Tourism could deliver our next boom
As a business leader, you’ve got a choice to make about your levels of optimism. And as a nation, we’re faced with a similar question. Right now, there is a lot of concern about the slowdown in the resources sector and what that means for the broader economy. You see that concern, among others, played out in the big moves we’re seeing in the share market.
There’s no doubt that the switch from construction to production in the resources sector, and the big drop in commodity prices, represents a major shift for our economy. We’re seeing some of the flow-on effects on board our aircraft, with a steady drop in passenger demand in-and-out of parts of WA and Queensland over the past 12 months or so.
But the flipside to this is a great opportunity in our tourism industry. Because the focus away from the resources means tourism has the potential to be the source of our next boom.
We know Australia as a destination ranks highly on people’s wish-list, particularly for residents of the USA, China and UK. That’s because we have plenty of the things tourists value most – good local food and wine, world class natural environments and high levels of personal safety.
Distance has become much less of a barrier. There are more airlines flying into Australia than ever before and the cost of a flight from London, for instance, has fallen by about 30 per cent over the past decade. There’s still a psychological barrier of distance with markets like the US. And it probably doesn’t help that the longest flight in the world is the Qantas service from Dallas to Sydney. That’s something we tackle in our marketing to the American market, and we’ve also enlisted Hugh Jackman’s help as our ambassador.
And then there’s the Aussie dollar. Now that the mining boom has faded and the dollar is returning to more ‘normal’ levels, we become a lot more attractive to foreign tourists simply because their currency buys 20 or 30 per cent more than it did a year ago. That is excellent news for a lot of local businesses, because it encourages overseas visitors to spend more when they’re here and also encourages more Australians to holiday domestically. (Already, about 70 per cent of our tourism activity is Australians seeing their own country.)
All these factors are starting to show up in the statistics. In the 12 months to August this year, more than 7 million tourists visited Australia, up 6.5 per cent on the prior year. The biggest growth market by far was China with a 21 per cent increase in visitors in 12 months, to reach 950,000 visitors.^
In the last financial year international visitors to Australia spent a record $33.4 billion, up 10% on the prior year. That’s the biggest year-on-year growth in expenditure since the Sydney Olympics in 2000.
Chinese visitors spent $7billion during their time in Australia, a 32 per cent increase in comparison to the previous financial year. Chinese visitors now account for $1 in every $5 spent by international visitors to Australia.*
That shows you how our tourism economy is changing – and its potential. Forecasts predict that Chinese visitor spending will grow to $13 billion by 2020.
But we’re not the only country in the world eyeing up tourism as a key growth industry. We’re competing in a global market for visitors.
So apart from a healthy dose of optimism, how do we make the most of this opportunity? Start by expanding our definition of tourism. It’s not just about people taking holidays – although that’s important. It’s about business travel. It’s about visiting friends and relatives. It’s about major events. It’s about international education.
We’re going to see ever-increasing flows of people as Asia grows and migration, trade and investment expand. We should embrace that as an open, welcoming nation: an Australia committed to social progress, to celebrating diversity, to things like marriage equality and to reconciliation with Indigenous communities.
In practical terms we have to get the four pillars of tourism working together: branding and marketing; global networks; tourist experiences; and infrastructure.
That means the private sector and tourism authorities working together to maximise investment in promoting tourism. Our marketing efforts should go beyond big ad campaigns to a more agile approach, especially through digital channels. Qantas is the biggest single private investor in promoting Australian tourism, and we’re now working with individual states and territories to showcase the best each has to offer.
We also have to strengthen our aviation links with the rest of the world. That shouldn’t be done by throwing the doors open to anyone who wants to fly here, because in many cases that succeeds mostly in helping other countries with their own tourism ambitions at the cost of ours. Rather, it should focus on strategic relationships with key markets to deliver more visitors to Australia. That’s what Qantas aims to do with its new China Eastern Airlines partnership, which is about making travel easier between Australia and our fastest growing tourism source market.
We also have to make sure our incredible tourism experiences are easy to get to, easy to navigate and easy to understand – simple things like signs in different languages make a huge difference, but Australia has some catching up to do on that front.
We should also take a hard look at how competitive we are when it comes to the price of a visa. For example, Australia is looking at charging $1000 for a 10-year multiple entry visa for a Chinese national wanting to come back-and-forth to Australia. The US recently introduced a similar visa for just $215, and the number issued jumped by 68 per cent in two months.
Finally, pursuing tourism success means investing in infrastructure that’s vital to the smooth running of the tourism industry, especially airports, public transport and events facilities. The commitment to a second Sydney Airport is a move in the right direction. But we urgently need to get our current major airports working as smoothly as possible so that we’re giving the best possible first impression of Australia. You don’t want to get off a twelve hour flight and spend the next hour in a queue. Next time you travel to the US, take note of how much they have invested in making it easier to move through their airports.
Australia is in a competitive neighbourhood. Our natural beauty and lower dollar are huge advantages for attracting tourism. But if we want to turn this industry into the source of our next boom, we need to start with a sense of optimism as well as some important reforms.
^ Australian Bureau of Statistics, Overseas Arrivals and Departures, 3401.0.
* Figures provided by TTF