Quarterly Market Update Tourism Australia’S Quarterly Market Update Provides an Update to Industry on the Current State of International Tourism for Australia

Quarterly Market Update Tourism Australia’s Quarterly Market Update provides an update to industry on the current state of international tourism for Australia. This report covers Australian Bureau of Statistics data and the latest International Visitor Survey data up to March 2015. August 2015

A POSITIVE START TO 2015

>> The Australia Bureau of Statistics (ABS) figures New Research publications available showed that international visitor arrivals to New research, undertaken by Tourism Research Australia (TRA) Australia surpassed 7 million for the first time in partnership with Tourism Australia, examines free and in the year ending March 2015, boosted by an independent leisure visitors from China and their dispersal eight per cent increase in visitors. patterns, using data from TRA’s International Visitor Survey for the period 2011 to 2013. To access the report click here. >> Of Australia’s top 20 inbound markets, 14 markets In May 2015, TRA also published the ‘Tourism Investment Monitor reported record arrivals to Australia for the year. 2015’, demonstrating that Australia’s tourism industry remains attractive to investors, with continued growth in tourism’s >> The latest International Visitor Survey (IVS) results contribution to national income and employment. Further showed that international expenditure for the supported by strong growth in demand for Australian tourism 12 months ending March 2015 reached a record services from both international and domestic visitors, Australia’s of $32.5 billion, an increase of 10 per cent. tourism investment pipeline continued to grow in 2014. This report estimates the total value of large-scale tourism investment projects in the pipeline in 2014 at $53.7 billion. To download the International visitor arrivals surpassed 7 million report click here. International arrivals to Australia continued to register strong growth, with an eight per cent rise in the 12 months to March Aboriginal Australia: Our Country is waiting for you 2015. There was growth across all segments during the year, with Tourism Australia launched a new short film on 14 July 2015, the Leisure segment supplying the lion’s share of the increase. aimed at encouraging more domestic and international visitors to Holiday arrivals grew seven per cent to 3.2 million, and arrivals for include Indigenous tourism experiences as part of an Australian the purpose of Visiting Friends & Relatives (VFR) grew 10 per cent holiday. Titled Aboriginal Australia: Our Country is waiting for you, to 2.0 million. Of Australia’s top 20 inbound markets, 14 markets the film was created in collaboration with renowned Australian reported record arrivals. Arrivals from New Zealand increased filmmakers Brendan Fletcher and Warwick Thornton and tells the five per cent to 1.25 million, Chinese arrivals were up 19 per cent story of Australia’s unique Indigenous tourism offerings. Developed and arrivals from the USA grew 10 per cent. India moved up the in partnership with Austrade, the film features a diverse range of rankings with a 25 per cent increase to more than 200,000 visitor Indigenous activities, adventures and immersive cultural experiences arrivals for the first time, to become Australia’s eighth largest which can be enjoyed in the Red Centre and Outback, lush inbound market for the year ending March 2015. rainforests and tropics as well as in cities and urban environments. For more information and to view the film, click here. International visitor expenditure growth rate on the rise International visitor expenditure on trips to Australia reached Business Events $32.5 billion during the 12 months to March 2015, up 10 per cent The latest business events expenditure data showed the sector year-on-year. Total visitor nights for the same period were also up increased three per cent to $12.9 billion in the year ending seven per cent. China remained Australia’s highest value market December 2014 (March 2015 data not yet available), with with total expenditure growing 25 per cent for the year ending international business events visitor expenditure up eight per March 2015 to reach $6.4 billion. China also recently overtook the cent to $2.5 billion. Business Events Australia continued its trade UK as the highest value market for Leisure visitors to Australia, and marketing activities in key markets to promote Australia as when measuring total expenditure for VFR and Holiday visitors. a business events destination, and in-market team members and convention bureaux across the country are reporting strong Global consumer confidence interest in Australia and with good leads being generated. According to a recent Nielsen report, global consumer confidence Business Events Australia, in partnership with industry, has a increased one index point in first quarter of 2015 compared to the busy program of activity recently attending four international fourth quarter of 2014. All regions except for Latin America saw trade shows in China, Europe and the USA, delivering two in- confidence levels increase, providing an overall upbeat start to the market showcase events in China and South East Asia (Singapore year. Japan posted the largest increase in consumer confidence, and Malaysia), and hosting six educational visits to Australia for rising nine points to the highest levels seen since 2005. Consumer incentive agents and corporate buyers. These visits enable the confidence also increased in the UK, Germany and USA. Click here Australian business events industry to connect with qualified for the full report. buyers in key markets and to showcase business events products to assist in growing future business to Australia.

1 Tourism Australia’s Quarterly Market Update | August 2015 Quarterly Market Update Tourism Australia’s Quarterly Market Update provides an update to industry on the current state of international tourism for Australia. This report covers Australian Bureau of Statistics data and the latest International Visitor Survey data up to March 2015. August 2015

Tourist arrivals to Australia (rolling annual) and monthly percentage change on previous year

Flooding and Cyclone Yasi Reverse impact from declines British Lions tour of ICC Cricket World Cup in Queensland in February 2011 in arrivals out of NZ during Australia Jun-Jul 2013 Feb-Mar 2015 RWC 2011

Grounding of flights due to Ashes Series Chilean ash cloud June 2011 Dec 2013

7,200,000 20%

7,000,000 15%

6,800,000

10% 6,600,000

5% 6,400,000

6,200,000 0%

6,000,000 -5%

5,800,000 Monthly % change year-on-year (RHS)

Annual tourist arrivals (LHS) -10% 5,600,000

Source: TA & ABS, 3401.1 Overseas Arrivals and Departures, Australia 5,400,000 -15% Jul 2010 Jul 2011 Jul 2012 Jul 2013 Jul 2014 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Oct 2010 Oct 2011 Oct 2012 Oct 2013 Oct 2014 Apr 2010 Apr 2011 Apr 2012 Apr 2013 Apr 2014 Apr 2015

