In the space of two months, two of the countryâs largest, well-established Destination Management Organisations (DMOs) have gone.
On the 3rd September Visit Kent, its parent company Go To Places and Visit Hertfordshire (which Go To Places were contracted to operate) went into receivership. Almost exactly a month later on the 2nd October Visit Cornwall announced it was going into voluntary liquidation.
Both organisations were accredited Local Economy Visitor Partnerships (LVEPs) working with VisitEngland to transform the local visitor economy landscape.
So what went wrong?
The reasons for the collapse of these organisations is largely explained by the end of government grants such as Shared Prosperity, reduced local authority funding and economic conditions impacting support from the private sector.
These DMOs and others like them tend to carry low reserves and whether a CIC (as in the case of Visit Cornwall) or a limited company (as in the case of Go To Place/ Visit Kent) are not really in the business of making a profit. Their approach tends to re-invest any surplus in activity which supports their core role of promoting the destination they serve.
There will be other DMOs who are just as precarious and who will be looking to the future with uncertainty. Most operate with a mixed model of funding and investment and it is that mixture of support that is key.
Businesses donât feel inclined to support without local authority help; and local authorities want to know that the local business community which benefits is also contributing. But as soon as one party cuts back, the whole basis on which partnership investment happens is undermined.
Having just finished re-reading the Hitchhikers Guide to the Galaxy for the umpteenth time, if I were to take one message from it is this: âDonât panicâ!
Iâve been giving some thought to what is taking place and I think there are reasons to be optimistic for the future of LVEPs and DMOs:
1. Devolution and local government reorganisation
Devolution proposals which transfer power from central to local government are gathering pace and more and more parts of the UK are moving to Mayoral Combined Authorities.
Where these already exist in places such as Manchester, Liverpool, the Tees Valley and Cambridgeshire & Peterborough it is evident that the visitor economy is valued and supported.
With 6 more agreed deals in development, in places like Sussex, Norfolk & Suffolk and Cumbria, this could lead to a more strategic focus on the visitor economy.
As well as devolution, local government re-organisation to create a single tier of unitary authorities might result in a more mixed picture of support. Many districts and boroughs greatly value tourism and have continued to invest in it so making sure that new unitaries maintain support, perhaps in a more strategic way, is critical.
2. Bed Tax/ ABID/TBID/DBID levy
The other change has been the creation of ABIDs, TBIDs and DBIDs and the way in which these organisations are able to collect income from tourism businesses based on their size and/or turnover. Itâs a model which is much closer to the one which has worked in North America over many decades and which has delivered sustainable funding for DMOs and major development such as new conference centres. Great examples are the ABID in Manchester and Liverpool and also the TBID in the Isle of Wight.
3. Commissioning models
The other change has been a shift in the role of DMOs and LVEPs from âdelivererâ of services to âcommissionerâ.
Once upon a time DMOs or their predecessors used to employ staff to operate TICs, do marketing, manage members, run projects, and do finance, HR and IT.
If you were designing a DMO today from scratch, given what we know about uncertain funding, wouldnât you design it with as many of those costs variable rather than fixed?
You can outsource HR and finance, project management, membership, marketing and IT. Yes, there will always be a need for strong leadership at the heart of any successful DMO. But, the default should probably be âwho can we contractâ rather than âwho can we employâ if a DMO is to find a sustainable model going forward, and one that is able to cope with changeable conditions.
The latest accounts for Visit Kent indicated 22 staff were employed â maybe that was the right size and structure. But that will inevitably have meant a large burden to the core costs of running the organisation.
So what is the answer?
Douglas Adams told us the answer to the ultimate question was â42â. The answer was meaningless of course because the people programming the computer didnât understand the question.
So, if you work in or for a DMO/LVEP whatâs the answer to the question: how can my DMO/LVEP survive and thrive? Iâd be interested to know what you think.