Slide no. 2 © South African Tourism 2012
Agenda
• Megatrends affecting Western Europe
• UK – an important source market
• Trends affecting the UK trade
• How to close the deal
Slide no. 3 © South African Tourism 2012
Megatrends affecting Western Europe
Economic slowdown in Europe and severe austerity measures have lead to political instability in key marketsEurope has been hit by an economic slowdown and a Euro-zone debt crisis, with the Italian cost of borrowing becoming unsustainable and increasing unemployment impacting Spain
• Severe austerity measures are being implemented in the key Western European markets to tackle the crisis which have to led to political instability in key markets and street protests in Spain and Britain
Internet based travel research and booking are increasing, with mobile emerging as the next ‘big’ channelTravellers are increasingly using internet for travel research and bookings – directly with airlines/hotels and with Online Travel Agents
Mobile is emerging as an important channel, with high usage of smartphones, travel-related mobile applications, and growing use of cell phone for travel-related searches and bookings
• However, use of travel agents is high in the UK and Germany for overseas and expensive holidays, respectively. Travellers feel agents provide them quality service and a sense of protection in an ‘alien’ land
Hit by the economic slowdown, tourists in the key Western European markets have become cost-consciousEconomic slowdown has impacted the tourism industry as travellers look to cut expenses and holidays. Tourists are on a lookout for deals and have taken up last-minute bookings in a bid to save on travel
• Fluctuations in exchange rates now have a greater influence on the choice of destination, with a growing preference for domestic holidays
FIFA world cup briefly aided South Africa’s reputation among the key Western European marketsThough South Africa’s reputation among the key markets grew in stature during the world cup, the country has not been able to maintain that level post the event
Tourists from Spain are attracted to South Africa’s safari and cities such as Cape Town and Johannesburg, whereas UK travellers perceive the country as an expensive destination
Slide no. 4 © South African Tourism 2012
EUROPE
The UK is the largest source market for South Africa from Europe. Despite the economic slowdown, the UK travellers’ spend per day in SA has increased since 2008
Note: 1Total Direct Foreign Expenditure, excluding CapexSource: ‘Tourism Flows Outbound in the United Kingdom’, Euromonitor International, Jun 2011; SAT Departure Survey, 2003-2010; Grail Research Analysis of focus group discussions in the UK
Why is the UK Market Important?
Travel is an Integral part of the UK travellers’ lives...
...And despite the economic slowdown, the UK travellers have increased their spending in South
Africa The UK is South Africa’s largest source market from Europe, in terms
of number of travellers
• While outbound travel from the UK declined by 7.8% between 2008-11, arrivals to SA declined by only 1.7% in the same period
• Despite the economic slowdown, the UK travellers’ spend (TFDS1) per day in South Africa grew at CAGR 3.8% between 2008–11
Travel forms an integral part of the UK travellers’ lives. A significant percentage of the population travels for leisure, annually
• After a decline of 14.3% in spending by the UK travellers on international travel in 2009 over 2008, the spending grew by 7.6% in 2009–10, to ~GBP 33.7Bn
• Outbound travel from the UK is forecast to grow by 1.5% p.a. from 2011 to 2016
SOUTH AFRICA
UNITED KINGDO
M
Largest source market from
Europe
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Who are the key UK Traveller Segments?
Key traveller segments from the UK are NSSAs and Wanderlusters, who have extensive international travel experience and seek variety at destinations
Next Stop South Africa (NSSA)
The British NSSA are wealthier, experienced international travellers, with annual household income above GBP 44,000. They are aged between 41 and 65, and do not have any dependant children
NSSAs typically look for natural beauty and authentic cultural experiences. They prefer independent or small group travel, and look for luxury and comfort as part of their experience. They thoroughly research the destination and plan out their holidays, before reaching the destination
Wanderluster
The British Wanderluster segment is made up of younger persons between the ages of 25 and 40, who do not have children. They have considerable travel experience, and have an annual household income above GBP 40,000
Wanderlusters’ desired experiences centre around nature, culture, and adventure. While the economic slowdown has forced Wanderlusters to spend in a targeted manner, they have preferred not to cut spending in travel, as travel forms an integral part of their lives. They have instead reduced their expenditure elsewhere
Source: Grail Research Analysis of focus group discussions in the UK
Slide no. 6 © South African Tourism 2012
UK Strategic Objectives 12/13 Business plan:
Consumer: Enthuse considerers to plan to visit SA now by credibly showcasing SA as an exciting and relaxing holiday that they can afford
Trade: Partner UK TO’s and TA’s to better promote SA as an escape which meets the needs for excitement and relaxation of the UK traveller, by packaging a larger variety of products and experiences and delivering innovative pricing into the market thus improving short term desire to travel to SA
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The British believe in their RIGHT to travel to escape the demands of modern life.
They want to visit iconic sites and also be INSPIRED by special experiences that are unique to them.
They want learn about the LOCAL CULTURE and people at tourist destinations.
Experiences of OTHER PEOPLE, particularly other Brits and the information they ‘discover’ will INSPIRE them to make their travel choices.
