Transcript No Slide Title

HOSPITALITY AND TOURISM
ADVISORY SERVICES
Future Marketing Strategy
for the International Markets
November 2006
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The surveys clearly revealed
 Israel has considerable “growth prospects”
in the international markets
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Which strategies / measures are necessary
 to realize these growth prospects
 to convert interest into trips?
Or else:
 What does the realization of the growth prospects depend on?
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Overcoming the Barrier “Political Situation”
Israel’s political situation acts as a strong barrier, but this should
 not be an argument for being inactive in the international
markets
In contrast,
 the political situation should be a spur to be particularly
active in the markets
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Because,
 the more present
 the more attractive
Israel appears as a tourism destination in the international markets,
 the more this barrier can be overcome
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Active Marketing
The precondition to realize Israel’s growth prospects is
 a very active
 continuous
 long-term oriented
marketing in the international markets
And (in connection thereto)
 a sufficient / long-term secured marketing budget
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5-Year Marketing Program
In a first step, irrespective of the political situation, an at least
 “5-year marketing program”
 with a guaranteed “5-year marketing budget” has to be
consequently realized
(For more than 5 years Egypt e.g. is consequently and successfully
adhering to its marketing program – independent from political events)
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The Aim for the Int'l Markets:
A realistic target (also considering political setbacks and, on the
other hand, aviation reform) is:
 to double the number of international tourists in the next 5 years
4-5 m
2m
2006
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The Potential
Substantial growth prospects for Israeli economy
 Doubling the number of annual international visitors by 2011 to
4 million visitors could result in:
 An annual addition of approximately NIS 18 billion in international
travel and tourism receipts in Israel
 An annual addition of approximately NIS 15 billion to Israel’s GDP
 The creation of nearly 45,000 new jobs in Israel
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Marketing Strategy for the Int’l Markets
What would be the most important strategies / measures for
the international markets in order to reach this target?
At first: to select the right markets for investment
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Priority / “High Potential” Markets
“First Priority” Markets
USA
Great Britain
Germany
The “three Big” demand markets worldwide
with high Interest Potentials for Israel
France
The second most important market for Israel at present
with a traditionally high affinity towards Israel
Italy
A growing market with a high interest in Israel
Sweden
A smaller but very high spending market and having an
above average interest for Israel
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“Second Priority” Markets
Switzerland
A smaller but substantial, high-spending market
Netherlands
A smaller market, but having one of the highest outbound
travel intensities
Russia
The most important Eastern European source market but
altogether a smaller outbound market
Canada
A smaller market for overseas trips but having a high ethnic /
Jewish share
China
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A smaller market but a growth market, also with an interest in
Israel (but only for 1-2 stays in the scope of a multidestination trip)
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Non-Priority Markets (at least in the next 5 years), among others
India
Small outbound market, primarily business trips
Poland
Smaller / low spending market (religious-inclined
market)
Hungary
Small / low spending outbound market
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“High Potential” / Most Promising Markets for Israel:
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 USA
 France
 Great Britain
 Italy
 Germany
 Sweden
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Marketing / advertising budgets should above all invest in
 the first priority / “high potential” markets,
the markets with the best earning prospects for Israel
and only to a lesser degree in
 the second priority markets
No specific investment (at least in the next 5 years) in
 the “non-priority” markets
After 5 years the ranking of the high potential markets / budget allocation
should be reviewed and adjusted if necessary
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Future Target Groups / High Potential Segments
Israel’s growth prospects in the international markets lie above all
 in the “holidaymaker” segment
 namely, in the segment interested in “Culture / Tour”
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Additional segments (but only for smaller target groups and/or
single markets):
 Sun&Beach with affinity for culture
 religiously-motivated / Pilgrimages
 ethnic / VFR
Generally not a target group for Israel:
 families with small children
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The Future Product Strategy
The absolute main product for all international markets /
the product with the best market chances is
 the Tour
In European markets: primarily Tour only Israel
America: Both, only Israel and multi-destination Tour (Greece, Egypt, Italy)
Asia:
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Only multi-destination Tours
(whereas the visit of Israel is limited to a maximum of 1-2 days)
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Strengths of the Tour
 highly competitive
(due to the uniqueness of the religious sites)
and
 less price-sensitive
 less safety-sensitive
due to less exchangeable:
- the “pyramids” can only be found in Egypt
- the “places of the bible” only in Israel
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Also important for all markets:
 Tour with a few “relaxing days”
above all at the seaside (Tour combined with Sun&Beach)
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Further products for the international markets
(although for smaller target groups and not for all markets):
 Sun&Beach holiday at the Red Sea (especially Great Britain, Sweden)
 Traditional religious Pilgrimage (USA, Italy, Poland, Canada)
 Spiritual/ Meditative/ Self-finding trips (Germany, Sweden, Italy, USA)
 Visiting Israel as part of a cruise (Great Britain, Sweden)
 Medical stay at the Dead Sea (Russia, Germany)
 CityBreak (Jerusalem) (Italy)
 Kibbutz stay (young people) (France, Sweden)
 Desert trip (Sweden)
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The Future Price Strategy
The realization of Israel’s growth prospects will also significantly
depend on
 the price strategy Israel follows in the future
In this context, it is decisive:
 prices must not constitute a second barrier
(beside the political barrier)
on the contrary,
 prices should be an instrument to somewhat compensate the
risk of the political situation
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Given moderate prices,
 the political barrier can be brought down
and
 a much broader target group can be reached
(a large part of the Israel potential, especially in Europe,
comes from the middle income brackets)
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Therefore, in the international markets, Israel should primarily follow a
 “mid-priced” strategy
Thus important:
 A sufficient offer “good quality mid-grade accommodations”
(3-star hotels, particularly also with a sense of place)
 inexpensive air fares
Focusing on a mid-priced offer does not exclude high-priced offers,
but the main emphasis should remain on good quality mid-grade offer
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The Future Distribution Strategy
The main distribution channel for Israel in the international markets
should be
 Tour Operators / Travel Agencies
In order to better exploit the large interest potential, Israel needs to
 strongly cooperate with tour operators / travel agencies
and should
 significantly increase the number of tour operators /
travel agencies offering Israel
This represent a central marketing task in the next years to come
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What do tour operators expect from Israel?
