GROWING TOURISM IN THE BEGA VALLEY SHIRE ECONOMY

GROWING TOURISM IN THE BEGA VALLEY SHIRE ECONOMY Discussion paper prepared by Sapphire Coast Tourism Ltd November 25, 2014

To realise the potential that tourism can play in the social and economic wellbeing of the Bega Valley community, new sources of financial support must be identified. INTRODUCTION The success of the partnerships between Sapphire Coast Tourism (SCT), Bega Valley Shire Council, business groups and community groups has been striking. The growth in the tourism economy has been significantly higher than the average level of growth in tourism elsewhere. There are many opportunities for this growth to continue, with the region expanding into tourism markets that traditionally have not been accessed, particularly international visitors. SCT has, however, reached its capacity to develop these opportunities under existing funding arrangements. There are not sufficient resources to develop the potential expansion of the Bega Valley tourism economy. To realise the potential that tourism can play in the social and economic wellbeing of the Bega Valley community, new sources of support must be identified. This discussion paper describes the current effort and the potential for expansion and suggests possible avenues for realising more sustainable sources of revenue to realise the region s tourism potential. After receiving community comment and suggestions, SCT will make a submission to Bega Valley Shire Council that includes recommendations for growing the shire s economy by capitalising on the potential of tourism. 2

THE REGION CONTINUES TO RELY HEAVILY ON THE DOMESTIC VISITOR Visitors by source market The domestic market makes up a dominant 96% of our visitors. Of these visitors, around 78% are in the over 35 year old age group. Nearly all visitors were self-drive. An estimated 22,000 international visitors come to the region. This figure is steadily growing from a modest base. The primary means of travel for internationals is by rental vehicle. Visitors 8% Sydney 10% Regional NSW The Bega Valley Shire received over an estimated 2,314,000 visitor nights for year ending June 2014. The most significant growth has been in the June quarter, with the recent 2014 figures showing the highest figures for that period since tourism figures have been monitored. 2700 ACT Victoria 23% 59% Visitor nights 000s 2025 1350 675 0 M11 J11 S11 D11 M12 J12 S12 D12 M13 J13 S13 D13 M14 J14 All data is an estimate only and custom extracted from Tourism Research Australia, National Vistor Survey, by Tourism Solutions Australia. 3

TREND IN VISITOR NUMBERS WHEN COMPARED WITH EUROBODALLA SHIRE (source DNSW) Data from DNSW Tourism Research Australia, National Visitor Survey 4

The key to successful tourism is to showcase those things that make you special, and resist the temptation merely to line up with many other coastal destinations that sell beach holidays. SAPPHIRE COAST TOURISM STRATEGIC DIRECTION Regional tourism is fiercely competitive and those regions that carefully position their brand in the marketplace and strategically manage their approach to tourism will reap the rewards. The key to successful tourism is to showcase those things that make you special, and resist the temptation merely to line up with many other coastal destinations that sell beach holidays. Market research, national, state and local, has consistently shown that the primary motivator for travel in the domestic and international tourism market is nature. Next on the winners lists are coastal experiences and journeys of exploration. The Sapphire Coast is well placed to offer and integrate all three of these top travel motivators. The region is the heart of Australia s Coastal Wilderness, recognised by Tourism Australia as offering one of Australia s top 16 nature tourism experiences. This recognition aligns with local research into the motivations of our domestic visitors. The key motivator is their attraction to the area s undeveloped natural environment and the opportunities to explore the region. Our magnificent undeveloped coastline is our appeal, our brand. Images, stories and experiences associated with that brand form the basis for the strategic approach. The brand is recognised and now shapes how associated tourism products such as nature based experiences, food and wine, events and heritage tourism, are developed and marketed. Clearly this strategic approach is resonating with the market. A particularly encouraging trend is the increasing popularity of the off-peak season, with strong visitor growth in the March and June quarters. This is highly desirable as it avoids adding to congestion in peak season and facilitates use of otherwise under-utilised infrastructure, thereby enhancing the viability of businesses in the region. This trend is particularly valuable considering that the current average occupancy rate for commercial accommodation is only 45% compared with 67% in NSW. The other encouraging trend is the steady increase in international visitors. This is a market the region has historically missed. This market holds huge potential for growth in the regional tourism economy. It is a high yield, low volume, all-season market. The visitors are well-heeled, well-educated and discerning with a strong preference for nature based experiences. They are also likely to seek experiences associated with heritage, cultural events and food and wine. 5

