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Global uncertainty and strong $A to remain challenges as Australian tourism waits for emerging markets


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22 November 2011: Depressed markets and a high Australian dollar are expected to remain the reality – and the ongoing challenge – for Australia’s tourism and hospitality industry.

That’s the conclusion of the fourth quarter 2011 Deloitte Hotel Market Outlook on the performance of the Australian tourism and hotel industries to September 2011.

Consultant to Deloitte, Rutger Smits, said: “Higher exchange and interest rates influenced by the commodities boom, combined with global economic uncertainty, have played havoc with a number of Australian industries, most notably the tourism sector.

“The dollar’s strength has seen Australians take flight, with the number of outbound Australian travellers doubling in the past seven years. Across the same period, inbound travel was also up, but not by much, and the lingering weakness in tourist flows has led to the tourism sector holding back on investment in new hotel rooms, facilities and better attractions.

“Challenges will continue for tourism operators, with the exchange rate to remain a concern, and some regional centres affected by skilled tourism and hospitality workers taking advantage of opportunities created by the mining boom.

“The dollar’s strength has also created a perception in some overseas markets that Australia is an expensive tourist destination. This reinforces the importance of effective marketing and new tourism product development.

“On the brighter side, China and other emerging economies continue to develop into major inbound tourism markets, and the recent announcement that the Gold Coast will host the 2018 Commonwealth Games provides a welcome morale boost to the Queensland industry and will further stimulate the development of new tourism infrastructure.”

Visitor flow and tourism consumption

The Outlook references the latest forecasts from the Tourism Forecasting Committee, including:

  • tourism consumption is forecast to decline by 0.3 per cent in 2011 (previously forecast to grow 0.4 per cent)
  • international visitor arrivals are now forecast to grow just 0.4 per cent in 2011 (a downward revision from 3.1 per cent previously forecast), with stronger growth from Asia offsetting declines from markets outside Asia
  • domestic visitor nights are expected to decline 0.3 per cent in 2011 (in line with previous forecast)
  • outbound departures will remain strong, with 9.2 per cent growth
  • the tourist deficit is now expected to reach almost 1.9 million by the end of 2011 (up from 700,000 just two years ago), and will pass two million in 2012

“There will be big long term gains for Australia’s tourism sector from rising incomes in Asia, but the early impact of the ‘rise of Asia’ has been dampened by the matching rise in the $A keeping the world away from our doorstep,” Rutger Smits said.

“While international tourism globally grew by 4.5 per cent in the first half of this year, international arrivals to Australia improved by 0.8 per cent in the first six months, equivalent to only an additional 22,000 travellers.

On the flipside, an additional 330,000 Australians left for foreign shores, an increase in departures of 10.5 per cent over the same period.”

Hotels

Key points from the Outlook, which examines hotel markets in Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Darwin, Gold Coast and Tropical North Queensland, include the following national trends:

  • overall, revenue per available room (RevPAR) forecast for 2011 remains positive, with 6% growth over 2010 to $94
  • the occupancy outlook has also further increased, from 64.3 per cent to 64.6 per cent, along with a modest room rate improvement over latest forecast, growing at 4.5 per cent over 2010 to finish at $145 for the year
  • RevPAR forecast for 2012 is also revised upwards, back to $101 from a previous downgrade to $99 in our last forecast, driven by a slight improvement in room occupancy to 65.2 per cent and an extra $1.50 in the room rate, to $154

“Hotels – particularly in the nation’s CBDs – have been performing fairly well of late. Business travel demand is up, and the gains on that front have been sufficiently strong to encourage operators to edge up room rates,” Rutger Smits said.

“Yet that is one of the few positives amid an otherwise distressed landscape. While the overall future performance of the Australian market may appear strong in comparison to historic results, it still hides a pronounced performance dichotomy between core CBD markets and regional hotel and resort properties.”

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Contacts

Name:
Simon Rushton
Company:
Deloitte
Job Title:
National Manager Corporate Affairs and Communications
Phone:
Tel: +61 2 9322 5562; M: +61 450 530 748
Email
srushton@deloitte.com.au

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