Gold Coast backpacker industry Essay Example

crisis had a worldwide impact, it particularly affected Australia's tourism industry as reported by Tourism Research Australia (2009). This led to a significant decrease in overnight accommodations. However, despite this downturn, Westthorp (2009) states that the backpacker market has experienced remarkable growth compared to other accommodation industries. In fact, even during the global downturn period, backpacking saw an increase in numbers. For example, according to Tourism Forecasting (2009), around 132,749 backpackers visited the Gold Coast and contributed approximately $126 million to the local economy solely in 2009.

According to Tourism Queensland's 2009 data, Gold Coast was ranked second in backpacker visitor numbers with 13.2%, while Brisbane ranked first with 15.2%. The backpacker market represents 36% of total visitors.

The Gold Coast City Council (2009) states that backpackers constitute 7% of Queensland and 23.7% of the Australian backpacker market, surpassing hotels and motels at 19.5% (Faulkner & Tideswell, 2002). To explore a fascinating question related to security at a government facility, click on this link: which one of these does not pose a risk to security at a government facility. The consumer groups served in the backpacker industry include local residents, international travelers and employees. However, according to the Australian Government Department of Tourism (2009), international travelers are the primary consumers on the Gold Coast. In fact, while domestic visitors stayed just 1.4 million nights in backpacker accommodation; international visitors stayed for a total of 14 million nights. The majority of international visitors in this industry are from the U.S.Gold Coast City Council (2009) reports that K

constitutes the highest proportion of backpackers visiting the area at 29%, followed by Japan at 10%, Germany at 7%, Switzerland at 6%, Canada at 6%, Scandinavia at 5% and Other accounting for the remaining 31%. Backpackers aged between 15-24 years constitute the largest age group, making up for around 58% of all backpackers. The next largest group are middle-aged adults aged between 25-30 years, constituting approximately37%. In general, young international adults choose Gold Coast as a popular destination. For backpackers, their main focus is accommodation.

The primary revenue stream in the tourism industry comes from accommodation, which comprises two-thirds of total income (ABS, 2007). Backpacker hostels offer a variety of lodging options, ranging from en-suite dormitories to twin/double rooms, tailored to groups or individuals, such as single or couples. Due to differences in demographics like gender, age, and country of origin (Hecht and Martin, 2006), backpackers are not a uniform group. Therefore, hostels cater to their diverse requirements by altering their core business approach.

Backpacker hostels offer both lodging and diverse activity options, including surfing lessons, party cruises, and water sports. Most hostels have a tour desk that provides current information and assists with activity planning. Additionally, some hostels have their own bar to attract guests and foster positive guest interactions, which also contributes to the hostels' revenue.

The backpacker sector on the Gold Coast is influenced by various factors, with the internet playing a significant role. According to Golden and Cunningham (2005), backpackers are often described as tech-savvy and enjoy sharing their experiences online. As a result, they use the internet to obtain information, plan their travels, and pay for global travel. Consequently, the internet is

a vital tool for promoting travel destinations and offering related services that can greatly impact travelers' decisions (Bonn et al., 1998).

International backpackers rely heavily on the internet when researching their travel destination, particularly when coming to Gold Coast. They search for affordable accommodations and prioritize spending their money on adventure rather than expensive lodging. The internet provides them with a wealth of information including photos and rates of potential accommodations, local maps, and tourist attractions. Additionally, the internet serves as a platform for backpackers to communicate with each other, sharing recommendations for hostels to stay at and places to visit while also warning of places to avoid during their trip.

According to Heung (2003), most backpackers rely on online information to select their hostels. The internet plays a crucial role for both suppliers and consumers in marketing products and locating the best options. This is evident in the task environment of the backpacker sector, where the internet plays an important role (4.0 Backpacker Sector Task Environment).

The hospitality industry faces fierce competition, particularly in the Gold Coast backpacker market where there are many similar services and significant fixed costs. Despite little differentiation between accommodation and other services, competition remains intense due to the industry's high fixed cost structure (Phillips, 1994).

Intense competition exists in the backpacker accommodation market due to the lack of change in the number of backpacker accommodations and a 7% decline in overnight visitors to Gold Coast in the year ending June 2009 (Tourism Queensland, 2009). Additionally, competition has increased due to low-cost alternatives like rented units/apartments and homes of friends/relatives (Ipalawatte, 2003). Like new entrants, substitute products also pose a genuine threat for industries

and organizations. Backpackers have various alternative accommodations to choose from in Gold Coast, such as holiday apartments and homes of friends and relatives.

According to Backpackers in Australia (2008), backpackers from overseas spent 35% of their nights in backpacker accommodation, 31% in a rented house or apartment, and 11% stayed with friends or relatives. Tourism Queensland (2009) states that other establishments of equivalent value to the backpacker sector include tourist parks, country lodges, and camping and caravan facilities. Tony (2008) explains that substitute products, while not as intense as primary competitors, can still impact market profitability and pose a major threat. Additionally, the size and concentration of customers are important factors in determining buyer power (4.3).

