ATEC View – Inbound recovery stuck on a slow road…

It's the pace of the growth that is biting many tourism businesses

Peter Shelley, Managing Director, ATEC

By Peter Shelley, Managing Director, Australian Tourism Export Council

LIKE me, you may currently find yourself fending off the winter chill while bearing witness to an endless feed of friends and influencers who are enjoying a sunny summer in Italy or Portugal or Spain. How is it that this time of year makes you feel like everyone else is travelling but you?

The truth is that leisure travel in Europe is back in full swing with the continent almost back to its pre-pandemic levels and some destinations even surpassing their previous success. Indeed, global travel sentiment seems to be strong and undeterred.

Meanwhile here in Australia, things aren’t quite so rosy.  We’ve always been a different destination. A bit more challenging, more time needed, further to travel, a longer lead-time.  Our industry has understood this and worked with a view to the future, building the pipeline of visitors who may book months if not years in advance of their big adventure to a once in a lifetime destination.

Since the day our borders shut back in 2020, ATEC has consistently warned of the impact these realities would have on our ability to get back to business post-COVID and, right now, these realities are biting.  Last month’s inbound arrival numbers show the number of short-term arrivals in Australia is about 80 percent of pre-COVID levels, with employment and visiting friends and relatives leading the numbers, but it’s when we delve deeper and look at the rebound of the leisure market, which has been stuck at roughly the same number since December, we can see there is a long way to go.  Indeed, for the month of April, international holiday maker numbers are still only 41 percent recovered.
One of the key trends which seem to underpin this lag is proximity.  For visitors in the UK, heading to Europe for the summer is as obvious and simple as us heading to the nearest coastal town.  For Americans, Europe will always hold a significant pull and is relatively close and accessible.
When we look at recovery for these markets in Australia the story is quite different.  The UK has recovered but is still almost 25 percent off its 2019 height while the US sits at 64 percent of its 2019 numbers. Yes, the conservative recovery of Japan and the yet to materialise ‘tsunami’ like potential of the China market recovery will ensure the pipeline of international visitors will grow, but it’s the pace of the growth that is biting many tourism businesses.
This is especially the case in regional Australia where inbound tourism has contributed significant visitor volumes and spend in the past.
The clear message emanating from the trenches is to adopt a conservative approach to growth over the next six to 12 months, keep a firm focus on costs and tightly manage business through a period where the trends are not necessarily our friend. We see the significant growth in the number of Australians travelling outbound contributing to softening in domestic tourism expenditure, not to mention the dampening effect of cost-of-living pressures.
With the inbound holiday sector on a slow road to recovery, it makes good sense to play a tight game over coming months in readiness for a significant period of growth as all markets recover fully towards the back half of 2024.

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