SUBMISSION BY THE SOVEREIGN HILL MUSEUMS ASSOCIATION

TO

INQUIRY INTO THE OPPORTUNITIES FOR INCREASING EXPORTS OF GOODS AND SERVICES FROM REGIONAL

BY THE RURAL AND REGIONAL COMMITTEE, PARLIAMENT OF VICTORIA

1. BACKGROUND

The Sovereign Hill Museums Association is a not-for-profit, community-based company limited by guarantee under Australian corporate law. It operates the internationally acclaimed Sovereign Hill outdoor museum at which currently enjoys annual ticketed visitation of over 700,000 at its museum and farm campuses.

It employs 380 staff (220 EFT) and has almost 300 volunteers to help activate the museum. Almost 25% of its visitor numbers originate from international markets, making it a very successful exporter of Australian tourism product.

In particular, Sovereign Hill presently attracts one in three mainland Chinese visitors to Victoria and has a marketing and sales office in Shanghai, with five Chinese nationals employed.

It is a major driver of regional dispersal of tourism into Victoria. On two occasions, 1992 and 2005, it has won the award as Australia’s Major Tourist Attraction at the National Tourism Awards. Sovereign Hill opened in 1970 and generates over 98% of its operating income from entrance admissions and its commercial operations; therefore it makes very little call on the State Government for operating funds and does not receive any Federal or local government operational funds.

Its capital has come approximately one-third from retained earnings, one-third from its own fund-raising and one-third from accessing capital grants from government.

Sovereign Hill operates independently from all three spheres of government and has never made an operating loss in its forty-four year trading history.

Ultimately, its assets would revert to the Crown; making it a most successful investment by the State Government in the development of an abandoned Crown land mining area in Ballarat in the 1960s leased on a 50-year term to the Association.

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2. TERMS OF REFERENCE: COMMENTS

(a) The identification and volume of Victorian Agricultural, Resource, Manufacturing and Service Industry exports to overseas markets originating in regional Victoria.

Sovereign Hill generates the following visitation numbers from international markets to its outdoor museum:

Approximately 70% of these visitors also pay to attend the separate Sovereign Hill Gold Museum, adjacent to the outdoor museum. A further 5% attend the nightly sound and light show “Blood on the Southern Cross” at Sovereign Hill.

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The proportion of Chinese visitor numbers has rapidly grown over the past two decades:

The total gross export income generated by international visitors, based on the annual per capita gross average, is estimated at $6m p.a.

Other international markets serviced by Sovereign Hill include New Zealand, Europe and UK, North America and India.

(b) Regional Victoria’s competitive advantages in meeting the demands of world markets.

The major competitive advantage that Victoria enjoys, in terms of inbound tourism, is the curfew-free Airport.

It has very cleverly developed its facilities and expanded its accessibility to key and growing overseas markets. Under present CEO, Chris Woodruff, it has in particular extended its reach into China and Asia and has positioned itself as the premier inbound airport service destination for Australia.

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The VFR (Visiting Friends & Relatives) market in regional Victoria is stimulated by the significant reach of institutions such as Federation University Ballarat, into markets in China and India.

The facilities provided by the Crown Complex in Melbourne are of the highest quality and the relatively easy access to day tours to regional areas is strongly supported by Crown as a huge driver of international tourism. Sovereign Hill and Phillip Island Nature Park between them have developed high quality tourism experiences which are in high demand from all international markets, in particular China and Asia. Accessibility from the Melbourne CBD is relatively easy on freeways and each has developed products specifically for China and Asia.

In fact, all tourism product within a 2-hour radius of the Melbourne CBD is readily accessible to inbound markets for day trips.

The excellent international work done by Tourism Victoria under the recent leadership of CEO, Leigh Harry and Tourism Australia, under former MD Andrew McEvoy, has enabled regional tourism products like Sovereign Hill, Phillip Island, the Yarra Valley Wineries, the , the Surf Coast and the Twelve Apostles/Great Ocean Road experiences to flourish.

International visitors view Melbourne as a 2-hour radius destination and do not necessarily differentiate regional products in this offering as being separate to the CBD experience. Future marketing strategies for Tourism Victoria need to incorporate this aspect in their application.

Road, rail and aviation assets are working to regional Victoria’s advantage to the extent that day tours are expanding. However, the downside is that there is a lack of international reach branded accommodation at desired capacities. More hotels are needed in key regional Victorian destinations to encourage and provide for overnight stays by the group markets in particular.

(c) Innovative approaches to exporting and lessons to be shared from successful exporters.

