Industry Potential… 2020 a scenario for growth

WHY IDENTIFY ’S The Australian tourism industry TOURISM POTENTIAL? needs to focus on improving its Tourism is a vital industry for Australia. Tourism generates $94 billion in spending. As a performance and competitiveness. sector, tourism contributes $34 billion in GDP bn – that’s 2.6% of Australia’s total GDP. Tourism The 2020 Tourism Industry $94 is Australia’s largest services export earner and amount of spending tourism generates provides around half a million jobs. Potential provides a vision For tourism to continue to play a significant that the industry and all and sustainable role in the economy, the industry needs to be more competitive and levels of government can rally productive. Over the past decade, Australia’s international competitiveness has not kept behind, a unifying direction pace with global trends and this has translated bn into a decline in international market share. to improve performance and $34 amount tourism contributes to the economy Domestic tourism’s visitor numbers have decreased with increasingly maximise opportunities. choosing to travel abroad rather than at home. The Australian Minister for Tourism, Hon. the value of targets and goals1. Through the Martin Ferguson, AM MP launched the development of the Potential, the Australian National Long-Term Tourism Strategy tourism industry’s opportunities and (Strategy) in December 2009. The Jackson challenges have been quantified. This is critical million Report, an input into the Strategy, identified for a successful roll-out of the Strategy. 0.5number of tourism jobs

1 “Governments and industry need to set targets for the industry and develop plans based on Australia’s competitive (Tourism Satellite Account 2009/10 advantage and priority destinations” (The Jackson Report, 2009) Document updated March 2011)

THE POTENTIAL – WHAT WILL A SUCCESSFUL AUSTRALIAN TOURISM INDUSTRY LOOK LIKE IN 2020?

Potential for overnight tourism expenditure by 2020 WHAT IS IT?

$150 The 2020 Tourism Industry Potential is a rallying call to Australian industry and governments to focus on increased returns from the tourism industry. The Potential is $130 focused on overnight visitor expenditure. By 2020 the Potential is estimated to be between Trend $115 billion and $140 billion in overnight Potential expenditure. Adding in day trips, total $110 expenditure is estimated to be between $135 billion and $160 billion. A range approach has been used to allow for various scenarios. The upper end of the range $90 represents a path of growth where the tourism $Billions, nominal $Billions, industry has achieved market shares in source markets better than those achieved earlier this decade, while the lower end of the range allows $70 for the impact of a range of shocks (economic, health, terrorism) or current market shares.

HOW IS IT MEASURED? $50 Overnight expenditure (nominal dollars) is the primary measure of the Tourism Industry Potential. Day trips has been kept as a relative $30 share of expenditure for the lower estimate and held constant for the upper estimate. 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2020 Tourism Industry Potential • November 2010 What does it mean?

WHAT DOES IT MEAN FOR DOMESTIC AND TOURISM INDUSTry potential total overnight expenditure at 2020 INTERNATIONAL TOURISM? Domestic tourism currently accounts for 62% of all overnight expenditure in Australian tourism. Given higher growth rates of inbound tourism over the next 10 years, by 2020 domestic UK tourism expenditure is expected to be 55% Germany Korea of total tourism spend and international China France expenditure is expected to be 45%. USA Japan domestic versus international India $expenditure

Singapore

International 62% International 55% 38% Domestic 45% Domestic NZ

Key markets in the analysis are summarised Tourism Industry Potential – 2009 Projected 2020 opposite. The table shows where expenditure incremental growth in expenditure at 2020

growth will come from and will be the focus Band lower Upper Band lower Upper of effort. China stands out with strong growth from a large base of visitors. China $4.6B – $6.3B $1.2B – $1.7B UK $2.1B – $3.3B India $1.1B – $1.5B USA $2.2B – $3.2B Malaysia $1.1B – $1.5B Sth Korea $1.6B – $2.2B Germany $0.8B – $1.3B NZ $1.5B – $2.2B France $0.6B – $0.8B Japan $1.2B – $1.8B

