japan masks by sofarsogood

VIEWS: 211 PAGES: 14


                           Clarity From Complexity

                              Speech by
         Ken Boundy, Acting Managing Director, Tourism Australia

                            2004 ATEC Marketplace

                           Wednesday 8 December 2004


In my last address as the leader of Tourism Australia, let me say at the outset that I
feel inspired and privileged to have the opportunity over the last three and a half

I have learnt so much from passionate colleagues in the industry that I thought it was
worth spending a little time bringing some of this knowledge together in a final

I intend to be open and honest today, taking a helicopter view of global trends, the
challenges we face and the ways we can excel against that background.

The industry, while still forming, is changing rapidly and the challenge is to find some
clarity and direction amid the complexity.


At the World Travel Market in London in November, there was a forum on the future
of tourism conducted by the University of Surrey and the Greek NTO. I have selected
eight key conclusions from this forum that are relevant for our industry:

       1. The power in tourism is shifting back to consumers
       2. Technology is changing the structure of the industry providing threats and
       3. Dynamic packaging is emerging as part of mainstream tourism distribution
       4. There is an oversupply of undifferentiated travel products increasing
          competition and reducing prices
       5. Environmental concern is coming to the front line of tourism
       6. Suppliers and tour operators need to work together to enhance
       7. There is a major demographic shift towards an ageing and more active
       8. Human resources and education will struggle to keep up with the service
          levels needed.

These points lead neatly into a classical Porter analysis of the industry that was part
of a consultancy recently done by Brian Geraghty for the shareholders in the
Australian Tourism Data Warehouse (ATDW).

It highlights the power shift toward consumers - facilitated by technology, together
with the issues facing suppliers and operators.



                                 • Low entry barriers SME’s
                                 • High cost of customer acquisition
                                 • Large resources to be major operator
             SUPPLIERS                                                       CONSUMERS
        • Low market power          • Technology impact                   • Rich choice of product
        • Economic pressure         • More competitive                    • Increased customisation
        • Shift to direct           • Drive for loyalty & channel         • Internet makes it easier
        • Changes needed              control


                                 • Consumer choice high

                                 • Noisy environment for reaching

Globalisation of tourism has driven alliances and consolidation.

In distribution, independent operations are under pressure due to economies of scale,
increased visibility of major players, and strength in distribution.

There is pressure for them to focus on niches. In fact some would argue that with 0.7%
share of the global travel market, Australia is a niche player.

Competition for inbound tourism is intensifying with an estimated 175 National Tourist
Offices (NTOs) all competing for their share. Competition is not only coming from
increased NTO spends but from technology as well.

                                                     A. GLOBAL TRAVEL TRENDS

                                             Annual Growth: Australian Tourism and Global Tourism Growth
                                                                     1980 to 2004

                               30%                                     Australia

                                                                                                     Percentage increase in International Visitor
                                                                                                     Arrivals between 1980 and 2002
                                                                                                     435% Australia
                                                                                                     145% Global


                       Visitor 5%
                                      1981                      1986               1991                     1996                         2001       2004


                                                       Global                               Jump in destination management
                                                                                            capability due to technology


         Source: World Tourism Organisation

The above graph shows that from 1984 to 1996, Australia outperformed the world in
tourism growth. Since then a jump in destination spend and management capability,
due primarily to technology, has brought us back to the field.

This year Australia will exceed global tourism growth. It is estimated that calendar year
growth in inbound tourism will be around 11 per cent compared with global travel
growth of up to 8 per cent.

However, this performance is patchy and strong growth from China, New Zealand and
Japan masks underperformance in Europe and the USA.

Arrivals from the UK and Europe need to be seen in the context of the aviation and
economic landscape. The strong Euro against the US dollar is driving travel to the

Further, there is a phenomenal demand for low cost air travel with short trips up 24 per
cent compared with long haul up 1 per cent. This figure aligns with travel to Australia
from Germany and the UK this year, which is up 1 per cent on the previous year.

I hasten to add though, that the UK has been a very strong market through the tough
times of 2002 and 2003. However, we need to take a fresh approach to Europe. I know
Tourism Australia’s International team is working through this.

USA outbound has struggled to return to the record year of 2000. In fact even though
US outbound travel has increased by 6.6 per cent this calendar year, it is still 9 per cent
below the record set in 2000.

Our arrivals from the USA are up 4 per cent and we still struggle to get Americans from
aspiration to intention and travel. One of the other background issues in the USA is the
“new normality”, which is keeping Americans closer to home due to economic and
security/fear factors.

