Price is right for destination WA - SPECIAL REPORT

The state’s tourism sector is reaping the rewards of a weaker dollar but more needs to be done to secure the full benefits of holiday spending and lower post-boom prices.

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Thousands are being lured to our sandy shores, but Western Australia risks missing the boat on the economic and jobs dividend of a reviving tourism sector.

The mining construction peak “knocked” WA out of the leisure tourism market, according to Tourism Council Western Australia chief executive Evan Hall.

The legacy of this period of unprecedented economic growth has been Perth’s reputation as Australia’s most expensive city.

At the heady height, headlines compared Perth prices with London or New York and, while locals railed against the spiralling cost of living, the bad press shut the gate on intrastate tourism.

The collapse of the iron ore price, the slowdown in mining construction activity and a softer oil price triggered widespread job losses and, without the carrot of employment opportunities, the budget end of the tourist sector was hit hard.

Backpacker hostels that were once dormitories for fly-in, fly-out workers from around the globe are battling to get cost-conscious travellers to make the long trip west.

“Tourism is very competitive and we are fighting this reputation problem,” Mr Hall said.

“We have got to get out into the market with compelling promotions and tactical marketing … that packages product at the new price point.”

He said the state government needed to ensure its destination promotions were supported by package deals that bundled cheap flights with the new competitive hotel rooms.

Convincing travellers there was more to Perth than Australia’s most expensive cup of coffee was essential, Mr Hall said, if the state was serious about capitalising on the tourism sector’s strong fundamentals – competitive hotel room rates, strong air links and a city undergoing a once-in-a-generation transformation.

He said the softer Australian dollar had slashed the cost of visiting Australia but more needed to be done to rebuild a post-boom identity for Perth.

“This impression exists that Perth is still a mining town,” Mr Hall said.

“Now is absolutely the time, we have the hotel rooms, we have the air carriers and WA needs these jobs because where else is the (jobs) growth going to come from?”

Mr Hall said the most challenging market was the intrastate segment, which he said fell into a hole in 2008.

This is a market where destination WA faces some of its toughest competition, particularly given the investment on the table from the east coast state governments.

Queensland will splash an additional $40 million over four years to boost its visitor numbers and the NSW government has committed $123 million over the next four years to bolster the state’s major events calendar.

Victoria’s newly elected state government recently announced a review of its major events calendar to ensure it had the right mix for the future.

Weaker commodity prices that weigh on the mining sector have delivered much-needed price relief for Perth’s room rates.

Corporate travellers are no longer booking out entire floors and room rates are down by as much as 15 per cent on weekends.

This downward pressure on room rates is expected to continue as new projects like the 362-room Westin Perth hotel bolster capacity by more than 2,000 rooms in the next few years.

The arrival of low-cost carriers like Singapore’s Scoot has put Perth within reach of new budget-conscious travellers out of Asia.

At the same time, new direct services from international carriers such as China Southern Airlines and the Gulf airlines demonstrate the demand for routes into Australia.

Tourism Western Australia’s research underlines the pulling power of these carriers. Visitors from Singapore jumped by an impressive 29.8 per cent in the 12 months to September 2014, Chinese arrivals increased by 13 per cent in the same period and Malaysian travellers were up by 12.2 per cent.

The remaking of Perth through bold new developments, including Elizabeth Quay, the Perth City Link and Perth Stadium will deliver fresh destinations for visitors, who will in turn support new businesses clustered around these projects.

The challenge, according to the broader tourism industry is to transform these critical elements – competitive hotel room rates, established air links and a re-imagined city – into a booming tourism trade and new jobs.

And that’s only going to happen, according to the Tourism Council, if the state government invests more in marketing WA to the rest of Australia and the world.

Two Feet forward

One tourism operation already leveraging the changing landscape of the city is innovative walking tour operator Two Feet & a Heartbeat.

It’s a contemporary and adaptive business that caters to both tourists and locals, especially in Perth, with its growing small bar scene.

The tours are a contemporary makeover of the dry, factual city tours of old.

These are journeys into the sights, sounds and sensory pleasures of a city embroidered with catchy tales of its history, culture and development.

The business adapted its product range to offset the plunge in visitor numbers at the peak of the mining construction boom.

To safeguard Two Feet from the peaks and troughs of the tourism market, founders Ryan Zaknich and Business News 40under40 winner Ryan Mossny developed tours they could sell to locals, newcomers or “imported locals”, as Canadian-born Mr Mossny describes himself.

“The city is undergoing a lot of change and for people who live in the suburbs it’s a great opportunity for them to look around,” Mr Mossny said.

“Our most popular product is our small bar tour, it’s the way we show people the city has some history and heritage.”

Two Feet is enjoying a surge in bookings for its tours as the Australian dollar drives down the price of holidaying in Australia.

Mr Mossny said bookings from Two Feet’s traditional leisure markets, New Zealand, US, Canada, UK and Germany, were up by as much as 30 per cent.

And the launch of airline Scoot had triggered a “massive increase” in bookings out of Singapore and brought a new breed of budget-conscious, experience-hungry South-East Asian tourists to WA.

By 2020, visitors to WA are expected to put $12 billion through the tills of businesses across this diverse sector.

