Many bumps in the road to recovery

Brisbane’s new COVID outbreak and the subsequent lockdown and travel restrictions are yet another reminder of the continuing shadow of COVID-19.

While Australia is very much in an enviable position when it comes to managing both the health and general economic impacts of the pandemic, this has come with a heavy toll on tourism businesses, which have witnessed international and – at times – interstate travel coming to a standstill. 

Prior to COVID-19, the Australian tourism sector was growing strongly, with growth in the sector outpacing that of the Australian economy. From 2009 to 2019, tourism expenditure in Australia increased from $86 billion to $152 billion, representing average annual growth of 6%.

Border closures have prevented international travel and a great deal of interstate travel in the country throughout 2020 – with international and interstate travel down by 81% and 65%, respectively, in 2020.

These declines correspond to 7.6 million fewer international arrivals, 45 million fewer domestic overnight trips and 84 fewer day trips in 2020 compared to 2019 levels. This results in a total combined loss of around $85 billion in visitor spend, including $40 billion loss in international and $45 billion loss in domestic spend.

Chart 1. Loss in overnight domestic and international trips, 2019 to 2020

Source: Deloitte Access Economics, Tourism Research Australia and Australian Bureau of Statistics. Data is not publishable for the Northern Territory and Tasmania as the survey error is too high

In the face of the drastic drop in activity, and the continuing international travel ban (and ad hoc internal border restrictions), it is not surprising that the recovery of the tourism sector is lagging that of economy more broadly. While nine out of every ten jobs lost in Australia during the pandemic have returned, tourism jobs were still down 10.8%.[1]

The operating environment for tourism businesses across many regions of the country continues to be extremely challenging.

It’s in this context that Deloitte Access Economics has examined a range of factors that will influence the recovery of tourism in Australia to determine the likely tourism demand outlook.

Charting the outlook for tourism now requires consideration of a wider range of factors than in past years – in addition to economic conditions here and overseas, there’s a need to consider ongoing government measures to manage the health crisis, consumer and business confidence, travel sentiment and whether some of the changes in travel patterns we’ve seen in 2020 are here to stay.

Should the pandemic remain largely in control (at least from an Australian context), including a smooth roll-out of the vaccines, our forecast is for domestic overnight trips to return to 2019 levels by early 2022. With the international travel ban extended until at least mid-June 2021, little international activity is factored into our outlook for 2021, with the exception of potential travellers from New Zealand (while we note early discussions with Singapore authorities around a travel bubble in the second half of the year). As such, our current forecasts show international travel is not expected to recover to near pre-COVID levels until sometime in 2023, with current projections of international arrivals 7% higher than 2019 levels.[2]

These testing and uncertain times provide the backdrop for the upcoming 2021 edition of the Deloitte Access Economics Tourism and Hotel Market Outlook released next week. In all, it will remain a difficult environment for the tourism sector while international borders remain closed. And interruptions to domestic travel – such as the current outbreak in Brisbane – make it even harder.

[1] ABS, Tourism Satellite Accounts: quarterly tourism labour statistics, Australia, experimental estimates, December 2020 

[2] Deloitte Access Economics, COVID-19 recovery for the tourism sector: How are we tracking, Jan 2021