Fairfax is reporting this afternoon that Australia’s tourism operators remain concerned about the elevated Australian dollar, which is making life more difficult that it should be:
The latest industry sentiment survey released by Tourism & Transport Forum and MasterCard found the level of the exchange rate remained the chief concern among local tourism businesses, ahead of other issues like taxes and charges on tourists and Australia’s reputation as a desirable tourism destination.
“This is most likely the result of the currency not depreciating by as much against the currencies of key tourism source markets such as New Zealand, the UK and Europe,” TTF chief executive Margy Osmond said.
A quick look at the monthly tourism trade data does show a strong negative correlation between the strength of the currency (measured against the trade weighted index or TWI) and tourism net exports:
Note above how tourism net exports fell sharply as the commodity boom kicked-off, causing the Australian dollar to appreciate.
However, over the past two years, the Australian dollar has fallen significantly as the commodity price boom has unwound, which has ushered in a strong rebound in tourism net exports.
With the Australian dollar still elevated, and likely to devalue further as commodity prices, the terms-of-trade, and interest rates continue to fall, there should be further good news ahead for Australia’s tourism providers.
