Download TRA Quarterly, Issue 1: September 2012 Executive summary Key

TRA Quarterly, Issue 1: September 2012
Executive summary
Key message:
Growth has been solid for most key visitor demand and expenditure categories over the past
year but growth slowed considerably in the September quarter 2012 for all expenditure
categories, except domestic day trips.
Despite the continuing strength of the Australian dollar, Australia’s inbound tourism sector
grew at 3.1 per cent in the year ending September 2012. A key driver of total inbound
performance was the Chinese market; it was responsible for half the increase in arrivals and
around 61 per cent of the $932 million increase in total international visitor expenditure.
Domestic day and overnight expenditure grew strongly (up 16.4 per cent and 7.0 per cent,
respectively) in the year ending September 2012, compared to the previous year.
For key supply-side indicators, seat capacity for domestic aviation in Australia rose strongly
over the past year, but international aviation capacity has slowed considerably. Growth in
accommodation supply remained subdued in all states and territories while room
occupancy rates and room yields continued to rise.
Latest indicators for tourism productivity, profitability and investment are mixed. Labour
productivity in tourism-related industries appears to have increased, and more strongly than
the market sector average for the period from 2007–08 to 2011–12.
However, indicators suggest that real investment in tourism-related industries has decreased
overall in recent years. This result does not take into account the strong rebound to growth in
building approvals in accommodation stock in the past year, which should result in stronger
investment in the future.
It should be noted, however, that indicators on profitability in tourism-related industries show
a gradual decline, which does not bode well for supporting stronger investment and
productivity in future years.
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Introduction
This is the first issue of the TRA Quarterly, which is Tourism Research Australia’s (TRA) latest
publication that provides a quarterly update on how the tourism industry has performed
during the previous quarter. It synthesises information and data that have already been
included in a range of TRA publications, such as the National Visitor Survey (NVS) and the
International Visitor Survey (IVS), as well as publications from other agencies such as the
Australian Bureau of Statistics. The TRA Quarterly is a ‘one-stop-shop’ for top line information
on how the tourism industry is performing. The State of the Industry (SOI) report—and its key
component, the Tourism Scorecard—tracks the key areas of the tourism supply chain, but is
only released annually. This document is designed to supplement the SOI, by providing a
more regular update of the industry’s progress, particularly in tracking the following variables:

total visitor expenditure

overnight visitor expenditure (progress towards the Tourism 2020 Potential)

key areas of travel activity - international visitor arrivals/nights, domestic overnight
trips/nights, and day trips

state tourism demand performance

aviation (domestic and international)

accommodation

investment.
The TRA Quarterly tracks the latest performance of each of these tourism indicators, and
other demand and supply issues, by state and territory. It also contains a brief discussion of
the broader macroeconomic environment which has influenced this performance.
As this document is a summary, it will be released in conjunction with a quarterly data-card,
which provides more detailed statistics on the tourism industry’s performance. For more
information or statistics, please contact TRA’s Statistical Enquiry Service at
[email protected].
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1.
The backdrop
1.1 Global economic health – still very patchy for Australia’s traditional inbound markets;
Australia is still the strong performer
Table 1 Macroeconomic environment in Australia’s top 10 inbound markets (% change)
Top 10 inbound
markets
GDP growth
Year ending
September 2012
September qtr
2012
Exchange rate
($AUS)**
Year ending
September 2012
New Zealand*
2.6
0.6
-1.3
China
7.4
2.2
-2.7
United Kingdom
-0.1
1.0
2.2
United States of
America
2.5
0.7
0.3
Japan
0.1
-0.9
-2.3
Singapore
0.3
-1.5
0.7
Malaysia
5.2
1.1
2.3
South Korea
1.6
0.2
3.6
Hong Kong
1.3
0.6
0.1
India
5.3
1.0
Australia
3.1
0.6
16.8
-
*New Zealand GDP data is available up to June 2012 only
** Change in Australian dollar against respective country’s currency
Source: GDP data are from the Treasury Economic Note (5 December 2012) and exchange rates are
from the RBA
A key driver for Australian tourism performance is the health of the global economy, which is
also a major influence on demand for travel, particularly for international travel. In the
September quarter 2012, most of the larger international economies were continuing to
underperform, while Australia continued to track at near-trend growth:

Growth in Australia’s Gross Domestic Product (GDP) remained robust (up 3.1 per cent) in
the year ending September 2012, slightly lower than the long-term average of 3.3 per
cent1.

In contrast, economic growth has slowed in most of Australia’s top 10 inbound markets,
particularly in parts of Europe, where the global financial crisis overhang of high public
debt and uncertain bond markets looks set to remain for some time. While Australia’s key
European markets, the United Kingdom2, Germany and France, have been better
performers in the European Union, they are either still experiencing recessionary
conditions or have just moved out of this situation.

