Australia will need increased investment for up to 20,000 more high quality hotel rooms, or the equivalent of 16 new hotels per year by 2020 in order to remain competitive in a global landscape, new research has found.
The finings come from the Productivity Commission’s release of its Australia’s International Tourism Industry research paper, which recognised the crucial need for investment in high quality tourism infrastructure, accommodation recreational, cultural and heritage assets.
Minister for Trade and Investment, Andrew Robb welcomed findings, saying it doubled as a reinforcement in the value and strength of Australia’s tourism industry, and provided confidence policy priorities were targeting the right areas.
“Tourism generates over $100 billion of revenue, directly and indirectly employs one million Australians and is our largest services export. Tourism is one of Australia’s strengths and as a government we are determined to back our strengths,” Robb said.
“I was particularly pleased to see the emphasis the Commission placed on tourism investment; one of five priority areas for investment identified by the government. We need up to another 20,000 high quality rooms, or the equivalent of 16 new hotels per year by 2020.”
“It is critical that we review and reform development approval frameworks at all levels of government and remove unnecessary barriers to new investment,” he said.
Investments from Singapore, Malaysia, Hong Kong and Chinese entities have funded some 40% of new hotel rooms in Australia.
The new international investments includes a $3 billion spend expected from China’s Wanda Group, in addition to its $900 million beachfront resort planned for the Gold Coast.
However Robb argues if Australia is to continue attracting foreign investment, the private sector would need to offer investor-ready projects.
“Our free trade agreement with China, for the first time, opens the door for Australian businesses to build, own and operate restaurants and hotels in China. You could open one or you could open 100 if you wanted to,” he said.
Robb also claims Australia should be targeting high-quality and high-yielding markets.
“Given the numbers entering the middle class, at all levels, across the region, what will appear to us as mass markets will in fact be niche markets,” he said.
“The transition to high-quality and high-yielding tourism is well underway. A few years ago, tour groups comprised 75% of the Chinese market, yet now they constitute only around 35%. Independent travellers are now the focus.”
“I am not saying that there is no role for 3 or 4-star experiences but we must set a high standard at the top,” he said.
On another note, the paper also commented on the aviation sector, with some three million additional airline seats required annually into Australia by 2020 – the equivalent of 120 more A380s each week to cater to growing international demand.
The report underscores the importance of further liberalising air services agreements in key markets, such as with the recent tripling of air capacity between Australia and China, and negotiations with Qatar, Malaysia and Indonesia will also take place this year.