Asia Travel Re:Set #20 – A Torrid Travel Year in Australia
Asia Travel Re:Set #20 – A Torrid Travel Year in Australia
"It will take upwards of 5 years to recover."
Hello. Welcome to Asia Travel Re:Set.
Last Christmas, I gave my heart to a Kylie Minogue destination video produced by Tourism Australia.
On Christmas Day, the “Matesong” campaign launched in the UK - where I was spending the holidays with family. It cleverly poked fun at the descending ‘Brexit Britain’ gloom, and invited Brits to take an escape Down Under.
Amid the beautifully shot Aussie-scapes, the fun 3-minute video included a line of offbeat brilliance: “Negotiating trade deals is a shocker, but look there’s a quokka.”
But there was a major problem. Timing.
One year ago, Australia was under siege from the devastating Black Summer bushfires. The Matesong campaign was cancelled. Australian tourism began a year to forget.
From the Black Summer, Australia careened straight into COVID-19, with its first infection on 25 January. Over the subsequent 12 months, it endured the Ruby Princess fiasco, bitter inter-state border disputes, a one-way travel bubble, returnee caps, hotel quarantine outbreaks, and - of course - a prolonged lockdown in Victoria, and the ongoing international travel ban declared under the nation’s Biosecurity Act.
Australia, which counts one of Asia Pacific’s most diverse and astutely strategised visitor economies, is hurting. Badly.
Tourism consumption decreased 19.3% (or AUD29.5 billion) to AUD123.1 billion in the 2019-20 financial year (ending 30 June 2020), compared to 2018-2019.
However, as a COVID normalised nation, the future offers new possibilities.
Domestic tourism is rebooting in time for the Christmas & January holidays. Live sports are intrinsic to the Aussie summer, and impressive crowds are gathering at its stadiums.
Yet, as we have seen across the region, locking down and suppressing COVID-19 is one thing. Reopening safely without inviting the virus back is entirely another.
As an island nation that has reached an advanced stage of containment, the myriad next-phase challenges will require patience, pragmatism and foresight.
Featured in this issue are forthright and clear-sighted opinions from 3 Australian travel experts that I hope readers will appreciate. Australian candour is infamous, and - in the current global tourism context - highly valued.
On a personal note, I wish Australia all the very best in turning around a tumultuous 2020 - because, above all, I can’t wait to get back and take up Kylie’s kind invitation.
Thanks for being onboard.
Gary
Each Sunday, Gary Bowerman charts the week’s key developments for travel economies across Asia Pacific.
If you are enjoying this issue so far, please feel free to…
The Sunday Itinerary
- DashBoard
From 2.5 to 104.8 million this week in Australia.
- QuoteBoard
Greg Hunt, Prof. Paul Kelly & Phillipa Harrison.
- ReaderBoard
5 Australian travel stories to bookmark this week.
- The Domestic vs International Debate
Analysing the travel results of the 2019-20 financial year.
- 2020: Putting a Torrid Travel Year in Perspective
2 expert insiders answer the question: “What are the key takeaways from 2020 for Australia's travel industry, and how can these lessons be applied in 2021?”
- “It’s Been a Devastating Year”
Highlights of this week’s The South East Asia Travel Show interview with Simon Westaway, Executive Director of the Australian Tourism Industry Council.
DashBoard
From 2.5% to 104.8 million this week in Australia…
2.5%: The contribution of Australia’s visitor economy to national GDP in 2019-20, down from 3.1% in 2018-19. [Tourism Research Australia]
28,025: Total number of COVID-19 cases in Australia, with 908 deaths. [Department of Health]
95,325: People granted a special outbound travel exemption since the international travel ban was imposed on 18 March. [Sydney Morning Herald]
16.4 million: Total domestic overnight trips in 2019-20 for the annual December-January holiday period. This figure may be broken this year. [Tourism Australia]
104.8 million: Australia’s current production and purchase order of COVID-19 vaccines: 53.8 million (AstraZeneca) and 51 million (Novavax). [Prime Minister of Australia]
- QuoteBoard
You heard it here…
“The hallmark of Australia's outcomes this year at a time when we see over 600,000 cases a day, agonising losses at record levels in terms of lives around the world, and Australia, by comparison, in the fortunate position of most days zero cases of community transmission.”
