PRESS RELEASE ON NEW WATERS MARKETING PLAN OF THE HUNGARIAN NATIONAL TOURIST OFFICE FOR December 2010

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1 Hungarian National Tourist Office Communications Office 1115 Budapest, Bartók Béla út Phone: , fax: PRESS RELEASE ON NEW WATERS 14 December 2010 MARKETING PLAN OF THE HUNGARIAN NATIONAL TOURIST OFFICE FOR 2011 Called On New Waters, the marketing plan of the Hungarian National Tourist Office for 2011 is now complete and has departed from former principles to reflect a new approach. Starting next year, the greatest novelties in Hungary's tourism marketing will involve the use of strategic brand communication internationally and domestically, as well as bringing sales incentives into sharper focus by relying more heavily on the travel trade, a different approach to segmenting source markets (in terms of the focus of communicating with the public and businesses) and targeting new markets with the generation of demand remaining a first priority. THE MISSION AND GOALS OF THE HUNGARIAN NATIONAL TOURIST OFFICE The Hungarian National Tourist Office is a state-owned company. Its mission as the national tourism marketing organisation is to position Hungary as a tourism destination internationally and domestically, which in effect is equivalent to delivering the factual information required for making travel decisions and to distinguishing the country from competitors. The HNTO pursues its business with the aim to increase the number of foreign and domestic guest nights, i.e. to promote tourist spending. With the business objectives of component markets collated and with a view to international forecasts regarding tourism, the Hungarian National Tourist Office projects a 3.4 percent increase in the number of foreign guest nights and a 2.7 percent rise in domestic guest nights. The goal of the HNTO as an organisation is to become a centralised professional organisation that acts in a market oriented manner and as a catalyst for the sector in fulfilling its mission through efficient financial management. BUSINESS AREAS As a market driven organisation, the operations and the budget of the Hungarian National Tourist Office are exclusively determined by its business objectives. Seeking to operate effectively and efficiently, the HNTO only engages in or finances activities that have a direct impact upon achieving its business objectives. To be able to do so, the HNTO minimises its operating costs to afford to spend more on its marketing activities. The first priority duties of the Company involve marketing communication with the public and travel trade sales promotion. The former entails marketing actions designed to address potential tourists directly, including though otherwise sales promotion oriented tactical campaigns, whilst the latter integrates a variety of actions targeted at tour operators, including the appearance at fairs, which may also be open for the general public. The secondary duties of the Hungarian National Tourist Office involve all kinds of professional support activities, including market research and the areas of coordinating tourism. Moreover, the national organisation responsible for marketing tourism also has additional travel trade related responsibilities which it shares with its partner organisations, with a special focus on the V4 cooperation, Hungary's EU presidency in 2011 and the Air Marketing Fund. The organisation will be restructured in line with its new function: the network of foreign representations will be responsible first of all for maintaining relations with travel trade 1

2 partners, coordinating travel trade related programs and sales promotion. The domestic network will be responsible for regional communication with the public and for developing partnerships with the travel trade. Classifying target countries Its limited resources prevent the HNTO from being present everywhere to conduct marketing communication. Accordingly, the Company has grouped countries into two categories (B2C and B2B markets) on the basis of business potential, trends and travel habits. The definition of a weighted index calculated for the purpose took into account the number and the growing (decreasing) rate of guest nights and the ratio of organised travel from each market. The B2C group includes countries typically sending individual tourists or a large number of travellers to Hungary. Conversely, B2B countries look upon Hungary as a remote, exotic destination, and tourists from these countries are fewer and tend to travel in groups organised by travel agencies. It is more practical to focus on convincing tour operators of the benefits of Hungary in these countries. B2C markets Austria Benelux countries Czech Republic Southern Slavic countries United Kingdom France Poland Germany Italy Romania Switzerland Slovakia Emerging markets Asia, especially China and India Countries of the Persian Gulf South America B2B markets United States of America Northern Europe Israel Japan China Russia Spain Ukraine Priority will be given to communicating with the public in B2C countries and to travel trade sales promotion in B2B markets. As sales promotion is inconceivable without communication and vica versa, this classification indicates focus rather than exclusivity. The HNTO is planning an active presence in emerging markets due to the potential they represent. COMMUNICATION AND BRANDING Communicating with the public seeks to promote individual travel decisions. That, however, requires establishing an emotional link in addition to providing tourist information to ensure that Hungary stands out and enjoys a competitive edge, as Hungary is one of the tourist products competing for a share of the international market. The goal of branding is to ensure that Hungary is associated with a clear fundamental travel concept which is also the vehicle for establishing an emotional link with potential tourists. The Hungarian National Tourist Office wishes to build its long term strategic position on the following consumer needs: a forecast by the WHO suggests that tourism and the health sector combined are to become a dominating sector of the global economy by Moreover, health tourism plays a major role among the travel motifs of foreign tourists visiting Hungary and also represents an outstanding share in the multiple day trips of Hungarian tourists to domestic destinations. 2

