Economy

Tourism takes a break

SmartCompany /

Competition, tighter household budgets and an ageing population mean tourism’s growth for the next five years will be modest.

By Jason Baker

The tourism industry is looking forward to very modest growth over the next five years. IBISWorld forecasts that this industry will expand at an average annual rate of 1.8%, to reach $66.7 billion by 2012.

Competition is expected to get even more fierce as discounted domestic and international travel becomes more accessible, and travellers become more discerning about where they stay (for example, the ever increasing ageing population may require comfortable, long-stay, budget accommodation), use online booking systems as opposed to travel agents and participate less in gaming, as household disposable income decreases.

Cafes, restaurants and coffee shops will experience revenue growth but this will be minimised by the ferocity of the competition. Industry employment will increase as casual and part-time staff are employed to cover peak customer service periods.

KEY STATISTICS 2006

Statistic

Value

Industry Revenue

63 billion

Revenue Growth (2005 to 2006)

–5.5%

Number of Enterprises

56,613

Employment

533,756

Exports

18,640

The past five years have been bleak for tourism operators. IBISWorld estimates that this industry has contracted at an average annual rate of 3.1% over the past five years.

In 2001 Ansett Airlines collapsed and the terrorist attacks in New York and Washington caused a slowdown in travel and tourism. There were double-digit reductions in business travel and Australians’ tendency to vacation domestically or in Australia’s backyard.

The fiscal year of 2003 was also catastrophic for the industry. The terror attacks in Bali, the looming threat of SARS and government warnings about travel to certain countries left employers reluctant to risk sending their employees overseas. Confidence to travel slowly returned in 2004, 2005 and 2006 but the industry was hit by rising fuel prices, Australians choosing to holiday overseas and employment and profit growth fell.

In 2007, fuel prices were again an issue mid-year and the strengthening of the Australian dollar may have discouraged some international visitors. Additionally, the drought and threat of bushfires curtailed domestic travel so that the industry outlook was again, bleak.

The outlook for 2008 onwards is not as dire as previous years. The industry will experience some growth as the number of international arrivals increases significantly, less Australians travel overseas and employment and profits stabilise. This forecast anticipates the breaking of the drought and the resumption of nearer to capacity water flows across regional Australia.

Key Success factors for operators in the industry

Ability to quickly adopt new technology. Ensures cost efficiencies and better linking to guests through internet linked information, bookings, reservations and payment systems.

Proximity to key markets. Ensuring that the tourism product is linked to key markets and their needs will lead to many satisfied guests and repeat visits.

Access to multiskilled and flexible workforce. For most operators there is a necessity to have access to skilled workers – many employed on a casual and permanent part-time basis – to ensure quality service can be provided to guest at peak times. This will maximise revenue and satisfaction levels.

Receiving the benefit of word of mouth recommendations. Satisfied guests ensure many good word of mouth recommendations and repeat visits, therefore future revenue growth and bookings.

Major Player

Market Share Range

Qantas Airways Limited

21.65% (2006)

Virgin Blue Holdings Limited

2.64% (2005)

Flight Centre Limited

1.57% (2006)

AAPC Limited

0.74% (2006)

MFS Limited

0.39% (2006)

Grand Hotel Group

0.26% (2005)

 

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