SISTER CITY PARTNERS
North Queensland has abundant natural assets to attract visitors from all over the world.
Yet, Townsville’s many hotels are struggling to fill their rooms. European and Anglo backpackers and students have dominated recent growth in international visitations. This cohort is, however, amongst the most ‘frugal’ of global travellers. Domestic visitations have been going backwards.
New focus is needed to not only grow visitation numbers in total, but to attract a broader base of higher spending tourists to the region.
The numbers tell the tale
Having, on and off, over the past few years raised concerns about the low levels of hotel occupancy and poor average revenues per available room in Townsville, it is now abundantly clear that a new approach is needed to visitations growth.
Business as usual isn’t working.
The evidence is well and truly in: there is simply not enough demand, let alone the right types of demand.
Don’t take my word for it. The data and the coalface experience of hotel operators in Townsville are clear.
According to data from Tourism and Events Queensland (TEQ), for the year ending March 2017, domestic overnight visitors fell by 8.9% over the previous year, and total domestic overnight visitors fell 7.6%. The compensating factor has been a 6.1% increase in international overnight visits, but frankly, this is small consolation.
Whereas domestic overnight visitors accounted for an estimated 1,115,000 for the year to March 2017, international overnight visitors accounted for 130,000. It’s still a drop in the ocean.
Domestic holiday visits were down 7.2% and people visiting family and friends was down a massive 18.9%. If this wasn’t enough to convince you that the talk of green shoots is little more than a mirage, the data points to a drop of 11.3% in domestic visitors’ expenditure. On average, that’s a fall in 11.9% in the last year. This is due to a 9% fall in visitor nights.
What growth there has been in international visitation, has largely been in the lower-spending segments of the backpacker market. This is evidenced by the fact that international visitors to Townsville are dominated by folk from the UK and Germany. According to the TEQ Regional Profile, international visitor expenditure “declined 16.9% to $88.4 million, driven by lower spending education visitors as well as fewer visitor nights overall (down 7.8%)”.
Time to shift gear
What counts for ‘strategy’ to date has been effective insofar as it has achieved some claim to fame in ‘edu-tourism’. There’s much to be proud of in this space, but as TEQ observed, it’s not exactly what you’d call a high-spending segment of the market. On top of that, add a healthy dose of frugal backpackers, and what you’ve got in numbers is offset by limited spending power.
Regional tourism needs to shift gear.
It needs to focus on international tourism – and Asian travellers in particular, firstly because right now it represents such as paltry proportion of total visitations. This suggests that there’s tremendous room for growth.
The region needs to get its head around Asia. In the year to March 2017, its top five holiday source markets globally were Germany, UK, France, Netherlands and USA. Again, this points to strategic success, for what that’s worth. A search of the Tourism Opportunity Plan 2009-2019 for ‘China’ comes up with a big fat donut. China barely rates a mention in the Townsville Enterprise Tourism Destination Plan, being described as ‘emerging target markets’ (p. 21).
In fact, that’s the only mention China gets in the entire Destination Plan. A similar oversight is evident in the Destination Tourism Strategy 2012-2016, which describes Hong Kong and China as ‘new and developing markets’. What the …?!
This lack of attention to China has been costly. Last year, for example, inbound visitors from China became the single largest source market for visitations to Australia, tipping 1.2 million. The rapidly growing middle class of China (and elsewhere in Asia) is the best hope the region has to grow its visitations base at rates above the recent historic average, and at the same time, attract a cohort that is reknowned for not being stingy when travelling.
By 2020, it is expected that there will be over 220 million outbound Chinese travellers per year. If Australia maintains its market share of around 3%, we’re talking about 6-7 million visitors from China coming to our shores. Even at half that, the numbers are very significant. Tourism Australia estimated that by 2020, Chinese travellers to Australia could be spending between $7-9 billion each year. It could be more than that.
Is Townsville North Queensland capable of capturing any of this?
Right now, the answer – based on recent experience – is no. But there’s no reason why the region cannot get there. The barrier isn’t the experiences that the place can offer, or the capacity of its people. The raw product is exemplary, and tourism employs over 5,000 people locally already.
If new product and infrastructure is at all required, it must pass a simple test: does it go towards ‘making and supporting a new market’? If it is another variation on the ‘same old / same old’ theme, then it’s probably fair to say that it’s not really going to make much of a difference.