3 Identifying a relevant product benefit, which Hungary can exploit in the face of competitors, is also a prerequisite for positioning the country's tourism brand. The supply side of tourism in Hungary is multifarious but it fails to contain emblematic components. At the same time Hungary ranks among the top five countries with the richest thermal water resources of the world. The versatility of the composition and the variety of healing effects of medicinal waters, health promotion through the use of these, sound experience and professional expertise with curing and rehabilitation combine to form a major competitive advantage. Medicinal and thermal resources cover 80 percent of the territory of the country. Although it is impossible to associate every tourist product with the concept of water directly, our spas encompass a broad area both culturally and territorially, which presents an opportunity for packaging cultural, religious, wine and gastronomy, active and ecological tourism with water. Hungary may be positioned as a tourism brand which is independent of sex, age and nationality and is based in line with global trends on the country's unmatched geological properties, underground water resources and the authentic ties with recreation motivated tourism. This position is also an attractive aspect for the professional target audience of conferences besides potential tourists. The real power of the brand is that it is similar to skiing and seaside holidays in that it may be a reason for regular return visits for the first time in the history of Hungarian tourism related marketing communication. A relevant brand position is associated with a product along its full life cycle. Departing from the practice of themed years Hungary will rely on consistently communicating the position of its brand as a token of success which achieves more than simply providing information to target audiences by evoking excitement and attraction through creative brand images. The message of brand communication is a unique competitive edge for Hungary: underground waters and related experiences. Simple announcing this message is not branding yet as an image or a brand image will always emanate from the way a message is communicated, the method (e.g. a smile) that a commercial message uses to convince a customer. The Company intends to place heavy emphasis in the future on creative ideas in its marketing communications to render messages unforgettable and to promote the image of Hungary. The marketing communication of the Hungarian National Tourist Office differentiates between strategic and tactical campaigns depending on whether they serve short or long term business objectives. While tactical campaigns tend to provide information about specific offers, strategic campaigns set the scene for consumer decisions by bringing an argument for emotional benefit in focus and seek to achieve a long term effect. Communication with the international public The HNTO will only communicate centrally to the public in B2C countries to either strategically promote the brand or to deliver tactical messages about Budapest, the Lake Balaton or to engage in a campaign of relevance for the given market. The HNTO will also allocate funds to communicating with the public in B2B markets, but these will be more modest and will depend on decisions made by the particular foreign representation. Communication with the domestic public The communication of the Hungarian National Tourist Office with the domestic public is divided into three areas: central strategic campaigns, central (tactical) campaigns designed to recommend programs and regional (tactical) campaigns designed to recommend programs. Strategic communication Central strategic campaigns are not focused first of all on repositioning Hungary, they seek to reposition the concept of domestic trips. The commercial problem with domestic tourism is not the lack of trips, it is the lack of trips generating domestic guest nights. The arguments used 3

