Backpacking Industry Needs to ‘Innovate or Die’

Backpacking industry leaders lowering their prices to attract customers are creating a negative price spiral, Campbell Shepherd told ABiC Melbourne today.

The CEO of Recreational Tourism Group told delegates dropping prices means lowering profit margins.

“It will only bring everyone else down with you,” he warned.

Mr Shepherd outlined how various factors have affected the backpacking industry in Australia, including how the high dollar is shortening length of stay and spending.

The increase in UK university fees has stalled the number of travellers arriving from the destination, and it’s cheaper for overseas visitors to head to the United States than it is to come to Australia.

However, outlining the positives for the Adventure Backpacking Industry Conference, Mr Shepherd said Australia is the place to come for highly paid work to fund travelling.

And he said there are an estimated two million students who will miss out on university placements in the UK.

But he criticised the backpacking industry reacting to the downturn in visitors by reducing prices in an attempt to attract customers.

He said free add-ons, such as food, trips and discounts are “all costing you money and are hitting your margin”.

“It’s going to be a tough winter. People are going to continue with this negative price spiral, thinking they’re attracting more people. But it will be a slow painful death,” he added.

“The industry has become pedestrian. There are very little new products and ideas in the market. I can’t remember the last time anyone had something new, exciting, different and blows people out the water.”

He also called on the industry to fund a public relations company to improve its image on an international scale.

“We’ve got a poor industry profile in the media – it’s sensationalistic. Where are all the good news stories about all the great things we’re doing? It’s something we need to change,” he said.

“We need to innovate or die.”

Mr Shepherd advised delegates to look for new income streams as well as developing new products within their existing services.

And he said the industry needed to get involved on a political level to drive innovation and change.