A competitive future for destination Australia Tourism Futures Conference, October 4 2005 Scott Morrison, Managing Director
A changing environment Increased Competition Technological Change Evolving Consumer Economic forces Pressure on Yields
A changing environment Increased Competition Product Destinations Consumer Categories Globalisation
UK Share of Voice Long Haul Market 180 LH and SH destinations advertised in the UK in the past 12 months Total Jan-July 04 = 14M Total Jan-July 05 = 18.6M ST LUCIA THAILAND CAYMAN ISLANDS OTHER AUSTRALIA SOUTH AFRICA OTHER AUSTRALIA MALAYSIA BARBADOS INDIA CHINA HONG KONG JAMAICA MEXICO MALAYSIA ORLANDO CANADA BAHAMAS HONG KONG USA BERMUDA INDIA KENYA NEW ZEALAND SOUTH AFRICA CANADA LAS VEGAS MAURITIUS NEW ZEALAND * 2004/2005 Mauritius = 51k/ 1.27M, Las Vegas = 54k/ 986k, USA = 1.989M Source: MMS
Australia s market share of Japanese outbound (1971-2004) 6% 5.6% 5.3% 5.3% 5.1% 5.0% 4.9% 5% 4.8% 4.8% 4.2% 4.4% 4% 3.6% 3.2% 3% 2.6% 2.2% 1.9% 2% 1.7% 1.7% 1.5% 1.2% 1.3% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 1% 0.9% 0.8% 0% 4.3% 4.0% 4.2% 4.3% 4.7% 4.2% 2001 2002 2003 2004 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
% Change for Japan Outbound for major destinations: 2000 to 2004-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% China Thailand Germany United Kingdom South Korea New Zealand -0.4% Malaysia -2% Spain -2% -4% -4% France Australia Italy 5% 4% 2% 1% 0.0% 27% -40% -36% -31% -33% -5% Indonesia -8% Taiwan -11% Singapore -14% Philippines Hong Kong USA North Mariana Island Canada -7% Total
Travel as share of Australian wallet 550 000 500 000 450 000 400 000 350 000 300 000 Household Domestic consumption visitor nights and the contribution Day trips of total leisure Outbound travel nights (domestic Holiday overnight, outbound VFR and domestic Getaway day) December 1998 to 2004 Household consumption ($ million) Contribution of getaway travel (%) 110 108 105 106 104 102 100 98 96 94 92 90 88 Household consumption Contribution of getaway travel to household consumption Why? Higher levels of personal debt Changing consumption patterns Decline in affordability of Australian holidays Strong $ and leakage of domestic to outbound Australians not taking their leave Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Year ended 12.50 12.00 11.50 11.00 Dec -98 Mar-99 Jun-9 9 Sep -99 Dec -99 Mar-00 Jun-0 0 Sep -00 Dec -00 Mar-01 Jun-0 1 Sep -01 Dec -01 Mar-02 Jun-0 2 Sep -02 Dec -02 Mar-03 Jun-0 3 Sep -03 Dec -03 Mar-04 Jun-0 4 Sep -04 Dec -04 100 95 90 Index In d ex 85 80 75 70 Year ended 10.50 10.00 9.50 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Year ended 9.00
A changing environment Increased Competition Product Destinations Consumer Categories Globalisation Evolving Consumer Independence Flexibility Knowledge Authenticity Assurance
Change in traveller type: Japan Outbound Package Air only 1990 Full package 80% Skeleton package 20% Holiday 10% Business 90% 2004 Full package 50% Skeleton package 50% Holiday 40% Business 60% 8 million 8 million FIT/SIT = 7.2 million
Web use by US visitors to Australia Australia.com becoming important planning and research tool 54% 47% 44% 44% 34% 30% 25% 16% 18% 19% 14% 12% 14% 11% 7% Qantas.com Australia.com Expedia Travelocity Orbitz Waves 1-3 (2002) Wave 4 (2004) Wave 5 (2005) Source 2005 PAX Study in the Qantas LAX lounge. Base: Respondents who used the Internet for Trip Planning
A changing environment Increased Competition Product Destinations Consumer Categories Globalisation Evolving Consumer Independence Flexibility Knowledge Authenticity Assurance Technological Change Communication Information Aviation Commerce
