Last year, the number of visitors from Brazil, Russia, India and China increased by 6.4%, 7.1%, 13.0% and 28.2%, respectively. Is the Australian Tourism Industry prepared for this?

Here are some thoughts on how to attract the new BRIC Tourist:

Follow the money!

In the next decade, the tourism market for Chinese visitors alone is forecasted to be worth A$6 billion to Australia, with almost one million Chinese visitors forecast to visit Australia in 2020. The Chinese tourist contributes twice as much value as the Japanese, with total inbound economic value (TIEV) having increased on average by 17.1% per year for the past ten years (a contribution to the Australian economy of A$7,287 per person).

Indian tourists also spend on average more each day than other nationalities. The total inbound economic value of an Indian tourist has increased by 14.9% per year for the past ten years. Indian tourists spend, on average, $73 per night and $4,607 per visit. For the next decade, the TIEV for Indian tourists is forecast to grow 6.7% year on year, moving the Indian tourist from Australia’s ninth to our fifth most valuable inbound market.

In 2010, Russians spent $26.5 billion abroad. As the BRIC country with the highest GDP per capita and the lowest levels of debt, the Russians have high purchasing ability and a relatively large luxury consumer market which is predicted to reach the size of Germany’s by the end of this decade.

Education policies requiring Brazilian students to study English are fostering outbound education tourism. Australia is a popular destination for young Brazilians due to our outdoor way of life, beaches and cultural similarities. In addition, Brazilians devote a large portion of their income to discretionary spending and choose to live for the present!

Casting a Wider Net

Unlike in the past, when the tourism industry has relied on above-the-line advertising and travel agents to attract business, the number one source of information for one-third of Chinese, Indian and Russian tourists is the Internet. Even more compelling is the knowledge that, unlike western travellers who usually plan and book their travel many months in advance, Chinese tourists booked their flights within one month of their date of travel.

The importance of reaching potential BRIC customers via online promotional material and marketing campaigns will be a necessary competitive edge for all travel companies in the future.

However, traditional methods of marketing and search engine optimisation are of little significance for BRIC tourists, in particular the Chinese. As an example, the Chinese population’s most popular search engine is Baidu, the Chinese equivalent of Google.  It is therefore very important for the tourist industry to establish a presence in local popular Chinese search engines to attract the lucrative mainland Chinese market.

Revamping the Product

With such alluring growth figures, it is going to become even more important for all tourism companies to develop products that have direct appeal to the BRIC tourist. The BRIC tourist differs quite significantly from their stressed out Western counterparts in that they want to cover as much of Australia in as short a time as possible! A typical day may include a photo stop at Bondi Beach in the morning, followed by a bus trip to the Blue Mountains in the afternoon and then an evening at the casino. This contrasts with Western tourists who typically enjoy sunbathing and relaxing on the beach. With over one fifth of outbound Chinese tourists being labelled as ‘Self Challengers’, Australia is a popular destination for those attracted to adventurous pursuits, being pushed outside their comfort zone and those who are attracted to some of Australia’s more remote areas.

Recruitment

There are approximately 150,000 Chinese students studying at universities in Australia, almost 70,000 Indian students, 18,000 Brazilian students and 1,500 Russians, but very few of them successfully find work in Australian companies after they graduate. These students not only have valuable cross cultural and language skills, but also Australian knowledge, experience and qualifications and possibly even high level connections in their home country. With the limited time available until their visa expires, many students are forced to return home if they cannot find suitable employment in the short period available, and this results in a loss of talent and valuable skill sets which could otherwise be retained in Australia – particularly in the tourism sector.

A good place for Australian tourist companies to start in developing a strategy to attract new BRIC tourists is to review their recruitment policies to attract international students who, after a short period of training and on the job experience, will significantly enhance their ability to tackle the BRIC market.

Business Tourism

The market for business tourism is largely untapped, but with 87% of business travellers staying longer than the ordinary tourist, both before and/or after their business engagements, the business tourism market presents numerous opportunities for the tourist sector. In 2010, business travel from Brazil increased by 59% due to the rapid growth of Australia’s energy and resources sector and the desire amongst Brazilian companies to learn from Australia’s success.

Why not tailor a tourism package that incorporates business meetings, site visits or even networking events for the more entrepreneurial and business-minded BRIC tourist? With numerous delegations coming to Australia from Mainland China every week, is this a niche opportunity for local tourist companies to start tapping into?

