Economic Watch: Australian tourism slowly recovers amid glimmer of hope

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SYDNEY, April 12 (Xinhua) — With Australia-New Zealand quarantine-free travel bubble to start within weeks, a glimmer of hope in uncertainties was brought to Australia’s struggling tourism sector.

As one of the worst-hit sectors during the COVID-19 pandemic, Australia’s tourism gross domestic product (GDP) fell 18.9 percent to 49.6 billion Australian dollars (37.9 billion U.S. dollars) in the financial year from July 2019 to June 2020, the lowest level since the financial year 2013-2014. Tourism’s contribution to the country’s GDP fell from 3.1 percent to 2.5 percent.

“They were the first to be impacted by measures introduced by governments in response to COVID, and will be among the last to recover,” Deloitte’s Tourism and Hotel Market Outlook 2021 said.

HUGE SHOCK

The biggest impact was the international travel restrictions. Statistics from the Australian Bureau of Statistics showed international arrivals in February 2021 witnessed an 18.5 percent decrease compared to the previous month and a 98.4 percent decrease compared to the corresponding month of the previous year, and only 8.5 percent of all arrivals were those arriving on temporary other visas.

“Our sector which relies almost entirely on international travel slammed to a shut in February last year. Nine out of 10 travel businesses have been surviving on a decline in revenue of 90 percent since then and most businesses have experienced at least a 70 percent decline,” said Australian Federation of Travel Agents (AFTA) Chair Tom Manwaring.

As the Australian government decided to extend border lockdown for another three months to June, hope for revival was placed on domestic travel market.

“We need to get domestic spending primed and pumping again,” said a spokesperson from the Australian Trade and Investment Commission.

The spokesperson told Xinhua in a written interview that before COVID-19, domestic tourism made up approximately 77 percent or 107 billion Australian dollars (81.6 billion U.S. dollars) of tourism spend.

TURN TO DOMESTIC MARKET

To encourage people to travel around, the Australian government put forward a 1.2 billion Australian dollar (915 million U.S. dollars) support package.

Travellers could get access to 800,000 half-price flight tickets to 13 tourism-reliant regions, subsidised by the government as part of the package.

Some local governments, including the states of New South Wales (NSW) and Victoria, also gave out vouchers to encourage residents to spend more in local businesses.

However, analysts expressed cautious optimism about how much domestic travel market could offset the losses from the international market.

Associate professor of the University of Queensland Gabby Walters told Xinhua that the domestic market will help, but won’t entirely offset, given that domestic travellers tend not to spend as much money as international travellers. The possible border closure or restrictions triggered by pandemic also make people reluctant to travel far away.

Just before the Easter holiday, locally transmitted COVID-19 cluster forced a regional music festival in Byron Bay, a coastal town in New South Wales, to be cancelled in the last minute.

CEO of Live Performance Australia Evelyn Richardson told national broadcaster ABC that the festival had sustained a “10 million Australian dollar (7.6 million U.S. dollars) loss” from the cancellation.

Another heavy blow is the end of Jobkeeper Program, a wages subsidy scheme which helped the tourism industry retain skilled and experienced staff during the hard time.

AFTA recently put out a research claiming that without a JobKeeper extension beyond March 28, eight in 10 people working in travel and tourism sector will be out of a job and 30 percent of businesses will be forced to close, according to the Australian Financial Review.

A survey by the NSW Tourism Industry Council found that 42 percent of the NSW tourism businesses would be forced to reduce staff numbers while 53 percent would reduce staff hours when JobKeeper was withdrawn.

UNCERTAIN RECOVERY

Deloitte said that there is evidence of recovery for the domestic travel sector through the first quarter of 2021, while international travel is not expected to recover to near pre-COVID-19 levels until sometime in 2023.

“The post-COVID recovery for Australian tourism will depend on a range of factors, including local and global economic conditions, ongoing government responses to managing the health crisis, travel restrictions and consumer confidence and behaviour,” said Adele Labine-Romain, Deloitte Access Economics partner and Deloitte national tourism leader.

Before the majority of Australians are vaccinated with similar patterns around the world, there may not be much change, Walters said.

“It’s really hard to put a date on the exact time (for the recovery of tourism) because nobody knows. Things change every single day,” the scholar said, adding “I think people just need to travel as much as possible, be in local, buy local. Even if they can’t get to a particular tour, get online and buy some product that they normally sell to overseas tourists.” Enditem

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