Brisbane Gold Coast. Sydney. Adelaide. Melbourne

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1 MARKET PROFILE Market overview In 215, Hong Kong was Australis s 1th largest inbound market for visitor arrivals and visitor nights and eighth for total visitor spend. Aviation routes from Hong Kong to Australia 1 Europe China Hong Kong Over $1bn Potential to be worth by 22 22, Visitor arrivals 2 (á 9 per cent) Singapore Cairns Perth Adelaide Brisbane Gold Coast Sydney Melbourne Holiday 48% Visiting friends & relatives 27% Which airlines 2 do Hong Kong visitors use to travel to Australia? Airline Cathay Pacific Airways 52% 47% 46% 47% 47% Qantas Airways 24% 31% 29% 27% 31% Singapore Airlines 5% 6% 6% 8% 7% Scoot % % % 2% 3% Jetstar (Australia) 1% 1% 1% 1% 1% Air Asia X 1% 2% 3% 3% 1% Others 17% 14% 15% 11% 1% Business 12% 38 *3 $1.2bn Total spend 3 (á 23 per cent) Education 8% 1 **3 Average nights stayed Median nights stayed Nov-Dec and Jun-Jul Booking peak period Lunar New Year, Jul and Dec Travel peak period Notes:*Average nights: the sum of all nights divided by the sum of all visitors. **Median nights: represents the midpoint length of stay for which 5% of visitors stay less and 5% stay longer. Data refers to an average of Refers to share of arrivals of respective purpose. Sources:. 1. Department of Infrastructure and Regional Development, December Department of Immigration and Border Protection, December Tourism Research Australia, International Visitor Survey, December HONG KONG Market Profile 216

2 MARKET PERFORMANCE The charts on this page provide a trend overview of visitor arrivals and spend over the last 1 years by main purpose of visit, by first time and repeat leisure Δ visitors and also a snapshot of age demographic split of leisure visitors and spend. Visitor arrivals 1 Visitor spend 2 Visitor arrivals (s) , Total trip spend ($bn) $1.2bn. Jun-7 Jun-9 Jun-7 Jun-9 Visitor arrivals by main purpose of visit 1 Visitor spend by main purpose of visit 2 Visitor arrivals (s) Jun-7 Jun-9 Holiday Visiting friends or relatives Business Education Employment Other Total trip spend (A$s) Jun-7 Jun-9 Holiday Education Visiting friends or relatives Business Other Employment First and repeat leisure visitor arrivals 2 First and repeat leisure visitor spend 2 Visitor arrivals (s) Return visit First visit Total trip spend (A$s) Return visit First visit 1 5 Jun-7 Jun-9 Jun-7 Jun-9 Leisure arrivals by age 2 Leisure spend by age 2 6 yrs & over 12% yrs 25% 6 yrs & over 11% yrs 29% yrs 33% yrs 33% 3 44 yrs 3% 3 44 yrs 27% Notes: Δ Leisure refers to main purpose of visit of holiday and visiting friends and relatives. Age profile data refers to an average of Sources: 1. Department of Immigration and Border Protection, December Tourism Research Australia, International Visitor Survey, December HONG KONG Market Profile 216

3 MARKET PERFORMANCE The following table provides a summary of arrivals, spend and the proportion of repeat visitors to Australia by main purpose of visit: holiday, visiting friends and relatives, business and education. HOLIDAY VISITING FRIENDS AND RELATIVES BUSINESS EDUCATION Arrivals 1 88,8 (48% ) 49,9 (27% ) 22, (12% ) 14,6 (8% ) Spend per trip 2 $4,226 $3,128 $3,432 $2,153 Spend per night 2 $142 $166 $385 $133 Repeat visitors 2 55% 85% 76% 8% Average nights stayed Median nights stayed The following provides an overview of top 1 regions visited by leisure visitors* Top 1 regions visited by leisure visitors *2 Sydney 53% Melbourne 36% Brisbane 16% Gold Coast 13% Tropical North Queensland 12% Perth 9% Hobart 9% Launceston 6% Adelaide 6% Canberra 2% Notes: o Data refers to an average of Refers to share of arrivals of respective purpose of visit. Top 1 regions visited data refers to an average of Percentages will not add to 1% as one person can visit multiple regions. The data refers to visitors who spent at least one night in the region. * Leisure refers to main purpose of visit of holiday and visiting friends and relatives. Sources: 1. Department of Immigration and Border Protection, December Tourism Research Australia, International Visitor Survey, December HONG KONG Market Profile 216

