AUSTRALIAN INBOUND FOR JANUARY:

Australia drew 3.6 per cent more overseas visitors in January 2000 than in the previous year. ABS data shows Australia welcoming 363,800 visitors in January. Individual markets recorded strong growth in January 2000 with visitor arrivals from Germany up by 22 per cent, the United Kingdom up by 15 per cent, the US up by 10 per cent and NZ up by 4 per cent. Asia is off to a good start, with Korea (+56%), China (+46%) and Malaysia (+11%) being the top performers.  Japan was expected to be down some 17%. A bad start to a bad year. The good news is that Golden Week looks good this year, thanks to public holidays falling on either end of the week and thus facilitating longer overseas trips.

The Tourism Forecasting Council is forecasting an overall 9.5% increase for 2000, including a widely optimistic 7.6% rise for Japan, 13.4% for Asia and 10.8% for North America. 

JAPAN 

The landscape of power and influence in the inbound Japanese tourism industry in Australia is shifting. Big Brother Qantas has marginalised itself as it seeks richer rewards elsewhere; even its code-sharing arrangements with JAL are causing problems. Upstart ANA has long gone, unlikely to return. Though JAL has put marketing dollars into the Australian market thus year, its long-term commitment will be tested if yields on other routes become too attractive to ignore. Back home, the politically sensitive ATC, QF's estranged half-brother in the north Asian tourism family, battles growing criticism of its campaigns and effectiveness. And Tourism Queensland is spending so much more in the market that its threatens to leave its competitors in its wake.

Among all this turbulence, one group's power and influence has remained constant. The Gold Coast mafia. Yet even this coiffured, soft Italian-leather brigade, with stake-outs dotting the Gold Coast Highway, are under challenge from an unlikely source.

Stung by NSW's problems in the Japanese market, Sydney's own Japanese-market brotherhood, with Ron Murray prominent, are beginning to flex its own muscle.  A select and vaguely clandestine meeting (for some leaders in the Sydney industry at least) was held in the offices of TCA recently. In attendance were Japanese wholesalers, ‘seriously concerned’ suppliers and other notables. (The point was made that while the Japanese inbound market accounts for 16.5% of all visitors to Australia, the Japanese market is far greater importance if the holiday traffic alone is examined. Then the Japanese account for 25% of all holiday- makers. For mass tourism transport suppliers the Japanese market is a cornerstone of their business.) 

At the TCA meeting, an executive from the ATC was invited to present on ATC's strategy for the Japanese market and, when finished, asked to leave the room. What followed was a 'full and frank' discussion on the merits of the marketing efforts in Japan of some of Australia's key tourism promotion bodies. The next day Phil Young received a call from the most senior management in ATC who suggested that the meeting may have proceeded in a slightly different manner.

Sydney is certainly where the action is at the moment. In the past, the only industry group was the Japanese wholesaler roundtable, the Nisuikai. Then the ATC got together with the Yonshakai, the top four Japanese wholesalers in Sydney. 

Now there's the formation this month of the Japanese Tourism Association of Sydney (JTAS). Its main objective is "the sound development of the Japanese tourism industry in Sydney". There are seven sub-committees: operator, guide/coach, accommodation, duty free/retail, restaurant, attraction and airline. These will meet monthly. The Chairman is Sato-san (QF), and vice-chairmen are Matsumura-san (Tourland) and Nukaga-san (JTB). The main committee is exclusively Japanese, although membership is open to all (though Japanese proficiency would help in meetings).The charter of the main committee (the board?)  will be approved this coming Thursday (April 20th). $50 to join and $300 annually. Interestingly, one of the unofficial aims is to provide a forum for non-ITOA members. 

