The long road back for Australia’s tourism industry

The timing of recent COVID outbreaks and state border closures could not be worse for Australia’s beleaguered tourism industry.

On New Years Eve – the peak holiday period of the year – we witnessed Sydney’s Northern Beaches outbreak, which was soon met with states snapping their borders closed to NSW. A few of my friends, who were camping or had hired holiday homes in Southern NSW, were caught in the turmoil. They were given hours to pack up and drive back to Victoria or be forced into mandatory 14-day isolation. They queued at Victoria’s border checkpoint for hours and then queued for hours again the following day for a mandatory COVID test. All despite there being zero cases in regional NSW (outside of Wollongong).

One friend, who had been drinking prior to the Victorian Government’s 3pm New Years Eve announcement to immediately return home, could not drive back until the following day. Because they missed the midnight curfew, their whole family was plunged into mandatory 14-day home isolation.

Each of these tourists could not complete their trips and, therefore, wasted money on their bookings. The tourism operators lost more as forward bookings and spending was cancelled.

Fast forward to the Easter School Holidays – the second biggest holiday period of the year – and history is repeating. The nascent COVID outbreak in Brisbane has spread to Byron Bay in Northern NSW. Most state governments have already closed their borders to Greater Brisbane and Queensland, with Byron Bay also declared an ‘orange zone’ or COVID hotspot by some.

Holiday plans are once again being cancelled and the tourism industry is again reeling.

Deloitte’s latest Weekly economic briefing shows the extent to which the tourism industry is suffering. It shows that “international and interstate travel [was] down by 81% and 65%, respectively, in 2020”:

These declines correspond to 7.6 million fewer international arrivals, 45 million fewer domestic overnight trips and 84 fewer day trips in 2020 compared to 2019 levels. This results in a total combined loss of around $85 billion in visitor spend, including $40 billion loss in international and $45 billion loss in domestic spend.

Loss of Australian tourism trips in 2020

The Australian tourism industry is suffering badly from the decline in travel.

With trigger happy state governments so willing to shut their borders at the earliest opportunity, as well as imposing mandatory isolation to people that have already arrived from these locations, how can the tourism industry recover?

The federal government can offer all the gimmicks that it likes, such as half priced airfares. But if Australians do not have confidence to travel, because of the perceived risks of lockdown, then they will stay put and keep their wallets closed.

Unconventional Economist
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  1. Yep although some tourist operators are not being too helpful/customer focussed. Ring to see if there are Covid cancellation refund options prior to booking and there is usually not. So the potential customer avoids a booking. If the issue arises, the operator has no customers. If it doesn’t, the operator still has no customers.

    • bearsbullsbattlestargalacticaMEMBER

      Yep, we had an awful experience with AirBnB when Melbourne locked down in Feb and lost money on a house in Adelaide. Host re-booked the property and refuses to issue a credit even though they said they would if they could re-book. AirBnB is just washing their hands of it even though we have screenshots of the whole lot. Obviously would be a different story if they couldn’t re-book – but the host is just double dipping.

      Had used AirBnB for years but wont be using them ever again, and certainly wont bother travelling anytime soon.

    • darklydrawlMEMBER

      It seems this is now standard operating procedure with many places (we are NOT all in this together!). The ‘new’ Rex airlines offers a full refund if your flight is cancelled due to Covid, but this is rare these days.

      Some compaines / places offer a rebooking credit if you’re lucky. More commonly on AirBnB / Stayz the vibe is ‘buyer beware’.

      We looked at booking a place in Victoria over the school holidays. All of the T&C’s were ‘no refund’ cancellations.

      The only variance was when the ‘no refund’ period kicked in. Some were a few days out, but the majority were 2-4 weeks prior to your arrival.

      Do you feel lucky and risk a couple of grand that you might end up donating to the property owner for nothing?

  2. Meanwhile the Arts industry has no issues with full refunds. Our QPAC show was cancelled this coming Saturday, they called us, rescheduled for another show in late April and fully refunded the extra tickets we no longer required.

  3. run to the hillsMEMBER

    I’m isolating at home in Sydney right now as I was in Brisbane a week and a half ago, NSW Health sent me an sms yesterday ordering this. I was due to fly to Melbourne on Good Friday to visit family for the Easter weekend which I was very much looking forward to after having Christmas in Melbourne cancelled at the last minute. I’ve now had to cancel the Easter trip as VIC won’t let me in without onerous conditions due to me having been in Brisbane within the last fortnight. I should post all my interstate holiday plans online so people can make their plans around my dates, as I’ve been totally jinxed by plague outbreaks and lockdowns every time I book an interstate trip. A warning for all, do not make plans to visit Hobart the last week of April as my travel plans can only mean there is impending doom for Tassie.

    • my understanding is that they don’t affect transmission (or at best the verdict as to lowing transmission is out) which is why I can’t get a handle on why everyone (esp MSM) keep referring to the vaccine and the rollout and blaming clusters on. As I understand it the vaccines only affect the severity/ lethality.

      A not popular view might be that as frontline workers vaccinated human nature will play a part (as they less at lethal risk) and that it might lead to more not less slips and clusters forming/ breakouts. I am still for vacinating frontline workers just posit it as an alternative view.

  4. karlflowersMEMBER

    Congratulations MB and Leith for at long, long, last recognising the tourism industry disaster unfolding before us. Remember, the speculation from MB and leading bank economists all through 2020 that because Australians can’t travel overseas domestic tourism would boom. It didn’t, it busted. Deloitte’s now predict domestic tourism spend had a larger dollar fall than inbound tourism spend in 2020 and overall visitor spend across Australia fell by around 70% and worse in Victoria. Time is past for hoping the State Governments’ won’t close borders quickly or that the Federal Government take appropriate national responsibility for quarantine. The Federal Government has introduced a “tourism rescue” package that makes most of the tourism industry (outside Qld and Tasmanian marginal seats) worse off. The Federal Government has ignored the pending business closures and increased unemployment from the end of JobKeeper beyond using the opportunity for marginal seat campaigning. So far. Given the fallout to come, get ready for an “emergency tourism rescue package” in around July, when the regional and capital city fallout from tourism employment declines is too big to ignore in the run up to a Federal election. The COVID recession remains our first microeconomic, selective industry, depression rather than the normal economic recession driven by macroeconomic challenges. Treasury and the Federal Government continue to run policies better suited to fighting the last recession.

  5. innocent bystander

    the sense of entitlement around demanding a holiday is mind blowing.
    let’s just say we are at war with the corona and adjust our expectations accordingly.

    I am not necessarily pro WA but their domestic tourism did/has boomed and the operators took it on themselves that if you have to cancel a booking then full refund – cause otherwise ppl were hesitant to book; simples really.
    And the protocol around instigating border lockdowns was consistent and foreseeable – you travel, you take the risk. your choice.
    Yes, easier for WA because their border is basically in the middle of nowhere, very different to Vic/NSW/Qld borders so common sense would tell you different solution required – better hot-spotting protocols around travel.
    But, get over it – support your local State or local potential hotspot for your much required holiday.