Media Choices USA: 1980 to Present The pool of media outlets is ever increasing: 1980 3 Broadcast TV Networks 28 Cable Networks 8,748 Radio Stations 1,745 Daily Newspapers 7,954 Weekly Newspapers 735 Sunday Newspapers 2,191 Consumer Magazines 17,590 Movie Screens And no Internet, Walkmans (let alone IPODS) Sources: Carat, Television Bureau of Advertising; Newspaper Association of America; Magazine Publishers of America: Broadcasting and Cable Yearbook 2001 Present 7 Broadcast TV Networks 66 Cable TV Networks 50 Regional Cable TV Networks 1,353 TV Stations in 21 Markets 220 Syndicated TV Programs 4 Hispanic Broadcast TV Networks 13,685 Radio Stations in 242 markets 2 Satellite Radio Networks 1,469 Daily Newspapers 17,600 Weekly Newspapers 913 Sunday Newspapers 3 National Newspapers 3 National Sunday Supplements 6,336 Consumer magazines 37,396 Movie Screens 210,000 30-Sheet Posters 56,000 Outdoor Painted Bulletins Innumerable Transit Options 29 million websites; 8 million blogs More than 15 million MP3 Players
Austria Belgium France Germany Italy Netherlands Portugal Spain Switzerland UK China Japan Australia US 61 50 47 57 40 69 55 44 69 65 8 51 71 69 Online (% population) Use mobile phone (% population) Have digital TV (% homes) Broadband (% homes) 77 75 62 76 53 81 69 63 81 80 26 66 85 78 24 34 18 16 9 35 17 18 26 16 4 37 50 48 61 73 52 51 30 86 43 40 51 50 22 87 85 71 7 8 22 13 18 6 13 18 15 59 1 15 2 22 23 34 35 35 38 36 37 28 43 72 11 39 25 55 83 76 67 75 91 74 91 84 81 86 24 72 85 63 87 80 75 81 94 78 93 87 85 89 31 80 90 72 Digital media trends: 2005-2010 Source: Carat
Projected Global Media Consumption Ave hours media consumption / week 100 90 80 70 60 50 40 30 20 10 0 Analogue radio Print Cinema Outdoor Analogue TV 80% of all media by 2020 66% of all media by 2010 50% of all media by 2007 1900 1920 1940 1960 1980 2000 2020 Games Wireless Digital radio Digital TV Internet Source: Carat
UK Media Mix Long Haul Market Australia has the most diverse media mix amongst LH competitors 100% 80% 73 1,911 201 42 133 20 703 Spend 000s 60% 40% 20% 0% 238 335 887 1,366 703 93 79 501 327 1,322 108 419 AUSTRALIA CANADA JAMAICA MALAYSIA NEW ZEALAND 286 61 SOUTH AFRICA 1,591 69 920 83 486 399 32 33 THAILAND USA LAS VEGAS MAURITIUS Internet Direct Mail Tv Outdoor Radio Cinema Press * Of the key brands Source: MMS
Brand Co-op with JAL (FIT Project) Web access
A changing environment Increased Competition Product Destinations Consumer Categories Globalisation Technological Change Communication Information Aviation Commerce Evolving Consumer Independence Flexibility Knowledge Authenticity Assurance Economic forces Exchange Rates Industrial Relations Fuel Prices Cost Recovery
Currency Appreciation and GDP Growth The strength of the Australian economy presents challenges as well as opportunities 14.0% 12.0% 12% 10.0% 9.6% 10.1% 9.5% 8.0% 6.0% 4.0% 2.0% 2.6% 1.7% 1.2% 2.7% 1.2% 0.6% 1.4% 3.6% 2.3% 3% 0.0% -0.1% -0.1% -2.0% -4.0% Australia Britain Canada France Germany -1.0% Japan United States -3.2% China* South Korea* Source: The Economist, Sept 17. 2005 1. Annual Growth based Qtr 2, 2004/2005 2. Annual movement as at September 14, 2005 * Currency movement based on appreciation against USD TWI Appreciation 1 GDP Growth 2