Growth in the United States remains weak, up 0.7 per cent in the September quarter. With
the US election now over, housing starts and prices on the improve, and the US
Long-term average refers to 30-year period
Latest quarterly results show that the UK grew 1.0 per cent in the September quarter 2012, but a major
component of this result was due to the London Olympics. Note that the event would also be a factor
impacting on international visitor arrivals from Europe in the June and September quarters in 2012.
1
2
3
unemployment rate now at a three-year low at 7.7 per cent, the US economy is showing
more positive signs of a slow but steady recovery.

Growth prospects look more positive in China, which is now Australia’s leading tourism
export market by expenditure and the second largest by arrivals. After six quarters in
which growth in China’s Gross Domestic Product (GDP) was slowing, economic growth in
the September quarter was 2.2 per cent. Latest indicators show more positive signs
following increases to public infrastructure spending and an increase in bank liquidity.

After rebounding quickly following the worst of the GFC in 2009, latest data suggests that
other Asian markets are remaining strong. In particular, the Indian economy is returning to
stronger growth.
1.2 Australian dollar – continues to detract from growth

Despite the recent sharp falls in mining commodity prices, the Australian dollar continues
to trade at near-record levels, particularly against the Euro and the US dollar.

At these levels, the Australian dollar continues to detract from the price competitiveness
of Australian exports, more so for those industries that are highly trade-exposed such as
tourism.
2
Demand indicators – visitor expenditure and activity
2.1 Global (international) tourism performance – performing at near-trend rates in 2012

The United Nations World Tourism Organization (UNWTO) reported in its latest Tourism
Barometer (released November 2012) that international travel globally is likely to increase
by 3 to 4 per cent in 2012 (which is around the long-term growth rate), and is set to
reach its milestone target of one billion international travellers this year.

With international travel dropping sharply during the worst phase of the GFC in 2009
(an exception was Australia which reported unchanged levels at that time), most
markets have now exceeded their pre-GFC levels. By region, the UNWTO reports that the
strongest growth is likely to occur in Asia and the Pacific, Americas and African regions.
2.2 International travel to Australia – increasing despite the weak backdrop

Despite the continued weak economic backdrop, international visitors to Australia
continue to increase in numbers albeit at a low rate, with growth for the year ending
September 2012 (compared to the previous 12-month period) at 3.1 per cent.
International visitor arrivals grew by 4.6 per cent in the September quarter 2012,
compared to the same quarter in 2011.

If this growth continues, Australia’s share of world international travel should increase
slightly, but remain at around 0.6 per cent of global international travel.
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
China has now become the second largest inbound market for Australia in terms of
visitor arrivals after New Zealand. Growth in this market has increased 17 per cent (or by
86,900) in the year ending September 2012 to represent nearly half of the 174,700 growth
in total arrivals over the past year.
2.3 Total international visitor expenditure – growth remains moderate

International visitor expenditure increased by 3.6 per cent to $27.2 billion in the year
ending September 2012 (compared to the same period in 2011).

This moderate growth in expenditure was primarily sourced from China, which increased
16 per cent to $4.1 billion. Spending by Chinese visitors represented around 61 per cent
of the $932 million increase in total international visitor expenditure in the year ending
September 2012, compared to year ending September 2011.

In contrast, growth in visitor expenditure from other Asian markets rose 0.5 per cent, while
the expenditure from non-Asian markets grew by 2.3 per cent in the 12 months to
September 2012, compared to the previous year.
2.4 Domestic overnight travel

Domestic overnight trips were up 4.1 per cent in the year ending September 2012,
compared to the previous year, but nights were up by a stronger 4.5 per cent. The
growth in the number of day trips continues to be robust, increasing 10.6 per cent to 174
million trips over the same period.

Domestic overnight visitor expenditure rose by 7.0 per cent in the 12 months to
September 2012. Growth in domestic day visitor expenditure was strong, increasing by
16.4 per cent (or $2.5 billion) to $18.1 billion in the year ending September 2012
(compared to the same period in 2011).
2.5 Outbound travel by Australian residents

The growth in outbound travel from Australia has slowed noticeably, but remains quite
high (up 7.4 per cent) in the last 12 months to June 2012.

Total expenditure by outbound visitors increased by around $3.8 billion in 2011–12
compared to 2010–11.
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Tourism industry progress towards 2020 Tourism Industry Potential

As measured by the sum of international and domestic overnight visitor expenditure, this
indicator grew by 5.7 per cent (or $4.2 billion) to $77.6 billion in the year ending
September 2012 compared to the same period in 2011 (refer Table 2 and Figure 1).

