TRA Quarterly, Issue 2: December 2012

Executive summary

2012 performance Growth was moderate for most key visitor demand and expenditure categories over the year to December 2012. Overall, total visitor expenditure rose 4.9 per cent1 (or by $4.5 billion) to $95.7 billion.

2012 Tourism Industry Potential

Over the same period, tourism’s main policy performance indicator for overnight visitor expenditure, the 2020 Tourism Industry Potential (the Potential), rose 3.6 per cent. This measure has now risen by $6.0 billion since 2009 and is tracking slightly below the path for the lower bound of the Potential.

Domestic tourism expenditure

Growth in domestic tourism expenditure was moderate in 2012, rising 5.3 per cent (or by $3.4 billion) to $68.2 billion. Domestic overnight visitor expenditure rose by 3.4 per cent (or by $1.7 billion), while the domestic day sector continued its recent upward trend (up $1.8 billion, or 10.7 per cent), to $18.2 billion. This growth in domestic tourism expenditure was slightly higher than the average annual growth achieved in the preceding two years of 2.9 and 4.6 per cent per year respectively.

Inbound tourism arrivals and expenditure

The continuing strength of the Australian dollar negatively impacted on Australia’s inbound tourism performance, both in the past year and since 2009. During 2012, visitor arrivals rose 5.0 per cent to reach 6.1 million. Spending by international tourists travelling to and in Australia increased by 4.0 per cent (or by $1.1 billion) to $27.5 billion in 2012 (compared to 2011). Similar to recent years, the continued strong growth in visitation from China provided around half of the $1.1 billion increase in total international visitor expenditure in 2012.

Overall, international visitor expenditure has only increased by $1.6 billion (or by 6.2 per cent) since 2009, which represents only 4 per cent of the additional $37.5 billion growth required to meet the Tourism 2020 goal. The $1.5 billion increase from Chinese visitors means that nearly all of the growth in international visitors has been achieved from this market.

1 All dollar and dollar changes are in nominal terms.

1 Supply side indicators

Employment

The latest data from the Australian Bureau of Statistics’ (ABS) Tourism Satellite Account shows that tourism employment increased by 1,600 jobs (or by 0.3 per cent) to 531,900 jobs in 2011–12. With stronger growth in total employment in Australia (1.1 per cent), tourism’s share of total jobs decreased slightly to 4.6 per cent in 2011–12.

Aviation

Over the past few years, both domestic and international seat capacity servicing Australian destinations has been strong. In 2012, domestic aviation in Australia again rose strongly (up 6.9 per cent), but slower growth was evident in international aviation capacity to Australia (up 1.9 per cent in 2012). However, there was a gradual recovery towards stronger growth in the second half of 2012.

Accommodation

The number of rooms in large-scale tourist accommodation establishments increased by 2,700 in 2012 (compared to 2011) to 229,300 rooms. Most of this growth occurred in Victoria (and mainly in Melbourne), with modest growth in most other Australian states. Other indicators for pipeline developments in the sector suggest—at best—low growth in the coming year.

More encouragingly, accommodation takings rose 5.1 per cent to $9.0 billion in 2012 (compared to 2011), featuring increases in yields per available rooms in all states. The strongest returns occurred in the mining boom states of Western Australia (up 8.8 per cent), Northern Territory (up 6.8 per cent) and Queensland (up 6.2 per cent).

Productivity and investment

Latest indicative data for these measures released by the ABS provide a mixed story for tourism- related industries:

 Partial indicators suggest labour productivity in tourism-related industries increased more strongly than the market sector average for the period from 2007–08 to 2011–12.

 Investment volume in tourism-related industries has increased 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.

2 Tracking Tourism 2020

This edition of TRA Quarterly features an update on the Tourism Scorecard, and the progress that key supply and demand indicators have made since 2009, following the development of the 2020 Tourism Industry Potential. This information has been included to update statistics for the 2012 calendar year, and includes revisions that were made to TRA’s National Visitor Survey in the June quarter 20122.

Overall, there has been a mixed story for each of these indicators with strong progress towards the 2020 goals being made to domestic and international aviation capacity and steady growth in tourism jobs, up 12 per cent on 2009 estimates.