Use of the Internet and the proliferation of hand-held electronic devices have revolutionised the way visitors make travel decisions. SAPPHIRE COAST TOURISM STRATEGIC DIRECTION The strengthening tourism economy in this shire is a reflection of the initiatives, based strategically on the brand that has been developed and implemented by Sapphire Coast Tourism in close partnership with the business community and Bega Valley Shire Council. Four key programs that have been implemented are: A digital media strategy. Use of the Internet and the proliferation of hand-held electronic devices have revolutionised the way visitors make travel decisions. Over three quarters of travel decisions now result from internet research. Significant numbers of visitors make their entire travel arrangements on the Internet, by-passing traditional marketing campaigns and booking systems. Likewise in-destination experiences are now discovered by use of digital tools and new experiences shared by visitors are a key driver of increased length of stay. Hence the digital strategy is underpinned by a multi-site strategy that centralises development of on-brand content and shares this hero content across key town brand websites - Merimbula, Eden and Bermagui. This strategy increases the reach of quality content, at the same reducing the costs of management. A full time digital manager has been engaged for day-to-day management and delivery of this content, integration with social media and cooperation with other digital partners*. * The full time digital manager position is funded only for the 2015 financial year. Comparisons are based on a six month period given new web initiative and reporting commenced in July 13 6

For destination brands today, it is about other people telling your story. Digital focus can help ensure it is the conversation you want. SAPPHIRE COAST TOURISM STRATEGIC DIRECTION Social Media Strategy This strategy focuses advertising investment in social media opportunities. This takes advantage of the rapid growth in social media as the new word of mouth marketing hero. Inspirational content is constantly being developed to seed motivation in the visitor dream phase of their travel planning, and importantly to stimulate shared on-brand experiences through visitor social networks. The digital manager is responsible for day-to-day engagement with social media assets; showcasing the destination brand with strategic focus on shoulder and off-peak seasons partnering stakeholders NSW National Parks and tourism bodies to source and share relevant content leveraging local events and communities to increase reach provide leadership to town tourism bodies to multiply reach and relevance of content December 2013 - October10 2014 o 890 pieces of unique content have been developed o Facebook fan base has grown from 250 to 6,150 o 734,735 Facebook unique users reached o 87,563 stories created o Total reach 4,241,611 o 63,989 - clicks to like, share or comment on content o Increased community engagement in the Eden Whale Festival from 252 to 3012 Social Media Return On Investment Estimate social media return +$ 12,000,000 Based on Social Media Valuation method - 20% of Facebook stories created multiplied by the value of average visitor stays ($722) 7

The desire to explore the region extends the visitor length of stay. SAPPHIRE COAST TOURISM STRATEGIC DIRECTION Heritage Tourism Strategy The Heritage Tourism Strategy was developed for two key reasons: National research identified heritage tourism as having the only growth potential in the constrained domestic market. Because this region is well endowed with cultural and natural heritage that can be interpreted and presented in all areas across the Bega Valley. The Heritage Strategy guides programs and planning for product development and community engagement in delivery of heritage experiences. The first heritage infrastructure program was the development of the Killer Whale Trail in Eden. This day-trip to the region s most compelling whale history sites is supported with digital stories and connects to other heritage stories in the region. The Journeys Program The Journeys Program will publish the first four journeys prior to the 2014 summer holiday season. The journeys are presented in themes, to cater for visitors with particular interests. The journeys will be National Parks; Earth History; Walks; and Historic Heritage. The journeys comprise high quality site and route information that will reach visitors through visitor information outlets, accommodation providers and the Internet. The decision to develop the journeys was based on results of domestic market research that showed a visitor preference to seek out a variety of experiences throughout the region, further afield from their accommodation. The desire to explore the region extends the visitors length of stay. Wireless Hotspots In view of the increasing significance of hand-held electronic devices used by visitors to access information, free Wi-Fi access at key locations is being provided by tourism bodies. The provision of this service will be implemented in the Bega Valley as a high priority if the resources proposed in this paper become available. 8

The success of marketing partnership with the likes of NSW NPWS require funding to continue. OPPORTUNITIES FOR BROADER DEVELOPMENT OF TOURISM Sapphire Coast Tourism has had demonstrable success with initiatives under the tourism strategy thus far. However, SCT has reached the limit of its performance with its available resources. It is not possible to capture promising opportunities to expand into new areas of visitor services and product development unless an additional and sustainable revenue source can be secured. If further resources were available priorities for expanded tourism initiatives would be Sydney Melbourne Coastal Drive Cruise Ship opportunity Develop region as heart of the coastal drive Best of nature-coastal experiences Leverage brand awareness Stimulate product development ACT Marketing Collaberation with visitcanberra Infrastructure partnerships NSW National Parks & BVSC Partnerships Tourism Australia Canberra Airport Destination NSW South Coast Regional Tourism Organisation Coastal Wilderness Partners Local business bodies NSW National Parks International Marketing - Nature experience development Signature experience development International linkages Industry development - RVEF funding Export ready development South Coast Marketing Shared coastal journeys - Industry development Collaborative marketing Advocacy Industry development - Collaborative funding Event development Collaborative campaigns - Nature product development 9

