Roger March@2013

Roger March@2013

Aims?

Provide my thoughts on the inbound industry after 20 years in inbound tourism research.

Gather thoughts of experienced operators and long-standing participants in inbound tourism.

Stimulate thought and discussion.

Roger March@2013

NZ, 1,199,600

China, 606,400

UK, 591,600

USA, 469,100

Japan, 349,800

Singapore, 332,000

Malaysia, 249,200

Korea, 196,800

HK, 172,600 India, 152,600

Australia’s Top Ten inbound markets

*12 mths ending Sept 2012

NZ, 986000

UK, 660000

Japan, 636000

USA, 413000

China, 272000

Singapore, 229000

Korea, 228000

Malaysia, 148000

Hong Kong, 143000 Germany, 142000

2005 2012*

Roger March@2013

Observations about Australia’s inbound tourism industry - 1

!! We’re not god’s gift to the world, yet we do punch above our weight.

!! As the closest western destination for most Asian markets we’re a “western holiday experience on training wheels.”

!! We’re now an expensive destination, Get used to it.

!! We’re increasingly dependent on segments largely price driven. Deal with it. !! “The high yields offered by Europe, UK, Japan and US are being replaced by

a torrent of low yielding visitors whose key interests are shopping ( for brand labels) and gambling. Traditional product e.g., quality dining experiences, Bridgeclimbs or quality cruise products are of limited appeal.”!

!! Everything is relative. It’s market share, not numbers, that reveal our competitive success.

!! By 2020, China is forecast to be FIVE times the economic value of the next biggest market, India. Consider the implications…

!! Our resort & accommodation infrastructure is old. And our competitors’ is new. Real growth in domestic tourism investment in has been sluggish for two decades and more.!

Sydney’s defunct tourist attractions.

Source: Tourism Investment in Australia, TRA June 2011

Roger March@2013

Observations about Australia’s inbound tourism industry - 2

!! The growth markets are, yes, India and China, although China is forecast to swamp us. !

!! On sales trips overseas: promote yourself, your destination and then your product.

!! China should not be the holy grail. !! Is Queensland a different ‘sell’ to the rest of Australia? Are Qld’s target

segments fundamentally younger and more hedonistic than those of any other state?

!! Friendly service is not good service. !! Tourism forecasting is a failure. !! Government policy affects only the margins. Markets decide.

Roger March@2013

Observations about Australia’s inbound tourism industry - 3

!! The growth markets are, yes, India and China. !! On sales trips overseas: promote yourself,

your destination and then your product. !! China should not be the holy grail. !! Is Queensland a different ‘sell’ to the rest of

Australia? Are Qld’s target segments fundamentally younger and more hedonistic than those of any other state?

!! Friendly service is not good service. !! Tourism forecasting is a failure. !! Offer an experience, not just a product. !! “Innovate to differentiate.”

!! Lack of new product development. !! Government policy affects only the margins.

Markets decide. !

Roger March@2013

Government policy doesn’t work. Markets do.

Roger March@2013

Government policy doesn’t work. Markets do.

Roger March@2013

Observations about Australia’s inbound tourism industry - 4

!! Korea is growing again. “The market is now quality conscious, against almost all other Asian markets.”

!! Britain: Indications are it will remain weak for 2013. Numbers contracted thought 2012 and despite the Lions tour we are not predicting any growth over 2011 numbers for the 2013 year. (Major Australian tourism transport operator #1)

!! US: The US market surprisingly grew during 2012. however our view is not bullish as underlying problems in their economy may impact travel during 2013. We are predicting numbers for 2013 to be about the same as 2012. (#1)

!! Europe: Very weak, will not show any growth. (#1)

!! NZ: Has been very solid throughout 2012 and we are hopeful that this will continue in 2013.

