CHINA MARKET ACTIVATION PLAN II

CHINA MARKET ACTIVATION PLAN II OCTOBER 2014

Mindil Beach Sunset Markets Northern Territory Government Disclaimer Tourism NT 18 Parsons Street Alice Springs NT 0870 PO Box 2532 ALICE SPRINGS NT 0871 Telephone: 08 8999 3900 Email: reception.tourismnt@nt.gov.au www.tourismnt.com (corporate) www.travelnt.com (consumer) We have taken due care and attention in ensuring information contained in this document was true and correct at the time of publication; however, changes in circumstances after the time of publication may impact upon its accuracy. We do not warrant that it is correct, complete or suitable for the purposes for which it is intended to be used. We disclaim all liability associated with the use of this information. Published October 2014 by Tourism NT, a statutory authority of the Northern Territory Government. Aboriginal and Torres Strait Islander readers and viewers should be aware that this material may contain images or names of deceased persons. Front cover images: (clockwise from top left) Territory Day Fireworks Yellow Water Billabong, Kakadu Sounds Of Silence, Uluru-Kata Tjuta National Park Uluru-KataTjuta National Park Crocosaurus Cove, Darwin City

CONTENTS Introduction 3 Background 6 Planning Framework 9 Strategic Context 11 Strategic Focus Area One: Marketing Insights 12 Strategic Focus Area Two: China Ready Destination 16 Strategic Focus Area Three: Aviation Access 18 Strategic Focus Area Four: Sales & Marketing 19 Strategic Focus Area Five: Investment Attraction 22 Model for Delivery 25 Measuring our Performance 26 CHINA MARKET ACTIVATION PLAN II 1

INTRODUCTION The China outbound travel market is the largest and fastest growing travel market in the world driven by increasing economic prosperity, and increased aviation capacity. As China progressively opens its doors to the world, a more internationally aware and digitally connected population is seeking to explore the world through travel. China is Australia s most valuable tourism market and it represents a significant opportunity for the Northern Territory given the NT s strategic positioning as Northern Australia s gateway between Australia and Asia. By the year 2020 Australia is expected to receive approximately one million annual visitors from China. Tourism NT has a target of attracting 30,000 visitors by 2020, equivalent to 3% of the estimated Chinese visitor market to Australia. This requires the NT increasing its market share by 1.2% from 2013/14 figures. This is an achievable goal if industry is prepared to work with Tourism NT and other industry partners to effectively target this market: participating in a consistent and integrated marketing approach, supported by tailored visitor experiences and itineraries that meet with market expectations. While the Chinese market represents a significant opportunity for the Northern Territory, global competition to attract visitation and investment from this market is fierce and a focus on numbers can over-simplify the challenge. Since the year 2000, Northern Territory visitor numbers from China (including Hong Kong and Taipei)* have grown at an average rate of 19 percent per annum and while the growth rate is impressive, it is off a small base. The China market still only represents a 5 percent share, or 13,000, of the NT s total international visitation. Figure 1 charts all purpose visitation from China, Hong Kong and Taipei since 2005. 14,000 13,010 12,000 10,000 Visitor Numbers 8,000 6,000 4,000 2,000 3,128 0 YE Jun 06 YE Jun 07 YE Jun 08 YE Jun 09 YE Jun 10 YE Jun 11 YE Jun 12 YE Jun 13 YE Jun 14 Figure 1: Chinese visitors to the Northern Territory (all Purpose, including visitors from Hong Kong and Taiwan) The Northern Territory is a relatively remote, big ticket destination choice for the Chinese traveller, therefore to achieve success, it is critically important that the Northern Territory undertake a targeted strategy, rather than a more generalised approach focusing on China s mass market for Australia. * From this point forward, a reference to China refers to the NT target markets of Hong Kong, Taipei and key cities within Mainland China. See Figure 4 on page 15. CHINA MARKET ACTIVATION PLAN II 3

