Maximizing Tourism Marketing Investments A Canadian Perspective

Maximizing Tourism Marketing Investments A Canadian Perspective

Understanding the potential of markets Economics: GDP; Inflation; Unemployment; Employment; Disposable Income; Private Consumption; Consumer Confidence; Trade - Imports; Exchange Rate - Sensitivity; Tourism: Travel Volumes; Travel Receipts; Average Spending; # of Nights; Trip Purpose; Air Access; Seasonality; Pure Pleasure Travel Target Population; Outbound Travel; Market Share;

Definitions Market Portfolio Analysis (MPA): Model that rate & rank markets against their relative market potential; Market Investment Model (MIM): Model that allocates optimal resource investments by market against relative market conditions.

What is the Market Portfolio Analysis - MPA? A rating system that objectively evaluates the potential & performance of markets (23) & ranks them in three tier subsets; provides a platform to: rank markets based on their respective market potential; flexibility to apply the model to a subset of markets; assist in prioritization of marketing investments; evaluates the potential of emerging/developing markets.

What is the MPA? A relative weighted index based on three main drivers of importance: 1: Size How big is the market? 2: Performance How have they performed in the last 5 years? 3: Potential What are indicators of future performance?

What is rated? Size: Overnight receipts; Receipts per person-night; Overnight person-trips; Direct air seat capacity; Target population level: 25 64 years old.

What is rated? Performance: over the last five years Net change in receipts; Net change in overnight person-trips; Average partnership ratio; Net change in long-haul outbound travel; Net change in market share;

What is rated? Potential: Receipts potential; Net Pleasure travel volume; Overnight trips in shoulder season; Potential with primary competition;

What is rated? Frame C Potential (Continued): Direct Air seat capacity potential following year; Net change in the projection of real GDP over the next five years; Net change in the projection of real GDP/capita over the next five years; Net change in the projection of the population for the 25 to 64 year old range over the next five years.

MPA - Tier 1 Results 2002 2003 2004 2005 2006 1. UK 81.17 1. UK 77.46 1. UK 79.51 1. UK 80.58 1. UK 81.24 2. Japan 54.74 2. Japan 41.07 2. Japan 52.61 2. Japan 40.52 2. Mexico 37.42 3. Mexico 31.45 3. S Korea 36.81 3. Australia 31.39 3. Australia 34.26 3. China 35.14 4. Germany 29.20 4. Mexico 31.81 4. Mexico 30.81 4. Mexico 33.82 4. Japan 34.71 5. France 28.83 5. Australia 28.12 5. S Korea 28.66 5. China 32.50 5. Australia34.66 6. Australia 28.78 6. China 27.73 6. China 27.21 6. S Korea 29.85 6. S Korea 33.73 7. China 28.73 7. Germany24.28 7. France 26.81 7. France 27.75 7. France 33.44 8. S Korea 25.02 8. France 23.64 8. Germany26.68 8. Germany26.55 8. Germany29.55 Weakening Strengthening

MPA - Tier 2 Results 2002 2004 2006 1. Netherlands 23.77 1. Netherlands 20.99 1. Netherlands 26.65 2. Italy 22.00 2. Switzerland 17.93 2. SE Asia 20.63 3. Switzerland 20.99 3. Italy 16.05 3. Switzerland 20.42 4. Scandinavia 19.94 4. Scandinavia 15.58 4. Scandinavia 20.40 5. Taiwan 17.60 5. Hong Kong 15.35 5. Hong Kong 13.84 6. SE Asia 17.28 6. SE Asia 13.86 6. Italy 13.37 7. Hong Kong 15.57 7. Taiwan 11.43 7. Taiwan 9.63 Weakening Strengthening

MPA - Tier 3 Results 2002 2004 2006 1. Belgium 17.33 1. Austria 13.76 1. India 18.34 2. Spain 15.29 2. India 13.07 2. Spain 17.26 3. India 14.86 3. Brazil 12.47 3. Brazil 16.66 4. Austria 14.22 4. Belgium 12.12 4. Russia 15.98 5. Russia 13.11 5. Russia 11.40 5. Belgium 13.51 6. Brazil 13.06 6. Spain 10.93 6. Austria 9.89 7. Argentina 3.59 7. Argentina 2.98 7. Argentina 2.48 Weakening Strengthening

Complementary Models MPA MIM Comparative Model 18 Measures/3 drivers 1 year of data Subjective Weights Market potential Tier Ranking Comparative Model 34 Measures/8 drivers 10 years of data Objective Weights Investment Allocations

What is the MIM? A model with a structured and measurable methodology to identify, validate and optimize marketing resource allocations for a subset of markets.

How did we approach it? Market Drivers 1. Attractiveness; 2. Growth; 3. Opportunity; 4. Receptivity; 5. Accessibility; 6. Prosperity; 7. Affordability; 8. Competitiveness;

How did we approach it? Market Attractiveness: Economic Factors: Employment GDP per Capita Sensitivity to Exchange rates Disposable Income as a % of GDP.

How did we approach it? Market Attractiveness: Tourism Measures: Target Population Long haul Inbound Volume Long haul Inbound Spending Market Share Average Spending per night Travel expense as a % of Disposable Income.

How did we approach it? Developed a weighted quantitative matrix; The weights are derived statistically for each measure & market driver & for each market;

What does it look like? UK Return 1 1 2 3 4 5 x Attractiveness x 01EC001 01EC002 01EC003 01EC004 01TS005 Measures Employment Per Capita GDP Elasticity of Inbound Travel to Exchange Rates Disposable Income as a % of GDP Target Population x x Tot Rev r-square 0.8670634751 0.5094065485 0.0776264049 0.7187676825 0.8981105213 1996 $ 566 year 1996 26.0598 31,918.2576 1.0986 28.9800 30,716.9000 1997 $ 641 year 1997 26.5253 34,995.7050 0.9966 27.9100 30,928.1000 1998 $ 687 year 1998 26.7953 39,056.4500 0.9400 25.7700 31,150.0000 1999 $ 824 year 1999 27.1583 39,169.2822 1.0703 26.8700 31,385.8000 2000 $ 883 year 2000 27.4725 38,120.1580 1.1788 29.1700 31,582.1000 2001 $ 1,074 year 2001 27.7018 38,542.9807 0.9670 30.7500 31,728.4000 2002 $ 1,026 year 2002 27.9170 41,525.1004 1.0371 29.4200 31,842.2000 2003 $ 993 year 2003 28.1830 41,231.9684 0.7849 31.1200 31,958.7000 2004 $ 945 year 2004 28.4653 44,293.7112 1.1472 30.0900 32,075.6000 2005 $ 1,279 year 2005 28.7000 41,393.4032 1.1867 33.4400 32,300.0000

How did we approach it? Developed a conversion matrix that converted weighted scores by market to an investment level by market.

2005 MIM Results 2006 Actual Budget 2005 MIM Results 2007 Budget Allocations % % % U.S. Total. 57.3% 38.2% 51.6% Europe/LA 23.5% 31.4% 25.0% UK 10.7% 11.4% 10.6% France 5.0% 6.3% 4.7% Germany 4.9% 3.0% 4.4% Mexico 2.8% 10.71% 5.3% Asia/Pacific 19.2% 30.5% 21.1% Japan 14.2% 9.3% 13.2% S Korea 1.5% 6.0% 2.6% China 1.4% 7.5% 2.4% Australia 2.1% 7.0% 3.0%

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