While Australia has achieved so much in combatting the Covid-19 pandemic, this has imposed a particularly heavy burden on the country’s tourism and hotel sectors.
Releasing the 2021 edition of the ‘Deloitte Access Economics Tourism and Hotel Market Outlook’, Deloitte’s Adele Labine-Romain, said: “These have been, and they absolutely remain, testing and uncertain times for our tourism and hotel operators who employ so many people and who are so important to brand Australia.
Sectors first to be hit and last to recover
“They were the first to be impacted by measures introduced in response to Covid and will be among the last to recover.”
She said that, given the minimal revenue being generated by international travel and tourism in the short term, domestic demand would have to lead the recovery.
“And when international travel restrictions lift, Australia will face an extremely competitive landscape with [many other] countries looking to reactivate their tourism industries as part of [their] recovery from the impacts of the pandemic,” she emphasised.
Tourism’s 2019 high is a distant memory
Prior to Covid, growth in Australia’s tourism sector was outpacing growth in the wider economy. From 2009 to 2019, tourism expenditure saw average annual growth of 6% and 2019 saw a record high of 9.5-million overseas visitors arrive in Australia, spending $45-billion.
According to Labine-Romain, when the pandemic hit, international visitor arrivals globally fell by one billion, or 74%, and the Asia Pacific region suffered the most.
“In Australia, inbound international and interstate travel fell by 81% and 65% respectively. The impact of the decline is dramatic – 7.6-million fewer international arrivals and 45-million fewer domestic overnight trips, resulting in a loss of around $85-billion in visitor spend.”
She said there was evidence of recovery for the domestic travel sector during the first quarter of 2021 via pent-up demand following the travel restrictions experienced in 2020. This recovery process was being aided by incentives and marketing campaigns to get Australians to holiday within the country.
“Should the pandemic remain largely in control – at least from an Australian perspective – domestic overnight trips are forecast to grow to 113-million by the end of 2021, [which is] just under 2019 levels – and to 134-million trips by 2023, a 14% increase on 2019.”
Equally stark impact on the hotel industry
Labine-Romain said the impact of Covid-19 had been equally stark for hotel operators. In 2020, travel restrictions led to hotel occupancy plunging to a low of 45%, a decline of almost 30 points on 2019.
Despite the devastating operating climate in 2020, over 5,000 new hotel rooms were added to the market in that year. And, looking ahead, there was the potential for more than 32,000 new rooms to be added. Around 40% of those were anticipated to open in 2022.
“With plenty of new [room]stock, and even more in the pipeline, hoteliers will face considerable headwinds, with average occupancy rates across the major markets covered in the report forecast to remain considerably lower than in recent years,” she stated.
“We expect the pace of recovery to be different across the city markets. Brisbane and Perth are likely to see occupancy rates returning to 2019 levels by 2023. The Gold Coast, Adelaide, Hobart, Tropical North Queensland and Western Sydney are expected to be slower to recover, largely due to their greater exposure to either business travel or international tourists, or both.”