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Rising tide of travellers

The Australian tourism sector continues to recover, but is also changing shape.

The Australian tourism sector continued to recover through 2023. Over the year there were over 7.1 million international short-term arrivals – 76% of 2019 levels and almost double the number of international arrivals in 2022.

Australians’ travel wanderlust has yet again been confirmed, with nearly 10 million overseas trips by Australians in 2023, reaching 88% of 2019 trip numbers. This recovery continues into 2024 with latest (January) data showing inbound visitors recovering to 83% of January 2019 levels, and outbound travel by Australians on par with January 2019. That said, the recovery is uneven across inbound traveller segments and source markets.

While the number of international arrivals visiting friends and relatives (VFR) in Australia nearly reached pre-pandemic levels (92%) in 2023, those arriving for a holiday have showed slower progress, at 64% of pre pandemic levels. However, for the first time since the onset of the pandemic, the absolute number of holiday arrivals surpassed VFR visitors, at almost 2.9 million holidaymakers compared to 2.6 million VFR visitors. Short-term arrivals for employment have had the largest recovery across all travel purposes, exceeding 2019 levels by 33%.

Chart 1: Recovery of international visitor arrivals by purpose of travel, 2023 (indexed to 2019)

Source: Australian Bureau of Statistics, Overseas Arrivals and Departures
Note: Recovery is indexed to 2019. Total arrivals for each category in 2023 are noted in the data label above each bar.

The top five source countries for inbound visitors in 2023 were New Zealand, United States, United Kingdom, China, and India – with China losing the top spot it had in 2019 and India displacing Japan as fifth source market. The recovery of incoming visitors varied significantly across countries. New Zealand, the United States, India, and Canada have seen inbound visitor numbers return to near 2019 levels. However, some Asian markets, including Hong Kong, Malaysia, and Taiwan, are experiencing a slower recovery pace. China stands out at only 37% recovery given it was the largest inbound market pre-pandemic with 1.4 million short term visitors arriving in 2019.

The slower recovery in Chinese visitors reflects the country’s later reopening in January 2023 and that Australia’s Approved Destination Status (which allows group travel from China to Australia) was only reinstated in August 2023. Since then, there has been a steady return of in visitors from China, with the recovery lifting from 46% in September to 60% in December 2023. Aviation capacity from China to Australia is also recovering strongly, with daily flights from China now at around 86% of pre-pandemic levels at the end of February supporting the ramp up in demand from the market. Deloitte’s 2023 Tourism Market Outlook forecasts that Chinese arrivals will return to pre-pandemic levels in 2024.

Chart 2: Recovery of international visitor arrivals by country of origin (indexed to 2019)

Source: Australian Bureau of Statistics, Overseas Arrivals and Departures.
Note: Countries have been ordered according to their market share in 2019. Recovery is indexed to 2019.

As Australians stretch their wings after the Covid-imposed travel hiatus, the most popular destinations for Australians in 2023 were Indonesia, New Zealand, United States, United Kingdom, and Japan – with Indonesia surpassing New Zealand as the most visited destination by Australians in 2023 for the first time. Outbound travel to visit friends and family recovered to near pre-pandemic levels in 2023, while overseas holiday travel is down 12% from 2019 levels. Notably, short-term business travel remains low (only 60% of 2019 levels), not unexpectedly as the prevalence of remote and hybrid work becomes more entrenched around the world.

Deloitte’s 2023 Tourism Market Outlook forecasts a continued tourism recovery, with 2024 seeing the return of both international visitors and overseas travel by Australians ahead of 2019 levels. This recovery is forecast despite persistent cost of living pressures and slower economic growth as travel is still being prioritised in the household expenditure bundle. 

This newsletter was distributed on 20th March 2024. For any questions/comments on this week's newsletter, please contact our authors:

This blog was co-authored by Nakshi Mehta, Analyst at Deloitte Access Economics

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