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20 August, 2021

Australia’s tourism sector bouncing back “stronger than expected”, says new government report

Woman walking down iconic Port Noarlunga boardwalk while watching spectacular sunset view, South Australia

It may not seem like it right now, but new research by the federal government shows the outlook for Australia’s tourism industry has improved “significantly”.

Austrade’s tourism intelligence branch, Tourism Research Australia has released a new report detailing how the country’s devastating bushfires and the global COVID-19 pandemic affected the industry in 2020.

While much of the data in the Australian Tourism in 2020 report is predictably bleak, it shows domestic tourism has been leading the gradual bounce-back, particularly in regional areas.

The report includes domestic travel data from the beginning of 2021, revealing that from January to March domestic overnight spend in regional Australia actually exceeded 2019 levels.

However, overnight spend in capital cities continued to suffer increased losses due to their reliance on international travel as gateway cities.

In 2019, 35 per cent of all visitor spend in capital cities came from international tourists; in Sydney and Melbourne, that number rose to 45 per cent and 40 per cent respectively.

Source: Tourism Research Australia

“The outlook for Australia’s visitor economy has improved significantly throughout 2021, along with a stronger than expected recovery for the national economy,” the report said.

“Domestic demand is on the rise. For the March quarter of 2021, total domestic overnight and day trip spend was $22.9 billion.

“While this was down 29 per cent on March quarter 2019 levels, it was 19 per cent higher than the $19.6 billion spend in the December quarter 2020.”

The bad news

The report quantified the gut-wrenching impact Australia’s national lockdown in March 2020 had on the industry.

In April 2020, the most severely impacted month, visitor spend dropped by 91 per cent, equating to a $10.7 billion loss.

There was also a 99 per cent drop in international visitor spend (a loss of $1.9 billion), a 97 per cent drop in domestic flight passengers, and hotel occupancy dropped below 20 per cent.

During this time, all regions experienced on average a 96 per cent drop in leisure spend compared with the same month in 2019.

A survey conducted by Tourism Australia showed 60 per cent of participants were not thinking about their next holiday in April 2020, but this improved throughout the year with only 38 per cent indicating they were not considering their next holiday by December 2020.

These sentiments, along with pent-up demand, also saw regions within a two to three-hour drive of capital cities recovering faster than other regions with occupancy rates higher than pre-pandemic levels during peak periods.

By December 2020, spend on interstate trips had recovered to $1.7 billion – 42 per cent below the pre-pandemic spend of $2.9 billion, which accounted for 37 per cent of all domestic spend.

The data suggested the pandemic also accelerated structural changes within the industry, with part-time jobs eclipsing full-time jobs in September 2020 for the first time.

Looking ahead, the report found that while domestic tourism is beginning to find its legs, many travel businesses remain vulnerable; particularly for travel agents and tour operators.

“Australia has done a good job in keeping the spread of the virus under control,” the report said.

“However, while other countries are looking to reopen borders, Australia is taking a more cautious approach.

“There are still many questions being asked globally that will influence quarantine-free international travel.”

Aside from travel bubbles and small pilot programs, the report said the Treasury has predicted that Australia’s borders will likely remain closed until mid-2022, while the International Air Transport Association (IATA) has indicated that air travel won’t resume to pre-pandemic levels until 2024.

Featured image source: iStock/moisseyev

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