WHAT DOES IT MEAN FOR THE ECONOMY? WHAT DOES IT MEAN FOR ACCOMMODATION? WHAT DOES IT MEAN FOR LABOUR AND SKILLS? Both the low and high Potential scenarios Increased investment and utilisation of imply significant additional economic benefits current capacity is required to meet the Labour and skills are seen as the greatest at 2020. Potential, with estimates of between 40,000 supply side challenge in terms of growing Achievement of the upper band of the and 70,000 rooms needed (at occupancy rates the Australian tourism industry. Significant Potential will mean: of 75%). If yields and occupancy rates increase, growth in capacity and productivity is required. less reliance on volumes is required. New It is estimated that jobs growth of between • a doubling of overnight expenditure from rooms will be needed mainly in our capital 12% and 32% will be needed for the industry $70 billion in 2009 to as high as $140 billion cities, with improvements on quality rather to grow; that is between 56,000 to 152,000 in 2020 than quantity the focus for regional Australia. additional jobs (or between 1 and 3 times • an increase in tourism’s contribution to GDP industry’s long run average growth). If yields from 2.6% in 2009 to up to 3.0% in 2020 increase, demand on jobs will be lower. WHAT DOES IT MEAN FOR AVIATION? • an increase in tax revenues from tourism Aviation capacity will need to grow if Australia from $9.3 billion in 2009 to as high as $14.5 is to meet the Potential. International aviation billion in 2020 capacity will need to grow between 40% and • Increased net exports of up to $6.7 billion. 50% and domestic aviation capacity will need to grow between 23% and 30%. While airport master plans and Bureau of Infrastructure Transport and Regional Economics aviation forecasts are higher than these estimates, work will still be needed to achieve these levels of growth, including infrastructure investment.

Sources: BDA Marketing Planning, Access Economics WHERE TO FROM HERE? Implementing the Potential will be a stepped approach with deliverables set deliverables by each phase set at each stage of implementation: of implementation 2020 $150

Trend 2018 2019 Potential $130 achieving $110 the potential

$90 $Billions, nominal $Billions,  The unity and focus of the industry and government $70 will finally result in “Achieving Australia’s tourism Potential” – $50 a competitive, profitable industry with a bright future for the benefit of $30 all Australians. 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

seeing the results

2015 2016 2017

With a strong foundation in place, we will start “Seeing the results”, learning from experience and using these insights to refine what we do.

setting the foundations

2011 2012 2013 2014

“Setting the foundation” will involve putting the fundamentals in place, including addressing important supply issues needed to meet the Potential such as increased investment in the industry, labour and skills initiatives and working with aviation partners to ensure sufficient capacity on relevant routes; and demand issues including identifying and targeting best prospect customers for Australian tourism, and developing the products and services these customers want.

WHAT DOES IT MEAN FOR TOURISM’S STRATEGIC FOCUS? To achieve the Potential, key areas of strategic On the demand side, Tourism Australia is focus will include: underway with a dedicated strategy that aims to achieve the upper band of the Potential. • Growing market share Key areas of strategic emphasis include: • Improving yield • Focus on the consumer – a global consumer • Improving dispersal that is predisposed to Australia and • Strategic aviation growth spends more • Attracting investment for a more appealing • industry development – using customer Australia for tomorrow understanding to influence investment and quality (National Tourism Accreditation • Improving capital efficiencies Framework) • Building labour and skills capacity • Aviation partnerships – that will help grow and productivity. profitable capacity The supply side strategic focus is aligned with the • A dedicated China Plan – recognising China’s National Long-Term Tourism Strategy and needs importance to Australia’s long term future to be underpinned by microeconomic reform. and building on more than a decade of To progress the National Long-Term Tourism foundation work in China Strategy, the Tourism Ministers’ Council • A continued global markets strategy and established nine Working Groups to implement partnership with Australian industry to the reforms necessary to increase Australia’s achieve the Potential. productive capacity. WHAT DOES IT MEAN FOR YOU? WHO IS ON BOARD? It means being part of a bigger picture for There has been significant consultation in Australian tourism, a competitive, flourishing, the development of the 2020 Tourism Industry profitable industry that is a world leader. Potential. This included all state and territory tourism organisations, the National Long-Term It means: Tourism Strategy Working Groups, industry • Having a competitive mind set – associations and many industry leaders. understanding and maximising our National tourism organisations – The Tourism competitive advantage. and Transport Forum, Australian Tourism • Understanding the characteristics of the Export Council, National Tourism Alliance consumer and using research to drive – and the businesses and associations they everything that we do. represent are highly supportive of the plan to deliver the Potential. • Marketing and distributing Australian tourism products in a coordinated way, At the October 2010 Tourism Ministers’ Council working with partners that allow us to meeting, federal, state and territory tourism leverage activity so that Australia receives ministers committed to working towards a higher return from its investment. achieving the 2020 Tourism Industry Potential. The Council also agreed to progress the • Developing products that our customers National Long-Term Tourism Strategy towards want and increasing investment where it reaching Australia’s 2020 Tourism Potential is needed. and called on industry and government to • Governments and industry working work together to address demand and supply- cooperatively to increase investment side challenges which could limit Australia’s and skills - ensuring we have the right tourism industry reaching its Potential. infrastructure in place, that we have a healthy aviation environment and that we have a service oriented labour force that can meet the needs of our customers.