4 internationally to promote health tourism could also motivate domestic trips. The true communication challenge, however, is to broaden the market of domestic travel. The Hungarian National Tourist Office targets its strategic domestic communications at people who have disposable savings for travel purposes but who tend to spend such funds on foreign travel or other consumer goods. Discount offers designed to boost sales may be used in the short term for convincing this segment to take domestic trips, but strategic campaign offering deeper going arguments are needed in the long term to complement holiday checks and recreation cards. Tactical communication Several successful tourism related initiatives (e.g. Pigging out Thursday, Festival Program Offering) have advanced to become permanent promotional activities in recent years. The HNTO will continue these promotional efforts with more pronounced media presence and innovative tools. Furthermore, regional program offers will give detailed account of the supply side of tourism in each region. To ensure uniform foreign communication, the Company will only conduct regional campaigns in other parts of the country and in border regions. The HNTO will give priority to the world wide web in providing both general and detailed travel information, which will save much of the cost incurred by publication appearing in print. The web-based operations of the Company will, however, be divided by target groups rather than countries for general communication purposes. The HNTO will restructure its websites addressed to foreign and domestic tourists (hungary.com and itthon.hu, respectively) to grant direct access to service providers as much as possible, ideally with integrated booking options to promote immediate sales. The newly developed corporate website of the Company will host travel trade information and will serve to maintain partner relations. In addition to these three central websites, the HNTO will continue to operate temporary sites for campaign purposes. TRAVEL TRADE SALES PROMOTION By means of travel trade sales promotion, the HNTO intends to convince tourists who tend to travel in groups or to go on organised trips, through travel trade partners, such as tour operators and travel agencies. These efforts of the Company include fairs, exhibitions and common activities with travel trade partners. Effectiveness and cost efficiency were the paramount criteria in determining the principles of planning such efforts. "Orbiting Group" Having new markets and new opportunities identified, the Company intends to expand the Office of Strategic Partner Relations set up formerly within the HNTO. Accordingly, a new unit of the HNTO organisation will be established and will be called "Orbiting Group" with the duty to attend to tasks associated with new markets, new products and new partners. The main focus of the Orbiting Group will be to assist sales promotion within the travel trade. One of the top priorities of the Orbiting Group will involve exploiting the country promotion opportunities associated with the production of film footage in Hungary. CONFERENCE TOURISM The HNTO will attach higher priority to increasing the number of guests and guest nights of conferences starting next year. The purpose of setting up a stronger MICE group within the organisation is to utilise as fully as possible the new business opportunities arising from our membership in international organisations (ICCA, UIA). Increasing the income from conference tourism by 5 percent is a general business objective for the HNTO. Operating for some years now, the Conference Envoy Program has set out to organise at least three international events with attendance between people and ten international conferences with participants below 500 in The Sports Envoy Program, which was also introduced earlier, intends to secure the rights to organise 3 international sports events next year. We expect the Hungarian organisations of every international company and sports associations to participate as partners in these programs. 4

5 Our key target markets in 2011 include the United States of America, the United Kingdom, the Benelux states, France, Poland, Germany, Italy and Russia. SHARED ACTIVITIES The Company will also perform individual assignments together with partner organisations with appropriate earmarked funding. There are three priority areas in 2011: Air Marketing Fund: The Fund seeks to improve the accessibility of Hungary. To achieve this end, the Company intends to cooperate with travel trade partners and service providers. In addition to increasing traffic for Budapest, the Fund also focuses heavily on developing traffic for the two international airports located in the countryside (Debrecen and Sármellék). V4 cooperation: The idea behind the cooperation is to help Visegrad countries appear efficiently together in remote markets. This cooperation has been successful for years and sales promotion can be fortified even further by raising new funds and operating common representations. Hungary's Presidency of the EU Council in the first six months of 2011: The presidency will also create an opportunity to present the country's tourism. The Company cooperates with the Ministy of Foreign Affairs and other peer organisations in an effort to utilise presentation opportunities arising during the six month period: several actions and programs are in the pipeline including the compilation of publications, the organisation of study tours for journalists and the operation of channels of information. Key events include the Danube Conference, the Tourism Conference and the ETC General Meeting. The full central marketing plan (in Hungarian) including target market sales activities broken down by projects, which are also open for partners to join, can be downloaded from HNTO s website at Your are also encouraged to visit the web sites of HNTO s foreign representations and regional offices for their continuously updated action plans: For more information, please write to: marketing@itthon.hu. 5