Sovereign Hill has been a key player in developing the inbound China tourism market since the late-1980s when mainland visitors, mainly Government officials, commenced their interest in coming to the heritage region as depicted by the outdoor museum.

Following a Federal Government report into Australian cultural tourism opportunities in 1993, Sovereign Hill appointed Mandarin and Cantonese speaking guides and initiated serious marketing activities to grow this emerging market. We now have over 25 such guides employed.

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By the time the 1998 decision to introduce the Approved Destination Status Visa scheme, Sovereign Hill was firmly established as a “must see” destination for this market.

Trade Mission and marketing activities were very well coordinated by Tourism Victoria and Tourism Australia and Sovereign Hill’s marketing staff participated in each one, with positive results for visitation.

A strong working relationship was put in place with the Melbourne Convention & Visitors Bureau to align the inbound MICE market with what regional tourism products like Sovereign Hill could offer.

Sovereign Hill’s capacity to handle large inbound groups, such as the South Pacific School Games (3500 students) in 2003 and later AMWAY and insurance MICE groups of up to 7000 international visitors in a short visitation cycle, is a regional advantage. Our caterers are Delaware North Companies Australian (DNCA) which also contracts for operation of the Australian Tennis Open and Melbourne Park, as well as Etihad Stadium. It has the capability of supporting huge events.

Catering resources need to be innovative and flexible to cope with widely varying and very demanding international market requirements and DNCA has that capacity. It has a long-term contract for Sovereign Hill’s catering requirements and is able to marshall all of the necessary resources to meet the markets’ demands.

Presentation of Sovereign Hill’s museum experiences in Mandarin is a point of difference for our product. The Gold Mountain Tour, Secret Chamber, Woah Hawp Mine Tour, the Chinese Village, the Gold Pour and the Gold Museum all add critical mass to the tourism product being exported into the China and Asian markets.

(d) Impediment and barriers creating difficulties for regional exporters.

Lack of high-quality, international brand reach hotel accommodation facilities in regional Victoria is a serious impediment to regional overnight dispersal of international visitors, particularly the group markets.

There is market failure in this aspect which requires Government intervention and financial stimulus.

Sovereign Hill currently has an Expression of Interest proposal in market for development of a 100+ room, international brand hotel on freehold land it owns, immediately abutting the outdoor museum. It is correctly zoned and the project is “shovel ready”.

If successful, this project could deliver an additional 50,000 visitors p.a. (at a 70% hotel occupancy rate) and generate significant new employment growth in the Ballarat region’s tourism sector.

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This project will require State Government infrastructure capital support, as well as marketing assistance in its initial years, if it is successfully negotiated.

Other barriers include a predominant focus by Tourism Victoria on marketing the sophisticated tourism experiences in the Melbourne CBD at the expense of the total product offering in the 2-hour radius around Melbourne. Additional marketing funds are required by Tourism Victoria to maintain its current level of investment in marketing of Melbourne as the “City-State” in effect, but also to grow its emphasis on the quality, accessible tourism opportunities in regional Victoria.

(e) The current and future roles of government in supporting regional businesses in their export endeavours.

Expansion of the Export Market Development Grant Scheme (EMDG Federal Government scheme) beyond its 8-year maximum term is required to support existing products which have used their entitlements to expand into new markets.

Local Government should be encouraged to continue or implement special rate levies that support tourism marketing in regional areas. Investment in this work has a profound multiplier effect in regional economies. It supports growth of export income and supports job growth as traditional manufacturing sector jobs reduce.

Continuation of the Super Trade Mission concept, introduced under the Baillieu State Government, should be a primary recommendation of this Inquiry. Sovereign Hill has benefitted immensely from its participation in this activity.

The State Government should actively engage with the tourism industry and the Chinese Consulate in Melbourne to develop strong partnership for business connections, visa issues and cultural awareness training for staff and volunteers.

Celebration of multi-cultural events, national days etc (e.g. Chinese New Year) should be expanded into regional centres, with involvement of local community organisations such as the Ballarat Chinese Community Association, and the Ballarat Multicultural Committee. In turn, these events need to be marketed effectively by Tourism Victoria in its international campaigns, especially in China and Asia.

The Victorian Multicultural Affairs Commissioner is an excellent resource for the tourism sector and is often overlooked or underused when strategies to grow inbound markets are being considered.

One point also worth making is that international tourists do make a considerable contribution to the GST pool by their consumption of goods and services purchased in market. This is an added incentive for State and Federal governments to support the sector’s growth.

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