Australia / Analyst Insights
Tourism industry benefits from rising visitor numbers
by Tristian Williams
May 03 2016

The tourism industry in Australia is comprised of a diverse range of operators, including accommodation providers, food and beverage retailers, and transport companies. Australia’s tourism industry has fared well over the past five years as the number of international visitors has increased, boosting demand for a range of services. An overall depreciation of the Australian dollar over this period has encouraged Australian residents to travel domestically and attracted international visitors to Australia. As a result, revenue for the tourism industry has increased by 3.5% annualised over the five years through 2015-16, to $121.9 billion. Higher tourist numbers have aided the online travel bookings industry, as domestic and international visitors have increasingly used the internet to arrange and book transport, accommodation and tourist activities. Travel agency and tour arrangement operators have also benefited from the increasing number of visitors as tourists seek activities and tours while on holiday.

While increasing tourist numbers are expected to come from all over the world, visitors from Asia are particularly large market for the Australian tourism industry. In particular, visitors from China are a growing market for the industry as their incomes rise and the Australian Government pursues ongoing initiatives to promote Australia as a tourist destination. Additionally, tourists from China are more likely to purchase package tours from Australian operators, boosting revenue for tour operators. Although the low Australian dollar has prompted some Australian residents to travel within the country, domestic travellers have taken more overseas trips over the past three years. Rising discretionary incomes and the continued availability of cheap airfares have encouraged Australian residents to travel internationally, benefiting airline operators but negatively affecting domestic tourism industries.

Transport, retail and accommodation are the industry’s largest product segments, all of which have benefited from rising tourist numbers. However, retail has been negatively affected by consumers increasingly seeking out high-quality dining experiences from restaurants and spending less money on shopping. Growing visitor numbers have boosted revenue for online travel booking operators as international and domestic tourists have increasingly used this method to book travel due to its convenience and accessibility. Bricks and mortar travel agents have therefore expanded their online booking capabilities to compete with online-only operators such as Booking.com and Expedia, which have lower overhead costs.

Similarly, accommodation providers are facing pressure from online competition as home-sharing networks like Airbnb allow individuals to rent out their spare rooms or entire homes. Although accommodation providers have benefited from increasing tourist numbers, services like Airbnb have increased room supply and drawn demand away from traditional accommodation. These trends are expected to continue over the next five years, increasing online competition for tourism industries.

The past five years have been positive for tourism industries as visitor numbers increased and the largest product segments all benefited from increased demand. However, online services will remain a growth area for tourism operators as competition from online service providers grows. To stay viable and continue benefiting from increasing visitor numbers, tourism industries will need to find ways to compete with online offerings in the face of changing tourist demands.

 

Relevant reports:

Tourism

Travel Agency and Tour Arrangement Services

Online Travel Bookings