Tourism and leisure take on mining

As one boom ends, those in the know are pinning tourism and leisure as the next big Aussie moneymaker.

According to the Australian Financial Review, funds managers lamenting the end of the mining surge are keeping their eyes peeled for new growth areas, and targeting a small group of ASX-listed stocks likely to benefit from a low Aussie dollar, and a rise in inbound travellers.

“During the mining boom, people had more money in their pockets and they travelled overseas. International tourists didn’t want to come here because it was too far and too expensive,” partner and head of Perennial Growth Management Lee Mickelburough told AFR.

“It’s the flip side of the mining boom.”

There are more tourists heading down under, especially from the likes of China, while a bigger number of keen Aussie travellers are staying local out of concerns over the shaky dollar.

According to AFR, Mickelburough’s top investment pick for travel and leisure investment is Mantra, the accommodation group that operates Peppers Mantra and BreakFree.

The themes of gaming, revival and theme parks have taken the spotlight, and Mickelburough has pointed to gambling heavyweights from China as a big win for Aussie casinos and gaming companies, such as Skycity Entertainment and Echo Entertainment.

Mickelburough also told AFR that Crown Resorts are nabbing more cash from Macau than its domestically-focused rivals.

Dreamworld QLD

According to Sydney Airport’s most recent annual report, there has been a 16.4% jump in visitors from China for 2014, an almost 12% rise from US holidaymakers, and an 11.6% jump in Malaysian jetsetters.

“More people are travelling to Australia, not just for holidays but also for work and study,” CBG Asset Management portfolio manager Robert Gregory told AFR.

Recent initiatives announced by the Aussie government to stir up inbound tourism also back this trend, including the Minister for Trade and Investment’s push to boost airline services between Australia’s major gateway cities and Chinese cities like Beijing, Shanghai and Guangzhou.

“There is early evidence that the 20% drop in the Australian dollar is already changing vacation patterns with more Australian’s staying local with occupancy and prices trending upwards,” Goldman Sachs Asset Management head of Australian equities Dion Hershan added.

“International tourism is poised to increase for cyclical and structural reasons with the Australian dollar falling and the pending boom in the Chinese and Indian middle-class where tourism is in its infancy.”

Mickelburough also told AFR that Amalgamated Holdings – the owner of Thredbo Alpine Resort and the cinema operator Greater Union – is well placed to capitalise on trends in the expanding leisure market.

On top of that, theme parks are set to benefit in the leisure department, with Village Roadshow, the operator of parks such as Wet and Wild, and Ardent Leisure, owner of Dreamworld, poised to make a killing.

While Hershan told AFR that tourism might not be big enough on its own to offset the mining sector freefall, it should be seen as a major player for investor growth, especially when you consider it accounts for around 3% of the GDP, and 5% of all employment.

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