LORD HOWE ISLAND MARINE PARK PROFILE OF LOCAL BUSINESSES Prepared For: Department of Environment Climate Change & Water Prepared By: Arche Consulting Pty Ltd Version: June 2010 Arche Consulting T + 61 0421 274076 Phillips Street Sydney NSW 2000 www.arche.com.au ABN 35 131 934 337
Disclaimer This report was prepared by Arche Consulting in good faith exercising all due care and attention, but no representation or warranty, express or implied, is made as to the relevance, accuracy, completeness or fitness for purpose of this document in respect of any particular user s circumstances. Users of this document should satisfy themselves concerning its application to, and where necessary seek expert advice in respect of, their situation. The views expressed within are not necessarily the views of the Department of Environment, Climate Change and Water NSW (DECCW) and may not represent DECCW policy. Copyright State of NSW and the Department of Environment, Climate Change and Water NSW ii
Table of Contents 1 Introduction... 1 1.1 The project... 1 1.2 This report... 1 2 The Marine Park... 1 3 Economic Profile of the local region... 3 3.1 Overview of the local region... 3 3.1.1 Introduction... 3 3.1.2 Population of the local area... 3 3.1.3 Employment in the local area... 3 3.2 Tourism and visitation... 4 3.2.1 Introduction... 4 3.2.2 Visitor types... 4 3.2.3 Visitor activities... 5 4 Commercial Activities... 7 4.1 Businesses on Lord Howe Island... 7 4.2 Permit Holders... 8 4.3 Businesses servicing visitation to the Marine Park... 9 5 Businesses servicing management of the Marine Park... 10 6 Conclusions... 11 6.1 The lord Howe Island region... 11 6.2 Marine Park expenditure... 11 6.3 Interaction and Future Opportunities... 11 7 References... 12 iii
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1 INTRODUCTION 1.1 THE PROJECT Arche Consulting was commissioned by the Department of Environment, Climate Change and Water (DECCW) on behalf of the Marine Parks Authority (MPA) to undertake surveys of local businesses servicing visitation to and management of NSW Marine Parks. This report is one of six prepared for each of the Marine Park regions. It has been created to provide baseline data about the region servicing visitation to and management of the Marine Park. This information is provided to allow comparative and potentially retrospective analysis. It provides a snapshot of the local economy at the time of the study. 1.2 THIS REPORT This report has been created to provide baseline data about the region servicing visitation to and management of the Lord Howe Island Marine Park. It provides a snapshot of the local economy at the time of the study. Information is sourced from reports produced during the establishment of the Marine Park, economic profiling data and consultation carried out as part of this study. Statistical data used is sourced from the Australian Bureau of Statistics (ABS). This economic data is based on the Lord Howe Island Statistical Local Area (SLA). During initial discussions with Lord Howe Island Marine Park Management and in consultation with DECCW, it was decided not to run a survey in Lord Howe Island. This was decided based on the volume of public inquiry currently occurring on Lord Howe Island in relation to the NSW Marine Park Zoning Plan Review process, the Commonwealth Marine Park Management Plan Review process and World Heritage Area Management Plan review process. Local businesses would have been overloaded with requests for information. A detailed economic profile has been developed for the Island in consultation with Marine Park Management, the Lord Howe Island Board and Lord Howe Island Tourism. 1
2 THE MARINE PARK The Lord Howe Island Marine Park was established in 1999, the third Marine Park declared in NSW. The current zoning plan was introduced in 2004. Lord Howe Island Marine Park (state waters) covers approximately 48,000 hectares, and stretches around Admiralty Islands and south-east around Balls Pyramid and South East Rock. The Park extends 3 nautical miles out to sea from the mean high water mark of the island. The park is approximately 600km off the NSW north coast and 700km northeast of Sydney (mpa.nsw.gov.au 2010). The Commonwealth Marine Park extends from this boundary and 12 nautical miles extending from the territorial sea baselines. Figure 1 Boundary and zones of the Marine Park Source: MPA 2010. 1
