Tapping our tourism potential

Australia is experiencing a boom in its terms of trade, due in part to record prices for many of our export commodities including minerals and energy.

Our highly favourable terms of trade have been a contributing factor to the strengthening of the Australian dollar, particularly against the US dollar.

While this has meant cheaper imported goods for Australian consumers, it has also placed pressure on manufacturing, tourism, education and other sectors of our economy.
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The tourism sector is struggling under the twin pressures of a high dollar and a collapse in domestic consumer confidence that has translated into reduced discretionary spending on items such as holidays.

A strong dollar not only makes Australia less attractive for tourists from other countries, it also makes international travel cheaper for Australians.

In the longer term, I believe that there is enormous potential for Australia to become an even bigger tourist destination because of our location and unparalleled natural attractions. Our geography will be our destiny.

By 2020, it is predicted that many of the world's largest economies will be in Asia including China, Japan, South Korea, India and Indonesia.

Asia will be home to 12 of the world's 22 largest mega-cities – defined as urban areas of more than 10 million people.

A report from the World Tourism Organisation and Hong Kong Polytechnic University titled "Mega Trends of Tourism in Asia-Pacific" identified some important trends in our region, with implications for tourism in particular.

For example it found that people are more focused on activities at their destination, rather than the destination per se, with people looking for flexible or customised tours and experiences.

New Zealand has been very successful in promoting tours to stunning locations where the Lord of the Rings movies were shot.

Similarly, Singapore and Indonesia have been successful in attracting Bollywood movie producers to shoot at least part of their films in their countries, thus attracting tourists who want to relive the romance of the movie while on holiday.

Australia has the potential to capitalise on such trends. (As an aside, as much as I loved it, I am not sure whether the movie Red Dog will attract significant numbers of tourists to our north west.)

China and India will increasingly dominate tourism flows around south-east Asia and the Pacific.

It has been forecast that by 2020 Asia will have more middle class consumers than the rest of the world combined with China expected to surpass the United States as the world's single largest middle class market in dollar terms.

China's middle class is already estimated to be at least 157 million people, but at only 12 per cent of its population that cohort is expected to grow sharply in the next 10 years.

It has already overtaken Britain as Australia's most valuable tourism market as measured by ''total inbound economic value'' worth more than $3 billion last year.

Analysts have pointed to the fact that Chinese consumers are now responsible for more than 25 per cent of global luxury goods sales and 13 per cent of global car sales, and is the world's largest mobile phone market, with increasing clout in many other consumer markets.

Similarly, the Chinese middle class is travelling abroad and contributing to huge growth in tourism in the Asia-Pacific region.

According to the latest report from the World Tourism Organisation, there was an increase in international travel of 4.5 per cent in the first four months of this year, compared with 2010.

The report predicts strong growth in international tourism for the remainder of this year, with at least 5 per cent growth in travel to the Pacific.

Inbound international tourism into Australia has grown steadily in recent years with 5.586 million in 2008 and 5.885 million in 2010.

However, this compares with annual growth of inbound tourism to Vietnam of 35 per cent per cent, China 27 per cent, Singapore 22 per cent, Cambodia 17 per cent, Philippines 17 per cent and double digit growth for many other countries in the region.

Tourism Research Australia is predicting that the strong Australian dollar will be with us for some time, predicting an average value against the Greenback of 85-87c from 2011 to 2020.

While 2011 is forecast to have lower than expected tourism growth due in part to the Japan earthquake and tsunami, the organisation is forecasting a stronger inbound tourism market next year, partly on the back of a slight weakening in the value of the Australian dollar.

Australia should be well positioned to take advantage of the opportunities presented.

One of the most important contributions the federal government can make to support our tourism sector is to boost consumer confidence in Australia, which has dropped to historically low levels.

People's expectations about the future have a direct impact on their spending and investment behavior.

If they feel positive about the direction in which the country is heading, and have confidence in government policies, they will spend and invest accordingly, which leads to increased economic activity.

However, survey after survey has found consumer confidence in Australia to be at a low ebb, along with business and investor confidence.

A recent Sensis Index showed that confidence in this government's policies is at a 15-year low.

The lack of policy cohesion and chaotic policy implementation has reached legendary proportions and the government's misguided carbon tax and ill-considered gaming reforms only add to the lack of confidence.

These particular policies will for example increase the costs for tourism operators in Australia compared with our competitors in the region, but will not solve the issues of increasing greenhouse gas emissions or problem gambling.

Australia should be promoted in the Asia Pacific Indian Ocean region as one of the safest and most appealing tourist destinations but we face increasing competition from around the world.

A lack of confidence in this government's policies and performance does nothing to enhance our tourism sector, at a time when the burgeoning Asian middle class is setting sail for foreign shores.

Soure - smh.com.au