Will the exit of VisitScotland's chief spell the end of the agency's problems or the start of new ones?

Everything was going well and suddenly there's a problem with the chief executive. It is just bizarre

ANOXIOUS mix of recession and volcanic ash was all that was plaguing tourism body VisitScotland recently, until last week when the firm's internal wranglings hit the headlines. News leaked out that Philip Riddle, the firm's chief executive, was set to get the push from Mike Cantlay, the new chairman.

Last week the group's communications team remained tightlipped after Cantlay refused to back Riddle, revealing only that "discussions are progressing" about his position. It also said that Riddle would essentially step down while the negotiations went on and that Malcolm Roughead, the firm's "director of visitor engagement", was to take on the chief executive duties on an interim basis.

Sources close to the board suggested that the carefully worded statement was designed to buy time while the VisitScotland board negotiated the terms of Riddle's termination.

The subject of Riddle's uncertain position arose in debate last week in the Scottish Parliament, as MSPs rounded on tourism minister Jim Mather over his role in the situation. Labour party sources had darkly hinted that the SNP wanted a more pliable leader to help promote Scottish nationalist-themed events such as the 2014 Homecoming, following last year's event. The chief executive's role is defined as being able to "deliver outcomes in line with Scottish ministers' priorities". But the parliamentary squabble failed to nail down whether the SNP was meddling with VisitScotland.

But the idea that Riddle was to be ousted came as a surprise to many. Gavin Brown, a Tory MSP and a member of the parliament's economy, energy and tourism committee, called Riddle's removal "bizarre".

"My personal view of Philip Riddle is that he's pretty good," says Brown. "He always struck me as knowing what he was doing. He gave some pretty good evidence to us a month ago and he was asked blunt questions about what happens if his budget gets slashed by 20 per cent and he had some thoughts about what he might do if that happened. Obviously he said: please don't.

"The government narrative has been that tourism has fought back well and has done well with the ash cloud and the recession, and claiming Homecoming was a big success. They are saying everything was going well, and we have some plans to get 100m worth of new tourism in the door and suddenly there's a problem with the chief executive. It is just bizarre."

But most in the industry shrug their shoulders and suggest that, as the new VisitScotland chairman, Cantlay is merely arranging things to his liking.

Stephen Leckie, the chairman of the newly formed Industry Leadership Group for Tourism and head of the Crieff Hydro, said the VisitScotland board, which welcomed five new non-executives last year, was ready for renewal.

"These things are always tricky. With a new chairman, perhaps it is just time for a new rule," he says.

"The board has changed fundamentally and fairly radically – different people are on the board. It is about personalities and approaches and attitudes. Maybe it is Philip's time to move on.

"We shouldn't forget Philip has been there for nine years. With Mike Cantlay coming in, maybe a refreshment is what is required."

But since he took the role over from former chairman Peter Lederer last month, Cantlay has also made it clear that VisitScotland has been underperforming. He has all but dismissed the group's "ambition" – as set out by the government in 2004 – of growing the tourism sector's revenues by 50 per cent by 2015. Although VisitScotland has taken to insisting it is not a target, the aspiration to grow revenues to 6.3 billion in the next five years now looks impossible. While industry revenues bucked the market by rising slightly to 4.1bn in 2009, it is still less than the 4.2bn in 2005, the figure on which the growth target is based. The plan was quietly dropped as the industry was shaken by recession and VisitScotland itself now faces a 10 to 20 per cent cut in its budget.

Nor was Riddle a universally loved character. The former oil industry executive, who enjoys a 160,000 a year salary, was seen by some as arrogant and over-bureaucratic.

Industry insiders say Riddle's VisitScotland lacked the trust of both politicians and the industry. He rubbed many people up the wrong way, in particular Donald Anderson, the former leader of Edinburgh City Council and a board member of VisitScotland for eight years. Anderson felt strongly that VisitScotland failed to promote Edinburgh sufficiently and he is pleased to see Cantlay, who was deputy chairman of VisitScotland when Anderson was on board, make changes.

"I really do welcome the appointment of Mike Cantlay as chairman of VisitScotland," says Anderson. "It is a fantastic boost for the industry and despite the difficulties VisitScotland is facing now, I am sure the industry and the country can look forward to strong dynamic leadership in the future."

Last year, several councils cut the money they contributed annually to VisitScotland. Instead, many set up their own destination management organisations, or DMOs such as that established for Aviemore and Cairngorms, reflecting the old system of the regional tourist boards that VisitScotland had done away with.

Edinburgh Council set up the Destination Edinburgh Marketing Alliance (DEMA). Instead of a block grant, the council now pays VisitScotland on an ad hoc basis for its services, which amounts to about half of the 550,000 it used to get.

Tom Buchanan, convener of Edinburgh council's Economic Development Committee, admits he did not always see eye to eye with Riddle.

"Philip and I have gone on a journey together," he says carefully. "He probably would admit himself he was uncertain about what Destination Edinburgh meant, about Edinburgh trying to promote itself and take a stronger role in directing its brand to the world. I wish him well."

Industry representatives are mostly in favour of Cantlay and are optimistic about his ability to lead the tourist body. Iain Herbert of the Scottish Tourism Forum said VisitScotland was working more effectively with the industry.

"It has improved," says Herbert. "Where there had been areas in the past we were concerned about, were lack of partnership and close working with industry. Communication with industry has improved."

Barbara Clark, VisitScotland's head of communications, acknowledges that the agency has had problems with its relationship with hoteliers and owners of visitor attractions.

"We have to make improvements in our engagement with the industry. It is something we are very aware of," she said.

Leckie, who aims to galvanise the industry through the leadership group, is positive about Cantlay, as well as about the VisitScotland board, which welcomed Manus Fullarton, former head of corporate for Lloyds TSB Scotland, and hotelier Paddy Crerar last year.

"I wouldn't speak ill in any way of Peter Lederer, the previous incumbent, but for me Mike Cantlay is, frankly, more my age and for me we can have a better association," says Leckie.

"The guys at the top of VisitScotland have been in the business. They are industry leaders and have been successful in business.

"The new non-executive directors around the table at VisitScotland – I stand in awe of them because they are and have been successful in business. That makes a huge difference. They understand what makes the world go round.

"He (Cantlay] is listening to what we have to say, he has some new fresh ideas, he is involving his board around the table. I think that is good news and he is a good communicator."