Responding to the challenge Serve your strategy Align to the consumer and be aware of/monitor first movers Speak to the market of one Increase competitiveness Brand Always business driven understand your unique role Investment Constantly understand Acquisitions to directly build implications and opportunities market power of new technologies Partnerships media, Innovation Alliances based on shared ICT commercial objectives that enable Drive, develop and keep up consolidation of core activities with shifts in commercial and and leverage the market influence distribution models of your brand through: Position on strengths that differentiate and minimise amplification reach Never assume Enhance substitutability - constantly connection Reduce production and and SOV question with the effectiveness your Understand consumer the of nature of your challenge distribution association; costs and everything Understand and prioritise your market contextualisation opportunities through Ensure consumer communications are compelling Put new wine new wine tactical messaging single minded Ensure focus effective utilisation of your corporate assets skins Informal alignment to Accurately Enhance target your and capacity understand to deliver your consumer over time capture/drive market synergies Ensure alignment, Increase integration yields and consistency across all marketing activities (especially product/brand match)
Our brand marketing challenge
Our objective: shift preference to intention BRAND Propensity to visit TACTICAL FULFILLMENT Brand Up to a 10 year process Messages must stay motivationally relevant to target market right through the purchase process Tactical Short term response process Messages not just product/t price based. Both rational and emotional benefit` Awareness Consideration Preference Intention Visit
The Attrition Curve - UK Australia versus competitive set 70% 60% 60% 50% 40% 45% 48% 30% 20% 10% 0% 29% 24% 27% 27% 16% 12% 1% 0% 30% 10% 7% 5% 0% 16% 13% 3% 0% 4%2% 3% 2% 0% Destination Awareness Consideration Intention Booking Visitation Australia South Africa USA (Excluding Florida) Canada Thailand New Zealand Base: n=810
Impact of Communication Awareness - UK 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 48% 27% Destination Awareness 48% 63% 30% 13% 8% 37% 11% 45% 5% 60% 3% 1% 0% 0% Consideration Intention Booking Visitation Total Communication Aware Total Communication Unaware Total Communication Awareness based on nett data from Q9 (Prompted Communication Awareness) and Q10 (Aware Delta Execution) Bases: Total Communication Aware n=689 / Total Communication Unaware n= 121
Prompted Recognition Awareness based on Q10 (Prompted Recognition - Delta) Total Communication Awareness based on nett data from Q9 (Prompted Communication Awareness) and/or Q10 (Prompted Recognition - Delta). Base: (Office Ladies) Total Communication Aware n= 255 / Total Communication Unaware n=145 / Delta Execution Aware n=88 Impact of Communication Awareness - Japan Office Ladies - Impact on Australian Attrition 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 43% 39% 14% 67% 70% 30% 26% 12% 62% 60% 18% 16% 6% 31% Total Communication Aware (Office Ladies) Total Communication Unaware (Office Ladies) Delta Execution Aware (Office Ladies) 28% 5% 100% 5% 3% 3% 2% 2% Destination Awareness Consideration Intention Booking Visitation
Domestic Holiday Behaviour Change: From awareness to conversion 100% 90% 80% Those that were aware of the Space campaign are more likely to have converted to taking an Australian holiday. 70% 60% 50% 40% 30% 20% 10% Contemplation Conversion 0% Destination Awareness Consideration Preference Intention Arrival Aware (n=362) Not Aware (n=747)
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