Figure ES1 Progress made to date towards Tourism 2020 for tourism’s key demand and supply indicators

Aviation capacity- Domestic 61

Aviation capacity- International 34

Potential - Domestic 14

Labour 12

Potential - All sectors 9

Accommodation - Room supply 7

Potential- International 4

0 20 40 60 80 100 Percentage change towards Tourism 2020 objectives

Sources: ’Potential’ data for tourist expenditure sourced from TRA surveys Primary sources for: aviation data - The Bureau of Infrastructure, Transport and Regional Economics accommodation data - ABS Cat. No. 8635.0, Tourist Accommodation Australia tourism labour data - ABS Cat. No. 5249.0, Australian National Accounts, Tourism Satellite Account

2 A short assessment of the impact of these revisions is contained at Appendix A.

3 1.0 Introduction This is the second issue of Tourism Research Australia’s TRA Quarterly, providing a quarterly update on Australian tourism industry performance. It synthesises data and other information 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 (ABS).

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. The TRA Quarterly 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

 aviation (domestic and international), accommodation and labour

 investment, profitability and productivity.

This edition of TRA Quarterly tracks the latest performance of each of these tourism indicators as well as providing a brief discussion of the broader macroeconomic environment and other related statistical information which has influenced this performance.

This update includes a discussion of revisions to historical estimates for domestic overnight visitors in the June quarter 20123 caused by an incorrect data file being delivered to TRA for processing. Overall, this revision meant that domestic overnight visitor expenditure was $1.0 billion (or 2 per cent) lower in 2011–12, than was reported in SOI 2012.

TRA is releasing an update of the Tourism Scorecard, in conjunction with the release of this report. The scorecard tracks tourism’s performance over the past 12 months to December 2012 for most supply and demand measures.

3 For more information on these revisions, please refer to Appendix A. Further details on the revisions are available on the TRA website: www.tra.gov.au. For more information or statistics, please contact TRA’s Statsline at [email protected].

4 2 The backdrop

2.1 Australia is still a strong performer in a patchy but slowly recovering global economy (except for parts of Europe)

A key driver for Australian tourism performance is the global economic environment. In 2012, most large international economies were continuing to underperform, while Australia remained robust with its GDP increasing by 3.6 per cent, slightly above its long-term average growth of 3.3 per cent4.

The global financial crisis hangover of high public debt and high unemployment continues to drive recessionary conditions in parts of Europe. Australia’s leading European tourism source markets such as United Kingdom, Germany and France—which have been better performers in the European Union in recent years—re-entered a period of near zero growth, if not recessionary conditions, at the end of 2012.

Table 1 Macroeconomic environment in Australia’s top 10 inbound markets

GDP Exchange Consumer growth rate Prices Change, Latest quarter Value at latest Latest Change, Latest 12 compared to a quarter quarter latest quarter months, year ago compared to compared to compared to a year ago a year ago the previous 12 months Per cent Per cent Per AU$ Per cent Per cent

New Zealand* 2.3 2.0 1.26 -3.1 1.3 China 7.8 7.9 6.53 1.5 2.1 United Kingdom 0.0 0.0 0.65 0.5 2.2 United States of America 2.2 1.9 1.04 2.6 2.6 Japan 1.9 0.0 84.2 7.7 0.0 Singapore 1.2 1.0 1.27 -2.5 3.9 Malaysia 5.3 5.5 3.17 -0.5 1.6 South Korea 2.0 1.5 1132 -2.4 1.9 Hong Kong 1.4 2.3 8.0 2.3 3.8 India 5.1 4.6 56.2 8.2 9.6 Germany/Euro 0.7 0.5 0.8 6.7 2.1 Australia 3.6 3.1 2.2

** Change in Australian dollar against respective country’s currency Source: International Monetary Funds' International Finance Statistics, Consensus Forecasts and Reserve Bank of Australia. OANDA is the primary source for exchange rates.

4 Long-term refers to average growth over a 30-year period to 2012.

5 Although growth in the United States remained weak in the December quarter 2012 (up 1.9 per cent), other indicators suggest the US economy is gradually improving, with rising housing starts and prices, the US stock market again reaching record levels, and the US unemployment rate falling to a three-year low.