Key to this is focusing on specific target market segments that have the propensity to travel to the NT and whose travel aspirations and expectations are aligned to what the Northern Territory has to offer. These target markets include 30-49 year old affluent free independent travellers; Special interest travellers (eg. photography, self-drive, fishing, hunting, and food and wine); Chinese international students, working holiday makers from Taiwan and the Hong Kong FIT Youth Segment; Business event and incentives market aligned to the Northern Territory s industry strengths, such as mining and resources. Central to unlocking these market segments is leveraging and expanding the Northern Territory s existing networks and relationships in Australia and China. One exemplar of this approach is the Northern Territory Convention Bureau s Business Events Ambassador Program launched in 2013-14 where prominent industry champions are working to bring business events to the NT in fields that have strategic importance to the economic, social and cultural development of the Territory. The Ambassadors have been chosen for their ability to influence at the highest level and a number of the Ambassadors have been specifically selected for their high level networks in China. While Tourism Australia has broadened its geographic focus for marketing to China in recent years, Tourism NT will continue to concentrate marketing efforts on the mature destinations of Hong Kong and Taipei, the tier one mainland cities of Beijing, Shanghai and Guangzhou, as well as the tier two mainland cities of Chengdu, Nanjing, Hangzhou, and Shenzhen. The reason for this focus is that these consumer markets are more mature from a travel perspective, the trade relationships in-market are well-established and the air linkages are relatively good. Accordingly Tourism NT is taking a strong digital approach to broaden consumer engagement around NT destinations and products, with the aim of converting the aspirations to travel to relatively new Australian destinations. Digital targeting through social media is also being used to engage with special interest or affinity groups both on a business-to-business (B2B) and a business-to-customer (B2C) basis. Given the highly competitive nature of the market, it is essential that the Northern Territory maximise its marketing spend by leveraging partnership opportunities with Tourism Australia, other gateway State Tourism Organisations, educational institutions, airlines, Australia-China Business associations and other China tourism stakeholders. When looking at the supply side, it is evident that whilst a number of Northern Territory businesses have commenced working in this market, there are significant capacity impediments to growth that must be addressed in order for the Northern Territory to noticeably expedite growth in visitation and realise the market s full potential, relative to the NT s offering. Some of the challenges in servicing the market include: limited convenient air access and no direct air access from key China source markets into the Northern Territory; the limited number and size of private NT tourism product operators in the Chinese market; the limited number of established Chinese specific distribution and ground handling businesses located in the NT; 4 CHINA MARKET ACTIVATION PLAN II

Ubirr, Kakadu National Park the limited availability of China ready product, in particular China market adapted accommodation and guest experiences that meet market expectations; access to Mandarin and Cantonese speaking guides, translated signage and tourist information; the limited awareness of China friendly payment options from businesses in the NT (tourism, hospitality and retail) ie. China Union Pay and Ali Pay; the limited number of NT Chinese community involved in the tourism industry; and the inability to meet market expectations in relation to pricing due to limited volumes. Addressing these challenges will require that industry and Government undertake a well informed, proactive and measured approach to growing the Northern Territory s market share of the inbound traffic to Australia, whilst working in parallel to increase industry capability and capacity, aiming long term for steady sustained growth in the market. Part of the solution to addressing the shortcomings in supply-side infrastructure is to attract Chinese investment into the sector. This is a key focus for the Northern Territory Government in its push to develop Northern Australia and to promote the Northern Territory as a compelling destination for Chinese investment. It is essential for the Northern Territory Government to: work with industry to identify and package investment opportunities to take to the China market; work with the local Chinese business community where relevant to engage them in tourism industry; and continue to leverage strategic partnerships in-market with key partners such as AustCham China, the Australia China Business Council, China Development Bank and the China Council for the Promotion of International Trade to generate awareness, and encourage and facilitate investment. CHINA MARKET ACTIVATION PLAN II 5

West MacDonnell Ranges BACKGROUND Tourism NT has had a presence in the China market since 2004. In 2012, off the back of strong growth forecasts for outbound travel from China and an increasing focus on the market at a national level, the key NT stakeholders came together to review activities, share market insights and discuss collaborative opportunities to harness the potential of the market for the Northern Territory into the future. As a result of these collaborations, Tourism NT developed the China Market Activation Plan in 2012 with the goal of attracting 30,000 Chinese visitors spending $25 million by 2020. In 2013-14, the Northern Territory received over 13,000 Chinese visitors (including mainland China, Hong Kong and Taiwan). This document, the China Market Activation Plan II or CMAP II, provides an update to the original, focusing on the most recent increased funding, latest consumer insights, target market analysis, policy changes and collaborative platforms that present opportunities for the Northern Territory tourism industry. CMAP II also seeks to consolidate existing programs and activities and introduces a new focus on attracting Chinese investment as a lever to drive tourism growth. RESEARCH In recent years, Tourism NT has invested significantly in Chinese focused consumer research, including undertaking dedicated consumer research to understand the barriers and triggers to booking, travel planning timeframes and sources of research. It has leveraged Tourism Australia s China research to conduct market audits, consumer demand testing and to deliver 2020 forecasts specific to the Northern Territory. This investment highlights Tourism NT s commitment to the market and its philosophy to adhere to an evidence-based marketing approach. For up-to-date research and information on Tourism NT s activities in the China market visit: http://www.tourismnt.com.au/en/marketing/international-marketing.aspx 6 CHINA MARKET ACTIVATION PLAN II

