Australia | Aug 31 2012
By Greg Peel
Tourism was once Australia's second biggest industry, but that was in the days when a more inviting Australian dollar made visiting Australia for a holiday relatively inexpensive, despite the tyranny of distance. Nowadays Australia seems an awfully long way to go to pay high prices, particularly if economic conditions at home are tenuous.
Believe it or not, overseas arrivals are actually trending up, according to ABS data. CommBank economists note the majority of visitors to Australia usually stay one one to two weeks, but those staying 6-12 months are up by 71% since 2006 with a similar advance being seen in the 3-6 month bracket. These foreigners are clearly not tourists, and indeed the increase in visitors matches neatly with the increase in employee numbers in Australia's resource sector. Since June 2007, CommBank, notes, the number of construction 457 (skilled worker) visas issued has jumped by 42%. Most workers (68%) end up in Queensland or Western Australia, but it is unlikely they are here to lie on the beach at Surfers or pet a dolphin at Monkey Mia.
Education is a significant domestic services export, CommBank points out, but while those visiting Australia to study increased steadily to 2010 the numbers have since plateaued. CommBank blames the dollar. (One might drag up unfortunate xenophobia issues as well.)
Travel to Australia to actually have a holiday remains the biggest reason to come here, but numbers have only increased marginally since 1992.
No surprises that Chinese and Indians represents the biggest growth segment of inbound tourists. The number of visitors from China has increased by 65% since the beginning of 2009, the statistics show. Asia is at the stage of development from which consumer demand is likely to increase significantly, CommBank suggests.
On the flipside, Australians can't wait to get out of here. The strong currency has opened up the idea of an overseas holiday to a much wider spread of Australians. Short term departures have risen by 62% since 2007. These are people who would once have chosen the Gold Coast, for example, as the holiday destination of choice. Of Australians heading offshore, 57% are doing so for a holiday. There is now a significant deficit between incoming and outgoing tourists.
These shifts over the past few years have provided significant flow-on effects, CommBank notes.
Queensland might be known as a mining state, but it was in the 1960s when the Sunshine State first began promoting itself as a great holiday destination for the chillier southern states. Next came the big influx of offshore tourists, but that all ground to a halt from 2009. It thus comes as no surprise that areas such as the Gold Coast, Sunshine Coast and Cairns have higher than average unemployment rates. CommBank notes 20,000 jobs have been lost in accommodation and cafes in Queensland over the past year. Lost jobs lead to lower consumer spending, and on to lower retail, commercial and residential property prices.
Indeed, the swing in the tourism balance also helps partially explain the weakness in national retail sales activity, CommBank suggests. Money previously spent by Australians on domestic travel costs and related spending is now heading offshore, and there are more Australians heading offshore than there are foreigners coming in to splash their currencies around. CommBank notes this offshore “leakage” is worth 1% of GDP.
The good news is that those visiting Australia for business purposes do serve to fill the gap in spending on hotels and restaurants and so forth, and since 1991 those coming downunder for business have increased in number by a remarkable 233%. Problem is, more Australians head offshore for business purposes than foreigners arrive onshore.
The bad news is that the tourism industry's fortunes are in the lap of the Aussie dollar gods. CommBank expects the currency to appreciate by another 1.4% by end-2012 and to remain elevated through 2013. “The resultant impacts are likely to mean,” say the economists, “that the tourism industry will continue to experience difficult trading environments”.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
