1B: Developing Tourism Partnerships

Introduction

The effective management of tourism at destination level can only truly be achieved through partnership, due to the number and complexity of stakeholders. For a long time, national and local governments have talked about partnership as a means to increase joined-up thinking and public/private sector involvement. The tourism sector, because of the nature of the work in engaging the private sector and working across boundaries, was an early adopter of the partnership principle.

However, the drive for partnership working has taken on a new dimension since England’s Regional Development Agencies (RDAs) undertook the remit for tourism and its funding in April 2003. Since that time the management structure of tourism has undergone a significant change. Many areas have seen the growth of destination management partnerships, although their delivery and style has not been uniform around the regions.

For example in the North West, Destination Management Organisations (DMOs) are affiliated to Economic Partnership structures, whilst in the South West, destinations were identified through research on what the visitor recognised as the destinations. This section does not give a critique of different structures but includes non-prescriptive guidance on partnership issues that a destination manager may encounter.

The purpose of tourism partnerships

In the past, tourism partnerships were primarily driven by local authorities and concerned mainly with the co-ordination of marketing/promotion and delivering council objectives with private sector approval. Partnership has been described as "The pursuit of funding/shared goals through mutual distrust".

In the current strategic climate, and in an effort to deliver truly sustainable tourism services, the aims of existing and new tourism partnerships have been widened to act as the strategic body of tourism within their destinations. This covers development, training, information and marketing issues.

Effective tourism partnerships can deliver significant benefits in the form of:

• cohesive, shared objectives and vision, increasing the likelihood of successful delivery
• co-ordination of development and marketing budgets and activities
• improved communication and understanding, and mutual respect between local authority and industry
• improved resource efficiency
• non-duplication of activities
• co-ordinated market intelligence, research and development activities
• a collective "voice" for the industry, increasing power and influence
• engagement of industry and the community to deliver sustainable tourism objectives
• co-ordinated, targeted and cost-effective marketing/promotion.

Partnerships are too often seen as talking shops (particularly by the private sector) and ineffective in delivering their intended role. Many partnerships fail in their intentions due to the lack of planning at the outset.

It is vital that the instigating body sets the purpose of the partnership at the outset and ensure buy-in from all the stakeholders. At the end of the day the partnership should be focused on customer outputs.

• For the visitor, that is increased satisfaction and enjoyment of their holiday
• For the business it is increased business productivity
• For the community it is increased buy-in and economic return within their communities.

The process of forming a partnership

The diagram below sets out a simplified step-by-step process towards setting up a partnership.

Basic partnership structure and principles

Tourism partnerships are often core funded by local authorities or a RDA. However, they may have elements of commercial activity, and in some cases membership schemes. In some partnerships the goal may be to become financially independent of core public funding. The possible commercial element of a partnership’s activities, coupled with the delivery of its role and function, will directly affect the type and structure of the partnership.

Details of the most common types of partnership structure are given below. It should be borne in mind that partnerships evolve through time. What was applicable at the outset of a partnership may change as the partnership matures and responsibilities or commercial activities increase. Its structure may need to change as a result.

Typically a partnership may start as an "informal partnership", become an "association" and then a "limited company" as its role and responsibilities develop.

Tourism partnerships should be affiliated to other local or sub-regional partnerships in order to avoid duplication, gain credibility and achieve delivery through other sources of funding and support, for example:

• local strategic partnerships
• sub-regional economic and rural partnerships
• training and skills partnerships.

Partnership stakeholders and chair

The stakeholders will be determined by the role and function that the partnership will play. The number of stakeholders is a much discussed subject and again is dependent on what the partnership has to achieve, what structure is decided upon, and by the size and complexity of the destination. For example the partnership may have a small, ie 12-member board that sits above a wider group of 20/30 stakeholders. Conversely the partnership may opt to convene a number of working groups with the chairs of the sub-groups sitting on the board. Again form follows function.

The stakeholders will also be determined by the nature of the issues that the partnership plans to address and could include:

• local authority(/ies) – often the catalyst and enablers of the process and core funders
• the host community, represented by businesses and residents and interest groups
• other funding or inception bodies – RDAs, chambers of commerce, etc
• other public sector bodies – protected landscape areas, skills bodies, Business Links, etc
• environmental groups – conservation Non-Governmental Organisations (NGOs), landowners, civic societies, etc.

Key groups and organisations from which a partnership may be formed are shown in Table 1.

The importance of the chair

Choosing the chair of the partnership is often not considered as carefully as it should be. As a rule, the type of chair required at the start of the partnership process may be different to that required once the partnership is established. The Constitution or Articles of Association should include details of a chair’s period of office.