Making a new market means capitalizing on the region’s unique attributes, and creating something that is genuinely unique. Emulating the experiences of other places shouldn’t be a priority; at best, aspirations of Melbournesque edginess in the form of a few wannabe-laneways in the old downtown is an ancillary support act to the main game.
The main game is the great outdoors, which is one of the big reasons for visiting Australia for the target audiences of China and Asia. And we’ve great outdoors experiences in spades. Within 180km of Townsville, a visitor can:
Access the inner reef (and check out Reef HQ when they are on land),
Visit Crystal Creek, Wallaman Falls and Paluma Falls,
Spent time at the Cromarty Wetlands,
Spot a croc on the Houghton River,
Bird watch in the Town Common,
Stay over at Hidden Valley and watch the platypuses at last light,
Enjoy world class mountain biking at Pallarenda and Douglas,
Fish the Hinchinbrook Channel or enjoy chartered fishing on the Burdekin River and Groper Creek system south of Home Hill,
Hike Hinchinbrook Island itself,
Horse ride on the beaches,
Herd some cattle from the Towers, and check out some of the historical sites of the gold rush (as well as visit Ravenswood where there’s still some gold mining),
Camp on one of the Family Islands,
Lounge on the secluded beaches of Magnetic Island (and other beaches),
Sail Cleveland Bay,
Check out the Cardwell spa pools, and
Experience indigenous cultures on Palm Island, and hike the Island’s hilly ridges to find WW2 flying boat wreckage.
And, there’s heaps more besides. There’s a rich equestrian culture, with regular eventing not to mention the winter racing carnival to attract those whose passion are the thoroughbreds.
Distribution, distribution, distribution
By Townsville Enterprise’s own admission, “Townsville North Queensland is relatively poorly known as a tourism destination outside the region” (Townsville North Queensland Tourism Opportunity Plan 2009-2019, p. 6).
And despite this, plan after plan has been focused on local product and infrastructure with little attention devoted to building distribution channels and sustained in-country engagement. Sporadic advertising and nonsensical thematics like ‘alive with curiosity’ are no substitute for institutional distributional capacity – especially in the Asian market place.
This fixation on (usually publicly funded) supply side spending, without a commensurate commitment to demand side stimulus and engagement has served the region rather poorly. The data tells us so much.
Cultivating high quality product, experiences and supporting infrastructure are, it goes without saying, important aspects of ensuring the region offers a compelling travel value proposition.
Yet, the evidence on international visitation shows that there’s simply a lot of growth opportunity … provided that the focus turns to developing the right kinds of market engagement and distribution channels and where necessary, the new kinds of products needed to open the region up to new growth segments.
What’s missing is a commitment to building a presence in the competitive media landscape of Asia and China to begin with. By this, I don’t mean a generic round of advertising, usually in English, or a trade mission every now and then. Rather, what’s needed is an industry-driven, continual high quality engagement program with potential visitors.
On top of this, a big gap is recognizing that the distribution channels that will work for the emerging cohort of Chinese and Asian travellers, who could potentially visit NQ, aren’t the conventional wholesalers that dominate the high volume / low margin end of the market.
The new independent traveller is more likely to do their own research, and make their own arrangements via social media platforms in which referrals are more important than conventional advertising. Travelogues can open up an engagement with an audience, which must then be built upon through sustained, in-depth in-market engagement. You can’t skimp this.
China and the Asian markets in general cannot be relegated to ‘emerging markets’ status. This folly has cost the region dearly. Rather, if we’re serious about capitalizing on the abundance of natural assets on our doorsteps, and creating sustainable employment of the 21st century, then we must align our region’s gifts with the desires and needs of a growing Chinese middle class.
Any additional investment in local infrastructure – including more accommodation options – must come with a capacity to expand sustained visitation growth. The city needs to triple or quadruple its annual international visitation intake. New infrastructure, aligned to engaging with and growing new markets in Asia generally and China specifically, can go a long way to supporting this broader objective.
Incumbent hotel operators can benefit from market making investments that can elevate the region to a large and growing Asian audience, so as to drive sustained volume growth. There’s insufficient demand (especially demand of the right type). New players need to be able to demonstrate how they can expand the pie not just cannibalise the anaemic pie that is presently the case. New supply investment coupled with demand growth capacities are critical to rejuvenating the city-region’s international tourism capabilities and driving a new era of expansion.