Much of the increased optimism in the global economy (excluding Europe) is sourced from slightly more positive growth prospects from China. After the growth rate of China’s economy slowed by more than expected through the third quarter of 2012, it has again gathered momentum. In the last three months of 2012, the output rose 7.9 per cent, bringing the full-year expansion to 7.8 per cent. However, concerns still remain regarding risks to higher growth, particularly the property sector, while latest indicators for China’s manufacturing sector and electricity consumption suggest weaker growth is more likely in coming quarters.

After rebounding quickly following the worst of the GFC in 2009, latest data suggest a mixed story for growth in other Asian markets. While growth in neighbouring Indonesia and Malaysia remains solid, India’s economic growth fell to 5.1 per cent in 2012, its lowest rate in ten years.

2.2 Global (international) tourism performance – growing at near-trend rates in 2012

The United Nations World Tourism Organization (UNWTO) reported in its latest Tourism Barometer (released January 2013) that international travel (overnight visitors) grew by 4.0 per cent globally to over 1.0 billion in 2012 (which is around the long-term growth rate).

Growth in international visitation to Australia was 4.6 per cent in 2012, which suggests a modest improvement in Australia’s share of global international travel at around 0.6 per cent.

By region, the strongest growth occurred in Asia and the Pacific, and featured a very strong recovery in travel to Japan (up 35 per cent) following the Tohoku earthquake/nuclear disaster in March 2011. Other countries in the region which had strong increases to international visitation were Taiwan (up 20 per cent), Thailand (up 16 per cent) and South Korea (up 14 per cent). On the other hand, international travel to China increased by only 0.3 per cent in 2012. UNWTO (2013) reports that travel to China ‘has not really been able to improve much on the bumper results of 2010, when it hosted EXPO in Shanghai’.

International travel dropped sharply during the worst phase of the GFC in 2009 (an exception was Australia which reported unchanged levels at that time) but travel to most markets now exceed their pre-GFC levels. By region, the UNWTO reports that growth in international arrivals is expected to continue at near-trend rates in 2013, but at a slightly lower pace of between ‘3 to 4 per cent’.

6 There has also been a slight improvement in Australia’s ranking as a tourism destination. According to the latest bi-annual report on travel and tourism competitiveness indexes (TTCI) released by the World Economic Forum (WEF, released February 2013), Switzerland and Germany remain the top ranked countries, while the world’s largest international destination (in terms of visitation), France, fell from 3rd in 2011 to 7th in 2013. Of the other top 20 countries previously listed by WEF, Japan (from 22nd in 2011 to 14th in 2013) and New Zealand (from19th in 2011 to 12th in 2013) recorded the strongest upward movements in their rankings.

Australia improved its ranking from 13th to 11th in 2013, overtaking Iceland and Hong Kong SAR. In this ranking, Australia scored highly in terms of air transport infrastructure (4th) and in general tourism infrastructure (20th). WEF (2013) noted that Australia has one of the most advanced visa policies in the world (especially with respect to electronic visa processing) at a time when a number of countries are moving in the opposite direction.

On the downside, and partially reflecting Australia’s long haul status, Australia’s price competitiveness ranked 137th (of 140 countries) in 2013, with key international markets such as Italy, Switzerland and the United Kingdom also lowly ranked for this measure.

2.3 Australian dollar – continues to detract from growth

Despite mining commodity prices easing back from the record highs of 2011, the Australian dollar continued to trade well above parity against the US dollar for the December quarter and for 2012 as a whole. It also reached record levels against the Euro in 2012.

At these levels, the Australian dollar continues to detract from the price competitiveness of Australian exports (including inbound tourism), more so for those industries that are highly trade-exposed such as tourism. Conversely, the high dollar boosts the price competitiveness of imports. For tourism, this also has the impact of reducing the price competitiveness of domestic tourism relative to Australians travelling overseas.