Reassuring News for ATC 

"We regarded young single females as the key consumer group leading the recovery in personal spending", according to economist Toshikimi Kaneki. As reported in The Australian newspaper, official Japanese surveys show that young women belong to the only group in Japan - where consumer spending accounts for relatively high 60% of economic growth - to have increased their spending in the past three years. As proof, Tiffany reported a 13% increase in sales in the three months to January this year, while Bulgari report a 22% lift in sales "thanks mostly to young women". A reported 80% of unmarried women aged 20 to 34 still live with their parents, and thereby avoiding the everyday living costs of the rest of the population. And once Japanese women reach thirty, only one in two will ever marry.

Internet in Japan 

H.I.S. Co. Ltd., Japan's top discount air ticket retailer (aka JTB's bete noire), and Sony Communication Network Corp. (SCN), operator of So-net, the nation's fourth largest ISP, have established an online joint venture, Skygate Co. Ltd.,  to sell travel-related products and services. Skygate will go online in August as a comprehensive portal site for travel-related products and services.  To attract users, H.I.S. will utilize its worldwide network of branch offices in 34 cities to offer up-to-the-minute "spot information" about popular travel destinations. Skygate users will be able to book/purchase vacation packages, airplane
tickets, rail and bus passes, travel insurance, hotel accommodations, rental cars, and more on a real-time, around-the-clock basis.  Buyers will be able to pay online, either by credit card or via So-net's "Smash" payment system, or in cash through major convenience stores. Use of cybercash and bank debit cards is also being studied. 

Buyers can choose to have tickets or coupons delivered to their homes, or pick them up at their  neighborhood convenience store. Eventually, the partners hope to implement "digital ticket" and "ticketless smart card" systems.  While H.I.S. currently has a Web site, its primary purpose is to support the activities of the company's physical offices. Skygate's online services will be almost completely automated with an eye to increasing transaction processing efficiency and reducing costs. 

They said, however, that the Skygate Web site will handle product and service offerings from other travel agents in addition to those of H.I.S. SCN sees the tie-up as a means of expanding its "entertainment-oriented" service offerings.  H.I.S. is looking to the link with So-net, which has some 1.2 million subscribers, about 40 percent of them female, to expand its online business opportunities.  The partners said they expect Skygate to achieve online sales of 2 billion yen (US$18.9 million) in its first year of operation.

THE OLYMPICS EFFECT:

A front-page story in The Australian on March 15, under the heading 'Games has tourists saying sayonara',  suggested that the Olympics may not be the bonanza expected in the Japanese market. I was quoted as saying that 'the Olympics is bad for business for Australia in the Japanese market'.  Which I believe. 

Let's think about. Sydney gets about 35,000 Japanese tourists each year in September. Japanese wholesalers will stop selling about September 5 or 6: hotels and airfares will be too expensive. Using crude arithmetic, three-quarters of September will see Japanese vacationers in Sydney slow to a trickle. (We can expect other states to benefit to some degree.) JTB Foundation in Tokyo has informed me that the industry in Japan expects only 20,000 Japanese to travel to the Olympics (15,000 via package tours and 3-4,000 FITs), but most of these will be for the soccer, the preliminary rounds of which will be held around Australia, and baseball, which of course is held in Sydney. (Mark down this date in your diaries: Saturday, May 27, when the soccer draw is announced.) In short, September looks bleak for Japanese business in Sydney.

And the news does not get better after everyone packs their toy koalas and leaves. Sydney hotels report strong bookings for conventions in October and November, and have upset Japanese wholesalers (again) with the news that fewer rooms than normal will be available. 

The question remains: Will Japanese want to travel to Sydney after watching the Games on TV? Well, according to travel industry executives I met in Japan last December, the answer is no. What benefits Sydney/Australia gains will be prior to the Olympics, not after.

The effects of the Olympics will surprise - and disappoint - many people. Local suburban businesses may be the worst affected.  Regular public opinion surveys since 1995 have shown that a growing number of Sydneysiders plan to leave town during the Games. At last count, some 40% of residents plan to pack their bags and head off for quieter places.