The MPA (2010) conducted a visitor survey in 2007 which identified that the major activities carried out in the Marine Park are: beach activities, with swimming, walking, boating snorkelling and scuba diving fish feeding and and glass bottom boat trips There are 13 permits issued by the MPA for commercial and recreational activities carried out in the Lord Howe Island Marine Park. The MPA consults with the local community through their local advisory committee which consists of 12 members representing commercial, tourism, scientific and community interests. 2
3 ECONOMIC PROFILE OF THE LOCAL REGION 3.1 OVERVIEW OF THE LOCAL REGION 3.1.1 INTRODUCTION Lord Howe Island is situated approximately 600 km off the East Coast of Australia on the same latitude as Port Macquarie. Lord Howe Island is self governed by the Lord Howe Island Board and sits within the Port Macquarie State electorate. The Lord Howe Island Board has 7 members, 4 of these elected popularly and 3 selected by Government. The Island was declared a World Heritage Site in 1982 and implemented a local environment plan in 2010. This plan outlines aims for the Island that seek to protect the world heritage and environmental qualities of the Island and ensure land zoning and planning, while empathetic to the importance of tourism on the Island, is developed within limits (NSW, 2010). There was also a Commonwealth Marine Park declared in 1999 in the Commonwealth waters surrounding the NSW Marine Park. 3.1.2 POPULATION OF THE LOCAL AREA The population of the Lord Howe Island Statistical Area in 2006 was recorded at 347 (ABS 2007). The tourism population of the Island is capped at 400 people per night. The tourism population is limited by the amount of beds licensed to accommodation providers on the Island. Accommodation providers are allowed to buy and sell their allocation of beds. Anecdotally these rights currently trade at a price in the vicinity of $100,000 1. The Lord Howe Island community is unique when compared to the other local communities and businesses sectors servicing Marine Park visitors and management. It is a much smaller economy and area and has a very high reliance upon visitation to the Island as a large employing industry for its population. 3.1.3 EMPLOYMENT IN THE LOCAL AREA Employment in Lord Howe Island is centred around accommodation and food service industries. This sector represents almost 40% of all employment on the Island (83 people employed out of 219). Figure 2 highlights this dependence. Other large industries by employment are Public Administration and Safety; and Transport, Postal and Warehousing. Arts and Recreation is another area that has a higher percentage than the rest of NSW. This is a very different employment profile to the economies in other Marine Park Areas and highlights the high degree of relevance of the Marine Park and its attractions to the community. 1 Figure provided by Ian Kerr MPA. 3
Figure 2 Employment by industry within NSW and Lord Howe Island Inadequately described/not stated Other services Arts & recreation services Health care & social assistance Education & training Public administration & safety Administrative & support services Professional, scientific & technical services Rental, hiring & real estate services Financial & insurance services Information media & telecommunications Transport, postal & warehousing Accommodation & food services Retail trade Wholesale trade Construction Electricity, gas, water & waste services Manufacturing Mining Agriculture, forestry & fishing Lord Howe Island NSW 0 5 10 15 20 25 30 35 40 % Source: ABS 2007. 3.2 TOURISM AND VISITATION 3.2.1 INTRODUCTION In 2008 Tourism Research Australia (TRA) prepared a Visitor profile based on 266 visitors to Lord Howe Island. Visitation is limited to 400 people per night and there are approximately 16,000 visitors each year (MPA 2010). This limitation has implications for Marine Park strategies and options when considering links and relationships with local businesses. 3.2.2 VISITOR TYPES The TRA visitor profile outlines that 99% of visitors to the Island are overnight visitors and 70% of visitors were 55 or older. Average stays were also very high at around 6.7 nights. Figure 3 Domestic visitors by State Tasmania 2% South Australia 10% ACT 3% Western Australia 1% Queensland 11% Victoria 14% NSW 59% Source: TRA 2008. 4