According to Kippenberger (1998), the factors that affect buyer power include the buyers' level of information and the concentration or differentiation of competitors. The extent to which buyers are willing or incentivized to exert their power depends on their perception of the associated risk of product use. As there are many budget accommodations in Gold Coast, there is a wide range of products and services available to buyers, particularly backpacker travellers. This means that in a truly competitive backpacker market, consumers have the ability to influence the pricing of backpacker rooms with their demand. Furthermore, consumers can positively impact the environment by making smarter choices about their backpacker accommodations (Shane, 2008).

4.4 The power of suppliers in bargaining

Suppliers, who sell travel products that they own or operate, play a crucial role in the Gold Coast Backpacker sector. These providers cater to their core business needs by sourcing materials, labor, and other supplies. Material goods are not as significant in this sector due

to the intangible nature of their service. The accommodation industry on the Gold Coast boasts of over 30,000 competent staff members, according to the Australian Government Workplace (2009).

Furthermore, whereas luxury hotels require an abundant supply of food and beverage providers, this is not necessary for the backpacker sector. Consequently, there is an excess of alternative providers which limits suppliers' bargaining power, as noted by Porter (1980). Despite this, the low power of suppliers does not imply a neglectful relationship between backpacker accommodation and suppliers, as suppliers are still able to set prices for their products. Furthermore, the industry's low bargaining power enhances its image. With a strong control over purchasing and distribution costs, the Gold Coast backpacker industry can be confident that profitability remains appropriate.

The Gold Coast backpacker market faces a risk of new competitors entering, but entry barriers exist to discourage them. The hospitality industry's most critical attribute is location, and this physical resource is among the barriers to entry that include increasing competition and low profitability for new accommodation businesses on the Gold Coast (Chu & Choi, 2000).

The Islander Backpackers in Surfers Paradise is renowned for its excellent location, such as the land value of Gold Coast, which has risen by an average of 12% since 2006 (Goldcoast.com.au, 2008).

According to YHA Australia (2010), their unique culture and reputation set them apart and are utilized in promoting their own brand. While some resources like beds, kitchen equipment, and reception are essential to operating their business, they can be easily replicated, resulting in low barriers to entry. The hospitality industry, as noted by Harrison (2003), does not have significantly high entry barriers.

The

Gold Coast City Council and Gold Coast Tourism collaborated to improve the backpacker industry in Gold Coast by establishing the Gold Coast Adventure Travel Group. This partnership aimed to strengthen communication and support amongst the backpacker operators. A brochure board was created, an 1800 information and booking service was established, and 34 members of the backpacker business were accepted to the group (Gardiner, 2005). The successful implementation of this project resulted in a 55% increase in backpacker visitor nights. Additionally, the Australian government invested $190 million in tourism development and implemented the Working Holiday Visa (WHV) policy (Australian Government, 2008; Pearce, Murphy & Brymer, 2009) to support the industry's growth.

The Gold Coast benefits from the Working Holiday Visa (WHV) policy, which supports the potential tourism market. Legislation, such as the Trade Practices Act (1974), mandates that prices for accommodation and amenities must be clearly stated to facilitate recognition (Tourism Queensland, 2006). To combat illegal backpacker businesses offering unpermitted accommodations, stricter laws have been established under programs like Current Affair (Hansard, 2002). The hospitality industry is vulnerable to economic fluctuations; however, despite the global economic downturn, the backpacker market has fared better than other accommodation industries such as hotels and motels (Pearce et al.).

In 2004, Huxley stated that most backpackers are young and want to maximize their travel experience while on a budget. The Gold Coast is popular among international visitors, so changes in foreign currency rates can affect the local backpacker market. Furthermore, the Gold Coast's share of Queensland's backpacker market has grown from 31% to 38%, resulting in an estimated 41,000 visitors and an additional 814,000 overnight stays. These figures were projected to generate

approximately $61 million in revenue as of 2009.

Gold Coast Tourism (2008) reported that the city welcomed five million visitors, predominantly comprising of young backpacker groups who opt for budget-friendly accommodations. This trend has given rise to a unique lifestyle among these visitors, observable during both day and night.

Backpackers consider backpacker accommodation as an opportunity to socialize with others, according to Hecht ; Martin (2006). The Gold Coast is renowned for its recreational activities and it provides various events and activities organized by Gold Coast Tourism (2008) and Pearce et al. (2009). While on vacation, people enjoy bonding with others, resulting in the establishment of dining facilities such as restaurants and pubs (Peel ; Steen, 2007). Well-being experiences like visiting recreation areas or socializing are sought after by top international source markets for Gold Coast tourists such as the UK, Germany, and New Zealand. This information is supported by reports from both Gold Coast Tourism (2008) and Tourism Forecasting (2009).

