Monday 22 June 2009

Output group 3
3.1 Tourism -
Mr FINCH - The Tourism Industry Council is one of the big losers in this budget.  Every other State and Territory budget seems to have been allocated more for the same level of resources to tourism next financial year.  Can somebody confirm that Tasmania is the only State where the allocation is reduced?

Ms O'BYRNE - For tourism globally I think what needs to be recognised - and you will note that I am not referring to a brief; this is my understanding of it - is that many other States have not invested in domestic marketing over previous years.  So we are seeing a bit of catch-up game playing by many States in the domestic tourism marketing area.  But, if you look at tourism budgets and analyse other States, you will find that Western Australia, for instance, may have increased its marketing budget but it has ripped money out of research and development of the industry and events.  If you look over their forward estimates, I think you will see a decrease. 

At the moment people seem to want to compare Tasmania to other States, and I do not think you can because the structures around our tourism engagement and investment are different.  The nature of our industries is a little different as well.  I am happy to talk about the merits of how we actually support tourism here and the decisions that we have made, but I do not think it is a fair enough argument to compare one with the other, particularly when you are looking at States that have a different domestic market from ours and also have a different history in relation to where we go. 

One of the important things to recognise when you invest in marketing is that you spend your first massive investment on getting people to know who you are and what your product is.  That is what Tasmania has done and we have done it really, really well.  Where our investment is now is in making sure that we are smart and targeted with that work.  This is not the best analogy but let us look at what happens in supermarkets. 

ABC washing powder comes on the market, and they will spend a lot of time in the early days marketing ABC washing powder to get it to the point that everybody knows what it is.  Once everybody knows what it is and once they have captured that market, where they spend their money is not on marketing ABC washing powder but on placement.  Not only is it placement of ads but also they will buy the space on the supermarket shelf.  So the ones that are at eye level - which I must confess is different for me than for others; I have always wondered about eye level; I can never reach the top shelf -

Mr FINCH - You have always wondered what's on that top shelf. 

Ms MARIANI - You get to look at the sugar-coated cereals. 

Ms O'BYRNE - Yes, I get sugar-coated cereals.

CHAIR - Heels are very useful, Minister - very high heels.

Ms O'BYRNE - Yes, until I break my ankle.  So the first investment that you make is about saying what you have and getting it to a point that people recognise what it is.  The second investment that you make is not only about keeping that place but about targeting where you do your placement so that you are getting access to the right people.

We are in a different position now than we were 10 years ago.  Ten years ago it was really hard for us to sell our product.  We had to effectively buy our place so that people would sell our products, so that distributors and wholesalers would have our product.  What we have now got is that our product is so well recognised - and we need to keep working at that - but it is well recognised enough that consumers are demanding it of their wholesalers and of their distributorship partners.  So it becomes important to the airlines to have Tasmania on its itinerary, it becomes important to the wholesaler to be able to provide a package for Cradle Mountain or Port Arthur or Freycinet or wherever.  So we have actually changed in terms of that sort of positioning within domestic marketing.  So that is why it is different to how you compare.

Queensland, for instance, has spent years playing to the Japanese market, I think you could safely say.  Their wealth has shifted so they have to change the way that they operate.  New South Wales has consistently underinvested in domestic tourism marketing and they are playing a bit of catch-up.  It is not fair to compare the two.  Now, I do not - I am not surprised by TICT saying that they want more money.  Even if I'd given them every cent they asked for, if I was them I still would have asked for more money because that is the nature of the industry and the lobbying that they are required to do.  Having said that, we do have to cut our cloth to the money that we have.  We have had to make some hard decisions to do that.  So our focus is to be doing things smarter.

Mr FINCH - But it seems, Minister, within times of recession, which we are not used to navigating our way through, tourism is one of the State's major industries and it would seem to me that in this time of recession industry-wide tourism needs more promotional resources rather than less.  Can you just give us a comment on that?  People are recognising the opportunity for Tasmania to attract people rather than spend the bigger dollars going to Japan or to America or Europe.  As they did previously with the SARS virus and other global impacts on Tasmania - they looked more locally for their holidays and I would have thought that we could have capitalised on that. 

Ms O'BYRNE - I think we are.  I think the point is we have just released the Tasmania visitors survey figures which have us at the highest level of visitation we have ever had.  We have had a 7 per cent increase in the amount of people coming to Tasmania.  That is in a time when across the nation we are seeing a decrease in the amount of tourists.  Our key has got to be not just about where we market; our focus has to be conversion, because you can spend as much as you want on advertising, if your advertising is not targeted to such a point that you can make somebody change their behaviour or act upon their desire to come, if you don't have a conversion from marketing into somebody sleeping in a bed, then it hasn't necessarily delivered anything.  So our real focus has got to be on delivering conversion, so actually making people come here. 
The other is, of course, there is a massive change in the way that people access their opportunities as well.  There are always going to be people who use their wholesalers and their travel agents.  There is a greater amount of people using the digital market in order to access their opportunities, which is why we have invested so heavily and will continue to invest in our online opportunities, our e-connect opportunities, because what we know from tourists-because we spent a lot of money researching what our target markets want to do and our target markets in Australia are New South Wales, Victoria, Queensland, a little bit of South Australia.  They are the people that we know have a propensity to come to Tasmania.  That is where we are focusing our targeting.  We need to ensure that they are able to get here when they want at the price they want and to be able to access it quickly.  Now, if they get on to the internet and find a product, what they don't want is to not be able to get that immediately.  So we are investing in ensuring that our tourism operators are able to take bookings immediately in real time. 