AIR ACCESS Since CMAP was first launched in 2012 changes to the aviation landscape have improved access opportunities for Chinese visitors to get to the NT. In particular the addition of Philippine Airlines and Malaysian Airlines services to Darwin, together with the established services of SilkAir and Jetstar, have increased linkages and capacity opportunities for growth out of China, Hong Kong and Taipei via Singapore, Kuala Lumpur and Manila. The expansion of code share arrangements, interline agreements and special price agreements between Chinese carriers and foreign carriers, such as the China Southern Airlines and China Eastern Airlines code share on Qantas flights, are increasing the relative attractiveness and accessibility of Australia as a holiday destination for Chinese travellers from numerous destinations within China. While direct services would be a great boost for growth capacity, the Northern Territory has succeeded in gaining strong tourism visitation numbers from other markets without direct aviation access (eg. Germany, USA, Japan). It is central to the strategy of CMAP II that the Northern Territory undertake cooperative marketing partnerships with the Australian states that enjoy direct air access, leveraging the opportunities to encourage visitors to travel from the key gateways into the NT. While there are no direct aviation links between the NT and the key Chinese source markets, it is not seen as a barrier to achieving the target of 30,000 visitors by 2020. The current priority for the Northern Territory Government is to focus on working with key existing aviation partners in China to grow passenger traffic via the traditional Australian gateways (including Cairns) and the Asian hubs of Singapore, Kuala Lumpur and Manila. Dispersal across the NT (to Darwin, Alice Springs and Uluru) will be achieved by ensuring they have the best possible interline agreements for connecting through to the Northern Territory, with the aim of filling current capacity and, over time, generating enough demand to attract the establishment of direct services. CHINA MARKET ACTIVATION PLAN II 7

CHINA TOURISM LAW AND THE REDESIGN OF THE AUSTRALIA-CHINA APPROVED DESTINATION STATUS SCHEME A significant change in the policy landscape since the first CMAP is the introduction of the New China Tourism Law (the Law) which came into effect on 1 October 2013. The Law seeks to address the anti-competitive and unfair practices of some inbound travel agents. These practices often include the travel agents, organising travel at unreasonably low prices, designating specific shopping sites, or optional tours without the approval of the consumer. Given that the nature of the market is that the shopping element is an intregal part of the generic travellers itinerary, this change is having a sizeable impact. Early effects have seen an increase in the number of Chinese consumers looking for alternative channels for planning and booking travel, away from the traditional travel agent channels, ultimately giving rise to more independent travellers. In addition, agents who relied on the traditional group travel market are looking to the incentives and business events market as a source of new group customers. At the time of writing, the Australian Government is in the process of redesigning Australia s Approved Destination Scheme (ADS) arrangement with the Chinese Government. The current scheme has been in place since 1999 and there are several factors driving a redesign of the scheme, one of which is to bring it in line with the introduction of the Law. Tourism NT supports a redesign of the ADS on the basis it will maintain Australia s competitive advantage and will, together with the recently introduced Law, increase the quality of the experience for Chinese travellers and, importantly for the NT, promote greater equity and dispersal of economic benefits arising from Chinese visitation to Australia. TRADE PARTNERS Tourism NT has established key trade partners across Tier 1 cities and regions in mainland China as well as representation in Hong Kong including: Beijing CYTS - one of the largest retail agents in North China, with 40 retail shops in Beijing and nine branches in China Ctrip in Shanghai - the largest travel company in China with an online travel presence. It has 16 product offices in China GZL in Guangzhou - one of the biggest retail travel agent groups in South China Sichuan CYTS in Chengdu the largest travel retailer/wholesaler to Australia in South West China Hong Thai Travel Services Limited - one of the largest travel agencies in Hong Kong with 19 local branches and outreach branches in Macau, Shenzhen, Guangzhou and Singapore. For up-to-date information regarding our trade partners, please visit : http://www.tourismnt.com.au/en/marketing/international-marketing.aspx 8 CHINA MARKET ACTIVATION PLAN II

OPERATOR INVOLVEMENT In 2013-14 Tourism NT delivered the Asia Product Partnership Program which engaged NT operators in a program of marketing activities focussed on the high growth Asian markets, particularly China. Results of the program for 2013-14 included: six companies participating in the Greater China Mission; ten companies participating in the International Tour Operator Engagement Sessions and; five taking part in China ready workshops. In October 2014, Tourism NT will lead its third annual Greater China Mission visiting Hong Kong, Guangzhou, Shanghai, Beijing and, for the first time, Taipei. This mission will provide an opportunity for NT operators to be introduced and build relationships with the Chinese market; to educate them about the Northern Territory and their products. At the time of writing, eight operators had confirmed their participation in the Mission, two more than the previous year. CHINA READY Since the 2012 CMAP was launched, a number of China Ready programs have been developed to assist industry in tailoring products and services to meet the needs of the China market. In the Northern Territory, a number of China Ready workshops have been held to assist operators to understand the market, evaluate the opportunity for their business and raise awareness of assistance programs and channels available to businesses targeting the China market. In 2013 the Australian Government developed the Servicing the Chinese Visitors Project with the aim of increasing the supply of quality Chinese speaking tour guides. The program is being rolled out throughout Australia in 2014. Through the redesign of the ADS scheme it is Austrade s intention to develop an approval process for tour guides supervising ADS tour groups and to monitor the tour guide s compliance against the new ADS Code of Business Standards and Ethics. The new code will set out the minimum standards expected of an ADS tour guide. A China Ready accreditation for tourism businesses has been developed as part of the Australian Tourism Accreditation Program. This program has the potential to help pave the way for established businesses, that are interested in tapping into the China market, by offering businesses the opportunity to become China Ready accredited. PLANNING FRAMEWORK Figure 2 provides an overview of the Planning Framework as it relates to Tourism NT s CMAP II. Framing the Future is the Government s vision for the Northern Territory. A Prosperous Economy is one of four strategic foci of the Government and is underpinned by the Economic Development Strategy. This strategy places the Northern Territory at the forefront of the Australian Government s nation building agenda for Northern Australia, and positions Darwin as Australia s gateway to Asia. The CMAP II directly relates to Tourism Vision 2020 and the Asian Engagement, Trade and Investment (AETI) Strategy, articulating the key activities and programs to be delivered by Tourism NT and partners to drive tourism growth and investment from China. CHINA MARKET ACTIVATION PLAN II 9

