The state of do­mes­tic tourism

Travel Bulletin - - CONTENTS -

In the 12 months to De­cem­ber 2015 – the lat­est fig­ures avail­able at time of pub­li­ca­tion – Aus­tralians took 87 mil­lion do­mes­tic trips and spent al­most 322 mil­lion nights away from home. In the process they parted com­pany with $57 bil­lion, half of that forked out by hol­i­day­mak­ers and a quar ter by busi­ness trav­ellers. They are sig­nif­i­cant num­bers. Com­pare that to the $36 bil­lion gen­er­ated by 248m in­ter­na­tional vis­i­tor nights and it starts to be­come clear how crit­i­cal a role do­mes­tic tourism is play­ing in achiev­ing the gov­ern­ment’s tar­get of gen­er­at­ing at least $115b in overnight spend by 2020. It is a role of­ten over­looked in the higher pro­file pur­suit of the overseas tourism dol­lar. What is less clear is the role bricks and mor­tar travel agents are play­ing in the sale of do­mes­tic prod­uct. While we can all agree – at least to a point – that a size­able per­cent­age of in­ter­na­tional travel will con­tinue to be booked through tra­di­tional re­tail­ers, the same can­not be said with the same level of con­fi­dence for do­mes­tic hol­i­days. Such a con­clu­sion is sup­ported by Roy Mor­gan Re­search which found travel agents are con­tin­u­ing to be a piv­otal seller of overseas hol­i­days but “are not so nec­es­sary” for Aus­tralia-based breaks. In its study from late 2014, Roy Mor­gan found only 8% of con­sumers who last hol­i­dayed in Aus­tralia used a bricks and mor­tar agent, with on­line agen­cies only marginally ahead on 10%. Air­lines mean­while cap­tured 18% of book­ings while 34% by­passed them all and booked di­rect with their ho­tel. Fur­ther­more, in a ‘state of the na­tion’ re­port on travel, Roy Mor­gan chief ex­ec­u­tive Michele Levine ob­served: “Travel agents are be­ing usurped by any­thing on­line ex­cept where there is a level of com­plex­ity like in­ter­na­tional travel.” She re­it­er­ated the widely held and oft-cited view that travel agents ex­cel if they add value and pro­vide unique prod­uct, some­thing they can per­haps more eas­ily demon­strate when book­ing in­ter­na­tional travel.