Volcanic eruption in Iceland RWC 2011 in NZ slowed impacted air transport outbound Kiwi travel in Apr-May 2010 Sep and Oct

Japan earthquake and series of aftermaths March 2011

2 Tourism Australia’s Quarterly Market Update | August 2015 Aviation Summary

Tourism Australia’s Quarterly Market Update provides an update to industry on the current state of international tourism for Australia. This report covers Australian Bureau of Statistics data and the latest International Visitor Survey data up to March 2015. August 2015

International aviation capacity to Australia increased three per Global aviation environment cent in the March 2015 quarter. Average overall load factors have strengthened and the outlook for capacity growth is positive. >> Global aviation capacity growth continued during April and A number of airlines have recently announced plans to add new May 2015, with mixed results across regions. services between Australia and markets such as Japan, China, >> Middle Eastern carriers continued to report the strongest growth USA and Singapore. in demand (passengers travelled), up 14 per cent during May 2015, driven by very strong growth in capacity which increased Case Study: A brighter outlook for Japan 20 per cent. As result of the increased capacity average load factors fell to 75 per cent from 79 per cent. Premium business >> Following a number of years of capacity declines between traffic remained strong as business activity strengthened. Japan and Australia, the outlook is now brighter, with a number >> Demand for Asia Pacific and Latin American carriers increased, of airlines recently announcing plans to launch new flights up nine per cent and seven per cent respectively during May between the two countries. Non-stop flights between Japan 2015. Average load factors also improved in these regions. and Brisbane and Melbourne have been re-established, reducing travel times between these cities. Average loads and yields have >> Demand for European carriers continues to improve, up also improved. six per cent during May 2015. However, the economic situation in Greece could potentially place downward >> From 11 December 2015, All Nippon Airways (ANA) plans to re- pressure on this growth. enter the Australian market after a 16 year absence, launching daily Tokyo (Haneda)-Sydney services using the B787 aircraft. >> North American carriers continue to report growth with demand ANA is one of Japan’s two major flag carriers and has extensive up two per cent during May 2015. While economic performance domestic and international networks from Japan. is expected to improve, the strengthening US dollar continues to place pressure on inbound tourism to the region. >> From 1 August 2015, Qantas plans to shift its daily Tokyo (Narita)-Sydney services to Tokyo (Haneda)-Sydney, which is >> Domestic demand within China and India continued to preferred by many business travellers as Haneda is closer to strengthen during May 2015. There has been renewed Tokyo city. The airline also plans to launch daily Tokyo (Narita)- confidence and stimulation by airlines in India, and China Brisbane services in August 2015. experienced strong growth despite GDP growth slowing. >> Jetstar launched four weekly Tokyo (Narita)-Melbourne services starting 29 April 2014, and currently operates a number of flights Domestic aviation environment in Australia between Japan and Queensland. Capacity growth in the Australian domestic aviation market >> The Low Cost Carrier (LCC) sector continues to grow in Japan. slowed during the first half of 2015, down an estimated two per In April 2015 Tokyo (Narita) Airport opened a dedicated LCC terminal with Jetstar Japan, Jeju Air, Vanilla Air and Spring Japan cent. As a result, average loads improved for the first time in a few moving into this new terminal. months suggesting capacity is more closely aligned with demand. Capacity declines continue to be focussed on high traffic mining >> Economic ties between Japan and Australia strengthened in routes, especially from Perth and Brisbane (e.g. Perth-Port Hedland, January 2015 with the signing of the Japan-Australia Economic Perth-Newman, Brisbane-Moranbah, Brisbane-Mount Isa and Partnership Agreement. Since the signing a number of new Brisbane‑Emerald). services have been announced. >> It is anticipated that capacity between Japan and Australia will grow between five and 10 per cent in 2015, followed by stronger growth (15 to 20 per cent) in 2016.

3 Tourism Australia’s Quarterly Market Update | August 2015 Aviation Summary

Change in international and domestic seats for the year ended June 2015 for selected airports

The majority of Australian airports reported slower growth in domestic and international capacity to Australia during the June 2015 quarter. Melbourne, Brisbane and Cairns airports helped to boost overall international capacity growth into Australia, while Adelaide and Melbourne airports reported strong growth in domestic capacity.

% change on same month Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 YE Jun 15 previous year Sydney Domestic 0% 0% 0% 1% -1% -1% -1% 1% 2% -2% -1% 3% 0% International -2% -1% -3% -3% -3% 0% 0% -2% -2% -3% -4% 0% -2% Melbourne Domestic 0% 0% 1% 2% 0% 2% 2% 3% 3% 3% 1% 4% 2% International 13% 9% 7% 4% 1% 4% 4% 6% 4% 3% 1% 1% 5% Brisbane Domestic 0% -2% -1% -2% -6% -2% -3% -2% -1% -4% -5% -2% -2% International 7% 7% 4% -1% 0% 5% 7% 6% 4% 1% 3% -1% 4% Gold Coast Domestic 3% 1% -2% 1% 2% 4% 1% 0% -2% -1% 2% 6% 1% International 2% 2% -4% -4% -5% -5% -5% -9% -10% 5% 5% 4% -2% Cairns Domestic -1% -3% -1% -3% -5% -2% -4% 7% 5% -2% -3% -1% -1% International -6% -1% -3% 3% 7% 12% 7% 19% 7% 21% 6% 10% 6% Adelaide Domestic 5% 6% 6% 5% 3% 6% 2% 1% 2% 2% 0% 1% 3% International 23% 22% 2% 7% -9% -9% -12% -22% -26% -26% -24% -27% -10% Perth Domestic -1% -3% 0% -1% -4% -1% -7% -3% -1% -3% -4% -1% -2% International 4% 0% 5% 1% -3% -7% -7% -6% -10% -10% 3% 6% -2% Darwin Domestic 3% 5% 7% 5% 1% 5% -7% -6% -9% -5% -6% -2% -1% International -22% -18% -7% -10% -25% -25% -24% -24% -19% -11% -12% 10% -16%