They need confirmation that their visit will be a UNIQUE EXPERIENCE exclusive to them alone.
WHO?…..INSIGHT - The UK Consumer
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Source: Grail Research Analysis of focus group discussions in the UK
The UK Travellers’ Travel Planning Process
It all starts with inspiration for the UK travellers. They have a list of destinations in their mind and they aim to shortlist countries to visit from this list
• The list is developed by listening to experiences of other people, reading/ watching things about tourist destination, and ‘iconic’ or ‘unknown/ less-developed’ status of the destinations
The UK travellers then take several factors into consideration for short-listing the destination to visit
• They thoroughly research on parameters such as travel cost, climatic conditions at a destination, and the security situation at the destination, to short-list the destination to visit
The UK travellers then determine the best time to travel to a destination, based on the availability and price of flights and hotel bookings, and seasons/ weather conditions at the destination
The UK travellers refer to multiple information sources for planning their travel, such as travel guides and the Internet
The UK travellers then move on to booking their travel. They conduct extensive research to determine the best bargain deal/ offer for them, along with the most reliable channel for booking
• They prefer booking through a travel agent when travelling to a lesser-known/ unsafe destination, or while planning a complex itinerary
Once a travel destination has been short-listed from the inspiration list, the British extensively research the destination, to plan and book their travel
Slide no. 9 © South African Tourism 2012
The UK Travellers’ Perceptions about South Africa
Source: Grail Research Analysis of focus group discussions in the UK
Seeing the photographs of fellow British travellers/ hearing their experiences about South Africa inspires the British to travel to the country
They believe that if they have a local contact, with whom they can roam around in the country, or if they take a packaged tour, they will be safer when visiting the country
The British have a limited awareness about the variety of experiences on offer in South Africa
• They primarily associate South Africa with crime/ apartheid, wine, wildlife, and Cape Town
• They relate safari/ wildlife more to Kenya than South Africa
The British feel South Africa is unsafe and an ‘unofficial apartheid’ is still prevalent in the country
• They feel that South Africa’s rich and poor are still divided along racial lines
The British believe that crime in South Africa is violent and barbaric. They know that South Africans live in gated communities, and therefore the British feel that their freedom will be curbed when visiting the country
The British feel that South Africans living in the UK are unfriendly, arrogant, and outspoken
Slide no. 11 © South African Tourism 2012
Channel Key Trends in the UK Travel Market
Competitive landscapeCompetitive landscape
Negative Impact of the Global SlowdownNegative Impact of the Global Slowdown
Change in Consumer DemandsChange in Consumer Demands
Increased Role of the InternetIncreased Role of the Internet
Travel retail sales fall by 3% to reach £25.2 billion in 2011 as the number of travel retail outlets also falls by 3% to 6,792
TUI Travel retains its leading position in travel retail value sales with a 24% value share in 2011
Overall travel retail value sales are expected to continue slowing down, registering a constant value CAGR of -0.4% over the forecast period to reach £24.7 billion in 2016
Travel retail sales fall by 3% to reach £25.2 billion in 2011 as the number of travel retail outlets also falls by 3% to 6,792
TUI Travel retains its leading position in travel retail value sales with a 24% value share in 2011
Overall travel retail value sales are expected to continue slowing down, registering a constant value CAGR of -0.4% over the forecast period to reach £24.7 billion in 2016
The growth in the number of trips did not have a positive impact on the performance of travel retail as UK consumers remained reluctant to spend on non-essential items as unemployment continued to rise.
UK consumers have not given up altogether on leisure travel, but are reviewing their choice of breaks. Many are opting for smaller short breaks and are also reconsidering what type of holiday to to ensure best value for money.
Holidays of seven days or less increased in 2011, accounting for over 41% of the total number of trips taken by UK consumers, compared to 40.5% in 2010, with those of three days or less growing slightly stronger.
Cruises continue to show strength compared to alternative travel, with sales showing a stable performance in 2011.
The growth in the number of trips did not have a positive impact on the performance of travel retail as UK consumers remained reluctant to spend on non-essential items as unemployment continued to rise.
UK consumers have not given up altogether on leisure travel, but are reviewing their choice of breaks. Many are opting for smaller short breaks and are also reconsidering what type of holiday to to ensure best value for money.
Holidays of seven days or less increased in 2011, accounting for over 41% of the total number of trips taken by UK consumers, compared to 40.5% in 2010, with those of three days or less growing slightly stronger.
Cruises continue to show strength compared to alternative travel, with sales showing a stable performance in 2011.
Travellers use the internet not only for purchases but also to obtain information about places to visit, hotels to stay in or the service of different airlines. Websites such as TripAdvisor, part of Expedia, are becoming increasingly popular among tourists planning their trips.
Although many people reduced their holidays as the economic situation around the world remained unstable, many decided to go back to travel, with many Britons deciding to stay in the country.
Travellers use the internet not only for purchases but also to obtain information about places to visit, hotels to stay in or the service of different airlines. Websites such as TripAdvisor, part of Expedia, are becoming increasingly popular among tourists planning their trips.
