VisitScotland chief calls for Euro-style tourism loans

Published on Thursday 16 April 2009 21:40

Philip Riddle is urging the UK and Scottish governments to create a tourism investment bank to pump cash into the sector

VISITSCOTLAND'S chief executive has called for a government-backed investment bank to be set up to pump millions of pounds into recession-hit tourism businesses.

Philip Riddle urged the UK and Scottish governments to establish a special tourism investment bank – working with existing private sector lenders – to secure investment in the industry during the downturn.

Under the radical proposal, the two governments would underwrite the bank's business, allowing it to offer lower interest rates on loans to medium-sized tourism businesses.

It would also offer insurance for the loans, giving lenders confidence to part with cash.

Riddle suggested such a scheme could be modelled on the bank set up in Austria, a format now used in other European countries.

Making a powerful case for greater help for the industry, Riddle said France and Spain had both unveiled support schemes for tourism and warned that Scotland risked falling behind its rivals if it did not invest.

Riddle told The Scotsman: "We have the potential to come out of this recession with tourism as a thriving, leading industry, helping to pull the country out of the economic downturn."

He added: "We have that potential but we do have to get investment going. Although the government has a role, it has to be government, banks and the businesses themselves willing to take the risk in partnership.

"I think that's the clarion call: we have to get investment because this is the time to invest – it's cheaper to get construction and materials. It's just a case of putting the money into the fabric of our industry."

Riddle suggested loans from the tourism bank could be aimed at medium-sized businesses – such as family-run guest houses or chains of two or three hotels – rather than larger developments.

Figures from VisitScotland showed that 72 per cent of tourism businesses planned to rein in their spending in light of tighter credit conditions.

But Riddle suggested the 4 billion sector – which employs about 200,000 people in Scotland – could add a further 2bn to the economy if investment was stepped up.

Colin Borland, from the Federation of Small Businesses in Scotland,

said: "Like many small firms, tourism businesses have been frustrated by the lack of fair access to flexible, affordable finance.

"The fact these issues are not peculiar to the tourism sector suggests our focus should be on solutions for small business finance across the economy."

A Scottish Government spokeswoman said: "This is an interesting idea and we look forward to seeing the details of this proposal."