!! Japan: Showing signs of recovery. we experienced a 5 % growth over 2011 and we are hopeful that this will continue throughout 2013. (#1)

!! India: Very weak in 2012 and we don't at this point believe 2013 will be any better. (#1)

Roger March@2013

Observations about Australia’s inbound tourism industry - 5 !! “Europe & US struggled during 2012 and the

forecast ahead is not encouraging. In the past agents would make block bookings for larger groups for a 12 month period and the materialisation was always 60-70%. This use to be the foundation for most of the large volume tourism enterprises. These days the block bookings are smaller, the entire bookings get cancelled and the materialisation is poor.” (Major Australian tourism transport operator #2)

!! “For travellers from South East Asia, South Asia, North Asia the fastest growing market segment is the online travel agencies. The upside is Wotif.com presence is growing and is currently holding around 5th on the market share (behind Agoda, Booking.com, Expedia and Asiarooms.com), the growth of Wotif.com outside of Australia will assist inbound into Australia.” (Australian GM of Thai resort hotel)

Roger March@2013

Observations about Australia’s inbound tourism industry - 6 !! Communication of market

intelligence and inbound data: Who needs what?

!! The tensions between big and small operators. Theme parks, hotels and small tourism businesses: Whose voice wins?

Roger March@2013

Observations about Australia’s inbound tourism industry - 7

TOURISM AUSTRALIA !! “TA Head Office is trying to control everything

from Sydney, even the markets who do not speak in English.” (Very knowledgeable Japanese with long TA and STO experience.)

!! Standardized advertising doesn’t work in Japan and elsewhere.

!! Have downgraded Japanese market from country to region, having impact on trade attitudes. (A Japan/Korea manager requires deep cultural understanding!)

!! “Have they gone too far with online marketing strategy?” Forgotten traditional forms of advertising?

!! TA will close their Japanese student/education (Shugaku Ryokou) micro site very soon, a decision made by Head Office without any consultation with the TA Japan or industry.

!

Roger March@2013

A look at China,

India and Japan.

Roger March@2013

Inbound to Australia: China, India and Japan 2005-2012

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2005 2006 2007 2008 2009 2010 2011 2012*

China

India

Japan

Roger March@2013

Home truths about China !! Growing, of course, but significant

price pressure and the yield is low. !! Europe is far and away the most

desired destination for Chinese. !! China is not the new Japan. Chinese

are not Japanese. They don’t want the same thing.

!! There is no universal Chinese tourist. 10 years ago TA had segmented three distinct markets in Beijing, Shanghai, & Guangzhou.

!! Almost 70% of Chinese outbound travellers are travelling to Hong Kong & Macau. The real Chinese outbound number is around 20M.

!! Chinese spend only 10% of nights in Australia outside gateway cities.

Roger March@2013

Home truths about India !! Only 14M Indians travelled overseas in 2011. !! Smallest leisure market: 20%. Business and education account for 20% each &

VFR 33%. !! 65% of leisure travellers are males !! Australia received 156,000 Indians in 2011. California received over 200,000. !! Indians spend only 12.5% of nights in Australia outside gateway cities. !! It’s our tenth biggest market now and is growing only steadily. !! There are no direct flights between India and Australia. !! Indians are traditionally frugal. Will pay for value, but less for status. Locally

produced goods & mid-range global brands are preferred. !! VFR is a primary travel motive. !! The package and group markets are affected due to the high Australian dollar

and significant competition in market from other destinations. !! Package tours are increasing and FIT travel decreasing !! There is no universal Indian tourist. Like China, there are sub-segments.

Roger March@2013

Home truths about Japan !! Market share peaked in 1993. Numbers peaked in 1997. Market

share is now the lowest since 1983. !! The koala did it. !! Do we understand Japan, even now? !! Traditional package and honeymoon business is soft. Only the student

market and the skeleton base packages with optionals being sold on the ground seem to be working.

Honey-mooners

OLs

EFTS

Shugaku ryoko

New 50s

Silvers

Jukunen

Family

Roger March@2013

“You must be dreaming…”

!! In 1994, the Australian Tourist Commission predicted, following the announcement Sydney would host the 2000 Olympics, that Japan would generate 1.45 million visitors in the Olympics year and 1.82M by 2004.

!! Japanese inbound to Australia peaked in 1997 and now stands at 332,000.