It is worth making a comment on China and the potential for a “boom and bust”
syndrome. The growing affluence in Asia together with liberalisation in aviation and
visas will fuel huge growth in travel.

Our challenge is to create demand from the right consumer groups and to ensure their
satisfaction with the Australian experience. Control of shonky practices in this market is
one of the biggest issues facing the industry today.

The other thing to keep an eye on is the emerging competition for inbound tourism in
Asia. The 2008 Beijing phenomenon will be huge and spawn a new global awareness
of China and its near neighbours.

Now to extend our thinking a bit more, let me share some of the predictions recently
made by Michael Nowlis, a consultant and Director for Tourism Control Intelligence:

           The cruise industry will experience explosive growth.

           An older, better educated population in Europe and America will
           increasingly seek ecotourism and cultural travel products.

           London, New York, Sydney and Dubai will be the leading tourism
           poles through the end of the decade.

           Shopping will increasingly become a critical feature for tourism

           Small luxury boutique accommodation will take share from the five
           star hotels.

           The distinction between business and leisure travel will erode as
           business clients seek fitness and entertainment activities.

           Hotel real estate will be increasingly concentrated in the portfolios of
           fewer investors.

           Airlines will continue to rack up big losses as they struggle to deal with
           high fuel costs, new security requirements, an onslaught of low cost
           carriers and brutal competition for “open skies” agreements.

           The introduction of new technologies in the upscale tourism industry
           will not replace the human element in service delivery. To the
           contrary, it will gain importance.

           The internet will become the dominant distribution channel for all
           travel and tourism products eliminating most intermediaries.

           Customer retention will replace customer acquisition as travel
           agencies’ strategic objective.

           Data warehousing and data mining will provide one to one and
           relationship marketing opportunities never imagined before.

Having absorbed these predictions and the competitive synopsis I shared earlier, it
highlights even more starkly the need for Australia to differentiate itself in all
elements of the travel experience. I will comment more about that later when we
focus on opportunities.

I know from my short time in this industry that there are issues that will be the subject
of perennial debate.

There are tensions and paradoxes that emerge around the issues and invariably
people need to make trade offs in their pursuit of business. (See below slide).



                      FEDERAL COOPERATION             STATE AUTONOMY
                      GOVERNMENT FUNDING              INDUSTRY CONTRIBUTION
                      MARKET TO STRENGTHS             FOCUS ON EMERGING MARKETS
                      EXCLUSIVE, PREFERRED            EQUAL, OPEN
                      AWARENESS / ASPIRATION          CONSIDERATION
                      MAINSTREAM PLAYERS              SME’s
                      YIELD                           VOLUME

We would all like to find the simple answers in this sea of complexity. And then again,
not everything is simple. We may always be in rough waters.

If we are to find simplicity it will only come from understanding. Complexity needs to
be brought into a clearing house by using principles. Principles guide our actions and
bring clarity.

Allow me to share four guiding principles which our new leadership team at Tourism
Australia has found helpful.

1. First Seek to Understand

The pursuit of the facts in our industry is too often thwarted by loose conclusions about
cause and effect. The classic is the correlation between marketing spend and arrivals.

I am not suggesting for a minute that good destination marketing doesn’t boost
awareness and conversion, but too often the bigger drivers (economic conditions and
aviation access and relative cost) are left out of the equation.

For example, it would be careless to claim the effectiveness of domestic marketing
programs when people were staying home in droves in the SARS period or when they
flocked overseas when the dollar strengthened. We need more analytical rigour and
access to good information and insights before drawing simplistic conclusions about
cause and effect.

The other element of understanding relates to groupthink – something I’ve seen
operating a lot in this industry. Groups have a powerful ability to induce conformity.

According to Amanda Sinclair, Professor of Management at the Melbourne Business
School, “weapons of mass destruction” is the latest example of how readily high level
concurrence seeking can not just create reality, but usher in a whole new world order.
Excessive concurrence seeking occurs when groups get comfortable. Yet many
researchers put a high value on bonding without seeing the pack mentality that is its

Sinclair also highlights gender differences - with men often driven to find their place in
the group and be accepted - any place is better than being an outsider. Fear of
exclusion and fear of intimidation from market power, drives dissent underground.
Women tend to be less needy about group acceptance but more driven by the need to
earn the approval of authority figures through hard work.

