From “reverse” to 200% growth: Businesses relish domestic travel revival, but months of uncertainty lie ahead

tourism

View Retreats founder Mat Lewis.

Just a few weeks ago View Retreats founder Mat Lewis was cutting his business to the bone to ride out the COVID-19 pandemic, convinced it could be six months or more before any new business came in the door.

But since mid-May, after NSW and Victoria began easing travel restrictions, business is booming.

“We’re getting customers at levels we’ve never seen before,” Lewis tells SmartCompany. “We’ve just had the biggest four weeks in our seven year history.”

View Retreats, an independent getaway platform partnering with accommodation providers across Australia and New Zealand, has seen bookings increase 200% on last year as domestic tourists flee the suburbs for coastal cottages, inland retreats and regional homesteads.

“We’ve gone from doing nothing and having no business to now going gangbusters, every single day is intense,” Lewis says.

The bump in business couldn’t have come a moment sooner. For Lewis and thousands of other tourism-reliant businesses across the country, the twin impacts of the January bushfires and the pandemic have caused more cancellations than bookings in 2020.

“Our whole business had dried up, you could say it was in reverse, because all we did was process cancellations,” Lewis says.

Finally, after the longest and most gruelling summer in its history, Australia’s $60.8 billion tourism sector is starting to show signs of life.

Borders are opening, albeit tentatively, and residents are beginning to venture not just outside their houses, but hours away from them.

But underneath the green shoots there are still more reasons than not to be worried about the medium term future of tourism in Australia.

International borders remain closed, Australia’s two-most populous states are still shut off from large swathes of the country, and the possibility of a second wave of infections is a spectre hanging over the industry.

Even those businesses now relishing the return of domestic tourism face trading through winter after a historically lean summer, with less than 100 days before JobKeeper wage subsidies are due to expire.

Lewis says he’s still worried, particularly if self isolation requirements for interstate travellers linger, after all, who would want to spend two weeks of their annual leave cooped up in a hotel?

“The government keeps saying there will continue to be infections, but will the general public continue to be confident enough to get on planes? Some will, so we’ll continue riding this wave for now,” Lewis says.

How COVID-19 devastated tourism businesses

Tourism reliant businesses aren’t the only ones set to go it alone in September, but they were among the first to feel the pain of the COVID-19 pandemic, after the federal government took the unprecedented step of closing Australia to all outbound international travel in March.

Quarantine periods were set up for all inbound travellers and before long, as the outbreak spread through NSW and Victoria, states began closing their borders individually, with most enforcing their own mandatory isolation periods for interstate arrivals.

It would be an understatement to say this was all bad for business. International arrivals in Australia plummeted 99% between January and April and halved again in May. Departures, which many other local businesses also rely on, have also crashed.

Domestic tourism, responsible for almost three quarters of sector-wide revenue in 2018-19, largely disappeared after Victoria and NSW issued stay-at-home orders, limiting the radius residents could travel from their homes for more than a month.

Small businesses reliant on the tourism industry have been devastated, and while domestic travel has begun to recover, the ongoing collapse of international visitors has ripped a hole in revenues heading into winter.

The Tourism and Transport Forum (TTF) estimated in March that the sector would lose $3 billion a month while coronavirus restrictions remained in place.

 

That pain extends beyond individual business owners too. Tourism accounts for more than 8% of Australia’s export earnings and entire communities rely on a constant flow of inbound travellers, which directly support about 666,000 jobs nationwide.

Sharon McNally, owner of Cumberland Charter Yachts in Queensland’s Whitsunday region, has seen the downturn caused by the travel restrictions in her region first hand and is worried many firms won’t survive the winter.

“Its very noticeable that our little community relies very heavily on tourism, McNally tells SmartCompany. “Seeing so many friends out of work was very upsetting and humbling at the same time.

“That said our boat owners have been exceptionally generous, those who can afford to buy that new tender or get their boat slipped and serviced have done so, for which we are most grateful as this has not only kept a few staff employed but it has touched our suppliers too.

Recovery: More questions than answers for business owners

While restaurants, fitness centres and retail shops have begun re-opening across Australia, business owners like McNally remain in coronavirus limbo, unable to determine when, and crucially how, international tourists will return.

“I would love to see JobSeeker extended to December for all tourism and hospitality business and available to all its employees, I have seven of my 15 staff who are ineligible which makes it hard to restart the business without them,” McNally says.

McNally says the Whitsundays have been devastated by COVID-19.

While domestic travel was the majority of the $150 billion in consumption generated by the tourism sector in 2018-19, international travellers are a vital growth vertical for operators, contributing about $39 billion to exports last year.

Business owners SmartCompany spoke with expressed anxiety about two prevailing uncertainties: when international travellers will be allowed to return, and whether domestic travel is enough to keep the industry going in the meantime.

At the back of their minds is the spectre of a second wave of coronavirus infections, a worst case scenario that would likely see states and territories re-impose business crushing border restrictions.

Federal officials are attempting to address industry concerns. Tourism minister Simon Birmingham was unable to provide a timeline for when border restrictions would ease this week, but said taxpayer resources would be deployed to encourage Australians to travel.

“For those Australians who can afford to do so, we want them to feel an almost patriotic duty to get out and support the jobs and small businesses of their fellow citizens by having whatever Aussie holiday they can, Birmingham told the National Press Club in Canberra.

Meanwhile, the tourism industry is lobbying hard for states to relax remaining border restrictions and for the Morrison government to extend further fiscal support to businesses.

West Australian Premier Michael McGowan has come under particular pressure in recent weeks to open up, including from Prime Minister Scott Morrison himself.

Others argue additional support could come in the form of a sector specific extension to the JobKeeper program, as federal MP Warren Entsch suggested last week.

”It’s going to be some time before we see international aviation open again; we will be one of the last ones to come in. I’m not even sure March next year will be sufficient time but I think it’s a no-brainer we have to do this [JobKeeper] extension,” Entsch said.

More likely though are federally funded advertising campaigns, similar to those pushed in the wake of the bushfire crisis, spruiking spring and summer destinations once existing government support expires in September.

But even the most patriotic response from Australians is unlikely to make up for lost revenue, as Associate Professor Gabby Walters of University of Queensland Business School explains.

“The domestic travel market won’t replace all of that [international] income, Walters tells SmartCompany.

“But because domestic travellers are going to be more likely to travel domestically we’re likely to see some more balance.

In reality, the tourism sector will be unable to fully recover until a vaccine is widely available, particularly in the realm of international travel, and it will be a while yet before that happens.

In the meantime, businesses are preparing to keep grinding out whatever revenue they can from domestic tourists and the few international visitors coming into the country.

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