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Topic: ASSESSMENT OF TOURSIM INDUSTRY IN AUSTRALIA.

CONTENTS
I.
II.

Introduction
Importance of tourism industry in the economy

III.

Factors that affect tourism:

IV.

Tourism 2020

V.

Challenges and summary

I.

INTRODUCTION:

This essay is about the tourism industry of Australia. We start with the importance of this
industry in Australian economy in terms of data. We then trace the factors that affect tourism,
following it up with recent initiatives taken, this includes Tourism 2020 launched in 2015 by the
government. Lastly we list some challenges to the industry growth and prospects in future.
II.

IMPORTANCE OF TOURSIM IN ECONOMY :

In 2014, direct spending on tourism made up 3% of Australias GDP, almost one-third of

this (equaling $11 billion) was contributed by international visitors. This contribution is
counted as service exports of Australia. These international tourists made up almost 60%
of total service exports, highlighting the importance of tourism in balance of payments as
well as in total Gross Domestic Product of the economy.
Total contribution of tourism stands at 10% in 2014, with growth rates exceeding 3%
forecasted for subsequent years. Australia is ranked 11th in terms of the % contribution of
this industry to GDP, behind US in 1st position and UK in 5th position.
Visitors generated exports that made up 6.4% of total exports .
In employment the tourism and travel industry contributed to 12.24% jobs in 2014.

III.

FACTORS THAT AFFECT TOURSIM:

Tourism industry is based on tourists, which are driven by Australias locations and their
spending power. In this sense supply of tourism is nature given to a large extent, as destinations
are nature based. For example Great Barrier Relief is nature gifted, and nothing can be done to
increase such destinations. However development of national parks, gaming zones (like Macau is
known as a gambling economy, basing its tourism on gambling), water parks and amusement
parks can supplement earnings from tourists, though nature based attractions are the main pull
factor. Earnings from tourists can be boosted if more man-made attractions can be provided
along with the natural destinations.
On the demand side, most of the factors that affect demand are income of the visitor,
accessibility of destinations, knowledge available about tourist sites, cost of overnight stays.
Only a few of these factors are in the hands of Australian tourist industry players. Income is
clearly not affected by any measures that Australia takes. The industry can however provide
more options for visitors staying in Australia, in terms of low cost stays through bed and
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breakfast places or cheaper service apartments. There are other ways where demand can be
influenced by improving accessibility. A good step has been to open new direct airline routes
between China and Australia and lift the cap on the number of flights and passengers between
China and Australia to attract Chinese tourists.
TOURISM 2020
In recent times the government has realized that a decline in GDP due to fall in mining activities,
along with fall in commodity markets internationally can slow down Australian growth. It has
identified tourism as a contributor to both GDP and valuable foreign exchange, and formulated
plan Tourism 2020 in line with these ideas. It states, Tourism 2020 is a whole-of-government
and industry long-term strategy to build the resilience and competitiveness of Australias tourism
industry and grow its economic contribution. It focuses on improving the industrys performance
and competitiveness by pursuing new opportunities for growth and addressing supply-side
factors. It aims to increase overnight spend total from 770 billion in 2009 to $115 billion by
2020- a target of 70% rise in 11 years.
The program has identified 4 main areas for success:

To encourage high-quality tourism experience for international visitors, along with

promotion of indigenous tourism among domestic toursists.

To make policy changes to limit taxes, red tape and other regulatory burdens faced by
industry.

To work on coordinated and effective marketing campaigns in order to attract visitors.

A participatory approach that looks at the industry and government as partners to support
development of infrastructure for tourism.
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The program has clear timelines marked as seen in chart below.

CHALLENGES and SUMMARY

It is well known and indisputable that tourism is important to Australian GDP. Recent initiatives
like Tourism 2020 show the governments commitment to this industry. While the government is
making efforts in boosting tourism, a few recommended areas include:
There is a need to improve airlines access to larger parts of the country. Greater access to
cities like Brisbane, Melbourne, Perth and Sydney could reduce congestion and improve
tourist flows. Specific tourist themes need to be given importance. The development of
theme parks, gaming zones and aquatic attractions must be encouraged at policy level.
The government can come up with a clear private partnership rules to develop national
parks. Similar approach must be followed to market tourism at international level.
Infrastructure spending on tourism related sectors has a long gestation period which
makes private investments less forthcoming. A cost benefit analysis of a typical
investments shows very low returns, discouraging private investors. The government
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therefore, must get into partnership or boost these investments through lower taxes and
rebates to investors. Improvements and capacity expansion of cruise terminals is another
promising area that can help to boost visitors through water routes.
Some factors like exchange rates, uniqueness of destination sites and incomes of visitors
are beyond the control of Australian policy makers, efforts must be made to make a
traveler friendly environment, in terms of easy travel plans, direct air access to more
cities and greater dissemination of destinations through targeted marketing.
In a general sense the recession in USA in 2008, and the more recent slowdown of
Chinese economy will weigh on tourism industry as the visitors are impacted by these
recessions. An impending correction in Chinese economy can play havoc as Chinese
visitors forma substantial chunk of total tourists. Otherwise also per tourist spend will
suffer if incomes suffer due to recession.
While there is a good future for Australian tourism industry, supplemental efforts can boost this
future in positive ways. This will allow Australia to keep the economic growth momentum,
despite a move away from mining based activities, and losses due to a virtual collapse in
international commodity markets. Specific attempts to attract visitors from US and Europe, as
well as Asia will give tourism industry some bandwidth to enlarge its demand base , and not
depend on specific regions ( like China) only for tourists.
REFERENCES

Scarr . L (2016) ,Cashed up Chinese head Australian Tourism Boom available at

http://www.news.com.au/travel/world-travel/asia/cashedup-chinese-head-australian-tourismboom/news-story/4846bb806308a9187ec86e6c4d68ebc66, accessed on 20 April 2016
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Ecotourism.org(2016) Great prospects for AustraliasToursim Industry in 2016, available at

http://www.ecotourism.org.au/news/great-prospects-for-australia-tourism-industry-in-2016//
accessed on 19April 2016.
Productivity Commission Research Paper (2015) Australias International Tourism Industry
available at http://www.pc.gov.au/research/completed/international-tourism/internationaltourism.pdf accessed on 19April 2016 accessed on 20april 2016
Travel and Tourism: Economic Impact Australia 2015. Available at
https://www.wttc.org/-/media/files/reports/economic%20impact%20research/countries
%202015/australia2015.pdf accessed on 20april 2016