Richard Branson and Oprah Winfrey sing our praises, but there are a plenty of long faces in Australia’s $72-billion tourism industry.
Once a famed tourist destination known for its vibrant cities, beautiful beaches and remarkable outback, Australia is now a net exporter of tourism.
And the gap between the number of international visitors and Australians heading overseas has reached record heights.
Australian Bureau of Statistics figures, released last week, showed the number of international visitors fell by 9% to 432,200 in September, whereas the number of Australians heading overseas rose by 8.9% to 790,600.
“Put simply, Australia is no longer flavour of the month,” Darrell Wade, chief executive of the tour operator PEAK Adventure Travel Group, tells SmartCompany.
Describing the inbound market as “very depressed”, with reports of a 15 to 20% decline, the Intrepid Travel co-founder does not expect the inbound market to pick up for another two or three years.
Even operators targeting the offshore market are expecting to battle through mixed conditions. “The overall numbers are strong as the ABS figures show, but average selling prices are low, meaning margins are lower than traditionally seen,” Wade says.
But there is hope. The fastest-growing tourism market in the world, Asia, lies at our doorstep.
And food tourism, particularly around the capital cities, is holding up well. Operators say with capital improvements under their belt, and a little Government assistance by means of direct flights and quickened visas for visitors, Australia could recover its past glory.
There’s no doubt it’s been an unlucky year for tourism operators: the Australian dollar reaching a post-float high, thereby luring locals overseas and discouraging foreigners from visiting or spending generously while travelling; natural disasters in Queensland; the ash cloud in Chile closing down airports and the grounding of budget airline Tiger.
Throw in lacklustre consumer sentiment and the bitter Qantas dispute which remarkably led to the airline grounding flights and locking out staff, and you’ve got the right ingredients for an annus horribilis.
“2011 for the tourism industry, particularly regional Australia, is one we want to put behind us,” says Tourism and Transport Forum chief John Lee.
Lee isn’t the only one pointing out that regional centres are vulnerable in a tourism slowdown.
Perrie Croshaw, co-founder of holiday accommodation rental company South Coast Holidays, says her locations within a couple of hours of Sydney are experiencing high demand, partly because business-people are not comfortable enough to holiday too far from work.
Luke Martin, of the Tourism Council Industry Tasmania, says the state’s regions are “struggling” as visitors eschew longer, rambling holidays in favour of a few days in Hobart and Launceston.
Daniel Gschwind, of the Queensland Tourism Industry Council, notes that “domestic tourism is the bread and butter for many regional operators”.
Queensland has always been a tourist mecca, but after suffering through Cyclone Yasi and flooding last summer, there are fears tourists will keep a wide berth in the months ahead. (There have been other troubles in the state, such as collapsed resorts and marinas.)
“The biggest concern for us is people who were holidaying in Queensland last time might be a bit shy,” Tourism Whitsundays chief Peter O’Reilly says. “We hope that their memories aren’t going to be that long.”
O’Reilly says numbers have been reasonable over the past few months, and observes that people are still holidaying, but spending less.
“The retail sector is suffering, and to a lesser extent, the tourism sector. So they [visitors] might go out to the islands or the reef, but not both.”
Still, O’Reilly expects things to go pretty well through to January, with more than 200,000 people typically visiting the Whitsundays – mostly domestic tourists.
Daniel Gschwind, chief executive of the Queensland Tourism Industry Council, says the state needs a good summer to remain competitive.
“We’re prepared for a good summer. Many operators have gone out of their way to shake their up their businesses,” Gschwind says.
While the cyclone-hit Dunk and Bedarra islands in Far North Queensland will be out of action for the foreseeable future, Gschwind is quick to point the other islands are up and running, it’s still a “fabulous time” to go yachting, and the Great Barrier Reef remains “the best managed reef on the planet”.
It’s a recovery story bought by mining magnate Clive Palmer, who spent tens of millions of dollars in July on the acquisition of Hyatt Coolum on Queensland’s Sunshine Coast.
Palmer said then he had bought at the right time of the cycle to capitalise on the state’s enormous tourism potential. “We have plans to increase the occupancy of the Hyatt Regency and make it one of the best resorts in the world.”
The state is also tipped to benefit from Qantas’s decision to offer tens of thousands of tickets to passengers inconvenienced by its decision to stop flights during its industrial blue.
“A lot of people are asking themselves, where do I want to go in Australia?” Gschwind says. “It’s a great boost for everyone.”
At the other end of the country is Tasmania, a favoured holiday spot for eastern suburbs-types from Melbourne and Sydney.
Tourism Council Industry Tasmania’s Luke Martin expects “no great bonanza” this summer. Tourism to the state peaked in 2008, on the back of growth in low-cost airfares, and numbers have fallen back to where they were six years ago.
Martin says the average spend is up, but the length of stay is down – suggesting people are willing to spend more to enjoy their limited time off work. It’s bad news for regional operators, but Hobart and Launceston are doing okay.
“Tasmania’s biggest problem has been the thought, ‘I’ll get down there one day,’” Martin says. He says the opening of the Museum of Old and New Art – MONA, reportedly the largest privately funded museum in Australia – has encouraged people to finally act on their desire to visit.
Although Martin describes international tourism as the “cream on the cake” – it accounts for just 15% of visitor numbers – he says the Asian market has picked up over the past two years, particularly from Korea.
And he says the shift in focus from the US and Europe to Asia has already happened at Tourism Australia. “Anecdotally the mindsets have shifted.”
Mixed signs for summer and the year ahead
So where to next for an industry that was estimated during the Qantas dispute to contribute to 2.6% of gross domestic products and employ about 500,000 people?
So far, the signs are mixed for the summer break and year ahead.
The Tourism and Transport Forum’s John Lee says bookings are down so far across Australia, and he’s reluctant to call an improvement in 2012, saying externalities such as natural disasters will largely determine how the industry will fare.
But Grant Wilckens, chief executive of the market-leading accommodation park group Discovery Holiday Parks, says forward bookings are up 7% for January, with some visitors booking as many as 10 months in advance.
With Darwin being named by Lonely Planet as one of the top cities and the Gold Coast winning the right to host the Commonwealth Games, Lee notes there’s plenty to be positive about: new hotels opening up in Queensland and strong indications of new beds in capital cities.
Tourism Whitsundays chief Peter O’Reilly adds that this month’s interest rate cut should boost the sector.
“We’ve also seen rates of saving not seen for decades,” O’Reilly says. “At some point, we might see that change.”
Perrie Croshaw, of South Coast Holidays, says bookings are up and she’s expecting a big summer.
“While we’ve had a more difficult year than we’ve seen before – and that’s really to do with the Australian dollar; people going to Bali and Fiji instead – traditionally Christmas and the south coast [of NSW] go hand,” Croshaw says.
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