Australia's international tourism industry
Commission research paper
This paper was released on 26 February 2015 and examines the trends and drivers of growth in Australian international tourism with a view to understanding their implications for government policy.
The Commission has also assessed the role for government in the tourism industry, and considered whether there are significant barriers to future growth in international tourism in Australia that are amenable to policy reform.
Download the paper
- Australia's International Tourism Industry (PDF - 1547 Kb)
- Australia's International Tourism Industry (Word/ZIP - 1079 Kb)
- Key points
- Media release
- Australia's international tourism industry has grown strongly over the past two decades - the number of international visitors to Australia has more than doubled, rising from 2.5 million in 1992 to almost 6.7 million in 2014. The composition of the industry has also changed.
- Markets in Asia, particularly China and India, have grown in importance as a source of international visitors to Australia, with China now the second largest source of visitors after New Zealand. Alongside this, there has been a slow down (and, in some cases, a decline) in growth in the number of visitors to Australia from some historically important source countries, such as the United States, the United Kingdom and Japan.
- Growth in the industry overall means regional visitation has increased, but the change in the composition of source countries has contributed to a decline in the proportion of expenditure and the proportion of international visitors travelling to regional areas of Australia (of about 5 percentage points between 2006 and 2014).
- There has been an overall decline in international tourism activity in some regions - in Tropical North Queensland there was a 20 per cent decline in the number of international visitors travelling to the region, particularly from Japan, and a 40 per cent decline in real expenditure between 2006 and 2014.
- The way businesses in the international tourism industry innovate and adapt to changing trends will largely determine how successful Australia is in continuing to attract international visitors. Governments also have a role, and a number of reforms would benefit the tourism industry and the economy more broadly.
- Many national parks are hampered by tired infrastructure and persistent funding shortfalls. Greater user charging and more private investment would provide an additional source of funding and facilitate innovation in the provision of tourism related infrastructure.
- Poor approval processes for tourism related infrastructure investments are not only costly to developers, but to businesses and communities. There is a need for governments to continually review and reform these processes so that they are flexible and risk based, and keep pace with innovations in the tourism industry.
- There can be a case for governments to be involved in attracting international visitors to Australia through the provision of international destination marketing and support for major events. However, assessments often overstate the net economic benefits of these activities - and consequently the basis for government support - highlighting a need for rigorous and transparent economic analysis to determine whether government expenditure is warranted.
- Although Australia's international aviation policy settings have served Australia well, it is expected that further liberalising access to Australia's major gateway cities - Brisbane, Melbourne, Perth and Sydney - would provide net benefits to the international tourism industry and the Australian community.
- It is difficult to see how restricting access to secondary airports serving the major gateways, such as Avalon and the proposed airport at Badgerys Creek, creates benefits for the Australian community. If any restrictions are to remain, the case for all restrictions, except those at Sydney Kingsford Smith Airport, is quite weak, and open access could be extended accordingly.
Further reform to support Australia's international tourism industry
In releasing a research paper on Australia's international tourism industry today, Commissioner Warren Mundy said that 'while there has been strong growth in international tourism over the past two decades, the tourism industry will need both further innovation and adaptable regulators if it is to respond to vigorous global competition to attract visitors.'
The paper finds that more could be done to allow the tourism industry to adapt to changing consumer preferences and emerging digital technologies. More travel is being researched and booked online and the tourism industry needs to keep pace with these developments.
The paper points to a number of reforms that would benefit the tourism industry and the economy more broadly.
The paper notes that poor development approval processes for tourism related infrastructure investments are not only costly to developers, but to businesses and communities.
'While there have been some reforms to development systems, implementing the reforms previously recommended by the Commission would enable the tourism industry to innovate and invest in a timely manner,' Dr Mundy said.
The paper also counsels that assessments of government support for international destination marketing and major events often overstate the net benefits of these activities to the community.
'It is critical that rigorous and transparent economic analysis is undertaken before government funding is provided to these activities' Dr Mundy said.
'Many national parks are hampered by tired infrastructure and persistent funding shortfalls. Well-chosen improvements to user charging and quality private investment would showcase one of Australia's most attractive tourism products, provide an additional source of funding and facilitate innovation in the provision of tourism related infrastructure,' Dr Mundy said.
The effect of international air services arrangements on international travel is also considered in the paper. The paper notes that although Australia's international aviation policy settings have served Australia well, there is scope to allow carriers to increase services for all Australia's major gateway cities - but particularly Brisbane, Melbourne and Perth.
- Cover, Copyright and publication detail, Disclosure of interests, Contents, Acknowledgments and Abbreviations
- Chapter 1 About this report
- 1.1 Why is the Commission interested in Australia's international tourism industry?
- 1.2 Understanding tourism and the tourism industry
- 1.3 The analytical approach and scope of the report
- 1.4 How the Commission conducted the project
- Chapter 2 Trends in Australian international tourism
- 2.1 Demand for Australian international tourism
- 2.2 Visitors' purpose of travel to Australia has changed
- 2.3 Preferences for travel
- 2.4 Factors influencing demand for tourism
- Chapter 3 The role of government
- 3.1 Government involvement in international tourism
- 3.2 A framework for assessing the rationale for government involvement in tourism
- 3.3 Assessment of government support for tourism
- 3.4 Facilitating the flow of international visitors to Australia
- Chapter 4 International air services
- 4.1 International air services and tourism
- 4.2 The Australian international airline industry
- 4.3 Australia's international aviation policy
- 4.4 Australian international aviation policy issues
- 4.5 Is there scope for further liberalisation?
- 4.6 Summing up
- Chapter 5 Investment in tourism infrastructure
- 5.1 Government investment in tourism
- 5.2 Regulation of privately provided infrastructure
- 5.3 Summing up
- Appendix A Conduct of the project