4 AVIATION LANDSCAPE There has been minimal capacity growth on the Hong Kong-Australia route in recent years with growth constrained under bilateral agreements and Hong Kong s International Airport infrastructure. Forty seven per cent of visitors from Hong Kong travelled on Cathay Pacific to Australia, with Qantas the next most utilised airline (31%). See table on page 1 for more information. In 215, direct capacity from Hong Kong to Australia increased by three per cent following similar growth in previous years. Growth was driven by Cathay Pacific (delinking Adelaide and Cairns). Talks were held in June 215 between the Australia and Hong Kong to discuss bilateral arrangements however an agreement was not reached. Due to minimal capacity growth, average loads continue to increase, up four percentage points to 89 per cent in 215. Average load factors are high for most months, but are particularly high during January/February (Lunar New Year), April, July and October. This is in part due to Australians returning home during school holidays. Alliances continue to evolve with Cathay Pacific working more closely with British Airways improving access to ports in the United Kingdom. Qantas is also working more closely with Emirates and Jetstar (including Jetstar Hong Kong) to strengthen operations. Seat availability for Hong Kong residents is expected to remain a challenge due to the increasing number of North Asian and North American tourists travelling to Australia via Hong Kong. Direct aviation capacity from Hong Kong to Australia 1 12 Seats per year (s) Cathay Pacific Airways Qantas Airways Virgin Atlantic Airways 2 Australian Airlines Apr-7 Aug-7 Apr-8 Aug-8 Apr-9 Aug-9 Apr-1 Aug-1 Apr-11 Aug-11 Apr-12 Aug-12 Apr-13 Aug-13 Apr-14 Aug-14 Apr-15 Aug-15 Weekly services to Australia 2 Operating Airlines Flights per week Route Alliance/ code share partner (on route) Cathay Pacific 4 Hong Kong Adelaide British Airways, Finnair, Qatar 7 Hong Kong Brisbane British Airways, Finnair, Japan Airlines, Qatar 4 Hong Kong Cairns Brisbane British Airways, Finnair, Qatar 21 Hong Kong Melbourne British Airways, Finnair, Lufthansa, Qatar 1 Hong Kong Perth British Airways, Finnair, Japan Airlines, Qatar 28 Hong Kong Sydney^ British Airways, Finnair, Qatar Qantas 7 Hong Kong Brisbane British Airways, Finnair 7 Hong Kong Melbourne British Airways, Finnair 11 Hong Kong Sydney Finnair, Jet Airways Hong Kong Airline 3 Hong Kong Gold Coast Cairns Notes: ^ Cathay Pacific up gauged a daily Hong Kong-Sydney service with a bigger aircraft (B777-3ER) in December 214 and second daily service in October 215 Sources: 1. Department of Infrastructure and Regional Development, Aviation Statistics, December Department of Infrastructure and Regional Development, International Airlines Timetable Summary (Northern Winter), HONG KONG Market Profile 216

5 DISTRIBUTION The travel distribution system in Hong Kong has taken a big step towards digital and online platforms, with traditional retail agencies promoting their online booking portals. Online travel agents (OTAs) aggressively market their services and airlines are offering direct special tickets on their own websites. Online booking has gained a greater percentage of conversion, but the major bulk of consumer are still choosing to book through the extensive branch office networks of retail agencies, especially for the final payment of the booking. Distribution system Wholesalers/ Large Agencies Commission Level: 3% to 5% Retail Agents Commission Level: up to 3% There are a small number of key wholesalers that offer commissionable packages to outbound travel agents. Jetour Holidays, Kuoni Travel and Charming Holidays are the key wholesalers for group travel which offer programs to Australia. To ensure differentiation to major retail agents, this group of wholesalers promote niche and diverse products. Their business model also operates directly with consumers and they have developed their own consumer brand and positioning to capture market share. Airlines in Hong Kong that fly to Australia have travel seller departments and act as the major wholesalers in the market for the free and independent travel (FIT) segment. These are: Qantas Holidays and SIA Holidays. They also have their own networks of retail agencies. The Travel Industry Council in Hong Kong has 1,762 travel agent members, which includes 1,534 outbound agents as of April 216. Key outbound retail agents have extensive branch office networks which promote ticketing and commissionable packages. Depending on airline pricing, retail agents adjust the inclusions and itineraries for Australia. Packages often have a limited shelf-life and the frequent production of brochures and flyers provide an opportunity for different operators to become involved in tour programs at varying times of the year. Wing On Travel and Hong Thai Travel are the two main retail agents in Hong Kong. They have an extensive network of branches and together account for 6 per cent of group business. Major group retail agents in Hong Kong include: Miramar Travel Limited, EGL Tours Company Limited, Goldjoy Travel Limited, Premium Holidays and Package Tours (Hong Kong) Limited. Major package retail agents include Cathay Pacific Holidays, Travel Expert, Wincastle Travel and Jebsen Holiday. Other retail agencies such as Amusing Travel Plan Limited, Concorde Air-Sea Services, EcoTour Travel Limited and The Events Team offer attentive, theme and special interest itineraries to compete with major retailers. Throughout the year, these agencies drive tactical promotions with short lead times, promoting special value-add offers. Aussie Specialists The Aussie Specialist Program (ASP) is the primary platform for Tourism Australia to train and develop front line travel sellers to best sell Australia. As at April 216, there were 1,224 qualified Aussie Specialists in Hong Kong. Online Online Travel Agencies (OTAs) active in the market are Hutchison-Priceline, Zuji Travel, Expedia, Hotels.com, who offer instant confirmation for airfares and hotel accommodation. They work with global distributors, hotel partners and inbound tour operators (ITOs). Traditional group retail agents have also increased their focus online in order to capture a larger market share of free and independent travellers, e.g. Wing On, Hong Thai, Miramar and EGL. Inbound Tour Operators Commission Level: 1% to 15%»» ITOs handle all group business from Hong Kong to Australia and play a key role in developing new itineraries and products for the Hong Kong market. 5 HONG KONG Market Profile 216

