VisitScotland: How can a website lose £12 million in 5 years?
- from forargyll.com
Troubled national tourism body, VisitScotland’s online booking website - visitscotland.com - has managed to lose £12 million in 5 years. The Scottish Parliament’s Public Audit Committee said yesterday (14th May) that the website had failed to live up to financial expectations and that the organisation itself had been slow to respond to problems. (The Committee might also have noted that VisitScotland has been equally slow to respond to opportunities.)
The website originally cost £3.25 million, released to VisitScotland for the purpose by the Scottish Government. The business case indicated that it would generate profits of £1.5 million per annum, after tax and after an initial 5 year period.
However, by December 2007 the site had accumulated losses of £12.4 million and the blame has been laid at the door of unrealistic estimations of the demand for online accommodation booking.
VisitScotland had taken a 36% share in the company, eTourism Ltd, which it established and to which it awarded the contract to run the website. When this company hit financial problems, VisitScotland bought out the other shareholders for £1.25 million. Its total investment in eTourism Ltd is said to be around £4 million.
Hugh Henry, Chair of the Public Audit Committee said : ‘We believe that it might have been possible for VisitScotland to secure its initial aims at a smaller cost to the public purse’.
Mr Henry also noted that the organisation’s decision to buy out the other shareholders in eTourism Ltd was taken without seeking any external advice.
VisitScotland and eTourism Ltd
There are a range of curiosities in the relationship between VisitScotland and eTourism Ltd.
In ‘About Us’ on the VisitScotland website this is how that relationship is described: ‘VisitScotland.com is the trading name of eTourism Ltd, which was originally established as a private limited company set up by a public private partnership in 2002 before becoming wholly owned by Scotland’s national tourist board, VisitScotland, in 2008.’
This suggests that:
- eTourism Ltd is the superior corporate identity
- eTourism Ltd’s sole business is running the VisitScotland website
Then a partnership agreement was signed between eTourism Ltd and Tiscover, described by VisitScotland.com as: ‘Europe and the world’s leading e-tourism company’, providing ‘technology platforms for national and regional tourism organisations in countries such as Austria, Germany, Switzerland, the UK and South Africa. They also provide the search and booking engine for www.visiteurope.com‘. Tiscover then became - at 15% - the second largest shareholder, after VisitScotland, in eTourism Ltd.
This raises the question why VisitScotland did not, at the outset, simply contract Tiscover to deliver their website. Instead they established, became the largest shareholder in and finally became the outright owner of a company that had to buy in from Tiscover the necessary expertise. If you were trying to come up with a scheme to waste public money, you would be hard put to beat this one.
Attempts to avoid disclosures of information legitimately required by members of the public
In June 2007 Scotland’s Information Commissioner , Kevin Dunion, found for Mr Alan Keith of Dumfries and Galloway Accommodation Providers. Mr Keith had used the Freedom of Information (Scotland) Act (FOISA) to ask to see all contracts between VisitScotland and visitscotland,com (eTourism Ltd). Mr Dunion’s judgment was that information had been withheld and that: ‘VisitScotland had failed to comply with the requirements of Part 1 of FOISA in responding to Mr Keith’s information request’. The Information Commissioner required the disclosure of the information for which Mr Keith had asked. The details of this case make interesting reading.
In July 2007, one month after the earlier decision, the Information Commissioner again found against VisitScotland and in favour of Mr Gordon Colquhoun who has asked for information on the price paid by visitscotlandcom (eTourism Ltd) to advertise in VisitScotland publications. His contention was that visitscotland.com had paid nothing for such advertisements which, were this to be the case, would mean that visitscotland.com would be in receipt of an unlawful subsidy under EU law relating to state subsidies. Mr Dunion required VisitScotland to disclose the information in question to Mr Colquhoun. Here are the details of this case, also involving the admirably energetic Dumfries and Galloway.
The big question
The more one learns the more unsettling is the picture of the organisation to which the marketing of Scotland is entrusted.
But the big question in this particualr matter remains unanswered. How - HOW - does a website - A WEBSITE - lose £12.4 million in 5 years?