I think the average around Australia is only about 10 to 15 per cent of tourism operations have the capacity to do real-time online bookings.  That is putting your name in, putting your credit card in, getting your confirmation.  What the rest of them do, if they are e-enabled, they do have internet, is that you have to send off an email saying, 'I'm interested in coming on X, Y, Z dates', and then you wait until they see that email and they will send it back and that may take some time.  But that is not the way people want to do their holidays at the moment. 

There are 26 per cent of our businesses that are already e-enabled to real-time conversion.  We want to grow that.  That has got to be a big focus because that is about how people make immediate decisions.  When you look at forward bookings, we are noticing a change in people's patterns as well.  They are moving from booking out six months or 12 months in advance.  You know, you might have decided to go on your holiday some time ago.  People in the current economic climate are making their decisions a lot closer to when their leave occurs.  They are able to do that because there is flexibility in prices because people are understanding that. 

Mr WING - Haven't they been doing that now for a long time, long before the global recession?

Ms O'BYRNE - It is getting shorter and shorter.  You can talk to tourism providers and they will say, 'I'm okay for this month, but I've got nothing for next month,' and then you get to next month and they say, 'I'm okay for this month, but I've got nothing for next month.' It is getting a really short lead-in time because you have people around the nation who are nervous about their own financial positions and their own stability so they are not necessarily taking the risk of booking their holiday until they know it is going to be okay.  The research that we have shown is that there is a propensity to travel but they are travelling within a cost structure that suits them.  So it is very much deal driven.  As tourism places get closer and closer to vacancies, they get sharper on the deals and people are responding to that as well. 

We have invested in research which I think is crucial for the industry.  We could have spent this money on marketing, and I am sure it would have been nice and it would have been interesting.  But I would rather be able to say to the players in our industry, 'We have researched what is happening to tourism and how people are making their tourism decisions in the current global financial crisis.  We know that they are interested in this.  We know that their needs are this.' That way our tourism operators can appropriately respond and plan their futures.  I think that is a really worthwhile and important investment that we are making.  That is the consumer sentiment survey that we have undertaken.

Mr FINCH - So the forecast for inbound and domestic tourism in Australia is bleak-

Ms O'BYRNE - For international inbound tourism?

Mr FINCH - in the short and medium term.  Do I sense some positivity about tourism for Tasmania from the minister?

Ms O'BYRNE - You can never be sure about where we are going to go, and I think that has been the case all of the time.  We have a smaller reliance on international tourism.  However, the impact on our international tourism has been somewhat less than it has been in other places as well.  Other States have had significant drops in their international tourists.  For instance, if you look at the North American market for us, yes, the North American market has dropped a bit in terms of USA but it has grown in terms of Canada.  So we get those kinds of fluctuations. 

What we are noticing, particularly in the domestic market, which is where our focus is because we are still a very exotic place for many Australians to visit, is that we are getting growth in that.  We are getting growth in that at a time when in the rest of the nation it is not growing, has stagnated or in many cases is declining.  So I think we have got the recipe right. 

We do have to take our share of pain in the current shortfall for budgets.  I will continue to look at opportunities whenever they arise to deliver more money for tourism.  But this is the money that we have now and we are going to spend it in the wisest way, which is in a combination of marketing and investing in our industry and making sure that our industry is well placed to capitalise on the opportunities as they arise. 

[4.30 p.m.]
Mr FINCH - Is the industry accepting what you are saying, Minister? Are they coming along that journey with you?

Ms O'BYRNE - I think the industry would always like more money for marketing.  I am not surprised at all by their request to do that.  Having said that, they also rate very highly the research data that we provide them and the opportunities that we give them to get access to targeted partners.  We are not getting criticism from industry on our Tourism 21 plan.  They would like to see more marketing and, should the opportunity arise and should we come out of this global financial crisis earlier, that is something we would absolutely look at.  But it would not just be about throwing dollars at it.  It would not just be about saying, 'I'm going to whack a whole host of ads on.' It would still be targeted.  It would still be aimed at conversion, and that is the big key.  If you are not going to get somebody looking at a particular marketing opportunity that you have driven and actually saying, 'Now I'm going to go to Tasmania,' then it is not delivering the best bang for the buck, and that is the focus we have to have. 

The other way of demonstrating that is to look at State comparisons.  I do have to mention that the Tasmanian visitor survey data that we get is way better than what the national visitor survey data is able to outline.  When the NVS figures come out they say, 'Here are the NVS figures, but if you want a really good picture of Tasmania go to the TVS.' That is the nature of having our borders based on water: we are much better able to track data.  But if you look at the NVS, there have been significant decreases in performances: New South Wales has lost 5 per cent of its market, Queensland has lost 12, WA has lost 20, South Australia has lost 8 per cent.  These are significant decreases.  When you look at our TVS data you will see that we have had a 7 per cent increase in tourists coming here. 