6 DISTRIBUTION Trends Planning a visit to market Distribution A number of National Tourist Offices (NTO) have established a presence (via an office or representation) in Hong Kong. As the market grows, newer NTO s to the market have included Czech Tourism and Brand USA. China holding enterprises are extending their footprint into the distribution market through acquisition. Morning Star Travel for example which has 43 years history was brought by Fantasia Holdings. Specialty tours for wedding, marathon, golfing, diving or skiing have significant growth in demand. Retail agencies are eager to organise this category of tours for its higher profit margin. Family and middle-aged (5-6) travel are an important segment with strong spending power. There is a growing trend towards digital applications, apart from using QR codes for itinerary promotion, traditional print advertising is shifting towards online and social media advertising. Cruising companies are expanding their presence and promotional activity in the market, offering intra-region and fly cruise packages to capture outbound travel market share. Online booking consumes a large percentage on leisure travel bookings, however it loses its competitive edge for booking to travel during peak seasonal holidays due to inflexible ticket terms and fluctuation on air tickets and hotel rates and availability. Planning and purchasing travel The most common Australian travel package is seven to eight days through Eastern Australia for group travel, and three to five night trips for the FIT market. Australia is considered a popular Western destination in Hong Kong and attracts a high level of repeat visitation. Air and accommodation only packages have gained market share as experienced Hong Kong travellers, especially to repeat destinations, prefer FIT travel. Hong Kong consumers tend to decide what activities they want to take first and then choose the destination that offers them. It is therefore important to associate destinations with unique activities/offerings to induce tourists. Value-add offers are key drivers, mature frequent travellers are prepared to spend more for higher quality products and services, such as five-star hotels or a business class upgrade with a competitive price. Weekends combined with public holidays are the most in demand travel periods. Hong Kong consumers tend to take frequent short breaks instead of a long break holiday. Printed materials such as guide books for destination information are still popular but there is a trend towards destination apps and electronic guidebooks. Due to the slow economic development, the market has both travellers seeking comfort/luxury travel and another segment looking for thrills/budget travel. Top tips for sales calls As the turnover rate for retail agency frontline staff is high, it is worthwhile for Australian products to arrange in-house training for committed travel agent partners on sales calls. Value-add or competitive pricing offers during the low season travel period from March to June are useful to trigger tactical campaigns with travel agent partners. The best time for sales calls targeting low season business is after Lunar New Year. To capture high season business and have products included in itineraries, visit the market after Easter for July and August high and shoulder season, and August or September for Christmas and Lunar New Year high season.»» For more general information on sales calls and planning a visit to market, please see Tourism Australia s Planning for Inbound Success ebook at inboundsuccess 6 HONG KONG Market Profile 216

7 DISTRIBUTION Key trade and consumer events Event Location Date Corroboree Asia Perth, Australia 5-9 September 216 Greater China Business Events Showcase TBC, China April 217 (TBC) Australian Tourism Exchange (ATE) Sydney, Australia May 217 Inter Tour Expo 216 (ITE & MICE Hong Kong) Hong Kong June 217 Where to find more information Tourism Australia s activities in Hong Kong are managed from its Hong Kong office. For more information, visit Tourism Australia s corporate website at Australian State and Territory Tourism Organisations operating in Hong Kong include: Destination NSW, Tourism and Events Queensland, Tourism Western Australia and Tourism Tasmania. Also see: Hong Kong Country Brief published by the Department of Foreign Affairs and Trade at: For the latest arrivals statistics, visit: For additional statistical reports refer to the Australian Bureau of Statistics (ABS) and Tourism Research Australia (TRA) websites: and Contact Level 29, 42 George Street Sydney, NSW, 2 Telephone: ask.us@tourism.australia.com Corporate: tourism.australia.com twitter.com/tourismaus Consumer: australia.com twitter.com/australia facebook.com/seeaustralia 7 HONG KONG Market Profile 216