Inbound tourism is big business! According to Tourism Research Australia’s forecast, inbound tourism will continue to grow, with international visitor arrivals to Australia forecast to hit 8.8 million in 2016-17 and grow to 12.3 million in 2024-25.
With this expected growth in international visitation to Australian, including international or inbound visitors in your business mix makes good sense. International visitors are good for the visitor economy because they stay longer, spend more and travel more widely than Aussies. The export tourism sector is valued at $37 billion per year (Source: Australian Tourism Export Council)
For operators looking to enter the market, it can be daunting.
It’s a big wide world out there, with over 8 million international visitors coming, how do you know which are the right ones for you and how do you go about attracting them into your business?
Nail your domestic product offering
Before you consider attracting international visitors, you must be working successfully in the domestic market first! International visitors and international distribution partners (I’ll tell you more about those in a minute) need to know that you offer a great experience and deliver amazing service.
Offer a great experience that is supported by sound business practices
How do you make sure you’ve nailed it domestically? Do you:
• Have consistent business hours?
• Provide a unique, local experience and clearly understand what differentiates you from your competitors?
• Work with your local VIC, other booking agents and your local tourism organisation?
• Have a website, a good one that is modern, up to date and mobile?
• Make it easier for visitors to book your product with a booking system, preferably an online one, that provides a quick confirmation
• Operate strategically with an existing business and marketing plan (and budget) in place
• Have a listing on the Australian Tourism Data Warehouse http://atdw.com.au/
Start by reviewing your performance in the domestic market and identify areas where you can improve:
• Look at your product and experience through your customers eyes – are you WOWing them at every single touch point?
• Look at your TripAdvisor reviews – what do they tell you?
• Do you have process in place to ensure consistency in customer service?
Do your research
Look at who is currently coming to Australia, your state, region and local area. What countries are the from, how are they travelling, how long are they staying, what activities are they doing and what activities do they want to do?
The good thing is there is heaps of research available to help you find out:
- Tourism Research Australia – produce the International Visitors Survey and Tourism Forecast
- Tourism Australia – have all sorts of statistics and well a market profiles and consumer demand report to give you an insight into international travellers from key international markets
- Your state tourism organisation will have state specific information on international visitors
- Talk to your local & regional tourism organisation and find out what types of international visitors are coming to your region. Other local businesses that are already working with international visitors can also give you some useful insights.
It is important to understand who is currently visiting your destination and to align your activities with your tourism organisations – they have done the research and strategically target markets where they know there is a growing demand for an Australian holiday!
You might think it’s a great idea to target Argentinian bird watchers, but if there aren’t many visitors from Argentina already coming to Australia (which there aren’t) and Tourism Australia isn’t actively working to attract more (they aren’t) – they might not be your best bet!
Understand the Distribution System
While there are a number of international visitors who research, plan and book all of their travel independently online, for most coming to Australia is complicated so they will book through a travel agent.
You be successful in attracting inbound travellers, you need to understand this system and how to work with it. In simple terms there are 4 key players:
International Retail Agents
The shop fronts located overseas, just like Flight Centre or Helloworld here, consumers can walk into them, talk about their travel plans, get some glossy brochures and the agent can make all the bookings for them.
Also based overseas, international wholesalers select the products that the retail agents sell. They put together the packages and brochures that are distributed through their retail partners.
Inbound Tour Operators (ITO’s)
They are based here in Australia and work select international wholesalers overseas. They are the one that will make all of the bookings for a customer’s itinerary direct with the Australian based products. They may work in one particular market – like Chinese group travel, Indian honeymooners or American Luxury Travellers or they could work in a range of market.
Online Travel Agents (OTA)
These are partners you may already be working with and have probably used when booking your own travel. Booking.com, Hotels.com, Wotif.com, Viator.com and Expedia.com are all online travel agents. It is likely that in essence, you local visitor centre is an OTA too.
Essentially the customer makes the booking online through the OTA and it comes through directly to your business.
Before you state working in inbound you will need to understand each of the players and how to work with them.
Be prepared to pay commissions
Of course if you are working with these partners, they will expect to be paid – you don’t work for free and neither will they.
The beauty of working with distribution partners is that you only pay them when they deliver you business. You will pay a commission when they book ‘bums on beds (or buses)’!
That’s were commission comes in, how much commission I hear you ask? As a guide you can expect to pay they following levels of commission when dealing direct with each trade partner:
• International Retail Agent – 10%
• International Wholesaler – 20%
• Inbound Tour Operator – 25 – 30%
• Online Travel Agent – 10 -15%
When I talk to people about commission, they usually baulk at the thought of paying 30% commission – it sounds like a lot.
You need to look at this as a marketing cost and consider it as part of your overall business mix – what do I mean by that?
For most tourism business (and actually for the Australian Tourism Industry as a whole), the domestic market will be their bread and butter, making up 80 -90% of their business. The majority of this business will either come direct where you pay no commission, some may come through an online travel agent or the local VIC where you might pay a commission of say 10 – 15%.
It may only be 10% of your business that comes through an ITO where you pay 30% commission. You won’t be paying this on every booking that you receive.
Working with distribution system will make your product bookable by more potential visitors around the world, and you only pay for that when a booking actually comes your way!
Breaking into the international market can time, it can take 12 -18 months from when you start working with international distribution partners to when you see results.
• Do your research
• Make a plan!
• Make sure you have adequate resources to work in the international market – staff, time and dollars!
• Be persistent – if you’ve done the research, got the right products and understand how to work with the trade, the results will come, but be prepared for it to take time.
That’s a pretty simplistic overview to inbound tourism.