Mr FINCH - Are we the only one bucking the trend?

Ms O'BYRNE - No.  The ACT has been reasonably stable and Victoria is remaining a bit flat.  It is not growing, but it is not necessarily dropping. 

Mr WING - Are those figures the number of tourists or the number of nights?

Ms O'BYRNE - They are numbers.  They are individuals.  We can probably get-

CHAIR - Do you have bed nights?

Ms O'BYRNE - I do actually have - we do have bed nights as well.

Mr WING - Bed nights are the really significant figures, aren't they?

Ms O'BYRNE - What we are also seeing is a growth in visitor length of stay and a growth in visitor spend as well and that is significant, too, because we did have a market that was changing.  We were very much getting a bit of a weekend market, you know, short stays.  We are now clearly seeing, with an extension of visitor spend and visitor nights, longer stay propensities. 

Mr WING - What is the average length of stay?

Ms MARIANI - Average length of stay for all visitors is about 8.3 nights.  For holiday visitors it is actually nearly nine nights.  Our length of stay is phenomenal in terms of how other States are performing.  So the overall length is slightly lower than the actual length of stay for holiday visitors which is great.  It means our tourists are coming and staying longer. 

Ms O'BYRNE - In terms of bed nights, New South Wales has dropped 5 per cent, Victoria is reasonably stable, Queensland has dropped 17 per cent, WA has dropped 28 per cent, South Australia has dropped 2 per cent and Northern Territory and ACT are all down. 

Mr WING - 28 per cent?

Mr FINCH - We win. 

Ms O'BYRNE - Look, we do.  It doesn't mean that we rest on our laurels.  We are doing really well, but it does mean that our focus on conversion, our focus on delivering the best mechanisms for people to get here at the best price and our investment in our digital regimes is actually working. 

Mr WING - Do you have any figures suggesting what the average expenditure is for visitors now because I know that some -

Ms O'BYRNE - It is up 4.4 per cent, I think. 

Mr WING - Some of the top restaurants and wine outlets are feeling that with budget airlines the majority of the visitors do not spend as much as they used to before.  Whereas before they would buy two cartons of wine some of them buy two bottles now. 

Ms O'BYRNE - The total spend is up, but I might ask Felicia to comment on the broader issue. 

Ms MARIANI - Just in terms of the issue around the fact - because it has been hanging around for a while - that the low-cost carriers are bringing a low-cost tourist, in fact that is not actually true.  I know they used to say the same thing about visiting friends and relatives, that they did not spend enough money either.  There has been enough research to show that people just shift their expenditure.  They are not spending as much on airfares; they may be spending more on their accommodation.  Just because they do not stay in paid accommodation doesn't mean that they don't spend a lot of money going out to attractions and eating out and shopping.  So it is a bit of just a shifting of the expenditure from one area to another. 

A lot of things get mixed up in sort of what the propensity is of people to spend money on certain things.  But if you just look at the average spend, Tasmania has actual performed quite well in that overall the spend is up to $1.43 billion, which is up 7 per cent for the year ending March '09.  The actual average spend per trip is now about nearly $1 600, which is pretty even; it hasn't fluctuated all that much.  If you are getting down to the actual holiday spend, that is the average holiday spend per trip, it is actually even higher than the average spend per trip.  Average holiday trip is $2 348, which is actually down slightly; it was $2 377.  And average holiday spend per night is now $268, up from $259. 

Mr WING - On what information do you base that?

Ms MARIANI - This is based on the Tasmanian Visitors Survey. 

Mr WING - Of the visitors themselves?

Ms MARIANI - Yes.  These are the surveys of the 9 000 interstate visitors coming in, 6 000 or 7 000 Tasmanians leaving.  It is a total of about 16 000 people that we talk to annually. 

Ms O'BYRNE - It is recognised as being extremely well -

Ms MARIANI - Just as an example, the NVS only surveys about 500 people from Tasmania, in terms of Tasmania's numbers, which is why they recognise that their survey is not as robust as what we do in the TVS because of the sample size but also this has been a consistent methodology for over 16 years.  So it is really seeing - and interestingly the national long-term tourism strategy - when we had the discussion with the chairman of that group, she actually recognised that Tasmania has indeed some of the most robust research of any State tourism body and, in fact, is actually using it much more effectively than any other State tourism body. 

Mr WING - Excellent. 

Ms O'BYRNE - Can I also say that they have held us up as a model in some of our digital work, so I will be happy to talk about that if there are questions later on. 

Mr WING - I have been wondering about backpackers, the numbers.  I think they have increased since budget airlines and they tend to spend more per trip. 

Ms O'BYRNE - They are down slightly.  We do not have -

Mr WING - They are down?

Ms O'BYRNE - They are down a little.  That probably also reflects some of the international trends in travelling at the moment.  Our percentage of them is, once again, smaller than the percentage that goes to other States, so we do not notice it as much in our broader tourism budget.