The chair has a hugely significant role to play at the outset; not only will they give credence to the process, but also they should have the vision, drive and energy to steer the group towards their goals.

Further advice on this is given below.

Obtaining resources

The amount of resources required to deliver a successful programme will depend on the objectives of the partnership. It is highly unlikely that the partnership will be successful without the input of some resource and these should be secured before the partnership is launched.

To become established, a partnership will need core funding for staff, work programmes and offices and equipment. Financing may be available from a range of sources and stakeholders, but many (especially the private and voluntary sectors) will be reluctant to provide funds until they can see the benefits of the process.

Local authorities and other public sector organisations have an important role to play in supporting and funding the partnership's initial activities. This funding may taper away over a period of three to four years as the partnership becomes established and draws in resources from other areas (eg private sector support, external grant funding, commercial income). Experience shows that successful partnerships develop a mix of funding streams (including core public sector funding) so that they are better able to manage the reduction or loss of one funding stream without going under.

It is important to be creative about potential resource solutions. Consider if it is possible to use the resources available in a partner’s offices free of charge, for example printers, photocopiers or meeting-rooms.

Some members of the partnership may also allow staff to work on the development of the partnership, thus providing free human resource.

Volunteers and donations of items such as stationery may also be sought from the stakeholders.

Strategies and monitoring

It is recommended that the partnership should have at least two documents to inform its creation and inform other stakeholders of its intentions.

• An audit of the destination’s tourism resources. Without knowing what you have, how do you know what you want to change?
• A tourism strategy with evidence-based priorities agreed by key stakeholders and partnership funding bodies

Based on an assessment of these documents the partnership should develop the following.

A business development plan and action plan

The business development plan and action plan should identify how the partnership is planning to develop and what it will actually deliver. This is especially the case if commercial activities are to take place. One person or organisation should take responsibility for leading this work, which must then be sent to partnership members at regular and agreed intervals for their comments. This will ensure that members are involved and should increase the incentive to build an effective partnership.

Any action plan should have deliverable goals attributed to specific people or organisations with a realistic timetable and deadlines. Regular progress meetings should be timetabled as part of the action plan. This is the best way to ensure that the work of the partnership moves forward.

A partnership performance review programme

A partnership performance review programme should include provision for reviewing performance against targets set in the business and action plans. Details on monitoring destination and management performance are set out in more detail in Section 3 Destination Monitoring.

Dissemination of the results should form a key element of a wider media and communication strategy. This keeps stakeholders updated, both those who are involved in the partnership and those who are not. It helps in identifying any issues before they become major problems. Importantly, communication encourages buy-in and commitment.

Websites can be a good way of promoting this information, linked to e-newsletters or news alerts. Face-to-face meetings or forums may however sometimes be the only realistically constructive option. They can be costly and time consuming to organise but Small and Medium Enterprises (SMEs) often appreciate the opportunity to hear first hand what is happening, and to meet their partnership representatives.

Gathering feedback is also important. Stakeholders should be asked for their feedback on all aspects of the partnership, including the relevance of the objectives to them, how well the process and delivery mechanisms are working and what can be improved. Not only does this provide those managing the partnership with information on how to improve, it also encourages ownership from the stakeholders. This buy-in will only be maintained if it is seen that the feedback has been taken seriously and addressed in an appropriate manner.

Common partnership structures

The most common partnership structures are listed below. In all cases it is advisable to seek legal advice on the appropriateness and efficiency of a particular structure in relation to the partnership's aims.

Limited companies

There are two types of limited companies: companies limited by shares, and companies limited by guarantee. A limited company is a separate legal entity and is (relatively) highly regulated, principally under the Companies Acts and insolvency legislation. Limited companies are generally regarded as one of the most appropriate vehicles for managing tourism partnerships, particularly those with income streams.

Management and control

• Management and control of limited companies is divided between the company’s members and its board of directors.
• Members retain overall control of the company because they (generally) have the right to appoint, remove and replace the directors. They also have to vote in favour of key resolutions, such as any change in the company’s constituent documents.
• The company’s board of directors has responsibility for the day-to-day operation and control of the company’s activities, subject to the ultimate sanction/control of the members and the authorities/regulators. The reality is that the board has a broad discretion to effectively manage the company’s operations. The general rule is that each director has one vote.
• It is possible for a company’s board to delegate particular functions or responsibilities, either to sub-committees, or to other groups or employees, or by contract. This does not however absolve the board of its overriding responsibilities, to manage and control the activities of the company.

