- Introduction
Australia – a destination of choice
1.1The Committee heard throughout this inquiry into Australia’s tourism and international education sectors that Australia enjoys a global reputation as a destination of choice for tourists. Australia offers pristine and iconic landscapes, unique and varied cultures, a world class destination for sporting, business and other events, nature and adventure activities, and a host of other outstanding experiences that are discussed further in Chapters 3 and 4. The Committee also heard that prior to the COVID-19 pandemic, the tourism sector was performing well – recording record visitor numbers, expenditure levels, and employment.
1.2However, Australia’s tourism sector was hard-hit by the pandemic, as detailed in this chapter, and continues to be challenged by a range of factors. From evidence, the Committee specifically notes a slower recovery in international visitation compared to domestic tourism, a phenomenon which continues to particularly impact regions dependent on international visitors. Persistent issues on the supply side in relation to workforce shortages, the level and cost of airline services, lack of investment, and resilience challenges from climate events continue to plague the sector’s growth. The Committee was asked to examine all of these issues as part of its terms of reference for the tourism sector.
Overview of tourism sector performance pre-COVID
1.3Prior to the COVID-19 pandemic, Australia’s tourism sector was performing at record highs. In the ten-year period to December 2019, visitor expenditure was up 78 per cent and international visitor arrivals had reached a record 9.5 million. The sector employed over one million workers directly and indirectly (or one in 12 of all Australian workers), and accounted for one in eight businesses in Australia. With $39.5 billion in export earnings in 2019, tourism was Australia’s fourth-largest export earner behind only iron ore, coal and natural gas. Beyond these economic contributions, tourism experiences influence travellers’ impressions of Australia and can foster people-to-people relationships, cultural exchange and international cooperation. A successful tourism sector provides an opportunity for people from around the world to learn about Australia’s rich and diverse histories and cultures, and experience Australia’s freedom and democratic traditions, as well as its natural beauties and welcoming people.
1.4According to the Tourism and Transport Forum (TTF), prior to the pandemic, the tourism industry accounted for nearly 10 per cent of Australia’s export income. It submitted that, with support and investment, the sector could return to pre-pandemic levels of success.
1.5Of the 9.5 million international visitors arriving in Australia in 2019, more than 50 per cent came from just five markets: China (15 per cent); New Zealand (15 per cent);United States of America (9 per cent); United Kingdom (8 per cent); and Japan (5 per cent). Of more significance, nearly 30 per cent of international visitor expenditure was from Chinese visitors, with the remaining four countries all accounting for under nine per cent each.
1.6While domestic visitors (Australians travelling within Australia) are the ‘backbone’ of Australia’s tourism sector (accounting for 64 per cent of total visitor expenditure), technically international visitors (with 36 per cent of total visitor expenditure) add more value to the economy. For every visitor dollar spent, international visitors contribute $0.55 of economic ‘gross value added’ (GVA), while domestic overnight visitors contribute 25 per cent less at just $0.41 of GVA.
Impact of COVID-19 – the numbers
1.7COVID-19 was an unprecedented shock to economies around the world, with tourism industries hit particularly hard. In Australia, international visitation dropped 98 per cent, gross domestic product (GDP) contribution fell almost 50 per cent, and filled tourism jobs were down over 40 per cent at their lowest point.Expenditure from international visitors fell from nearly $45 billion in 2019–2020 to $1.3 billion in 2020–2021. Austrade estimates tourism expenditure losses through the pandemic period (March 2020 to June 2022) totalled over $150 billion. Many witnesses and submitters argued that pandemic-related border closures and travel restrictions had hit the country’s tourism sector the hardest.[13]
1.8Dr Gabby Walters, an academic from the University of Queensland working on crisis recovery and tourism, told the Committee:
The COVID pandemic has demonstrated just how vulnerable tourism is as an industry that relies heavily on global movement. One might argue that Australia’s challenges in this regard were and remain to be unique given our geographical proximity and the fact we are cut off from the rest of the world.
1.9The Committee also received evidence on the impact of COVID-19 on the tourism sector within specific states, territories, and regions. In South Australia, for example, the South Australian Tourism Commission (SATC) submitted that international visitors contributed up to $1.2 billion each year prior to the pandemic, with this falling to around $15 million during the pandemic. The SATC emphasised the impact of COVID-19 on international aviation, with passenger numbers falling from 16,000 per week to zero.
1.10Describing the impact of COVID-19 on the sector, the Queensland Tourism Industry Council (QTIC) stressed the impact on regions dependent on international visitors:
[Pandemic losses have] placed severe financial stress on operators, with many businesses becoming unviable or having to close, with impacts acutely felt in regions that are highly dependent on international visitation.
