Hang on in there – be creative, innovative and smart

Yes, things don’t look good. In fact they probably look less than good. But that doesn’t mean there aren’t creative, innovative, clever things you can do to ensure your business is ready and able to leap on every opportunity that presents itself, no matter what the economic climate.

As the global economic crisis starts to bite, the central message seems to be: hang on in there – it will pass. As Paul Yeo the CEO of the Inbound Tour Operators Council of New Zealand says this is a timely reminder that it’s easy to get seduced by the good times and in this type of climate all the work on business planning and strategy will come into its own.

So what will happen? No one really knows. It’s all crystal ball gazing at present but an October report from BNZ economics team noted that the main deterrent to changes in the number of visitors to NZ is not the exchange rate but the confidence and income movements of households in source countries.

“And people offshore are currently feeling shattered as they watch their wealth in housing and equities slip away and worry about losing their jobs. In this environment the desire to travel to the other side of the planet is going to fall away substantially.” 
The BNZ economists predict inward visitor numbers will fall by more than the 5 percent decline which occurred during the Asian crisis.

So what to do?

As Ann Andrews of The Corporate Toolkit says, it’s in rocky times such as this when creativity is the key to staying in business.

“History has proven many times that in a down-turn some businesses not only survive but create whole new businesses out of a different set of circumstances.”

And now is the time to refine, repackage and enlarge your business thinking to ensure you hone in on every opportunity that presents itself.

It’s also important to remember that downturns are a fact of life and while this swing is quite different from the Asian crisis and SARS the fact is every downswing is followed by an upswing.

By Annie Gray

Paul Yeo says the industry is certainly expecting a softer summer.

“There is no denying that but it does depend on where businesses are placed and where their main markets lie. Some parts are up, others down. It is, he says, a mixed bag.

The general consensus is that this summer will be softer than the last… and there is a lot of focus on the Australian market picking up last minute stuff.
The wider concern is about the next 12 to18 months.

Yeo says it’s about both being sensible and cautious. Those who will weather it well are those who have been working hard on their businesses for the past few years.

So how important will domestic tourism be?

Paul Bingham, the CEO of Black Cat Tours and a board member of Tourism New Zealand and Air NZ says domestic tourism was, and will, become even more important to the tourism sector.

“Good businesses should have already been planning their strategies to address this market, well before the latest global crisis hit.

“NZ won’t be immune to this global recession and we’ll need to track how much impact it will have on New Zealanders ability to holiday at home. People will still want to take holidays.

So will people swap Queensland for Queenstown?

That says Bingham, remains to be seen. “More likely is a deferral of travel plans to major offshore markets, not so much deferral of Australian holidays.

Success in the domestic market will very much depend on your product, your reputation and your brand presence in the local market. It’s hard to switch on the domestic tap if your product is aimed at high yielding US customers.

Geoff Penrose, the CEO of Qualmark says there will be some substitution of demand as domestic visitors replace international ones.

“This is likely to be uneven across different sectors and regions. Some sectors such as the luxury end of the guest and hosted sector that may have relied on the American market may need to reposition their product to target domestic and Australian visitors.

“This will not apply to all regions as some may hold up better than others, however where this does need to happen the businesses will be tested on their creativity and ability to package their product for these new markets. It is also about continuing to deliver on your quality proposition.”

So what’s an operator to do?

TIA chief executive Tim Cossar recommends.

  • Operators work with their RTO and other tourism businesses of similar quality to develop packages, events and marketing initiatives. “By working with other tourism operators in joint ventures or clusters, you can create attractive packages of accommodation, activities and attractions that will help attract both domestic and international visitors to your area and encourage them to stay longer. You can also save costs by sharing services such as marketing.”
  • It is always a good time to review your website and your distribution chain. “It is estimated that up to 85 percent of travellers now make their first contact with your business online so it’s vital that your website captures the essence and quality of the experience you are offering, as well as providing accurate and up-to-date information.
  • Explore how you can achieve a high ranking on search engines like Google, and ensure you are listed on other important websites like Tourism New Zealand’s .
  • “Ensure you are using the most effective distribution channels – monitor where and how your international and domestic visitors make their bookings.
  • “Keep refining your product and look for that unique selling point that will attract customers.
  • “Stay close to your suppliers and let them know what you are doing. Good contacts and relationships can make all the difference during a slowdown.
  • “Find opportunities to lower your costs without impacting quality or the safety of your employees and customers. Work with your existing suppliers for the best deals or shop around.
  • Monitor your energy costs and reduce them where possible. TIA’s Tourism Energy Efficiency Programme has identified opportunities for participating operators to make savings worth thousands of dollars.

