Flight Centre says Aussies still heading overseas despite lower Australian dollar

Flight Centre chief Graham Turner has reason to be smiling.

Despite an Australian dollar up to 10% lower than it was a year ago, with expectations of it sinking further, he hasn’t seen much evidence of Australians shunning overseas travel.

‘‘Results from both our leisure and corporate businesses in Australia have improved year-on-year, with leisure currently recording stronger growth,’’ he said at the company’s annual general meeting yesterday, while reiterating his growth projections for the coming year.

That’s great news for Flight Centre, whose share price reached an all-time high on Wednesday.

But what about Australia’s SMEs, many of whom lose out on custom when Australians head overseas for their holidays?

For the past few years, Australian domestic tourism has grown, but at a far slower rate than international tourism, both into and out of Australia.

However, tourism overall has grown, meaning the businesses in our hospitality, retail and entertainment industries are seeing more tourists through their door.

This is counterintuitive. After all, you’d think the high Australian dollar in recent years would have deterred tourists.

But that hasn’t been the case, says David Beirman, a senior lecturer at the University of Technology Sydney’s Business School, who ran a national tourist office for 12 years.

“Some of the markets around the world, particularly China, are growing so much that we’ve been getting some of that growth,” he tells SmartCompany.

“This year, it’s expected that 88 million Chinese people will travel outside China. If 700,000 of them are travelling here, that makes a difference.”

Australia gets 6.5 million in-bound international tourists a year, while Australians make eight million trips offshore a year.

And while tourism overall is growing in Australia, it’s not all good news for small business operators.

For one thing, international tourists tend to stick close to where they arrive, while domestic tourists travel more widely.

“If you look at what we call the ‘mass tourism’ market – that’s your package tours and the like – most of those people tend to stick quite close to where they arrive. If they land in Sydney, for example, they might do the Hunter Valley, the Blue Mountains, and they might go to Canberra. If they land in Cairns, they’ll focus on the Barrier Reef.

“Once you go out to the regions, however, you’ll find that the majority of the businesses out there depend on domestic tourism for their custom.”

The exception to this, Beirman says, are backpackers, who comprise a large percentage of inbound tourists to Australia.

“They don’t spend a lot per day, but they stay for much longer. And they end up in places you wouldn’t expect.”

Australia’s tourism trends are influenced by plenty of factors other than the Australian dollar, Beirman says, which means while a lower $AUD might encourage more tourists to head here or stay here, it’s unlikely to be the only factor.

“With a lot of Chinese tourists, if the dollar bought $US3 or $US4, they’d still come,” he says.

“Australia may not be the cheapest destination, but it’s still very good value for money. And we sell unique experiences.

“You’ve got to try and promote the things your destination has that no one else does. And to Tourism Australia’s credit, I think they do that quite well.”

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