The single largest place of residence identified in a visitor survey performed by the Marine Parks Authority undertaken in 2007 was the Sydney region which represented 39% of all survey responses. International visitation only represented 5% of survey responses in this survey (MPA 2010). The survey received 376 responses which was representative of 1,476 individuals (only one survey per group was required). 3.2.3 VISITOR ACTIVITIES The two major reasons for visitation to Lord Howe Island according to the TRA visitor profile were to visit a place that was un-touched/un-developed and to experience nature. This focus was also highlighted in an attitudinal study undertaken by the MPA in 2010 with 500 people surveyed, including 419 visitors. Visitors highlighted that holiday was a major reason for their visit, however natural areas on land, natural areas in ocean/marine park and world heritage status all had significant levels of response. Figure 4 Main reasons for visit to Lord Howe Island Source: MPA 2010. Activities undertaken by visitors to the region were highlighted in the TRA profile and included: Bushwalking (93%); Go to the beach (89%); General sightseeing (85%); Visit museums (84%); Eat out (72%); Go on an organised guided tour (69%); Go on a skippered charter boat/island cruise (63%); and Cycling (62%). 5
Stakeholders consulted perceive the majority of visitors to the Island would interact with the Park at least once during their average 6-7 night stay. 6
4 COMMERCIAL ACTIVITIES 4.1 BUSINESSES ON LORD HOWE ISLAND The ABS (2007) reported that there were 51 recorded businesses on Lord Howe Island in 2007, while there had been no change in the total number of businesses in the period 2004-2007 there were small changes in the mix of business types. The business sector seems to be relatively established and stable. Table 1 Number of businesses by industry Lord Howe Island 2007 Industry Number of Businesses Agriculture, forestry and fishing 3 Retail trade 3 Accommodation, cafes and restaurants 24 Transport and storage 12 Finance and insurance 3 Health and community services 3 Cultural and recreational services 3 Total businesses 51 Source: ABS 2010. Figure 5 Size of local businesses Employing businesses: 5 or more employees 29% Non employing businesses 47% Employing businesses: 1 to 4 employees 24% Source: ABS 2010. The Lord Howe Island Board are strong contributers to the local economy with expenditure on services of around $8 million per annum (TRA 2010). It has been noted in discussions with local Marine Park Management that proprietors of businesses on the Island often own and manage more than one type of business. There are two accommodation providers who also hold permits for operations in the Marine Park. It is thought both the limits placed on visitation to the Island and the high seasonality that is experienced drive the need for business diversification. That is, to generate sufficient income business owners look to offer a range of services. 7
There is little known information about the total size of the Lord Howe Island economy. In a visitor survey undertaken in 2007, it was estimated that the visitor expenditure for a 7 night stay was between $1000 - $2400 per person. Accommodation represented over half of all expenditure whilst on the Island for both domesetic and international visitors. Based on an annual visitation of 16,000 people, or an average of approximately 300 people per week, an assumption of annual expenditure is in the vicinity of $23.4 million, taking $1,500 as a typcial expenditure per week. 4.2 PERMIT HOLDERS There are currently 15 permit holders in the Lord Howe Island Marine Park, the majority are boating related businesses. The 13 Marine based permit holders and their service offering are listed in Table 2. Table 2 Marine operator permit holders Fishing Charters Sightseeing tours Snorkelling / Scuba Diving Glass bottom boat tours Kayak tours / hire Land Based Activity Fish Lord Howe Sea to summit expeditions Belle Chase Double Trigger Oblivienne LHI Environmental Tours Pro Dive Lord Howe Island Howea Divers? Marine Adventures LHI Nature Tours Islander Cruises Divine Seafoods Blue Billy Fishing Charters There are two accommodation providers who hold a permit for commercial activity in the Marine Park. 8
4.3 BUSINESSES SERVICING VISITATION TO THE MARINE PARK There are 18 accommodation providers listed on the Lord Howe Island Board website some of these businesses are also permit holders in the park for activities they offer their guests such as kayak tours and boat trips. There are also five accommodation providers and one retail outlet which also have a restaurant/cafe on the Island. Business types are summarised in Error! Reference source not found.. Table 3 Businesses servicing visitation to the Island Accommodation Providers Restaurant / Cafe Tour providers Retail 18 13 18 9 Tourism is a major industry for the Island and subsequently the protection and promotion of the Marine Park as an environmental asset is important to many businesses on the Island. In speaking with the local tourism association, while there is limited growth capacity due to the bed restrictions on the Island, a key focus for businesses has been to reduce the effects of seasonality on visitation, and widen the market of potential visitors. The Marine Park provides an opportunity to compliment the current promotion strategy to attract greater volumes of active and environmentally aware visitors. 9
