the businesses themselves willing to take the risk in partnership.

"I think that's the clarion call: we have to get investment because this is the time to invest – it's cheaper to get construction and materials. It's just a case of putting the money into the fabric of our industry."

Riddle suggested loans from the tourism bank could be aimed at medium-sized businesses – such as family-run guest houses or chains of two or three hotels – rather than larger developments.

Figures from VisitScotland showed that 72 per cent of tourism businesses planned to rein in their spending in light of tighter credit conditions.

But Riddle suggested the £4 billion sector – which employs about 200,000 people in Scotland – could add a further £2bn to the economy if investment was stepped up.

Colin Borland, from the Federation of Small Businesses in Scotland,

said: "Like many small firms, tourism businesses have been frustrated by the lack of fair access to flexible, affordable finance.

"The fact these issues are not peculiar to the tourism sector suggests our focus should be on solutions for small business finance across the economy."

A Scottish Government spokeswoman said: "This is an interesting idea and we look forward to seeing the details of this proposal."




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1

WJohn,

West Lothian 17/04/2009 07:43:21
Sounds a wizard wheeze.
It should be extended to farming, distilling, shipbuilding, building industry, retailing and all the other failing industries essential for the future of Scotland.
2

Active Sassenach,

Luton, England 17/04/2009 09:50:34
Like the Scottish Government, I look forward to seeing the details. The pessimistic nature of Riddle's remarks is probably what got "Green Custard" Mandelson going. Here we are again needing to borrow money to keep businesses going - whether in Tourism or any form of economic activity.

Any business that needs a bank to lend it money it never pays back is not a viable business. There are businesses that fund their expansion out of cash they generate from profits. I realise this is "so last year" to today's generation of highly leveraged stitch up and run merchants. Their accounting tricks that looked so smart on the hoof have been slaughtered, put on the table and found to be inedible.

Borrowing is to invest against a proposition with reasonable prospects of repaying the loan and then gaining from the expansion in future. Otherwise you do not raise a loan, you raise equity and pay the risk premium.

The great Riddle is what else in Tourism makes a profit apart from borrowing to build guest houses because construction and materials are cheap?
3

David55,

Edinburgh 17/04/2009 13:45:03
#2 - True. Which is why the government should have let the dud banks go to the wall.

Giving the banks money has set a precedent and now every other sector wants a handout too.
4

Eddie Tait,

London 21/04/2009 16:07:08
Having made numerous trips to Europe this year it strikes me that Scotland (and the UK) should be a very attractive place for European tourists. In normal bars in the centre of Paris, for example, local beers are Euro10-Euro13, Coke Euro 5-7.50 and Pasta/Pizza Euro 15 (and, likewise, hotel, accommodation and attraction prices). With Euro: Pound currently around 1:1 or 1:1.1, Scotland and the UK is a relatively cheap place for Europeans (in the Euro zone) to eat and drink out and buy goods at present. Hopefully we should be seeing a greater net influx from these areas and ditto the US/Americas. I think we should be capitalising on the thirty percent decline in the value of the pound over recent months and marketing Scotland accordingly.

Scotland needs better and cheaper air links to the rest of the world. We've got so much to offer, but until visitors can get to a wide range of Scottish destinations easily and cheaply we'll still be up against it when it comes to competing for visitors with other key destinations. Most notably, Londoners can access cheap Ryanair and Easyjet flights to a wide range of destinations more easily and cheapily than they can Scotland. The same holds for foreigners who live at the other end of these destinations. If London-Edinburgh is the busiest commercial flight route in Europe, it would be good to see it as the cheapest and most competitive. Addressing this issue through current measures helps but much more could still be done. I am happy to speak with interested parties to discuss a plethora of ideas.

Yours aye,
Eddie Tait
Founder
Scotsin.com - Scottish Network (incorporating Scots In London)
www.scotsin.com / www.scotsinlondon.com

 

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