ARE NEW MARKETS EMERGING?
t this time of year, I occasionally try to dust off my crystal ball and try to figure out what our industry can expect for the coming season and beyond. It is no secret that things haven’t been good for the past several seasons, though there have been a couple of bright spots.
Clearly, the change in the US dollar has had a profound effect on northern Ontario tourism. This effect is felt differently in the northeast and the northwest because of some differences in markets and how folks do business. In the northeast, it has raised the price of our product at a time when many other factors are discouraging tourism. We have high fuel prices, a generally sluggish US economy and increasing perceptions that the border is difficult to cross. Eventually, all of the factors weigh heavily enough on a guest that he simply decides to stay home.
The situation in the northwest is somewhat different. Because the market is approximately 90% US business, it has become customary for the majority of businesses in our industry to set prices in US dollars. Therefore, for the consumer, prices have not gone up. Rather, tourist operators are now offering their product at a deep discount – so deep, perhaps, that they are barely profitable. Of course, those other factors keeping guests at home, like fuel prices, make it very difficult to raise rates to the place they need to be.
Many businesses in the northeast have responded by aggressively courting domestic markets. We have seen strong growth in Ontario and Quebec markets in some parts of northeastern Ontario, mostly due to increased marketing in those areas. Of course, northeastern Ontario has the advantage of proximity and reasonably good transportation infrastructure.
The situation is much more challenging for northwestern Ontario. Major domestic markets are not within reasonable driving distance, and other travel infrastructure like air and rail is seriously lacking. I am aware of a few very interesting attempts that are being made to work around these limitations. Thunder Bay, for example, is actively promoting northern weekend getaways in key southern Ontario markets, based on inexpensive air fares available from Toronto – “Beat the long drive to the Muskokas – fly to Thunder Bay”
Of course, the recently announced marketing campaign that will target the Chicago market for northwestern Ontario tourism is also very good news. US consumers are likely to be the major market for our industry for a long time to come.
The bigger and more interesting question than “Where will our future clients come from?” is “Who they will be and what they will want to do while on vacation?” We know that anglers and hunters are an aging and shrinking demographic. Granted, with a market in the US of 330 million, it can shrink a fair bit more before we run out of potential clients. We do need to ask ourselves, however, whether there are some better markets emerging. I’m definitely not suggesting that everybody get out of fishing and into ecotourism as some have said in the past.
However, our industry has seen a slow but steady shift in some areas from guests who come to fish to guests who come for a vacation that includes fishing. Fishing remains the main attraction, but it is no longer the only attraction. Some see it in the form of more family groups vacationing at lodges; others see traditional fishing parties, except that one or two members don’t bother to go fishing. Not surprisingly, the change has often been quickest in places where the fishing is not as good as it once was.
When I talk to operators I hear more and more discussion around guest activities and preferences other than fishing. One operator I talked to recently told me about the tremendous growth he had seen in guided overnight camping trips from his lodge. Another told me he was considering developing a small paintball park at his resort. The questions I hear operators asking themselves run the gamut from “Should I put in a games room and satellite TV” to “Should I consider composting toilets for my outposts”. These are not ideas coming from some government analyst sitting in an office. This is just a small sample of the things folks whose livelihood and future depends on getting it right have told me about.
Is there likely to be a single “next big thing”? I think there will be lots of little things, but I think they will have some elements in common. I think we will see a growing clientele of guests who are not avid outdoors-people and who want help and guidance in enjoying the outdoors. How many of you would attempt an unguided fishing trip to Brazil or hunting trip to South Africa? Even avid outdoors-people need help and support if the trip is exotic and different, and northern Ontario is exotic and different to many.
One operator recently said to me that he expects the coming season to be a difficult one for fly-in outpost operators. He felt that the market of avid outdoors-people who take fly-in outpost trips is down during the present tough economic times, though many American plan lodges seem to be doing OK. Is there a new product niche for some outposts? Perhaps we’ll see a shift from the traditional do-it-yourself outpost experience to a mini-American plan product. Or maybe we’ll see something else new and unexpected.
I have no doubt that our industry will survive the present downturn. Some businesses will emerge stronger than ever. I believe that these will be the businesses that recognize emerging opportunities and make the strategic investments in product and infrastructure to move forward.
A fellow former advertising executive told me an interesting story recently. During one of the many cyclical downturns in the mining industry, he had a client who increased his marketing budget dramatically. His logic was simple. He was not looking to maintain his bottom line; he was looking to grow his market share. If he had ten percent of the market now, he wanted to emerge from the downturn with forty. Although even forty percent would not represent much business in the present market, it would be phenomenal when the next wave came.
Are you ready for the next wave?
Executive Director, NOTO
This article was taken from pages 5 & 6 of NOTO's "The Outfitter" publication, Winter 2007 Issue