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How Covid set tourism back five years and wiped out $153 billion in spending

The Covid pandemic wiped out $153.6 billion in tourism expenditure between March 2020 to June 2022, according to new data from the Federal Government’s Austrade.

Dec 16, 2022, updated Dec 16, 2022
Groups tours from China have been given approval

Groups tours from China have been given approval

These losses included $84.8 billion for international travel, $50.5 billion for domestic overnight travel and $18.3 billion for domestic day trips.

“Notwithstanding these losses, the Australian visitor economy has turned a corner and its recovery is now underway,” the report said.

The forecasts in the report indicated that Queensland would have an initial win in market share at the expense of NSW and Victoria over the coming years the two southern states would recover closer to their pre-pandemic levels by 2027.

It also showed how domestic travel was booming, but it probably only had a year before the reality of higher costs and the increased options for overseas travel impacted.

The report said that at the end of September, domestic overnight trip spend was up 22 per cent to $73.5 billion and domestic day trip spending was up 2 per cent to $19.7 billion on the same period in 2019. Inflation helped, but longer average trips and increased holiday travel were also boosting the overnight spend.

But the losses in international tourism have been profound and the report claims five years of growth in international tourism was effectively wiped out.

“It is expected to take until 2025 for international visitor arrivals to return to pre-pandemic levels,” the report said.

International arrivals were forecast to reach 9.5 million, exceeding pre-pandemic levels, in 2025 and by 2027 an estimated 11 million international visitors would arrive in Australia, which was close to the number previously anticipated by 2022-23 in the absence of a global pandemic.

“Such an outcome (if realised) would represent a loss of nearly five years of growth from Australia’s international tourism market.”

At the end of September there had been 2.1 million international arrivals into Australia which was fourteen times the number for the same period in 2021, but only 31 per cent of the number seen in January to September 2019.

India and New Zealand were expected to recover most quickly, but the turnaround would take longer to the US, UK, Europe, and Japan.

The China market was not expected to reach pre-pandemic levels until 2026.

It said the recovery for domestic travel was more advanced with overnight trip spending already higher than in 2019.

“Visitor nights to all states and territories are expected to move higher than pre-pandemic levels by 2024, with this mark forecast to be reached by some as soon as this year or in 2023,” it said.

Growth in domestic travel is expected to continue but vary over the near future.

Next year Australians were expected to draw down savings and use recreational leave accumulated during Covid. However, a dip in growth is expected in 2024.

“By then it is expected that savings will have been reduced considerably by increasing cost-of-living pressures,” the report said.

“The substitution effect of having international trips as a travel option will also have fully re-emerged.

By 2027, there is forecast to be $179 billion in total domestic spend (67 per cent higher than pre-pandemic) including $137.9 billion in domestic overnight trip spend (up 71 per cent on 2019) and $41.1 billion in domestic day trip spend (up 56 per cent on 2019) and 465.8 million domestic visitor nights (up 11 per cent on 2019).

Business travel and travel within the capital cities are the main impediments to growth.

 

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