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Tourism is a significant driver of the economy both nationally and in Victoria. In 2019, tourism generated 6.5 per cent of the gross state product for the Victorian economy and employed almost eight per cent of the state’s working population (Business Victoria, 2020).[i]
However, due to repeated border closures, extended lockdowns and the worst bushfire season in history, Victoria’s tourism industry has been hardest hit. According to Tourism Research Australia, overnight domestic visitor expenditure in Victoria was down 59 per cent in 2020 compared with 43 per cent nationally.[ii]
The Victorian government have recognised these challenges with the recent announcement of a visitor economy recovery and reform plan. This is a welcome initiative in light of our research that shows that these challenges have left the industry financially and emotionally depleted. If tourism operators are to survive future shocks, we need to invest in improvements and resilience and urgently work to improve the industry’s supply of skills and labour.
Between June and November 2020, we examined the impacts of the crises across Victoria as well as localised implications for two regional tourism destinations – Bright (in Victoria’s north east) and Echuca-Moama (conjoined border towns on the Murray River). Drawing on a key disaster risk management framework,[iii] we examined destination resilience and vulnerability characteristics, or factors that help or hinder recovery and adaptation to future crises.
A survey of 323 Victorian tourism businesses and in-depth interviews with 33 tourism stakeholders showed the crises exposed existing vulnerabilities as well as resilience factors that enabled the tourism industry to push through adversity. Of the businesses surveyed, 60 per cent were affected by bushfire, 84 per cent were forced to close at least once during the pandemic and 65 per cent estimated financial losses between 75 per cent and 100 per cent during 2020.
The stress of managing the crises meant that 45 per cent of respondents were concerned about their mental health and 41 per cent were concerned about their employees. This depletion of financial and emotional reserves will make recovery and improvements of visitor infrastructure and experiences more challenging. Government support has been vital. Almost all respondents (91 per cent) relied on JobKeeper to maintain business operations.
The industry relies on temporary and casual workers, and 46 per cent of casual staff were laid off permanently, while 54 per cent were furloughed. Many of these staff have since moved into other industries, amplifying existing labour and skills shortages in the sector. Almost half of respondents (42 per cent) were worried about attracting and retaining staff in the next 12 months. Interviews indicated that the “tree change” phenomenon (driven by remote-work opportunities for employees who were previously city-based) is driving up real estate prices and there is little affordable accommodation for workers. The absence of temporary migrants such as backpackers and international students means that labour shortages are acute.
Other cracks that have been exposed by the crises relate to risk management. Our study showed that accredited businesses were more confident in their capacity to recover. However, the tourism industry is predominantly made up of micro and small businesses (95 per cent), who do not always adopt formal risk-management plans, or participate in accreditation and training programs. In addition, business insurance costs have risen between 100 per cent and 400 per cent in bushfire affected areas.
Our study also showed the essential role that strong leadership and coordinated governance mechanisms play during crises and recovery. Given the unprecedented nature of the pandemic, and the primary role of public health officials in introducing infection-control measures, many of the rules and guidelines had an unforeseen impact on tourism. Border towns were hardest hit by repeated border closures, with little or no consultation with residents or businesses prior to decisions being made. Many residents who use services both sides of the border were marooned, and the primary supply of visitors was cut off. It was evident that there was an incomplete understanding of the tourism industry and limited engagement with stakeholders was a key issue. There was little appreciation of the diversity of the industry or its interdependence with the many businesses that indirectly rely on visitation.
Our study identified key resilience characteristics of businesses that are likely to enable faster recovery and an ability to rebound. These include access to business networks, having collaborative relationships with other businesses, industry accreditation and strong industry associations. Tourism businesses identified that they lacked skills in business development, risk management and IT.
Some key policy priorities arise from the findings:
Our research provides further evidence that collaboration, leadership and good governance are central to industry resilience. Future destination planning needs to encourage collaboration, rather than competition, between regions and states.
[i] Business Victoria. (2020). Value of Victoria's tourism industry: A significant economic driver for Victoria. Retrieved 5/11/2020 from https://www.business.vic.gov.au/tourism-industry-resources/tourism-industry/value-of-victorias-tourism-industry
[ii] Tourism Research Australia. (2020). National visitor survey results December 2020. Data Tables.https://www.tra.gov.au/data-and-research/reports/national-visitor-survey-results-december-2020/national-visitor-survey-results-december-2020