Tourists keep coming – but is there room at the inn?

Tourism, already one of Australia’s key economic drivers, is set for exceptional growth over the next decade.

International visitors to our country will rise by 50% over the coming decade, from the 7.1 million recorded for the past year 2014-2015, to 10.6 million in 2024-25, according to Tourism Research Australia (TRA).  That’s an increase of 3.5 million visitors – twice the size of the increase seen over the previous decade.

As the tourists keep coming, one thing is for sure: they will all need somewhere to stay, and new stock will be required to accommodate them.

Overseas arrivals are only part of the story of our significant growth in tourism.  Over the next decade, domestic overnight trips are forecast to rise from 83.2 million to 119.4 million.  This is an increase of just over 36 million trips and is three times the increase of the previous decade.

How well placed are we to provide accommodation for tourists?  Let’s look at the situation by accommodation type.

Increase in the demand for hotel rooms in the 10 years to 2013-14 outstripped the increase in supply.  Even though the stock of hotel rooms increased by 13% over this period, occupancy rates for all rooms still increased by a further 4.5%, from nearly 67% to over 71%.

During this time, the stock of serviced apartment rooms has increased by a staggering 40%.  This huge increase in stock has been matched by demand, so that occupancy rates have remained stable over the past 10 years.

The stock and occupancy rates of motel rooms have remained stagnant for the past decade, suggesting that this once popular form of Australian holiday accommodation is waning in appeal as tourists opt for apartments which afford the conveniences of home, such as kitchens and laundries.

Across the board, the stock of rooms in hotels, motels and serviced apartments has increased by 13% from 207,300 rooms to 229,600, at an average annual growth rate of 1.2% over the decade to 2013-14.

The healthy forecasts for tourism are largely a result of the steady growth of the Australian economy, the weakening of the Australian dollar, lower aviation fuel prices and increasing incomes of residents of international growth markets.

Tourism directly accounted for $40 billion, or 2.7%, of Australia’s national gross value added (GVA) in 2013-14, according to TRA. This was higher than the 2.5% share of GVA provided by the agriculture industry, traditionally seen as one of the pillars of our economy. Tourism directly employed 534,000 jobs, or 4.7% of national employment.

Indirectly, tourism attributed $50 billion to Australia’s GDP (generating a total flow-on effect of $93 billion to total national GDP). Tourism indirectly provided 391,000 FTE jobs, generating a total flow-on effect of 925,000 jobs in 2013-14. This was equivalent to 1 in 12 jobs across Australia.

It is clear that tourism is very important for the Australian economy, and will become increasingly valuable as it shoulders a greater portion of responsibility for our economic well-being.  We need to ensure that we have sufficient and appropriate accommodation for our overseas visitors and domestic tourists so they don’t seek to travel somewhere else.

Inbound Visitor Arrivals and Domestic Overnight Trips, Growth Rates, 2006 – 2025

Graph1_TourismSource: Tourism Research Australia, Tourism Forecasts (2015) ; MacroPlan (2015)

 

Stock of Hotels, Motels and Serviced Apartments, 2004 – 2014

Graph2_TourismSource: ABS Cat. no. 8635.0 Tourist Accommodation (2004 – 2014) ; MacroPlan (2015)

 

About MacroPlan:

MacroPlan’s experienced and qualified economists align their understanding of macro-economic forces with micro-economic variables such as geographic and industrial characteristics, demographics, labour market shifts, resource demand and commercial realities.  Contact Joel Taylor – General Manager National Business Development today to discuss your property research requirements.

 

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