Tourism predicts delayed recovery

By: Jason Whittaker

Almost half of Australia’s tourism businesses do not expect a sustained recovery until the second half of next year, according

Almost half of Australia’s tourism businesses do not expect a sustained recovery until the second half of next year, according to the Tourism and Transport Forum(TTF).

The TTF-MasterCard Tourism Industry Sentiment Survey reveals 45 percent of operators are predicting a delay, with the third quarter of 2010 the most common response for a turn-around.

TTF Managing Director, Christopher Brown, says it is clear industry now expects conditions to remain depressed for longer.

"Just three months ago, quarter one 2010 was the most popular response, indicating that operators expect the downturn to persist for six months longer than previously," Brown says.

"Also, while the TTF-MasterCard Industry Sentiment Index is up 9 points to 71, activity remains significantly below what could reasonably be expected at this time of year," he says.

According to TTF, this rise is almost entirely due to expectations for international tourism, which have jumped from 50 in the second quarter to 63 for the third quarter.

"Expectations for domestic tourism – which accounts for almost three quarters of Australian tourism activity - remain virtually unchanged at 77, up from 75 in Quarter 2," Brown explains.

"Combined, these results indicate that operators believe we may have hit the bottom, although conditions are not expected to improve in a hurry," he says.

However, Brown says there are possible signs of green shoots, with intentions regarding staffing levels improving in the last three months.

"In April, 44 percent of businesses expected to make no future cuts to staffing levels. But that’s now jumped to 68 percent," he says.

Overall, the proportion of businesses which have, or will, cut staffing levels has fallen substantially from 72 percent to 59 percent.

According to Brown, this indicates that many employers have taken action in the early stages of the economic slowdown to ensure business viability.

"It also suggests that while many operators believe signs of improvement are marginal, conditions are not going to get worse," Brown says.

"Nearly half-a-million Australians are directly employed in tourism, which is 4.7 percent of all jobs nationwide, and nearly half of those jobs are in regional areas," he says.

The latest TTF survey shows rural and remote areas dependent on tourism for economic activity and employment are being hit hardest.

Tropical North Queensland and the Northern Territory are two spots in particular that are buckling under pressure.

"This is supported by recent accommodation sector figures, which show 5,573 job losses in the six months to the end of March, 73 percent of which were outside the capital cities," Brown says.

"The latest ABS jobs figures also show the impact on tourism-dependent areas, with unemployment in Far North Queensland (including Cairns) at 10.7 percent and the New South Wales north coast at 10.1 percent," he says.

"As tourism is a labour-intensive service industry, increasing demand helps to retain and create employment, which is a stated aim of governments around the country during the economic downturn."

Due to the impact of the economic downturn on the tourism sector, the TTF is calling on the Federal Government to provide a one-off injection of $40 million for tactical marketing partnerships.

This could then be matched by industry, to promote Australia in the markets which are responding to current campaigns.

"Well-funded domestic marketing is also essential to the industry’s well-being and employment outlook, as it accounts for almost three-quarters of tourism activity in Australia," Brown says.

According to the survey, business events and major events sectors are performing the worst, while luxury travel has also been hard hit.

Best performing sectors include backpacker/youth travel, low end/budget travel and drive tourism.

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