Tourism on the improve but warning of “two speed” tourism industry between city and country destinations

Australia’s tourism industry is continuing to strengthen with sentiment improving amongst operators, according to the Tourism and Transport Forum’s MasterCard Tourism Industry Sentiment Survey published today, but the forum also warns of a “two speed” tourism industry.

While bookings are up in the cities, the survey found leisure-based regional destinations are doing it tough.

The survey found the ongoing strength of the Australian dollar has had a strong impact on the tourism industry and the exchange rate remains the industry’s top concern, with 61% of respondents listing it as an issue.

However, this number is down on last year when 72% of respondents listed it as a concern, suggesting the tourism industry has become accustomed to coping with a high Australian dollar that makes Australia more expensive for international tourists.

Labour supply issues were raised as a concern in the survey by 76% of respondents who said there was a shortage of skilled labour in place, while a shortage of unskilled labour was listed as a concern by 68% of respondents.

Respondents also highlighted issues with accessing bank financing, concern over the quality of Australia’s retail offering and concern about the opening hours of bars and restaurants.

John Lee, chief executive of the Tourism and Transport Forum, told SmartCompany the survey delivered “mixed messages” from the tourism industry.

“There are definite signs that the number of Australians taking overseas holidays is moderating and with that moderation comes a redirection of intention of Australians to take a domestic holiday; and our hopes are that it will be a leisure based holiday in regional Australia,” says Lee.

Lee says the survey has reinforced what he dubs the “two speed” divide in Australia’s tourism industry.

“Overall the hotels and major cities are doing pretty well and those areas related to the resource sector are doing pretty well, but leisure-based regional destinations like the Red Centre and Tasmania are really struggling at the moment with hotel occupancy,” he says.

Lee says to overcome these issues tourism operators need to ensure what they are offering is updated.

“What we do need to ensure is that product remains fresh and enticing for international visitors,” he says.
“There’s no doubt that we have seen those tourism operators that have reinvested in their product have been able to maintain their market share and increase it. If you look at Hayman and Hamilton Island they have upgraded their product and with that have come good occupancy levels.”

Despite the concerns raised in the survey, operators believe conditions will improve in the current quarter, with expectations for domestic tourism up 10 points and international up 4 points, although performance is expected to remain below average for this time of year.

Lee says the optimism for the next quarter reflects strong bookings in the lead up to Christmas and simpler factors such as better weather conditions.

“There are some early signals for the next quarter that things are starting to look stronger, the other underlying factor is aviation capacity,” he says.

“At the moment we have strong competition from international airlines, and major offerings from Qantas, Virgin and Tiger are providing an excellent environment for Australians to see Australia.”