Roger March@2013

Judged by the company we keep

Roger March@2013

Between 1986 and 2000, Japanese outbound grew 323%.

Between 2001-2011, outbound grew 5%.

In 1997, 814,000 Japanese visited.

In 2011, 332,000 Japanese visited

Australia.

Australia’s market share peaked in 1993 at 5.6%.

Our market share has collapsed to 1.8%, lowest in 30 years.

In 2000, China & Korea accounted for 26% of Japanese outbound.

In 2011, China & Korea accounted for 43% of

Japanese outbound.

What the bloody hell happened?

Roger March@2013

Queensland reflects Australia

Roger March@2013

0%

5%

10%

15%

20%

25%

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Change in Market Share, Selected Regions & Countries

Hawaii U.S. Main China Resort Australia

China

Resort destinations

US Mainland

Hawaii

Australia

Roger March@2013

Market Share by Main Destination: 1998-2009

0

5

10

15

20

25

30

35

40

Europe NE Asia SE Asia Nth America Oceania Hawaii Guam/Saipan Others

Perc

ent

Destination

1998 2000 2002 2004 2006 2008 2009

Source: Market Insight 2010, JTB Foundation

0

2

4

6

8

10

12

14

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Hawaii Australia

We are not alone: Market shares of Australia and Hawaii: 1992-2009

Roger March@2013

Changes in Market Share of Major Destinations: 1999-2009

China , 90.0%

Sth Korea, 63.0%

Taiwan, 30.0%

HK, 26.0%

Thailand, 0.0%

US Mainland, -6.0%

Guam, -10.0%

Hawaii, -35.0%

Singapore, -40.0%

Australia, -51.0%

-60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Source: JNTO statistics

Change in Market Share between 1999-2009 (as % difference)

Losers

Winners

China , 90.0%

Roger March@2013

External factors: non-controllables !! Foreign exchange !!Economic cycles & downturns !! Japanese consumption & leisure patterns !! Japanese demographic changes !! Intensifying competition !! Investment in tourism !!Airline events – ANA & Northwest

withdraw, Ansett collapses, Jet! to Japan

Roger March@2013

Internal factors: controllables

!! Image of Australia in Japan: Big Nature & cuddly animals

!! Advertising campaigns

!! Coherence of marketing efforts in Japan between TA, STOs and individual operators

!! Relationship management with Japanese travel

!! Tourism Australia’s conflicting priorities

!! Servicing the Japanese tourist in Australia (& Hawaii)

Roger March@2013

Reasons for Decline in Japanese Market: Survey of Tourism Operators Operators

Competitor destinations, An-Kin-tan

Airline capacity

Strength of AUD

Campaigns ineffective or inconsistent

Lack of new offerings by Australia

Decline in Japan economy

Australia no longer flavour of the month

Costs in Australia

Roger March@2013

40

50

60

70

80

90

100

110

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Yen/A$

Japanese Visitors

Exchange rate

…and it ain’t exchange rates

Despite strengthening yen, numbers fall Despite strengthening

Roger March@2013

Young Japanese are deserting overseas travel.

0

5

10

15

20

25

30

35

40

45

1990 1993 1998 2003 2009

Figure 4: Market share of outbound travel by age: 1990-2009

60+ 50 to 59 40 to 49 30 to 39 20 to 29 under 20

The 60+ plus market is now equal largest.

Market share of outbound travel

by age: 1990-2009

Roger March@2013

Being a preferred destination means nothing.

Roger March@2013

Some gratuitous observations and advice…

Roger March@2013

Observations on the Gold Coast ! Strong network of highly experienced

tourism professionals

! Gold Coast offers the genuine Aussie holiday experience: beaches, theme parks, family based

! “2018 Commonwealth Games to boost visitation. !! The trick will be how the destination

captures interest in the Gold Coast as a leisure destination post event, and capitalises on the investment in new sporting infrastructure in the region (similar to what the London Olympics did with athlete accommodation after the games). Precinct planning and activation after the games will be critical.”

