Tourism Industry: Devon and Cornwall

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.

Let us reflect on what these challenges can result in. Holiday accommodation will not simply lie unused, and the challenges I have set out can result in pressure to use it for other things. A hotelier faced with a relatively light booking sheet can find it all too tempting to take on long-term guests, be they asylum seekers from the Home Office or those owed a housing duty by their local council.

I have been supporting Torbay Council’s efforts to challenge the conversion of properties in our key tourism locations to longer-term accommodation on planning grounds. The objective is to prevent precedents from being set for the conversion of tourism-based accommodation that was designed for short stays into poor-quality longer-term accommodation. That often brings issues of housing standards and antisocial behaviour, while sometimes also helping to block regeneration efforts by giving a building that could have been acquired for a needed rebuild an income stream in its current poor condition. I hope that the Minister will engage with his colleagues in the Home Office and the Department for Levelling Up, Housing and Communities about how we can move away from such uses, which affect not only local communities but the tourism sector overall.

I know from responding to this type of debate myself that it is always good to provide a summary of what we are looking for. The first thing is business rates reform. The recent moves by the Chancellor were welcome, but how does the Minister see longer-term reform of business rates being taken forward? What representations are being made about how we end what is effectively a tax penalty for investing in sectors that require bricks and mortar?

The second thing we are looking for is real engagement on energy costs and future support schemes. It is welcome to see hospitality recognised, alongside traditional energy-intensive industries, as a sector that will need continuing support with energy prices. How does the Minister see engagement being done with the sector over the next four months to identify the specific requirements of businesses both small and large, along with how a package could be appropriately targeted at them?

Then there is work to encourage consumers and local residents to use hospitality and tourism businesses where they can. I will be interested to know how the Government will work with the sector to promote its opportunities not only to potential domestic and international visitors, but to investors who could fund the future of our tourism sector. Finally, I am conscious that the Minister is still a relatively recent appointment, but how does he plan to engage with the sector on the range of issues affecting it?

I am delighted to have secured this opportunity to highlight both the opportunities and the challenges facing the tourism industry in Devon and Cornwall. I look forward to hearing from the Minister how the Government will play their part in ensuring that the sector has a bright future in our region and, in due course, to welcoming him to see for himself what our two counties have to offer visitors.

The south-west of England is a known popular tourism destination. Nearly one fifth of all trips made to England in 2019 were in the region, and that figure has been steadily increasing. That presents us with a huge opportunity to get visit numbers back to pre-pandemic levels by working on the plan’s objectives. As we know, people see the south-west as an attractive destination for a holiday, and the Government have been working to build the sector back post covid and have kept in close contact with stakeholders to ensure that everyone is on board. However, we continue to take into account the new challenges that have emerged in the past year when assessing the sector’s recovery.

The plan was a demonstration of our commitment to regain the UK’s reputation post pandemic as one of the most desirable tourist destinations in the world. We know that we already have an outstanding offer; we just need to advertise and inform people of that offer.

We also want to go further by enhancing what we already offer to tourists so that the UK can reach its full potential. First, we have set out six key objectives. These include the short-term objective of bringing back domestic and international visitor spend as quickly as we can, and the medium to longer-term objectives of supporting the sector to become more resilient, accessible, sustainable and able to benefit every region and part of the United Kingdom. It is about growth, but it is also about productivity.

Secondly, we have started to talk more about the visitor economy rather than tourism as an ecosystem of transport, culture, heritage and hospitality. We believe that that will help to demonstrate how the sector can both contribute to economic growth and support the Government’s objectives of levelling up.

Finally, improving our tourism offer in regions across the country will make us more attractive to potential visitors and event hosts, encourage a higher spend, reduce seasonality and promote investment. That will help to ensure that businesses chose the UK over other destinations, and I strongly believe that we must find ways to encourage international travellers to travel further than London and sample the excellent coastal tourism that areas such as Devon and Cornwall have to offer. This will no doubt bring benefits to such regions.

There are also other levers that the Government can pull. As announced in the Chancellor’s autumn statement, the Government are in advanced discussions on mayoral devolution deals with local authorities in Cornwall. I look forward to hearing about further developments on these plans, and I am sure that my hon. Friend the Member for Torbay is, too. There are also plans to help the tourism sector with targeted support to help with the cost of business rates over the next five years, worth more than £15 billion. The Government recognise that businesses are facing significant inflationary measures, so business rates multipliers will also be frozen in 2023-24, and ratepayers facing increased bills will have further support. I heard much about that at the UKHospitality reception yesterday.

My hon. Friend is right to point out that Putin’s war has caused the sector huge issues, which is why the energy bill relief scheme, announced earlier this year, is providing further support for businesses. As my hon. Friend will know, the scheme will provide support through the winter period, protecting businesses against excessive bills until March next year. A review will then be published that will consider how best to offer further support to exactly the types of hotels he mentioned. I will continue to have meetings with stakeholders and colleagues across Government to highlight the need for support.

Tourism is already a devolved policy area, but giving local regions more authority is one way to ensure that growth can be generated from the ground up. Members may be aware of Nick de Bois’ independent review into the structure and organisation of destination management organisations. It was published in August 2021, and the Government responded in July, including with an accreditation framework to streamline and improve the DMO landscape. That will enable more efficient and strategic DMOs, ensuring that they can bring out the best in their local tourism offer. We will also be piloting a funded partnership model in a region of England to be announced on Friday. We hope to use that to collect evidence to showcase the success of the proposed model and to enable it to be rolled out to other regions.

My hon. Friend rightly talked about short-term lets. Cornwall and Devon’s popularity as tourist spots is great for creating jobs and supporting businesses. However, I appreciate that not all of tourism’s impacts are welcomed by local residents. As my hon. Friend will know, there has been a sharp increase in short-term holiday letting in recent years, which has been driven by the rise of online platforms such as Airbnb. While the Government support the sharing economy and the economic benefits that it can bring, we are aware of a variety of concerns, such as the impact on the housing market and local communities. During my time as Housing Minister, I was lobbied extensively on that by my hon. Friend and many other south-west MPs.

To address the concerns and to look towards potential solutions for short-term accommodation, we first needed to hear from all interested parties, so we held a call for evidence between June and September. The evidence has helped us to understand the scale and nature of the short-term letting market in England and the benefits and potential problems it is causing in communities across the country, including in the south-west. It has enabled us to hear from stakeholders and other interested parties about how the sector could be improved. We are now in the process of analysing the near 4,000 responses and will look to provide an update to the sector soon about the next steps.

As my hon. Friend will know, tourism in Devon and Cornwall can be very seasonal, with a huge influx of visitors in the summer months. In 2019, 14% of the annual spend in overnight trips was in August alone, with just 5% of spending occurring in January. I know that the fluctuation in visitor numbers can have a huge impact on the ability of businesses to retain staff year-round. I also understand that it is a particular challenge this year, given that Christmas bookings have been slow and there is still some uncertainty about the future for some businesses. None the less, I believe that the changes that we, with the co-ordination of VisitBritain, will make to the structure of DMOs as they become local visitor economy partnerships will really help to boost tourism in Devon and Cornwall.

I thank my hon. Friend again for securing this important debate, and I can assure him that the Government and I are absolutely committed to supporting all areas of the UK’s tourism industry and to encouraging visitors to visit areas outside London that have an excellent tourism offer. This is our vision for the future and, by working with Members from all parties, that is what I hope we will be able to deliver. I look forward to continued engagement with the tourism sector over the coming months, and I promise that I will be a champion of its cause within the Government and will work with my hon. Friends.