Maybe we need more women leaders, maybe we need more people standing up to say
“I don’t think this feels right”. In any case we need to seek first to understand and have
the courage to express our conclusions based on the facts.

2. Focus On What We Can Control

While we are impacted by factors like macro economies, terrorism, disease, currency
movement, technology developments, competitor activity, we need to limit the focus
on them to appropriate responses. We can influence, but only have partial control
over factors like airline capacity, standard of industry service delivery and conversion.

My simple point is to put our energies into things we can have direct control over like
marketing strategies, research and insights and our business models.

From a Tourism Australia perspective we have a clear picture of what we can
influence and who else plays a role. It’s interesting to look at the marketing spend in
international and domestic markets.


               Estimated shares of international & domestic tourism
                                marketing spending

                 Commonwealth Government
                 State Governments
                 Private Sector

            International            25%     Domestic           19%


While there is the ability to directly impact on Australia as a destination by spending
25 per cent of total international marketing of the country overseas, the role in
domestic needs to be different and add value to what others do.

It’s about understanding what we can control and influence. Having reached this
point we then need to forge agreements with partners about the role we play in
marketing. Richard Beere and his international team has done some good work in
getting clarity with STO’s and industry partners about where in the value chain each
party can best add value.

3. Listen To The Customer

The customer has powerful economic messages for us - from the way they book their
travel to the experiences that motivate them.

We mentioned the trend in the global tourism system for increasing customer power.
To be recognised as superior you need to be consistently 20-35 per cent better on
attributes that matter to your customers. To be recognised as inferior you only need
to be 5-10 per cent worse than competitors on attributes that matter to your

We are fortunate that, while the gap might have closed with competitors on marketing
spend and technology, no-one can match the unique experiences that customers
value that relate to Australians and Australia. We are only scratching the surface in
tapping into high yield consumers who want life altering experiences.

Take for example some recent comments from the visitors’ books at Longtitude 131.
There were many entries referring to an “experience” with adjectives such as
unforgettable, breathtaking, special, privileged, profoundly moving, unique and

Other comments included, “the heart and soul of Australia”, “a reverential and
revitalising oasis”, “we now dream of Australia”, “the perfect distinction” and the one I
love, “we will never get over the view or the free beer”. I reckon you’re doing
something right when you’re thanked for free beer after paying $1,500 a night! The
point here is that Voyages “get it” in providing life altering experiences for which
people will pay high prices.

Many of you will recall Ross Honeywill talking to the ATEC symposium in Adelaide
about neo consumers – those high spending, high margin, and high discretionary
individuals – of which there are 4 million in Australia and 53 million in USA. Ross’s
recent survey of Australian neo preferences revealed the top 10 preferred
destinations for more than 3 night stays. (See slide next page).


                                    AUSTRALIAN NEO CONSUMER
                                     PREFERENCES > 3 NIGHTS

                                    1.   MT HOTHAM
                                    2.   FALLS CREEK
                                    3.   FREYCINET
                                    4.   MARGARET RIVER
                                    5.   BAROSSA VALLEY
                                    6.   BROOME
                                    7.   CRADLE MOUNTAIN
                                    8.   WHITSUNDAYS
                                    9.   ULURU
                                    10. PORT DOUGLAS

These snippets are just examples of how we can be informed by consumers. Tourism
Australia and the STOs are gathering insights about global consumer choice that you must
demand to have access to.

Some would argue that brands are no longer in control. It is now consumers who create
and maintain the consumer culture and it’s the brand engineers who are trying to keep up.

4. Match Capability With Ambition

One of the typical problems is having our capability underdone.

Imagine the added complexity if we are in the over promising arena. ATC and Tourism
Australia have been guilty of this in the past as we have tried to be all things to all people.

There will be an even bigger challenge to focus on and say no to given the expectations
associated with the new body’s broader agenda and White Paper deliverables. I commend
this simple principle to you for use in your own business as a further way of getting clarity,
efficiency and simplicity.


                                   MATCH CAPABILITY AND AMBITION
                          Goals            Over

                                                       the promise ”




We’ve talked about complexity and change. Have you considered the paradox that to
achieve continuity we have to be willing to change? Change is in fact, the only way to
protect whatever exists, for without continuous readjustment the present can’t
continue…..and consider another paradox, that the very things we wish we could
hold onto were themselves originally produced by changes.

So, armed with a better understanding of the changing tourism world and some
principles to deal with the complexity, I want to focus on five areas that provide
opportunities against that background.

