Heads turn to Asia as Aussie dollar strengthens


An award winning tour bus operator says the strengthening Aussie dollar has an upside as the operator looks to Asia for fleet expansion to increase in-bound yield

Heads turn to Asia as Aussie dollar strengthens
Heads turn to Asia as Aussie dollar strengthens

By David Goeldner | October 21, 2010

A past winner of multiple tourism awards says a forecast inbound tourism slump due to the strengthening Australian dollar will see some tour operators take ‘desperate’ measures to retain market share.

Go West Tours Director Terry Smit says businesses need to stick to a strong business model and resist the temptation to discount as the ‘pie’ starts to shrink.

"When the market suffers the pie shrinks and everyone loses part of their market share," Smit says.

"People do desperate things, slash prices and discount left, right and centre – we haven’t done that in years gone by and we don’t intend to do it in the future."

Smit says a forecast 10 to 20 percent drop in inbound tourism won’t cripple his business.

"The Australian dollar going higher certainly is not going to be helpful," he says.

He adds areas of concern for coach tour operators include price sensitive markets such as China and Korea.

Currently his operation comprises 85 percent in-bound international tourism.

"But we’ve been seeing reasonably strong growth over the last few months, and that’s due to some of the things we’ve been doing as opposed to overall market conditions," Smit says.

Featured on the Australian tourism Trip Advisor website, Go West Tours is rated second on the list of Melbourne tourist options.

"We obviously have a very strong reputation and believe those at the bottom will drop off while we maintain our position towards the front," he says.

"And at the end of the current crisis we might emerge bigger and stronger."

Smit believes Australia will remain a ‘very special place’ for international tourists, and a 20 percent drop might temporarily toughen trading conditions.

"But we have to keep investing in our rolling stock because if we don’t we are not going to back-up the quality of our touring with quality vehicles."

Smit operates a fleet of eight small coaches – mostly Toyota Coasters – as part of a sight seeing operation based in Melbourne, specialising in Great Ocean Road and Phillip Island day tours.

In business since 2000, Go West Tours has continued to expand through a series of economic crises-induced events, including the World Trade Centre attacks, demise of Ansett, swine flu, and the recent global financial crisis.

In recent years Smit has signed a series of contracts with large wholesalers and other inbound operators.

"I guess our strategy is to create a niche for ourselves where we are a small group operator offering a level of comfort and service that isn’t generally available in the small bus market place," he says.

He also sees the current strengthening of the Australian dollar and the potential to buy cheaper imports as a positive.

"From the point of view of purchasing imported vehicles there’s a benefit there and you take advantage of that," Smit says.

His company is looking to expand into a larger fleet both by number and seating capacity, increasing yield through the purchase of a 33 seat class small coach.

He says that while his fleet of Coasters has been ‘bullet proof’ the restricted seating options are limiting business growth.

"It’s been a challenge in the marketplace to find a vehicle that allows you to maintain a small group size but offer a high level of comfort with reclining seats in more coach-like conditions," he says.

"We’ve already moved into a couple of Hino Rainbows, but they are older vehicles and don’t have a long future, and we are looking at the next possibility."

Smit is considering current options for newer brands on the Australian market – King Long, Higer and BCI.

.

"With a 33 seater we would be looking to refit to 29 seats so we can maintain a slightly smaller group," he says.

"We are of the opinion that there’s a limit to which you can consider yourself a small group operator and 29 is probably where it is."

Smit says a 29-seat small coach option would be ideal for a business of his size and scale in terms of a yielding strategy under the current economic conditions.

"I would hope over the next few years we would add to the fleet, and there will be people who still want to come to Australia."

You can also follow our updates by liking us on Facebook