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ATEC view: Learning from the past

Peter Shelley, managing director of ATEC describes how we can continue to expand the international tourism industry but cautions to learn from past mistakes and balance risk.

Peter Shelley, managing director ATEC

Learning from the past

It’s a familiar story. Australia’s tourism industry continues to shine and the expectation is this will be sustained by the strong growth trajectory of our key emerging tourism economies — China, India and Indonesia.

As I move around the industry I often find myself engaged in very positive discussions regarding its future. Right now, industry expectations are that Asia will continue to dominate our inbound visitation numbers and spend while traditional markets will continue to deliver growth, but to a lesser extent and the yield associated with many of these markets will ensure strong engagement by the broader industry.

So where should our industry place it’s greatest effort?

It would be of no surprise to hear that inbound air capacity to Australia grew 11.6% in 2015-16 and looks to have grown around the same for the 2016-17 period. The expectation is that this growth will continue at a strong but lesser rate for the coming few years with the strongest growth to be sourced from China, India and Japan.

As an island destination, Australia is very dependent on its ability to attract and maintain air capacity, but there is some concern this level of seat growth may be unsustainable if capacity is not matched by demand — a positive challenge.

Right now, Australian tourism is in a good place. The lower dollar of recent years has made us more affordable for many of our key markets, we have less involvement with geopolitical issues which make us a more attractive destination, and oil prices are low enough to provide competitive airfares and make long-haul travel to Australia more appealing.

But as we learnt from our experiences with the Japan market back in the late 90’s, Australia’s affordability is a key component of our success. Back in 1992, Japan accounted for 24.2% of Australia’s inbound market and we claimed almost 6% of all Japanese overseas travellers. But by 1997, when the Japanese economy was biting the hip pockets of its travellers, Australia had lost significant market share and many in the industry suffered the harsh consequences.

Conversely, back then Australia was caught in the perfect storm. We were expensive, at a distance and Japanese visitors had less money in their pockets, closer Asian destinations were winning out. Collectively, we have learnt an important lesson with most businesses actively engaged in the inbound market implementing a more diversified approach in the market place.

As always, forward planning is all about balancing risk, there is no doubt there is an abundance of opportunity for Australia to grow its market share of international travellers, however, one always needs to keep a firm eye on external global influences which can act as a handbrake on future opportunities.

 

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