Roger March@2013

“Fall in love with your customer, not your product.” !! Gold Coast Tourism executive says he

believes the ‘Famous for Fun’ campaign brings to life everything the Gold Coast is all about.

!! "We're an exhilarating, fun holiday destination for families mainly, and this theme is something Las Vegas would kill for.

!! "It's so powerful. When I saw all the imagery that goes with it, to be quite honest, I got quite emotional because we're lucky enough to live in this place 52 weeks a year. It's got everything and most other locations have got one of what we have many of." (Las Vegas repositioned itself away from gambling to family destination.) SMH Oct 9 2011

Roger March@2013

You will compete and succeed based on the quality of the tourism experience you offer. An integral

part of that experience is the quality of your customer service.

Roger March@2013

Our service standards are not good enough. Tourism and Transport Forum chief executive John Lee said you only had to look online at hotel review websites such as Tripadvisor to see tourists posting negative comments about their experiences in Australia. Recent comments described staff at one 4.5 star Queensland hotel as showing complete indifference'', having a "hick town'' approach and "not my responsibility'' attitude. Mr Lee said Australia has struggled to keep up with the rising quality of service standards in parts of Asia when it came to leisure-based tourism, particularly in regional areas. "Tourism is a global industry,'' he said. "Australia is competing with Fiji, Indonesia, Thailand... the bar keeps rising and it's really important in terms of customer service.'’

Source: News.com.au, May 3, 2011

Roger March@2013

Tourism is a service industry; Asia comprises many service cultures* Acknowledge the inbound customer ! It’s always interesting to sit in hotel lobbies in Australia and watch how few

porters, concierge and reception staff greet and welcome incoming guests, especially those from Asia. In retail environments ot is the same. Some Japanese friends of ours, after spending two weeks in Australia, asked if it is a custom in Australia, to NOT welcome customers as they enter a shop, restaurant or hotel.

! Knowing some greetings in the language of your inbound markets is a plus, however, if you are unsure of there background, always, always use English only. Once you are sure of them being Japanese/Chinese/Korean etc, then utilize your respective greeting for the customer. Also, when using any foreign language, be sincere when using it.

! Body language needs to be welcoming at all times, with a front-on, professional stance, without looking like a soldier or bouncer, when trying to welcome and/or engage the inbound customer.

! Once you have approached the guest, or vice-versa, we always recommend a very slightly stooped/slightly bowing stance to show some respect and a sense of paying more attention. Show listening with facial expressions as well.

* Thanks to Trevor Lee of TravConsult for these insights.

Roger March@2013

Appreciate the customer !! Once you have identified where the customer is from ie China/

Japan/Korea, share this knowledge with the staff around you in a subtle and professional way. That is, don’t yell it out so the customer hears, but pass it on through a quiet word. This helps staff to use the right foreign language if it is known. It can also help when it comes to recommending restaurants, engaging in conversation and helping the customer in general.

!! Knowing dates significant to each of your respective inbound markets is another way of showing appreciation. For example, Chinese New Year (China/HK/Taiwan etc), Independence Day – January 26 (India), Korean New Year’s Day (1st day of first lunar month) / Korean Declaration/Independence Day (March 1) etc. Staff can learn the correct phrase, for the respective market and occasion. Appropriate decorations, signage and even food etc can also be arranged to show both appreciation and respect for the inbound customer.

Roger March@2013

Food, glorious food! !! Whichever inbound market you are are

engaging, they all like to have even just a little of their own cuisine while travelling abroad. Staff should do more than just find out the details of the nearest Chinese restaurant, for example. They need to know important items from the menu, prices and the type of specific cuisine and/or where the restaurant’s chef is from. Cuisine differs greatly from region to region and even city to city in all Asian countries, even Japan. Having this knowledge in advance really goes a long way in helping the inbound customer to enjoy their stay.

Roger March@2013

“Good service is never having to ask for

service.”

Bronwyn Green, Quicksilver 1995

Roger March@2013

Thank you. Dr Roger March rogerstgmarch@gmail.com