1.11For Queensland’s Gold Coast, in 2019 more than 14.4 million tourists visited the region, contributing nearly $6 billion to the sector with $1.3 billion of that from international tourists. Destination Gold Coast submitted that the pandemic cost the region $5.6 billion in annual revenue, and 12,000 skilled workers had left, many of whom were international students and working holidaymakers (see also Chapter 4).
Recovery
1.12The consensus of evidence to the Committee was that domestic tourism has been much quicker to recover from the pandemic than international. Recent statistics show that the domestic visitor expenditure for 2023 was 33 per cent higher than pre-pandemic levels. By contrast, international visitor spend is still down 11 per cent on pre-pandemic levels.[18] The Australian Bureau of Statistics (ABS) reported that for 2023 there were 7.19 million visitor arrivals to Australia. While this figure is nearly double the 3.69 million that arrived in 2022, it is still down approximately 25 per cent on the pre-COVID-19 high of 9.47 million in 2019.
1.13Evidence to the Committee supported this ‘two-speed recovery’ between the domestic and international segments, with this contribution as an example:
The 2022-23 financial year brought us more customers than any year preceding the pandemic. These were primarily domestic groups, and slowly this past year internationals have returned in small numbers.
1.14The Queensland Department of Tourism, Innovation and Sport attributed the slower return of international visitors to ‘significant and ongoing challenges’ including workforce shortages and unstable global economic conditions. Queensland Airports Ltd (operators of the Gold Coast, Townsville, Mount Isa and Longreach airports) reported being back to pre-COVID-19 levels of domestic visitors in the first half of 2023, but noted that international recovery had been slower, at around 70 per cent of pre-pandemic levels.
1.15The Australian Tourism Export Council (ATEC) reported that international recovery was ‘sluggish’ due to travel restrictions in China, the war in Ukraine, high flight costs, visa delays, and workforce and skills shortages.The Tourism Industry Council of South Australia (TICSA) noted in February 2024 that the state was still recovering from the pandemic, saying that international visitor numbers were still down by 19 per cent on pre-COVID-19 levels. The SATC noted that whilst international visitor expenditure in the state had surpassed pre-COVID-19 levels, this was fuelled in part by rising prices and does not necessarily represent profit or recovery within the industry.
1.16The QTIC added that rising costs could explain the lack of a quicker international recovery and pointed to the increasing price of long-haul travel. It also highlighted the lack of available and affordable insurance for tourism operators, as well as a shortage of affordable housing for employees in key tourism destinations which was ‘risking an inability to meet consumers’ expectations’.
1.17The ABS also publishes figures based on the purpose of travel and country of origin. It reported that 40 per cent of visitors arriving in 2023 were ‘holiday’ travellers, with the largest source country being New Zealand (with 18 per cent of the total). After New Zealand, the top next top four countries were: the USA, the UK, China and India. The ABS reported that though visitor numbers are recovering, the numbers from different countries have recovered at different rates, with South Korea being the only country in the top ten source countries to exceed pre-COVID-19 visitor numbers in 2023. The recovery for the Chinese market was the lowest at 37 per cent of the 2019 arrivals numbers.
1.18Austrade reports a positive outlook for sector growth, forecasting tourism spend to increase by 31 per cent over the next five years to 2028. This will put the sector at 61 per cent above the pre-pandemic level. To achieve this, however, the sector will need to seize the opportunities outlined in this report and also tackle some significant challenges.
The intersection between tourism and international education
1.19On 19 October 2023 the Committee tabled its interim report, ‘Quality and Integrity – the Quest for Sustainable Growth’: Interim Report into International Education (Interim Report). The Interim Report focused on the challenges and opportunities for the international education sector since the reopening of Australia’s borders after the COVID-19 pandemic. While this report focuses on international tourism, it also includes information on international education received since the Interim Report was completed.
1.20During the inquiry, the Committee heard about the criticality of international education to the tourism sector. Mrs Melissa Banks, Head of International Education at the Australian Trade and Investment Commission (Austrade) advised the Committee that 69 per cent of tourism spend is generated from international students.
1.21The Committee is conscious that the issues affecting the tourism sector significantly overlap with the issues faced by the international education sector due to the reciprocal and interdependent nature of the two sectors. This is particularly the case for regional areas in Australia. The Committee also notes that the recommendations contained in this report, if implemented, may also improve the quality and sustainability of the education sector, and the desirability of Australia as a destination of choice for international students.
Conduct of the inquiry
1.22On 11 October 2022, the Minister for Trade and Tourism, Senator the Hon Don Farrell, requested the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT), through its Trade Subcommittee, inquire into Australia’s tourism and international education sectors (inquiry).