The targets set out in the CMAP II form part of the Tourism Vision 2020 goal to grow the visitor economy in the Northern Territory to $2.2 billion and the AETI Strategy to capitalise on the Northern Territory s high quality offerings, competitive advantages and proximity to rapidly growing Asian markets to increase trade and investment flows that strengthen and diversify the Territory economy. Activities in CMAP II closely align with and leverage off activities undertaken by Tourism Australia and Austrade in the China market. The Northern Territory will work in close collaboration with the Commonwealth to achieve economies of scale in marketing initiatives and to ensure maximum return on investment for every dollar spent in the market. COMMONWEALTH GOVERNMENT RELEVANT PLANS AND POLICY Northern Australia White Paper NORTHERN TERRITORY GOVERNMENT PLANNING FRAMEWORK Framing the Future Prosperous Economy Balanced Environment Strong Society Confident Culture Prosperous Economy: Economic Development Strategy Blueprint for the Northern Territory Where Government is focusing its efforts and why Tourism Vision 2020: NT Strategy for Growth Asian Engagement Trade and Investment Strategy Evidence based strategies with actions and measures Tourism Australia China 2020 Strategic Plan Austrade / Tourism Australia Australia Unlimited China Market Activation Plan Eg. Asia Product Partnership Program China Activity Plan Investment Attraction Program Individual Sector Activation Plans Figure 2: Planning framework 10 CHINA MARKET ACTIVATION PLAN II

TOURISM 2020 VISION ~ 30,000 Chinese visitors $25 million spend 30 operators participating in the Asia Product Partnership Program For more information, go to Tourism Vision 2020: Northern Territory s Strategy for Growth STRATEGIC CONTEXT A few of the factors that warrant special consideration in developing strategies to attract visitation from the China market include: The sheer size and diversity of the China market; The rapid change in the lifestyles and aspirations of the Chinese population; Rapid digital enhancement, and; The degree of Government control over traditional travel distribution channels. Extensive market research and industry consultation was conducted in the development of the first China Market Activation Plan (CMAP) in 2012. Since that time Tourism NT and industry partners have been active in the market and the research and consultation has been increased. Through these insights and experiences in-market, Tourism NT has identified five strategic focus areas to guide the collective efforts of industry and Government along the path to achieving the goal of attracting 30,000 Chinese visitors with a total spend of $25 million by 2020: Strategic Focus Area One: Strategic Focus Area Two: Strategic Focus Area Three: Strategic Focus Area Four: Strategic Focus Area Five: Market Insights China Ready Destination Aviation Access Sales and Marketing Investment Attraction CHINA MARKET ACTIVATION PLAN II 11

STRATEGIC FOCUS AREA ONE:MARKETING INSIGHTS The population of China is estimated at 1.3 billion, the country is vast and the culture diverse. China is not one homogenous market; it comprises multiple different markets in various stages of maturity. Understanding the Chinese traveller, who they are, their expectations, purchasing behaviour, travel desires and choices is vital as it underpins strategy development in marketing and experience development. Tourism Australia and Tourism NT have invested heavily in researching the Chinese traveller and have developed a targeting strategy based on these insights. Tourism Australia uses geographic segmentation and this research, combined with Northern Territory s own insights on destination awareness, perceptions, preferences and areas of latent demand, is used to understand our true market potential. It is also used to develop a profile of the ideal visitor target segments and to form the basis of Northern Territory s marketing direction in China (see Figure 3 below) Figure 3: Marketing strategy development based on consumer insights COMMERCIAL INSIGHTS In-market expertise Commercial business intelligence Formal industry surveying MARKET FUNDAMENTALS NT Market Prioritisation Visitor demographics Visitor nights Dispersal Expenditure DESTINATION PERCEPTION Brand values Regional / activity appeal Likelihood to travel to the NT Aviation access Other barriers COMMUNICATION PERFORMANCE TESTING Awareness measurement Execution effectiveness measurement Image testing Competitive analysis TRAVELLER BEHAVIOUR Booking lead time Information sources Prompts / triggers to book Preferred holiday types 12 CHINA MARKET ACTIVATION PLAN II

