22 May 2009
By David Scott
The body responsible for the promotion of tourism in Scotland has been criticised over its handling of a loss-making website.
The Public Audit Committee of the Scottish Parliament said VisitScotland could have achieved better value for the public purse by using a different business model to develop its internet service.
The committee found that the website, eTourism, a public-private partnership, was based on a failed understanding of the demand within the tourism industry for online booking.
In a report published on May 14, the committee disclosed that eTourism’s performance had not met the predictions outlined in the ‘flawed’ business plan.
At December 31, 2007, the financial statements for the website reported cumulative losses of £12.4m, including £1.3m of losses incurred in the year and net liabilities of £6.3m.
‘It is a matter of regret to the committee that the venture failed so significantly in relation to predicted revenue generation,’ the MSPs stated.
The report followed an inquiry by the committee into a report by auditor general Bob Black, which examined the events leading to VisitScotland’s purchase of all shares in eTourism.
VisitScotland chief executive Philip Riddle argued that the venture had worked extremely well. But the committee pointed out that it failed to produce the expected income set out in the business case. It added: ‘In that regard at least, the venture clearly cannot be said to have worked well.’
Committee convener Hugh Henry said ‘It would appear that the option of buying out the shareholders was possibly the better option, but we are disappointed that external advice was not sought to inform this decision.’
