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Home|Business|Riding The Dragon

Business

Riding The Dragon

warwick_powell

 

 

WARWICK POWELL

FOUNDING CHAIRMAN
SISTER CITY PARTNERS


North Queensland needs a new China tourism strategy. The Queensland Premier, to her credit, knows this to her core and made it clear on her recent week-long visit to Townsville. And so do local tourism operators and leisure facility owners.

warwick-nov16

While Chinese tourism has been the fastest growing contributor to international visitors to Australia in recent years, the North has simply missed the opportunities to harness this growth. Indeed, in the last 12 months (to June 2016) inbound tourists from China to Australia exceeded 1 million visitors and now make up the single largest cohort of visitors to Australia.

The dollars are nothing to be sneezed at either, with average spend per visitor of around $8,000.

For far too long, the potential of the China market has not featured on the North’s mainstream tourism radar screen. The region’s Destination Strategy has consistently seen China as non-core, most recently describing it as an ‘emerging market’. Nothing could be further from the truth. It may have been an ‘emerging market’ 10 or 15 years ago, but it is anything but these days.

I have in my social media posts and previous pieces in DUO over the last 18 months pressed for a greater focus on the opportunity of China and tourism development. I initiated a Tourism Roundtable on China and the Great Outdoors in Townsville back in late 2014, to put the opportunity on the table. At the time, I estimated that there were around 40 million active outdoor enthusiasts in China, which represented a significant and growing demographic who would find the North’s great outdoors incredibly appealing.

That there has been a belated recognition of China’s tourism market potential for the North’s economic transformation from various local quarters in recent months is an encouraging shift. But new approaches are needed. And needed fast.

Playing catch up
The North must move with the times and is now playing catch-up.

In 2007, the North’s political leaders recognized the potential to ‘get in on the ground floor’. Then Mayor Tony Mooney and Local MP and State Government Minister Craig Wallace actively pursued the possibility of direct flights with Hainan Airlines (HA). At the time, HA was an up-and-coming, entrepreneurial and ambitious company – a good fit if there ever was one.

With the support and advice of then Queensland Government Trade and Investment Commissioner in Hong Kong, Simon Lee, Mooney and Wallace met with Hainan Airlines to begin framing a case. Wallace also opened up a dialogue with Chongqing Airlines a few years later. Nine years on, there is still no direct flight link between China and Townsville. Mooney vacated public office in March 2008, and Wallace in March 2012. Both understood the potential of China, but also appreciated the hard work that would be needed to build a robust business case. They each worked in a determined fashion to build the foundations of a meaningful economic relationship between the North and China. I know; I accompanied them on quite a few missions over the years.

While the Chinese inbound tourism market continued to expand in leaps and bounds, the North’s tourism leadership (if you can call it that) turned its back on Asia, and North Asia in particular. Strategy after strategy; advertising campaign after advertising campaign; product development efforts … they all pivoted to the Anglo-Saxon markets of European backpackers and American college students, and more recently to the nomads of the sea: the ocean liners.
Sure, there’s been finally some dividend from this orientation, so the issue isn’t an either/or. Rather, the critical observation is one of missed opportunity when China growth was the most obvious game in town.
Since 2013, the City has reached out again to China. And sensibly so. The Mayor, Jenny Hill, should be commended for this and the effort needs to be ramped up not diminished. On various trade missions since, talk of tourism has bobbed up, but I think it would be fair to say that developing the North’s China tourism potential has largely remained a sideline proposition. At least the civic diplomatic links have been re-established.

New channels, new demographics
In that old Castrol GTX TV ad, John Laws turns to camera and says: “Oils ain’t Oils”.
The same can be said for the increasingly diversifying Chinese outbound tourism base. As China’s outbound tourists grew in number, so too did their demographic diversity. From an era where mass tourism was the dominant mode of practice domestically, we now see massive growth in independent small group travel.