Si­mon Latchford, head of mar­ket­ing and strate­gic par tner­ships at Visit Sun­shine Coast, agreed with the Roy Mor­gan find­ings by ex­plain­ing Gen Y con­sumers in par tic­u­lar are cutting out both bricks and mor tar and on­line re­tail­ers on straight­for­ward do­mes­tic trans­ac­tions. “What is hap­pen­ing in­creas­ingly is con­sumers are find­ing a price, con­tact­ing the prop­erty and say­ing ‘can you bet­ter this rate if I do busi­ness with you di­rectly’. “Nine times out of 10 the hote­lier will say yes be­cause they don’t have to pay com­mis­sion. Even if it’s the of­fer of a bot­tle of cham­pagne or a box of choco­lates it’s enough to get the con­sumer over the line.” Yet while ac­knowl­edg­ing that trend is un­likely to change, and in all prob­a­bil­ity will ac­cel­er­ate, Latchford said the Sun­shine Coast will con­tinue to work di­rectly with travel agents to cater for an older, less dig­i­tally savvy de­mo­graphic who will sim­ply never book on­line. He high­lighted a cam­paign with Flight Cen­tre last year which saw the Sun­shine Coast heav­ily promoted through 750 stores. The mar­ket­ing ac­tiv­ity co­in­cided with the first of three back to back pe­ri­ods of record vis­i­ta­tion for the des­ti­na­tion. “What you need to re­mem­ber is these cam­paigns are not nec­es­sar­ily about con­ver­sions,” Latchford ex­plained. “Even though that is the end game, part of it is about des­ti­na­tion aware­ness. Peo­ple can’t buy what they don’t know ex­ists so it’s about rais­ing aware­ness of the Sun­shine Coast and get­ting into the mind­set of con­sumers.” The shift to book­ing do­mes­tic travel on­line and, in­creas­ingly, di­rect with prop­er­ties was recog­nised by some state and re­gional tourism bod­ies whose sole con­cern is driv­ing vis­i­ta­tion, no mat­ter where the book­ing orig­i­nates from. Tourism West­ern Aus­tralia said book­ing habits have evolved since 2010. “In the past peo­ple would use tra­di­tional travel agents to make their travel ar­range­ments in­clud­ing book­ing flights, tours and ac­com­mo­da­tion,” a spokes­woman said. “Now we’re see­ing more peo­ple pre­fer­ring to book their do­mes­tic hol­i­days them­selves on­line.” Nev­er­the­less, Tourism WA recog­nised that some con­sumers still pre­fer to use a travel agent to book do­mes­tic travel, cit­ing “older peo­ple and those book­ing more com­plex and ex­pen­sive itin­er­ar­ies”. “So we en­sure agents are part of our do­mes­tic mar­ket­ing strat­egy through we­bi­nar train­ing op­por­tu­ni­ties, famil pro­grams and mar­ket­ing in trade pub­li­ca­tions,” the spokes­woman said. Gold Coast Tourism also said the “con­sump­tion of travel has cer­tainly shifted to the adop­tion of new tech­nol­ogy and me­dia”. “How­ever, there re­mains a por­tion of the mar­ket that looks for a per­son to per­son in­ter­ac­tion via a tra­di­tional travel agency shop front,” a spokes­woman said. But such a view is at odds with data from Tourism Re­search Aus­tralia (TRA) which sug­gests agents have been used spar­ingly by con­sumers book­ing do­mes­tic breaks for at least a decade. Fig­ures from TRA show agents were used as an “in­for­ma­tion source” in only 2.1% of do­mes­tic overnight trips in 2007, a fig­ure which dipped to 1.1% in 2014. The in­ter­net mean­while was used in 31% of trips in 2007, ris­ing to 34.4% in 2014. De­spite the general trends, re­tail­ers re­main typ­i­cally bullish about the fu­ture of do­mes­tic book­ings and, far from be­ing dispir­ited, claim they are ex­pe­ri­enc­ing a resur­gence in sales of Aus­tralian prod­uct. Trav­ellers Choice ad­mit­ted it saw a “fairly sig­nif­i­cant” dip in do­mes­tic busi­ness but is now wit­ness­ing “strong dou­ble digit growth” that be­gan last fi­nan­cial year and has con­tin­ued into 2015/16. Manag­ing di­rec­tor Chris­tian Hunter told trav­elbul­letin a num­ber of fac­tors lay be­hind the up­turn. “Con­sumers are re­al­is­ing that play­ing the role of a travel agent them­selves is not al­ways as it seems,” he sug­gested. “Yes you can jump on­line and book a flight and a ho­tel but it’s not al­ways that easy. “There are a lot of dif­fer­ent sites and as the on­line space gets more com­pet­i­tive it be­comes more con­fus­ing for peo­ple to find what they think is the best deal. “We are see­ing con­sumers are mov­ing away from the con­cept of ‘do it your­self’ to one of ‘do it for me’. They know where they want to go and are say­ing ‘just or­gan­ise it for me’.” Hunter added that the way do­mes­tic tourism is be­ing promoted has also evolved which has played to the strengths of tra­di­tional re­tail­ers. Rather than fo­cus­ing on the sale of ba­sic flight and ac­com­mo­da­tion pack­ages, more add-ons are be­ing in­cluded that are not so easy for a con­sumer to book. “We are not spend­ing a lot of time pro­mot­ing flights and ho­tel pack­ages, it’s more around unique prod­uct around events or sports or theatre tick­ets where we can pack­age a deal with flights, ho­tels and some value added items,” he said. “Those sorts of pack­ages have been re­ally pop­u­lar and it has helped stim­u­late busi­ness.” Trav­el­man­agers chair­man Barry Mayo also claimed do­mes­tic busi­ness has shown a sharp year-on-year im­prove­ment. Sales climbed 14% in 2014 and are a fur­ther 21% ahead in the first seven months of the cur­rent fi­nan­cial year, he said. But in fig­ures which il­lus­trate the dom­i­nance of in­ter­na­tional prod­uct, do­mes­tic prod­uct still only rep­re­sents 6.7% of Trav­el­man­agers to­tal rev­enue, a 0.6 per­cent­age point rise on the pre­vi­ous year. “It is a small over­all per­cent­age but it’s still a sig­nif­i­cant amount in dol­lar value,” Mayo said. “It is im­pres­sive growth which I put down to a mix of po­ten­tial rea­sons. It’s partly driven by the weak­en­ing dol­lar, partly a re­sult of ter­ror­ism and partly even down to the re­cent health threat of Zika. They are all

