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Backpacker Tourism

Backpackers spend more, travel further and stay longer than other travellers. The backpacking sector in NSW is about attracting more adventurous and independent international travellers into regional areas, through the development of more 'must see and do experiences'.

Understanding the Backpacker Market

Harnessing opportunities to benefit from the rapid growth in backpacker tourism relies on a good understanding of the market.

Following is an overview of the backpacker market characteristics and opportunities.

Overview includes:

 

1. Backpacker Profile

Despite their reputation as tourists on tight budgets, backpackers spend more, travel further and stay longer than other travellers. The typical backpacker is young (18-35 years), educated, adventurous and price conscious. Their travelling style is characterised by the following factors:

Preference for budget accommodation
Most backpackers use the wide variety of hostels around Australia. Whilst they prefer to spend as little as possible for accommodation, they also want value for money and may not always choose the cheapest available. Most of their travel finances are spent on other activities.

Eager to mix with travellers and locals
Social contact (including establishing friendships and partying) is a primary motive. Meeting fellow travellers is also an opportunity to acquire good travel tips. Backpackers are particularly interested in meeting and living with ordinary Australians.

Price Conscious
Whilst aware of prices and wanting to spread their money over a longer period, backpackers spend, on average, double the amount of other international visitors to Australia - $4,747 as against $2,370 (Source: International Visitor Survey, year end June 2005).

Flexible itinerary and extended stay
Backpackers visiting Australia stay longer than the average international visitor - 65 nights compared with 26 nights (Source: International Visitor Survey, year end June 2005). They are more inclined to travel 'off the beaten track' and with time up their sleeves; they seek diverse experiences in varied locations. They usually arrive in Australia with flexible itineraries and travel ideas but few actual bookings.

Active adventure seekers
Of particular interest to backpackers are adventure tours and attractions that require active participation. Activities that are authentically Australian, and removed from the mainstream tourist experiences are of major appeal. They are also looking for interaction and information about Aboriginal culture.

Working holiday
A reasonable proportion are planning to work casually (if they have a Working Holiday visa) to supplement their funds.

Profile
The term 'backpacker' is extensively used by this market in Australia and New Zealand. In recent years, it has begun to be used overseas, primarily by people setting up hostels and tours. However, it might be misunderstood in some regions like the US where it is used to describe a bushwalker. 'Budget travel' or 'independent travellers' are alternative phrases.

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2. Positive Market Trends

10% of all international visitors to Australia are classified as backpackers and they account for about 25% of all international visitor nights. The numbers visiting Australia grew steadily throughout the last decade.

At least 77% of international backpackers visited New South Wales during their stay in Australia. But this visitation has been heavily weighted to two main areas - Sydney and the Northern Rivers Tropical NSW region (Byron Bay).

The main source countries for inbound backpackers to Australia are the UK (26%), Europe (excluding Germany) (24%), the US (9%) and Germany (9%).
Source: International Visitor Survey, year end June 2005.

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3. Market Segments

The backpacker market is not homogenous but includes a number of identifiable segments, which have slightly different interests and needs.

Working Holiday Maker
The Working Holiday Maker (WHM) visa is frequently used by backpackers (from participating countries) travelling to Australia, and is valid for 12 months. The number of working holiday visas granted has increased gradually in recent years, from around 35,000 in 1994-95 to over 100,000 in 2004-05.

Australia has reciprocal WHM visa arrangements with 19 countries, including the UK, Ireland, the Netherlands, Canada, Germany, Malta, Japan, Korea, Sweden, Denmark, Norway, Finland, France, Italy and Belgium. This visa is available to 18-30-year-olds and allows them to supplement their funds through casual work. The majority of visas issued are to UK citizens.

People on the WHM visa have a number of characteristics:

  • extended length of stay in Australia
  • extra funds to spend on travelling and adventure activities
  • tendency to spend up to three months in one place whilst working
  • whilst working, can also do short trips (weekends etc.) to local sights and attractions
  • work generally includes harvesting, farm labour, nannying, nursing, hospitality and temporary office work
  • happy to work for a short term, for relatively low pay and in positions of limited responsibility
  • in rural areas, they often fill gaps in the workforce that would otherwise be difficult to fill by the local working population.