For the September quarter 2012, compared to the same quarter in 2011, growth slowed
noticeably to around 0.8 per cent.
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Table 2 Tourism expenditure against 2020 Tourism Industry Potential
Tourist expenditure against 2020 Tourism Industry Potential
Year
ending
Sept 2012
Change in YE
Sept 2012 on YE
Sept 2011
$ million
Per cent
Domestic overnight
50,439
International
27,176
Total overnight expenditure ($ million)
77,615
Domestic (same) day, $ million
18,099
Total expenditure
87,249
7.0
3.6
5.7
16.4
8.1
Tourism 2020 Industry Potential
Lower limit
77,337
Upper limit
84,135
Source: TRA IVS and NVS data
Figure 1 Tourism 2020 Industry Potential
$ billion, 2020 Tourism Industry Potential:
nominal Boosting overnight expenditure over the 2009-2020 period
140
120
$ billion,
nominal
140
Upper limit - $140b in 2020
120
Lower limit - $115b in 2020
100
100
80
80
60
60
40
20
Potential: $77.6b in YE Sept
2012, which remains at the
lower end of the 2020
20
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
YE 9/12
2012
2013
2014
2015
2016
2017
2018
2019
2020
0
40
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4
Performance by state and territory
TRA data for destination visitor expenditure is modelled by state and territory on a rolling
annual basis. Table 3 presents a detailed picture of changes to key tourism demand and
supply indicators for the year ending September 2012 (compared to the same period in
2011).
Table 3 shows the following key trends:

Total visitor expenditure increased strongly in Western Australia and the Northern Territory
(up 16.0 per cent and 13.8 per cent, respectively), with moderate to low growth in other
states and territories.

The strong (16.4 per cent) growth in expenditure by day visitors at the national level was
reflected in solid growth across all states and territories.

Strong expenditure growth by overnight visitors to Western Australia and the Northern
Territory underpinned a 41 per cent growth in overnight expenditure at the national level.

International visitor expenditure rose strongly in Tasmania (up 21.5 per cent) and Western
Australia (up 18.1 per cent), with moderate growth in most other states and territories.
The Northern Territory and South Australia, however, experienced declines in international
visitor expenditure.

In the mining boom states of Western Australia and Queensland, accommodation
demand outstripped supply with occupancy rates increasing strongly by 2.5 per cent
and 2.1 per cent respectively in the year ending September 2012 (compared to the
same period in 2011). Correspondingly, available room yields in these states increased by
13 per cent in Western Australia and 6.6 per cent in Queensland.

