Industry divided on domestic revival

Sydney Flickr

By Louise Wallace

Domestic tourism has been through the wringer in recent years as more Australians pack their passports and head overseas. The latest ABS data provides a pretty clear indication of where the industry is heading, with Australian departures topping around 760,000 in 2014 compared to around 360,000 in 2004.

Everyone who’s anyone in the industry has put in their two cents worth as to why outbound travel keeps growing, but the latest IBISWorld Tourism in Australia report put the surge down to the high Australian dollar and aggressive discounting from airlines. It also pinned domestic tourism as the poorer sister of overseas travel. “Domestic tourism has struggled to sustain the growth exhibited over the past few years [and] less has been spent on domestic tourism, thus hampering industry revenue growth,” the report said.

There’s no denying that domestic tourism has plateaued – it has been trending that way for some time. But the weakening Australian dollar has provided a glimmer of hope for domestic operators who are hopeful that it will prompt a shift in traveller habits.

AAT Kings and Infinity Travel told travelBulletin that domestic bookings were up in 2015, while APT reported a “renewed interest” in domestic travel on the back of the currency slump.

TTF chief executive Margy Osmond says the softening Australian dollar is the turnaround that the domestic industry has been waiting for to inject some much needed love into the sector. Citing research conducted by the TTF late last year, Osmond said the domestic industry was going strong, with an online survey of over 1000 participants showing that 85% of Australians intended to holiday at home over the 2014 Christmas period. Just one in seven intended to travel overseas, the report found, with most choosing their holiday destination based on cost.

“The fall of the dollar will have a positive impact on domestic tourism. Not only will locals be encouraged to spend their money at home, but those visiting from abroad will have approximately 20% more to spend when they get here,” she told travelBulletin.

But while the TTF is confident the domestic sector will make a come back, analysts aren’t so sure. Senior research analyst John O’Shea claims that international travel has won favour among Australian travellers and the domestic sector is unlikely to claw its way back. Drawing on ABS figures which show spending on outbound travel tripled that of domestic holiday spend from 2005-2013 (click here for more), he told travelBulletin that the trend is likely to continue “for the foreseeable future”.

But the TTF is unfazed, insisting that domestic tourism comprises the bulk of tourism spend in Australia. “It is important that we continue to focus on and grow this part of the industry,” Osmond said.

The argy bargy over the domestic sector has made headlines before, but regardless of which sector takes the podium, domestic has been a consistent contributor to the Australian economy, injecting $40 billion to the economy in 2013.

However, as outbound travel continues to gain momentum, the question remains whether the trend for domestic is structural or cyclical. Tourism Australia did not comment on the matter, insisting that its focus is now “exclusively” focused on international inbound travel. But Destination NSW CEO Sandra Chipchase says it’s a “bit of both”.

“Domestic tourism has fluctuated over the years and growth in domestic has come at a time where domestic dollar is at a record high, but it has also slowed when the dollar has been less favourable, so it’s both structural and cyclical,” she said.

Chipchase acknowledged that domestic tourism had been in the “doldrums” for the past decade and international travel had taken the focus away from domestic. But she also pointed towards the latest Tourism Research Australia update which showed a 5% in domestic overnight trips and 4% increase in expenditure to $53.7 billion.

“It’s heartening for us to see that the groundwork is paying off and the 2020 Tourism targets for the domestic sector are tracking quite well,” she said.

loader