When once holidaying was often arranged through one’s work unit (or danwei), and tourism was more about large groups, big buses and ‘following the flag’ to the iconic photo-taking site, the aspirations and practices of Chinese tourists is now more subtle and granular. One could dare say Chinese tourism has become increasingly sophisticated. Photos are still important, but the experience is more diasporic and less explicitly herd-like.

At the same time, the dominant channels have been disrupted. Where once the ‘organized fun’ modality of group touring was arranged through bulk travel agencies, the modern independent traveller is increasingly ‘doing it for themselves’. Sure, putting packaged tours out via travel agencies remains a key part of reaching the burgeoning consumer base, but it’s no longer the sure fire way of distributing the opportunity.

A new distribution architecture has emerged organically, thanks in large part to the Internet. Over 800 million Chinese are internet connected via mobile devices with mobile platform social media apps like Wechat claiming a user base of 600 million or so and Weibo over 500 million. Social media also enabled the organic formation of associations or communities of interests, which now share information and experiences in real-time, all the time. This architecture hasn’t so much as disrupted the conventional mass tourism agency model, but rather, has added new dimensions of possibility to new demographics.

A disrupted supply chain
Not only has technology disrupted the traditional supply chain of bulk agencies organizing mass tourism, the capacity of this supply chain to deliver for the North is severely compromised in any case.

To begin with, agencies are being bombarded from all over the world with high volume opportunities. Iconic cities and sites that remain attractive to mass tourism can still depend in large part on the traditional agency model. High volume drives commissions, which is the lifeblood of this channel. As competition is intense, agency commissions are wafer thin. Only volume makes it worthwhile opening the doors each day.

In the schema of things, North Queensland tourism isn’t really what you’d call a volume play; certainly not in the sense that is necessary for low-margin / high-volume business models like traditional agencies.

The second related reason is that agencies are often integrated in one way or another with airlines. The kind of actual or quasi-vertical integration is a prevalent business model. Airlines by the very nature of their business need volume to justify routes. Increasingly, they’re also eyeing opportunities to increase their ‘share of wallet’, by getting involved in the entire tourism supply chain.

The third reason why traditional agencies are less immediately relevant to the North is directly related to the likely demographic that the North’s offer would appeal to. This group are more likely to be independent small group travelers who are digitally savvy. Social media, peer reviews and recommendations and informal associations are more important to this demographic than traditional travel agencies.

Great products exist already
These are some of the features of the new world of independent Chinese tourism. The research that my colleagues at the China and the Great Outdoors project have been doing for the past few years tells us that there’s a growing fascination with the natural world.

In part, it’s a reaction to the claustrophobic weight of hyper-speed urbanisation, as well as the growing accessibility to outdoors and wilderness areas for China’s burgeoning urban middle class denizens. Roads around China are better than they’ve ever been, not to mention the scale and reach of fast trains and domestic air travel. Getting from A to B is now easier and cheaper. Car ownership is also growing, and so we see the preconditions emerging for independent, small group travel away from cities.

This fascination has extended to the outside world. Chinese tourists in ever-growing numbers are drawn to places that offer high quality outdoor-based experiences. And that’s what we have in droves (see my piece in the May 2016 issue of DUO ‘Why Ours Should Be The Zhang’s Great Outdoors’).

The bleeding obvious
Truth be known, it’s all been under our very noses, as has the wave of Chinese outbound tourism. And yet, our tourism institutions have conspired to miss the most obvious for far too long. It’s time for new optics, new sensibilities and new approaches. China isn’t an ‘emerging market’, it is the biggest opportunity we have in a generation to build the foundations of new industries.

The region simply cannot afford more of the same.

www.sistercitypartners.com.au

Written by: Warwick Powell
November 3, 2016
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Finally, a women's lifestyle magazine that covers all of North Queensland. Now in its thirteenth year, DUO is the elegant bi-monthly publication that features exclusive and insightful interviews with the amazing women of our region as well as the latest in home design, style and fashion, dining and recipes, travel and the arts.
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