Now we’re see­ing more peo­ple pre­fer­ring to book their do­mes­tic hol­i­days on­line’ them­selves

pos­si­ble fac­tors, but it’s hard to be spe­cific.” Asked what value a travel agent could bring to a sim­ple pack­age to the Gold Coast, Mayo re­sponded: “It may not al­ways be so sim­ple. Where it be­comes more com­pli­cated for con­sumers is if it’s a fam­ily holiday and in­volves in­fants and cots or mul­ti­ple uses of a room, or ad­join­ing rooms. They are not al­ways easy to book. “Con­sumers will of­ten turn to agents when there is any­thing that might make it a more com­pli­cated trans­ac­tion.” An­other fac­tor con­tribut­ing to the up­turn in do­mes­tic sales has been the “change in mind­set of agents”, ac­cord­ing to Hunter. “There was a view that there was lit­tle mar­gin in do­mes­tic book­ings but that has changed,” he said. “There has been a re­al­i­sa­tion that there is money to be made and you ig­nore it at your peril. “If you look at what the do­mes­tic prod­uct would com­pete against, such as the South Pa­cific or Bali or Thai­land, there’s of­ten not a lot of mar­gin in those prod­ucts these days. “Agents have em­braced the phi­los­o­phy that do­mes­tic is a vi­able and worth­while prod­uct to sell.” While some tourism bod­ies such as WA and the Sun­shine Coast openly ac­knowl­edge the swing to­wards on­line, all pre­dictably in­sist bricks and mor­tar agents and whole­salers re­main im­por­tant part­ners. San­dra Chipchase, chief ex­ec­u­tive of Des­ti­na­tion NSW, de­scribed such part­ner­ships as “vi­tal“. “Des­ti­na­tion NSW’S level of partnership with travel whole­salers for do­mes­tic travel has re­mained con­sis­tent over the past few years,” she said. “We in­tend to main­tain this level of partnership into the fu­ture as Des­ti­na­tion NSW con­tin­ues to work with all distri­bu­tion part­ners.” Chipchase high­lighted re­cent cam­paigns with Hel­loworld and Flight Cen­tre as ex­am­ples of the on-go­ing re­la­tion­ship with

There was a view that there was lit­tle mar­gin in do­mes­tic book­ings but that change’ has

