INSIDER: WA tourism industry faces voyage into the unknown to rebuild after coronavirus scare

It is a beautiful January day in Mandurah and Myrianthe Riddy, co-owner of Mandurah Cruises, is at the beach with her children. It’s sunny, 24 degrees and hordes of West Australians are enjoying the Australia Day long weekend. Work interrupts — a tour group operator tells Riddy their guide has been allocated the wrong seat on the boat. Riddy quickly works to iron out the problem and then it’s back to playing in the sand. “That was my biggest stress that morning,” Riddy says. “By the evening, the world had changed.” It was Saturday January 25, 2020, the day the Chinese government announced it would stop its citizens from booking overseas tours as part of the country's effort to contain the emerging COVID-19 pandemic. “By the evening, my inbox was flooded with cancellations. It all changed very, very suddenly.” Riddy, a Cambridge University graduate, left an international career as a senior commercial manager with oil giant Shell in late 2016 to buy Mandurah Cruises and Rottnest Cruises with her husband Peter Robinson and other partners. Since then, they have invested time and capital expanding the business to tap into the increasingly lucrative international market. As well as its dolphin-watching tours, they developed a luxury seafood tour which offers guests the opportunity to catch crayfish and enjoy an on-board feast of fresh seafood and local wines. It is incredibly popular with international visitors, especially from China. “We were going to be at full capacity, we were all guns firing and then overnight it began to unwind quickly. First groups weren’t allowed to leave China, then flights were banned and the trajectory continued to go downhill as the pandemic became worse.” It has been five months since that day at the beach. Since then, Western Australia has become “an island within an island” after hard international and State borders were put in place to protect the country from the virus. Travel boundaries were also erected within Western Australia, stopping movement across regions. Restrictions on gatherings prevented hospitality businesses from operating as normal, events from being held and group tours from running. The response has protected Western Australia from the devastation COVID-19 has wreaked in other parts of the world but it ground the tourism industry to a halt. As travel within Western Australia resumes but the hard State and international borders remain in place Mandurah Cruises, like much of the State’s tourism industry, is now facing a key question — how do I adapt my business to target West Australians and will that be enough? THE BACKDROP The tourism industry in Western Australia is large and varied with businesses spanning transport, accommodation, attractions, experiences and tours. While major brands often dominate the headlines and billboards, small operations are the lifeblood of the industry and account for the majority of its growth. There were about 28,750 tourism businesses in Western Australia as at June 2018, according to Tourism Research Australia, and of these about 21,400 were ‘micro businesses’ with fewer than five employees or none at all. “A lot of the sector is made up of very small family businesses,” says Chris Pye, a long-standing WA tourism investor and the chairman of regional tourism association Australia’s Golden Outback. “There are businesses, for example, that have their houses sitting on the edge of their overdraft and if this thing continues much longer some people could lose everything.” The McGowan Government has recognised the impact the restrictions are having on many tourism operations and has launched a tourism-specific $14.4 million grant program in response. As part of applying for the grants, which range from $6500 to $100,000, businesses must complete a “recovery plan” outlining how they will adapt to target the West Australian market in the short term and the interstate market in the medium term. State Government agency TourismWA also launched a $2 million advertising campaign early this month to encourage West Australians to “Wander out Yonder” and explore the State. The message from the State Government is clear: tourism businesses should adapt to appeal to locals, and West Australians need to get out and support the industry. The challenge, however is in the numbers. According to TRA, West Australians accounted for 77 per cent of the 12 million visitors who took overnight trips in the State in 2019, but only 50 per cent of the $8.6 billion these visitors spent. Or in other words, the average spend of a West Australian travelling for a night or more within the State was $475, compared to the average spend of interstate and international visitors at $1048 and $2331 respectively. Senior industry leaders and business owners Insider spoke to repeatedly pointed to these statistics and raised concerns about the extent to which an increase in local tourism could counteract a 50 per cent reduction in visitor expenditure. THE PLAYERS The idea for Perth’s first walking tour company was born in scribbles on the back of a coaster at a pub. Thirteen years later, co-founder Ryan Mossny laughs that he couldn’t have imagined a time when every pub in the country would be closed or, less jovially, when about 70 per cent of his customer base wasn’t able to visit the State. But Two Feet and a Heartbeat isn’t closing its doors, it is innovating. Leaning on the expertise of its team, the company plans to offer new tours in the suburbs of Perth and incentivise its guides to help develop them. “Instead of paying a commission to an international organisation, like an inbound tour operator, I am going to pay that money to the guide,” Mossny says. “That supports our guides and puts money back in the local economy which is what is important right now.” Structural changes to the business, government support, and a chunk of the company’s cash reserves will likely be needed to see out the recovery, Mossny says, but he hopes the new offering will allow him to continue operating, form local partnerships and diversify his business. It’s a similar story for hundreds of small tourism businesses across the State. Busselton Jetty CEO Lisa Shreeve says the iconic attraction is working to add value to the experiences it offers to encourage locals to visit or return. Indigenous tour operator Bart Pigram of Narlijia Experiences is preparing to do his first virtual tour of Broome. Jan Barrie, director of Global Gypsies, says the 4WD tour operator has begun offering more accessible “corona-busting safaris”. Australian Hotels Association WA CEO Bradley Woods says hotels across the State are partnering with local food and beverage venues, entertainment or tours to entice patrons. And at Riddy’s Mandurah Cruises, the dolphin cruise has been expanded to include a crabbing demonstration in the canals and birdwatching through the wetlands. “We are refreshing our product and making our business even more resilient in a Western Australian economy so we really thrive when things go back to normal,” Riddy says. For large tourism operators the challenge is the same but, for the most part, their balance sheets afford them greater breathing space. At Sandalford, 2020 was supposed to be a milestone