Backpackers to the Northern Territory DEPARTMENT OF TOURISM AND CULTURE. Executive Summary June 2018

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1 Backpackers to the Northern Territory DEPARTMENT OF Executive Summary June 2018

2 Background and Objectives DEPARTMENT OF There has been a continuous decline in international backpacker numbers since the height experienced in 2010 where 126,000 international backpackers visited the Territory. The Territory was ranked fourth in the number of backpackers it attracted in 2010, behind NSW, Queensland, and Victoria. Tourism NT engaged Instinct & Reason to undertake research to better understand the backpacker market and implications for the Northern Territory. The primary objective of this research was to understand how the decline in backpacker visitation can be reversed. The study explored why backpackers have not been visiting at the same volume as 2010 and uncover strategies that can be implemented to attract them to the Northern Territory. The International Visitor Survey by Tourism Specifically, this project was designed to: Research Australia showed backpackers visiting the Northern Territory declined from - Explore why backpackers are not visiting the NT at 5,000 in the year ending June 2015 to just the same volume over 85,000 in the year ending June 2017 a - Understand the backpacker market drop of 10%. - Identify strategies to attract backpackers to the NT

3 Potential Reasons for the Decline in Backpacker Visitation There is a new type of backpacker who self-identifies as a backpacker but does not demonstrate the same behaviours as those who fit the more traditional definition. - In this research, backpacking was defined as a holiday where you travelled for a long period of time as a free independent traveller [making your own travel bookings] and may have worked to earn some money while travelling, and included people who selfidentified as backpackers as per that definition. - The findings show that there were three types of backpackers: 1) Those who are on a quest (27% of the backpacker market), 2) Those who are out to challenge themselves (52% of the backpacker market), and 3) A New Backpacker segment (21% of the backpacker market). - The New Backpacker segment appear to be anti-backpackers in that while they self-identify as a backpacker, they do not demonstrate typical backpacker behaviours since they travel with a firm end-date in mind (unlike traditional flexible backpackers), and are not looking for an adventure or to socialise with people from other parts of the world. - Whilst there was no age or gender skews, almost half (46%) of this segment indicated they were backpacking for the first time. - While they do stay in hostel accommodation to socialise/party with other backpackers, a number of them also choose to stay in properties marketed via AirBnB (32%) and 4-5 star accommodation (20%). This segment of New Backpackers is softer and is not necessarily looking for typical adventurous backpacker tours where comfort is secondary. This segment also has a higher proportion of Asian travelers. Summary: Potential Reasons for Decline 1. Changing backpacker segment the New Backpacker. 2. Backpackers going to approximately four destinations on their trip to Australia, thus affecting the amount of time they spend in Australia. 3. Limited awareness of NT experiences. 4. Perception of Australia as being expensive, too far and not sexy. Please note that 87% of the backpackers in Australia surveyed in this study had been in Australia for longer than 3 months, suggesting they were working holiday visa holders.

4 Potential Reasons for the Decline in Backpacker Visitation The number of destinations backpackers visit on a trip has continued to increase; therefore the amount of time they spend in Australia has decreased (resulting in a shorter overall stay when in Australia). - Only 16% of backpackers in Australia indicated Australia was the only place they were visiting on this trip. - Close to 40% would be visiting other countries before they returned home, 21% visited other countries before they came to Australia, and a quarter (24%) fell into both categories. - The findings indicated that backpackers in Australia have visited approximately 4.4 other countries before Australia and planned to visit 4.6 other countries on the way home. - Bali - Indonesia, Thailand and New Zealand were found to be popular destinations that backpackers coming to Australia visited. - Social media and technology could be contributing factors for why backpackers now aim to visit more places on their trip than they did before. Travellers are exposed to more destinations as social media grows in prominence and are able to travel to more destinations at a relatively cheap price. THAILAND Before Australia 15 NEW ZEALAND After Australia 31 QD4a Which countries have you visited since you left home before coming to Australia? NEW ZEALAND GERMANY ITALY INDONESIA / BALI SPAIN FRANCE OTHER SOUTH EAST ASIA - PHILIPPINES, LAOS ETC. SINGAPORE THAILAND INDONESIA / BALI FIJI VIETNAM CAMBODIA JAPAN SINGAPORE Base: QD4a Base: Those who have been to other countries since leaving home and before coming to Australia. Total (n=185) Which countries do you plan to visit after Australia before you go home? Those who will go to other countries after leaving Australia and before going home. Total (n=260) VIETNAM CANADA

