Australia's tourism sector will have to look inward for a couple of years at least. (Xinhua, Bai Xuefei via Getty Images)
- International travel will not return properly until 2023, according to new analysis from Deloitte on Friday, leaving parts of the Australian economy exposed.
- With no international visitors and far fewer business travellers, hotels in cities like Sydney, Hobart, and the Gold Coast are expected to take more than three years to recover fully.
- "In the short to medium term therefore, hotels in the major cities will need to look at ways to encourage a greater volume of domestic holidaymakers to fill the gap from business travellers," Deloitte national tourism leader Adele Labine-Romain said.
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Australia's economy may be in recovery mode but there's at least one sector that will take years to return to anything resembling normal.
With international tourism expected to be off for several more years, the struggles of hoteliers and tourism operators are just beginning, according to a new report from Deloitte's economics team.
"They were the first to be impacted by measures introduced by governments in response to COVID, and will be among the last to recover," Deloitte national tourism leader Adele Labine-Romain said, noting that "international travel is not expected to recover to near pre-COVID levels until sometime in 2023".
The withdrawal of JobKeeper, the bungled vaccine rollout, and the focus of government aid on the aviation sector is unlikely to alleviate pressure on businesses reliant on foreign visitors. With international borders remaining firmly shut, notwithstanding a New Zealand travel bubble, the onus will fall on domestic tourists to do the heavy lifting.
On that front, Labine-Romain expects pent up demand to at least recover some of what was lost last year.
"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, just under 2019 levels, and to 134 million trips by 2023, a 14% increase on 2019," she said.
While those figures are encouraging, there are still doubts however over whether a domestic travel boom can truly compensate for the international shortfall.
Historically, domestic tourists don't spend nearly as much as their foreign counterparts in Australia. While holiday-starved Australians may be willing to splash some extra savings this year, they also tend to not spend in the same way, generally forgoing expensive tourism activities and tours.
Hotels will need to compete for Australian visitors
Given 5,000 new hotels rooms opened in 2020, and with another 32,000 coming in the next two years, it may be the accomodation sector that struggles the most.
"With plenty of new 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," Labine-Romain said.
Unlike tourism operators, the accomodation sector will also be smacked by a complete absence of business travellers.
"The corporate travel segment will clearly be critical in terms of the recovery, and markets where corporate travellers represent a relatively larger share of demand will face significant challenges, particularly as so many businesses big and small have settled into people connecting via technology," Labine-Romain said.
It's expected the fallout will see Brisbane and Perth be the only two cities to recover by 2023, with the Gold Coast, Adelaide, North Queensland, Hobart, and Western Sydney to take even longer.
This will likely force accommodation providers to create deals aimed at filling rooms.
"In the short to medium term therefore, hotels in the major cities will need to look at ways to encourage a greater volume of domestic holidaymakers to fill the gap from business travellers."