The Yorkshire Leaders Board - made up of council leaders and the region's two metro mayors - released a statement this afternoon confirming the decision following a meeting in private yesterday.
Minutes later, Welcome to Yorkshire released a statement confirming it was going into administration. Chairman Peter Box said the decision had been taken with "deep regret".
The organisation had said it was planning a public board meeting today, Tuesday, but Mr Box's statement revealed it had actually taken the administration decision in private on Monday night.
The council leaders' followed a £25,000 review ordered by the board and conducted by Merran McRae, a former chief executive of Wakefield and Calderdale councils. The decision follows years of reputational and financial troubles for the agency, which is a private company but receives millions in public funding.
After being established as the successor organisation to the Yorkshire Tourist Board, it was originally led by Sir Gary Verity who received a knighthood for bringing the Tour de France to Yorkshire in 2014. But he left the organisation on health grounds in 2019 amidst concerns about expense spending and the treatment of staff.
His successor James Mason joined Welcome to Yorkshire in January 2020 but left the organisation last October in the midst of an investigation into an unspecified complaint. Four board members resigned in connection with Mr Mason's departure and the agency currently has no chief executive but its chairman is former Wakefield Council leader Peter Box.
The statement from the Leaders' Board following the meeting said the board had agreed "unanimously" to stop funding Welcome to Yorkshire with public money. It is intended that a new Destination Marketing Organisation to promote Yorkshire will be established in its place.
An initial meeting is planned in May to agree the timeline for establishing the new organisation.
Co-Chair of the Yorkshire Leaders Board, Cllr Stephen Houghton, who is Leader of Barnsley Council, said: “Every district, borough and county in Yorkshire benefits from tourism. The industry, and the communities that rely on it, deserve our support, in particular as we continue to recover
from the effects of a global pandemic over the last two years.
"Welcome to Yorkshire has played a pivotal role over the last decade, enabling us to bring high profile sporting events and investment to the region, and showcasing our talent and diverse offer.
"But a lot has changed and, following consideration of the views of our public and private sector stakeholders on the current arrangements, we have unanimously agreed that a new approach is needed.
“We all agree that our visitor economy needs a champion, and we will now speak further to our stakeholders to ensure we have an organisation with a clear purpose, that works for all, and is sustainable for the future.
"On behalf of Leaders and Elected Mayors, I would like to thank the current and previous Board and staff at Welcome to Yorkshire for the phenomenal job they have undertaken in supporting the tourism sector in Yorkshire over nearly 30 years, and particularly through some difficult, more recent
times. I would particularly like to thank the current Chair of the Welcome to Yorkshire Board, Peter Box, for the leadership and commitment he has shown in such challenging circumstances."
While the report from Ms McRae has not been made public, the Leaders' Board has published a summary of its findings.
It said a recent Government-ordered review into the future of Destination Marketing Organisations had shown the problems being experienced in Yorkshire were also common across the country.
It said: "The DMO landscape in Yorkshire mirrors the findings of the De Bois report on DMOs nationally: hard-working but underfunded, fragmented and confusing to the point of ineffectiveness in strategic terms. There are a plethora of private and public DMO websites, membership organisations, and accommodation portals.
"Welcome to Yorkshire (WtY) itself also reflects national findings. It evolved from a traditional Tourist Board offering services not available elsewhere, to a highly funded partner of the Regional Development agency, Yorkshire Forward, with a broader economic remit, and then to an organisation whose core offer was becoming outdated in the modern digital age and whose financial stability has been increasingly uncertain.
"This has been exacerbated by both reputational damage from the legacy of weak managerial leadership and the impact of Covid 19 on all those
operating in the tourist environment.
"There is widespread support for a regional DMO although WtY under its current operating model is not sustainable.
"The majority of businesses support the concept of regional level marketing but do not want to pay a significant amount and see this as public sector role linked to economic growth and skills and jobs creation. Local Authorities understand the principle of this strategic role but would expect core public sector funding to be underpinned by robust and transparent governance."
Council leaders considered three options - relaunching Welcome to Yorkshire with a new funding model; ceasing funding and consulting on the creation of a new DMO or creating an 'inhouse' local authority service.
They have opted for the second option but have also agreed to start negotiations with Welcome to Yorkshire "with a view to acquiring, at appropriate value, assets including the brand name".
A statement from WtY chairman Peter Box said: "It was with deep regret that last night the Board of Welcome to Yorkshire (WtY) took the decision to place the organisation into administration.
"The past three years have been incredibly difficult for Board members and staff as we have endeavoured to deal with well-publicised legacy issues.
"These matters, coupled with the impact of Covid and the task of securing sufficient funding from the public and private sectors to place WtY on a sound financial footing, have made the situation increasingly challenging.
"The de Bois review of Destination Management Organisations could have created the opportunity for WtY to be given the structure and long-term funding required to move on, grow and develop into the organisation we believe it should be on behalf of Yorkshire and its people.
"Sadly, the decision of the Yorkshire Leaders not to commit to a multi-year funding package, whilst understandable, removed that pathway and means that WtY cannot continue in its present form.
"Most importantly, I want to pay tribute to the team of talented and dedicated professional staff who have continued to do remarkable work in the toughest of circumstances to promote Yorkshire’s many attractions to the world. I offer my heartfelt thanks and wish them well in their future careers.
"I must also place on record my gratitude to those Board members who have remained with WtY, working selflessly in a collective effort to save the organisation from closure.
"It is my sincere hope that the public sector will recognise the value of a new regional Destination Management Organisation to build on the many achievements of WtY.
"This can offer our tourism industry the chance to move forward with a focused approach, deliver on regional priorities, and secure the best outcomes for everyone who visits, lives, works and studies in Yorkshire.
"Rob Adamson, Michael Kienlen and Daryl Warwick of Armstrong Watson LLP have been appointed as Joint Administrators of Welcome to Yorkshire on 1 March 2022.
"The Joint Administrators intend to trade the Company for a period of time whilst they finalise a strategy to secure the best possible result for the creditors of the Company."