1.4 Trends Analysis

Introduction

Tourism has emerged as one of the most remarkable economic and social drivers of the 20th century. There is, however, no doubt that the terrorist attacks in the US and the fall of Ansett have had immediate and far reaching ramifications for Australia's tourism industry. While the long term prospects for the sector remain strong, there is a need to overcome the short term negative impacts. These impacts include the downturn in inbound tourism to Australia and the flow-on effect to regional dispersal, capacity constraints on international air routes, and increased competition between destinations for a share of a smaller travelling market.

"It will be at least 2004 before we get back to the pre-11 September position."
Ken Boundy, Australian Tourist Commision (ATC) Managing Director

The events of September 2001 have permanently changed the industry, in particular air travel. Safety has become a significant consideration for travellers, access to some regional areas will be limited, airlines worldwide are downsizing and an uncertainty about the world's future remains. While these issues are considerable, it is important to remember that the downturn in inbound tourism is expected to be reasonably short-term, with an overall return to positive growth expected in 2002-03.

Being a short haul destination to Australia, Asian markets should be able to weather the storm in the short term better than most, with many good opportunities remaining in the region. The Tourism Forecasting Council (TFC) expects growth in the market (excluding Japan) of 3.8% for 2001, and a further 6.6% in 2002. The long haul North American and European markets have been affected more significantly. While there were considerable cancellations from Europe immediately following September 2001, overall visitor arrivals from the UK for 2001 are expected to increase by 5.5%, and 6.1% in 2002. However, it is expected that it will be 2004 before North American visitor arrivals to Australia will reach 2001 levels again.

The demise of Ansett however, has changed the domestic aviation market indefinitely. While Qantas and Virgin Blue will continue to compete for domestic market share, it is anticipated that there will be a shortfall in airline capacity on certain routes. A big issue for the tourism industry is that the less profitable regional routes will remain under supplied. In the short-term it will be necessary to communicate effectively with potential travellers overseas to assure them that the collapse of Ansett will not significantly effect a future holiday in Australia.

The period following the events of September 2001 has been a disconcerting time for the tourism and travel industry globally. However it has highlighted the importance of the industry to sustaining economic and community development. The challenge for the tourism industry is to harness this heightened community awareness and channel this momentum as a positive force.

Tourism, the world's largest industry and growing

Tourism is one of the largest and fastest growing industries not only for Victoria and Australia, but the world. Tourism is expected to generate US $10 trillion of economic activity and 328 million jobs worldwide by 2010. As highlighted in the chart below, October 2001 forecasts from the Tourism Forecasting Council (TFC), predict Australia will receive 9.4 million international visitors in 2010, up from 4.9 million in 2000.

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Source: International Visitor Survey, Bureau of Tourism Research
Forecast, October 2001, Tourism Forecasting Council

For Victoria, the number of international visitors to the State is expected to increase from 1.1 million in 2000, to almost 2.1 million by 2010.

Tourism has a significant economic impact in Victoria, making an important contribution to Gross State Product (GSP) and generating valuable jobs. Tourism is worth a total of $8.5 billion to the State's economy, contributing 5.2% to Victoria's GSP and generating 144,000 jobs.

As with previous plans, research plays an integral role in the development of strategies that will strengthen Victoria's competitive position to 2006 and beyond. Analysing, interpreting and acting on shifting trends in international and domestic tourism is central to an effectively targeted and successful strategic plan.

Some of the key national and international trends identified as part of the research and analysis for the Strategic Plan 2002-2006 are highlighted in the Trends Analysis Model below. The model summarises the major economical, political, technological, environmental and socio-cultural trends that are expected to have an impact on the tourism industry during the 2002-2006 period. The trends with a greater impact on the Victorian and national industries are highlighted in darker purple, while those affecting the world tourism industry are highlighted in light purple.

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Some of the key trends for 2002-2006 include:

Social and Cultural Trends

• Travel is competing with an increasing number of substitutes for leisure time. Australia is on the cusp of an explosion in a number of home based electronic leisure activities including interactive television, online services, and home theatres.
• Australia's population is ageing. The baby boomers are not only getting older, but more affluent. This will result in an increasingly important seniors market, which will have the time, money, and good health to travel.
• Changes in society have seen a decline in the traditional family. This is partly due to fewer marriages, higher divorce rates and couples having fewer children. There are more one or two person households than ever before, and it is expected that people living alone will be one of the most common household types by 2006.
• Australians work in new types of jobs, often with part time and flexible hours. People are spending their money as they earn it, especially on leisure and recreational activities.
• There has been an increase in the number of hours worked throughout the Australian workforce. This is particularly true for managers and professionals.
• The 1990s saw a huge change in lifestyle for many people, with an increasing emphasis placed on physical fitness and healthy living. People are not only in search of more natural and spiritual experiences in their leisure time, but are looking for a holistic type of recreation, an overall balance of body soul and mind. This in turn will fuel a market for indulgence products, outdoor activities, family holidays and short breaks.
• More and more people are condensing a holiday into an intense weekend or short trip experience. This has resulted in growth in spontaneous travel, for shorter periods, and with shorter lead times.
• More educated and discerning customers, particularly among higher yield markets, resulting in more emphasis on niche/specialised/tailored tourism product.
• Residential population movement to coastal areas and accessible country areas driving urbanisation, increased services, and cultural change in regional communities.
• In the longer term, it is expected that there will be a yearning for village life within Australia, based on a belief that society is losing its sense of community, resulting in a greater focus on family, community values and stability.
• A greater search for authentically distinctive settings that provide a sense of place and activities that provide a sense of belonging in response to globalisation and an increasing sense of disconnection, dislocation and lack of control.

Economic Trends

• In today's global economy, international boundaries have been reduced. The rise of e-commerce, together with globalisation will continue to expose the Victorian tourism industry to global markets.
• A decline of traditional industries and increasing unemployment, resulting in a need to diversify the economy and provide tourism and hospitality jobs.
• Fluctuations in the value of the Australian dollar, and world fuel prices significantly impact on the Victorian tourism industry. With the value of the Australian dollar relatively low, Australia and Victoria become an increasingly attractive destination for both international and domestic travellers.
• In light of the events of September 2001, the aviation industry remains a dynamic sector. Rationalisation and reprioritisation of services worldwide, advances in airline technology, changing trends in booking and travel patterns, and security are among the major issues facing the industry.
• The demise of Ansett has significantly affected the domestic aviation sector. Key issues include the reduced competition between the existing carriers, Qantas and Virgin Blue, and the short fall in airline capacity that will occur in the less profitable regional routes.

Technological Trends

• The increased use of the internet by consumers and businesses around the world is having a profound effect on the production, marketing and distribution practices of the tourism industry. Both in Australia and around the world, the internet is increasingly being used to research, promote, book and pay for tourism products and services.
• Faster and more comfortable transport is increasing the accessibility of regional areas.
• Technological advances in vehicles and equipment is creating opportunities for increased participation in equipment-based adventure activities.

Environmental Trends

• Global warming is resulting in climate change, particularly in the snowfields, coastal areas and semi-arid zone.
• There is increased interest in and emphasis on ecological/ environmental sustainability.
• Increasing environmental awareness and international and domestic interest in natural attractions.