According to a major study by the Tourism Forecasting Council (TFC) released in 1997, the Sydney Olympics will generate an extra 1.62 million international visitors in the period, 1997-2004. This includes 342,000 additional international tourists in 2000.  Director of the Griffith University-based Co-operative Research Centre for Sustainable Tourism, Bill Faulkner, has warned  against overly optimistic expectations however. According to Dr Faulkner, Barcelona in 1992 recorded 100,000 extra visitors, while 400,000 people visited Los Angeles in 1984, well short of the expected 625,000. At the 1988 Seoul Olympics, when the normal levels of visitors were factored in, only an extra 47,000 were in the city for the
Games. Dr Faulkner also warned that destinations outside of Sydney, such as Cairns, the Gold Coast and other state capitals, might see little business during the 17 days in September.

CHINESE INBOUND 

In August 1999, ITOA developed a Code of Ethics for inbound tour operators handling ADS business from China. Approved ITOs were engaged in the development of the Code and collectively signed the Deed of Agreement acknowledging their support of ethical business practices. A monitoring group has been convened to manage the adherence to the agreed Code. The next meeting of the China Monitoring Group and the ADS Approved Operators will take place in Hobart on 3rd May at Symposium.

HAWAII INBOUND 

Japanese travel to Hawaii declined 7.7% in 1999. The one bright spot was the strong rise in the number of honeymooners (up 19% to 357,620); vacation traffic was down 12% to 1,347,050. An analysis of travel type has lessons for Australia. Group travel was down -11% to 1.052M; and FIT down
37% to 232,680. 

INTERNET AND KOREAN TOURISM

Korean Air and Star Cruise of Singapore have jointly launched the sale of three honeymoon package tours in Southeast Asia via the Internet (www.koreanair.co.kr). The five-day tour costing 990,000 won (US$889) per person will start from Seoul. Tourists will fly to Hong Kong from Seoul and set sail on a boat to Danang, Vietnam via Hainan Island, China, and fly back home to Seoul from Hong Kong.

INDONESIAN INBOUND 

The Australian Tourism Council (ATC) has predicted that the number of visitors from
Indonesia to Australia will rise 42.8% to 120,000 this year as a result of improved bilateral relations, according to Anatra news service. Deputy Managing Director of ATC Bill Calderwood said tourists from Indonesia had always contributed substantially to the country's visitors arrivals numbers. Relations between Jakarta and Canberra suffered a setback following the conflict in East Timor. Calderwood said Indonesia was the 10th largest source of foreign visitors to Australia in 1999. Among southeast Asian nations, Singapore topped the list with 26,966 visitors, followed by Malaysia with 139,793 and Indonesia with 90,992 visitors.

AIR TRAFFIC TO AUSTRALIA

More Americans and fewer Japanese are flying to Australia, according to figures released by the Commonwealth Department of Transport. The  Los Angeles-Sydney route was the busiest Australian international air traffic route for the year ending July 1999. (No, I don't why figures for this period are being released nine months later.) Of the major routes, Tokyo-Sydney recorded the only decrease in traffic in that period - a 13.8 per cent drop. Los Angeles-Sydney surpassed Auckland as the leading departure point and destination for people flying to and from Australia. The Singapore-Melbourne and Bangkok-Sydney routes recorded the most significant increases. The five busiest routes in July 1999 were Los
Angeles-Sydney, Auckland-Sydney, Singapore-Sydney, Hong Kong-Sydney and Auckland-Melbourne. 

