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Australian tourism industry welcomes record visitors during first half 2016

25 August 2016: Tourism grew three times faster than the Australian economy over the year to June, according to the August edition of the Deloitte Tourism and Hotel Market Outlook.

This performance has prompted Deloitte Access Economics to further upgrade its forecast for international tourism, with arrivals forecast to grow at 6.2% per annum (up from 5.4% in February) on average over the next three years.

Huge growth in leisure travel to Australia has seen international visitor numbers surge 10% in the year ended June 2016 – their fastest rate of growth since the mid-1990s. In the past year, international visitor expenditure has grown by 17.6% – more than double the 7.9% average of the past five years. At the same time, the number of Australians travelling domestically is growing at its fastest pace since formal records began in 1998 (7.6%).

Lachlan Smirl, Deloitte Access Economics partner, notes: “The growth tourism is posting – and the impact that’s having on activity across the economy – is a very clear sign the transition that needs to take place and its contribution to the Australian economy is occurring. A three-fold out-pacing of growth across the economy is no mean feat.”

Smirl also says international visitation has found yet another gear. “What is remarkable about the tourism growth we are observing is that it is being achieved against a relatively soft economic backdrop – both internationally and here in Australia. Yes, the Australian dollar remains relatively favourable, and the sustained growth of the middle class in Asia continues to buoy international travel. But as income growth in China slows, travel to Australia is in fact accelerating. And this pattern is observable across a number of markets.

“At the same time, the increase in arrivals from many of Australia’s traditional markets – the US, the UK, Japan – is defying the relatively subdued economic conditions and ensuring the tourism success story is a far broader one than emerging Asia alone.”

“While we know travel often lags the economic fundamentals, there are nevertheless clear indications it is more than just the economic drivers spurring the records Australian tourism is chalking up. Destination Australia is in demand.”

In terms of domestic travel, visitor numbers have grown for the 20th successive quarter and at their fastest pace in nearly two decades. While the average spend by domestic travellers fell marginally, the huge growth in volume meant total expenditure grew sharply (by an estimated 7.5% in annualised terms).

Smirl explains: “Growth was led by corporate travel, but the standout story for the domestic market was leisure tourism. Australians’ love of holidaying at home remains firmly rekindled, with trend growth of around 9% the fastest on record and adding an additional three million trips to the domestic holiday market annually. Encouragingly, this growth was concentrated in regional Australia. In fact, visitation to regional holiday destinations grew 50% faster than capital city domestic leisure travel.

“Growth in Australians holidaying domestically again surpassed the growth in Australians travelling overseas – the tide remains turned.”

Looking ahead, Smirl notes: “The long-term upside for tourism is now well established, and we’re seeing it play out before our eyes. Near-term, the economic outlook is moderating however the tourism outlook has strengthened further. While China remains the headline story, a raft of other emerging and traditional markets are underwriting the growth outlook.”

In a period when solid growth in visitor trips was recorded in all states, key highlights from the latest data include:


  • Western Australia and the Northern Territory recorded especially strong growth of 13% and 37% respectively, in the number of visitor trips received
  • Total visitors to regional New South Wales grew by 6.2%. The state’s north coast led the way in terms of volume, with an additional 586,000 visitors, while the New England West region also saw strong gains, with total visitors increasing by 166,000, a 14% increase on last year
  • Visitors to regional Victoria grew by 8.1%, with the strongest gains including the High Country (22% growth) and Gippsland (26% growth)
  • Visitors to regional Western Australia grew by 17.3%. The south west saw the largest share of this increase, with total visitors up 22% on 2015
  • Following the introduction of flights from Singapore and increased traffic from Shanghai and Hong Kong, Tropical North Queensland saw a 3.3% increase in visitor arrivals
  • Mining-related corporate travel, on a steep downward slide since 2012, has stabilised over the last six months – at around 2010 levels (and hence healthy territory relative to long-term history).


  • Sydney continued to be the standout performer among the major hotel markets, with trend occupancies hitting record levels of 89%
  • Hobart saw hotel occupancy rates grow by 2.1% to 81% over H1 2016
  • Increases in airline arrivals to the Gold Coast resulted in occupancies picking up by 1.6% to 79%, although room rates remained flat
  • Occupancies in Brisbane (74%), and Darwin (67%) were weaker as softer demand, and increasing supply of rooms weighed on performance

Discussing the outlook for the hotel sector, Smirl comments: “The hotel performance outlook is very much a two-speed one. There are the markets with resource sector exposure and, typically, strong supply growth outlooks. These dual forces continue to weigh on performance.

“Then there’s the markets where supply growth remains restrained and where demand-side exposure is predominantly to the fast-growing leisure segment. The outlook for these markets remains strong.

“The markets that have led the way over the last six months will remain atop the performance league table over the outlook period. Sydney’s average occupancy will edge into the 90s and only the leisure hot spots of the Gold Coast and Tropical North Queensland will contend with it for the nation’s fastest growing revenue per available room (RevPAR) measure.

“Hobart will continue to benefit from Tasmania’s ever-growing tourism appeal, while Melbourne room rate growth will start to give way as occupancies climb higher still.”

In aggregate, Australian room stocks are expected to expand by 14,000 over the period to December 2018, representing a 10% increase on the February 2016 outlook. “Interest in hotel development continues to grow, as the sector’s performance is increasingly recognised by developers and investors,” Smirl adds.

Smirl concludes: “The gap between supply and demand projections remains unbridged. An improved demand outlook sees demand set to grow at twice the pace of supply over the period to end-2018, despite a net increase in the supply pipeline. National occupancies are accordingly projected to climb two percentage points to 72% by 2018.

“Demand pressure will sustain average room rate growth of 2.8% p.a. and RevPAR growth of 4.8% per annum to the end of 2018, pushing national hotel expenditure from $14 billion to $16.5 billion per year.”

About the report

The Deloitte Tourism and Hotel Market Outlook uses the forecasting, modelling and analytical expertise of Deloitte Access Economics, one of Australia’s leading economics advisory practices. The Outlook also draws on Deloitte’s real estate industry experience and insights, and a range of other sources, including hotel data collected by STR Global Limited.

Full state and territory hotel performance breakdown and forecasts, including RevPAR, room rate and occupancy is available to paid subscribers.

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