A lot of backpackers on WHM visas work in Sydney during their stay. They are therefore an identifiable group to whom the attractions of regional New South Wales can be promoted.

Free Independent Traveller (FIT)
This segment includes a wider range of ages and couples. It includes people who choose backpacking as a mode of travel partly for social reasons. They may have a larger income, and different interests from mainstream backpackers.

Domestic
The domestic market is already a substantial market for backpacker accommodation and is expected to grow as Australians become more aware of the budget travel options available within this country.

Asian
Whilst the Asian sector is currently small, it has some growth potential.

Students
Young people coming to study in Australia offer good opportunities for short breaks around New South Wales.

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4. Catering to Backpacker Needs

Australia's backpacker appeal stems from its image as a safe, friendly, youthful, fun, dynamic, natural, English-speaking and adventurous destination. Addressing the needs of the budget traveller will help maintain this perception.

Preferred Accommodation
The growth of the backpacker market has created a demand for inexpensive accommodation that is of a reasonable standard, safe, clean and value for money.

Backpacker accommodation is defined as properties offering, at low cost, a range of sleeping arrangements, including dormitories, with communal and self-catering facilities and an emphasis on guest interaction.

Budget travellers usually seek accommodation in the hub of a town/city or in close proximity to sites and attractions. Backpackers may be attracted by the opportunity to stay in remote and picturesque locations that offer an alternative tourist experience, but unless there is available public transport and good promotion, they are unlikely to find their way in sufficient numbers to such spots.

Hostels
The last fifteen years have seen the development of a large number of converted or purpose-built backpacker hostels, which may be part of a major "chain" (e.g. YHA) or independent and non-aligned.

When considering a backpacker hostel development, it is worth doing a market analysis including the following:

  • Who will come to the property?
  • What will attract them to the area?
  • How will they get there?
  • What will they do when they get there?
  • Will they come in sufficient numbers for a sustainable business?

Potential hostels need to be market-driven (i.e. meeting a quantifiable need) rather than product-driven (looking for a new use for existing building).

When either converting an existing property or building a hostel, points to bear in mind include:

  • A Development Approval and Building Certificate will be needed to operate.
  • Whilst some Sydney councils have developed specific regulations for backpacker hostels, not all local councils are very familiar with this style of accommodation.
  • Standards are constantly being raised and add to the cost of developments.
  • The Fire Brigade may be involved in the planning process.
  • Professional advice is recommended for a successful development including a town planner, architect, building certifier, engineers and a Building Code of Australia consultant.  A ratings scheme for hostels is operated by AAA Tourism.

Transport
The vast distances separating Australian regions make affordable and comprehensive public transport networks essential. Individual transport operators can address backpacker travel needs by offering flexible, competitively priced itineraries with specially tailored fares and passes. These schemes supported by effective promotion will appeal to the independent traveller, and will be useful to local and international travel agents for pre-travel bookings.

The development of backpacking in regional New South Wales has been hindered by the lack of reliable public transport, and the ease in which people can travel onto neighbouring states or access cheap interstate airfares.

The principal sources of public transport used by backpackers are:

  • Coaches: The most popular transport mode, offering cheap flexible travel. Most backpackers buy a pass of some sort to take them along major routes for example from Sydney to Cairns.
  • Backpacker Tours : These have grown in popularity in recent years - either promoted as extended 'jump-on, jump-off' style tours, or shorter point-to-point trips along popular routes.
  • Train: The least patronised transport system, with a lack of coordinated national passes to rival the coaches. The Countrylink Backtracker Pass, allowing for multiple journeys in any direction, is assisting in making train travel more popular.
  • Air: Air travel is being accessed by more and more backpackers - either with cheap add-on sectors to their inbound tickets, or through increased competition making air travel less expensive. Backpackers will use these fares to jump a section of the country, before slowing down again, using land transport out of major cities.
  • Self Drive: An increasing proportion of backpackers opt for self-drive vehicles (usually purchasing older cars or using rental cars/vans) for some of their trip, providing greater scope to travel more extensively. Bikes and motorbikes are also an option.

Lobbying to have transport stops placed in close proximity to your operation and working with major transport operators to ensure services are regular, reliable and reasonably priced will benefit business. Special fare structures may also be an option to be negotiated as part of any packages.