1.23A media release announcing the inquiry was published on 19 October 2022. The Committee invited submissions from a variety of stakeholders including government agencies, peak travel and education industry organisations, universities, and higher education peak bodies, academics and the general public.
1.24The Terms of Reference for the inquiry identified two distinct areas of focus: international education and tourism. Given the breadth of each of those topics, the Committee decided to receive evidence on both topics concurrently, but to report on them separately.
1.25The topic of international education was prioritised so the Committee could provide recommendations to the Australian Government to inform various activities underway in 2022 that would have significant implications for Australia's international education sector and student visa and graduate visa policies and processes. This included the Migration Review, the Australian Universities Accord and Education Services for Overseas Students Review, and the Rapid Review of Australia’s Visa Systems.
1.26On 19 October 2023 the Committee tabled its Interim Report. The Interim Report focused on the challenges and opportunities presented to the international education sector since the reopening of Australia’s borders. While this report focuses on international tourism, it also includes information on international education received since the Interim Report was published.
1.27In its entirety, the inquiry received 143 submissions, including several supplementary submissions, and two exhibits, as listed in Appendix A and Appendix B. The Committee held 31 public hearings across Australia, as listed in Appendix C. The Committee heard from a range of stakeholders including international and regional tourism operators and providers, including First Nations tourism operators, local councils, government agencies, education and tourism peak bodies, international students and student associations, and education providers.
1.28A list of witnesses and organisations who attended these public hearings is in Appendix C. Submissions and transcripts of the public hearings can be found on the inquiry website.
1.29The Committee also undertook seven site visits, as detailed below.
- On Thursday 18 May 2023, following the public hearing on the Gold Coast, the Committee visited Currumbin Wildlife Sanctuary and received a tour of the Sanctuary and Wildlife Hospital.
- On Wednesday 16 August 2023, following the public hearing in Cairns, the Committee attended a site visit at Hartley’s Crocodile Adventures, a wildlife sanctuary and ecotourism park in Wangetti.
- On Sunday 20 August 2023, ahead of the public hearing in Broome, the Committee visited Air Kimberley Terminal and met with Mr Ash Munn, the Co-owner of Air Kimberley.
- On Tuesday 3 October 2023, following the public hearing in Port Campbell, the Committee visited the 12 Apostles Visitor Centre and Lookout. The Committee met with Richard Nesseler from 12 Apostles Helicopters, as well as David Petty, District Manager, and Rhianna Burns, Ranger Team Leader, Port Campbell from Parks Victoria.
- On Wednesday 4 October 2023, following the public hearing in Ballarat, the Committee toured Sovereign Hill, including the Main Street, Sovereign Hill Living Museum and the Sovereign Hill Outdoor Museum. The Committee met with Ms Sara Quon, Sovereign Hill Living Museum CEO, and Ms Katrina Nitschke, Deputy CEO and Director.
- On Tuesday 16 April 2024, prior to the public hearing in Darwin, the Committee visited the Royal Flying Doctor Service Darwin Tourist Facility and the Darwin Military Museum. The Committee received a briefing and tour from Ms Noni Romano, Tourist Facility Manager at the Royal Flying Doctor Service, and from Dr Norman Cramp of the Darwin Military Museum.
- On Thursday 2 May 2024, following the public hearing in Launceston, the Committee met with representatives of Launceston Airport, including Mr Shane O’Hare, CEO.
- The Committee would like to thank the organisations and individuals who provided evidence to the Committee during the inquiry.
- The Committee would also like to acknowledge the Traditional Owners of the various lands on which they had hearings and site visits.
Report structure
1.32The report is divided into six chapters:
- Chapter 1 details the background of the tourism sector and the impact of the COVID-19 pandemic on the sector and the conduct of the inquiry.
- Chapter 2 describes the complex tourism sector ‘ecosystem’, explaining the supply and demand sides and how they need to work together for the sector to be successful and to grow.
- Chapter 3 explores the opportunities and challenges for First Nations tourism, particularly meeting the increasing demand for First Nations tourism products and supporting authenticity and self-determination.
- Chapter 4 sets out the issues facing regional and peri-urban tourism in Australia, particularly around workforce, infrastructure and marketing and promotion. It also looks at other tourism opportunities including eco-tourism, sustainable tourism, business and events tourism and accessible tourism and increasing international market diversification.
- Chapter 5 considers broader enabling factors affecting the tourism sector, such as roles and governance, workforce capacity and capability, access and transport (including aviation and cruise access), visas, climate and natural disasters and insurance.
- Chapter 6 includes information on the international education sector received since the Interim Report was published in October 2023, with a focus on issues related to international education in regional Australia.