Consumer Sentiment Tracking

22 October 2020

Since the week commencing the 24 February, Visit Victoria has been tracking consumer sentiment regarding coronavirus (COVID-19) on a weekly basis to help us measure the impact on consumer perceptions and behaviours in intrastate and interstate tourism markets. This is conducted through an online consumer panel of Victorians and Australians, through quantitative surveys. This has been supplemented by a wide range of consumer, digital and industry metrics, to help understand both the levels of demand that may occur on the pathway out, as well as the consumer trends and desires in a COVID world. 

Demand will be there when the time comes

Much has been made of the low levels of consumer confidence throughout the nation and Victoria. Consumer confidence is a measure Visit Victoria regularly tracks, as it is fundamentally a measure of confidence to spend discretionary income. But we also know consumers do not view all forms of discretionary income the same. For many, travel is a fundamental part of their lives. This cannot be described better than a statistic by Bastion Insights, who found that travelling is the second most missed activity during the lockdown, second only to socialising with friends and ahead of activities like spending time with family. While we can't ignore the reality that consumer confidence is low, we know travel is not the same as other forms of discretionary income, like buying a new television or a car.  

Recent sentiment tracking has shown that travel consideration from Victorians has recently (Late September and October) been at the highest levels since COVID specific tracking started in March, even higher than weeks in June where travel was open. There is still strong agreement to the statement of ‘I would prefer to avoid travelling within Victoria until COVID-19 is contained’, showing that consumers are waiting for the go-ahead that travel is safe and allowed, but positively, the underlying desire is strong and unlikely to dissipate anytime soon. 

Consumers are impacted in a variety of different ways and there is not a one size fits all model of how we will behave.

COVID-19 has put a large psychological and financial toll on many Victorians. But throughout the doom and gloom headlines, it is important to remember not everyone has been impacted severely, at least in terms of personal finances. Quantum Market Research have sized the market based on whether consumers have been directly impacted, as well as on future confidence. The biggest segment by far is ‘comfortably secure’, those who have not been negatively financially impacted, and still feel confident about the next five years. Household savings rates are currently at the highest levels since 1974. For some, that will be due to nervousness, but also, due to the inability to spend as much money in a lockdown environment. In a travel context, consumers have not been able to spend on any form of travel, including outbound travel, which Victorians spent $17.5bn on in 2019. A recent statistic from Quantum Market Research has shown that travel is the most common item that ‘savers’ are saving for. Additionally, we consistently see relatively minor differences in travel intent amongst those who have lost income, versus those who have not. 

This has two key implications for travel in Victoria, particularly for the intrastate market, in the short term.

• Many travellers are financially impacted, but still want to travel. Many of these will be budget conscious, but intrastate travel is the cheapest form of travel (Compared to interstate and outbound), and offers some opportunities to ‘downgrade’, rather than not travel at all. Younger Australians are far more likely to be in this segment, due to the nature of employment losses and financially insecurity.
• Many travellers are not financially impacted, and in fact are suddenly cash rich. There is a yield opportunity for businesses that offer premium experiences, or for businesses to consider higher end versions of their product offering, to provide options for different parts of the market. Many consumers will be willing to spend more on their domestic travel than they previously would have, as long as the value exchange is clear.   

It’s a great time to encourage longer stays and to travel further, but we cannot ignore the fundamentals of domestic travel.

As consumers have not been able to travel overseas, and many have cash to travel domestically, it is intuitive to think we can now expect or try to get Australians to travel like international visitors; who often visit multiple destinations in a state, whether overnight or on a daytrip, and stay for a long time. Now has never been a better time to encourage longer trips, to get Victorians and Australians to stay an extra night, or perhaps, simply to travel a little bit further than they usually would. 

But we need to be mindful that Australians will always view domestic travel differently to travelling overseas. In a poll we recently ran on visitvictoria.com, we found that most Melburnians (69%) are interested in taking short stay getaways of 1-4 nights within Victoria. This largely aligns with the market pre-COVID. There is still a market of Melburnians out there looking for longer stays in their home state, however, it is not the norm, with only 18% of respondents interested in a stay of 5 nights or more. Empty nesters are typically the ‘low hanging fruit’ for these longer trips and offer great opportunity in the short term, as this group have often travelled both domestically and internationally, and can now commit to more domestic travel.

 The poll also found that interest in multi-destination overnight stopovers in a single trip is rare with most people (75%) opting to be based in one destination during their stay. Although most respondents said they would prefer to base themselves in the one spot, a majority (70%) said they would take day trips to different destinations during their stay. Encouraging road trips is key; after all, it is basically the entirety of the intrastate market. But we need to be mindful of the behaviours that are the norm. Encouraging longer stays is positive step to take, but the majority of the market is unlikely to undertake lengthy road trips, with multiple overnight stopovers.  Destinations are better off placed highlighting how they are relevant for all kinds of trips, but offerings for a short break are a must. Within this, it is worthwhile highlighting how a variety of smaller daytrips can be conducted in a ‘hub and spoke’ way, rather than those that require an overnight stay in another destination altogether.

There is desire for many forms of activities, but we can’t forget the underlying reasons why we want to travel.

Research conducted across June has shown a desire to travel to cities for reasons that align to Melbourne’s core strengths. Diverse regional experiences in close proximity to the city, food and drink experiences and shopping experiences all have high levels of interest – and we know Melbourne leads perceptions of these attributes within our interstate market. While interstate travel is not possible right now, we know our offering in a COVID world remains strong, even if this looks different. 

Further, the core strengths of a trip to regional Victoria are what Victorians are looking for in a state-based trip in 2020. Nature and food / drink experiences have always been core drivers of intrastate travel, and are relevant to all areas across the state. The need to unwind, recharge and get out into nature arguably has greater resonance once restrictions next ease and it is safe to undertake these experiences. 

While these lists and other research often focuses on the things we want to travel for, we can not forget the underlying reasons of what motivates it in the first place. As important as these things are, we do not simply just travel for a nice meal in a regional restaurant, or to see a new gallery exhibition. Pre-COVID research by Visit Victoria identified six key needs of travel, which are brought to life by consumer quotes.

• Freedom. “Feel like I’m a million miles away from normal life. You can fully relax & enjoy without anything holding you back”
• Energise. “...to experience new. To be spontaneous, see what comes up, what I find. I like not knowing what’s around the corner.”
• Growth. “Unique experiences opening up my mind & make me re-think the way I see the world. To feel inspired for new challenges.”
• Connection. “...spent time with family...it made the trip much more significant than any amazing location could be by itself”
• Mindfulness. “It gives me a chance to stop and appreciate everything a little more”
• Pleasure. “...you get treated really well. You don’t have to worry about anything.”

One of the most heartening aspects of our tracking has been a motivator that has perhaps always been there, but is now more front of mind – travelling because it’s the right thing to do, in order to support local communities (Altruism). 84% of Victorians surveyed since the week commencing 21 September agree with the statement ‘It will be important to support local businesses and communities when restrictions are lifted’. Interestingly, this statistic is consistently high, even amongst groups who have been financially impacted by COVID. This statistic may seem intuitive, but we know people can often look purely inwards during a crisis, and this shows that Victorians are still thinking about the wider community and those that are doing it tough. The Click for Vic campaign effectively taps into this, through highlighting local makers and creators, which has a strong resonance with consumers right now. This is something that businesses small and large can tap into; through highlighting the provenance of the offering, no matter what that is, and telling local and personal stories.