So who are the Northern Territory s best prospects? 30-49 year old affluent free independent travellers, experienced in Australian travel. These travellers are the affluent middle-class, mainly university educated with at least basic English language skills. They are well-travelled and have been previously to Australia or UK/ Europe/ USA. The ability to see iconic and famous sights features strongly in their destination choice. They are also interested in local culture and exploring nature, however feeling safe and comfortable is equally important to them. They are described as Assisted Free Independent Travellers, tending to pre-purchase their travel through trade partners recognised for selling Australia, although they do conduct a lot of travel research online. Most enter Australia through Sydney spending 9-11 days in the country on a pre-arranged itinerary involving multiple destinations. On the ground, they expect to have a full itinerary and are not accustomed to long road distances between attractions. While not essential, they would prefer to have access to Chinese speaking guides and Chinese food for at least one meal per day, ideally breakfast. They have high expectations of service and like to shop for local products, especially branded, to take home as souvenirs of their travels. Special interest travellers (e.g. food and wine, photography, self-drive, fishing and hunting) These travellers are also from among the affluent middle-class with special interests being a key motivation for their travel. While not members of official associations, many are members of online affinity groups ; networking and communicating through social media sites. Chinese International Students and Taiwanese Working Holiday Makers (WHM) and the Hong Kong youth segment. In 2012 there were 150,000 enrolments of Chinese student enrolments in education and training institutions across Australia, equivalent to 29% of all international students. While only 0.1% of the market is based in the Northern Territory, the Chinese students that reside in other centres such as Sydney and Melbourne are key targets in the domestic market for travel to the Northern Territory. In addition, Northern Territory education stakeholders are working to promote the Northern Territory overseas, including China, as a destination of choice for education at the secondary and Tertiary level. Taiwan is Australia s second largest source market for working holiday makers after the UK, with 29,366 working holiday (first and second) visas granted in 2013-2014. Tourism NT s main focus is to target Taiwanese WHM in Taipei and on-ground in Australia, for travel to the NT. The youth market in Hong Kong is also a key target, particularly for short break experiences to the Top End via Singapore. Business events market aligned to the Northern Territory s industry strengths and the incentives market. From a business tourism perspective, China is one of the Territory s major trading partners, with many Chinese companies connected with the resources sector. There is an opportunity to leverage these business links and to target business event decision makers and organisers in China to develop the lucrative business events and incentives market travel segment. The NTCB s Business Events Ambassador Program seeks to tap into the business networks and spheres of influence of prominent industry professionals to develop business event hosting opportunities for the Northern Territory. CHINA MARKET ACTIVATION PLAN II 13

And where do we find them? While Tourism Australia has broadened its geographic focus for marketing to mainland China in line with the opening up of the China outbound ADS scheme, Tourism NT will continue to concentrate marketing efforts on the tier 1 mainland cities of Beijing, Shanghai and Guangzhou, the mature tier 2 mainland markets of Chengdu, Nanjing, Hangzhou, and Shenzhen and the mature destinations of Hong Kong and Taipei. Refer to Figure 4 on page 15 for a map of the key target source markets. These are the markets where the Territory s investment is best realised as the consumer markets are more mature, trade relationships are well-established and the air access is relatively good. In the consumer market, Tourism NT will target consumers with a high awareness and desire to travel to Australia, using digital marketing to increase the profiling of NT destinations and experiences so that the NT is considered as part of planning any Australian itinerary. In addition to increasing profiling, digital targeting through social media will be employed to tap into special interest or affinity groups such as those interested in food and wine, photography, fishing, hunting or self-drive holiday experiences. Now, who are our competitors? It is a mistake to think that the Northern Territory simply competes with the east coast of Australia for Chinese visitors as our target market is very different to the traditional east coast Chinese visitor. Experts in-market advise that the NT competes internationally for Chinese travellers with destinations with similar natural, cultural and adventure tourism offerings, such as Mongolia, Nepal, South America and Africa. This notion is supported by Tourism Australia s Consumer Demand Project which found that world class nature is a core strength of Australia for China. Further, according to Tourism Australia s Knowing the Customer in China (2012) research, Australia is attractive to Chinese travellers due to the relative safety of the destination, the ease of access (visa processing) and its laidback lifestyle. While iconic attractions are undoubtedly key motivators for Chinese visitors to Australia, our strengths in safety, access and lifestyle should be a key focus of all marketing communications targeting the China market. 14 CHINA MARKET ACTIVATION PLAN II

MARKETING INSIGHTS ~ ACTIVITIES Continue customized consumer demand research and share market intelligence from all sources (eg. Tourism Australia, Tourism NT, in-market representatives) with industry Further develop target market profiles and insights for sharing and use by the wider NT tourism industry and in Tourism NT s marketing programs Educate NT industry about the opportunity, distribution partners and unique preferences of Chinese visitors NT Government to learn from industry experiences in the China market and leverage existing industry contacts and networks. Facilitate partnerships between NT operators and companies active in relevant market segments to address gaps for sales and marketing, service and product Match priority segments with market opportunity and stimulate operator involvement Build a market intelligence system that captures and informs stakeholders of commercially important market trends and visitor behavior Refine the target markets and evaluate the return on investment from the various market segments Develop Destination Visitor Satisfaction surveys for the Chinese consumer market Complement IVS statistical data with satisfaction surveys and trade partner reports along with industry sentiment and reports on visitation Figure 4: Geographic target markets: Mainland China, Hong Kong and Taipei CHINA MARKET ACTIVATION PLAN II 15

