Mixed economic signals for Australian tourism, but falling dollar a welcome developmentDOWNLOAD
18 July 2013: While growth in resource-related corporate travel is slowing rapidly, a buoyant inbound market and a recovering domestic leisure segment are underwriting robust growth in Australia’s tourism industry.
Releasing Deloitte’s latest Tourism and Hotel Market Outlook, Deloitte Access Economics’ Lachlan Smirl said the ability of the Australian economy to maintain growth as the mining construction boom peaks, along with weaker economic news from overseas, was creating a degree of uncertainty for tourism operators.
“A degree of uncertainty for the sector remains a reality,” he said. “But there are also clear positives – from continued impressive growth in international visitor arrivals and domestic leisure travel and, of course, the falling Australian dollar.
“The decline in the dollar will be welcomed by our tourism operators. While its value may have a relatively modest impact on decisions to visit Australia, its impact on spending levels is considerably more pronounced.
“We forecast, for example, that as the dollar moderates over the next three years, expenditure by international holiday visitors will grow by 8 per cent per year in real terms.
“On the domestic side, it is also likely to further slow growth in outbound travel by Australians as the price-competiveness of local destinations improves.
International visitor arrivals grew 4.9 per cent over the year to March 2013, while international visitor nights grew 7.2 per cent, significantly outpacing average growth of the last decade.
“While this growth has been largely led by the emerging Asian economies, and particularly China, which accounted for more than a third of total growth in visitor arrivals, there has also been a sustained pick up in visitor arrivals from the United States as the local economy gains momentum,” Mr Smirl said.
“We continue to project solid growth in international visitor arrivals and nights over the next three years, with arrivals forecast to grow by 4.5 per cent and nights by 4.9 per cent per year.
“Asia is projected to account for two thirds of forecast growth in international visitor nights over the next three years, with China expected to remain the single largest contributor.
“In an encouraging sign for our larger regional tourism destinations, recent trends have also revealed Chinese travellers venturing beyond our capital cities in increasing numbers, with the Gold Coast and Tropical North Queensland now visited more commonly by Chinese visitors than by international travellers generally.
“Broadly speaking, the size of the China opportunity remains unprecedented, for both capital city and regional destinations. If its growth trajectory were to follow a similar path to Japan, then in little more than 20 years, the number of Chinese visitors to Australia could parallel today’s entire international tourism market.
“The economic benefits for the cities, regions and towns successful in luring the Chinese traveller will, therefore, be very significant.”
Looking forward, Deloitte Access Economics forecasts international arrivals continuing to grow on the back of growth in Asia’s middle class. Visitor arrivals will grow by an average 4.5 per cent per annum over the next three years and international visitor nights by 4.9 per cent per annum.
After the sharp rebound in domestic visitor activity in the first half of 2012, growth continued throughout the December and March quarters, albeit at a more moderate pace. Over the year to March 2013, domestic visitor trips grew by 1.8 per cent while domestic visitor nights grew by 2.2 per cent.
“In a particularly encouraging sign for Australia’s tourism industry, the holiday segment grew strongly in the December and March quarters,” Mr Smirl said.
Relative to the corresponding period in the previous year, holiday visitor nights grew 6.7 per cent in the December quarter and 11.6 per cent in March, leading to a substantial increase in demand for key leisure destinations, including Queensland’s Gold and the Sunshine Coast.
Business travel nights grew by 6.4 per cent over the year to March nationally, but declined by more than 20 per cent in Brisbane and Perth.
“While the corporate travel segment is notoriously volatile, and the numbers for Brisbane and Perth are still above those of three years ago, there is clear evidence of a sustained slowdown, consistent with resource-related construction reaching its peak,” Mr Smirl said.
Deloitte Access Economics forecasts domestic visitor nights to grow by an average of 1.6 per cent per year, and domestic visitor trips to grow by 1.7 per cent per year, over the next three years, moderately lower than the growth rate recorded over the year to March, and reflecting a softening domestic economic outlook and its impact on domestic corporate travel. Coupled with the depreciation of the Australian dollar, moderating local economic conditions are expected to see the composition of this growth shift gradually toward the leisure segment.
The trends in domestic business and holiday travel to particular destinations have in turn impacted the performance of individual state markets:
Deloitte’s Tourism and Hotel Market Outlook utilises the forecasting, modelling and analytical expertise of Deloitte Access Economics, one of Australia’s leading economics advisory practices. The Outlook also draws on Deloitte’s real estate industry experience and insights, and a range of other sources, including hotel data generated by STR Global Limited.
A separate Tourism & Hotel Outlook media release covers the hotel sector.
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