Main advantages

• Limited liability – members of the company will meet the debts of the company up to a (generally very small) specific limit in the event of its failure, generally what they have agreed to pay on the issue of their shares. Directors do have a number of duties which may in certain circumstances result in personal liability being incurred, but not if they act with a reasonable degree of skill and care.
• Familiarity – limited companies (along with partnerships) are probably the most common vehicle for carrying on business in this area.
• Transparency – although the degree of hands-on regulation is relatively light, the filing and reporting requirements for limited companies are such that the finances and decision making of this type of organisation is relatively transparent.
• Ease of operation – it is relatively easy to set up, carry on, or close down a business or activity using this vehicle.
• Independence – because of their stand-alone status, limited companies are often used to set up and run a separate operation, which is distanced and ring-fenced from other businesses or activities carried on by their stakeholders.
• Separate legal identity – the company has a corporate existence and can enter into contracts in its own name, including bidding for external funding.

Main weaknesses

• Voting rights – because of the (usual) "one share one vote" rule, it may be felt that a majority could change the company’s operations, constituent documents or rules of engagement, to the disadvantage of the minority and/or by moving away from the original plan.
• Set up costs – there is a cost to setting up a company and certain documents need to be filed with Companies House in order to set up.
• Ongoing administrative burden – the requirement for transparency and for compliance with the legal and regulatory controls on limited companies may create an administrative burden for a small partnership which will have to comply with the ongoing filing requirements of Companies House and will need to file a notice with regards to any change in members or directors as well as keeping statutory books, board minutes, etc.
• Grants and loans – limited companies may be viewed less favourably by grant funding or "soft loan" providers, on the grounds that they rarely include effective limits or controls on the business or activities of the company and it is relatively easy for members or directors to (properly or improperly) divert profits or assets for their own use or benefit.

Community Interest Companies (CIC)

A Community Interest Company (CIC), also known as Social Enterprise, is a relatively new category of company listing. It is possible to set up a company limited by shares, or a company limited by guarantee, as a CIC. About 500 companies have been formed as CICs. They are becoming increasingly popular for non-profit making partnership concerns.

• The key distinguishing feature of a CIC is that it must be able to demonstrate that it will use its profits and assets for public benefit and that its constituent documents include an "asset lock" so that, if the company is ever wound up, its assets will not be distributed to its members but will instead be given or applied to another entity fulfilling or providing the same roles or benefits. This helps in securing the objectives of the partnership should it fail.
• CICs are subject to some additional, low-key, supervision and to some additional administrative controls.
• It may well be that, over time, CICs will achieve widespread recognition as the preferred route for those setting up not-for-profit bodies, especially if they want to attract grant-funding but do not want to submit themselves to the much more rigorous regime which applies in the case of charities. It is however too early to tell whether this will become a serious issue, or whether unforeseen or unwanted compliance or regulatory issues may arise.

Formal partnerships

The perceived advantages of formal partnerships are that they are very lightly regulated and the costs of setting up and operating a partnership can be significantly lower. Typically they will have a "terms of reference" and constitution to regulate their business.

• A partnership is "transparent", in the sense that it is not a legal "entity" which exists independently of its partners. Responsibility is shared. This has a number of consequences in particular that all partners are responsible for the debts and liabilities of the business and any income or benefit is taxable in the hands of the partners. This restricts commercial opportunities that may fail and incur liability.
• It is now possible to set up a special type of partnership, called a limited liability partnership. This vehicle does allow partners to claim the protection of limited liability, without setting up a company limited by shares or guarantee.
• Partnerships may not be politically acceptable to the private sector as the perception may be that a limited company has a stronger commercial credibility.

Unincorporated associations

It is possible for a group of persons to set up a joint venture or operation, without any sort of agreement or structure.

Main advantages

• No set up costs – unincorporated associations are relatively straightforward and cost nothing to set up. They usually make their own rules for running the organisation and set these down in democratic constitution (rather than a memorandum and articles as with a company).
• Governance – usually a management committee is elected to run the organisation on behalf of the members
• Good starting point – can be used as an initial structure to set out partnership arrangements which can relatively easily be developed into a limited company when the time is right.
• Fewer filing requirements – there is no need to register with Companies House and no ongoing filing requirements or obligation to submit accounts or annual returns
• Freedom of operation – unincorporated associations are not regulated by Companies House or the Financial Services Authority.

Perceived weaknesses

They have no separate legal identity – this means that members may have to sign any contracts that the association enters into as individuals and carry the risk of personal liability for any legal actions or debts facing the organisation (Note: if set up as a subsidiary of a wider economic partnership (eg Economic Partnership) or as a committee of a local authority rather than an Unincorporated Association, then the "parent" body will sign any agreements and this should not apply). This is important if it is intended that the new company will eventually take on employees, raise finance, apply for grants or open bank accounts, enter into large contracts, take on a lease or buy freehold property.

