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The curve here in Australia has been flattened. While we must not be complacent, the success of measures taken to date has seen some of the state and territories start to relax some restrictions around activities and travel. For example, Queensland residents are now allowed to go for a ride within 50 km of their home, some parks and reserves in the NT reopened and NSW has started to eased some gathering restrictions.
In this emerging recovery period, travel that is close to home will resume first. Intrastate visitors spent $68 billion in 2019, and as noted previously, spending on intrastate trips make up 40% of Australians’ total travel spending. The share is even greater among residents of Queensland, Tasmania, the Northern Territory and Western Australia where intrastate spending accounts for more than 45% of residents’ travel expenditure bucket.
What is the early outlook for cities and regional destinations? As individual destinations and operators consider their near term sources of demand, who should they have in their sights?
Capital cities attract a greater share of interstate and international visitors than regional destinations, and therefore the task of replacing this revenue in the short term during the intrastate travel only period will be a greater one given the share of intrastate spending in capital cities is 34%, while across regional destinations intrastate spend represents 66% of their total tourism revenue (see Figure 1).
Figure 1. Tourism expenditure mix in capital cities vs. regional destinations, 2019
Given our geography and concentration of population in capital cities, and expectations that travel restrictions will be lifted progressively, it is instructive to distill intrastate spending into visitor spending by local visitors (within a specific tourism region) and those in the rest of the state. Over a third of tourism spend in regional destinations is from local visitors compared to just 20% in capital cities.
Cities and regional destinations that are more reliant on interstate and international visitors will face larger challenges in the near term.
Among capital cities, Sydney, Melbourne, Hobart and Darwin are the most dependent on expenditure from outside their respective states with only around 30% of spending in each case from intrastate visitors (see Figure 2). Canberra, of course, is even more dependent on external revenue given the tight parameters of its geography.
While in aggregate, intrastate visitor expenditure is a greater share of the usual expenditure mix in regional destinations, this varies considerably from highs of 70-80% in regional NSW, VIC and WA to much lower proportions in regional Tasmania and regional NT.
Breaking down intrastate travel – how local is local?
Even within the category of intrastate travel, all destinations – whether cities or in regional areas – attract a mix of very local visitors and others from the rest of the state (or territory).
The relative importance of these two groups varies considerably across cities, where the mix is relatively equal for Sydney and Melbourne, more reliant on local residents in Perth and more reliant on visitors from the rest of the state to support intrastate activity in Adelaide (the specific boundaries of regions plays a role here).
Regional destinations, while generally less dependent on interstate and international visitors than their city counterparts, will need to connect with residents both in the capital cities and across regions to encourage demand once a return of intrastate travel is permitted.
Figure 2: Mix of tourism expenditure by segment across jurisdictions, 2019
Where to focus attention in the near term?
In anticipation of some travel restrictions lifting, destinations and tourism operators will be considering who their first visitors will be and will be looking to convince them to redirect (at least some) of the spending they would usually be making on interstate and overseas trips to travel plans closer to home.
The existing visitor spend of residents in cities and regions, based on previous spending patterns, is shown on the map in Figure 3 below. Melbournians, for example, collectively spent $28 billion to travel intrastate, interstate and overseas in 2019, while residents across regional Queensland (outside of Brisbane and the Gold Coast) spent $13 billion.
On the map below, the width of the rings represents residents’ mix of spending – in their home city/region, rest of the state, interstate or overseas. The two grey inner bands represent residents’ spending on intrastate travel pursuits, and the objective in the short term will be to support a resumption of these activities wherever possible (and safe) to secure this base of activity for the sector.
The two blue outer bands represents residents usual spending on interstate and international trips that is curtailed at the moment that could be repurposed and redirected to the current mission of restarting tourism. The level and mix of spending, and the scale of the opportunity to redirect some of the retained spending, differs between residents of cities and regional areas, but suggests that regional destinations should find ways of reaching out and engaging city residents to convince them that a regional trip could help fill their growing wanderlust.
Figure 3: Residents visitor expenditure across segments, 2019
Adele is the Australian Tourism Sector Leader at Deloitte and a partner within Deloitte Access Economics’ economic and policy advisory practice. With a deep understanding of the tourism landscape and experience in strategy and policy development including executive roles with Tourism Australia (Executive General Manager, Strategy and Research) and peak industry body Tourism & Transport Forum (Executive Director), Adele works with government and private sector clients across tourism-related industries including aviation, transport and cruising, hotels, business events, sports and major event and attractions.