7 Figure 1: The Tourism Scorecard, comparing performance in 2012 to 2011

Source: TRA and TRA calculations

8 3 Demand indicators – visitor expenditure and activity

3.1 Total visitor expenditure

As shown in the updated Tourism Scorecard (Figure 1), all visitor expenditure5 travelling to and within Australia rose 4.9 per cent6 (or by $4.5 billion) to $95.7 billion. Growth in the main travel sectors (inbound, domestic overnight and domestic day) was variable, with the strongest growth recorded for the smallest sector, namely, day travel, where expenditure increased 10.7 per cent (or $1.8 billion) to $18.2 billion.

Expenditure growth in the other travel sectors was more modest in 2012 (compared to 2011). Domestic overnight expenditure rose 3.4 per cent (or by $1.7 billion) to $50.0 billion, while international visitor trip expenditure (including prepaid expenditure on travel to Australia) rose 4.0 per cent (or by $1.1 billion) to $27.5 billion.

3.2 Tourism industry progress towards the 2020 Tourism Industry Potential

As measured by the sum of international and domestic overnight visitor expenditure, the Tourism Industry Potential (the Potential) increased 3.6 per cent (or $2.7 billion) to $77.5 billion in 2012 (compared to 2011, refer Figure 2).

Since 2009, the Potential has increased by 8.4 per cent (or by $6.0 billion) and is tracking slightly below the lower limit of the 2020 Potential range. The Potential has achieved around 9 per cent towards its ‘ambition’ of $140 billion by 2020.

Figure 2 2020 Tourism Industry Potential

$ billion, 2020 Tourism Industry Potential: $ billion, nominal Boosting overnight expenditure over the 2009-2020 period nominal 140 140 Upper limit - $140b in 2020

120 Lower limit - $115b in 2020 120

100 100

40 Potential: $77.5b in 2012, 40 which is just below the lower 20 end of the 2020 Potential range 20

0 0 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 0 0 0 0 0 0 0 0 0 0 0 9 0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Source: TRA Surveys

5 TRA’s release of the National Visitor Survey Data for the December quarter 2012 included corrections for errors in the survey results in the June quarter 2012. A summary of these errors are at Attachment A. 6 All dollar changes are in nominal terms unless otherwise stated.

9 3.3 International travel to Australia – increasing despite the weak backdrop

Despite the continued weak economic backdrop, international visitors to Australia continue at record levels, up 4.6 per cent to 6.1 million in 2012. Stronger growth was evident in the December quarter 2012 (up 5.9 per cent), compared to the same quarter in 2011.

With similar growth occurring in global international travel in 2012, Australia’s share of world international travel remained at around 0.6 per cent in 2012.

In 2012, China overtook the United Kingdom to become the second largest inbound market for Australia in terms of visitor arrivals. Growth in this market increased 16 per cent (or by 84,000) in 2012 to represent nearly a third of the 269,200 growth in total international visitor arrivals over the past year.

Chinese visitors contributed more than 50 per cent of total additional inbound visitor arrivals for holidays and 17 per cent for Visiting Friends and Relatives (VFR) during 2012. These two categories of purpose of visit (holidays and VFR) constituted more than 85 per cent of the growth in total arrivals during 2012 compared to 2011.

Among other purposes of visit, inbound travel for business rose 2.8 per cent (or 24,449 visitors). Of this increase, 43 per cent of visitors were from the United States of America (up 9.3 per cent) and 21 per cent were from the United Kingdom (up 9.4 per cent). Inbound visitors for employment purposes also grew strongly (up 7.5 per cent or by 15,110 visitors) in 2012 over the previous year.

Inbound visitors for the purpose of education declined slightly (down 0.9 per cent) in 2012, (compared to 2011) due mainly to decline in visitors from India (down 19.2 per cent) and the United States of America (down 16.6 per cent).

3.4 Total international visitor expenditure – growth remains moderate

As stated earlier, international visitor expenditure increased by 4.0 per cent to $27.5 billion in 2012 (compared to 2011). This moderate growth in expenditure was again primarily sourced from China, which increased 13 per cent to $4.2 billion. Spending by Chinese visitors represented nearly half (around 46 per cent) of the $1.1 billion increase in total international visitor expenditure in 2012.