STRATEGIC FOCUS AREA TWO:CHINA READY DESTINATION The Chinese travel market is unique, with specific requirements and expectations of an international holiday experience. While there are a number of core experiences in the Northern Territory that are attractive to the Chinese traveller, the market requires tailored pricing and packaging of experiences and itineraries, which are culturally relevant and address key practical requirements. Itineraries must be balanced, delivering the sought after natural and cultural experiences, whilst also attending to the Chinese traveller s desire for value, safety and comfort away from their home environment. While the Northern Territory has made some inroads to developing visitor experiences that meet the needs of this market, there is a significant amount still to do to deliver a chain of confidence to the customer and to ultimately harness the full potential of the market for the destination. For example, a lack of Mandarin and Cantonese speaking guides, in-language information, signage and China friendly payment options impacts on the Northern Territory s ability to deliver a quality tourism experience to the Chinese visitor and also creates issues from a logistical and safety perspective. Development of language skills in the sector and provision of not only translated, but culturally tailored, relevant tourism information, is a priority for destinations and businesses looking to attract the Chinese traveller. From an accommodation perspective, the Northern Territory s current offering rates poorly when compared to the service and standards available in other approved destinations for Chinese travellers. Further, inbound tour operators are unable to secure special rates as the Northern Territory is not a volume destination for Chinese visitation. However, while the Northern Territory cannot compete on price, it can focus on promoting the destination as a high value region for agents to sell, for example, leveraging some of the NT s icons, including the Word Heritage Listed National Parks of Uluru- Kata Tjuta National Park and Kakadu National Park packaged together with premium tourism experiences and accommodation. Highlighted above are the key issues for consideration in relation to developing a China Ready Northern Territory. As the market is constantly changing, please reference the following websites for current information. Tourism NT http://www.tourismnt.com.au/en/marketing/international-marketing.aspx Tourism Australia http://www.tourism.australia.com/markets/market-regions-greater-china.aspx For insight into our competitors approach, Tourism Queensland has some detailed fact sheets on Understanding the Chinese Independent Traveller, Chinese Visitor Expectations, Chinese Cultural Overview, Useful Chinese Greetings etc. See http://teq.queensland.com/industry-resources/how- To-Guides/Be-China-Ready The Northern Territory tourism industry now has access to the extensive information, tools and programs it requires to make effective business decisions regarding entering and working China market. Recent initiatives, including the introduction of a China Ready accreditation as part of the Australian Tourism Accreditation Program and the Servicing the Chinese Visitor Project presents an opportunity for Northern Territory operators to develop and align their tourism product with the needs of the China market. 16 CHINA MARKET ACTIVATION PLAN II

Ultimately, the Northern Territory s success in the China market relies on the success of the tourism industry in attracting the market to the Northern Territory and delivering experiences that meet the expectations of the Chinese traveller. CHINA READY DESTINATION ~ ACTIVITIES Deliver an annual Asia Product Partnership Program outlining development and marketing opportunities Share with industry resources, research and market insights, marketing assets and tools for product enhancement and adaptation Ongoing delivery of China Ready programs Develop Chinese business events and Incentives itineraries that align with NT industry strengths, and establish the NT as a preferred destination for business events and incentives with a unique selling proposition relevant to the China market Collaborate with NT industry and existing contacts to expand networks and build relationships from which to develop business. Encourage industry to develop appealing Asian travel experiences and offer Chinesespeaking tour guides Develop a China specific website and related initiatives for NT operators to better communicate to Chinese consumers Attract appropriate Chinese inbound tour operators to focus on the NT as a destination to promote through the Chinese distribution partners. Identify new and existing tourism opportunities for Chinese visitors and investors Identify innovative technology solutions to deliver quality tourism information via multi-channel distribution Work with stakeholders include NT and Commonwealth Park agencies to ensure Chinese language interpretation, signage and market-appropriate activities are available at key attractions Collaborate with Australian Tourism Export Council (ATEC), Austrade, Tourism Australia and the Department of Industry to leverage China programs and activities Work with NT Airports, Councils and Regional Tourism Organisations (RTOs) to provide a genuine welcome through improved Chinese language signage and language abilities Work with industry, RTOs, China Union Pay and Ali Pay to encourage take up and use of China friendly payment options CHINA MARKET ACTIVATION PLAN II 17