5 Potential Reasons for the Decline in Backpacker Visitation Backpackers have little understanding of the NT experience and limited knowledge of specific places in the NT. - While backpackers saw the NT as being a destination for adventure, to experience the outback and get a deeper experience of the Australian culture, they struggled to name places in the NT and identify specific things they could do there - This was more so the case with Asian markets (Korea/ Taiwan/ Hong Kong/ China) where 82% indicated they did not know any place in the NT. - Of those that could name places, 75% reported Darwin, 41% Alice Springs, 40% Uluru, and 11% Kakadu. Some evidence was found for other potential barriers to visiting Australia. - A quarter (26%) of backpackers who were closed to Australia (i.e. had not visited and were not considering visiting Australia on their next backpacking trip) believed flights to Australia were too expensive: one in five (1%) thought it was too expensive to backpack in Australia, and 16% thought it would be too expensive to travel around Australia. - Other barriers worth noting were the brand consideration: 27% had not even thought about Australia, 24% indicated Australia was too far to travel, and 18% thought it would be difficult to get a visa to visit. Interesting to note No evidence was found to indicate that the Backpacker Tax made Australia seem expensive or affect any travel decision. - Two-thirds of the backpackers surveyed in Australia indicated the tax did not have an effect on them of which, 20% did not even know about the backpacker tax on income. - Compared to other groups, however, backpackers from Asian markets were more likely to believe the backpacker tax made it difficult to earn enough money to have a great experience in Australia (4%). There was also no evidence found indicating that it was too difficult to get a visa to Australia. - Four out of five backpackers in Australia (7%) indicated they had no problems securing a visa to Australia. - Backpackers from Asian markets, however, were more likely to indicate that the paper work was challenging compared to other groups (27%). Not something I have thought about Flights to Australia are very expensive Too far to travel to Australia too expensive to backpack in Difficult to get a visa to visit Don t have enough time Too expensive to travel within Australia Other Ql1 Base: Other Potential Barriers Don t know/not sure % Why have you excluded Australia from your backpacking trip? Those who have not yet visited Australia and do not plan to. Total (n=16)

6 Understanding Backpacking in Australia Backpackers in Australia Backpackers in Australia (in market) - More than half of the sample surveyed in Australia (54%) either had been or were planning to visit the NT. They indicated that the key triggers for their visit were: 1) Wanted to see more of Australia (60%), 2) Wanted to see the real Australia (55%), and 3) Visit places they had not been/ always wanted to go (33%). - German/Swiss backpackers were more likely to have visited the NT (27% visited) compared to other groups with American and Canadian backpackers being least likely (11% visited). - Those who visited the NT were more likely to stay in camping areas (54% in paid camping areas and 5% in free camping areas), and were more likely to travel around Australia in their own car (45%). - 58% of those who had visited the NT indicated that they would recommend the NT to other backpackers. - Overall, backpackers who had visited the NT indicated they were satisfied with different aspects of their NT trip. Key challenges, however, were flights to the NT where 13% reported having a poor experience with the cost of flights being the main reason for their rating. - Backpackers who were considering a visit to the NT were more likely to be looking to experience the entire country as opposed to just popular routes (i.e. Sydney, Melbourne, Gold Coast, Brisbane, and Cairns). - From backpackers likely to visit the NT, 70% fit into the Challenger segment (i.e. looking to push themselves out of their comfort zone) and 63% were backpacking for the first time (indicating a need to make the NT accessible for them in terms of providing information and visit options). - Regarding perceptions of the NT, backpackers in Australia considered the NT to definitely be: 1) A place with amazing scenery and landscapes (73%), 2) A place to discover Australia s outback (70%), 3) An adventure experience with places they could explore (62%), 4) A place that offers memorable experiences of the real Australia (58%), and 5) A place to go to escape from usual life (55%). - On the other hand, the NT was definitely not considered a place: 1) To socialise and party (41%), 2) A cheap place to visit (40%), 3) A place you can find a job easily (38%), 4) Easy to visit (35%), or 5) On trend right now (30%). - There was also a lot of uncertainty about the NT around the following aspects, with travellers (56%), 1) A safe place to visit (56%), 2) On trend right now (56%), and 3) A place that provides a variety of dining experience (54%). - What this indicates is that while the NT offers the promise of an authentic experience of Australian culture and landscape, it does not provide a rich promise of other experiences you could have. This in effect positions the NT as a niche destination for visitors looking for that kind of experience.

