Sunny skies return for tourism

Could Australia’s beleaguered tourism sector finally see some light at the end of tunnel? That’s the clear message from this week’s big travel sector profit results and a new report from Access Economics on the tourism outlook.

Australia’s tourism industry is arguably the sector that’s been hit hardest by the high Australian dollar, which has dealt tourism a double whammy of pricing international tourists out of a holiday here while making overseas holidays more affordable than ever to Aussies.

But things appear to be turning around.

Virgin Australia is back in the black this year with net profit of $22.8 million, up $90.6 million on the previous financial year, an increase that chief executive John Borghetti attributes to an improvement to the airline’s strategy of forging international alliances and moving upmarket on domestic services.

It stands in stark contrast to Qantas’ results, but that’s a whole other kettle of fish.

Flight Centre’s full-year results were even better, boasting a record net profit of $200 million, a 43% increase, and turnover which has tripled in the last decade.

It’s no wonder that Access Economics’ Tourism and Hotel Market Outlook released today is overwhelmingly optimistic.

The Access Economics report noted a surprising jump in domestic visitor trips and visitor nights, which are up 5.4% on last year’s results for the same time.

But real growth in tourism is dependent on inbound tourists from Asia and in particular from China.

Access Economic’s longer term outlook for international visitor arrivals is positive, with a forecast that moderation of the Australian dollar and the growth of emerging Asian economies, including China, will drive solid growth in international visitor numbers.

Assuming China continues to achieve forecast growth of between 8-9% a year, international visitor arrivals are projected to grow solidly through to 2014.

But Australia can’t just sit back and wait for Chinese tourists to arrive.

Sure, Tourism Australia is making a push into the market with its $250 million ‘There’s nothing like Australia’ campaign, which was launched in Shanghai in June.

But more is needed, like Aussie tourism operators thinking about what Chinese and Asian tourists actually want from an Australian holiday.

At the moment Australia has a big advantage on the United States as it’s easier for the Chinese to get a visa to visit Australia, but that advantage may not last for long.

There’s also the risk that the Chinese economy will begin to stagnate, which would have significant implications for Australia’s international visitor count.

Things are looking up, but addressing the malaise in Australia’s tourism sector is not as simple as just chucking another shrimp on the barbie.