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4 Jul, 2005

No Use if Australia is “Loved” But Not “Visited,” Corporate Plan Says

PERTH: Released here last week, the 2006/08 corporate plan of the Australian national tourism organisation, Tourism Australia, contains a noteworthy comment: “Destination awareness is not destination demand – just because we’re loved doesn’t mean we’re visited.”

In other words, the Australian ‘brand’ may elicit a generally positive feel among global travellers, thanks to the country’s sports- and film-stars and other ‘image-making factors,’ but certain ground realities can hold back the conversion of that positive image into an actual booking.

As the corporate plan makes clear, these realities include everything from currency factors to the country’s geographical location which makes it 100 per cent dependent on aviation.

Tourism Australia managing director Scott Morrison, attending his first Australian Tourism Exchange, since being appointed to the job last year, says that battling these external realities is a major challenge.

Indeed, he admits that while “non-marketing factors” like strong global economic growth, a recovery in outbound travel from SARS affected markets, and reduced airfares from New Zealand helped boost arrivals last year, other factors can also have a negative affect.

For example, the Australian government plans to give tourism no additional funding. The corporate plan says funding projections would drop from A$137.8 million in 2005/06 to A$134 million in 2006/07 to A$136.1 million in 2007/08.

While the strong Aussie dollar has helped Tourism Australia buy more for less in key markets, the corporate plan says a ‘key objective’ is to raise funds from states, territories and non traditional sources and also identify opportunities to develop revenue generating programmes.

Historically Tourism Australia raises around A$20 million in international marketing funds from the private sector and tourism industry sources.

Mr Morrison indicated that he plans to stretch this via partnerships and cooperative marketing programmes with media and industry stakeholders who also benefit from tourism growth.

The strong A$ itself is a double edged sword.

Says the plan, “In 2004, 28% of spending on trips to Australia came from the USA or markets with currencies pegged to the US$ (Singapore, China, Hong Kong, Malaysia and Taiwan).

“Averaged across 2004 the US$ bought 26% fewer A$s than in 2002, while the Yen bought 17% fewer A$s, the British pound 10% fewer A$s, the Euro’s value was little changed while the NZ$ in 2004 bought 6% more A$s.

“Although most visitors will still come with a rising value for the A$, they are not expected to stay as long, or spend as much. This helps to explain why arrivals grew at 10% in 2004 but total trip spending only grew by 6%.”

At the same time, “the strength of the A$ also helps to explain why outbound tourist departures grew by 29% in 2004.”

On the aviation front, the plan says, “In the year to April 2005 there was 10% growth in scheduled airline seats into Australia.

“However, after nearly two years of airlines restoring idle capacity and with much higher fuel costs, we expect growth in seat capacity to slow to less than 5% in the coming year.”

While low-cost airlines (LCAs) are always cited as a positive factor for domestic and inbound tourism, Tourism Australia says there can be some down-sides, too.

Although LCAs are operating robustly in Australia’s domestic market, the plan says that “the affect on dispersion of lower domestic airfares is more complicated than first appearances might suggest.

“Many regional centres on major touring routes for domestic tourists are now being overflown, travelling by air encourages shorter duration domestic travel while a share of inbound tourists prefer to travel on traditional interlined domestic air services and are avoiding regional destinations serviced chiefly by low cost carriers.

“Where low cost short haul airline activity builds up in our medium to long haul markets, the initial impact on inbound tourism to Australia has been negative. As a long-haul destination, Australia suffered a loss of competitiveness in Europe over the last three years as low cost carriers expanded their services.

“Low cost airline activity has recently spread to South East Asia and India and is set to spread to North Asia and possibly Japan in the next two years. The loss of competitiveness expected for Australia due to low cost carrier expansion in South East Asia was evident by the end of the first quarter of 2005 as intra-Asian airfares fell heavily.”

The plan says the situation should improve over the longer term as tourism spending grows as a result of cost reductions within airlines, allowing them to profitably offer new destinations or increase frequency.

“As these cost savings are shared with the consumer due to competition, long-haul destinations like Australia benefit as airfares represent a larger share of the total trip expenditure and as leisure travel is comparatively responsive to changes in airfares.”

The plan notes that this is why arrivals from New Zealand to Australia boomed during 2004.

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