Canberra
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INTRODUCTION
Welcome to the 2nd Annual Australian Tourism Directions conference.
This Conference is an initiative of the National Long Term Tourism Strategy to deliver market leading information, sector analysis and industry assessment.
The program has been designed to challenge industry and encourage debate and audience participation.
STATE OF THE INDUSTRY
By now, many of you will have taken the opportunity to absorb the 2011 State of the Industry Report in detail.
Those looking for a “good” assessment or a “bad” one will be disappointed.
You and I know the reality is more complex.
A lot has happened since I spoke at the inaugural Tourism Directions Conference in November last year.
OPRAH VISIT
In December we experienced the Oprah effect.
Before the shows even aired in 145 countries, the investment of $5 million by governments, had paid for itself many times over.
And although Oprah can’t fix the US economy, I remind you that thanks to Tourism Australia’s excellent work more than 86,800 media stories about Oprah’s Ultimate Australian Adventure generated $380 million in free promotion.
NATURAL DISASTERS
Then we were struck by the first two natural disasters - the Queensland floods, and Cyclone Yasi.
Together they wiped $1.4 billion off total visitor expenditure in the March quarter 2011 compared with the previous March quarter.
We then had the international disasters - the Japanese and New Zealand Earthquakes and the Chilean volcanic ash cloud, which further impacted the industry.
Although the Japanese market has been gradually falling from its peak in 1996, arrivals plummeted by 18 per cent in the first eight months of this year.
INTERNATIONAL TOURISM
Fortunately for Australia, this next century is the Asian century.
A remarkable shift occurred within our international tourism market in the September quarter last year, which cannot go unremarked, even though it went largely unnoticed by those outside the sector.
China surpassed the UK as Australia’s most valuable tourism market, with its value now beyond $3.4 billion per year.
Last financial year there were 475,000 Chinese visitors to Australia - an incredible 26 per cent more than the year before.
In many ways, Australia is turning to face not just China but our other near neighbours.
It is envisaged that there will be visitor spending levels well over $1 billion per annum each from India, South Korea and Malaysia by the end of the decade.
The Australian Government and Tourism Australia will invest over $55 million in 2011/12 telling the world that “There’s nothing like Australia” with significant investments in China, Japan and Korea.
We will maintain our investment in Australia’s traditional high yield markets such as the USA, UK and New Zealand, which continue to be important despite their domestic economic setbacks.
International arrivals are forecast to grow by 3.4 per cent a year to reach 8.1 million by 2020.
AIR CAPACITY
And Australia’s air capacity is increasing to accommodate this growth.
Airlines such as China Southern recently announced increased services, doubling the daily direct flights into Melbourne to two, adding an extra flight per week into Brisbane taking the total to four and introducing three a week into Perth.
Seat capacity between China and Australia is estimated to quadruple to more than 2.4 million seats by 2020.
DOMESTIC TOURISM
The State of the Industry report highlights the challenges for domestic tourism.
Increased national wealth and a high Australian dollar mean that more and more Australians are heading overseas.
At the same time households are also changing the way they spend their income, focussing on paying down their mortgages and other debts, and directing more and more money into paying for services like mobile phones and pay TV.
Despite this, domestic tourism has secured a $43 billion share of the consumer purse, one per cent more than last year and visitor nights are also up 0.3 per cent Australia wide.
The real challenge though will be in getting those international visitors into the regions.
Whereas UK visitors spend 39 per cent of their nights outside the gateway cities, Chinese visitors only spend 18 per cent.
Attractions such as the impressive Chinese Golden Dragon Museum I visited last week in Bendigo and Winemakers Federation plan to improve cellar door experiences are just two examples of how work is being done to lure visitors to regions.
CHALLENGES
Australians are travelling overseas in record numbers and while this is a factor of the high Australian dollar another key driver is wealth.
Australians have seen a 29 per cent increase in average real disposable household weekly income since 2000.
The rapid industrialisation of China (and India) is creating unprecedented demand for Australia’s resources and rapid expansion of our minerals and energy sectors.
Industries such as tourism will continue to face intense competition for labour.
As the Australian Tourism Labour Force Report we released today shows, there are at least 35,000 tourism and hospitality vacancies currently across Australia, which is expected to grow to 56,000 by 2015.
And growth in tourism investment is much lower than for growth in Australian investment overall.
