By Martin Kelly

THE Far North Queensland tourism market faces major challenges in sustaining its international business base due to falling Japanese visitor numbers and increased competition from other destinations.

But the FNQ industry leaders – veterans of a famously cyclical market – have seen it all before and remain optimistic about the future, pointing to steady domestic growth and increased visitation from new markets like Korea.

The number of Japanese visiting FNQ dropped 10% in the year to June, according to the latest Tourism Research Australia figures, while overall international visitations fell 3.2%.

Meanwhile, international arrivals through Cairns Airport have slumped 15% since 2005 – a trend set to continue with the Qantas Group cutting capacity by 5% on the key western Japan routes through Osaka and Nagoya.

As result the Cairns accommodation market has been hit with room occupancies dropping 4.5% to 62% through the traditionally slow March quarter, while the June quarter was also quieter than usual.

Chairman of Tourism Tropical North Queensland, Stephen Olle, says: “Japan has been the major reason, while there’s also been a softening in the domestic market compared with the year before when (the aftermath of) Cyclone Larry caused a spike in the visitor numbers.”

The famous storm slammed into the coast south of Cairns last March, destroying a number of towns and resorts.

“Cyclones are a double-edged sword – that one benefited Cairns but if had been 50km north it would have been a very different story.”

Cyclone Larry strongly boosted visitor numbers as Cairns become the hub of the rebuilding effort. Hotels and car hire companies in particular did well.

“The feeling around town at the moment is that it’s a little bit soft compared with what it should be – some hotels are up, some are down –  however there’s not a great deal of concern.”

Olle, who is also CEO of the Village Property Group, which owns the All Seasons Cairns Gateway Resort, says the traditionally stronger September and December quarters are “looking ok”.

“Port Douglas also appears to be quite busy at the moment,” he says.

General Manager at the Hilton Cairns, Guy Hutchinson, is another optimist and claims his property has been running stronger occupancies than the official industry average.

“The destination is still strong and still successful but there’s no question the downturn from the Japanese market has affected growth rates,” Hutchinson says, adding that the Cairns industry has always been resilient.

A crucial element of this has been the local industry’s determination to get out and market the destination.

“Far North Queensland has always been a very dynamic destination in terms of promoting itself and there’s now an increased focus on emerging markets like Korea, Japan and India,” he says.

Marketing is also top of mind for Brett Claxton, Chairman of Backpacking Queensland and owner for the past 11 years of Calypso Inn Backpackers Resort.

Claxton says the Cairns backpacker market fell slightly last financial year with occupancies at Calypso dropping by two per cent.

“I’d say that’s reflective of the general market,” Claxton says.

Yet he remains extremely upbeat – “we’re on the up and up and going from strength to strength” – although he says Cairns must work harder to promote the destination.

Domestic tourism is one area he believes offers great potential and is working hard through a couple of industry associations to boost the number of travel agent familiarisation programs.

Over at the Hilton, Hutchinson is also pushing the local line, an approach which has resulted in domestic business more than doubling from 11 per cent to 25 per cent of the total.

But at the end of the day, international tourism will remain the core focus for Cairns and Far North Queensland.

“International still has the biggest potential to grow,” says Olle from TTNQ.

And, while the local industry looks toward new and exciting source markets, it is still the Japanese that hold the greatest allure.

Some concern still lingers over the introduction of Low Cost Carrier Jetstar to a market that has been used to Qantas, both in terms of service and brand knowledge.

Jetstar is a completely new proposition for the Japanese, a market where on longer-haul routes airline seats are largely controlled by tour operators.

As a result Jetstar has had to alter its direct-to-the-public approach used so successfully in Australia.

Corporate Communications Manager, Simon Pregellio, says 80 per cent of Jetstar’s Japanese business is coming through wholesalers, while 20 per cent of customers are booking direct, more than originally forecast.

She says the airline has also staffed up and is working hard on relationships to drive volume, which has started slowly but is now picking with good loads forecast from next month.

Olle from TTNQ says the industry is strongly backing Jetstar and working hard to familiarise local operators with the new product.
     
“Our aim is to keep the Japanese market viable and be ready for when they come back – and we think they will come back,” says Olle.

“Can we get back the numbers we once had? That’s a hard question to answer but we certainly need to work .harder to stimulate demand.”

In the meantime, TTNQ, the Cairns Port Authority (which owns the airport) and the State Government is doing everything it can to attract new airlines to the what is a far-flung destination.

“We are working very hard to get a couple of carriers across the line in the next 12 to 18 months,” Olle says.

Travel Trends: September 24, 2007

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