Key rules in partnership management

Recruit the right/most appropriate chair

A number of questions should be addressed before embarking on the recruitment of a chair.

• What stage of development the partnership is at – new, developing, or mature?
• Is a private or public sector representative required?
• Define the job role/description of the chair.
• Will there be any remuneration/expenses?
• What is expected from them time-wise and in commitment?
• Will the position be advertised and candidates interviewed, will the selection take place via nominations and votes, or will an appointment be made without either of these processes taking place?
• Who will manage the selection process?
• Will the partnership get a vote?
• For what term will the chair be in post?
• Will there be a vice chair?
• What training/familiarisation might they need?

All board members must have a role and be aware of it

It is a common misconception that everyone on a partnership board knows why they are there and what is expected from them. Too often, if this is not communicated, members can become disengaged from the partnership.

It is good practice for the partnership manager/chair to actually ascertain why each partnership representative sits on the partnership. If an individual does not have a role then their place has to be questioned. As a rule all partnership attendees should have a clear idea of their role and the expectations that may be put upon them.

Involve all stakeholders early in the process

Missing a stakeholder out in the early stages of the process can result in time consuming bridge-building later. With large partnerships it may be necessary to gather smaller, like-minded groupings prior to bringing everyone together, so that each grouping feels it is relevant; eg B&Bs may meet initially separately from (larger) hotels.

Do not allow the partnership to be driven by one party

The partnership should not be driven by one party. Partnerships by their nature can be overtly political entities. They involve individual people, all of whom have a vested interest in the delivery or outcomes of the partnership for the organisation that they represent. This tendency can be overcome by having a clear and agreed approach led by the business plan.

It is ultimately the chair’s role to manage this process and to give all parties the space to add their views and be involved with all elements of the partnership. If an impasse is reached, it is usually a good idea to gain support to resolve any issues by employing an outside facilitator to broker a resolution.

It is often a misconception that those people/organisations with the biggest budgets have all the power. In one sense this is true. Without these funds delivery would not be achieved. Conversely however if those individuals could deliver what is required without other agency/stakeholder's support, why would they sit on a partnership?

Building the bridges between public and private

When managing partnerships, especially at the outset, it is often the case that there is mistrust or a misunderstanding between partners. It is common to hear that the private sector believe that the public sector are too slow or bureaucratic, and the public sector sometimes feel that the private sector are to hasty or don’t understand the public obligation.

This can cause significant issues. Again it should be remembered that we are dealing with people. And again, through good business planning and chairing, these issues can be overcome.

In essence it is about building trust. If structures where the public and private sector can truly work in partnership are achieved then delivery will follow. Allow the private sector a real hands-on role in assisting in delivery and let the partnership take the praise. Then the private sector is happy due to their influence and seeing things happen and the public sector gain satisfaction through the recognition that they get from their involvement.

Plan, plan and plan again

All too often partnerships proudly show off their business plans and communication strategies and then they are put on the shelf and forgotten. This leads to inactivity, lack of direction and ultimately the slow demise of the partnership.

Plans and strategies should steer the partnership. They are often expensive in time and money to produce and should therefore be in constant use. Performance monitoring should be developed to measure progress and value for money.

Leadership

Successful partnerships have positive, inclusive leadership that makes difficult but informed decisions when necessary, acts decisively and achieves results. It is not about continually compromising to the lowest common denominator. The role of the chair is key in this, as is the positive engagement and buy-in to the partnership’s aims from all stakeholders.

Give it time

Time is an important function in the establishment of a partnership. If correct procedures and functions are carried out at the outset then a partnership can be sitting within six months to a year. A partnership may not become truly functional – made up of the right people, with secure funding and delivering on its objectives – for between two to five years.

Partnerships are not to be rushed, or bolted together if the outcomes that are expected are to be seen in reality. Partners should be willing to commit time and resources for an appropriate period and accept that, initially, things may take longer to discuss and agree on, since all stakeholders need to be engaged.

Further reading

1. Information on the Tourism Beacon Authorities at www.idea.gov.uk includes examples of best practice for partnership development.
2. Partnerships Online is a community-based partnership resource that has some good general advice on partnership.
3. Business Link has information on setting up businesses and on company structures including setting up a social enterprise.
4. Members of DP:UK can get access to their Advice Sheet number 11; Developing Effective Partnerships.
5. The Employers' Organisation for local government (EO) has a website that includes a toolkit for assessing partnership and a review of the learning needs and skills partnership managers and members may need. See www.lgpartnerships.com
6. Five Vital Lessons is a website that sets out guidelines for partnerships. It was produced for the Department for Education and Employment.