In the US, BusinessWeek says it in a nutshell - “manage your credit, watch costs, thinking globally and hang on until a recovery materialises”.

The article on also quotes Howard Anderson management professor at Massachusetts Institute of Technology's Sloan School of Management who is certain that most small business owners will persevere. "Small businessmen are very adept and they are total pragmatists. … I can say that the small business owner is the most resilient animal on earth."

Closer to home Ann Andrews says in the tourism industry apply the 4 x I’s and see what happens:

a. Involve: Get your people together and be honest with them and let them be honest with you. Ask them for ideas and input, after all their jobs and futures are on the line too.

b. Improve: Ask the question – what are we doing in four steps that we could do in three or even two. And what are we doing that we could eliminate altogether? What are we not doing that we should be doing?

c. Innovate: Ideas, ideas, ideas – there is no such thing as a stupid idea.

d. Implement: We don’t have years to implement ideas, we have weeks- get going – keep experimenting – try different things – review, review, review. 
Andrews says that recently she was in one of Auckland’s waterfront cafes and staff were going round each table asking if they could get people more coffee.“I saw virtually every table order at least one more coffee. How difficult was that?”

Garry Bond, the gm of New Zealand Tourism Online says that regardless of market conditions a tourism business needs to continue marketing itself.

“Often businesses reduce their advertising and this creates an opportunity for others to pick up the extra income. Just remember that visitors have differing planning cycles and you need to be seen by them. New Zealanders typically organise their travel close to the time, while Australian's take slightly longer and long haul travellers tend to plan months or even a year in advance.

“Essentially it's important not to look at a short term gain of reduced or no advertising otherwise you may be missing a big chunk of the market longer term.”

Innovation isn’t hard to find in the local market

There is plenty of very clever thinking already going on in the tourism sector as the international credit crisis starts to make itself felt.
In just the course of one week we came across at least four great examples.

First up is Auckland tourism business owner, Anthony McAnulty, who has created a three phase plan to help his business through “whatever is coming”. He calls his concept Auckland 1, 2, 3.

McAnulty and his wife Marlene own the well known Eden Park Bed and Breakfast which is currently number one on for ‘B&B in Auckland’.

Part two of the three phase plan is Auckland Ghost Tours which McAnulty aims to make a unique component of the Auckland tourism market. Its marketing invites tourists to “learn the authentic stories of the macabre and bizarre, as you are led by your Ghost Walker on this lantern-lit walking [night-time] tour around the most historic streets of Auckland City”.

McAnulty says the Ghost Tour is a fun component, a “very simple concept with low overheads”.

And the third part of the Auckland 1,2,3 concept is “a total mobility passenger transport system, which offers a door-to-door, on-demand, pickup/drop-off service for the aged, infirm and transport disadvantaged”.

McNulty says this is a future direction for him with a specialised domestic product . “I have already found there is a tourism market spin-off for specialised transfer assistance within the hotel sector. Time will tell with this model.”

McNulty points out that all of the products he is developing are tourism based.

“I feel that it is vital to think outside the framework of what we currently do and develop parallel components that enable us to increase cash flow.”

Meanwhile down Queenstown way Eichardt’s Private Hotel has just launched the Eichardt’s Breakfast Club in its house bar giving members of the public the chance to “sample one of its legendary breakfasts, until now a service only offered to the privileged few staying in one of the hotel’s five suites”.

For the first time since its opening in December 2001, Eichardt’s is opening the doors to its house bar for breakfast daily from 7:30am to 10:30am overlooking Queenstown Bay and the mountain ranges beyond.

Further north, has launched its innovative online series of travel guides designed specifically for anglers visiting New Zealand.

The company says the high quality publications are delivered by email so visitors can print them before they leave home, use them to plan their fishing trip, and take them (in print or digitally) when they travel.

Each of the six guides takes anglers to the best fishing waters in a different part of the country. The company says they are rather like a Lonely Planet guide to New Zealand fly fishing.

And in Wellington there’s some smart marketing afoot with Holiday Inn Wellington enlisting “a little car with a big personality to boost awareness in a way that gets attention, makes people smile and is good for the environment”.

GM Heather Idoine-Riley says they felt the tiny Smart car really reflected what Holiday Inn Wellington’s all about – great design, value for money, a little bit out of the ordinary and easy to deal with.”

The team at Holiday Inn Wellington will be taking weekly turns to use the car in their everyday activities which, apart from having high-visibility advertising moving around the city, has the added business appeal of combining the advertising and vehicle spend in times of tighter budgets.

Posted: Thursday 24 September 2009