Travel industry should look closer to home for growth

Australian Tourist Commission's local boss says selling his country smarter could bring in an extra $100m for NZ.

By Greg Ansley

SYDNEY - Michael Yates stifles his impatience when he debates the informal policy that in most New Zealand travel companies puts callow new consultants on the Australia desk and assigns the glitz of New York and Europe to the agents who really know how to sell.

Okay, he argues, he may be the Auckland-based regional director of the Australian Tourist Commission (ATC) - but selling Australia smarter could pump up to $100 million more a year into the Kiwi travel industry.

The argument is compelling: with more New Zealanders travelling across the Tasman than to anywhere else in the world, and airline commissions hewed to the marrow, adding value to what is at present a mainly bare-bones product would significantly boost agents' revenue.

And with an aggressive new sell-Australia campaign under way, designed to attract an additional 128,000 Kiwis over the next eight years, Mr Yates believes there is a natural symbiosis between the two industries.

Already, with economic woes and changing market structure pushing down business from Japan, New Zealand will this year become Australia's biggest single source of visitors, with 728,000 Kiwis forecast to fly the Ditch.

At an average forecast growth of 2 per cent a year, that number will swell to 856,000 by 2007.

And while New Zealanders remain inveterate travellers regardless of economic climate - our 3.8 million people made 1.1 million international trips last year - more than 60 per cent end up in Australia.

It is not the first choice. ATC surveys show that New Zealanders would rather travel to the United States, Europe, Britain or the Pacific Islands.

But exchange rates, proximity and time mean that while Australia places fifth on the wish-list, it outstrips the rest when in comes to cash on the agent's table.

The potential buying power of transtasman travellers is also rising with the increasing disposable income of the baby-boomers.

The ATC is now targeting the higher-yield market of households earning an average $40,000 a year, which by and large tend to take more frequent, shorter holidays.

There are undoubted uncertainties in the Australian forecasts.

The commission has blended the econometric analysis of the Australian Tourism Forecasting Council with its own best guesses to assemble its growth projections, which assume in large part a continuing and increasing level of repeat business.

As far as Australia goes, Mr Yates says, New Zealanders are mature and sophisticated travellers with a good knowledge of the country who would nonetheless be lured to more exotic destinations if there was a surge in the Kiwi dollar against US and European currencies.

Even with a dismal economy and a weak Kiwi, cheap packages saw the number of New Zealanders flying to Asia soar by 28 per cent in the last four months of 1998.

Competition toughened elsewhere, with new Qantas flights to Argentina and Chile, $1900 fares to Europe, a new non-stop Air Pacific service to Honolulu and $799 six-night packages to Fiji.

Australia's incentive to pull business from New Zealand has also become greater with the sharp fall in tourism from Japan, now about to be toppled from its perch as the nation's number one source of visitors.

Although New Zealand has been hurt by a 5 per cent fall in Japanese tourists, Australia's pain has been greater - a 7.7 decline last year, with only a fractional recovery expected this year.

Australia's problems have stemmed not only from Japan's economic malaise, but also in a rapid shift in market trends that will place increasing importance on the 50 year-plus market.

Australia is already moving its emphasis away from white collar 18 to 24-year-olds, whose main determinant in deciding holiday destinations is price, to the far less price-sensitive 25 year-plus market.

But the pressure remains on New Zealand, where Australia has already launched a new "So you thought you knew Australia" campaign to convince Kiwis there is life beyond Sydney and the Gold Coast, and to return time and again to hunt it out.

Present campaigns to push self-drive holidays through regional Australia will over the next five years be joined by new gourmet, cruising and rail holidays.

The Internet is also being used: the inclusion of the ATC's website on its TV ads has driven the average number of hits from less than 1000 a month to more than 2000.

But Mr Yates acknowledges it will be a hard road ahead: "It is a challenge, absolutely."

A large part of that challenge will be to convince New Zealand's travel agents to put experience back into Australia, increasing sales skills to push higher-yielding products beyond the bare-bones air fare and accommodation deals.

Mr Yates argues this is the New Zealand industry's bread and butter.

At both wholesale and retail level, he says, Australia often accounts for more than 50 per cent of a company's business - and adding value has become even more important since Qantas and Air New Zealand cut commissions on transtasman fares from 9 per cent to 5 per cent in January.

The sale of additional products would bring commissions of 20 per cent, shared between wholesalers and retailers.

Mr Yates says this could add an extra $100 million to agents' revenue. "It's a blue-sky figure," he said. "But that's the kind of additional commission you're looking at."

The ATC has already signed 340 retail agencies, with more than 1000 consultants, to its Aussie Specialist Programme, involving training seminars, trade events, consumer referrals and product mailings.

Now they have to sell Australia to the rest of us.