7 Understanding Backpacking in Australia Backpackers in Australia DEPARTMENT OF Backpackers likely to visit the NT. 70% fit into the Challenger segment*. That is looking to push themselves further and out of their comfort zone. *The Challenger segment makes up 52% of the total backpacker segment, followed by those who who are on a quest (27%) and the New Backpacker segment (21%). Demographics Even split male/female 3% between 25-30yrs 28% Uk/Ireland 24% Canada/USA 43% here for 1-2 yrs Backpacking experience 63% backpacking for the first time Backpacking is about 38% building confidence and overcoming challenges 24% backpacking has taught me a lot about life Sources of information (while travelling around in Aus) 63% destination social media pages 55% friends and family Why did they take this trip? 70% because I wanted to challenge myself 68% I wanted to do something different Why Australia? 75% to experience the lifestyle 52% See iconic landmarks 41% experience the outback 44% saw pictures and was interested in the place Places they will visit? In Australia 46% Cairns 36% Perth 27% Adelaide In the NT 74% know of places they can visit in the NT 57% Ayers Rock 51% Darwin 50% Alice Springs 24% Kakadu National Park Trip details for Australia Accommodation: 0% hostels 40% free camping areas Travel: 81% public transport 70% planes Discretional spend 4% $5,000 - $15,000 Significantly higher

8 DEPARTMENT OF Backpackers in Australia (out of market) - Looking at backpackers out of market, only 12% had either visited Australia or were considering Australia on their next backpacking trip. Understanding Backpacking in Australia Backpackers overseas (out of market) 42% Challenger segment Demographics 73% Female No age skews or location - Backpackers who are likely to visit Australia were more likely to have never been backpacking before. Backpacking experience - The key trigger for considering Australia was that they were looking for a challenge and to visit places where they have not been before. 31% building confidence and overcoming challenges 27% backpacking has taught me a lot about life 54% never been backpacking before Backpacking is about Why did they take that trip? 33% who had backpacked wanted to challenge themselves 22% who had backpacked wanted time to themselves 56% were away from home for 3-6 months in total Why are they planning that trip? 35% to visit places they haven t been before 31% to do something different 88% think they will be away from home for 6 months or less Significantly higher

9 Strategies to consider In order to identify strategies the NT could carry out to attract backpackers, a choice model design was implemented. The reason for adopting such an approach is that choice modelling enables us to identify the factors that are most important to the consumer and how those factors would impact on consumer demand. As part of a choice modelling approach, participants are presented with specifications of a product or experience and asked if they would buy it. In this study backpackers were presented with a brochure of the type of experiences they could have in the NT and they were asked if they would visit the NT on a backpacking trip to have that experience. As part of the choice model, a number of attributes found to be important in the qualitative research were included, each with a number of levels. In addition, three geographical areas were used as a basis for the experiences: visit the whole of the NT, visit the Tropical Top End, or visit the Red Centre. In considering a trip to the whole of the NT, the attributes and levels considered most important/attractive were: TRIP TO THE WHOLE OF NT Top 5 Attributes How they will travel to the NT (15.3%) Accommodation in the NT (14.8%) Activities to socialise with Territorians and other tourists (.8%) Top Levels A long-haul bus was the most preferred option (36.1%) followed by buying a van or a car (34.7%). Shared accommodation (Airbnb, Couch Surf, stayz.com) was the most preferred type of accommodation while travelling across the state (40.%). Music festivals were the most preferred form of socialisation for backpackers. Bass in the Grass (50.%) attracted the highest interest followed by the prospect of attending a festival in the outback (Wide Open Space) (48.5%). Activities that will challenge you (.2%) Nature based experiences such as mountain biking in Alice Springs (48.5%) followed by 3-day 4wd tours of Kakadu and Litchfield (48.1%) had the greatest impact on demand. Experiences to reflect and escape (.0%) Swimming in crystal clear blue waters at the hot springs (50.8%) was the most preferred option.