Seasonal Differences

While a seemingly obvious point, it is important not to underestimate the power of seasonal differences, particularly to attract Chinese and Russian tourists. The peak months for Chinese tourist arrivals to Australia are in January and February which, amongst other things, is caused by their desire to avoid the harsh winter climate and travel over the Chinese New Year Season. For Russian tourists, December and January are the peak months for tourist arrivals as they seek to escape the harsh Russian winter.

Tourism companies should focus their marketing and promotional activities to attract Chinese and Russian visitors during our warm summer months.

Cultural Differences

Whilst there are distinct cultural differences between Australia and the BRIC countries, Australia is uniquely placed and well positioned to take advantage of our exclusive position as the only western country within the BRIC region.

With over 1 million Chinese Australians (either born in China or of Chinese ancestry), large numbers of business migrants arriving each year from all of the BRICs, our growing number of international students and our strong cultural and historical ties throughout the region, Australia is a truly multi-national, multi-lingual and multi-cultural society which has so much to offer the BRIC Tourist.

“Speak with one Voice”

In the words of Geoff Dixon, Chairman of Tourism Australia, Australia’s tourism industry needs to “speak with one voice” when marketing overseas. Unlike other sectors, The tourist industry is highly fragmented in Australia which means that collaboration, rather than competition, to attract the BRIC tourist will result in everyone having the chance to share in a much bigger pie.

As an example of this, in 2010, Italy, France and Spain signed an agreement to work jointly to attract BRIC tourists, a partnership which would have been unthinkable a decade ago.

Also, in Pattaya, Thailand, high end luxury resorts have been collaborating to attract the Russian Tourist, a innovative strategy which has met with almost immediate success. By introducing Russian street signs, Russian restaurants and developing training courses for hotel staff and waiters to learn Russian language and cultural differences, Pattaya is now attracting large numbers of big spending Russians.

The BRIC tourist presents an unprecedented growth opportunity for the Tourism Industry….what is your BRIC strategy?

This is a summary of a presentation I gave earlier this month to the Australian Tourism Export Council Meeting Place 2011 in Sydney.

Over 100 Victorian companies will be taking part in the mission to India, making it Australia’s largest ever trade mission to the rising nation and Australia’s fastest growing export market, growing at an average rate of 25 percent each year since 2005.

“The size and scope of this Super Trade Mission clearly demonstrates our commitment to grow Victoria’s already strong relationship with India,” Mr Baillieu said.

“Victorian businesses have strong capabilities in many sectors that India needs to support its future growth – including automotive, aviation, cleantech, education, food and beverage, ICT, life sciences, tourism and sustainable urban design.”

The mission to India aims to boost Victoria’s economy with more jobs and export opportunities. “It will build on the successful trade mission to India involving 60 companies that took place in April this year,” Baillieu said, “led by the Minister for Innovation, Services and Small Business, Louise Asher – which is anticipated to generate more than $63 million in new exports, $19 million in capital investment and over 570 jobs in Victoria over the next 18 months.

“Trade missions provide Victorian companies with great opportunities to connect with their overseas counterparts and grow new markets for our high-quality goods and services.”

Commencing in Delhi on the 21st February 2012, the mission will also focus on other key centres in India including Bangalore, Mumbai, Hyderabad, Chennai and Pune. Victorian organisations interested in joining the Super Trade Mission to India can visit www.trade.vic.gov.au for more information.

While Jim had already gained recognition and widespread respect for his previous work as an economist and currency analyst, he acknowledges that his career has now been shaped in large part by this simple term. While many eyebrows were raised at the time by some of his more dramatic predictions, notably the one that China would overtake the US to become the largest economy in the world within 30 years, the BRIC concept is now almost a household term, widely recognised within the media, academia, business circles and certainly by the investment community.  At the end of 2009, Jim’s BRIC research was widely acclaimed as the “Call of the Decade”.

With the benefit of 10 years since he first invented the BRIC acronym, it is worth pausing to reflect on how much the world has changed since 2001. As Jim wrote this week in an article in the UK Telegraph in which he reflects on the progress of the BRICs over the last decade:

“All four of the BRIC countries have exceeded the expectations I had of them back in 2001. Looking back, those earliest predictions, shocking to some at the time, now seem rather conservative.

The aggregate GDP of the BRIC countries has close to quadrupled since 2001, from around $3 trillion to between $11 – $12 trillion.

The world economy has doubled in size since 2001, and a third of that growth has come from the BRICs. Their combined GDP increase was more than twice that of the United States and it was equivalent to the creation of another new Japan plus one Germany, or five United Kingdoms, in the space of a single decade.

Some observers say the effect of the BRICs on the world economy has been exaggerated because their growth was primarily driven by exports to the developed markets, as well as the rise in commodity prices.

