Wednesday Letter: Cycling to prosperity

Dave Bamford

Following the inaugural Cycle Tourism Business Summit, organiser Dave Bamford of the Timber Trail Lodge tells the Ticker about the growing number of international visitors on NZ’s Great Rides, how ebikes are transforming the industry, and why collaboration and social license are vital for success.

Our very first Cycle Tourism Business Summit in August brought together some of the key Great Ride influencers in the country. A priority for an invitation to the event, which was held at the Timber Trail Lodge on the Pureora Forest Cycle Trail, was that all invitees had to have “skin in the game”.

Those who came represented about $15m per year worth of business and a collective total of around 10,000 clients. So, we can see already that this is clearly an emerging market and one we have very high hopes for.

The purpose of the summit was to bring some collaboration to the sector, to connect it in a way that it has not been previously and to share mutually beneficial insights. Exploring options to work together marketing-wise and providing business advice with the aim of helping us all “grow the pie” was an important part of the three-day event.

While there were some seasoned hands among us, some of the industry’s newer recruits were reassuringly clear about what the vision for their business is and why they are in the game at all.

For those relatively new operators, making sure they are building resilience for any significant changes in the marketplace is important. After all, if you are a new recruit to the industry and have only seen the market grow by 10-15% a year, you may think that this is simply the way the market operates and that it will go on forever.

However, old hands know that September 11, the Global Financial Crisis, and stock market crashes all happen and they can seriously affect markets. In tourism, you need to be able to react quickly and effectively to those types of shocks.

Over $100m has been spent on the country’s 23 Great Rides but the hard reality is, only if you build good trails will the market come. Build bad ones and the markets and businesses that support them will stay away. Some rides are not yet up to scratch with a lack of investment and hence a lack of commercial infrastructure from cafes to baggage transporters to accommodation holding the ride back.

However, in general, the Great Rides building programme that began in 2009 has been very successful with some trails providing exceptional experiences. The Alps 2 Ocean and Old Ghost Road in the South Island, and the Timber Trail and the Hauraki Rail Trail are just a few that are doing well and those are the ones that have attracted businesses.

Financing those businesses is not easy. Generally, funding for investment is coming from family, bank loans, or private investors. In the last two or three years, we have seen some mergers and acquisitions taking place as smaller businesses try to grow and achieve economies of scale and market penetration. At the other end, you have established businesses like those associated with the Otago Central Rail Trail, such as Trail Journeys. Trail Journeys is a significant player in this niche market and it has expanded out of its Clyde base in Otago to the Tasman Great Taste Trail.

In terms of market mix, the more mature a Great Ride is, the more chance of meeting international visitors on it. On the Otago Central Rail Trail, around 40-50% of riders are internationals, predominantly from Australia. Relatively new products have less than 10% of riders coming from overseas. Historically, we see that that changes over time. As trails reach their sixth or seventh year, you begin to see much greater penetration by offshore markets. We are starting to see that now with the Timber Trail.

One the most significant challenges new operators face is overcoming that lack of knowledge of how to put a journey together. How do you get to the start, where do you stay overnight, and how do you finish your trip? What crucial parts of the service sector will deliver a good experience for riders?

That is why collaboration is key if you are trying to provide an integrated product to a client. That’s the real success of the Otago Central Rail Trail, where you have this seemingly seamless experience, from the start to the finish, with cafes, meals, and a range of accommodation options. Alongside big baggage delivery and plenty of rental bikes and e-bikes to choose from, it makes that trail a very compelling proposition. Collaboration between all operators is a real focus for the Timber Trail businesses over the next season and beyond.

One opportunity that is starting to transform the industry is ebikes. They are becoming increasingly common and are opening up trails to a wider market. What that means is that group compositions will change to include more people who are not active cyclists. We are seeing that on the Otago Central Rail Trail and the Hauraki Rail Trail, and it is starting to emerge here on the Timber Trail too. As ebikes improve and become more widely available we will see a greater mix of clients.

When it comes to marketing the Great Rides, Tourism New Zealand has golfing and cycling priorities to market offshore and they are doing that very well. We believe they could also benefit from having more staff focused on niche products like golf, snow sports or indeed cycling. It is not easy when there is only one person at Tourism New Zealand whose role is to cover several niche products but we appreciate their support. The more they can do, the better for the industry.

The market is not massive at this stage but it is growing and it is providing opportunities for people in rural communities to become involved at various levels.

Likewise, Tangata Whenua are a crucial stakeholder in the industry. The location of many trails means operators are working in the back country. Local iwi should be involved and they should also see some of the benefits a successful trail can generate. Without their support operators will struggle to be successful. The value of having a social license to operate came up again and again at the summit and it cannot be understated.

The New Zealand Cycle Trail and Great Rides need good businesses and good businesses need great rides. Unless they support each other, businesses will not be able to deliver the benefits these trails deserve and the rides will not attract the commercial interest that allows the public to enjoy them.
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