4 Tourism Australia’s Quarterly Market Update | August 2015 South and > South East Asia Tourism Australia’s Quarterly Market Update provides an update to industry on the current state of international tourism for Australia. This report covers Australian Bureau of Statistics data and the latest International Visitor Survey data up to March 2015. August 2015

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

Singapore 371,400 6% -1% $1,157,430 8% Malaysia 323,100 11% -2% $1,085,658 14% India 214,900 25% 42% $959,020 35% Indonesia 153,300 7% 10% $591,155 -10%

Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> Visitor arrivals growth remained solid across all up from 21 per cent in the previous year. Malaysian arrivals for the South/South East Asian markets in the 12 months first three months of 2015 were down; this slight decline occurred to March 2015. in the lead up to the introduction of a GST policy in Malaysia (commencing 1 April, 2015), and during a period of increased petrol >> Growth rates from India were a highlight, reaching and utilities prices due to reduced government subsidies. Despite those factors, Malaysian consumer confidence was up five points in the highest levels recorded in six years. As a result the March 2015 quarter to 94 points according to Neilsen1, and it is India became Australia’s eighth largest inbound expected that the arrivals decline is only a temporary adjustment. market based on visitors and 11th largest market based on expenditure. India overtook Hong Kong and South Korea to become Australia’s eighth largest inbound market for visitor arrivals in the 12 months >> Expenditure grew from most markets in the region, to March 2015. Arrivals from India grew 25 per cent – the highest improving yields from Singapore, Malaysia and India. annual growth recorded in the past six years – and 42 per cent in the first three months of 2015, boosted by the 2015 ICC Cricket World Cup events. Holiday arrivals from India grew 46 per cent in Singapore, the largest inbound market in the region, showed the year ending March 2015, and VFR arrivals grew 20 per cent. strong results for arrivals and expenditure for the year ending Total expenditure from India grew 35 per cent and Leisure spend March 2015. Growth in Leisure visitors was consistent throughout increased 48 per cent. Leisure visitors’ average spend per trip to the year, with Holiday arrivals up six per cent and Visiting Friends Australia rose to $2,616 (from $2,291 in the previous year), which and Relatives (VFR) arrivals up 11 per cent. Expenditure by Leisure was a welcome improvement to yield from the market. Consumer visitors increased five per cent. The overall outbound market confidence in India rose one per cent in Q1 2015, to 130 points from Singapore reportedly grew at a rate of three per cent in according to Neilsen1 with a return to optimism following the 2014, indicating that Australia gained market-share for the year. general elections in 2014. There is an expectation that political Growth rates appear to have eased in the first few months of stability will continue to drive economic growth, disposable income 2015, however there is an expectation of improvement as the and outbound travel into 2016. year unfolds in-line with increases in air services to Australia (see aviation section), steady consumer confidence1, and a weaker Visitor arrivals from Indonesia remain buoyant, however Australian dollar. A bilateral government focus on Australia- expenditure is down. Indonesian arrivals grew seven per cent Singapore business relations is expected to further strengthen ties during the past year to more than 150,000, and 10 per cent in the and travel between the two countries in 2015. first three months of 2015. Holiday arrivals increased eight per cent and VFR increased 10 per cent in the 12 months to March Malaysian arrivals reached new record levels, above the 300,000 2015. Leisure expenditure was down 21 cent per in the year ending mark in the 12 months to March 2015. Holiday arrivals grew at a March 2015, with a reduction in the average length of stay, and off faster rate than the overall market, up 13 per cent, while arrivals the back of a 45 per cent increase in Leisure spend in the previous for Visiting Friends and Relatives (VFR) purposes increased five year (12 months to March 2014). The fluctuations in Indonesian per cent. Visitor expenditure grew faster than arrivals, up 14 per expenditure are attributed to economic and political uncertainty, cent overall, and Leisure expenditure also registered double-digit and a devaluation of the Indonesian Rupiah. Consumer confidence growth of 12 per cent in the year ending March 2015. The number has since returned in Indonesia with a three point rise in Q1 20151, of Malaysian visitor nights spent outside of capital cities (beyond however it is yet to be seen what impact this may have had on Sydney, Melbourne, Brisbane and Perth) spiked in the period, up future bookings. 41 per cent; this is likely a result of Air Asia X’s flights into Adelaide which have, however, since been withdrawn (see aviation section). More than a quarter of all Malaysian nights (26 per cent) were 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions recorded outside of these four capital cities in the 12 month period, Around The World Quarter 1, 2015.

5 Tourism Australia’s Quarterly Market Update | August 2015 South and > South East Asia Tourism Australia’s Quarterly Market Update provides an update to industry on the current state of international tourism for Australia. This report covers Australian Bureau of Statistics data and the latest International Visitor Survey data up to March 2015. August 2015