ATTRACTIONS NEWS:

FOX STUDIOS is struggling. The $400 million development in Sydney is to be given a $40 million rescue package as joint developers News Corp and Lend Lease hose down speculation that all is not well at Moore Park. A Lend Lease official last week that the rescue package may grow because of the need to put in a 'mega' attraction. Hailed as the new jewel in Sydney's tourism crown,  the Studios had a less than auspicious entry into the Japanese market when JTB World executives were outraged at the lack of due
courtesy they and their guests received when attending the gala opening night last year. It is now part of Japanese industry folklore that Matsumoto-san of JTB World returned to Tokyo and immediately removed the attraction from future Look JTB programs. With the coming opening of Universal Studios in Osaka, the  task of attracting Japanese to the complex will be that much tougher. Tenants, who have been disappointed by lower than expected retail sales, are "blaming  Fox's marketing and communication
strategies", according to a report in the Fin Review. As of two weeks ago, the position as head of marketing at the Studios was vacant. 

SEA WORLD Property Trust is planning to invest upwards of $150 million in a new theme park on the jaded Gold Coast. "We are constantly looking at the possibility of another theme park and we know what we have got to build", said Chairman Terry Jackman at the AGM held last week. According to a report in the Daily Telegraph, the trust would have to spend $100-$150 million to build a new theme park.

QF NEWS

Qantas Airways report international, domestic and regional passenger numbers rising 4 per cent in January from a year ago to 1.7 million. Revenue passenger kilometres -- the number of paying passengers multiplied by kilometres flown -- rose 3 per cent to 5.6 million kilometres. Available seat kilometres -- a measure used by analysts to gauge passenger yield numbers -- rose 3.3 per cent to 7.3 million kilometres from a year earlier. The revenue seat factor fell by 0.2 percentage points to 76.3 per cent. 

ACCOR AND THE INTERNET

French hotel group Accor on Tuesday posted an 18.2 percent leap in 1999 net profit, promised lasting profit growth and aggressive use of the Internet. "Accor from now on is on track for lasting profit growth," Chairman Jean-Marc Espalioux told a news conference.  To this ongoing favourable trend we are now adding the Internet effect that will rapidly give added dynamism to Accor's sales, (international) renown and profits." The company expected 25 percent of its reservations in the next five years to come directly from the Internet. 

By the end of April the company will open two Internet portals, Accor.com and Accorhotel.com, that will allow clients to make reservations directly in any of five languages in any of the 3,314 hotels (365,000 rooms) it controls.  With investment totalling some 60 million euros between 2000 and 2002, online reservation facilities represent a "veritable revolution" in the budget hotel sector which was previously closed to reservations due to weak margins, Espalioux said.  Accor also announced an "aggressive
strategy" to establish its presence at all levels of e-distribution, planning to invest $500 million in the next 12 months in Web-based tourism and service startups via a new investment arm to be called Accor E-Company.  However Espalioux declined to comment on the impact of the Internet on Accor's costs, sales or rate of hotel occupation. 

Accor has 477 hotels under development, half of which are located in Europe, and has 125,000 associates that are active in 140 countries around the globe.

A WORD OF WARNING?
Beware Destination Promotion Organisations with Big Budgets!

The American Travel Weekly magazine (2-17-00)  describes a lawsuit that the Sierra Club  (an environmental non governmental organisation) has filed against the Hawaii Tourism Authority (HTA). The Sierra Club intends to block the "$119 million in marketing money until it [the HTA] conducts an environmental assessment on the impacts of tourism." I can think of one Australian state that perhaps should consider the implications of this 'development'.

LAST BUT NOT YEAST:

Known as the "Pudding Prince of Frequent-Flyer Miles", David Phillips of Davis, California earned himself 1.25 million miles by buying every chocolate-fudge pudding cup in the Sacramento area. For a short time Healthy Choice food products were offering 1,000 miles when 10 of their brand items were purchased before June 1999. When Phillips found Healthy Choice puddings for 24 cents each he realized $62.50US would get him 25,000 miles. In the end, he spent about $3,000 on 12,150 puddings and, by donating most of the puddings to food banks, got a $800 tax break as well. The Phillips will never have to buy another plane ticket or pay for another hotel in their lives. It is also not likely that they will never eat chocolate-fudge pudding again either.