Benefits to the Community
Backpacker expenditure generates substantial employment for Australians. Backpackers generally spend what they earn. Because they have the time and often choose self-drive transport, they are more likely to travel to regional areas thus spreading their funds more widely than other tourists. Their spending has a significant impact on businesses involved in transportation, food, retail, petrol, accommodation and tours.

It is of benefit to all backpacker businesses to ensure that the local community is made aware of the value of this type of tourism and supports it. Backpackers are eager to interact with locals, and get to know the 'real Australia'.

Safety Issues of Significance
The New South Wales Police Service has established a Tourism Liaison Unit whose role is to provide general safety instructions, trace missing tourists and work to recover stolen property.

Tourism operators providing adventure activities with an element of risk are required to adopt safe practices and have a duty to implement adequate safety precautions. Membership of a relevant industry organisation may provide accreditation.

Key safety advice backpacker operators can provide to the adventurous backpacker includes instructions concerning hitchhiking, swimming hazards, sun exposure, venomous creatures, outback travel precautions (e.g. water and fuel supplies etc) and other personal health risks.

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5. Developing Quality Standards

To remain competitive, tourism operators are required to consistently apply excellent service standards and regularly review these standards. However, backpackers in particular rate 'atmosphere' very highly, often above more tangible physical aspects of the business.

Operators should ensure they are fully informed of their legal and regulatory obligations to customers in terms of the provision of products and services, and claims made in promotional materials.

Quality tourism products are enhanced by quality service.

Training
There are a number of training courses and organisations, which can assist industry members to meet their training needs. These include industry association programs as well as short courses conducted by Business Enterprise Centres and a range of private providers. A variety of other relevant short courses as well as more formal training can also be acquired at TAFE.

Industry Association 
The Backpacker Operators Association of NSW Inc. (BOA) was established in 1992. This trade organisation represents the concerns and interests of NSW backpacker operators. Its objectives include:

  • promoting Sydney and New South Wales to overseas and interstate visitors.
  • promoting cooperation between operators and other tourist and travel sectors.
  • providing an avenue for approaching government.

Members are required to provide evidence of compliance with appropriate regulations and standards.

BOA was involved with the drawing up of the New South Wales Backpacker Development Action Plan in conjunction with Tourism New South Wales in 2000, and in the implementation of its recommendations.

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6. Packaging Your Product

Failure to maximise the business opportunities arising from backpacker tourism can be the result of a lack of cooperation and communication between tourism operators, and a misunderstanding of the potential logistical barriers a traveller faces in accessing an area.

Regular Market Research
Understand the movement patterns of backpackers into your area - where they come from, how they are travelling, where they are staying, what they want to do during their stay, where they are going, etc. It is also important to realise that a substantial proportion of backpackers do not pre-book or pre-purchase land content before arriving in Australia.

Cooperative Marketing and Package Development
An idyllic location is not really enough. All attractions and activities of real interest in the surrounding area must be identified, experienced first-hand by operators, and then promoted as a package.

Business can be improved by working closely with other local tourism operators and/or government bodies to develop a complete tourist package highlighting the selection of local accommodation, attractions or activities and prices.

However, to enhance prospects for success, the content of such packages must be relevant and of appeal to the identified interests of this market (particularly the types and quality standards of the experiences offered).

Package prices should be set at an acceptable level and maintained for at least a 12 month period. International bookings should be charged the same price, or possibly even at a cheaper rate using this discount as a pre-travel booking incentive.

Cooperative marketing ventures not only enhance the tourist experience, but provide economies of scale in terms of marketing and promotion costs for all operators involved. For example, backpacker operators working cooperatively with other tourism outlets can cost-effectively coordinate familiarisation tours for specialist student/campus travel agents and participate in travel shows promoting backpacker specific product.

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7. Promotion

Hands-on research is the best method of determining the wants and needs of the backpacker and the most appropriate distribution means for promotional material. This market acts differently to mainstream tourism sectors, and money can often be better spent on in-formal, non-traditional methods of promotion.

No one of the methods covered below on its own will ensure the success of a business. However, many enterprises have not survived either because they have failed to fully research the attractiveness of their business to backpackers, are too remote and inaccessible, or because their marketing has not been suitably targeted or sustained over a long enough period.