Aviation news Industry news

>> During the year ending March 2015, direct capacity to Australia >> Tourism Australia has employed an on-ground representative in from Singapore declined by four per cent, whilst capacity from Indonesia for the first time in 15 years. Levie Lantu joined Tourism Malaysia increased 16 per cent, capacity from Indonesia grew Australia in June 2015 as Senior Business Development Manager, 15 per cent, and capacity from India grew by 66 per cent.2 Indonesia based in Jakarta. His key responsibility is to expand traditional and non-traditional partnerships and educate the >> SilkAir launched direct services from Singapore to Cairns starting market of the diverse experiences available in Australia. 30 May 2015, the first time there has been a direct connection in nine years following the withdrawal of Australian Airlines >> Nine corporate buyers and one journalist experienced an in 2006. educational visit to Cairns and Melbourne in Q2 2015. The visit was timed to align with the launch of SilkAir’s direct services from >> Scoot announced it will commence flights between Singapore Singapore to Cairns. In a post-visit survey all participants indicated and Melbourne in November 2015, using B787 aircraft. Scoot they would be ‘more likely to send travellers to Australia’ as a currently operates services from Singapore to Sydney, Perth and result of the visit. the Gold Coast.3 >> Tourism Australia delivered a South East Asia Business Events >> Singapore Airlines added a fifth daily Singapore-Sydney service showcase in Singapore and Kuala Lumpur in Q2 2015 to promote on Thursdays, Fridays and Saturdays starting 30 July 2015. incentive products and experiences to qualified buyers. Business The three additional weekly flights will use Airbus A330-300s Events Australia was joined by 21 industry partners, including configured with 30 business seats and 255 economy class seats. convention bureaux and industry from across the country. More >> Qantas relaunched Singapore-Perth flights five times per week than 70 agents and corporate buyers attended the showcase in starting 26 June 2015, just over a year since the airline withdrew Kuala Lumpur, while 68 agents and corporate buyers attended the service. the Singapore event, which included a series of scheduled appointments and networking events. >> AirAsia X suspended its five weekly Kuala Lumpur-Adelaide services on 25 January 2015; this followed a reduction to their Sydney and Perth frequencies in late 2014. >> Malaysia Airlines outlined its plans for a major restructure in June 2015, expecting to shed around 6,000 staff. The airline has said it will begin operations under a new brand in September 2015. Malaysia Airlines also announced it will cut capacity to Australia by 40 per cent in August 2015, ceasing Brisbane and reducing capacity to Adelaide, Melbourne, Perth and Sydney.3 >> Air India de-linked its daily Delhi‑Sydney/Melbourne services in May 2015. It now operates four weekly Delhi‑Sydney services and three weekly Delhi-Melbourne services. >> Negotiations for the ASEAN single market agreement, which is expected to fully liberalise air travel between member states in the ASEAN region, are ongoing however there are hopes it could be finalised in 2015. Once the agreement is ratified by all members demand is expected to be diverted away from Australia in the short term as intra-Asian travel is stimulated.

2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation

6 Tourism Australia’s Quarterly Market Update | August 2015 Greater China

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

China 891,500 19% 19% 6,440,942 25% Hong Kong 206,300 13% 9% 1,053,356 20%

Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> China strengthened its position as Australia’s number On 17 June, the Australian government announced the one market for total international visitor expenditure introduction of a new 10-year multiple-entry visa available to for the year ending March 2015, overtaking the Chinese citizens travelling to Australia. The new visa is a result of the signing of the Australia-China free trade agreement UK as the number one market for Leisure visitor on the same date and will be available in 2016. Australia is expenditure (Holiday and VFR) and the largest market the fourth country to offer Chinese nationals decade-long for Holiday visitor expenditure. visas, following Singapore, the United States and Canada who have similar schemes. >> Visitor arrivals from Hong Kong grew to more than 200,000 during the past 12 months, while On 29 June, Tourism Australia signed three important strategic marketing deals in China aimed at promoting Australia to high expenditure rose above $1 billion. yielding travellers and business events professionals. The wide- reaching, three-year marketing deals consist of partnership Chinese visitor arrivals to Australia continue to grow at a agreements with two major airlines – China Eastern Airlines phenomenal rate, up 19 per cent in the year ending March 2015, and Singapore Airlines – as well as with one of China’s largest with an incremental increase of more than 140,000 visitors e-commerce companies specialising in travel services, Alibaba. compared to the previous year. Growth was driven by the Leisure Under the new three-year partnership with Alibaba, Australia will segment, with Holiday arrivals up 17 per cent and VFR arrivals up become the first overseas long-haul destination to have its own 29 per cent in the past 12 months, with no sign of this growth rate dedicated sales webpage on the Alitrip website. The portal will slowing. Chinese visitor expenditure grew 25 per cent in the year be co-branded using ‘There’s Nothing Like Australia’ campaign ending March and Leisure spend increased by 26 per cent. China assets and feature Australian travel packages offered by Tourism became the largest international market for Australia when ranked Australia’s dedicated network of preferred travel distribution on Holiday expenditure, worth over $2 billion. partners in China. Visitor arrivals from Hong Kong to Australia continued on a steady Tourism Australia and Singapore Airlines Greater China also signed growth trajectory and surpassed the 200,000 mark, driven by a new $2.7 million marketing agreement which will see Singapore a positive Leisure sector. Holiday arrivals from Hong Kong grew Airlines become an exclusive business events partner for marketing 18 per cent in the year to March 2015, and VFR arrivals grew activities within Greater China, targeted at both MICE agents and 10 per cent. Total expenditure from Hong Kong increased to over corporate buyers. Under the three-year agreement, the two parties $1 billion, with Leisure expenditure up 30 per cent in the 12 month will each contribute $1.35 million towards jointly developing a period. The high growth in spend was a result of increased length range of campaigns, marketing and promotional activities within of stay, and growth in the proportion of first-time visitors who Greater China, promoting Australia as the ideal destination for are known to spend more that repeat visitors. Hong Kong was business events. Australia’s 10th largest inbound arrivals market and ninth largest market by total spend in the year to March 2015. Consumer confidence in China decreased one percentage point in the March quarter of 2015, but remains above the base level at an index of 1061. It is likely that confidence would be down in the second quarter of 2015, following the Chinese stock market crash in June.

1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, 2015.