Technology has brought about significant changes in the hospitality accommodation market. The extensive use of computers is a prominent factor, and social networking sites have enabled people to connect and share information in ways that were not possible before. Previously, success in this industry largely depended on location compared to other businesses (Murphy, 2000; Pearce et al., 2009).

According to Murphy (2000), the impact of technology allows customers to book rooms and receive services online. Therefore, having technological facilities is essential for success in the business world. The Gold Coast aims to become a leader in Queensland by improving and establishing modern technology services by 2020 or 2030, as stated by Moore (2002). The Gold Coast backpacker industry

faces three key strategic issues, with the first being an opportunity.

Australia's student backpacker market encompasses various groups, such as individuals seeking leisure, business, or educational pursuits. The international student segment presents a potential for financial growth and advancement. In 2009, the Department of Education, Employment and Workplace Relations (DEEWR) reported a 16.8% increase from the previous year with 631,935 international students possessing visas.

The backpacking industry has experienced a significant impact due to the rapidly expanding niche market of student backpackers. According to Tourism Research Australia's 2008 report, this market accounted for 29% of all international visitor nights in Australia and totaled to 46 million nights spent. The DEEWR's 2009 report revealed that China dominates the higher education market with 24.5%, followed by India with 19.1%.

The Gold Coast Regional Snapshot in 2009 viewed student markets from China and India as important potential supporters of the backpacker sector. The rise in education visitors has played an influential part in expanding the length of stay for international visitors to the Gold Coast. It is recommended to consider considerable opportunities for connecting this student market to the backpacker business, in addition to the support provided by the WHV policy. Issue 2 - Threats at 6.2.

Although the backpacker industry has been less affected than other types of accommodations, it has still experienced significant changes in visitor numbers and profits due to the global financial crisis (Pearce et al., 2009). As a result, there is a need for innovative decision-making and strategic management of opportunities and challenges to address potential threats to the Gold Coast's backpacker industry caused by the current economic situation.

Consumers' increased financial awareness has led to a decrease

in visits to the Gold Coast. Tourism Queensland reports that the decline in international tourism can be mainly attributed to the worldwide economic recession, which had a significant impact on Australia's tourism sector.

According to Gold Coast Tourism Research, there was a 7.8% decline in the number of international visitors who visited Gold Coast compared to last year, resulting in a total of 790,398 visitors. However, these tourists spent $1.01 billion on their trip which shows an increase of 4.0% in spending despite Queensland's negative growth during 2009.

The Global financial crisis is still a concern, even though it poses a threat to the Gold Coast backpacker industry. The key success factors are highlighted in Issue 6.3.

The backpacker market on the Gold Coast has experienced a significant impact as a result of improved technology. Previously a low-tech industry, the hospitality sector has undergone a transformation due to advances in technology. The primary profit source of the Gold Coast backpacker market is young people (Huxley, 2004), who are extremely responsive to present trends, such as their heavy reliance on the internet. This phenomenon is directly related to the backpacker market (Bergh, 2000), as young people commonly use the internet to search for accommodations when traveling.

Various strategies should be implemented in the backpacker market, including Internet site advertising and collaboration with travel agencies. Additionally, technology has focused on enhancing the internal aspects of backpacker facilities, particularly with regards to room security. Short-term stays (typically less than a week) have led to concerns about security and prompted a shift in door key technology from traditional keys to computerised card-type keys (Lee et al., 2003).

According to Lee, Barker, and Kandampully (2003),

being different in terms of current technology can be crucial for survival in similar markets, rather than just price. In conclusion, the Gold Coast backpacker market has experienced significant growth even during a global economic downturn. Compared to other accommodation organizations such as hotels, the backpacker market was less affected. The Gold Coast backpacker industry is the second most popular budget accommodation option in Queensland and serves mainly young adult tourists from the UK, who make up 58% of the consumer group.

The primary function of the backpacker industry is to provide accommodation and outdoor activities, including surfing lessons, water sports, and cruise parties. The industry is greatly impacted by technological advancements like the Internet, which enables people to find extensive information and experience immense satisfaction. Due to the similar competencies in this market category, it is crucial to identify competitors. In the Gold Coast, there are various budget accommodations that still pose a threat to the backpacker sector. Although backpackers often influence pricing, consumer groups hold considerable power in controlling prices. Compared to other accommodation industries, backpacker sectors offer budget-priced rooms, creating minimal supplier power.

Moreover, the presence of entry barriers such as location makes it difficult for new competitors to enter the market. It is important to analyze broad environmental factors including political, economic, socio-cultural and technological factors that may have an internal or external influence on the market. To achieve success in this business, three key strategic issues need to be analyzed. The most significant source of profit in the Gold Coast are educated students and this specific demographic is increasing in number. As a result, exploring the student market could lead

to significant opportunities for success.

The negative effects of the global financial crisis have had a detrimental impact on the backpacker market, making it a significant threat. Therefore, implementing technological advancements like the Internet and computerised door key can be crucial for survival in this competitive industry.