Exports certainly played a major role for China, but since the 2008 credit crisis and the consequent fall in demand in the US and elsewhere, that is no longer the case.

For India, domestic demand has been the driver throughout the last decade, and increasingly it is the domestic consumer as well as an increase in infrastructure spending that is fuelling growth in the BRIC economies.

The credit-fuelled growth in US demand certainly played its part in their ascent, but even since 2008, and despite the ongoing US struggles, the BRIC economies have continued to power ahead.

However you choose to interpret the data, the importance of the BRICs in global economic growth is beyond dispute. Personal consumption in the BRIC countries has skyrocketed. In China, between 2001 and 2010, domestic spending increased by $1.5 trillion, or roughly the size of the UK economy.

The increase in the other three was about the same, perhaps slightly more. BRICs now account for probably close to 20 percent of world trade compared with less than 10 percent in 2001.”

Whilst the BRIC idea was first dreamt up as an investment idea or theme, designed to challenge the thinking of investors and their professional advisors, even Jim has been surprised by how quickly the BRIC countries themselves have started collaborating via their annual BRIC (now “BRICS” to include South Africa), Leaders Summit which has met every year since 2009 to discuss opportunities for political, economic and even trade collaboration.

The recent BRICS Leaders Meeting in China in April 2011 laid the tracks for greater ‘intra-BRIC’ trade and investment co-operation in the years ahead.  This is vital to the global economy and should be occupying the minds of all forward thinking business leaders, investors and entrepreneurs.

‘Intra-BRIC trade’, or trade among the BRIC members, has grown at the rate of 30 percent per annum since 1999 and now accounts for 8 percent of global trade. During the last 10 years, intra-BRIC trade increased nine-fold, compared to global trade which only doubled over the same period.

In recent years, Intra-BRIC trade has been mainly characterised by Russia and Brazil supplying natural resources to satisfy the industrial and infrastructural needs of India and China. However, this is likely to change. Watch out for more investment and trade deals between the BRICs as they create their own trading bloc and invest in each other’s capabilities.

10 years later, it is time to acknowledge Jim O’Neill’s vision, foresight and thought leadership. But as he reminds me from time to time, the BRIC idea has a long way to run yet!

NSW Premier Barry O’Farrell has been one of the first to congratulate the company, winners of the NSW Export Award for Arts and Entertainment, at a ceremony in Mumbai to bless the project.

“Laservision beat strong global competition to win this $5.5 million export deal,” O’Farrell said earlier this week at the shrine of Indian spiritual leader Shri Sai Baba at Shirdi, near Nasik in Maharashtra.

“The high tech spiritual theme park, which will be the first of its kind in India, will display the interactive teachings of the spiritual leader to the 20 million devotees who visit the shrine every year,” he added.

In India to lead a trade and investment mission to Mumbai, Delhi and Bengaluru, O’Farrell praised Laservision’s success as an example of NSW’s ICT sector.

“Laservision, which exports 97 percent of its services, is an innovative and creative leader in the entertainment sector and a great example of how NSW companies are competing and winning in the global marketplace,” he said.

Unfortunately the incident occurred as our dollar rose, competition from Canada, the UK and the USA became fierce, and our visa categories changed, which led to a significant fall in Indian student numbers, says Peter Linford, Austrade senior trade commissioner for South Asia.

“So we’ve undertaken a fairly comprehensive roadshow in India, reintroducing Australia as a study destination for Indian students. The focus of it is quality education: it’s not cheap education with sunshine and a great lifestyle, it’s quality education with the added benefit of an Australian lifestyle,” he explains of the new campaign designed to re-engage the market.

Rebuilding confidence

Ravi Bhatia, national vice chairman of the Australia India Business Council and CEO of Primus Australia, says the media coverage of the protests was part real, part hyperbole, but it clearly dented confidence in the sector. In the next few months, however, he expects to see a major improvement due to Austrade’s campaign, as well as the formation of the Committee of Student Related Activities (COSRA).

“The Indian diaspora in Australia has taken upon itself to enhance confidence. The diaspora has formed a group called COSRA, which is supported by the Indian Consulate General, and it consists of 10-to-15 very prominent Australians,” Bhatia relays.

In mid-July this year COSRA began hosting support workshops for incoming Indian students, an orientation “familiarising them with Australia, talking about cultural sensitivities, modes of behaviour including police as a friend and so on,” he says. In addition to the workshops, to be held every six months, COSRA will also develop into a network to provide individual support for students tackling issues such as medical emergencies and accommodation and employment problems.