To support this target the Barnett government committed an additional $24 million at the last election to support marketing activities.

About $13 million of this funding has already been delivered over the past two budgets, and in the latest budget the government delivered on the outstanding $11 million across the next two years.

However, it also slashed funding for the Perth Convention Bureau’s Business Events Marketing and Promotional Services Agreement with Tourism Western Australia by 28 per cent.

The PCB plays an important role in attracting major conference events to the state and it claims to be responsible for more than $100 million in delegate expenditure last financial year.

On the bus

ADAMS Coachlines business is booming but managing director Adam Barnard warned the state could not afford to reduce support for the events sector.

Mr Barnard said events could be a “future powerhouse” for the WA economy and were vital to support developments such as the new stadium and the thousands of hotel rooms under construction.

Mr Barnard has recently returned from the north-west of WA, where he re-opened the group’s Broome depot. The Broome depot was shut down in 2010 when the price of hotel rooms in Perth skyrocketed, shutting leisure travellers out of the city and the state.

It’s a very different story today, and ADAMS is bracing for a period of “rapid growth”.

Bookings are back to the highs of 2007 before Perth hotel rooms filled up with suits keen to carve off their slice of the mining pie.

The holiday makers are back in town and they could prove to be one of the biggest drivers of the WA economy, according to Mr Barnard, but only if the state government does its bit to sell the state.

“We run almost exactly opposite to the rest of the economy because we rely so heavily on inbound tourism,” Mr Barnard said.

“If we market ourselves correctly we could see tourism grow at an exponential rate.”

BREAKING: ADAMS Coachlines chief Adam Barnard says it is vital the state supports the events sector.

Mr Barnard urged the Barnett government to take a broader view of the sector and address diverse issues like the hurdles to developing tourist attractions, and penalty rates.

“We have tied ourselves to mining for so long,” Mr Barnard said.

“There are potentially hundreds of millions through out Asia who want to come to Australia.

“Even if they are average wage earners, if we grab that we will create thousands and thousands of jobs.”

The state opposition has seized on tourism’s employment potential and tourism spokesperson Paul Papalia said Labor identified tourism as a “key economic portfolio”.

Mr Papalia said the Treasury-centric view of tourism as a cost centre rather than a revenue generator needed to change.

“We have to be more robust in our ability to measure and educate people about that return (on investment),” Mr Papalia said.

“In light of the collapse in revenue from royalties and the drop in the iron ore price and also the massive growth in state debt … it’s essential the tourism sector is supported and grown to diversify the economy and provide jobs that are desperately needed.”

He said one of the key challenges was defining a point of difference between Perth and the east coast capital cities, which enjoyed a stronger public profile.

“Ask me what defines us as being different from the east coast and I keep coming back to our indigenous culture,” Mr Papalia said.

“We need high-quality product and there is the potential to develop far more.

“If we elevate the value of Aboriginal culture in the eyes of the broader community it becomes a tourism asset that will have benefits far beyond the sector.”

The Barnett government has identified tourism as a “major force” in securing the economic future of WA, especially given the challenges facing the resources sector.

Tourism Minister Kim Hames said the industry generated more than 91,000 jobs in the state and that the government was working hard to grow the sector and capitalise on national, international and intrastate markets.

Tourism Western Australia, the state-funded marketing body for the sector, is also grappling with the challenges and opportunities in post-boom WA.

The collapse of the iron ore price along with a weak oil price has forced WA resources companies to tighten their belts and reel in costs like business travel.

Tourism Western Australia chief executive Stephanie Buckland said cost cutting and associate job losses had both negative and positive impacts for tourism.

“For the first time in a long time hoteliers are chasing both business and leisure tourism,” she said.

“And the state government is also taking notice of tourism as it looks to diversify WA’s economic future and shore up jobs ahead of the next election in 2017.

“On the flip side, aviation services to some of WA’s more remote areas such as Broome and also Exmouth – the jumping-off point for Ningaloo Reef – are at risk because there are fewer oil and gas passengers underpinning the services.

“And of course the state budget is highly reliant on royalties income, so the sharp decrease in commodity prices means there is a lot less in the state coffers.”

The influence of the Tourism WA appears to be one of the stand-out winners of the mining downturn.

Its message of job creation across a huge number of industries and the sector’s potential to spawn new enterprises has got the state government listening.

Ms Buckland is grasping this opportunity to shape “longer-term government investment in tourism”.

One of the key tranches of Tourism Western Australia’s publicity push over the next five years is promoting Perth as a destination in its own right, rather than simply a gateway to the state.

The popularity of the ‘Incredible and Phenomenal Journey of the Giants to the Streets of Perth’ demonstrated the power of culture to bring a community together, generate a return and promote Perth around the globe.

The public-private investment behind this $5.4 million event was more than justified by the estimated $10 million spend in the city alone over The Giants weekend.

Events are an increasingly powerful tool in destination marketing but the challenge with this part of the market is keeping the events diary fresh, which Tourism Western Australia acknowledged required vigilance.

It’s hoped the construction of the new stadium will attract new performers and shows to Perth in the same way the completion of Perth Arena has brought a host of new entertainers to the city.

Big-ticket events are yet another way to broadcast the reshaping of the city and put Perth and WA on the map for would be holiday makers.