Critically on-brand attributes should be the focus of new tourism product OPPORTUNITIES FOR BROADER DEVELOPMENT OF TOURISM New product development Critically on-brand product will be the focus eg: touring, heritage tourism, niche accommodation, guided tours, Indigenous heritage. International ready Development of existing product to assist in gaining accreditation and then to access Tourism Australia promotion Fostering skills for the Asian market Chinese ready opportunity Integrating coastal tourism with the Australian Alps and other regional nature partners Increase investment in digital assets and marketing channels Cross promotion and itineraries to deliver coastal and alpine experiences Continue to invest in best practise digital platform Implement strategies to leverage digital for broad dissemination of high quality visitor information Increase capacity of town and tourism bodies to contribute to dissemination of on-brand messaging Implement strategies to use Search Engine Marketing to differentiate and promote the brand Leverage key events Improve visitor information services Develop new markets Showcase experiences Focus on return visitors Increase length of stay Assist Tathra in developing appropriate visitor service model Assist Cobargo in enhancing role as gateway to the shire Develop strategy and implement plan for meetings and conference market Visitor signage Increase focus on partnership with BVSC & NSW NP to improve visitor signage 10

SCT MISSION Identify and promote the region s compelling visitor experiences Tourism in Bega Valley Shire is managed by the Board of Sapphire Coast Tourism Ltd, a not-for-profit organisation established by Bega Valley Shire Council in 2008. The Board members are volunteers and the constitution of the Board is a mix of community and tourism industry representatives. A councillor from Bega Valley Shire Council attends board meetings, as do council staff from time to time. It is not the Board s role to market and promote tourism businesses. That task is for the individual businesses and their representative bodies. The Board s role is set out in the company constitution. The first objective is: To identify and promote the region s compelling visitor experiences to maximise the social, cultural, environmental and economic wellbeing of the community through sustainable tourism. Hence, the programs outlined in this discussion paper are aimed at this objective. The Board s funding for tourism is derived from a special purpose rate levy imposed on business premises in the shire. 2014/2015 special purpose rate levy $272,000 2014/2015 special allocation $75,000 MANAGEMENT OF TOURISM IN THE SHIRE 2013/2014 269,000 2013/2014 special allocation 100,000 In previous years the Board has been successful in obtaining Commonwealth grants for its strategic planning and development. 11

The success of marketing partnership with th likes of NSW NPWS require funding to continue shire boundaries have little or no impact on visitors aspirations or enjoyment MANAGEMENT OF TOURISM IN THE SHIRE A major draw on funds of $90,000 supports the operation of the four accredited Visitor Information Centres. An additional major expense supports a full time Tourism Manager with full time resources to underpin the social media and website strategy. Funding also supports employment of a part time financial manager. Other funds are allocated to the normal administrative expenses associated with the tourism management operation. The balance of funds ($50,000) is allocated to marketing and promotion activities, mostly in cooperation with partners including local business groups, the National Parks and Wildlife Service, Destination NSW and the South Coast Regional Tourism Organisation. The Board strongly fosters partnerships across shire and state boundaries because such boundaries have little or no impact on visitor aspirations and enjoyment. Close relationships have been developed with neighbouring shires to present the greater region as an outstanding nature tourism destination. Valuable partners include the NSW National Parks and Wildlife Service (the Regional Manager is on the Board) and adjacent shires and agencies connected with the Coastal Wilderness, including Eurobodalla, Bombala and East Gippsland Shires and Parks Victoria. There are also close partnerships with local community business bodies who manage the four accredited Visitor Information Centres. The traditional role of Visitor Information Centres, in providing accommodation booking service and tourism information, is changing because of the increasing use of the internet for holiday research, planning and booking. This changing role is the subject of study and debate around Australia and it makes sense for the management of VICs in the shire to adapt to these changes. Funding split - base 49% Operations Promotion 18% Visitor Centres 33% 12

The success of marketing partnership with th likes of NSW NPWS require funding to continue OPTIONS FOR FUTURE FUNDING OF TOURISM Suggested range of targets It should be noted that no funds are expended (nor plan to be expended) on Board Director s fees and expenses, reflecting the contribution and community commitment of the Directors as volunteers. To assist with the discussion, a comparison between council funding for tourism between Bega Valley and Eurobodalla shires is made: Comparison 14/ 15 budgets - expenditure SPEND BEGA EURO Promotion $180,000 $708,000 VIC spend $90,000 $874,000 Visitor numbers 741,000* 1,260,000* Expenditure per visitor $0.36 $1.26 Spend by each visitor $349 $301 (* four year average to year ending Sept 2013 Destination NSW) Eurobodalla tourism funding amounts to $1.26 per visitor around $1.6m. If Bega Valley tourism expended $1.26 per visitor, the total expenditure would be $1.2m. The current funding sourced from Bega Valley Shire Council is $272,000. This figure is significantly less than a desirable $1.2m a shortfall of $930,000. A desirable funding target will be identified in the final submission to council following the public discussion process. A range of targets could be set depending on the degree to which the community wishes to maximise the economic opportunities available to tourism. Respondents may wish to comment on the desirable target within the range of $0.272m (status quo) to $1.2m. 13

