Tourism Industry: Devon and Cornwall

Gary Streeter Excerpts

Wednesday 23rd November 2022 Westminster Hall

[Sir Gary Streeter (in the Chair)]

I will call Kevin Foster to move the motion and then the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates. I call Kevin Foster.

[Kevin Foster (Torbay) (Con)]

I beg to move,

That this House has considered the tourism industry in Devon and Cornwall.

It is a particular pleasure to serve under your chairmanship, Sir Gary.

Why this debate? Although our two counties might be bitterly divided over how to best eat a scone—our friends across the Tamar do not recognise that cream first is the only way to do it—we are united in a shared interest in seeing our tourism sectors thrive. After all, Devon and Cornwall are the most popular destinations for domestic tourism. That means tourism is a key employer for our two counties, representing 10% of all employment in Devon and 20% in Cornwall, with many jobs in other sectors relying on the trade created by providing services to that vital sector.

The scale of the visitor-related spend should not be underestimated; across the wider south-west peninsula, it was an estimated total of £7.3 billion in 2019. It is not only visitors from across the UK who make a big impact on Devon and Cornwall’s tourism sector. International travel contributed £2.5 billion to the south-west’s regional economy in gross value added, equivalent to 3.8% of total gross value added in the area. Given those numbers, it is encouraging to note that international travel in the south-west region is forecast to grow 15% by 2027 compared with 2019 levels.

Such debates often just list the problems, so I should mention the positives before I turn to the challenges. Today is not about asking for a Government subsidy for a failing business or an industry that has not adapted to changing markets and consumer choices. It is about how we can take forward a positive future for the tourism industry in our two counties and not lose it to some short-term challenges. For example, Torbay is seeing a level of private investment in building large new hotels that has not been seen for decades. Last year, a large new hotel opened on Torquay’s harbourside. Large new purpose-built hotels will shortly open on Paignton’s esplanade, the first to be built there since the modern borough of Torbay was formed in the late 1960s.

Other large hotel projects are either planned or already under construction, with the Fragrance Group alone investing approximately £140 million in Torbay—a real vote of confidence in our bay’s future. We are also seeing new businesses opening on our harboursides to serve customers looking for both traditional and more contemporary dining experiences, plus our attractions are innovating to attract new customers and respond to the challenges of the last two years, driven by the pandemic along with changing demand such as for online ticketing.

Tourism businesses can also have wider social impacts beyond the employment and business activity they create. For example, the Wild Planet Trust, which runs Paignton’s and Newquay’s zoos, is dedicated to helping halt species decline. Zoos that in decades past were simply attractions where, for a fee, we could see exotic animals or plants collected from the wild are now places that aim to inspire their visitors to think globally and ecologically while using the revenues generated to provide a vital safety net from extinction for many endangered species as well as, we hope, the reintroduction of some that have been lost to war, hunting or destruction of habitats globally. Similarly, Torbay’s status as a UNESCO geopark not only helps attract those who wish to have a holiday in a unique space but provides a superb location for the study of its detailed geology, with accommodation and services provided by our tourism sector to support it.

It would be odd not to at least briefly mention Torbay’s famous queen of crime writing, Dame Agatha Christie, whose legacy across south Devon still sees many sites visited by her fans to see the locations that inspired her, including the Paignton Picture House, one of Europe’s most historic cinema buildings, which, after a generation lying derelict, is now being revitalised by a combination of the passionate team at the Paignton Picture House Trust and about £4 million of support from the Government.

All that positivity must be seen against the challenges faced by existing and new businesses across our two counties, while bearing in mind that those challenges follow the impact of the pandemic, which saw an average decrease of 52% in turnover of tourism businesses in the south-west, with many businesses still facing repayments on loans taken out simply to survive. Only today we have heard news that the Devon Valley holiday park in Shaldon, south Devon, will not be opening for the 2023 season. Several factors behind the decision have been cited, including significant increases in the electricity bill.

Let me outline some of the challenges. The obvious one to start with is energy and rising prices. For many businesses, Putin’s attack on Ukraine and the resulting spike in energy prices have had a big impact—costs that cannot be recovered simply by increasing prices. Earlier this year I heard from many local businesses, big and small, that faced dramatic increases in their energy bills, with the price of gas potentially up more than tenfold compared with their previous fixed price.

The energy price guarantee has made a big difference; one business owner said that it meant that they would be staying open. However, the Government must look at the realities of the sector as they consider the review of the EPG, due in early 2023. Take, for example, the Meadfoot Bay hotel in Torquay. To compensate for an increase of £80,000 in utility costs, it would need to sell another 550 bed nights, or 1,700 covers in its brasserie, over the coming year. In a buoyant market, that would be a big target for a hotel with 14 bedrooms; in the midst of a recession, it is simply not going to happen. In short, the hotel could face making a loss not because it is not innovating or providing good services to its customers, but because a bill for a basic need of its business has increased dramatically for reasons well beyond its control.

Energy bills are not the only ones that are rising. Food and maintenance bills and other costs are also increasing, presenting a real challenge for hospitality businesses. The next challenge that I want to highlight is business rates; I doubt whether the Minister will be surprised to hear that I am bringing up a tax on doing business from a premises. Trading from a premises is something that tourism and hospitality businesses across Devon and Cornwall have to do by default—a night out online with a computer is not likely to be as attractive as a night out at the pub or a physical business. Fundamentally, such things cannot be moved online. Often it is the business rates bill, enforced through the magistrates court, that finally tips a business over. Landlords might offer a rent cut if necessary and suppliers might cut a payment deal—it is often business rates, which must be paid simply to exist, that are the final blow for a business.

The moves by the Chancellor last week are welcome—extending and increasing from 50% to 75% business rates relief for eligible retail, hospitality and leisure businesses, for example. I note that that will benefit 230,000 retail, hospitality and leisure properties, which will be eligible to receive increased support worth a total of approximately £2.1 billion. Yet more is needed to ensure that businesses that must operate from a premises have a level playing field.

On the subject of buildings, it is worth starting to reflect on the impact that competition from Airbnb-style operations can have, particularly when short-term holiday lets are created in what were long-term homes for families. Although a certain level of such property is welcome and provides customer choice, there is now a real danger that unregulated growth is bringing negative effects—for example, working families being effectively evicted from a house that has for many years provided a home for rent, to allow a landlord to offer short-term holiday lets instead. The issue is not about avoiding competition. Unrestricted growth not only endangers the local housing supply, but undermines those holiday accommodation providers who, for sensible reasons, must comply with a range of safety regulations that do not apply in domestic properties.