STRATEGIC FOCUS AREA THREE:AVIATION ACCESS The Northern Territory s aviation links with mainland China, Hong Kong and Taipei have been strengthened with the introduction of new and expanded air services offered via the major Asian hubs of Singapore, Kuala Lumpur and Manila. Aviation providers Qantas, the SilkAir/ Singapore Airlines network, Jetstar, AirAsia, Malaysia Airlines and Philippine Airlines provide Chinese travellers with a range of itinerary options to access the Northern Territory. The expansion of code share arrangements, interline agreements and special price agreements between Chinese carriers and foreign carriers are increasing the relative attractiveness and accessibility of Australia, and therefore the Northern Territory, as a holiday destination for Chinese travellers from numerous destinations within China. Currently, most Chinese holiday visitors who visit the Northern Territory enter Australia through Sydney or Melbourne on a multi-destination itinerary that includes a visit to Uluru, Alice Springs or Darwin. The NT is closely monitoring Cairns to evaluate opportunities to leverage growth on point-to-point itineraries. AVIATION ACCESS ~ ACTIVITIES Drive demand and build sustainable aviation services through promotion of existing flight connections and cooperative marketing activities with airline partners Overall, the NT continues to see healthy increases in Chinese passenger arrivals partly due to improved aviation links and a maturing market willing to travel on non-chinese carriers. In addition to this, Tourism NT s marketing partnerships with airlines and Tourism NT-led activities in-market that raise the awareness of the NT as a holiday and business destination. Tourism NT s current focus is on generating demand through marketing activities to support the existing capacity. Link airline partners to Australian preferred trade partners with the aim Tourism NT will continue to proactively seek opportunities of packaging the NT to offer add-on itineraries to the Northern Territory targeting those travellers taking direct flights from China, Hong Kong and Taipei, through the Australian gateways of Melbourne, Sydney and Brisbane, Cairns and Perth, along with visitors travelling through the key Asian gateways of Singapore, Kuala Lumpur and Manila for travel into Darwin. This marketing activity is supported by the Department of Transport and NT Airports aviation development work in relation to connectivity. Collectively, these efforts, which are delivering growth in Chinese passenger numbers, all contribute to building the case for direct air services between key Chinese markets and the NT. Whilst direct air services to the NT from China are not a requirement in seeking the target of 30,000 visitors per year by 2020, it would provide a welcome boost for the Northern Territory. Establishment of direct air services comes first and foremost from a sustained increase in demand. It also requires a whole-of-government approach to business case development that is cognizant of the ongoing relationships with the Australian, Chinese and other Asian carriers and the opportunities for expansion. The NT Government will continue to work strategically to build the case for the establishment of direct services with China, where those services will operate on a genuinely sustainable basis. 18 CHINA MARKET ACTIVATION PLAN II

STRATEGIC FOCUS AREA FOUR:SALES AND MARKETING Tourism NT s marketing and communications activities are informed by dedicated Northern Territory consumer research that identifies the barriers to travel to the Northern Territory, the triggers to book, the planning time and research touch points. From these insights Tourism NT works with key trade partners to shape marketing strategies and communications content with the aim of influencing visitors to book their holidays to the NT. This commercially important market intelligence is shared with Northern Territory operators to develop their product and invest their own marketing dollars to grow our NT voice. As outlined in the Market Insights section of this document, Tourism NT is not targeting the mass market, many of whom are looking for a cheap trip to go shopping and who only support Chinese companies. Tourism NT is growing a sustainable free and independent traveller market segment (FIT) that includes the affluent 30-49 year old middle-class consumer, experienced in Australian (or UK/Europe/American) travel; the youth traveller comprising the education and working holiday maker segments; the special interest or affinity groups; and the business events market. Tourism NT has a representative agency based in Shanghai and currently works in market on year round cooperative campaigns with key trade partners across the core cities in mainland China including CYTS (Beijing), GZL (Guangzhou) and Ctrip (Shanghai), Sichuan CYTS (Chengdu) and Hong Thai Travel Services (Hong Kong), and other ad-hoc partner campaigns when the opportunity arises, often in conjunction with Tourism Australia. They comprise digital, social media, print and consumer seminar activity to promote both the Red Centre and Top End to consumers in these cities and surrounding regions. The aim is to increase the profile of NT destinations and products and to equip the trade to better sell the NT to their customer groups. The NT aims to capitalise on the latent demand following the introduction of the new Law as outlined previously. In the consumer market, Tourism NT targets consumers, predominantly through digital channels when they are researching and planning an Australian holiday. In particular, Tourism NT will target the prominent vertically integrated travel planning sites and apps that are most relevant to the Chinese consumer. The aim is to ensure that the Northern Territory is considered as part of a consumer s planning of any Australian itinerary. In addition, digital targeting through social media is also being employed to tap into special interest or affinity groups such as those interested in photography, self-drive, fishing, hunting and food and wine holiday experiences. In Australia, Tourism NT works with a select group of partners to promote the Northern Territory within the Australian based Chinese communities. The purpose of this is to stimulate visitation from the resident population, and to ensure that the Northern Territory is considered when friends and relatives come to visit. Tourism NT s market research shows that 42% of Chinese holiday visitors made their decision to travel to the Northern Territory based on recommendations from friends and family. Among the targets onshore are students studying in Australia, WHMs from Taiwan and the Hong Kong Youth Segment. Lastly, but most importantly, strategic partnerships with key industry stakeholders such as Tourism Australia, Austrade, the business and leisure travel trade, aviation and non-tourism related partners are integral to the Northern Territory achieving success in this market. Similarly Tourism NT s relationship with other NT government agencies such as the Department of Chief Minister s Asian Engagement Trade and Investment team adds credibility in the business market, particularly in China where there is a high regard for the office of Government. It is only through working collaboratively and leveraging strategic partnership opportunities that the Northern Territory will deliver the 2020 goal of 30,000 Chinese visitors, spending $25 million. CHINA MARKET ACTIVATION PLAN II 19