For the period 2000-01 to 2009-10, investment growth in tourism was only 3.9 per cent, compared to 7.3 per cent growth for the over all economy.
Right now, while the industry is getting back on its feet we’re facing a challenge of another kind- the inconvenient displacement of travellers as a result of the industrial action by Unions against Qantas.
Airlines such as Qantas and Virgin are fundamental to the viability of our domestic tourism operators – both big and small.
Combined they move more than 41,500 passengers to 60 cities and regional destinations on more than 5,600 flights per week, from Melbourne to Mount Isa and from Darwin to Devonport.
Like the tourism industry Government wants all parties to reach a resolution and settle their disputes as quickly as possible. It’s in the best interest of Union members, Qantas and the inconvenienced Australian travellers who depend on fast and reliable air travel to traverse our vast continent for both business and leisure.
Just as important are the businesses and their employees whose incomes, directly or indirectly depend upon the smooth functioning of our air travel system.
I would note however, that in terms of the potential for Government intervention, there is no need for any amendments to the Act.
The Fair Work Act already provides that in exceptional circumstances, industrial action that has wider implications than for just one business can be suspended or terminated if it threatens significant damage to the economy or to the welfare or safety of the population.
Clearly if the disputes go on for much longer industry will continue to clamour for action and the Government will be required to consider potential actions available to us under the Act.
THE WAY FORWARD
So what lies ahead for Australia’s $34 billion tourism sector and its almost 500,000 directly employed workers?
As we move beyond these foundation years with our micro-economic reform agenda, the industry can expect to see even more outcomes from the National Long Term Tourism Strategy.
We’ll continue our investment in tourism skills and labour with more initiatives like the Pacific Seasonal Worker program pilot in Broome with workers from East Timor expected to begin in February next year.
The Government will back the industry with labour agreements for front of house workers, simple to use guides to engage 457 visa workers and regional migration plans for areas such as Esperance and Darwin.
Just yesterday we announced the extension of the Work and Holiday visa to include Papua New Guinea and we need to keep working on options to increase recruitment and retention of Chefs.
We can expect to see more of the great success the Indigenous Land Council has achieved through its acquisition of Ayers Rock Resort.
Thirty four indigenous people have been employed at the Resort and the ILC aims to employ 350 indigenous Australians at the Resort by 2018- a far cry from the two indigenous workers who were employed when they took over.
We can expect to see a rapid take up of the TQUAL Accreditation Program given the TQUAL tick will soon feature in a world-first partnership with TripAdvisor, the largest travel site in the world.
Increased investment in tourism will come from reducing up-front regulatory costs and barriers to investment.
I am therefore pleased to note that planning reform has been included in a recently released consultation paper from COAG’s Business Regulation and Competition Working Group identifying possible further reform priorities under COAG’s ongoing ‘Seamless National Economy’ initiative.
I encourage industry to support this call by raising the issue with relevant state and local government authorities.
We will continue to work towards increasing aviation access and I will join industry representatives in Nanjing next month for Tourism Australia’s Greater China Travel Mission, giving industry direct access to travel agents, tour operators, media and airlines from the region.
Last week, we announced the extension to tourism of the Enterprise Connect Program using TQUAL Grants funding.
Tourism businesses have productivity which is below the national average- Enterprise Connect provides access to a network of experienced Business Advisers to help firms improve their supply chain, management structures, workforce systems and export strategies and assist firms to compete through distinct products and services rather than solely on price.
And finally- with 62 per cent of international travellers to Australia in 2010 using the internet for information and 42 per cent for travel bookings we can not afford to ignore the power of the mouse.
The tourism e-kit, and the National Online Strategy for Tourism will get businesses one click away from their customers.
CONCLUSION
Tomorrow I will meet with my Ministerial colleagues at the Tourism Ministers’ Council Meeting. The governments we represent will spend a combined $652 million on tourism marketing this year alone, some 9.3 per cent more than last year.
But governments can only do so much- the opportunities are there for the industry to invest, to lift productivity, to access staff, to gain help with training and to get exposure to domestic and international markets by buying into campaigns.
Ladies and gentlemen, the portfolio sectors I represent - resources, energy, and tourism –account for more than 60 per cent of Australia’s goods and services exports.
I look forward to continuing our work together which is contributing to the current strength and resilience of the industry.
Thank you.