Word of Mouth
Word of mouth is a powerful information source. Backpackers' travel itineraries are rarely planned prior to arrival and travel choices are often made following discussions with fellow travellers regarding the best sights, best accommodation and best transport options. A good reputation is worth a great deal, bad news travels fast and is hard to stop.

Guidebooks
Guidebooks are considered essential travel accessories prior to and during a backpacker holiday. Backpackers will usually carry at least one or two books, with the most popular titles being produced by Lonely Planet, Rough Guides and Let's Go. There are also specialist foreign language guides to Australia.

It is absolutely essential to ensure your business is included in these guides. There is no paid advertising, but reviewers are constantly travelling Australia. A good impression, and therefore a good write-up, will attract the interest of backpackers.

Backpacker Publications
There are a number of locally produced backpacker publications, which are mainly free, distributed through hostels, airports, coach stations etc. They rely on advertising for their income.

Many fly-by-night operators have set up publications, selling advertising to unsuspecting operators, so it is worth fully checking out publications before placing advertisements.

Magazines that have existed for a number of years include TNT (various state editions), Aussie Backpacker and The Word.

Leaflets, brochures, posters
These are relatively cheap to produce and are likely to be retained by backpackers and used by travel agents. Include good maps where necessary, and on any cover use people-based images e.g. the environment/nature, action activities, attractions, social and cultural life and native wildlife. Glossy is not always better. (See information on Creating your own brochure)

Product Giveaways
Free offers are positively received by backpackers, agents and suppliers. T-shirts are the souvenir most purchased by backpackers in Australia. Cooperative marketing ventures can make this promotion more cost-effective.

Free postcards featuring a carefully selected, enticing and good quality image of a destination/experience can also be distributed to backpackers. These are generally posted overseas providing business exposure internationally.

Media Coverage
Use newspapers, travel magazines, radio and television travel shows to obtain free coverage and improve credibility.

Regional Tourism Associations (RTOs)
RTOs significantly contribute to information dissemination by coordinating local and regional promotions and assisting with local product development. Visitor Information Centres are valuable sources of local knowledge and important points of sale.

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8. The Power of the Internet

Accessing the communication capabilities of the Internet has become a powerful medium for international promotion. Given that backpackers are generally well educated and familiar with the latest technology, the Internet can be particularly effective in reaching this market.

There are opportunities to list business operations free of charge on the Tourism Australia's website and on the Tourism NSW site.

Most businesses will benefit from having a website but it's worth bearing the following in mind:

  • Big is not necessarily better - websites can be set up relatively cheaply.
  • Don't invest in a site unless you're prepared to adequately market it - include the address on all promotions (brochures, posters, business cards etc), and commit time and effort to getting it placed on search engines, and linked to other high-traffic sites.
  • Always make sure key information is on the home page - what your product is, where you are, how much, how to book.
  • Use humour and simple graphics and colour to catch the eye.
  • Online booking facilities must be through a secure server system and be able to be quickly acted on.

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9. Backpacker Business Tips

  • Familiarise yourself with backpacker characteristics, their travel patterns and their wants and needs.
  • Understand the growth markets and define your target markets, and incorporate these markets into your promotions.
  • Don't limit yourself to the 'backpacker' stereotypes.
  • Constantly strive to improve the quality of your business through relevant training.
  • Consolidate Australia's image as a safe, friendly, adventurous destination through your product and service.
  • Work with other tourism operators including transport services operating in your area. Consider creating an overall package that will enhance the attractions of your area and reduce your promotion costs.
  • Remember the importance of word of mouth amongst backpackers and ensure that you are mentioned positively.
  • Promote your product thoughtfully and economically using the most appropriate methods for your product and target markets.
  • Consider creating giveaway souvenir material that will promote your product widely e.g. t-shirts (an extremely popular backpacker souvenir), caps, postcards.
  • Access the Internet to inform potential backpackers (local and international) of your product's unique selling points.

Research

Organisations

Backpacker Operators Association of NSW (BOA)
GPO Box 5276
Sydney NSW 2001
Ph: (02) 8267 0402
Fax: (02) 9261 1969
Email: boa@boansw.org.au
Website: www.boansw.org.au

Consumer websites

 

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