The announcement of international borders remaining closed until 2022 acts as a further setback for the Australian tourism industry. To recover the losses imposed by this prolonged travel ban, domestic travellers have been encouraged to take longer trips to replace lost international spending. However, this may not be enough.
Longer domestic trips will only partly solve the issue
A report by Tourism Australia showed that if Australians took slightly longer holidays in the country than average, this could potentially make up for the loss of international travel.
Destinations such as Australia rely on ‘high-yield’ international travellers, who are willing to spend more on a trip and stay for longer. According to GlobalData, visitors to Australia in 2019 spent on average 11 times more than domestic tourists in the country, which itself signifies the economic dependence of these high-yielding international visitors.
However, sectors such as accommodation will suffer with this domestic-only travel campaign. VFR travel (Visiting Friends and Relatives) will spike post-pandemic, as families that are spread across states will be desperate to unite after many months apart. With VFR trips, travellers are likely to stay with friends and relatives, reducing the cost of the trip for the traveller. However, this is not good for accommodation providers. VFR day trips also cut out the need for accommodation, which commonly takes up a large proportion of travel costs.
Alongside this, budgets for domestic trips have shrank even further as the pandemic has ensued. According to a live Verdict Community Survey*, when respondents were asked how their holiday budgets have changed due to Covid-19, 36% said they cannot afford to go on holiday in the near future. This shows that there may not be the potential for increased spending amongst Australian residents on a domestic vacation.
Cautious travel restrictions could leave devastating impacts
The tourism industry in Australia has so far lost $80bn according to Tourism Australia due to the prolonged border closure, and this figure is expected to grow exponentially. This could be the last straw for some tourism businesses that heavily depend on influxes of international travellers each year. In 2019, international arrivals accounted for 7% of total trips made in Australia, however, they accounted for 30% of total spending, according to GlobalData. International tourists stay for longer, spend more and visit more places.
Prolonged travel restrictions also make Australia’s position as a world-class destination vulnerable. If restrictions are in place longer than competitor nations, Australia is likely to lose market share to other countries with less strict rules on international visitation. The longer strict restrictions are in place, the more impact it will have on the travel industry, where more elaborate domestic travel may not be enough to account for the loss in international visitors.