year. Not only was CEO Grant Brinklow planning to celebrate 180 years of the business, he was also anticipating the most successful commercial year in the wine producer’s history. Sandalford is yet to reopen its restaurant, cellar door, weddings and functions in the Swan Valley. Brinklow says with more than half of the 200,000 paying guests Sandalford welcomed in 2019 from interstate and overseas, it makes sense for it to “hold our breath a little longer” and focus online. “We set ourselves a goal of doubling the sales of wine online in six months to double what we achieved in a four year period previously,” Brinklow says. “We are in the third month of that six-month plan and we are ahead of target … the interest in wine and wine consumption has continued and that’s been a really positive thing for us.” Crown Perth is one of the State’s largest tourism assets, counting more than 10 million visits every year and employing over 5800 people across its hotels, casino, function venues, bars and restaurants. Over 95 per cent of its workforce was stood down when the Government announced the closure of large venues in March. As its operations gradually resume and hundreds of its employees in Perth return to work, Crown Resorts CEO Australian Resorts Barry Felstead says it is “undeniable that the business has been put under pressure”. “We have been fortunate as, due to our size, we have been able to weather the storm better than many others have,” Felstead says. “Now we want to see Western Australians embrace the government’s call to start travelling and supporting the local industry so we can rebuild.” THE CHALLENGE It’s early days but sandgropers appear to be taking up the call to “Wander out Yonder”. When bookings for the 268 campgrounds managed by the State Government’s Parks and Wildlife service reopened on May 1, the volume of traffic caused the system to crash. “Around 600 bookings were made that day, with one booking received every four seconds during the peak period,” according to a spokeswoman. On 2 June, the day the department returned its booking period to the usual 180 days in advance, a staggering 1600 bookings were made with 250 processed in the first minute alone. WA-owned fishing and camping store Getaway Outdoors says it is as busy as its peak Christmas and Easter periods. “As restrictions eased we have got busier and it’s not just our regular customers, it’s people saying to us ‘we are starting out camping, what do we need’ which I think is a sign people who might normally spend two weeks in a Bali resort are getting out to explore WA,” says marketing and business development manager Louise Jonasson. What remains to be seen is how much cash West Australians will part with when they travel and whether it will help to make up for the lack of high-spending visitors from elsewhere. Tourism Minister Paul Papalia is optimistic, pointing to the $7.3 billion West Australians spend each year on about two million leisure trips interstate or overseas. “Previous data on what Western Australians spend in WA is not a reliable indicator of what we expect them to spend in the current environment,” Mr Papalia told Insider. “Western Australians are great travellers, but until now the vast majority have spent their time and money holidaying outside the State. ”COVID-19 has had the effect of introducing a whole new market of intrastate travellers, many who haven’t taken holidays in WA for decades, whose spending habits are not captured by previous data. “We expect those Western Australians who generally spend thousands on international holidays to be spending similar amounts at home this year, and we expect that to flow through to a greater average spend for local travellers.” The Government’s “Wander Out Yonder” campaign is designed to encourage just that and will then “pivot rapidly to focus on the interstate market” when borders reopen. Australia’s Golden Outback’s Chris Pye says “this is the time for us to be patriotic”. “Our industry isn’t going to survive if we have an attitude that everything has to be free or cheap, or that we are doing businesses a favour by going to see them,” he says. ”We need to pay them what we would pay for a similar product or experience overseas.” While he is hopeful this eventuates, Ross Dowling, an honorary professor of tourism at Edith Cowan University, says he expects to see an increase in local tourism but that it is unlikely to make a meaningful difference in terms of tourism expenditure. “So what a lot of businesses have been saying to me is that they are just adapting to make it through the next 12 months… because that is when international borders are expected to have properly reopened.” Even then, Dowling suggests will people will likely be reticent to travel immediately. COVID-19 has had a significant impact on many people’s personal finances. And if they do travel, this pandemic could have changed their behaviour —- including staying away from crowded events, limiting time on transport including flights, and other health-conscious habits. ON THE ROPES You can understand why the industry is uneasy. Operators and industry advocates are calling for the interstate borders to open, or at least for the State Government to provide an indicative date so they can plan. The Federal Government is being asked to consider an extension to its JobKeeper program, with several industry players pointing to the potential for businesses, especially in the north of Western Australia, to struggle to survive when that support ends in September. Robert Taylor, CEO of the Western Australian Indigenous Tourism Operators Council said COVID-19 had coincided with the northern tourism season and put businesses under significant cashflow pressure. “In the Kimberley they have a very short season from usually April to September,” Taylor says. “They were ready to start, had spent money from their banks ahead of the season and then it all stopped and they had to cancel all their bookings and try to find cash to not only pay back deposits but also to live on, with no income coming in.” Sonia Beckwith knows this challenge all too well. Live Ningaloo, her whale shark swimming tour business, was preparing for its busiest season yet. Now, the roughly 960 seats that were booked for the season have either been refunded or postponed, bills are becoming stressful and it’s unclear when things will turn around but Beckwith isn’t giving up. “We are boxers. It is unnatural for an untrained fighter to lean into punches. Your body doesn’t want to expose itself to damage but boxers are trained to not only accept those punches, but to lean into them,” Beckwith says. “Entrepreneurs and, by my estimation, gritty, rural, seasonal tourism operators are boxers in that way ... and we are leaning in right now. ”It is second nature to us and it is part of the grit you need to sustain your business but there will be a time when the knockout punch will come because you can’t go that long getting beat up and not get medical attention.” Beckwith acknowledges the government support to date but says more assistance will be needed and is calling on West Australians to do their bit. “Book tours and don’t ask for discounts, invest in regional communities, recommend businesses to friends on social media, buy vouchers. Don’t let us get knocked out.”