There was strong growth in visitor expenditure from Japanese tourists reflecting recovery in this market (up 15 per cent) following the earthquake/nuclear disaster that occurred in March 2011. Of the other leading markets, expenditure growth was strong from international visitors from the United States of America (up 8.5 per cent) and moderate from New Zealand visitors (up 5.4 per cent) in 2012 compared to 2011.

This growth was partly offset by falls in visitor expenditure from India (down 9.3 per cent), South Korea (down 3.8 per cent), and the leading European markets of Germany (down 4.8 per cent) and France (down 6.1 per cent).

3.5 Domestic overnight travel – also increased moderately

10 Domestic overnight trips were up 3.6 per cent in the year ending December 2012, compared to the previous year, but nights were up by a stronger 4.1 per cent.

The growth in the number of day trips continues to be robust, increasing 7.9 per cent to 174 million trips over the same period.

3.6 Outbound travel by Australian residents – growth slowed in second half of 2012

After increasing strongly in recent years, the growth in outbound travel slowed noticeably in the second half of 2012. Taking this into account, Australian resident outbound travel increased by 5.4 per cent in 2012, recording the lowest growth in six years.

Latest indicators also show that total expenditure by outbound visitors increased by $1.8 billion (or by 4.3 per cent) to $42.3 billion in the 12 months to September 20127.

3.7 Total spending by Australian residents – the $110 billion market

Total expenditure by Australian residents on tourism rose by around $6.6 billion (or by 6.4 per cent) to $109.8 billion in the year ending September 2012 (compared to the same period in 2011).

Again reflecting the strong and increasing propensity for overseas travel, Australians continue to travel (in terms of time), but more so to overseas destinations. Overall, total travel nights by Australian residents have increased 4.4 per cent (or by 18 million nights) to 426 million nights.

7 The National Visitor Survey estimates for outbound travel (visitor nights and expenditure) are lagged one quarter compared to other TRA survey estimates.

11 4 Supply indicators – growth continuing in the key parts of the tourism supply chain

4.1 Employment

The latest data from ABS’ Tourism Satellite Account show that the tourism labour force rose slightly by 0.3 per cent (or by 1,600 jobs) to 531,900 jobs in 2011–12, with a small increase in part-time employment more than offsetting a small decrease in full-time jobs. Of the largest contributing industries, there were falls in accommodation jobs (down 3,200), cafes restaurants and takeaway food services jobs (down 1,800) and retail trade jobs (down 1,000). These falls were offset by increases in jobs also linked to outbound travel, such as air, water and other transport (up 3,200 jobs) and travel agencies (up 1,300 jobs).

4.2 Aviation

Domestic aviation capacity in Australia in terms of available seat kilometres grew by 6.9 per cent in 2012 (compared to 2011). This reflected ongoing intense competition from the major operators, Qantas and Virgin, and from the continued strong demand for regional aviation services, particularly for Fly-In/Fly-Out (FIFO) workers.

After several years of solid growth, international capacity (seats in) growth slowed to 1.9 per cent in 2012 (compared to 2011). There was a sharp fall in direct air services from Europe, as airlines switched capacity through Asian hubs.

4.3 Accommodation

The growth remained low (up1.2 per cent) in large-scale accommodation room supply in Australia in 2012. Room supply in this sector rose by 2,700 rooms in the December quarter 2012 (compared to the same quarter in 2011) to 229,300 rooms. While room supply increased in most states, the largest share of this growth occurred in Victoria.

Most of the net accommodation room supply growth has been in Melbourne. Since 2009, room stock in Melbourne has increased by over 3,400 rooms, while there has been an additional 1,900 rooms in other Australian capital cities. On the other hand, there has been a contraction of nearly 2,500 rooms in room stock outside Australia’s capital cities.

Reflecting both the low growth to room supply (particularly in capital cities), and growing demand from non-leisure tourists (such as FIFO workers), yields per available rooms increased in all states with the strongest returns occurring in the mining boom states: Western Australia (up 8.8 per cent), and by 5.8 per cent in both Queensland and Northern Territory. Overall, accommodation takings in Australia rose 4.1 per cent to $9.0 billion.

Accommodation demand remains slightly stronger than supply, with occupancy rates increasing steadily in both capital cities and non-capital city tourism regions over the past year, and since 2009.