re­tail groups. Tourism and Events Queens­land also flagged its con­tin­u­ing col­lab­o­ra­tion with re­tail­ers while the South Aus­tralian Tourism Com­mis­sion (SATC) said there re­mains a need to con­nect with peo­ple who “still like to plan and book their travel through travel agents.” “In the past 12 months we have con­ducted co­op­er­a­tive mar­ket­ing cam­paigns with Hel­loworld and Flight Cen­tre,” an SATC spokes­woman said. “We have also hosted the Trav­el­man­agers Con­fer­ence in Ade­laide which saw over 200 top Trav­el­man­agers visit South Aus­tralia. “Part of our role with travel agents is not only our co­op­er­a­tive mar­ket­ing cam­paigns but also train­ing of staff through our on­line train­ing mod­ule SA Ex­perts, in-per­son train­ing, famils, a spe­cially tar­geted agent e-news­let­ter and net­work­ing road­shows.” Flight Cen­tre, whose in-house whole­saler Infinity Hol­i­days sells do­mes­tic pack­ages to a range of des­ti­na­tions, said point to point air­fares have in­dis­putably moved on­line. “We still do a truck­load of do­mes­tic book­ings and some­where be­tween 45% to 50% of tick­ets we sell ev­ery day are do­mes­tic tick­ets,” spokesman Haydn Long said, adding that Flight Cen­tre and the state and re­gional tourism or­gan­i­sa­tions con­tinue to col­lab­o­rate “very proac­tively”. Ac­corho­tels chief op­er­at­ing of­fi­cer Si­mon Mcgrath backed up Hunter’s ob­ser­va­tions by sug­gest­ing con­sumers are be­com­ing over­awed by dig­i­tal tech­nolo­gies and be­gin­ning to re­turn to agents. “It’s a bit like on­line and off­line me­dia. We are all do­ing on­line dig­i­tal me­dia but there’s of­ten just too much to con­sume so we are now see­ing bet­ter cut through off­line,” Mcgrath said. “If you look at that in the travel agent space, I think there is a swing back to the travel agent be­cause you can sit down and have a chat. “There is also a greater story to be told by travel agents about a des­ti­na­tion. There is no doubt they have a role to play in the fu­ture.” He added bricks and mor­tar agents bring an “ac­tiv­ity and an­i­ma­tion” to sales that can’t be found else­where. While con­sumers clearly book do­mes­tic travel through a va­ri­ety of chan­nels, some brands con­tinue to rely heav­ily on the trade. One such op­er­a­tor, AAT Kings, es­ti­mated that 80 per cent of its guided holiday do­mes­tic sales come through the trade. Manag­ing di­rec­tor Anthony Hayes told trav­elbul­letin he re­versed a di­rect-to­con­sumer strat­egy when he took over in a bid to re­vi­talise the brand. “We have seen millions and millions of dol­lars of growth over the last three years be­cause of our re­la­tion­ship with the trade,” he said. “If you are go­ing on a beach holiday then do­ing it your­self is prob­a­bly easy, but if it’s some­thing that re­quires a bit more thought like a guided holiday then peo­ple still want to talk to an ex­pert. “Con­sumers will re­search on­line but still want that re­as­sur­ance from an agent. There are also many dif­fer­ent types of peo­ple out there. The older de­mo­graphic, those liv­ing in re­gional Aus­tralia, not all of them want to book on­line or find book­ing on­line as straight­for­ward as it may seem.” Hayes also iden­ti­fied re­newed pas­sion for Aus­tralian prod­uct, not only among con­sumers but within the agency com­mu­nity it­self. “The fo­cus over the past few years has been on sell­ing in­ter­na­tional travel but what is ex­cit­ing is that it seems to be turn­ing around,” he said. “At the re­cent Flight Cen­tre ex­pos there was a lot of agency fo­cus on do­mes­tic travel.” Such a fo­cus by the trade – as­sum­ing it is main­tained of course – will be mu­sic to the ears of tourism lead­ers in Aus­tralia. If the re­tail groups can lift their do­mes­tic sales even marginally, as the likes of Trav­ellers Choice and Trav­el­man­agers have done, it could make the dif­fer­ence be­tween the in­dus­try achiev­ing its lower end 2020 targets or go­ing some way be­yond.

Camel Ride, Ca­ble Beach WA ©Tourism Aus­tralia


Do­mes­tic tourism is play­ing a large part in reach­ing the govern­ment’s 2020 goal of $115 bil­lion in overnight vis­i­tor spend­ing. And clearly there are some big dol­lars at play, so how are bricks and mor­tar agents go­ing at cap­tur­ing their share? STEVE...

Syd­ney Har­bour ©Tourism Aus­tralia

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