COMMENTARY: Tourism’s Slow-down Down Under: Euro Back-packers Not So Keen As Once Before …
- November 1st, 2012
- Posted by EUEditor
Australian tourism is casting around for some new formulae to get the good times rolling again.
Whether pricing itself out of business, with the high A-dollar, or being cold-shouldered by very many of those leading global travellers, the Europeans, it’s a case of a lead export industry now running at well below optimum levels.
Writer Elena Eichenlaub has been looking at the facts and figures of the business, while taking in some of the sights of the land of overpowering beauty and adventure, and talking to people on the ground – getting things I n perspective.
She says one of the key the answers to the present Australian dilemma, a new tourist trade from Asia, has been sluggish to get going. Elena Eichenlaub writes:
TRYING A NEW DEAL
Last week, Tourism Australia signed a A$14-million joint marketing agreement with the Emirates airline, hoping to boost visits from its traditional European prime markets, namely the United Kingdom, France, Germany and Italy.
As top spenders the four countries account for 20% of all tourism expenditure across the globe, with Germans, ranked first, having spent A$ 80.25-billion on tourism last year.
But difficult economic conditions in Europe have reduced the motivation of Europeans to travel long haul, let alone to visit far-far-away Australia.
The UK market as the second strongest contributor to Australian tourism declined by 8.1% last year, and other European markets such as Germany stopped growing.
Leo Seaton, spokesperson for Tourism Australia, is confident that the large volume European markets will bounce back as their economies return to growth.
He says Australia remains a highly desirable destination amongst Europeans, and as Europe’s economic woes subside, the visitors will come back.
However, not just the European debt crisis is to be blamed for the decline of the European market, but also the strong Australian economy.
The mining boom, along with other causes has pushed the Australian dollar to sustained highs, hurting other industries like tourism.
Five years ago £1 in British money bought A$2.50; today it’s closer to A$1.50.
Even Byron Bay, popular amongst backpackers for its hippie culture, has been hit by the recent woes of the industry.
Todd Batson, manager of Aquarius Backpacker at Byron Bay says Europeans are not staying as long any more because they are now looking for work as soon as they arrive in the country.
“They used to travel for three or four months. But they haven’t got as much money as what they used to, and as the Australian dollar is quite high, their money doesn’t last long,†Mr. Batson says.
Tourism is essential to the Australian economy and significant for the growth of all sectors.
Its direct contribution to Australia’s GDP was worth $34.6-billion in 2010–11, or around 2.5% of GDP.
Being labor-intensive, tourism’s share of jobs in Australia (4.5%) was even greater than its economic contribution, with around 513,700 persons employed directly in 2010–11.
ALL ROADS LEAD TO EUROPE
According to the United Nations World Tourism Organisation, total global international arrivals are expected to reach a record of one billion this year – and it’s Europe that is still the biggest market accounting for 53% of all tourist arrivals across the globe.
So, whereas tourism prospers in a global context, Australia is experiencing a slowdown, with a decrease in international tourist arrivals by 0.2% last year.
Yet Australia still ranks eighth for international tourism receipts worldwide and has the highest spend per trip from international visitors.
Within the Asia-Pacific region Australia’s share of international tourist receipts was 10.9% in 2011, second only to China.
Concurrent with stagnating conditions in Europe, Asia has become the new driver of the industry, with China as the number one market in terms of total value. Chinese tourists generated A$3.5-billion dollars in revenue last year, 17% more than the year before.
WATCHING THE TRENDS
Australian Tourism Ministers have been watching this.
They have added a special focus on Asia under the National Long-Term Tourism Strategy to build strong growth from markets such as China, Singapore, Malaysia, and the emerging markets of India and Indonesia. The China market is projected to be worth up to A$9-billion alone by 2020.
The Managing Director of Tourism Australia, Andrew McEvoy, has said being ‘China ready’ was critical if the industry was to fully leverage Australia’s destination appeal amongst China’s new urban elite. He requested that Australian tourism operators should tailor their services according to the needs of Chinese visitors, to embrace the opportunity.
It will demand adjustments on some scale, actually leaving a range of business owners empty-handed; services that have traditionally attracted European travelers might struggle to maintain in business.
A Northern Territory safari tour operator, Genda Campbell, has noticed a decline of European travelers this year.
Having specialised on catering to European backpackers, he now experiences falling demand for his tours through Kakadu National Park.
“Our tours filled out only the day before, some trips were even short. Last year, we had to turn people away because we had such high demands,†Mr. Campbell says.
HIGH PRICES
Mr. Campbell believes it’s the remarkably high prices for service, food and accommodation in Darwin and Kakadu Park that are turning tourists away.
“It’s not a bonus for people to come here any more. Only the dedicated people who want to see these particular places come up here,†he says.