1. Industry Targets

At Tourism Australia we measure what we can influence. We are only one of a
number of players influencing the achievement of industry figures for arrivals and

As an industry we need to agree on what are sensible stretch goals for us to target. I
would also suggest that we need a single measure to focus on. And guided by the
yield focus of the White Paper, the best measure is export earnings. Starting from the
TFC growth projections, I believe that a stretch goal on the growth per cent forecast
for export earnings is a good starting point.

For example stretching the expenditure growth rate forecast by 15 per cent from 7.6
per cent (compound growth) to 8.7 per cent, would generate an extra $600 million in

For the domestic market we should boost the relatively flat visitor night arrivals
growth by 20 per cent from 1.1 per cent to 1.3 per cent, generating an extra $200

The more aggressive growth suggested for domestic is based on a belief that there is
big scope to lift domestic visitor nights with the right stimulus for Australians to take
holidays. Andrew McEvoy is putting together a brilliant multi-pronged strategy for
domestic growth, but that must be the subject of another forum.

It doesn’t matter if these are the right figures or not. My point today is that Tourism
Australia, the STOs and industry need to get together and agree on some stretch
targets. ATEC has a key role in helping to frame the international numbers.

2. Information and insights

We spoke of the need to understand to reduce complexity and drive better decisions.
According to de Bono, true simplicity comes from thorough understanding.

In my view, access to relevant and timely information to enable understanding is still
a big industry gap. We are however, making good progress to closing this gap under
Geoff Buckley’s leadership of Tourism Australia’s Research and Strategy area.


                        The Hierarchy of Information


At a high level our aim has been to understand who does what, where the overlaps
and gaps exist and to agree on a better alignment for the future. The second
challenge is accessibility.

In a general sense there is probably enough information generated to satisfy the
decision making needs of the public and private sector. In fact other countries are
envious of it.

The problem is that much of the work sits in publications, CDs, or in people’s heads.
For example, the NVS and IVS contain a wealth of information that can be
interrogated to generate insights. It’s worth just reminding ourselves at this point
about the hierarchy of information: data, information, knowledge, understanding and

Too much of our material remains as data! One of the challenges is to provide better
access and better interpretation. We need to work with the STOs, who, in some
cases still believe that “knowledge is power”, instead of the notion that “sharing
knowledge is power”.

Other initiatives will include the introduction of eight Tourism Australia outreach
officers working with the States located in the STO offices, together with the use of
the CRC tool Decipher as a gateway to information. If you are eager for information I
can commend CD MOTA, a Tourism Research Australia product that enables access
to a wealth of information that can be easily interrogated.

The only other comment I have about research is that at times we need to make a
call that enough information exists and that we can back the understanding derived
from it. I am concerned about a tendency to always run to new research for the
answers when the big picture is already apparent from existing information – be it
formal research or intelligence gained from the industry.

3. Exceeding Consumer Expectations

We are lucky in Australia with our natural assets but they tend to cover a few
shorfalls! For example, we have a long way to go in providing service that is natural,
customer focused, consistent and professional. New Zealand beats us hands down
and so does much of Asia Pacific.

We pride ourselves on our product base in Australia and can justifiably claim that
awareness is still a bigger issue than meeting expectations.

We do almost always exceed expectations of international visitors. My message
today is that we can’t afford to be complacent. Consumers are changing and so is the
competition. It won’t be good enough to rely on great weather, friendly people and
good accommodation.

With a little help from Tom Peters and Reg Bryson, I have tried to capture some of
the shifts in consumerism and flag this as an opportunity for our industry to continue
to differentiate ourselves from the rest of the world.

                          The Changing Consumer

                          PAST                           FUTURE

             Satisfies needs                 Helps define who you are
             Wealth and well being           Inner growth and development
             Holiday                         Experience
             Agrees with wallet              Agrees with psyche
             Spin and packaging              Honesty
             Selling                         Inspiring
             Success equals happiness        Happiness equals success
             Retirement                      Rejuvenation
             Women are a specialty market    Women are the market

Investors tell me that there is little money in creating new five star lodges and
boutique accommodation. Maybe so but there are many existing and potential new
products that could grow to become unforgettable experiences with some more
thought about reading today’s consumer.

Often simple initiatives like the right interpretive experiences can make all the
difference in meeting the needs of today’s consumer.

Big opportunities exist in environment and heritage. There are people and companies
in Australia that “get it” and they will prosper.

