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Australia has a robust and detailed tourism research infrastructure that puts data and numbers behind the tourism economy of the country. Tourism Research Australia, part of the government, provides tourism intelligence to various national and state bodies, and as part of that, does regular economic studies on the industry. It recently came out with a “Tourism Forecasts – Spring 2013” report that provides ten-year forecasts for Australia’s inbound, domestic, and outbound tourism sectors.
The headline number on international visitors: International visitor arrivals are forecast to grow 5.8 percent to 6.6 million between 2013 and 2014 and 5.6 percent to 7.0 million in 2014 to 2015. This is driven by growth from China, the United Kingdom, New Zealand, and the United States. Inbound expenditure is forecast to grow on average 3.5 percent per annum and reach $39 billion by 2022–23.
As part of this research, TRA came out with a classic SWOT analysis of Australia’s tourism market, outlining the potential risks, both upside and downside, to these forecasts, and is instructive for other tourism economies around the world as an example to follow. We’ve extracted the SWOT analysis below, in full:
- Australia’s destination appeal and uniqueness.
- A weaker than expected Australian dollar – the AUD assumption for the TFC April forecasts was US$0.99 for 2013−14. The current forecasts assume US$0.91 for 2013−14.
- Global economic recovery still progressing which assists volumes growth.
- Significant investment in digital marketing and online booking systems in recent years drives healthy competition and supports a domestic tourism market that is willing to research and book tourism services online.
- Competitive aviation sector supports solid growth in air capacity and subsequently drives down air fares (in real terms). This is expected to continue to support increased domestic and international volumes).
- Many European economies—many of which are among Australia’s highest in terms of average trip expenditure—have been in deep recession and not expected to emerge for two to three years.
- Below trend Australian economic growth is likely to last longer and be more pronounced than expected. This will likely drive up unemployment, limit discretionary expenditure, and further weaken consumer and business confidence.
- Domestic business travel growth is expected to remain weak for the next two to three quarters (limited by business confidence and restricted budgets).
- Despite hotel occupancy rates remaining strong (in metropolitan areas), some segments in the accommodation sector are cutting average daily rates largely due to a slowing business segment.
- Proximity to Asia and that region’s growth in incomes and aviation capacity (to/from Asia)—led by both full service and low cost carriers.
- Limited refurbishment and investment is occurring in regional areas which should support international dispersal (supporting or increasing average leisure expenditure).
- Softening outbound demand may lead to lower load factors in the short term, subsequently leading to lower airfares and assisting to improve inbound tourism’s competitiveness.
- A depreciating Australian dollar is likely to grow the economic value of tourism through: i) improving Australia’s affordability appeal to price sensitive leisure, incentive, and events sectors; ii) increasing inbound visitors’ travel budgets when they exchange their home currency for Australian dollars; and iii) the possible shift of some outbound demand to domestic destinations (as the cost of outbound travel increases as a result of a lower Australian dollar).
- Stockpiled’ loyalty points with many companies seeking to reduce this liability via goods and services such as tourism.
- US debt ceiling remains unresolved into the longer term, driving not only the US into recession but also implicating other nations and regions—notably Euro-zone and Japan—resulting in stalled recoveries.
- Recovery in corporate travel does not occur in line with economic growth.
- China’s new ‘Tourism Law’ effective 1 October 2013 (which seeks to address practices such as coercive shopping measures, low price and low quality tours) may impact that market’s growth longer and deeper than the anticipated three to six months.
- Bilateral aviation capacity caps limiting future growth on several traditional and emerging markets; regional aviation consolidation leading to decreased competition impacting the price sensitive leisure market.
- Intensifying competition for the tourist dollar (notably, marketing efforts by Thailand, US, and New Zealand national tourism organisations)