Uncertainty easing for Australian tourism as evolution continuesDOWNLOAD
22 May 2012: Post-GFC uncertainty for Australia’s tourism industry continues to ease, but a range of challenges remain, according to Deloitte Access Economics’ Tourism & Hotel Outlook for the second quarter of 2012.
Deloitte Access Economics’ Lachlan Smirl said: “The Australian tourism industry continues to evolve. Inbound and domestic business markets are the main drivers of growth, as the sustained strength of the Australian dollar and growth in low cost carriers continues encourage leisure travellers overseas."
“International arrivals continue to grow strongly, although slower than over the last decade, and the emerging Asian economies – and primarily China – remain the key over traditional source markets such as Japan, the UK and New Zealand.
“On forecast trends, international visitor nights are projected to overtake domestic visitor nights by 2018. This will be a first and a milestone which underscores the increasing importance of international visitors to the Australian tourism industry.
“Since 2000, spending by international visitors has grown from 16% of total tourism expenditure to 24% – that is, by 45%. And visitors from China are a key driver. They are coming in greater numbers; they are staying longer; and they are spending more per night.”
Mr Smirl said that just as the international growth trend was forecast to continue, domestic tourism projections were effectively flat over the outlook period.
“On the domestic front, the signs of stabilisation continue. In fact the outlook shows very modest growth, which is a good news story after a decade of decline,” he said.
“But the story is all about business travel. The domestic leisure market continues to look overseas on the back of the strong Australian dollar and low cost international airlines offering fares too good to refuse.”
Based on upward revisions in expected commodity prices, Deloitte Access Economics’ expectations for the Australian dollar have also been revised upwards since the last Outlook, with the dollar to remain strong against its US counterpart into 2014.
“As we have said previously, the exchange rate has only a limited effect on international visitation to Australia, but the strong relationship between the high dollar and outbound travel by Australians remains very relevant,” Mr Smirl said.
“Another reality for the industry is an increasing concentration of tourism activity in the capital cities. This will present an increasing challenge for regional tourism operators and regional economies and also place increasing pressure on our capital city tourism infrastructure.
“Since 2000, the proportion of total visitor nights spent outside capital city areas has fallen from 30% to 24% – a trend likely to accelerate given Chinese travellers’ overwhelming preference for capital cities.”
Mr Smirl said the cruise sector remained a shining light for the broader tourism industry.
“While the Australian industry as a whole has been largely stagnant since the onset of the GFC, cruise tourism has grown strongly over the last five years,” he said.
“The sector has seen average annual growth in passenger days at port of 24% since 2005, and forecasts to 2013 are for average annual passenger growth of 32%, although this will then moderate to 7% per year, as growth in ship capacity moderates.”
He said investment conditions for the tourism sector remained weaker, just as they did for the broader commercial sector.
“The ‘definite’ pipeline in hotel development remains weak, with an 8% decline in value of committed hotel and resort projects over the past year. However, the value of those ‘in planning’ – those which may or may not go ahead – has improved 30% since December 2010.
“The weak investment pipeline is a key contributor to the continued growth in hotel occupancy rates which, under Deloitte Access Economics’ latest forecasts, will see average occupancies reach a record 68% by the end of 2014 and as high as 88% in some capital cities.
“That said, the challenges facing the tourism industry in this regard have been recognised, with the Federal Government recently announcing a plan to prepare an annual list of ‘investment ready’ tourism projects to encourage investment in hotels, especially in capital cities where returns are typically higher and where capacity constraints are, in some cases, becoming acute.”
Please download the Tourism and Hotel Market Outlook Q2 2012 report and the media release above.