7 Tourism Australia’s Quarterly Market Update | August 2015 Greater China

Aviation news Industry news

>> For the year ending March 2015, direct capacity to Australia from >> In March, Tourism Australia announced the appointment of China decreased by four per cent following strong growth in the Andrew Hogg to the role of Regional General Manager Greater previous year. Seat capacity between Hong Kong and Australia China, based in Shanghai. Mr Hogg joins Tourism Australia from increased by six per cent over the 12 months to March.2 Qantas Airways, where he held the position of General Manager China since 2011. Andrew’s career spans more than 25 years, >> In January 2015, the Chinese and Australian Governments including roles in finance, sales, marketing and operations with expanded their Air Service Agreement to allow more flights Qantas Airways. between the two countries. Chinese carriers subsequently announced plans to increase capacity to Australia. >> Tourism Australia held Corroboree Greater China on Hamilton Island, from 11 to 15 May. Two hundred buyers from China, >> Chinese conglomerate Dalian Wanda Group has helped fund Hong Kong and Taiwan met with 103 Australian sellers. Ninety- new Wuhan-Gold Coast flights, operated by Jetstar aircraft twice nine per cent of attendees were satisfied with the event and a week. The new B787 services will commence in late September 100 per cent of buyers said they feel more capable of selling and will be offered as part of integrated holiday package tours, more Australian product due to their attendance at the event. subject to regulatory approval.3 >> Dreamtime, Tourism Australia’s signature event for the business >> Qantas and China Eastern are seeking to deepen their events sector, will be held in Adelaide in December 2015. cooperation on the Shanghai-Sydney route. However, in March Dreamtime is Australia’s largest business events showcase, 2015 the Australian Competition and Consumer Commission allowing Australian sellers to connect with qualified buyers rejected the proposed joint venture in a draft determination. from key international markets. Tourism Australia is targeting >> In June, Hong Kong Air Transport Licensing Authority rejected 20 buyers from Greater China to attend the event. Jetstar Hong Kong’s application for a licence to operate, saying its >> Sydney, Melbourne, Darwin, Hobart and Adelaide hosted primary place of business was not in the southern Chinese city. educational visits for corporate buyers from China in the >> Cathay Pacific will add a second daily Hong Kong-Sydney service first half of 2015. The visits were designed to showcase starting October 2015. Australian incentive products. For the three visits, 100 per cent of participants indicated they were ‘very satisfied’ with their experience and more likely to send visitors to Australia as a result. Tourism Australia exhibited at the IT&CM trade show in April 2015 with 11 stand partners, and delivered the North Asia Showcase in Shanghai, providing a platform for Australian products and experiences to meet and do business with Chinese incentive buyers. >> Australia won ‘Best International MICE destination’ at the eighth China Golden Chair Awards in April 2015. >> Tourism Australia’s Hong Kong office moved in June to the Regus Centre in the China Resources Building with Destination NSW.

2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation

8 Tourism Australia’s Quarterly Market Update | August 2015 Japan and South Korea

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

Japan 324,400 0% -2% 1,336,932 0% South Korea 211,800 6% 13% 1,170,620 4%

Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> Arrivals and expenditure from Japan were stable in Korean Holiday arrivals increased three per cent in the year the 12 months to March 2015. ended March 2015, while VFR arrivals grew 15 per cent, helping to boost overall growth of six per cent compared to the previous >> Leisure visitors were the driver of arrivals growth out year. Expenditure grew four per cent, buoyed by a seven per cent of South Korea in the year-ending March 2015, with increase in Leisure visitor spend. Growth in spend was boosted by a greater proportion of first-time visitors from Korea to Australia (67 double-digit arrivals growth occurring in the first per cent were first-time visitors), with first time visitors known to three months of 2015. spend more than repeat visitors.

Visitor arrivals to Australia from Japan remained stable in the year ending March 2015, however an increase in visitors for Aviation news Business purposes (up eight per cent) was masked by a decline in >> For the year ending March 2015, direct capacity to Australia from Education arrivals. The increase in Business visitor numbers was Japan and Korea decreased by two per cent for each country.2 partly attributable to the Rotary Conference held in Sydney in June 2014. Holiday arrivals settled at 211,600 (down one per cent), >> Qantas will commence a new Tokyo (Narita)-Brisbane service in accounting for 65 per cent of all Japanese visitors, while arrivals August 2015. for Visiting Friends and Relatives (VFR) purposes increased one per >> All Nippon Airways (ANA) announced a new Tokyo (Haneda)- cent. Japanese expenditure remained stable, despite a reduction Sydney service, effectively adding 78,000 seats into Australia in visitor nights, indicating that the visitors who came to Australia from Japan commencing 11 December, 2015. ANA represents the spent more per night than in the previous year. Average Leisure first Star Alliance carrier operating on the Japan-Australia route visitor spend from Japan was $194 per night for the year ending which is currently dominated by OneWorld carriers; this is likely March 2015, based on an average duration of 19 nights. to create a more competitive environment and lower airfares.3 In the first three months of 2015, Japanese arrivals to Australia >> Jetstar Japan will increase its Cairns services to six days a week were down, consistent with overall outbound travel from Japan. from December 2015. However, the cancellation of four well booked Australia-bound >> Korean Air will increase capacity on the Seoul-Sydney route Jetstar flights had an impact on numbers. Consumer confidence by utilising larger aircraft toward the end of 2015 including in Japan rose nine points to an index of 88 in the March quarter 1 B777-300s in November-December and A380s for the first time of 2015, the highest score recorded in by Neilsen since 2005 . December-March. The A380 will deliver almost a 50 per cent Increases in aviation capacity to Australia throughout the capacity boost on their services. remainder of 2015 should help capitalise on the increased confidence in the market (see Aviation section). >> Korean Air announced plans to increase frequencies on the Seoul-Brisbane route to daily, starting December 2015. South Korean visitor arrivals to Australia increased 13 per cent in the first three months of 2015 compared to the same period last >> Asiana Airlines reduced their Seoul-Sydney services to five per year. The highlight was arrivals growth of 18 per cent in the month week starting 26 May due to seasonal demand and expects to of March 2015, an incremental increase of 3,000 Korean visitors resume daily frequencies in September 2015. compared to March 2014. >> Korea’s low cost carrier announced its first long haul flights with services to Hawaii commencing in December 2015; the new services are seen as a competitive threat for Australia in the short term.

