Domestic tourism, retail industries back on track

Both the tourism and retail industries have been given a shot in the arm, after new figures released by the Federal Government and a private forecaster show the two teetering sectors may have a recovery in store.

But the tourism market has warned any recovery is being put at risk due to the government’s new tax regime, which includes a new levy for international tourists, and the industry has warned the recovery is still spread unevenly across the states.

“It’s no secret that sectors of the industry are struggling,” Tourism and Transport Forum chief executive John Lee said in a statement.

“Queensland figures are especially strong relative to the state’s disastrous first quarter of 2011, while the apparent boom in West Australian traffic reflects the boom in that state’s mining sector.”

The tourism figures released by the government show domestic tourism is on the rise, with 73 million overnight trips taken in the year to March – up 5% from the previous corresponding period. Domestic travel spending also rose 10% to $50 billion, with more than two thirds of people travelling within their own state or territory.

Queensland was a particularly attractive spot, with overnight trips up by 10%. The state has been suffering over the past few years, and several resorts have collapsed.

Seven million international trips were recorded as well, and Tourism Minister Martin Ferguson said the numbers were the best they’d been in four years.

“The fact we are now seeing results reach pre-global financial crisis levels for domestic travel is excellent news for Australia’s tourism industry, particularly since the high Australian dollar continues to make international travel attractive for Australians,” he said in a statement.

The tourism market has been struggling even since the financial crisis, and international travel has been waning as the dollar keeps overseas visitors at bay. These figures are some of the first signs the tourism market is actually taking off.

However, the TTF warns the new tax regime could hinder growth – Lee says the carbon tax and the departure tax could hit visitors hard.

“Finally, major airports will also have to pay for Australian Federal Police presence, despite taxpayers having already paid for policing,” Lee said.

“We welcome the news that the Australian tourism industry is starting to rebuild, but have deep concerns over the long-term viability of the industry being hit by these new taxes.”

The retail industry has also been given some hope as well, according to new figures released by Deloitte Access Economics which show the industry is likely to record growth of 2% in 2011-12, after just 0.7% in 2010-11. Growth will hit 3% in 2012-13 as well.

Access Economics director David Rumbens says in the report that interest rate cuts have helped retail in the early part of 2012, noting that “those cuts will free up a substantial chunk of disposal income”.

Rumbens was contacted this morning by SmartCompany but no reply was available prior to publication.

While the 2% growth rate is slower than some retailers would like, Rumbens says the “gloom permeating shopping malls may be starting to lift”. The industry is now at its best point since the end of 2009.

Food retailing is ahead of most other sectors, although department stores and clothing retailers have fallen over the past year.

Lower interest rates and payouts from the federal budget for parents of school children should help retailers, Rumbens said, while real wages growth will help sustain the industry between 2012 and 2013.

“Overall, we expect that interest rate cuts and budget handouts will help the retail sector
continue some upward momentum in the coming months,” he said.

However, there are still some risks. Consumer sentiment is still weak and, as Rumbens says, the potential for job losses is still high should global economic conditions deteriorate, which would also cause savings rates to rise as well.

Canberra is set to record the lowest real growth, 2.3% in 2012-13, even following a recent spike, and South Australia is set to record 3.2% growth next financial year. Tasmania will record the third highest sales in 2012-13 at 3.3%., following Western Australia and Northern Territory.