I had a really interesting conversation with a colleague running a hotel and backpackers in the Gold Coast last week. He was reporting to me that numbers had died and although this was a tradtional weak time for him in the backpacker market, his hotel market had also collapsed beyond anything experienced before. I have had similar conversations with friends and colleagues in Cairns, Sydney, and New Zealand.
On the complete flip side I have had similar conversations with operators in all these palces who are reporting boomer seasons and tourism numbers.
This kind of got me thinking about my view of the impending implosion of the New Zealand and Australian tourism markets and who are going to be the winners (or at the very least survivors). I know I differ greatly from most in having a pretty negative outlook on the market in the coming 12 plus months and I also am aware that this is a pretty radical swing from my earlier post in which I professed that New Zealand and Australia would be winners from the recession – but my view is just based on what I see and hear when I travel around and talk to industry friend and foe.
The one view I do hold strongly though is that regardless of the market the opeartors that have focussed on their product over the price will be the winners. Of course this has always been true in the market, however, in the past 5 years or so I believe that many have failed to keep pace with the leaders of quality products due partly because they have been making money anyway. There was an interesting discussion on Australian industry website Thumbrella around the Nomads World Hotels new hostel in Byron Bay and I questioned whether backpackers really wanted this sort of “flashpacker” services.
I don’t know either way and I certainly did not in my comment make an argument either way, I just cited a number of extremely highly rated hostels that you would definitely not call flashpackers. I know some people who have some pretty firm feelings about this and believe that the increasingly higher quality of services that the likes of Nomads are offering is actually bad for the industry and not what the travellers want. One thing I do know, however, is that the guys behind the Nomads brand are no idiots and no strangers to business (and we are now talking close to 5 years since they took over Nomads I guess), so they are no strangers to the industry – and I very much doubt they are basing their model on a punt.
Over the next two years I believe that the downturn in traveller numbers to Australia and New Zealand will be unprecedented and I believe that we will see a number of casulties within the industry. However, it is my feeling that the winners will be those that have focussed on offering a product that they can firstly sustain price wise (that is, a reduced margin yet still continue to make money) and secondly that offers an experience that is better than the run of the mill. Whether that be unique cultural stopovers, exceptional accommodation services, higher quality transport offerings, the best customer services or the use of technology to make travel better for the customer; having a point of difference that sets a business above the pack will be essential in surviving the downturn. Those that offer pretty much the same tired formula are going to struggle.
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Good Article. You see it everyday with businesses. They focus on short term; Increasing Volume and cutting costs. Focussing on Quality is key. http://en.wikipedia.org/wiki/W._Edwards_Deming
Flashpacking is a newly born trend appeared along with the budget flights. They seem wealthier than backpackers but they use more budget option than regular holiday travellers.
In the positive perspective, it is a new, expanding market for hostels (or at least it was before the financial crisis, will see in the near future), on the other hand it could be quicksand if this is just a passing fashion.