Published on Wednesday, July 19, 2006

State aid complaint updated against EnglandNet

Almost 50 UK domestic organisations have made an updated complaint to the European Commission over VisitBritain’s EnglandNet online project.

It follows a state aid compliant by a group of 37 independent holiday cottage booking agencies including Hoseasons submitted to Brussels in 2004 relating to EnglandNet.

Devon-based independent holiday home company Helpful Holidays has submitted the updated complaint.

The firm says it objects to the use of public money to create websites which provide booking services that it claims compete directly with private sector firms already operating in the market.

The new complaint is supported by 49 agencies, trade associations, online marketing companies and the Forum of Private Business.

Helpful Holidays general manager Moray Bowater said: “We find it bizarre that despite our efforts to reach agreement with VisitBritain in 2004 they have pursued their commercial ambitions in respect of this project.

“The domestic holiday market is enormously competitive. Consumers have a wide choice of commercial organisations which will help them with their holiday choices and make bookings.

“The interference of the public sector into this already crowded market is unwelcome, unnecessary and will compete directly with private firms which already successfully offer consumers this service.”

VisitBritain said that should the Commission pursue the original complaint it will be for the UK government to respond.

“As such it would not be appropriate for VisitBritain to comment on the substance of the complaint at this stage.”

The spokesman added: “EnglandNet is a national online distribution system for marketing England’s tourism products that works behind our existing websites enjoyengland.com and visitbritain.com. It makes it far easier for consumers to find and book Britain’s rich variety of tourism products.

“The VisitBritain and EnjoyEngland websites will give national and international access to a potential 17 million website visits in the UK and worldwide, set to rise to over 25 million in the next three years.”

As part of the VisitBritain response, Hoseasons chief executive Richard Carrick was quoted as saying: “Hoseasons Holidays are keen to find a way of working with VisitBritain and EnglandNet and after recent discussions are close to this.

“Whilst we are confident that VisitBritain will not go down the road of establishing a commission earning agency which would effectively act in competition to existing booking agencies, there are already other precedents within the UK that give us cause for concern.”

VisitBritain chief executive Tom Wright said: “The opportunities provided by EnglandNet will be of tremendous importance to this country’s tourism industry and VisitBritain wants englandNet to be supported by all sectors. To that end VisitBritain will maintain a continuing dialogue with all interested parties.”

Report by Phil Davies

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  • Consider the implications

    I always understood the role of any state aided tourist board was to market a destination by providing visitors with sufficient reasons and information (or sources of information) to influence their purchase decision. Not to duplicate or replicate established commercial operations. Anyone who evaluates their websites will quickly conclude that they do not archive their primary remit, preferring instead to develop on-line booking services to compete with commercial operations but with the benefit of state aid; both for the development of this service and its on going operation with the not inconsiderable benefit of their publicly funded marketing budgets. Tourist Board websites should act as a portal to established commercial booking services, or IF its acknowledged there is a need for a booking service to meet a specific market sector, tender the service to experienced commercial suppliers. Supporters of their current approach should also bear in mind that it won't be too long before Government will cut-off their source of funding for this service, expecting them to generate income from their 'commercial activities'. When that happens, accommodation suppliers will soon find that the boards will charge the same (or probably more) than commercial operators. But by then the boards will have stifled commercial alternatives and will have developed a market dominance. Operating a booking service that features tens of thousands properties which will then create a numerous of ways and means for properties to get top of any search, and each will have a price.

    By Graham Tayler, Friday, August 11, 2006

  • Head in the sand attitudes

    Little wonder our balance of trade deficit for tourism continues to grow when so many in the trade persist in such 'head in the sand' attitudes. EnglandNet offers everyone an opportunity to sell online without the need to persist in the outdated use of expensive middlemen. This is particularly significant in the case of small, individual operators whose margins are small and to whom the adtional cost of heavy commissions etc are a burden too far. Rather than seeking to protect the out of date lifestyles of costly agencies let's start to consider helping the individual, front line operator. This will encourage more business by reducing overheads and, hence, helping to make the industry more cost competitive with overseas rivals.

    By Nigel Embry, Thursday, July 20, 2006

  • Is State Aid for EnglandNet legal or illegal?

    Stillers the Stickler says that "state competition is great competition". That maybe a valid point of view but surely the question here is whether the state aid to EnglandNet is legal or not? If commercial operators are experiencing direct competition to their legal activities (which inter alia require substantial investment in IT systems and marketing activity) from a publicly funded body which is also spending money on an IT system (EnglandNet) and marketing the related services that this IT system provides then it is surely not surprising if these commercial operators request an answer to that question from the European Commission. One legal opinion I have recently found on the web states "If, because of public funding, a local authority were in a position to enjoy an unfair advantage in its operations on a market, there would indeed be a state aid issue. By refraining from provocative activity the local authority might escape challenge from a private sector undertaking and the attention of the European Commission. But such restraint could not render lawful any aid that would otherwise be unlawful. State aid is either lawful or unlawful. If it is lawful it must be applied to the purpose for which it was given. If it is unlawful, the organ of state which granted it must claw it back when instructed to do so by the European Commission." This raises the possibility that, if the state aid hitherto provided directly to EnglandNet - around &#pound;10 million according to published figures - is found to be illegal, then it might have to be repaid by VisitBritain to the UK Government.

