The global recession and subdued economic recovery through most of the world since the global financial crisis has meant that foreign inbound tourism to Australia has generally been weak. There have been only small increases in the number of foreigners coming to Australia for a holiday over the past few years.
The reasons for this are quite simple: the weak economy means that many people are either unemployed or they don't have the finances that will support a holiday all the way over to Australia.
Making Australia financially attractive for foreign tourists has been the very high level for the Australian dollar. The cost of coming to Australia in US dollars, Euros, Japanese Yen or Chinese Yuan increases as the Australian dollar increases in value. Hotels, restaurant meals, tours and the like are all much more expensive for tourists from China, Japan or Europe.
For holiday makers in those countries, it is often cheaper to visit a country whose currency has been weak, which is why tourism into Britain and Europe has flourished.
The strong Australian dollar also has an impact on how we Australians think about our holidays.
In recent times, and especially with the high Australian dollar, it is often the same price, if not a little cheaper, to pack the family up and go to Bali, or California or some lovely resort in Asia than take a holiday in Queensland or take a trip to lovely Tasmania.
The local tourism industry has suffered as a result.
With the Aussie dollar up 30 or even 40 per cent against the British pound and Euro, the threshold needed for the holiday to London, Paris, Rome or some other wonderful European destination for we Australians is all of a sudden affordable. This has seen Australian outbound tourism increase at a stunning pace.
And of course this means that rather than holidaying locally, many Australians are spending a higher proportion of the holiday or travel dollars on international adventures, which unfortunately has been to the detriment of local tourism operators, hotels, restaurants and those sectors closely linked to travel.
It is also very important to recognise that the Australian economy has also performed outstandingly well in the last few years. Unlike most places, there has been no recession – for more than 22 years now – which means the unemployment rate is low and has been below 6 per cent for more than a decade. Wages and incomes continue to rise and household wealth has been rising in line with rising house prices and a strong recovery in the stock market.
This strong economy and rising personal financial position means that we Australians are among the richest in the world. Little wonder we are indulging in a few luxurious visits overseas.
The net effect of all of this is that, according to the Australian Bureau of Statistics, the number of short-term arrivals to Australia (which is holiday makers and business people) was around 520,000 to 540,000 a month so far in 2013. This sounds like a lot of people coming to Australia until you consider it against resident departures, which jumped to almost 740,000 in August alone.
As things currently stand, there are about 200,000 more Aussies heading overseas each month than there are foreigners coming to Australia for work or pleasure.
Things are starting to improve for the local tourism industry.
The fact that the Australian dollar has fallen by around 10 per cent over the last six months or so makes us a more desirable and affordable destination for foreign tourists. It also makes us Australians a little more inclined to look at overseas trips as being a little more expensive and therefore we are likely to holiday at home.
More recently too, there are clear signs that economic conditions are improving in most countries around the world. China has rebounded and the US appears to be stronger than it was a couple of years ago. Even Europe is out of recession, which suggests the financial well being of many in these countries will improve their ability to look far afield for their travel plans.
As these trends continue into 2014, it is likely that tourism will have a better outlook as incomes, jobs and wealth increase around the world.
And with the Australian economy doing well in very general terms, people should have some spare cash to spend on holidays, with a few more staying within Australia as well as heading overseas.
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