10 Strategies to consider In considering a trip to the Tropical Top End, the attributes and levels considered most important/attractive were: TRIP TO THE TROPICAL TOP END Top 5 Attributes Accommodation in the NT (20.2%) How they will travel to the NT (18.0%) The cost of the trip (10.%) Activities that will challenge you (10.6%) Activities to socialise with Territorians and other tourists (7.%) Top Levels Free campsites (31.4%) was most preferred when it came to the Tropical Top End. Backpackers would prefer renting (32.7%) or buying (31.8%) a van/car to visit the Tropical Top End. Cost was a concern when considering a trip to the Tropical Top End. Swimming with crocodiles in the Cage of Death (40.0%) was more preferred over a 3 day, 4wd Kakadu and Litchfield tour (35.6%). The Bass in the Grass music festival (36.1%) attracted greater interest compared to a helicopter pub crawl for a day. In considering a trip to the Red Centre, the attributes and levels considered most important/attractive were: TRIP TO THE RED CENTRE Top 5 Attributes How they will travel to the NT (16.1%) Accommodation in the NT (15.2%) Activities that will challenge you (12.6%) Adventure activities (10.8%) Iconic landmarks (10.5%) Top Levels A budget flight was the most preferred option (24.4%) followed by a hire van (23.8%). Shared accommodation was the most preferred type of accommodation while travelling to the Red Centre (20.5%) Skydiving at Uluru (33.5%) was most preferred compared to mountain biking in Alice Springs (26.4%). A hiking experience like the Larapinta Trail (2.7%) was more preferred. Seeing the sunset at Uluru (2.5%) was most preferred.

11 Strategies to consider & Methodology Overall, backpackers need to be informed of the accommodation options available in the NT, how they can get to the NT, and activities that will challenge them. It is important to keep in mind that 70% of those who were likely to visit the NT fitted into the Challenger segment. Providing information on activities they could participate in that would be exhilarating and would push their limits is essential to convince them of the value of an NT trip. Backpackers also need to be informed about experiences that would allow them to socialise with Territorians and other tourists (especially to encourage them to travel across the state and to the Tropical Top End). This is particularly important given that the NT is not currently perceived as a destination to party and socialise. Methodology The research project applied both quantitative and qualitative methods and included three stages: Stage Objective Approach Desktop Research Define who backpackers are. Identify trends, extraneous factors impacting, and experiences that backpackers are interested in. Review of academic and non commercial reports to understand who backpackers are and where they travel Qualitative Research Quantitative Research Understand what suppliers think is happening and experiences they can provide. Identify segments in the backpacker market. Typical behaviours and size of those behaving. Strength of perceptions about Australia and the NT. Experiences of interest. Sources of communication used. 8 interviews with suppliers 1x 1.5-hour focus group in London 3x 1.5-hour focus groups in Sydney Online questionnaire and choice model. n=42, backpackers in Australia (in-market) focusing on backpackers from UK/Ireland, USA, Canada, Scandinavia, Netherlands, Germany, Switzerland, France, Italy, China, Korea, Taiwan & Hong Kong. n=222, backpackers overseas (out of market), focusing on backpackers from UK/Ireland, USA, Germany & France

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