These people understand that their challenge is to win share of heart. They know
how to make connections and engage people to make their dreams become reality.

These are people like Grant Hunt, Craig Wickham, Jude Franks, Simon Currant,
Anna Guillan, Max Davidson, Ken Latona and others.

I acknowledge that most of the industry still feels that tourism is about putting a visitor
into a hotel room – and there is a place for that. But what’s hot and what
differentiates Australia sustainability is what these people and others like them have

Ground based leisure tourism can learn a lot from cruise experiences with the strong
emphasis on learning and achieving as well as luxuriating.

The other area of responsibility is with inbound operators and wholesalers who have
a tendency to include known product and experiences. The better operators are
constantly refreshing their offers and reading the signals from their clients.

On the theme of complacency, we can’t let our NTO off the hook. Despite the fact
that Tourism Australia was just voted best tourism board in the world, the competition
is fierce and doing things the way we have always done them is not acceptable.

As ATEC members you need to find voice to ensure TA continues to make the
environment more conducive for you to write better business.

4. Crafting and Exploiting Brand Australia

With 0.7 per cent of the world’s tourists and high satisfaction rates and high repeat
visitation, we have a big challenge to share our secrets with the world in a way that
differentiates us from the competition. We can be honest about our offers and have
the confidence that we can (for the moment) generally deliver on the promise.

The relaunch of Brand Australia is just the start of a journey that will enable us to
market Australia globally in a consistent way and in a way that inspires people to
want to do anything to experience Australia.

It’s the best thing that we can do to provide you with the potential to drive stronger
profits and lift total industry yield.

The brand story, values and proposition, “Life in a different light” will be the backbone
of Brand Australia for five to 10 years.

I have enormous confidence in our new Director of Marketing at Tourism Australia,
Ian Macfarlane. He is one of the smartest marketing strategists I have come across.

In his first three weeks with us, Ian has endorsed these fundamentals but will add
new direction to our creative approach globally, to the use of brand in other parts of
the marketing mix (particularly the web), to media and campaign management, to our
ability to simply articulate the essence of the brand and to the participation of
partners in using brand as a means to an end rather than an end in itself.

Without wanting to solve the perennial debate about whether Tourism Australia
should focus on awareness or conversion, Ian makes the point that there are dual
objectives to grow the demand reservoir and to convert. The following graph helps us
understand the challenge.


                             The Global Marketing Challenge


         Potential/    50%                        Brand/                                   Conversion
         actual                                 proposition






Ian talks about “crafting” the brand and as this process gathers momentum, we can
expect the power of the brand to get stronger and stronger in working for us. We
must suspend any disbelief and jump on board as the key elements won’t change.

What will change is that we will have greater clarity in the role that each of us can
play in exploiting the brand as the vehicle to help us differentiate Australia to the right

I am confident that the brand will strongly underpin some of the new marketing that
we need to embrace to stay ahead of the pack. I refer to interactive television,
branded entertainment, and personalised messaging and viral marketing as

5. Leadership

The people in this room today will help determine the future of our inbound industry.
We have a changing world to respond to and also the chance to be proactive in the
way we lead our businesses and industries.

The thinking and talent in tourism is mixed. The industry is forming. Margins and
therefore salaries tend to be low and it’s a constant challenge to attract fresh talent to
the industry. What we can do as leaders is to constantly strive for the best solutions.

Peter Drucker shared his philosophy of leadership with the world in June this year
after a 65 year consulting career. It has great relevance for personal, business and
industry leadership.

Drucker worked with leaders across the globe, from the extroverted to the reclusive,
from the easy going to the controlling, from the generous to the parsimonious. What
made the effective ones stand out is that they all followed eight practices:

            a.   They asked “What needs to be done?”
            b.   They asked “What is right for the business?”
            c.   They developed action plans
            d.   They took responsibility for decisions
            e.   They took responsibility for communicating
            f.   They focused on opportunities not problems
            g.   They ran productive meetings
            h.   They thought and said “we” not “I”

The first two practices gave them knowledge they needed. The next four helped them
convert the knowledge into action. The last two ensured that the whole organisation
felt responsible and accountable. Simple but powerful!

I wish you well in your leadership challenge. This is a good industry with the potential
to be great. Effective leadership will be one of the determinants of whether that
potential is reached.

Thanks for your support and friendship over this journey. Keep the passion alive and
show leadership in all you do.


To top