Note: Also see Japan Aviation Case Study on page 3 of this Update.

1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions 2 Source: Department of Infrastructure and Regional Development. Around The World Quarter 1, 2015. 3 Source: CAPA Centre for Aviation

9 Tourism Australia’s Quarterly Market Update | August 2015 Japan and South Korea

Industry news

>> Tourism Australia launched the Tabelog Australian restaurant app on 13 July, in addition to existing Cookpad ‘Tourism Australia Kitchen‘ partnership announced earlier in the year as part of the Restaurant Australia campaign. >> Walkabout Japan 2015 will take place in Osaka, Nagoya and Tokyo from 8 to 12 September, with 48 Australian sellers registered to attend. >> JATA Tourism Expo, which will run from 24 to 27 September, will comprise of a trade day and two consumer days. >> Tourism Australia and Australian State and Territory Tourism Organisations will be attending Modetour Travel Show in Seoul, Korea in October 2015.

10 Tourism Australia’s Quarterly Market Update | August 2015 Americas

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

USA 566,200 10% 9% $2,949,156 14% Canada 141,700 7% 10% $792,974 4% Data not reliable for Brazil Brazil 45,700 21% 12% (sample size too small) - Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> A consistent phase of arrivals growth can be seen also Leisure driven, with a three per cent growth in Holiday arrivals across the three key markets in the Americas region. and 16 per cent growth in VFR arrivals in the year ending March 2015. However, the growth from the Leisure segment was offset >> Expenditure from the USA reached almost $3 billion, by slight declines in the Business and Education segments. Total up 14 per cent in the year ending March 2015. expenditure increased four per cent and Leisure spend remained stable at just over $0.5 billion. A four per cent decline in Canadian >> USA Leisure spend was a recent highlight, increasing Holiday spend was countered by a seven per cent increase in VFR 19 per cent to $1.7 billion for the year. spend over the year to March. Arrivals from the USA surpassed the 500,000 peak level in 2013, Consumer confidence declined in Canada in Q1 2015 to the and continued to grow consistently at around 10 per cent to reach country’s lowest score since 20121. A downbeat economic outlook 566,200 in the year ending March 2015. While all segments of meant consumer confidence remains volatile and uncertain. the market are in growth, the Leisure segment continues to drive Neilsen summarised the situation saying: “A drop in confidence is increases in visitors, with Holiday arrivals up 13 per cent and normal following the holiday spending season when the bills start Visiting Friends and Relatives (VFR) segment up nine per cent in rolling in, but this year consumers were also reeling from the effects the 12 months March 2015. USA Leisure visitors accounted for of the coldest winter in 25 years, which led many to spend more time 67 per cent of all arrivals and 58 per cent of total expenditure. indoors. Exacerbating the situation further was the drop in oil prices, Leisure spend grew 19 per cent to $1.7 billion and Holiday spend which led to significant job losses in the country.” was up 18 per cent to $1.2 billion, accounting for 40 per cent of Nonetheless, the outlook for Canadian travel to Australia is positive, total expenditure. VFR spend also grew 21 per cent in the year and the announcement that Air Canada will commence three ending March 2015. The average US Holiday spend per trip weekly Vancouver-Brisbane flights in June 2016 was welcomed was $5,400 based on an average 16 day duration, indicating this earlier than expected. Air Canada have said they intend to grow the segment is high yielding market for Australia with nightly spend of Vancouver-Brisbane route to daily frequencies over time. approximately $340. Double-digit growth has continued from Brazil, with total arrivals The outlook for the USA market is for continued positivity into increasing by 21 per cent to 45,700 in the year ending March 2015. 2016. Consumer confidence in the USA increased one index point The Leisure market now accounts for more than half of all Brazilian in the first quarter of 2015 to a score of 107, maintaining an visitors (56 per cent) with 25,500 arrivals in the 12 months and above-the-baseline level for more than a year now1. Travel trade growing. The average spend per trip from Brazilian Leisure visitors partners are reporting strong forward bookings and increases in air to Australia was $5,134 in the year ending March 2015, up capacity to Australia, which will help convert this bullish demand 36 per cent. into future visitation to Australia. Qantas and American Airlines (AA) are expanding their partnership and AA announced daily Los The current economic concerns in Brazil saw consumer confidence Angeles-Sydney flights starting in December 2015; this marks a fall for the second consecutive quarter to its lowest level since return of AA aircraft to Australia for the first time since 1992. Air 2009. According to Neilsen1, the number of Brazilians who believed New Zealand is also expanding their capacity from the USA with they were in recession increased to 85 per cent, up from 73 per cent five weekly services departing Houston starting December 2015 in the previous quarter and up from 55 per cent a year ago; this is (see Aviation section for more detail). mostly caused by negative sentiment about future job prospects. In the first three months of 2015, Brazilian arrivals to Australia It has been a solid year for the Canadian market, with an upbeat increased 12 per cent compared to the same period in 2014. Whilst start to 2015 in terms of arrivals, demonstrated by 10 per cent still positive it is at a slower rate of growth than seen last year. growth in the first three months. Increases in Canadian visitation is Tourism Australia’s focus in the Brazil market is on affluent long haul leisure travellers who are less likely to be adversely impacted 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions by economic downturns. Around The World Quarter 1, 2015.

