Tourism 21 - A Strategic Business Plan 1997-2000

2.1 Introduction

This section presents an integrated package of goals, strategies and actions for the three critical issues:

Issue 1 - A Market-Led Industry

Issue 2 - Sustainable Investment in Quality and Export Ready Products

Issue 3 - An Integrated Industry and Leadership Structure and Strategic Partnerships

2.2 Industry Overview

Strategically, there are basic characteristics of the Tasmanian tourism industry and its markets that have to be understood before addressing the critical issues and strategies. The characteristics include:

Small Market Share

• Tasmania has small market share in both the domestic Australian and international tourism markets and, compared with its competitors, does not occupy a strong position in these markets.

Tasmanian holidays represent only 3% of Australia's domestic tourism market and only 2% of Australia's overseas visitors. Small market share means that Tasmania has to be sharply focused in its use of limited financial resources and fight hard to maintain and increase market share against interstate and overseas competitors such as Queensland, Victoria, New Zealand and other near neighbours.

Tasmania's Core and Developmental Markets

• Domestic Australian markets represent the core source of visitors and export earning revenue [405,500 visitors and $488m - TVS 1995] for Tasmania compared to overseas markets [75,000 visitors and $90m - TVS 1995].

Approximately 85% of Tasmania's visitors and tourism revenue comes from the Australian domestic market. Even though the domestic market is only growing at 2% per annum, it is the State's core market which must be maintained and expanded.

International tourism represents 15% of the State's business and is a secondary yet critical developmental market, where Tasmania has potential to tap into visitor growth of more than 10% per annum.

Total Dependence on Air and Sea Travel to Tasmania

• As an island, Tasmania's tourism and its customers are totally dependent on air and sea travel.

Whereas 70% of all holiday trips in Australia are undertaken in the traveller's own car, Tasmania relies entirely on visitors purchasing air or sea travel. In effect, for the interstate market Tasmania is the same as an overseas destination, and has to not only sell a holiday but a travel package.

The development of the industry clearly depends on the strategies of the transport industry and how carriers develop their services to and from the State.

Seasonal Nature of the Industry

• Tasmanian tourism is seasonal with a pattern of visitation that shows a significant decline in numbers from the summer peak to the shoulder seasons of autumn and spring and the low trough in the winter off-season.

Figure 1 shows the seasonal nature of the industry.

Figure 1: Tasmanian Visitor Departures for 1995 [TVS 1995]

The trough extends over the four months from June to September. Visitor numbers in August, the lowest month, are 35% of the January peak; that is about 43,000 fewer visitors.

The 1996 Tasmanian Tourism Operators Survey [TTOS 1996] showed that a significant number of accommodation properties and attractions have respective occupancy rates and load factors of less than 50%. Many businesses also have limited capacity so that even if there were more visitors in the peak season they could not accommodate them.

While tourism is a seasonal industry, due to traditional holiday patterns, it is critical for visitor numbers to be increased in the shoulder periods and the winter trough.

Large Number of Small Operators

• Tasmania's tourism industry is made up of a few big operators and a large number of small businesses which contributes to a generally fragmented and poorly resourced approach to marketing, industry development and service delivery.

Tourism Tasmania has identified approximately 1,300 businesses in Tasmania whose principal activity or focus is to serve the needs of visitors. Approximately 90% of those surveyed [TTOS 1996] are small businesses employing less than five staff on a full time basis or no staff at all. Many are part-time operators and do not rely on tourism as their only source of income.

Securing marketing resources and coordinating marketing is accordingly a difficult challenge, as is securing consistently high standards of infrastructure and service provision by all operators.

Low Yield and Limited Capacity to Invest

• The low critical mass of interstate and overseas holiday travellers, and the seasonal downturn, severely limits the industry's capacity to generate the yields that will sustain business over a full twelve months or justify investing in refurbishing infrastructure, or expanding or developing new product.

The TTOS 1996 confirmed that many small tourism enterprises do not generate substantial returns for operators. Some are marginal operations, and many rely on local and intrastate business as well as interstate and overseas visitors to survive.

There have also been consistent concerns raised by interstate wholesalers and retail agents that infrastructure, in many cases, needs refurbishment and that investment is needed to expand capacity and to develop new experiential product.

While sustainable industry growth depends on private sector investment, this will not occur until the industry and financiers see evidence and are confident that tourism can generate real rates of return.