In 2017-18, China is set to become Australia’s largest source of visitors, overtaking New Zealand for the first time ever.
What a surprise we hear you say.
The monumental change for Australia will become the biggest tourism driver since China overtook the United Kingdom as the biggest spender on travel in Australia in 2010-11, according to IBISWorld Senior Industry Analyst, Jason Aravanis.
“While Chinese tourists will exceed New Zealand visitors, traditional markets such as the United States, United Kingdom and Japan have also grown,” added Mr Aravanis.
In 2017/18, Chinese visitors to Australia will total 1.41 million with New Zealand just behind at 1.407m visitors, the U.S. third at 807,000, U.K in fourth at 779,000 and Japan fifth at 465,000 visitors.*
Pic: Tourism Australia
IBISWorld research found that international travel to Australia has increased at an annualised 8.2% over the five years through 2017-18, to reach 9.1 million visitors with a surge in visitors from the United States, Malaysia, India and China driving this growth.
“Over the past five years, a weaker Australian dollar has made Australia a relatively affordable travel destination compared with similar countries, such as the United Kingdom. In addition, rising middle-class wealth in China has increased the number of households with sufficient discretionary income to travel overseas,” said Mr Aravanis.
IBISWorld anticipates international travel to Australia to grow at an annualised 5.1% over the five years through 2022-23, to reach 11.7 million visitors, largely driven by tourists from China.
Growing travel to Australia has benefited several areas of the economy. For example, the international airlines industry has undergone annualised growth of 4.9% over the past five years, according to IBISWorld.
Similarly, revenue for foreign currency exchange services has increased at an annualised 4.5% over the same period, and revenue for hotels and resorts has increased at an annualised 2.7%, despite disruptive forces in the industry.
CLOSE CONNECTIONS TO CHINA
Tourists from China have faced favourable travel conditions in recent years, with Australia and China both focusing on improving bilateral relations, such as through the 2015 China-Australia Free Trade Agreement.
“Following bilateral cooperation and trade, the two nations have formed a key partnership, known as the China-Australia Year of Tourism (CAYOT). CAYOT is designed to increase tourist numbers between each country. The event’s opening ceremony was held on 5 February 2017 at the Sydney Opera House and the closing ceremony is to be held in China at the end of 2017,” said Mr Aravanis.
The popularity of Australia as a destination for Chinese tourists is particularly beneficial for Australian businesses, as Chinese tourists tend to spend more relative to other visitors.
According to IBISWorld research, several Australian industries, including travel agency services, restaurants and casinos, have benefited from this trend.
“Chinese tourists typically use travel agency services, contributing to 5.0% annualised growth in revenue for that industry over the past five years,” said Mr Aravanis.
AUSTRALIAN DOMESTIC TRAVEL
Australia’s tourism industry is expected to benefit from increased domestic tourism over the next five years. According to IBISWorld, domestic tourist visitor nights are projected to increase by an annualised 2.7% over the five years through 2022-23, to total 401.4 million.
‘The Australian dollar is projected to remain weak over the period, making it more expensive for Australians to undertake overseas trips. According to Tourism Research Australia, Australians are expected to spend $108 billion on domestic tourism in 2022-23. This is a good sign for operators that generate significant revenue from domestic travellers,’ said Mr Aravanis.
“As more Australians make domestic trips during this period, travel operators will appeal to home country travellers by offering premium services, discounted upgrades and all-inclusive packages to better compete with international offers,”
added Mr Aravanis.
International travel by Australians is expected to grow at an annualised 3.3% over the five years through 2022-23, to reach 12.0 million trips. Despite the weakness of the Australian dollar, cheaper airfares and increased international airline capacity are expected to continue to drive overseas tourism by Australians.
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*Source: Tourism Research Australia via IBISWORLD