The continuing global economic recovery and an easing Australian dollar were positives for Australian tourism in 2013 – and will remain so in the future, says Deloitte.
Deloitte’s latest Tourism and Hotel Market Outlook points to momentum continuing to build for the local industry, with international visitor nights forecast to grow at 4.8% per year, and domestic visitor nights by an upwardly revised 2.0% per year through to 2017.
The Deloitte report Positioning for prosperity? Catching the next wave identifies tourism as a future super-growth sector for the Australian economy.
According to Deloitte Access Economics’ Lachlan Smirl, the economic recovery is gaining pace in the United States (US) and the United Kingdom (UK) and positive signs are also emerging across mainland Europe.
“While we know Asia is the big long term growth driver, the US and UK are two of Australia’s most important traditional tourism markets and re-emergence of growth from these regions is a huge positive for Australia’s visitor economy,” he said.
“When the improving prospects for these economies are overlayed with a robust outlook for emerging Asia and an Australian Dollar which is forecast to depreciate further over the next three years, it’s no surprise industry confidence is rebounding.”
“Adding to the good news for the local tourism industry is the fact that Australians are increasingly opting to holiday at home. In fact, in 2013 domestic holiday travel grew at its fastest pace in seven years. As this trend continues, the domestic tourism growth baton will be progressively passed from corporate to leisure travel.”
International
Growth in international visitor arrivals continued to accelerate over 2013, growing by 5.5% for the year – considerably faster than its 3.1% average of the last decade.
“Asia continued to provide the engine for growth,” Smirl said. “Visitor arrivals from China grew by 14.2% over the year, while visitors from Malaysia, Singapore, Taiwan and Hong Kong all grew by more than 10%, supported by strong growth in low cost airline seat capacity.
“There’s no question the China Tourism Law has put a temporary brake on inbound arrivals from China. But to the extent that the law serves to reduce unscrupulous organised tour activity, it’s got the potential to be a long term positive for Australian tourism, boosting the visitor experience, repeat visitation and word-of-mouth marketing.
“The other big good news story in 2013 was the re-emergence of growth from Europe and the US. Visitor arrivals from Europe grew by 5.5% for the year, the fastest annual growth rate since 2004. Expansion of airline capacity to and from Middle Eastern hubs contributed to the growth observed, as did the Ashes. The US was similarly strong, with arrivals posting 6.2% growth.
“With Europeans heading for regional destinations – spending 37.4% of visitor nights outside the mainland state capitals; compared with 28.4% for other visitors – a rebounding Europe is good news for the likes of Tropical North Queensland and the NT.
In terms of the outlook, international visitor trips are forecast to grow by 4.3% and visitor nights by 4.8% p.a. on average over the next three years.
“It’s been some time since conditions have been this favourable for Australian tourism. There are genuine signs of economic recovery in the US and Europe coupled with sustained strength throughout emerging Asia and a currency that’s fallen from its highs and is expected to depreciate further over coming years.”
Domestic
Growth in domestic overnight travel accelerated in 2013 – by 4.1% over the year to September – to reach its highest level since 2000.
Smirl said: “In encouraging news, leisure travel grew 6.6%, its fastest annualised pace since September 2007 and only marginally behind outbound leisure travel, which grew by 7.4%.”
“While domestic corporate trips grew by a solid 3.5%, the pace of growth in corporate travel has slowed from its double-digit highs of 2011 and early 2012, as growth in mining-related travel has eased.
“Looking forward, with domestic economic growth forecast to remain below trend over the next two years, growth in domestic activity will remain relatively moderate, although the easing Australian dollar will see the leisure market outperform other segments.
“Domestic visitor nights are forecast to grow by an average of 2% per year, and domestic visitor trips by 1.9% per year over the next three years. While these rates of growth may seem modest, bear in mind that until recently domestic tourism had been in a decade long period of stagnation or decline.
“While we continue to see business trips growing at more moderate rates over the next two years as resource-related construction is wound back and economic growth remains below trend, the considerable easing of the Australian dollar will provide added support for growth in domestic leisure travel.
“Demand for outbound travel remains strong, but far from the double-digit growth of its peak. Again, the easing of the Australian dollar will impact outbound leisure travel over time, with growth in outbound trips moderating to 3-4% p.a. over the next three years.”
State-by-state
The trends described above have in turn impacted the performance of individual state markets:
-Domestic visitor activity grew faster than the national average in NSW, while international activity was in line with the national average. Domestic visitor trips grew by 5.4%, driven by a 10.3% increase in domestic holiday trips, particularly to regions such as the Central Coast and the North Coast. The outlook for international arrivals in Sydney remains strong, given that it is attracts a strong share of arrivals from Asian growth markets;
-Domestic visitor activity was relatively steady in Victoria, but international activity grew faster than the national average. International visitor nights grew by 6.4%, well above the national average of 4.4% aided by the expansion in low-cost carrier routes. Domestic holiday trips to Melbourne grew by 11.8%;
-While the Brisbane corporate market remained soft, Queensland benefited from an influx of international visitors, particularly to Tropical North Queensland, with international visitor nights growing by 7.7%. Business visitor nights declined in Brisbane but this was offset by a 16.1% increase in holiday visitor nights. Domestic holiday visitor nights grew by 20.0% in Tropical North Queensland, while the revival of European visitor arrivals helped stimulate activity in a number of regional areas with a 10.7% increase in international visitor nights being recorded in Tropical North Queensland and a 15.1% increase recorded in the Whitsundays;
-While domestic and international visitor trips to Tasmania rose, Tourism Research Australia recorded a fall in visitor nights. Nevertheless, the domestic outlook for Tasmania is particularly strong given that the state attracts a higher proportion of leisure travellers than other states.
-Domestic visitor nights were relatively steady in South Australia, but international visitor arrivals grew by 10.9% over the year to September. The growth in international visitor arrivals was driven by a 13.3% increase in international holiday visitors to the state.
-Western Australia saw domestic visitor nights grow by 13.7%, but international visitor nights fell by 3.1%. While corporate visitor nights in Perth had been declining, they recovered in the last two quarters meaning corporate visitor nights remained relatively steady for the year to September. The decline in international visitor nights was driven by a fall in travel for employment purposes, suggesting that the demand for international workers on some of the large resource-related projects has begun to fall. This outweighed a 12.2% increase in international holiday visitor nights.
Deloitte’s Tourism and Hotel Market Outlook utilises the forecasting, modelling and analytical expertise of Deloitte Access Economics, one of Australia’s leading economics advisory practices. The Outlook also draws on Deloitte’s real estate industry experience and insights, and a range of other sources, including hotel data generated by STR Global Limited.