Latest indicators on productivity and investment

12 The latest indicative data released by the Australian Bureau of Statistics (ABS) showed a mixed story for tourism-related industries for productivity and investment.

4.4 Productivity

Labour productivity in tourism-related industries appears to have increased (1.7 per cent) more strongly than the market sector average (1.6 per cent) for the period from 2007–08 to 2011–12. TRA is looking to confirm this key measure when it releases its benchmark Tourism Productivity in Australia publication later this year.

4.5 Investment

Indicator data show that investment in tourism-related industries8 increased overall (up 8.2 per cent in real terms) in 2011–12, compared to the previous year, featuring strong growth in transport and arts/recreation industry investment (Figure 1). On the other hand, there was a slight contraction in accommodation investment (this reflects both new stock and the refurbishment of existing stock). Other indicators—such as building approvals—suggest there may be modest growth in room stock in coming years.

5 Tracking progress towards 2020

5.1 The strategic priorities

Under Tourism 2020, the Australian tourism industry has set a major challenge to increase overnight tourism expenditure in Australia from around $70 billion in 2009 to between $115 billion and $140 billion in 2020.

The first phase of Tourism 2020 (2012–2014), is titled ‘Progressing the Strategic Priorities’. It represents a period for setting policy and other strategic foundations to enable the industry to capture many of the growth opportunities associated with the Asian century and other mega-trends later this decade.

In this context, growth for many of the strategic priorities (and other areas of the tourism value chain) is expected to be lower in the first phase, than during the second half of this decade.

5.2 Current progress towards the Potential

8 Source: ABS Cat. No. 5204.0, Australian National Accounts. Please note that this is a different source than that used in TRA’s Tourism Investment Monitor.

13 Overall, the $6.0 billion increase in the Potential since 2009 represents 9 per cent of the $68.5 billion increase needed to achieve the $140 billion Potential by 2020 (Figure 3).

Figure 3 2020 Tourism Industry Potential, progress made to date towards Tourism 2020

China 23 New Zealand 15 All domestic markets 14 Singapore 13 Main Asian markets (for scorecard) 12 2020 Tourism Industry Potential 9 Malaysia 8 All international markets 4 Japan 4 United States 3 Rest of the World 1 India 0 South Korea -3 France -5 United Kingdom -15 Germany -16

-20 0 20 40 60 80 100 Percent change towards Tourism 2020 objectives

Sources: ’Potential’ data for tourist expenditure sourced from TRA surveys

This means that the Potential will have to increase by around 8 per cent on average each year (in nominal terms) from 2012 to 2020 for the industry to reach $140 billion in 2020. To achieve its lower band, the overnight tourist expenditure in Australia will need to increase by 5 per cent per year until 2020, which is broadly in line with the current TFC forecasts9.

The growth in overnight expenditure from some markets such as China and New Zealand are well on their way to achieving their 2020 targets (23 and 15 per cent respectively), while other markets have contracted since 2009, such as Germany and United Kingdom (Figure 3).

Overall, international visitor expenditure has increased by only 4 per cent (or by $1.6 billion) of the $63.4 billion increase required by the sector over the 2009–2020 period to meet the Potential. Demonstrating Australia’s reliance on the Chinese market, China has provided around $1.5 billion of the growth in international visitor expenditure since 2009.

5.3 Current progress towards the Potential for tourism’s key demand and supply indicators

Figure 4 Progress made to date towards Tourism 2020 for tourism’s key demand and supply indicators

9 The Tourism Forecasting Committee forecasts for tourist expenditure are expressed in real (or CPI-adjusted dollar) terms.