11 Tourism Australia’s Quarterly Market Update | August 2015 Americas

Aviation Industry news

>> For the year ending March 2015, direct capacity to Australia from >> Tourism Australia is attending Virtuoso Travel Week in Las Vegas the USA increased by two per cent, and capacity from Canada 8-13 August, 2015. grew 13 per cent, off the back of seasonal increases.2 >> The Inaugural ‘There’s Nothing like Australia’ Retail Roadshow >> Qantas and American Airlines (AA) announced expansion to their was held between 23-27 March 2015 visiting Toronto, New York, partnership in the USA.3 Chicago and Houston. Following the success of the first event, plans are underway to run a similar roadshow again in 2016. >> AA announced it will start new daily Los Angeles-Sydney flights in December 2015; this marks a return of AA aircraft to Australia >> Tourism Australia employed Business Events Manager, Paul for the first time since 1992. Flight tickets went on sale on Griffin (based in Boston) who commenced 30 April, 2015 and 27 July 2015. Business Events Specialist, Chris Ingram on 1 July 2015 (to be based in Los Angeles once relocated from New Zealand). >> Qantas will recommence six weekly departures from San Francisco in December 2015, and reduce Los Angeles-Sydney >> Tourism Australia attended IBTM America in Chicago in June frequencies by four per week, as well as their Los Angeles- 2015 to meet with key buyers from the North America region. Melbourne frequencies by one per week. >> Two educational visits from North America were welcomed >> Air New Zealand is expanding capacity between the USA and to Australia during Q2 2015. The first group, comprising eight Australia with five weekly services departing Houston starting incentive buyers, visited Cairns, Port Douglas and Sydney; while December 2015. the second group of seven incentive agents experienced Sydney and The Whitsundays. 100% of participants indicated they would >> Air Canada will commence three weekly Vancouver-Brisbane be more likely to send visitors to Australia as a result of their flights in June 2016 using new 787-9 aircraft. Air Canada have experience. said they intend to grow the Vancouver-Brisbane route to daily frequencies over time. >> Air New Zealand announced Buenos Aires-Auckland services commencing in December 2015; this new service will improve access to Australia from Argentina, Brazil and other Latin American markets.

2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation

12 Tourism Australia’s Quarterly Market Update | August 2015 UK and Europe

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

UK 669,500 0% 8% $3,524,611 0% Germany 188,300 6% 2% $1,028,468 1% France 118,900 6% 3% $743,160 7% Italy 73,600 2% -1% $493,234 0%

Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> Arrivals from the UK remained stable in the year Arrivals growth from Germany continued to peak, reaching ending March 2015; a solid result considering 188,300 for the year ending March 2015, and expenditure the comparison period saw more than rose above the $1 billion mark for the first time. Arrivals and expenditure from France remained positive, up six and seven per 40,000 incremental visitors to Australia for the cent respectively in the 12 months to March 2015. Italian arrivals Lions Rugby Tour and the Ashes Cricket Series. and spend however remained relatively flat. >> Arrivals growth from Germany continued to peak, Growth in Leisure visitation from European markets was driven reaching 188,300 for the year ending March 2015. by visitors for VFR purposes in the year ending March 2015. VFR In the same period, German expenditure rose above arrivals from Germany increased 14 per cent, while Holiday arrivals increased just four per cent. VFR arrivals from France increased $1 billion. 18 per cent, while Holiday arrivals increased one per cent. Arrivals from Italy for VFR purposes increased eight per cent, while Holiday >> Growth from France and Italy continued, driven by arrivals decreased four per cent. increases in VFR arrivals. However, overall growth has slowed from these markets due to a weaker working In the first three months of 2015, arrivals growth from Germany, holiday segment France and Italy has slowed. There has been a reported recent decline in Working Holiday Maker (WHM) Visa applications across European markets, with visitors from Italy being the most effected Australia retained the same level of UK arrivals in the year ending in the region to date. Tourism Australia will continue to monitor the March 2015 as the previous year – the year ending March 2014 situation and consider the need to address any declines through saw 10 per cent growth. It is estimated that Australia welcomed regional marketing and media activity. more than 40,000 incremental visitors from the UK for the British & Irish Lions Rugby Tour and the Ashes Cricket Series combined. The outlook for the UK and Europe remains positive, with UK arrivals increased eight per cent in the first three months of consumer confidence in the UK rising three points to an index 2015. In February and March 2015, the ICC Cricket World Cup of 97, the highest level since 2006 and closer to the optimistic delivered approximately 20,000 UK visitors to Australia according 100 baseline level. Unemployment in the UK continues to fall and to economic impact analysis conducted by PwC. The next relevant wage growth hit a four-year high. Confidence in Germany rose sporting events for Australia in the UK market include the 2017 two points to 100 in the March quarter off the back of record low Lions Tour to New Zealand in June and the Australian Ashes Tour unemployment and positive economic projections. Consumer starting November 2017. confidence levels in France and Italy remained subdued, indexing at 60 and 57 respectively, however both countries confidence For the year ending March 2015, UK Holiday visitors declined six increased in Q1 2015. The Italian economy grew in Q1 2015, the per cent (to approximately 250,000) while arrivals for Visiting first growth reported in four years.1 The debt crisis in Greece Friends and Relatives (VFR) purposes increased four per cent (to remains an ever-present issue in European media and has potential approximately 300,000). Since 2012, the VFR segment from the UK to impact other economies in the Eurozone depending on how the has been the largest by purpose of visit, currently accounting for situation unfolds in 2015-16. 45 per cent of arrivals to Australia, compared to visitors for Holiday purposes which accounted for 37 per cent of visitors.

1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, 2015.

