HONG KONG Market Profile 202,000. $1.0bn. 7.5m. Overview. Aviation routes from Hong Kong to Australia 3

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1 Market Profile Overview In 214, Hong Kong was Australia s ninth largest inbound market for visitor arrivals, and the tenth largest market for total visitor expenditure and visitor nights. Aviation routes from Hong Kong to Australia 3 Europe China Hong Kong 22, 1 Visitor arrivals (á 1 per cent) $1.bn 2 Total spend (á 9 per cent) Singapore Cairns 7.5m 2 Visitor nights (á 2 per cent) Brisbane Perth Adelaide Sydney Nov-Dec and Jun-Jul Booking peak period Which airlines 3 do Hong Kong visitors use to travel to Australia? Melbourne 4 Airline Cathay Pacific Airways 49% 52% 47% 46% 47% Qantas Airways 28% 24% 31% 29% 27% Singapore Airlines 5% 5% 6% 6% 8% Air Asia X 1% 1% 1% 3% 3% Virgin Atlantic 6% 8% 7% 7% 2% Scoot % % % % 2% Others 11% 1% 9% 9% 1% Total 1% 1% 1% 1% 1% Chinese New Year, Jul and Dec Travel peak period 1. Source: Department of Immigration and Border Protection as at year ending December Source: International Visitor Survey, Tourism Research Australia, December 214 quarter 3. Source: CAPA-Centre for Aviation, Tourism Australia analysis 4. Table includes direct and indirect capacity. Source: Department of Immigration and Border Protection Visitor profile 2 HOLIDAY VISITING FRIENDS AND RELATIVES BUSINESS 71, arrivals (46%*) 41,9 arrivals (27%*) 22,5 arrivals (14%*) $3,989 spend per trip $3,7 spend per trip $3,365 spend per trip $145 spend per night $169 spend per night $43 spend per night 56% repeat visitors 84% repeat visitors 75% repeat visitors Data refers to an average of * Refers to share of arrivals of respective purpose of visit 1 HONG KONG Market Profile 215

2 Market Performance The charts on this page provide a trend overview of visitor arrivals and expenditure by main purpose of visit and also the age demographic split of leisure* visitors and expenditure (based on latest 12 months data). Visitor arrivals Visitor arrivals by main purpose of visit Visitor arrivals (s) , Visitor arrivals (s) Holiday Visiting friends or relatives Business Education Other Jun-6 Jun-7 Jun-9 Jun-1 Jun-6 Jun-7 Jun-9 Jun-1 Employment Visitor expenditure Visitor expenditure by main purpose of visit Total trip spend ($bn) Jun-6 Jun-7 Jun-9 Jun-1 $1.bn Total trip spend (A$s) Jun-6 Jun-7 Jun-9 Jun-1 Holiday Education Visiting friends or relatives Business Employment Other Arrivals by age Expenditure by age yrs 3% 6 yrs & over 9% yrs 21% 6 yrs & over 5% 3 44 yrs 22% 3 44 yrs 31% yrs 3% yrs 52% * Leisure refers to main purpose of visit of holiday and visiting friends and relatives Age profile data refers to an average of Source: Department of Immigration and Border Protection International Visitor Survey, Tourism Research Australia 2 HONG KONG Market Profile 215