While Bhatia says Australia’s tough language requirements may dampen numbers, he believes initiatives like COSRA will go a long way to enticing Indian students back to our shores. “It is being conducted by some very well known members of the diaspora who have credibility. It is soft stuff, but the word is going to travel back and I think it is a good way to address the confidence issue.”

Another key factor is stakeholder support. “The Australian representation in India at a diplomatic level has been superb. That extends also to DFAT and Austrade. People are very proactive, they are full of fresh ideas, and they are projecting an excellent image for Australia and opening a lot of opportunities,” he states, adding: “The Indian diaspora in Australia has expanded substantially, which is leading to a better understanding of the opportunities on one hand, better political relationships on the other.

Hybrid education

A trend on the horizon is hybrid education, “whereby an Indian student can complete part of his higher education to Australian standards within certain institutions in India and come and complete the degree in Australia and possibly work here for a few years and take that experience back to India,” Bhatia predicts.

Linford says industry/education hybrid programs already exist in areas short of talent. This initiative, separate from the inbound education drive, delivers training in India linked to industry. An Indian company that has invested in an n Australia mine approached Austrade. “They said: ‘We can’t get enough people to work on this mine, we need to bring in Indian workers’,” Linford recalls. These workers, however, would need the requisite skills for the new roles, as well as training in Australian safety standards, and so the model was born.

Jointly chaired by the Minister for Tertiary Education, Skills and Jobs, Chris Evans and India’s Minister for Human Resource Development, Kapil Sibal, the meeting was a further step in a “deep and enduring” bilateral relationship, Evans said.

“Today’s meeting of the AIEC provides a critical forum for leaders representing government, education and training organisations and industry to identify strategic goals of mutual benefit to both nations in further strengthening the bilateral education, training and research relationship.”

The two ministers also met as part of the Annual India-Australia Ministerial Dialogue on Education Cooperation. In the wake of a series of attacks on Indian students in Australia, the pair agreed to sign a Memorandum of Cooperation (MoC) on Student Mobility and Welfare. Both countries agreed to implement measures to enhance the safety and welfare of students and strengthen the monitoring of education agent activities.

The Ministers also launched a new bilateral Australian India Education Links website as an information portal and welcomed initiatives to increase cooperation and collaboration agreed during the India Australia Vice-Chancellors’ and Senior University Executives’ Workshop held in Delhi on 31 July.

Senator Evans said the meetings are reflective of both Australia’s and India’s commitment to education and training.

“Australia has a long relationship with India when it comes to bilateral cooperation in education and training,” Evans said. In 2009, Indian students made up 18 percent of Australia’s foreign student population, contributing approximately $30,000 per person each year to the Australian economy.

“Both countries have high ranking tertiary education institutions, strong vocational and education training initiatives funded by our respective governments and robust economies that require highly skilled workforces.”

The AIEC will meet annually in conjunction with the Annual India-Australia Ministerial Dialogue on Education Cooperation.

“The Japanese earthquake and tsunami have knocked one of Australia’s most important tourism markets, particularly in Queensland,” said Federal Minister for Tourism Martin Ferguson, in response to the latest figures from the Australian Bureau of Statistics (ABS).

In March, overseas short-term visitor arrivals fell by 5.1 percent compared with the year before. There was some growth, however, as arrivals from China increased for the 14^th consecutive month, up 16.7 percent.

Ferguson said although traditional markets like the US, UK and Japan remain high-yielding for Australia, both Tourism Australia and the federal government have put funding elsewhere. “We’ll continue to aggressively market into China,” he said.

As more Australians chose to holiday at home, overseas short-term resident departures fell for the first time in 23 months. Both state and federal governments have contributed to a $12 million tourism recovery package, aimed at dispelling myths about the recent devastation in Queensland, which may explain the shift.

“The fact is the majority of Queensland’s tourism regions have suffered minimal or no damage and the majority of those affected are now open and operating normally,” said Jan Jarratt, Minister for Tourism in Queensland.

Emerson said the move is a milestone in the developing Australia-India relationship. “India is an enormous, rapidly expanding market for Australian businesses and negotiations for a high-quality trade deal are central to the Gillard Government’s wider plans for greater economic integration between our two countries.”

Australia hopes the deal will remove tariffs, broaden the base of merchandise trade, remove barriers to services trade, facilitate and encourage investment and address behind-the-border obstacles to trade.

India is Australia’s third-largest export market, buying $19.8 billion of Australian goods and services in 2009-10. Exports to the subcontinent have grown by an average of 22 percent per year during the past four years, despite diplomatic tensions.