5 BUSINESSES SERVICING MANAGEMENT OF THE MARINE PARK The Marine Park also has a direct relationship between the MPA and the local economy. This includes direct employment, and associated flow-on expenditure, and the purchases of services from businesses on the island. Lord Howe Island Marine Parks Authority employs 2 staff in the area at an annual cost of $218,000. The LHIMP Manager is housed in accommodation that was the previous house and office of Australian Customs Services and is now owned by the Marine Park Authority. The 2 nd staff member is a Marine Ranger who is a resident and sources rental accommodation. There are a number of key services provided locally including dive equipment hire and service, fuel (sourced locally), boat & vehicle maintenance, maintenance of signage and mooring buoys. The Lord Howe Island Marine Park management estimated operational expenditure to be approximately $101,000 per annum. Due to the unavailablility of some services on the Island only 55% of the expenses are spent locally. The MPA also has a limited travel budget to and from the island for work-related travel. The Manager is provided with 1 return trip/ year. Table 4 Lord Howe Island Marine Parks Authority expenditure Operational costs Cost Contract (Y/N) Percentage Local Fuel $11,000 N 100% Boat maintenance and service $7,000 N - Vehicle maintenance and service $1,000 N 100% Dive equipment and service $3,000 N 100% Chandlery $4,000 N 50% Maintenance of buoys and signage Cleaning $3,000 N 100% Nil Advertising & Printing $14000 N 10% Catering $1500 N 100% Office supplies $2500 Y 10% Utilities $9000 Y 90% Temporary accommodation $4000 N 100% Contractors $20,000 N 20% Rent $16,000 N 100% Travel $5,000 Total $101,000 55% 10
6 CONCLUSIONS 6.1 THE LORD HOWE ISLAND REGION This project has analysed relevant ABS and TRA data, and the results of face to face and phone interviews and an online survey with businesses who service visitation to and management of the Marine Park. With a population of 347, and a number of beds for visitors to the Island capped at 400, Lord Howe Island is unique to the five other Marine Park regions. Employment and business statistics outline the importance of tourism related business on the Island, with accommodation and food services employing 40% of local residents. Visitor profiles are however similar to the other regions with a large proportion of visitors from Sydney (39%) and only 5% of international visitors. 6.2 MARINE PARK EXPENDITURE Established in 1999 the Park has 2 FTE staff, at an approximate cost of $218,000 per annum (excluding on-costs). There are a number of key services provided locally including dive equipment hire and service, fuel (sourced locally), boat & vehicle maintenance, maintenance of signage and mooring buoys. The total operating budget is approximately $101,000. 6.3 INTERACTION AND FUTURE OPPORTUNITIES Stakeholders consulted indicated that the MPA has taken a number of steps to increase interaction with tourism based local businesses. This includes the MPA joining the local tourism association. The MPA plays a proactive role in providing information to support business activities, including tourism promotion. Due to the small nature of the Lord Howe Island community, the MPA and staff are connected to local business operators. The tourism community has highlighted they are seeking to increasingly attract environmentally aware tourists. Promotional activities will reflect this strategic direction. Given the importance of the marine environment on the Island, the ongoing contribution of the MPA to tourism marketing efforts will be important.. 11
7 REFERENCES Australian Bureau of Statistics (2006) 2006 Census of Population and Housing NSW Marine Parks Authority (2010) Lord Howe Island Marine Park Attitudinal Report NSW Marine Parks Authority (2010) Lord Howe Island Marine Park: Summary of social, cultural and economic uses Tourism Research Australia (2008) Lord Howe Island Visitor Profile and Satisfaction Report NSW Marine Parks Authority (2010) Lord Howe Island Marine Park Visitor and Expenditure Survey. 12