 Financial support in subsidizing aviation in the form of a safety
net for seat occupancies / cancellations
(although only relevant to large tour operators with own charter flights)
 Well-priced flights
(generally more important because this also benefits the small
and medium-sized tour operators)
 Free information trips
(particularly important for tour operators not offering Israel)
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But:
The by far most important sales-supportive measure from the tour
operators’ / travel agencies’ view would be
 a more “moderate price policy”
and conducting
 a continuous / intensive “consumer advertising”
both in order to activate / increase the consumer demand
Therefore, the so-called “safety net” would be an important but only
flanking measure (for large tour operators with own charters only)
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Expected support in the case of an “acute crisis”:
 fast, honest and reliable information
 professional first response / evacuation measures
 assumption of all costs (cancellations / transportation, etc.)
and a “post-crisis management”, including:
 advertising to rebuild the clients’ trust
 reduction of prices / special offers in the following season
That means, decisive for the tour operators are:
 moderate prices
 and consumer advertising
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The Internet as a Sales Channel
The tour operators themselves are increasingly offering online
bookings
At least for the next few years, Israel should refrain from its own
online sales because:
 personal contact and consultation are very important in the case of Israel
and
 it would be counterproductive for a good and close relationship
with tour operators
Except: Flight bookings for repeat / VFR-visitors
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The Future Communication Strategy
The image of Israel (above all in Europe) is a negative image shaped
by the political situation
It is a “must” to contrast this negative (news) image in the future
Therefore, if Israel wants to better exploit its large interest potential, it
is a precondition (irrespective of the present political situation):
 to run a strong consumer “advertising campaign”
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With highest priority, Israel has to set up a second / positive / peaceful
a “touristic” image
in the markets / in the consumers’ minds
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The development of such a second / touristic image cannot be done overnight
This is:
 a long-term process
 following a long-term concept
 which should only be briefly interrupted in the case of a political event
It is a measure which is also long overdue from a touristic point of view –
but not only:
 such a campaign would also have an extremely important function for
Israel in general
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In a first step, a
5-year budget of 250 million USD
50 million USD per year
should be provided for the international markets
This budget would be in line with the competitors
And this budget represents a precondition to realize Israel’s
growth prospects
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In this context, it should again be mentioned that
 tour operators give such a touristic image campaign a higher priority
 than a so-called “safety-net” (subsidizing in the aviation sector)
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ROI of 9:1
 Our analysis suggests that for every additional dollar
invested in marketing, the return on investment will be $9
in additional spending
 An annual increase in marketing spending to $50 million
could initially yield an annual average of $447 million in
spending and over 510,000 additional visitors.
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In general important for the future advertising measures:
It is not recommendable to
 provide “ad hoc budgets at the end of the year”
 sporadically place one or two ads or TV commercials
 change the advertising concept / line within short intervals
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Additional communication measures:
 Development of a “crisis plan”
and
 a superlative Israel “website” as the central information system
In contrast: Printed promotional material as a Tourist Board service
abroad can be dispensed with
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Summary
Israel has
 a large unexploited interest potential in international markets
 and thus considerable growth prospects
The political situation acts as a barrier but it can be overcome via
 the establishment of an attractive “touristic” image
 and a “moderate price” policy
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Israel’s most important strength is
 its worldwide unique “religious culture / history”
(but primarily in a touristic culture / sightseeing
than a pure religious sense)
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Recap of Core Measures for Int’l Markets:
 Concentration on the first priority / high potential markets
 Concentration on the core product “Tour”
 Implementation of a 5-year image campaign
(with a budget of 250 million USD)
 Following a “mid-priced” strategy
 Close partnership with tour operators / travel agencies as the central
distribution channel
 Improvement of the offer quality / orientation on the core product “Tour”
 Improvement of the flight offer / cheaper flight prices
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Great prospects for Israel
Take your chance!
Be’Hatzlacha!
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