15th April 2020
Article by Simon Westaway | Strategy Director
So where to from here?
Coming out of the traditionally high-travel, recreational and major family, friend and event period that is Easter, this of course has been anything but normal. The important religious significance of this time to so many Australians has also been restricted to the household and online and digital receival of church services.
A nice PR line was recently hatched that at least the Easter Bunny was declared sometime back as an essential worker. Our sense at Royce is that the EB did his duty well last Sunday.
One of Royce’s specialist practice areas is the tourism and visitor economy. It’s a great sector, a genuine national economic pillar and several of our people have real insight and importantly executive leadership and operational expertise where it has counted on the inside. We remain well placed to best guide existing and future clients as our deep experience includes in aviation, national and state tourism marketing agencies, destination marketing, major events and public policy delivery.
Backward facing, but nonetheless just-released and informative data from the Federal agency inside Austrade, Tourism Research Australia, had both our domestic and visitor industry to the year to 31 December 2019 running at record levels in terms of spend and recorded overnights (both at 12% on the domestic front) along with a genuine spread of travel.
Holistically and pre-COVID-19 and the horrendous bushfire events over our long, (but to some a quickly forgotten summer), has rapidly shrunk Australia’s $150 billion visitor economy in annual value in real terms. At Australian tourism’s latest peak at the end of 2019 an estimated 1 in 13 Australians workers were directly employed within it! So, it makes sense how hard things rapidly came about with those spiralling jobless queues outside of Centrelink offices of recent times.
Industry experts and those with long memories have to date made the point that tourism and travel, which has been hit so hard on all fronts – domestic, international, business and organised events – since the onset of the virus, can also be best placed to generate green shoots in the aftermath.
This is however a simplistic view, good for a headline, but ignorant of the major macro and micro economic and social impacts now at play and where the global economy is estimated to have contracted by over 1/3rd in rapid fire time. Australia of course is not immune.
It needs acknowledging that amongst the small number of high-profile industry players in travel, tourism and aviation, the vast bulk of visitor economy enterprise delivery points are done by small business and most defined as having 5 or fewer employees including many sole traders.
Further, the current realities are that accommodation rates remain well below 10%; Qantas and Virgin Australia are now collectively flying only between 5 to 6 return flights a day on one of the world’s largest air routes – the Sydney-Melbourne corridor – and State by State and a number of regional travel restrictions alongside the well-entrenched international travel ban to Australia remain steadfastly in place. Hundreds of thousands of Australians have lost their roles or are within the JobKeeper arrangements and superannuation returns are under great pressure. The drivers for an immediate return to travel and leisure activity are frankly not particularly strong.
As such the greenest of green shoots for Australian tourism and local travel may look decidedly less fertile at immediate close inspection and those engaged around this great industry sector need to be circumspect. Yet unquestionably once the green light is given by Federal and respective State authorities (and we believe this will not be simultaneous) the healthy, wealthy and many other Australians will again get on the move.
Like the response to a ‘standard’ natural disaster this could initially be for day trips or short getaways, a reconnection by car or caravan with nearby appealing regions with family and long-needed-to-see friends. It may even be spurred along while junior, amateur and professional sports (including the AFL and NRL) remain effectively in hibernation until later this year.
As an insight that very short period after the Victorian fires dissipated at the end of January and pre-COVID-19 into mid-February, there was real evidence of people doing just this and over-emphasising their activity in terms of length of stay and spend in some select regional areas based on data we’re privy too.
At Royce we’d welcome a conversation over the phone or via Zoom around where your response or perceived opportunity within our visitor economy may next lie.