AusChamber view: Tourism at a tipping point?

JOHN Hart, executive chair, Australian Chamber — Tourism

Tourism at a tipping point?

Australia’s tourism industry is remarkably resilient. While it is most certainly being buoyed by the exchange rate, there has been very little impact felt from the global instability of trade wars and political unrest. Great care needs to be taken not to be complacent given that 40% of our visitors are from markets affected by these phenomena.

This month the Visitors Survey found international visitors to Australia for the year reached 8.6 million with a spend of $44.6 billion, with increased spend from the major markets including Japan, the United States and China — albeit the length of stay is decreasing. This is almost certainly the result of the Tourism Australia targeting high value travellers.

In terms of our own value, again despite the exchange rate, we still have a huge mountain to climb. In the World Economic Forum’s 2019 Travel & Tourism Competitiveness Report, Australia ranked 130 out of 140 Countries for price competitiveness. Value is inversely proportional to price. As a result, any further deterioration in price competitiveness will make value difficult to justify.

The quality numerator in value is holding up for Australia. Natural resources were ranked at 3, Tourist Service Infrastructure (including hotels) at 8 and Air Transport Infrastructure at 2. This is good news but in a very competitive global market, where are competitors are not shy about spending significant amounts on promotion, we need to work hard to maintain a value proposition to our visitors.

The stand out performer in terms of visitation growth and growth in spend (at 53% and 68% respectively) is India. This will be greatly assisted by the 2019 Federal budget allocation to promote the T20 World Cup in India. This will help leverage the sporting relationship between Australia and India. This market will yield for Australia but we need to remain focused on ensuring the high value travellers from India are attracted through a strong marketing effort.

India is expected to reach 2 million outbound luxury and MICE tourists by next year. Australia is getting a total of just over 300,000 visitors from India now. As with most markets, the luxury and MICE sector is the sweet spot which all our competitors are chasing. The level of competition is almost overwhelming as can been seen in our own outbound market.

Some significant players, such as Japan, have seen a doubling in marketing spend. As a longer haul destination Australia needs to work doubly hard. We are very used to tourism continuing to grow and continuing to contribute to our economy without a lot of effort. Now is the time to make sure we protect our tourism future with a matched Government and industry investment to growth.

The Competitiveness Report describes a tipping point for tourism. The tipping point for Australian tourism is the point at which we realise we might lose out long-term if we don’t match the investment of our competitors.

 

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