Tourism: The long road to post-pandemic recovery

Australia’s tourism and hotel industries have begun their long journey toward recovery from the immense losses imposed by the COVID pandemic, but the road will remain rocky for some time yet.

Camels walking along Cable Beach at sunset in the north-west town of Broome, Western Australia, Australia. Camel rides at sunset are a popular tourist activity in Broome.
With travel restrictions gradually easing, and the lifting of our international travel ban, the recovery can hopefully gain traction. Photo: Shutterstock. (Image source:

Tourism: The long road to post-pandemic recovery

Australia's tourism and hotel industries have begun their long journey toward recovery from the immense losses imposed by the COVID pandemic, but the road will remain rocky for some time yet.

Adele Labine-Romain Deloitte Access Economics partner and national tourism leader, said the hotel and tourism sectors were the first to be impacted by COVID and the government response and will be the one of the last to recover.

"The recovery remains highly uncertain and reliant on many factors, from local and international economic developments and COVID's ongoing unpredictability.

"With travel restrictions gradually easing for most parts of the country, and the lifting of our international travel ban, the recovery can hopefully gain traction, but the industry will remain under pressure until borders are fully open again and the relatively free flow of people into, and within, Australia can resume."

With borders being closed for all non-essensial travel there was an immediate decline in domestic tourism, overnight trips and subsequent spend was down 67% and 80% respectively. Things looked to be improving until Deltra-induced lockdowns started in June 2021, potentially stopping the spread of Delta, definitely stopping domestic tourism recovery.

"Globally, a significant share of consumers are still not ready to head overseas. Less than 30 per cent of consumers across Australia's key source markets are showing a likelihood to travel internationally for leisure purposes, an indication that the effects of the pandemic on global tourism will take some time to unwind, and a slower recovery for our inbound, and export dollar generating, travel industry." Said Ms Labine-Romain.

The latest edition of Deloitte Access Economics' Tourism and Hotel Market Outlook, shows some market segments are expected to recover more quickly than others.

"Virtual meeting technologies, cost savings and organisations' growing consciousness around sustainability will see corporate travel face a slower return than leisure travel.

"Overnight trips in Australia are expected to surpass 2019 levels and reach 124 million trips by the end of 2022, and 132 million trips by 2023.

source: Monthly results of the National Visitor Survey (NVS) | Tourism Research Australia

"The recovery of international tourism is going to be slower than expected, while arrivals are forecast to reach around 6.6 million by the end of 2022, 76% per cent of 2019 levels, this early recovery stimulated by pent up demand is expected to moderate after 2022, and only return to 2019 levels in 2025.

"To offset the shortfall in international visitor spend, any increase in domestic travel by Australians needs to be above already high levels of domestic tourism activity. It would take around seven domestic overnight trips to generate the equivalent spend of one international visitor. And this would need to be in addition to the average 14 domestic trips Australians typically take in a year. This represents a significant challenge for policy settings and the sector."

Significant, prolonged lockdowns in Sydney and Melbourne decimated the hotel market. Occupancy rates were down to 20% and smaller capital city markets were further strained with dependency on interstate travel demands.

"The pace of recovery for hotels will vary across the city markets. Brisbane, Perth, Gold Coast, Canberra and Darwin are expected to see occupancy rates return to 2019 levels by 2023. Sydney and Melbourne will take a little longer due to their high pre-pandemic occupancy rates, their greater dependence on demand from international tourists and corporate travellers, and significant new supply coming on line." Concluded Ms Labine-Romain.

An innovative digital banking feature helped provided NSW businesses with a much needed boost injecting $4.9m of additional spending to the ecomony in June 2021 according to recent Commbank research.

NSW customers were encouraged to use the Government's Dine and Discover NSW program via the bank's Benefits Finder feature.

CBA's Chief Digital & Analytics Officer, Dr Andrew McMullan said, "it's been encouraging to see people across NSW supporting various dining, arts and recreation businesses across the state and providing much welcomed revenue."

"Through Benefits finder we're supporting Aussies to claim their Dine & Discover NSW vouchers and spend on what they enjoy, while helping to get Australian businesses back on their feet.
Minister for Digital and Customer Service Victor Dominello said the NSW Government welcomes CBA's Benefits finder and the promotion of the Dine & Discover program to its customers.

"Similar to the NSW Government's cost of living program, the CBA's Benefits finder is all about raising awareness and making it easy for customers to access information,

"I commend CBA and other institutions for promoting Dine and Discover and other NSW Government stimulus initiatives." Mr Dominello said.

The research shows the campaign helped accelerate the NSW Government stimulus take-up, with customers also spending additional money to bolster the value of the vouchers increasing their spend at leisure and entertainment venues.

Tourism plays a significant part in the economy, contributing to GDP and employment. In 2020 Tourism GDP dropped 17.6% and employment fell 6.6%

According to Tourism Australia, 60,000 international visitors entered over a 12 month period ending in March 2021. This injected $0.79b into the Australian economy, total international capacity to Australia decreased by 99%, with total international visitor spend down 98%. It's no wonder the hotel and tourism sectors are crying out for not just international travel and spend but intrastate and interstate travel too.

Interstate travel was heavily reduced thanks to State border restrictions:

  • took 248,000 interstate overnight trips, down 93% on September 2019*
  • spent $613 million, down 86% ($3.9 billion) on September 2019.

Intrastate travel

  • took 3.2 million intrastate overnight trips, down 50% on September 2019*
  • spent $2.0 billion, down 30% ($860 million) on September 2019
  • contributed 77% to total spend, up from 39% in September 2019.

*Typically, monthly results are compared with the same month in the previous year. However, Tourism Research Australia has compared this month's results with September 2019 rather than the COVID-19-affected September 2020. For completeness, in September 2020 Australians took 5.4 million overnight trips (down 46%) and spent $3.2 billion (down 56%).

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