The role of the domestic market for the recovery of Australia’s tourism industry has been highlighted in a new report by Australia’s peak tourism research body.
Created as a resource to assist Australian tourism providers to plot courses out of the choppy waters of the COVID-19 pandemic, the ‘Moving forward – The role of domestic travel in Australia’s tourism recovery’ report by Tourism Research Australia (TRA) reveals key insights for the future recovery of our industry.
Here are three of the most important insights Travel Weekly found in the report…
Australians were outspending international visitors 2:1
The role of domestic overnight travel and day trips in Australia’s $152 billion visitor economy far outweighs that of international travel, TRA revealed, with 2019 figures showing more than nine million international visitors came to Australia, spending a total of $45 billion.
With only $31 billion of this international spend reaching the Australia economy, this was overshadowed by the $107 billion Australians spent on domestic overnight travel and day trips.
It was also significantly less than the $65 billion spent by Australians on 11.6 million outbound trips – half of which was holiday travel.
Therefore, when analysing who spends what and where in Australian tourism, two key facts stand out from the 2019 data: Australians travelling internationally spent $26 billion more overseas than overseas visitors spent in Australia; and domestic travellers already outspend international visitors in Australia by a ratio of more than 2:1.
However, TRA noted that domestic tourists have different travel and spending patterns to those travelling overseas.
Trips taken by Australians in Australia tend to be shorter, lower yield and involve fewer activities than those of our international visitors – the average domestic overnight trip lasts less than four nights and costs under $700. While typical overseas trips span 18 nights and cost $6,500.
Consumer behaviour patterns are also likely to be different as a result of COVID-19, with travellers likely to be more concerned about personal hygiene and safety.
TRA said this will hinder the resumption of all kinds of travel, and people may be more reluctant to undertake some of the activities they did before.
Resumption of business travel likely to coincide with a mass return to office-based work
The resumption of domestic business travel will likely coincide with a mass return to office-based work and airline reopenings, according to the report.
However, the pandemic has significantly altered the way people interact with each other in a business setting. In a far more challenging financial environment, organisations may reassess the amount of physical travel they consider necessary.
The prospect of much higher unemployment and reduced incomes means the recovery for domestic holiday travel may be more subdued, as well.
TRA reckons this would see domestic trips becoming shorter and less frequent with a greater focus on lower-cost options. Holiday travel will still remain highly seasonal, underpinned by strong school holiday demand.
With Australia’s ski fields and tropical destinations entering their peak season in winter, the report noted that the timing of interstate border reopenings will be critical.
However, what is yet unclear is the behaviour of those travellers who would have otherwise holidayed overseas.
In the short term, there may be some available capacity as people cannot venture overseas, but this is expected to only prop up the domestic market rather than enlarge it.
Part of this comes down to the reason for travel: with more than 11 million outbound trips annually, Australians like to travel overseas, meaning many will hold out for an overseas experience if they think the option will arise soon, according to TRA.
Therefore, people who would travel overseas for business or to visit friends and relatives will have no additional reason to travel domestically.
Changes in the visitor mix
The report noted the decline in household incomes will have significant impact not only on travel propensities, but also on travel behaviours.
Over the past five years, households with incomes over $200,000 have been the drivers of growth in both domestic overnight and outbound travel (with TRA noting an increase, on average, of 13 per cent and nine per cent per year, respectively).
Compared to those earning below $150,000, these wealthier households are three times more likely to stay in luxury accommodation, are 50 per cent more likely to travel interstate, and typically spend 80 per cent more per person per night on domestic overnight trips.
Moreover, these travellers spend 90 per cent more per night on outbound trips.
Furthermore, spend among households with incomes of under $150,000 have been declining, with trips more likely to include free activities and more regional travel.
The older age profile of domestic travellers, including those who currently take outbound trips, means there will be more retirees in Australia’s visitor mix in a domestic led recovery, TRA said.
These travellers are less time-conscious, but will have additional needs.
Moreover, recovery of the cruise industry over the short term will rely on persuading some of the two million older Australians who would otherwise be holidaying overseas to consider this type of travel.
Given the greater risk of illness among this cohort, TRA said this will require even more stringent health and safety protocols.
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