Australia’s travel and tourism industry is reeling from the pandemic, and uncertainty around restrictions, lockdowns and border measures are only making it worse.
While many operators are hinging their hopes on government aid, new data from Roy Morgan Research Institute (RMRI) suggests that high earning, high spenders will be the key to the sector’s recovery.
And discounting will only drive them away, says Roy Morgan.
“Government support, particularly JobKeeper, has been important for the travel and tourism sector to date, but it is an emergency flotation device, not a path back to economic safety,” said Roy Morgan chief Michele Levine.
A new economic order of premium consumers (NEOs) drove economic recovery following the global financial crisis [GFC], says Ms Devine. And, according to RMRI data, the 4.7 million Australians who comprise these powerhouse consumers may play a similar role leading Australia out of the pandemic recession.
“The evidence on the new economic order is incontrovertible. We tracked NEOs as they drove the post-GFC recovery and we’re already seeing them charge ahead in what will be a two-speed recovery,” said Ms Levine.
While domestic destinations may be the only travel option for the foreseeable future, 76 per cent of NEOs had already nominated Australia as the preferred destination for their next holiday – significantly higher than the 59 per cent figure for the population.
NEO-preferred destinations span all states, too, with the most preferred destination being Victoria’s Spa Country. The data was taken from March 2020.
“NEOs are the future shapers. They are ready to travel as soon as permitted; in many states they are already back out accumulating cherished experiences and spending freely,” said Ms Levine.
“However, to appeal to NEOs you must genuinely understand their thinking or mindset. This requires discarding truisms about doing business in a recession, especially the push to discount.
“To attract the big spending visitors, travel operators need to find value-add promotions rather than just offering discounting.”
NEOs are also more likely than other Australians to take a three-week trip over the next 12 months, spending far more than those who opt for weekend holidays.
And while nobody wants to spend more than they have to, NEOs are happy to pay full price “as long as they can find something to fall in love with – something that touches their spirit”.
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