Many beneficiaries make no contribution to the planning and management of Bega Valley tourism. OPTIONS FOR FUTURE FUNDING OF TOURISM Member based funding Many regional tourism bodies rely on contributions from industry members. Historically these bodies have been able to source extra revenue from commissions arising from accommodation bookings and media assets in the visitor centre themselves. In the Bega Valley, industry participants support the business based operation of the Visitor Information Centres and, as a consequence, receive membership of Sapphire Coast Tourism. The use of the Internet for research and booking is now significant and this has reduced commissions from bookings, drying up that source of revenue for tourism bodies. As at July 2014, there are 376 members of Sapphire Coast Tourism, most by virtue of their membership of a Visitor Information Centre. The membership fees will generate around $3500 for 2014-15. Membership fees are a significant contribution to the running of the Centres. If additional resources for expansion of the Tourism Strategy, as outlined in this paper, were to be sought from existing members, it would amount to many thousands of dollars per member. Many business beneficiaries of the members contributions and funding from the tourism Special Rate Variation on zoned businesses make no contribution to the planning and management of Bega Valley tourism. This is because they are neither tourism body members nor are their business premises subject to the rate variation. Suggestions are invited for the mechanisms that ensure these business make a fair contribution to the programs that they benefit from. Suggestions would also be welcome regarding the development of different membership models or actions that may motivate people to become members. Accommodation levies Accommodation levies are a common source of funding for tourism, particularly in overseas locations. Some examples of surcharges on hotel bills are: Fiji 5% California 9% Florida 11% Bali 15% To achieve a $0.75m target, a levy of about 38 per visitor per night would need to be levied on each visitor. If a levy of this type were to be set in Bega Valley Shire it would have to be voluntary as there is no legislative capacity for local government to ensure compliance. 14

All rate payers benefit from a robust and growing regional economy through programs and infrastructure OPTIONS FOR FUTURE FUNDING OF TOURISM Special rate levy A rate levy for tourism purposes is common in Australia. Bega Valley Shire Council currently levies a Special Rate Variation (SRV) on businesses to fund tourism promotion throughout the Bega Valley Shire. Council has resolved to contract out this service to Sapphire Coast Tourism for a period of 3 years from 2014 through to 2017. An SRV requires the approval of the Independent Pricing and Review Tribunal (IPART). The NSW Government, in its Visitor Economy Action Plan, supports in principle IPART guidelines to facilitate special rate variations for tourism purposes. The SRV for tourism levied a total of $250,000 (indexed each year through inflation) in 2011-12 on properties liable for Business rates. There are 855 assessments falling into this category. The value of the SRV is approximately $276k in the 2015 financial year. There are many more registered businesses in the Bega Valley Shire than are rated as business properties. In 2006-07 there were 2682. Many of these businesses are involved in tourism, or benefit directly or indirectly from tourism. A common feature of special rate levies applied elsewhere is that they are imposed on businesses that benefit directly or indirectly from tourism. If this model were to be applied to all beneficiaries, there would need to be an audit of the nature of these businesses, perhaps using the company information available through the Australian Securities and Investments Commission registers, to determine qualifying businesses. There would need to be ongoing audit of businesses to maintain accuracy. Potentially a large cost. A special rate variation applying to all rate payers There are 19,167 rate assessments in Bega Valley Shire. To raise the general level of funding target of $0.75m a uniform levee would impose an additional yearly cost of $39 per assessment. The option is presented for discussion in this paper in the context of the community-wide social benefits that arise from a healthy tourism economy. All rate payers benefit from a robust and growing regional economy through programs and infrastructure. Social benefits also accrue through improved employment and opportunities for young people in the area. 15

NEXT STEP Comment is sought on the matters raised in this paper or any alternatives that may have not been properly canvassed. Comment should be in writing forwarded to Anthony Osborne, Tourism Manager, Sapphire Coast Tourism, PO Box 89, Merimbula 2548 by 6 February 2015 or emailed to aosborne@sapphirecoast.com.au by the due date. The Board would be pleased to meet with interested parties during the comment period to discuss options and possible solutions. Following the public discussion period the Board will make a submission to Bega Valley Shire Council. Bruce Leaver Chair Sapphire Coast Tourism 16