3 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. Almost half of Hong Kong visitors to Australia travelled on Cathay Pacific but the airline has lost some market share to Singapore Airlines and Low Cost Carriers (AirAsia X, Scoot). Qantas is the next most utilised airline (27 per cent) (see chart page 1). In 214, 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), with Qantas reducing capacity (Hong Kong-Perth) and Virgin Atlantic exiting the route. Tourism Australia expects growth to resume in 215, up an estimated 1-2 per cent depending on whether bilateral agreements are expanded between Hong Kong and Australian governments (currently Hong Kong carriers are unable to add additional flights to Australia). The Australian and Hong Kong governments are expected to meet later this year to discuss bilateral agreements and potentially reducing restrictions imposed on the number of seats allowed to be operated between the two countries. Due to minimal capacity growth, average loads continue to increase, up three percentage points to 85 per cent in 214. Average load factors are high for most months, but are particularly high during January/February (Chinese 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 UK ports. 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 America tourists travelling to Australia via Hong Kong. Direct aviation capacity from Hong Kong to Australia 1,2 Capacity () Seat 1, Cathay Pacific Airways Qantas Airways Australian Airlines Virgin Atlantic Dec-4 Source: Bureau of Infrastructure and Regional Development Weekly services to Australia Operating Airlines Flights per week Route Alliance/ code share partner (on route) Cathay Pacific 28 Hong Kong-Sydney^ British Airways, Finnair 21 Hong Kong-Melbourne 1 Hong Kong-Perth 7 Hong Kong-Brisbane 4 Hong Kong-Cairns-Brisbane 4 Hong Kong- Adelaide Qantas 7 Hong Kong-Sydney 7 Hong Kong-Melbourne 5 7 Hong Kong-Brisbane ^ Cathay Pacific expanded with a daily Hong Kong-Sydney service with a larger aircraft (B777-3ER) in December 214 and adding a second daily service in October 215. Source: CAPA- Centre for Aviation and OAG, Tourism Australia analysis 3 HONG KONG Market Profile 215

4 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. 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 there is still a major bulk of consumer choosing to book through the extensive branch office networks of retail agencies, especially for the final payment of the booking. system Wholesalers/ Large Agents Commission Level: 3% to 5% 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 to consumers and had developed their own consumer brand and positioning to capture their 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, Cathay Pacific Holidays and SIA Holidays. They also have their own networks of retail agencies. Special Interest Specialised niche travel agents are growing in the market catering to a specific target audience, promoting experiences such as golf, luxury, romance (overseas trips for pre-wedding photography and honeymoon travel) and diving. Packages to international marathons are popular for Hong Kong visitors, particularly the Gold Coast Marathon. Cruise packages are increasingly in demand and popularity amongst families. Royal Caribbean Cruises and Carnival Corporation had set up Hong Kong office to increase their sales and marketing focus. Retail Agents Commission Level: up to 3% The Travel Industry Council in Hong Kong has 1,755 travel agent members, which includes 1,519 outbound agents as of May 215. 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 and China Travel Service (HK) Limited. Major package retail agents include Travel Expert, Wincastle Travel, Westminster Travel, Lotus Tours and Jebsen Holiday. Other retail agencies such as Amusing Travel Plan Limited, Greenice Tours, Lightfoot 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 valueadd offers. 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. 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 1 May 215, there were 1,128 qualified Aussie Specialists in Hong Kong and a further 354 agents in training. 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. 4 HONG KONG Market Profile 215

5 Trends A number of National Tourist Offices have established a presence (via an office or representation) in Hong Kong as the market grows, such as Czech Tourism and Brand USA. Retail group agents are promoting new destinations or itineraries in an attempt to sustain market share with the growing Free and Independent Traveller (FIT) trend. There is a growing trend towards digital applications, such as retail agencies using QR codes used for itinerary promotion. The number of online players catering for the FIT segment is growing, with operators such as Trivago.com, Hotels. com increasing their sales efforts. 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 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 make purchasing decisions based on valueadd offers and 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. Lead times for leisure travel bookings are becoming shorter. Printed materials such as guide books for destination information are still popular but there is a trend towards destination apps and electronic guidebooks. Planning a visit to market 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 Chinese 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 Chinese 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. 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: the South Australian Tourism Commission, Tourism and Events Queensland, 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: statistics/arrivals For the latest International Visitor Survey statistics, visit: statistics/international Key trade and consumer events in 215 and 216 Event Location Date Inter Tour Expo 216 (ITE & MICE Hong Kong) Hong Kong June 216 Australian Tourism Exchange (ATE) Gold Coast, May 216 (TBC) Australia 5 HONG KONG Market Profile 215