Australia has always been known as a prime tourist destination, with its impressive landscapes, diverse culture, and welcoming people. Before COVID-19, Australia’s tourism industry was one of the largest contributors to the national economy, accounting for 8.2 per cent of Australia’s export earnings, generating $60.8 billion in direct tourism GDP and employing five per cent of the Australian workforce. Tourism also provided Australia’s regional areas with 8.1 per cent of their workforce. With the pandemic upending the world, the tourism industry in Australia has taken a significant hit.
Today, however, discussions on ‘revenge tourism’ abound, with forecasts of significant increases in travel spending as people make up for lost travel time. The 2022 visitor economy results showed a bullish trend in the number of visitors, spending, and employment nationally. But does this mean that tourism has rebounded?
Tourism rebounded, or has it?
While showing signs of recovery in the past year, our tourism GDP in 2021-2022 remained low at only $36.5 billion, severely impacting growth in other areas such as education services, which was still down at $1.7 billion in 2021-2022 compared to $8.6 billion in 2018-2019.
The Australian domestic tourism market is affected by ever-higher interest rates and inflation, limiting traveller’s spending and discretionary income. The appeal of nearby tourist destinations such as Indonesia and Vietnam does not help, as they are perceived to offer better value for money compared to Australian tourism destinations.
Internationally, the shortage of aircrafts and aviation crews remain a problem, but the decrease in inbound flights to Australia and the consequent increase in travel cost are creating gaps in our tourism supply. This will hurt not only the travel industry but also the economy as a whole. Australia is already a far destination to reach, and the decreased flight routes make it even more inaccessible.
While the reopening of Chinese borders has sparked some hope, the biggest pre-pandemic international market for Australian tourism is not returning as quickly as we hoped. Despite recent efforts to target Chinese tourists, the ongoing tensions experienced between Australia and China in the past few years could result in a significant loss for Australia's economy.
Finally, the Australian tourism industry is experiencing a severe shortage of skilled workers, threatening its ability to recover and grow. This has quickly become the biggest problem for most tourism and hospitality providers. Although at its highest level since pre-pandemic times, the labour market still shows a shortfall of 20.3 per cent in the number of jobs compared to 2019, with many tourism businesses struggling to find qualified staff. Those who lost their tourism jobs during the pandemic have chosen career options that are less risky, better paying, and with more flexible working conditions. The lag time in visa processing is also making it difficult for potential workers to enter the country. The recent news of the reintroduction of international students’ work hours cap from July 2023, will further shrink the labour supply. This shortage is negatively affecting the quality of travel experiences and threatening tourism businesses.
Eight rebound strategies for tourism in Australia
Despite the current challenges, there is optimism within the industry for a stronger rebound in 2023-2024. Future-forward strategies are crucial in propelling this recovery, addressing critical supply issues, and identifying opportunities to boost Australian tourism products and key markets.
Importantly, Australia needs to ask, ‘How are we improving the lives of all stakeholders in our tourism recovery strategies?’.