Although many people reduced their holidays as the economic situation around the world remained unstable, many decided to go back to travel, with many Britons deciding to stay in the country.
Online sales reported another positive performance in 2011, up by 4% to £12.3 billion, representing almost half of all travel retail sales and showing no signs of abating.
Consumers continue to research and book travel online more than through traditional bricks and mortar outlets, which continued to see sales suffer, down by 8% in 2011.
While an increasing number of UK consumers buy their holidays online, most still prefer to delegate the perceived hassle of looking for the best offer to professionals
The industry has also seen greater use of mobile technology, so more consumers are at least researching travel plans through their mobile devices and estimates are that around 10% of smartphone owners have booked travel using their smartphones
Online sales reported another positive performance in 2011, up by 4% to £12.3 billion, representing almost half of all travel retail sales and showing no signs of abating.
Consumers continue to research and book travel online more than through traditional bricks and mortar outlets, which continued to see sales suffer, down by 8% in 2011.
While an increasing number of UK consumers buy their holidays online, most still prefer to delegate the perceived hassle of looking for the best offer to professionals
The industry has also seen greater use of mobile technology, so more consumers are at least researching travel plans through their mobile devices and estimates are that around 10% of smartphone owners have booked travel using their smartphones
Source: Euromonitor
Slide no. 12 © South African Tourism 2012
16%
25%
13%
0%
25%
50%
75%
100%
Total Awareness Likeability /Positivity
Consideration Plan to GatherInformation in Next
18 Months
Plan to Visit in Next18 Months
Have GatheredInformation in Last
18 Months
Have Visited in Last18 Months
Aided
Unaided
South Africa
Note: Sample based on those that have traveled internationally in the last 3 years; Respondents to likeability limited to quota; Likeability / Positivity, Plan to Gather Information in Next 18 Months, and Plan to Visit in Next 18 Months based on ratings of 6 or 7 on a 7-point scale; Source: UK Channel Research, 2005
Research suggests is that it is necessary for SAT to ensure that the channel is equipped to meet increased consumer demand
It is only possible for the channel to close on SA if the consumer enters the channel with SA already as a desired holiday destination
Key Factors in recommending a destination:
Consumer interest
Consumer’s budget
MY own knowledge of the destination
MY own experience of the destination
Key Factors in recommending a destination:
Consumer interest
Consumer’s budget
MY own knowledge of the destination
MY own experience of the destination
If the sales person does not have knowledge and/or experience with
South Africa they are likely to ‘divert’ the client to a destination that they are
familiar with (the implication is lost sales to SA)
If the sales person does not have knowledge and/or experience with
South Africa they are likely to ‘divert’ the client to a destination that they are
familiar with (the implication is lost sales to SA)
The channel tells us that to move the consumer from
information gathering to becoming an arrival
– they need 4 key inputs
The channel tells us that to move the consumer from
information gathering to becoming an arrival
– they need 4 key inputs
Slide no. 13 © South African Tourism 2012
1.6
1.6
1.7
1.7
1.8
1.8
1.9
2.2
2.3
2.4
2.5
2.6
1 2 3 4
In addition to being equipped, the channel also needs to be able to offer the right product; price is a major product barrier
Please Indicate the Degree to Which You Feel That Each of the Following is a Barrier For You Selling South Africa More Often
Flights to the destination are too expensive
I do not feel the destination is safe
High capacity utilization on the flights
Packages to the destination are too expensive
I do not feel familiar with the destination
Destination does not represent good value for money
Lack of easy access to information on activities and / or hotels
Consumers are not interested in visiting the destination
There are not enough / type of tour packages offered
Flight schedules to the destination are not convenient
Destination does not offer comparable cultural experience
Destination does not offer as many interesting activities
Price is a recurring theme in the U.K.
Ave = 2.0
Note: 1=Not a barrier, 5=Significant barrierSource: U.K. Channel Research (2005)
Minimum Service Level
Minimum Service Level
Intermediate
Service Level
Intermediate
Service Level
Advanced Service Level
Advanced Service Level
Customized Bi-Annual Consumer Newsletter
Access to Work-shops
Prioritized Access to Printed Collateral
Access to Trade-Only Call-Centre
Reactive Access to Collateral
Access to Trade-Only Internet Site
Monthly Trade Newsletter
ImportantImportant PriorityPriority
JMAs
‘Fam’-trips
Preferential Call-Centre Access / Trade Mgr Access
Support In-house Educational / Training
Programs
Co-Sponsorship of Pages in Brochures
Chain TAs
and
Conglomerat
esIndependent
and Affi
liate
d
TAs Pure P
lay
TOsTOs w
ith a
Retail A
gent
StandardStandard
SAT evaluates ROI on investing in brochures vs other media
Channel Wish List:
Services desired by channel
Legend
Services SAT provides to the channel
For the U.K. market, the types of channel players have been prioritized and allocated to a particular service model
How are we doing?
• Trade trained: 2008 = 1,925 2009 = 2,085 2010 = 1,926 2011 = 1,729
• JMAs signed to date: 14