14 Aviation capacity- Domestic 61

Aviation capacity- International 34

Potential - Domestic 14

Labour 12

Potential - All sectors 9

Accommodation - Room supply 7

Potential- International 4

0 20 40 60 80 100 Percentage change towards Tourism 2020 objectives

Sources: ’Potential’ data for tourist expenditure sourced from TRA surveys Primary sources for: aviation data - The Bureau of Infrastructure, Transport and Regional Economics accommodation data - ABS Cat. No. 8635.0, Tourist Accommodation Australia tourism labour data - ABS Cat. No. 5249.0, Australian National Accounts, Tourism Satellite Account

Employment

According to the latest estimates from ABS’ Tourism Satellite Account, there has been a 3.5 per cent increase (or by 18,100 jobs) in tourism employment since 2008–09, with most of this increase occurring in part-time jobs (up 12,100 jobs). By industry, the cafes, restaurants and takeaway food services (up 12,500 jobs) and travel agencies and tourism operator services (up 4,200 jobs) industries provided most of the growth, offsetting the small decrease (or 1,800 jobs) in accommodation employment.

This increase means that tourism has achieved around 12 per cent of its Tourism 2020 goal of an increase of 152,000 jobs in 2020.

Aviation

In terms of the supply measures, strong progress has been made in relation to the domestic and international aviation seat capacities. Under 2020, domestic aviation capacity was required to increase by 20-30 per cent. After several years of solid growth, domestic aviation has achieved two- thirds of its goal. Despite growing modestly in 2012, international aviation seat capacity has achieved around one-third of its Tourism 2020 goal of 40-50 per cent by 2020.

Accommodation

Nearly all of the 1.2 per cent growth in accommodation room supply (up 2,800 rooms) that has occurred since 2009 occurred in the 12 months to December 2012 (up 2,720 rooms). However, other indicators for the value of pipeline developments, such as building approvals and commencements for

15 accommodation has slowed, suggesting that progress towards the Tourism 2020 goal for an increase of 40,000 rooms in 2020 (Figure 4) could at best remain slow for some time.

5.4 Further assessment of the tourism industry’s progress

The latest forecasts released by the Tourism Forecasting Committee (TFC, 2013, Issue 1, released 26 April) indicate that the industry is well placed for further growth. The TFC forecast that in the next two years, real tourism expenditure from all sectors will increase by 3.3 per cent in 2012–13 and by a further 2.7 per cent in the following year, passing the $100 billion mark. The TFC also project growth in real expenditure to moderate slightly over the next eight years to reach $117 billion in 2021–22, assuming that:

 the global economic recovery continues (with slow growth in Europe)

 trend growth continues in Australia

 gradual depreciation in the Australian dollar occurs.

In addition, the TFC expect that the rapid growth seen in Australian outbound travel will slow noticeably, and that domestic travel will continue—albeit at below Australian population growth. Further, the TFC forecast that growth in international travel to Australia will continue at between 3-4 per cent in most years over the next decade, with growth again principally sourced from China.

The recently released Tourism Satellite Account also provides the critical components for other TRA publications, including State Tourism Satellite Accounts and TRA’s calculation of Australian tourism’s direct and indirect contribution in 2011–12. Both these important policy-focused releases are expected to be updated by end of June 2013.

In mid-May 2013, TRA will release the second edition of its Tourism Investment Monitor, which identifies the level of investment in the tourism pipeline. This year’s edition will include a new regional dimension, identifying hot spots for tourism investment in Australia.

6 Conclusion

As industry progress remains just below the 2020 Tourism Industry Potential, stronger growth is needed in order that overnight visitor expenditure reaches between $115 billion and $140 billion per year by 2020. International visitation/expenditure and accommodation room stock are the indicators that are currently most problematic.

Steady progress continues to be made in the core areas of the tourism supply chain but at differing rates. Growth in the key measure of tourism demand (including expenditure) was moderate in 2012

16 (particularly for domestic overnight and international), but growth in day trip expenditure remained strong.

For supply, indicator data suggest that growth in jobs in tourism-related industries has been moderate, and lower compared to all Australian industries. However, aviation supply (more so domestic growth) was solid over the past year, and the surprisingly stronger growth in room stock in larger hotel, motels guest houses and serviced apartments in the December quarter 2012 was also welcome. However, more growth is needed beyond Melbourne and Victoria if the industry is to achieve its ambition of an extra 40,000 rooms by 2020.

