Regional tourism facing a struggle

Regional tourism facing a struggle
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Regional tourism is likely to suffer further as the focus remains firmly on Australia’s capital cities, a report has warned.

The Deloitte Access Economics’ Tourism and Hotel Outlook study said the issue will worsen as more Chinese travellers head to Australia's major centres, piling more pressure on regional businesses.

The trend will also impact the major cities which at times may struggle to cope.

“A reality for the industry is an increasing concentration of tourism activity in the capital cities,” Deloitte analyst Lachlan Smirl said. “This will present an increasing challenge for regional tourism operators and regional economies and also place increasing pressure on capital city tourism infrastructure.

“Since 2000, the proportion of total visitor nights spent outside capital cities has fallen from 30% to 24%, a trend that is likely to accelerate given Chinese travellers’ overwhelming preference for capital cities.”

Deloitte predicted that by 2018, international visitor nights will surpass those of domestic stays, a position that will “underscore the importance of international visitors to the Australian tourism economy”.

“Since 2000, spending by international visitors has grown from 16% of total tourism expenditure to 24%, that is by 45%,” Smirl said. “And visitors from China are a key driver. They are coming in greater numbers, they are staying longer and they are spending more per night.”

Domestic travel, however, looked set to remain largely flat over the outlook period as travellers continue to head overseas on the back of low cost airfares and the strong Australian dollar, which is expected to remain strong against its US counterpart into 2014.

But strong business travel growth meant the domestic sector looked set for “very modest” growth after a decade of decline.

Australian hotel room occupancies are projected to grow from 65% to 68% over the next three years with growth in demand set to outstrip growth in supply as the hotel development pipeline remains “weak”.

“Room nights sold are to grow by 2.3% a year, with room nights available to grow by just 0.7% a year,” Smirl said.

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