HOW DO YOU GET INVOLVED? The 2020 Tourism Industry Potential work Websites is an initiative of Tourism Australia with the For information on addressing quality issues: assistance of the Department of Resources, www.ret.gov.au/tourism/policy/national Energy and Tourism working closely across all tourism accreditation framework/Pages/ levels of government and industry. NationalTourismAccreditationFramework.aspx If you want more information on the 2020 For information on the National Long-Term Tourism Industry Potential please contact: Tourism Strategy: Corporate Communications, Tourism Australia www.ret.gov.au/tourism/tmc/nltts/Pages/ [email protected] default.aspx Tourism Division, Department of Resources, For information on characteristics of Energy and Tourism the consumer: Phone +61 2 6213 6745 www.ret.gov.au/tourism/tra/Pages/default.aspx www.tourism.australia.com.au

2020 Tourism Industry Potential • November 2010 Tourism Industry Potential… Government and industry working together to 2020 improve performance and maximise opportunities

Federal, State and Territory Tourism Ministers committed to working towards achieving the 2020 Tourism Industry Potential – a scenario for stronger growth Tourism Ministers’ Council communique , October 2010

“The 2020 Potential provides a challenge “In 2008, the National Tourism Alliance “The 2020 Potential sets an ambitious to the accommodation sector to make member associations identified in their target for our sector but one that is decisions that will allow us to boost tourism strategic planning the importance achievable if we work collaboratively market share that will return us to the type of goals and measurement to the future across all parts of the tourism industry. of growth we enjoyed in the lead-up to direction for tourism. When we were The Australian Hotels Association looks the 2000 Olympics. The HMAA members approached to become involved in the forward to working with our members on are ready and willing to provide the extra Potential for tourism in Australia, the initiatives to drive investment to ensure quality beds needed to greatly boost the National Tourism Alliance jumped at the Australia has relevant accommodation economic benefits of tourism, and look chance, seeking active engagement as a and services to support achievement of forward to doing this collaboratively with partner in the discussions about what is the 2020 target of $140 billion in tourism our industry partners.” possible for Australia to achieve. related expenditure by 2020.” The work on the Potential has been well researched, and is strongly supported by Lorraine Duffy the National Tourism Alliance as it provides Des Crowe, Chief Executive, Chief Executive HMAA an opportunity for us to work together Australian Hotels Association towards a common goal. “

Col Hughes, Chairman, National Tourism Alliance “Our sincere thanks for the work “The industry capability project is the right “Tourism has long suffered for a lack of undertaken on the 10 year industry project at the right time in the industry’s authoritative data and analysis of its wider potential launched at the Tourism history. It provides the industry with an economic benefits to demonstrate to policy Directions conference. This was a very aspirational mission, while the Long–Term makers and investors the advantages important piece of work for the tourism Tourism Strategy seeks to provide the of this sector. This commendable work and hospitality industry that was long pathways to achieving that mission. I provides this platform and should inspire overdue. The future of our industry can congratulate Tourism Australia for having greater effort and performance from the only be assured through the development the vision and confidence to propose the Australian tourism community.” of strategies around key metrics. For the project and I am sure the industry and first time this is now possible based on a other stakeholders will harness their solid data platform.” collective energies to support it.” Christopher Brown Former Managing Director Tourism and Transport Forum John Hart, Chief Executive Officer, Matthew Hingerty Restaurant and Catering Association Former Managing Director Australian Tourism Export Council

2020 Tourism Industry Potential • November 2010