SALES AND MARKETING ~ ACTIVITIES Collaborate with Tourism Australia to build market demand for the NT including leveraging key trade and consumer marketing initiatives e.g. Restaurant Australia, Aussie Specialist Program, Australia Week in China Continue to seek specialist commercial expertise and in-market representation to optimise the NT s investment, opportunity and market share growth Business Events to target and engage with corporate companies and incentive travel buyers to attract them to hold events in the NT Develop of China-specific marketing assets and content Implement a Chinese digital and social media strategy including a website hosted in China with customised content to present the destination to the Chinese audience Lead NT operator in-market activities through the Asia Product Partnership Program such as the annual China Mission Through DOB programs, facilitate the development of pre/post touring and technical tour itineraries in language Insist on consistency in destination marketing communications across industry Continue to build major trade partnerships with the preferred Chinese wholesalers including CYTS, Ctrip, GZL, and Hong Thai Travel. Through DOB programs, encourage innovative cluster marketing initiatives amongst operators, such as delivering packages tailored to the Chinese market. 20 CHINA MARKET ACTIVATION PLAN II

Mindil Beach Sunset Markets Increase focus on relevant special interest groups e.g. self drive, photography, hunting, fishing, food and wine. Identify Australian (east coast) based Chinese market opportunities to attract Chinese born residents, Visiting Friends and Relatives (VFR) and ex-pats as potential leisure visitors Shift spending over time to more direct channels and partnership support programs that will have a greater impact Establish an international education marketing partnership with Charles Darwin University and the Department of Education Drive a whole-of-government approach to leverage the Australia Unlimited partnerships to help connect Chinese investors with tourism Work with government, local business and community partners in the Northern Territory who have existing relationships with visiting Chinese travellers Explore partnerships with traditional and non-traditional partners to leverage activity in market inluding building on existing contacts and networks already established by NT Industry. Facilitate distribution training and education through trade partnerships and technology Explore visitation opportunities through sister-city relationships Build a network of China-based business partners in key regions of China Develop strong partnerships with other states and explore dual destination activities CHINA MARKET ACTIVATION PLAN II 21

STRATEGIC FOCUS AREA FIVE:INVESTMENT ATTRACTION China has more than a million high net worth individuals, of whom over 300 are billionaires ($US). In 2012 alone, China s outward Foreign Direct Investment (FDI) increased by 12.6 per cent to exceed US$77 billion. According to Austrade, State Owned Enterprises (SOE) account for over 90 per cent of China s outward FDI, and Australia is the largest recipient market of accumulated direct investment from China. Wealthy private investors in China are increasingly looking to overseas markets to secure growth opportunities and diversify their holdings. The very high level of interest in Australia s Significant Investor visa program underscores the potential for China s high net worth individuals to channel private investment to the Australian market. China s FDI interests in Australia are overwhelmingly weighted towards the mining and energy sector, with agriculture emerging as an important new area of focus, so it is important to identify and focus on outbound Chinese investors with interest in tourism infrastructure. Persuading them to invest in the NT would alleviate the supply-side constraints currently being experienced. With annual growth of around 17 per cent, China has overtaken the United Kingdom as Australia s largest source market for tourists. It is Australia s most valuable market in terms of visitor nights and per capita spend. However, as the NT currently has just over a 1% share of this market it is relatively unknown as a destination. It is important therefore that investment efforts focus on raising awareness of the experiences the NT has to offer and the opportunity for investment in the hotels and related infrastructure needed to enhance the quality of the visitor experience. The strategic importance of securing Chinese investment is demonstrated by two flow-on benefits for the tourism industry: The attractiveness of the destination to Chinese visitors will be enhanced by the knowledge that the Chinese have invested in it and Industry capability will increase as a result of increased Chinese investment, for example, if new Chinese investment resulted in the introduction of a Chinese hotel chain to Darwin, it has the potential to raise the bar for all NT accommodation providers. The Northern Territory Government has existing partnerships with the China Development Bank (CDB) and the China Council for Promotion of International Trade (CCPIT) who have helped promote NT tourism investment opportunities to their network of members, clients and Chinese investors. There is genuine interest from the Chinese market in tourism investment opportunities in the NT, however more work needs to be completed in order to package specific tourism investment opportunities for the China market. From a tourism perspective, Chinese investment attraction will aid in delivery of tourism infrastructure and services in order to meet the supply-side constraints outlined in Tourism Vision 2020; increasing Chinese visitation through inbound investment missions and increasing NT industry capability through knowledge transfer and competition. One of the most important roles the NT Government can play is to open doors, establish a presence and provide confidence in China. This is a key role of the Department of Chief Minister s Asian Engagement Trade and Investment Division (AETI) Such activities would include government to government relationship building such as the Chief Minister s visit to China and his meeting with key Chinese Government agencies: National Development and Reform Commission (NDRC) and Ministry of Commerce People s Republic of China (MOFCOM) 22 CHINA MARKET ACTIVATION PLAN II