13 Tourism Australia’s Quarterly Market Update | August 2015 UK and Europe

Aviation news Industry news

>> Etihad Airways introduced A380s on the Abu Dhabi-Sydney leg of >> DERTouristik Germany has acquired Swiss tour operator company its London-Sydney route, allowing passengers to travel by A380 Kuoni in Switzerland, UK, Scandinavia and Benelux. Discussions the entire way. Etihad added a second A380 to the London-Abu- on future development and strategy are still in progress. Dhabi part of the route last month. The new daily A380 Abu- >> Partnership Marketing Manager at Flight Centre, Sarah Dean Dhabi to Sydney service, together with an upgrade to a B777- accepted a position as Head of Marketing at STA. Sarah will 300ER from the current A340-600 for the airline’s other four commence on 10 August 2015. weekly flights, will increase the total number of two-way seats on the route by 30 per cent to 9,568 seats per week.2 >> Travel giant dnata announced its travel executive team with Stella Travel Services UK chief executive Andrew Botterill >> Etihad Airways commenced daily Edinburgh-Abu Dhabi service taking the top trade focused job in the UK and Europe. Botterill on 8 June 2015. The airline operates the route with A330-200 becomes Chief Executive of dnata travel B2B Europe, taking aircraft configured with 22 business class and 240 economy responsibility for all of the company’s UK trade-facing brands, seats. Edinburgh is the airline’s first destination in Scotland and including Travel2 (including Simply Luxury), Gold Medal its third in the UK. (including Pure Luxury) and The Global Travel Group. He will >> Etihad Airways appointed James Harrison as their UK General also be responsible for all airline relationships and commercial Manager, replacing Clive Wratten. negotiations across all dnata UK brands, for Netflights retail, and the Thomas Cook relationship. >> Singapore Airlines has launched premium economy seats and new inflight products following a two-year development >> TUI Group and Intrepid Travel have mutually agreed to end their program and investment of US$80 million. The new cabin class PEAK Adventure Travel Group tie-up, which started four years is designed to offer greater comfort and more inflight amenities ago. The venture, 60 per cent owned by TUI and 40 per cent by with priority check-in. The cabin class will enter service on Intrepid was designed to cut costs by at least £10 million a year 9 August 2015, and will be progressively introduced on 19 A380s, within the first three years through economies of scale. The 19 B777-300ERs and the airline’s first 20 A350s. The new cabin two groups will now part ways and Intrepid Travel co-founders class will initially be available on Sydney services before being Darrell Wade and Geoff Manchester will take back full ownership introduced to destinations including London. of the brand. >> Royal Brunei Airlines reported handling more than >> Explorer Fernreisen launched their special self-drive program for 130,000 passengers on its Brunei-Melbourne services since Australia with 19 tours. All of them FIT focussed. deploying B787-8 equipment on the route in April 2014. The >> Boomerang Reisen is closing its office in Freiburg, airline said the traffic placed it in the top four airlines for South of Germany. passengers transported from Melbourne onward to Dubai and London. >> Tourism Australia exhibited at two major Business Events trade shows in Europe in Q2 2015. Tourism Australia increased its >> Malaysia Airlines has announced it will cease flights to Brisbane presence at IMEX Frankfurt this year, the region’s signature as part of its measures to cut costs. The last service to Brisbane industry event which welcomed close to 9,000 participants. from Kuala Lumpur will be on 8 August 2015. The beach house inspired Australia stand hosted 15 partners and generated more than 50 leads. Three Australian industry partners joined Tourism Australia at the International Association Congress, attended by 210 association delegates.

2 Source: CAPA Centre for Aviation

14 Tourism Australia’s Quarterly Market Update | August 2015 New Zealand

Market Arrivals % Change % Change Spend (A$000) % Change (Year End March 2015) (Year End March 2015) (Jan to Mar 2015) (Year End March 2015) (Year End March 2015)

New Zealand 1,253,300 5% 5% $2,481,064 7%

Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia)

>> Visitor arrivals and expenditure growth from Industry & Aviation news New Zealand remained strong off a large base of 1.25 million visitors in the year-ending March 2015. >> For the year ending March 2015, direct capacity to Australia from New Zealand increased by three per cent, with an additional 2 >> Tourism Australia transitioned to a business events 119,000 seats compared to the previous year. only focus in New Zealand starting 1 July 2015. >> Air New Zealand announced a 30 per cent increase in Auckland- Perth capacity between December 2015 and May 2016. It has been another strong year for New Zealand arrivals to >> Qantas operated 21 additional services to Australia during the Australia, growing five per cent in the 12 months to March 2015. July 2015 school holiday period.3 New Zealand retained its position as Australia’s largest inbound >> NZ Stats indicated a 15 per cent drop in international airfares market based on visitor arrivals, and Australia also maintained its and a seven per cent fall in package holiday prices in Q1 2015. 48 per cent share of the outbound travel market. New Zealand Holiday arrivals to Australia grew six per cent, just short of >> Eight senior business events agents from New Zealand 500,000 visitors. VFR arrivals grew five per cent to 440,000 visitors participated in an educational visit to Tasmania to experience in the same period. Saffire Freycinet and Hobart in May 2015. In a post-famil survey 100 per cent of participants indicated they were ‘very satisfied’ In the 12 months to March 2015, spend by New Zealand visitors with their visit. to Australia totalled $2.5 billion, an increase of seven per cent. Leisure expenditure grew at a greater rate than total, up nine per cent to $1.6 billion; Leisure spend accounting for two thirds of all expenditure. Average trip spend overall for Kiwi visits to Australia was $2,172 based on an average stay of 14 nights. The repeat visitor rate from New Zealand remained steady at 94 per cent in the year ending March 2015. In the first three months of 2015, the five per cent growth rate of arrivals to Australia was maintained, ahead of the overall rate of outbound travel which increased four per cent. Consumer confidence in New Zealand increased one point to an optimistic index of 102 in the first quarter of 20151. The outlook for outbound travel is positive, with Australia in a good position given the recent shift to a more favourable exchange rate. New Zealand remains Australia’s largest inbound market for business events arrivals, and as announced in February 2015, Tourism Australia is set to focus solely on the business events opportunity presented in this market going forward. Visitors for Business purposes declined two per cent to 204,100 in the year ending March 2015, and it will be Tourism Australia’s priority to work with business events decision makers to arrest any further declines going forward. Business events specific data for New Zealand and other markets will be reported later in the year.

15 Tourism Australia’s Quarterly Market Update | August 2015