17 7 References

Australian Bureau of Statistics (ABS, February 2013) Cat. No. 3401.0, Overseas Arrivals and Departures, Australia, ABS, Canberra ABS (2011–12), Cat. No. 5204.0, Australian System of National Accounts, ABS, Canberra ABS (June 2012), Cat. No. 5206.0, Australian National Account, National Income, Expenditure and Product, ABS, Canberra ABS (2010–11), Cat. No. 5249.0, Australian National Accounts, Tourism Satellite Account (TSA), ABS, Canberra ABS (February 2013), Cat. No. 6202.0, Labour Force Australia, ABS, Canberra ABS (February 2013), Cat. No.6291.0.55.003, Labour Force Australia, detailed, quarterly, ABS, Canberra ABS (2012), Cat. No. 8635.0, Tourist Accommodation, Australia, December quarter 2012, ABS, Canberra ABS (2012), Cat. No 8635.0.55.002, Tourist Accommodation, Small Area Data, Australia, December quarter 2012, ABS, Canberra ABS (2012), Cat. No. 8731.0, Building Approvals, Australia, ABS, Canberra ABS (2012), Cat. No. 8752.0, Building Activity, Australia, ABS, Canberra Bureau of Infrastructure Transport and Regional Economics (BITRE, 2013), Domestic Airline Activity, December 2012, BITRE, Canberra BITRE (2013), International Airline Activity, December 2012, BITRE, Canberra Reserve Bank of Australia (RBA, 2012), Statistical tables (including exchange rates, economic growth and household consumption), as at December 2012, RBA, Sydney Tourism Research Australia (TRA, 2013), Travel by Australians, December 2012 Quarterly results of National Visitor Survey, TRA, Canberra TRA (2013), International Visitors to Australia, December 2012 Quarterly results of International Visitor Survey, TRA, Canberra United National World Tourism Organization (UNWTO, 2013), World Tourism Barometer, January 2013, UNWTO, Madrid, Vol. 11, p. 8 World Economic Forum (WEF, 2013), Travel and Tourism Competitiveness Report 2013: Reducing Barriers to Economic Sector’s Development, WEF, Geneva, p. xxii

18 Appendix A: Summary of changes to TRA’s estimates, National Visitor Survey, June quarter 2012

During TRA’s checking for the December 2012 NVS release, an error was detected in the June quarter 2012 input data for domestic overnight travel supplied by the NVS market research provider. The error (due to an incomplete file being sent to TRA) specifically affected data for the month of June. As a result, the error impacted previously published estimates of domestic overnight travel for June quarter 2012 and the year ending June and September 2012.

For the June quarter 2012, these errors were significant:  Domestic visitor nights: overstated by 5.6 million or by 8 per cent  Domestic overnight visitor expenditure: overstated by $1.0 billion, or by 8 per cent.

This revision impacts a number of documents that were released by TRA over the September 2012 to February 2013 period, including State of the Industry 2012 (the full report, the abridged report and the separately published Tourism Scorecard).

These changes mean that domestic visitor expenditure and nights are now each lower by around 2.0 per cent for the 2011-12 financial year than the figures that were reported in State of the Industry 2012.

As State of the Industry 2012 featured an analysis for the 2011–12 financial year, figures based upon the domestic overnight expenditure in that year were overstated by 2 per cent. However, after an assessment of these changes, TRA confirms that the key messages contained in State of the Industry 2012 are largely unchanged.

TRA has already revised a number of its publications that feature quarterly statistics, including the quarterly June and September reports for the National Visitor Survey. Instead of re-releasing State of the Industry 2012 (and related documents), TRA has included many of the key statistics (including the Tourism Scorecard) for the 2012 calendar year in this edition of TRA Quarterly. A separate scorecard for the 2012 calendar year is being released at the same time as this TRA Quarterly.

Further details on the revisions are available on the TRA website: www.tra.gov.au. If you require more information, please contact TRA’s Statsline at [email protected].

19 Authors: Jai Kookana and Geoff Bailey

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: May 2013

This work is licensed under a Creative Commons Attribution 3.0 Australia licence. To the extent that copyright subsists in third party quotes and diagrams it remains with the original owner and permission may be required to reuse the material. This work should be attributed as TRA Quarterly, Issue 2 December 2012, Tourism Research Australia, Canberra. Enquiries regarding the licence and any use of work by Tourism Research Australia are welcome at [email protected]