The government’s recent ‘State of the Industry’ report has affirmed this single case experience by presenting double-digit declines in international holiday package and non-package travel expenditure.
Tourism Research Australia data show that regional areas in the Northern Territory were by far the most reliant on tourism expenditure nationwide.
Genda Campbell says he has noticed more South Koreans over the past years, but they would not make up for the lost numbers; and contrary to the Australian Government’s projections on tourism, he has hardly as yet had any Chinese customers.
Despite figures showing that international tourists spend more than 82% of their overall expenditure in the capital cities and the Queensland Gold Coast, business in those areas has still gone flat.
The bad floods in Queensland had a strong impact especially on tourism in the state, but tourists were already spending less all across Australia in the March quarter of 2011, nine months ahead of the main trouible.
For the Directing Manager of Tourist Australia, Vincent Borg, this meant he had to reduce staff from nine to two.
He says two years ago he used to get a lot of requests for big tours along the East Coast. While people would spend up to A$3000 on a tour back then, they would now book only one- or two-day-tours.
Most of the requests would still come from Europeans on a working holiday; Asian customers were rare.
What he finds most challenging is that people are looking for prices that are not realistic. He believes the market will become much more price-driven in the near future.
“Quite possibly there is going to be a reduction of quality of tourism products to get the prices that tourists are actually willing to pay,†he predicts.
Three months ago he closed down his sports car rental company at the Gold Coast where Europeans accounted for 60% cent of his clients.
DOWN UNDER FOR HIGHER LEARNING
Recent results of international visitor surveys have shown that holiday visitors are the biggest spenders on tourism in Australia, followed by visitors who travel for education purposes.
Education travel – going to Australia to study – has long been the largest contributor to tourism export earnings in Australia, with 45% growth between 2000 and 2010.
Higher education is the most economically significant part of the sector. Making up a third of the total international student market, it generates more than half of its export revenue. On average, each international higher education student spends $33000 on services and accommodation while living in Australia.
However, once again, international student numbers have started to decrease since 2010. Recent data indicate a 5.1% decline in commencements compared to last year.
This would have little to do with the current financial situation in Europe, states Charles Tyler, international student recruiter at the University of Sydney.
The European debt crisis would only be a minor factor in the Australian dollar’s rise, and in addition, Europeans would account for only 5% of all international students which is small compared to numbers from other regions of the world.
“Half of our German and Scandinavian students and a third of our UK students are on Study Abroad or Exchange programs, and might be exempt from tuition fees,†Mr. Tyler adds.
For the University of Sydney as for most universities across the country, the most valuable markets are China and India, accounting for about 30% of all international students – and all top five countries come from the Asian market.
Mr. Tyler said the main impact of declining numbers of international students was the loss in revenue, and the university had decided to increase its fees to make up for the losses.
GET A BARGAIN IN THE BUSH
That is not really an option for the smaller, regional universities, which have smaller offerings, and feel a need to stay competitive through low fees.
Tessa Mao, marketing co-ordinator at the University of Ballarat in Victoria, reports that international student numbers have grown over the past years, but only because the fees are about 50% lower than in Melbourne.
THE RED CENTRE STILL BECKONS
As for the legions of young Europeans yet to be seen around the highways, adventure sites and fun spots of the country; even while the European market may not be so valuable to the universities as Asia, European students still benefit the economy in their role as backpackers, during their spare time.
In fact, many Europeans regard their study visit in Australia as a lifetime opportunity to travel the country.
German student Svenja Köfeler initially arrived as a backpacker four years ago, and she says she she enrolled to study because she wanted to stay longer.
The strong Aussie dollar has not restrained her from travelling.
Svenja still visited most of the places she wanted to see, most recently Darwin and the Red Centre, and works in several casual jobs to cover the high living costs.
Laura Eggeling decided to study in Australia because she wanted to experience the Aussie lifestyle; She believes Australia is attractive to Europeans because of its potential for adventure.
“It’s far away from home and also so different; that’s exciting,†she says.
More than half of Australia’s tourist arrivals are return visitors, Laura being one example, as a person who visited Australia before she decided to return as a student.
COSTS OF FLYING, ALSO
Whereas capacity and connections between Australia and continental Europe have increased over the past few years, especially through Middle Eastern airlines, flight prices have climbed by approximately 15% due to fuel surcharges and rising taxes.
With the added impact from price reductions to other destinations, industry feedback has indicated that Australia is now the most expensive long-haul destination from France and Germany, in the financial year ending in 2011.
This gets back to the recent marketing deal signed with Emirates by Tourism Australia, which seems to have determined that, all things considered, Australia is going to keep on being a highly desirable travel destination amongst Europeans.
Will all the money it now takes to visit Australia, turn out to be such good value, that the travelers will return; people at the bottom of the world will excitedly wait for them to come back for another round – if they ever will.