How this Queensland city has boomed despite China’s dead cat bounce

China was going to be the great hope for a Covid-ravaged tourism sector, except when the borders re-opened the flood of people just didn’t happen. What happened next is a key lesson for governments and business in the mythologising of China.

Jun 10, 2024, updated Jun 10, 2024
Cairns is driving the economic recovery. (Photo: Cairns Regional Council)

Cairns is driving the economic recovery. (Photo: Cairns Regional Council)

Everyone was waiting for China to reignite tourism. Politicians led trade missions, airlines rescheduled services, airports celebrated and destinations started putting out the welcome mat and they waited … and waited.

Compared with other markets like New Zealand, the rebound from China has been a dead cat bounce, less than half the 2019 levels when 500,000 Chinese hit our shores spending $1.6 billion in overnight expenditure.

The Australian Bureau of Statistics said China had the lowest rate of recovery of the major source countries to our shores, reaching 37 per cent of 2019 arrivals.

Qantas even scrapped its Shanghai-Sydney service because of a lack of demand from China, which is currently less than half the pre-Covid level.

The reason? Real estate, pure and simple. China is going through a real estate meltdown and that has robbed the huge middle class of disposable cash. Also, the cost of international travel has escalated wildly and the Chinese Government has provided incentives to its citizens to travel domestically.

Economists now think that a recovery in China is three to five years away.

The cost of a seven-day trip between China and Australia was double the cost of a similar trip to Tokyo, four times the cost of a trip to Bangkok and six times the cost of a China domestic trip.

That should be a disaster for the tropical north. Given that the region was hit badly by a cyclone late last year that cost it about $300 million in lost revenue, it would be easy to think the sector was on its knees without a horde of tourists from China.

It probably is a disaster in other markets, just not here. Something remarkable has happened. It appears the love affair with domestic travel that was inspired by Covid, has not entirely evaporated.

CBA transaction data for the June quarter showed a remarkable boom in Cairns. It found spending compared to last year in bars and drinking establishments was up 31 per cent and fast food precincts 8 per cent. Caravan park spending jumped 18 per cent and tour operators were up 17 per cent. Accommodation and lodgings rose 6 per cent.

The bank’s asset finance data shows Cairns-based businesses have stepped up their investment plans over the past 12 months, recording a 227 per cent increase in funding.

Meanwhile, the Cairns airport has seen an increase in domestic passengers of 4 per cent in the past year while international passengers were still about 100,000 below the record in 2019.

Conus economist Pete Faulkner said the boom that occurred after Covid restrictions were lifted was still going.

“The reality has been that the surge in domestic tourism (which has always been the larger) has meant that the sector as whole has never been stronger,’’ he said.

“Domestic tourism expenditure YTD Dec 2023 is up 35 per cent since December 2019 nationally, up 45 per cent in Queensland and up more than 50 per cent in Tropical North Queensland (even after some slight declines since Dec 2022 as Aussies started to travel abroad again).’’

And despite the belief that the Chinese were coming here with armfuls of cash to spend, Faulkner said they were not big spenders, anyway.

Overall, international arrivals to Queensland are still about 50,000 a month below December 2019. Nationally it’s about 316,000.

“If you’re in the tourism sector and reliant on international visitors (and haven’t been able to pivot to a more domestic market) then the time since COVID has certainly been challenging and continues to be so,’’ he said.

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“However, if the domestic market is your bread-and-butter _ and in much of regional Queensland, it is – then these have been boom years.’’

Pre-pandemic, China was Queensland’s largest market by expenditure and visitation, with 497,000 visitors spending $1.61 billion in overnight visitor spend with an average stay of 19.7 days.

“The Tropical North has been experiencing a tourism boom since COVID. Although domestic expenditure has eased a little in the YTD December 2023, we have seen a (slow) recovery in international markets which has meant that the total tourism sector is up 30 per cent since pre-COVID (and was up 40 per cent at the peak a few months ago).’’

He said international tourism visitor numbers were down 43 per cent since 2019 in the tropical north and the international expenditure data was down just 19 per cent.

“Part of this is the effect of inflation, but part is also the fact that the huge numbers of Chinese visitors we were seeing pre-COVID (although they actually peaked well before COVID) were not high spenders.

“International visitor nights to TNQ from the UK, Japan and the US are almost back to pre-COVID levels and these are higher spending visitors than the Chinese.’’

“Despite the large number of visitors, in terms of visitor nights _ which matter more _ China was never that much more significant than UK, US and Japan in TNQ, anyway.’’

The fact that tourism remains strong in the regions is significant boost for the state’s economy.

Cairns also has seen house prices boom. The median price in the city is up 21 per cent for the year and at a record high of $580,000.

Given the way other industries pivoted when China introduced trade bans, the clear message from is that mythologising of China has led Australians to believe we were a basket case with it.

The tropical north is showing that is not always the case.


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