Changes to international seat capacity were varied across the states and territories. It
rose strongly (up 13.9 per cent) in Adelaide, but contracted sharply (down 20 per cent) in
Perth. International seat capacity to Darwin International Airport also declined strongly
(down 14.2 per cent).
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Table 3 Tourism industry progress in year ending September quarter 2012 on year ending September
quarter 2011 ( per cent)
NSW
Vic
Qld
SA
WA
Tas
NT
ACT
Australia
Visitors
Domestic day
7.2
11.4
15.5
12.3
5.5
17.1
15.5
-0.6
10.6
Overnight
0.8
4.7
4.8
3.1
12.0
3.4
21.3
9.7
4.1
Intrastate
2.7
8.5
8.8
6.7
13.8
-0.2
30.6
Interstate
-3.1
-3.0
-3.5
-3.1
4.2
8.3
15.3
9.6
-1.6
International
2.2
3.3
1.0
-10.8
2.1
-2.8
-13.7
3.7
3.1
Domestic
0.7
3.2
7.3
-2.5
13.6
13.4
10.0
3.3
4.5
International
Total
1.4
1.0
4.6
3.8
1.9
5.3
8.5
1.0
26.4
19.6
13.6
13.4
-7.1
3.2
19.8
10.2
5.8
5.0
Domestic day
Overnight
9.3
1.6
18.8
5.8
24.9
11.7
21.2
-1.8
7.1
17.9
20.9
8.1
57.2
17.7
9.7
3.6
16.4
7.0
International
Total
2.5
3.4
4.1
8.2
1.7
12.2
-9.9
1.4
18.1
16.0
21.5
11.9
-10.4
13.8
4.8
4.8
3.6
8.1
Holiday
0.5
10.2
10.3
8.3
22.1
4.9
13.9
4.8
7.6
12.7
13.5
21.2
3.9
23.9
-0.4
10.2
9.5
8.7
35.3
12.1
6.7
23.5
-7.0
33.2
63.1
2.0
17.2
4.5
25.8
24.7
14.8
-5.4
13.0
4.7
-16.7
13.6
Holiday
-2.8
7.5
9.0
-1.3
12.4
-0.5
52.9
n/a
-1.6
VFR
13.1
10.7
19.8
11.6
12.3
4.1
50.5
n/a
4.4
Business
-2.1
3.0
-9.8
28.8
32.3
-3.5
16.7
n/a
-3.9
-3.6
15.7
16.3
3.5
-12.9
-15.3
-3.3
n/a
-13.6
Holiday
-3.3
-6.5
1.6
-0.8
-2.1
6.2
14.8
-2.1
4.3
VFR
3.9
1.9
2.3
-12.4
17.7
24.1
12.1
21.2
13.9
Business
-6.8
1.9
-20.4
-1.6
0.0
10.5
20.3
13.4
2.1
Other
-22.7
-23.1
6.2
18.9
-3.6
-7.5
-46.5
-21.4
4.0
Holiday
0.1
2.8
0.8
-15.1
-6.4
-3.8
-13.4
0.7
2.0
VFR
8.9
10.2
-0.5
-8.8
1.1
10.0
-21.5
16.5
4.9
Business
-1.8
-1.9
8.2
-0.8
3.6
-6.6
2.9
1.1
3.3
Employment
4.0
-2.2
-3.6
-9.2
5.2
-4.5
-62.7
-10.6
-0.6
Education
7.5
2.3
14.6
6.6
56.8
-38.9
5.7
-6.4
12.5
Other
-7.1
-10.4
-0.9
-45.5
22.9
-87.5
-25.8
19.1
0.3
Rooms
-0.4
3.3
-0.3
-0.4
-0.3
-0.1
3.0
1.3
0.5
Yield
3.6
1.1
6.6
3.1
13.0
1.4
3.8
2.3
4.8
Occupancy
rate
0.2
-0.2
2.1
0.4
2.5
-0.3
0.9
-1.8
0.9
Domestic
2.6
14.0
8.0
11.7
7.5
18.9
-3.2
-3.3
10.0
International
-0.8
1.5
1.1
2.3
1.2
4.2
13.9
-0.1
-20.1
12.4
-1.4
-14.2
0.8
7.7
1.2
3.1
n/a
7.0
Visitor nights
Visitor expenditure
Visitors by purpose
Domestic day
VFR
Business
Other
Dometic overnight
Intrastate
Other
Interstate
International
Accommodation
Aviation seat capacity
Leisure discretionary
spending*
-
-
* Represents spending by households on recreation and culture and hotels, cafes and restaurants
Note: Total international visitor expenditure at national level includes all prepaid airfares and packages,
but excludes expenditure on prepaid airfares and packages at state and territory level due to difficulty
in allocating these expenditures to the states and territories.
Sources: TRA IVS and NVS data, BITRE aviation data and ABS National Accounts
8
Other indicators
For the year ending September 2012 (compared to the same period in 2011);

Mirroring the solid growth in the Australian economy, total household final consumption
expenditure (HFCE) in real terms rose to just below the ten-year average at 3.4 per cent.

Discretionary spending on leisure grew strongly in the mining boom states of Western
Australia (up 12.4 per cent) and Queensland (up 4.2 per cent) and less strongly in other
states and territories.

As a result of the solid growth in spending on leisure travel across all sectors, Australian
tourism’s share of 10.4 per cent of Australian household consumption in 2010–11 improved
slightly in 2011–12 to 10.5 per cent.
5
Conclusion
After a period of solid growth for most visitor demand and expenditure measures, growth
slowed in the September 2012 quarter. Despite this slowing, the performance of Australia’s
tourism industry in the 12 months to September 2012 has been quite strong with the following
key trends:

The number of international visitor arrivals grew at 3.1 per cent to reach 6.0 million.

After New Zealand, China is now Australia’s second largest inbound market. Overnight
visitor expenditure increased 5.7 per cent to reach $77.6 billion and remains on target to
reach the lower end of the Tourism Potential by 2020.

The growth in outbound travel by Australian residents has slowed, but was still 7.4 per cent
in the year ending June 2012.

Domestic aviation capacity continues to grow at 10 per cent but international capacity
rose by 1.2 per cent.

Despite the fact that occupancy rates and yields continue to grow, there has been little
growth in accommodation supply.
Tourism Research Australia
Department of Resources, Energy and Tourism
GPO Box 1564
Canberra ACT 2601
ABN 46 252 861 927
Email: [email protected]
Web: www.ret.gov.au/tra
Publication date: January 2013
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be required to reuse the material.
This work should be attributed as TRA Quarterly, Issue 1 September 2012, Tourism Research Australia, Canberra.
Enquiries regarding the licence and any use of work by Tourism Research Australia are welcome at [email protected]
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