    By Gilbert Archdale, Thursday, July 20, 2006

  • Tired old arguments

    Sounds to me very much like the so often played record of established companies crying foul against "public funds" being spent unfairly with the purpose of killing their business. How about looking at it from a customer perspective? A visitor to Britain who searches and plans a trip wants convenience and a one stop shopping experience. Who better to provide this than a national marketing organization such as VisitBritain. As other DMOs they are constantly under pressure to provide proof of the ROI of their marketing expenditures. It is no longer sufficient to say that it has produced so many responses to a particular campaign and leads to so many third parties who have then either closed the sale, or more likely not. In today's reality of disintermediation and transparency the internet has brought about a direct measurement by online booking functionality is for the first time available to DMOs. Instead of harking back for the good old days, when every intermediary was protected and made an easy buck, why not embrace these new distribution platforms, try to work with them - even if it needs revisiting business as usual - for the benefit of the destination? Co-opetition is a term widely used in many industries, but like so many innovations not widely used in the travel industry.

    By Joe Buhler, Thursday, July 20, 2006

  • Very Foolish VisitBritain ?

    Instead of VisitBritain spending vast amounts of "Public Money" on a scheme which is in direct competition to the agencies who currently attract thousands of visitors to our shores every year, why not invest these funds in additional marketing of Britain at home and abroad to further help visitor numbers? There isn't a problem with visitors using the internet to book holidays in Britain, agencies all over the country continue to invest in improving their own IT, let's work together not in competition. VisitBritain may firstly want to look at the mess their administrators are making of the current inspection system and invest some money to improve what is the cornerstone of our holiday business, QUALITY !!

    By Iain Butterworth, Wednesday, July 19, 2006

  • Come on, EnglandNet!

    The group of 49 are on to such a loser here. Unless, of course, they can somehow negotiate to squeeze all their own inventory on the portal alongside EnglandNet's, which is probably what this is all about. Helpful Holidays general manager Moray Bowater said: "We find it bizarre that despite our efforts to reach agreement with VisitBritain in 2004 they have pursued their commercial ambitions in respect of this project. "The domestic holiday market is enormously competitive... Well, no, Moray. Not enormously competitive at all – perhaps only reasonably competitive, especially in the holiday cottage sector. There are too many overnight places in the market and too few self-catering places. And everything is horrendously overpriced. It is noticeable that despite an increase over the last 20 years in the number of holiday cottage agencies in this country and in the size of their inventories, the margins which holiday cottage agencies enjoy have not substantially changed at all (even after Foot & Mouth). Some margins, indeed, are extraordinarily high for what the agency actually provides. Consumer demand continues to outstrip inventory supply and the profits accruing to agencies remain not just healthy but handsome. Moray also says: "Consumers have a wide choice of commercial organisations which will help them with their holiday choices and make bookings..." A disingenuous statement because it conveniently omits to mention the other party in the ménage à trois. Consumers may indeed have a wide choice, but holiday cottage owners DO NOT. Holiday cottage owners who wish to remain independent of agencies may promote their product on a few comparatively small-scale commercial non-agency websites which take bookings and via local Tourist Information Centres which take bookings on a commission basis. However, until EnglandNet, there has been no state web outlet in England which both takes bookings on a national scale, with a size of inventory that merits national distribution and with a reach that national marketing spend can provide. Independent holiday cottage owners have therefore suffered unnecessarily. They have suffered directly at the hands of the commercial agency sector which can and does provide strong national coverage. They have also suffered indirectly from the lack of state provision for marketing their properties with similar coverage via the web on a strict payment-by-results-only basis (ie., commission), rather than the traditional advertising fee-based model (which is both speculative and unaccountable). Then there's more..."The interference of the public sector into this already crowded market is unwelcome, unnecessary and will compete directly with private firms which already successfully offer consumers this service." I say that state competition is great competition. Thank God for the BBC in the competitive arena of a myriad of channels, for instance. And, no, the market is not so crowded as to satisfy demand – summer inventory in particular is invariably sold out, meaning that demand in this is much higher than supply. The state’s objective is to get more people on holiday in this country. And rightly so. It follows that much more self-catering inventory is required, especially at peak. It costs owners too much at the moment. A swift way of achieving success, though, is to offer a much reduced rental commission, so that more owners release more product onto the market independently of agencies. That is the threat (unremarked by Moray because it is undeniable) that EnglandNet poses to the holiday cottage agencies and a welcome one it is, too. More power to the owners, please.

    By Stillers the Stickler, Wednesday, July 19, 2006

  • Campaign to reclaim VisitScotland web site launched

    The complaint to the EU now includes the relationship between Visitscotland and the private company which operates its website (visitscotland.com). The Scottish situation has been cited by the complainants as an example of what might happen in England. A campaign has been launched by a group of accommodation providers in SW Scotland to reclaim the website into public ownership. See www.reclaimvs.com for further information.

    By Mark Chambers, Wednesday, July 19, 2006

  • Tour Operators should think "bigger"

    How many visitors from overseas will take the time to search out a UK tour operator's website when they can find everything they want on one website? Is it not much better to add your products onto a website which can bring you business you would not otherwise have got rather than squeal at "unfair play" when all VisitBritain is trying to do is to make it easier for the consumer to go to a one stop shop. We really should be more mature about these issues and try to work together for the common good.

    By Ashley de Safrin, Wednesday, July 19, 2006

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