India reacted strongly to a series of violent acts perpetrated against Indian students in Australia in 2009, with thousands taking to the streets. The Indian Government also objects to Australia’s refusal to export uranium to India. Australia does not export uranium to nations that haven’t signed the United Nations Nuclear Non-Proliferation Treaty.

However, Emerson hopes a free trade deal will strengthen the Australia-India relationship, in line with goals for economic integration set out by Indian Prime Minster Manmohan Singh and then Prime Minister Kevin Rudd. The pair set out a series of relational objectives in the Australia-India Strategic Partnership during Rudd’s first visit to the country in mid-November 2009.

Emerson will meet Sharma at the Joint Ministerial Commission scheduled for 12 May in Canberra.

The European Commission Director General for Trade Jean-Luc Demarty said that not all options and avenues for market access had been explored. “That is why we felt we should formulate ideas to stimulate further engagement. Gaps can close if the political will is there.”

The talks have stalled over conflict between developing and developed nations over market access and trade tariffs. China, India and Brazil all have developing country exemptions for market restrictions, which the US believes are no longer fair as these nations have huge export economies.

The EU’s plan aims to keep everyone happy by tailoring tariffs to different products, focusing on high tariffs for industrial goods including chemicals, machinery and electronics and zero tariffs in other areas.

US ambassador Michael Punke said the US was open to the idea. “We can’t know what the outcomes might be but we can certainly know very quickly whether or not it can catalyse negotiations.”

However, Punke noted the plan only dealt with industrial tariffs and didn’t propose a solution for conflict over agricultural tariffs. Nations dependent on agricultural exports including Australia want greater access to markets in the US and Europe, which are currently heavily subsidised to protect local industry.

There is hope the plan will reinvigorate the Doha round, which is flagging in spite of a self-imposed completion deadline of November 2011. However, many delegates hold little hope as months of US-China bilateral trade talks have gained little ground. The Chinese ambassador Yi Xiaozhun has criticised the mercantilism approach to the talks, saying the WTO member nations had lost sight of the idealist aim. “Negotiations seem to be diverting away from the development mandate and towards market access.”

WTO Director-General Pascal Lamy said the implications of failure would be serious. “Failure of the WTO to harness our growing economic interdependence in a cooperative manner risks a slow, silent weakening of the multilateral trading system in the longer term. With this, a loss of interest by political leaders in many quarters, an erosion of the rules-based multilateral trading system and a creeping return to the law of the jungle.”

It is particularly interesting to find South Africa at the BRIC table, as this appears to have been driven more by geo-political than economic reasons. According to Jim O’Neill of Goldman Sachs, the original inventor of the BRIC acronym in 2001: “As far as the economics are concerned, South Africa is one of the more wealthy nations in Africa, and is currently the largest in US$ terms at around $350bn. However, this is quite small, not only by BRIC standards, but compared to some others. For example, Russia is around $1,600bn, nearly five times larger than South Africa, and India is currently similar in size to Russia. Brazil is currently closer to $2bn in size, while China is considerably larger at around $5,500bn. Importantly, there are a number of other economies from the so-called emerging world that are bigger than South Africa. This would include Indonesia (approximately $700bn), Mexico ($1,050bn), Turkey ($725bn) and South Korea ($1,000bn). These four nations, along with each of the BRIC economies, are all one percent or more of global GDP, and what we would increasingly think of as growth economies.” It is tough to see how South Africa matches up to these four countries, never mind the BRIC countries.

It made this next meeting of the “BRICS” leaders even more intriguing for those of us who follow the changing dynamics of the new world order, a world in which the US finds itself as more of an “observer” than the dominant player it once was, and a world in which some of the poorest African, Latin American and Eastern European nations are likely to have increasing influence and power at the expense of their western cousins.

This will inevitably challenge many of the practices, traditions and institutions that have been taken for granted during the last century, and will result in new alliances and groupings of countries who, until quite recently, were heavily dependent on the developed world for foreign aid, investment and financial support.

The global financial crisis of 2008/9 accelerated a process which began back in 2005 or so when China’s economic success, and the increasing dependency of the US on China, caused new trading and economic relationships to be formed between the BRIC countries. China started investing heavily in African resources, Russia and India traded energy, IT and military hardware, and Brazil exported iron ore, oil, coal and other commodities to China. Suddenly, the BRIC countries were voting as a “bloc” at WTO negotiations in Doha and collaborating on climate change at Kyoto (and later Copenhagen) creating significant new problems for the original G7 group of nations, which had become the G8 with the inclusion of Russia in 1994.