Greg Hunt, Minister of Health of Australia.
"We weighed up all of the issues, but particularly the ongoing situation internationally and the sort of risks that could come to Australia if we relaxed at this point."
Prof. Paul Kelly, Acting Chief Medical Officer of Australia, on the extension of the international travel ban.
“What better way to capture the rising optimism we’re seeing at the moment, as travel restrictions ease and [state] borders re-open again, than by gifting a holiday or a holiday experience. And what better gift shop than Australia itself.”
Phillipa Harrison, Managing Director, Tourism Australia, on the launch of the domestic Holiday Gifting campaign.
- ReaderBoard
Five articles to bookmark this week (click the underlined links to read)…
Full details about the decision to extend Australia’s international travel ban until at least 17 March 2021.
Australia has shelved plans to include a COVID-19 vaccine being developed by the University of Queensland and CSL from its procurement strategy after ‘false positive’ results during clinical trials.
Thai Airways has suspended flights to Melbourne, Perth and Brisbane until late March, and is closing its Brisbane office. A weekly Bangkok-Sydney flight will continue.
Queensland has joined the One-Way Trans-Tasman Travel Bubble by allowing direct flights for quarantine-free air passengers from New Zealand this weekend.
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The Domestic vs International Debate
This debate continues to rage in travel economies across Asia Pacific - even though the playing field is uneven. In countries where borders remain closed, a domestic uplift is inevitable. Travellers have nowhere else to go.
But COVID-19 has forced tourism policymakers to re-crunch legacy data, and identify where inbound and domestic travel and spending patterns converge and diverge.
Overall, Australia’s tourism industry “experienced sustained growth from 2009 to 2019,” according to Tourism Research Australia. It adds, however:
“The impacts of COVID-19 on the visitor economy are unprecedented.”
Annual tourism consumption fell by 19%, or AUD29.5 billion, in 2019-20.
Australia welcomed 9.4 million international visitors in 2019. However, in the 12 months to June 2020, the country recorded 92 million overnight domestic travel trips.
With the international travel ban extending to a full year, until at least 17 March 2021, can a domestic travel upsurge help the travel industry pull through?
“COVID-19 has highlighted deep disconnects between the local and inbound visitor economies.”
Sadly, it seems unlikely. As we have seen across Asia, COVID-19 has highlighted deep disconnects between the local and inbound visitor economies. These always existed, but they were rarely analysed with the rigour of 2020.
In its favour, Australia is a vast and astonishingly beautiful country - and has a captive market of restless and adventurous travellers who will take the opportunity to discover more of their own land.
A 2018-19 report by Tourism Research Australia said the role of domestic overnight travel and day trips in Australia’s (then) AUD152 billion visitor economy “far outweighed” that of international travel.
In 2018-19, international visitors spent a total of AUD39.6 billion, while AUD113 billion was spent by Australians on domestic overnight travel and day trips.
That is a considerable spending gap.
“International visitors spent AUD39.6 billion, while AUD113 billion was spent by Australians on domestic overnight travel and day trips.”
In 2019-2020, both figures fell significantly. International visitor spend was AUD31.2 billion, and domestic travel spend was UAD91.9 billion.
Although domestic travellers easily outspend international visitors in Australia, domestic tourists have different travel and spending patterns.
Trips taken by Australians in Australia tend to be “shorter, lower yield and involve fewer activities than international visitors."
In 2018-19, the average domestic overnight trip “lasted less than four nights and costs under AUD700”. While typical overseas trips spanned 18 nights and cost AUD6,500.
Piecing back together the inbound economy will be a giant challenge.
Australia’s top 15 unbound markets include 6 long-haul US and European markets and 9 Asia Pacific markets - which range from short-haul (New Zealand and Indonesia) to mid-haul (China and India). Rebuilding air capacities will take time whenever the borders reopen.
For the immediate future, driving up domestic tourism income will be critical.
To channel some of the nation’s pent-up travel frustration, Tourism Australia this week launched its Holiday Gifting domestic campaign for the upcoming holiday season.
What are the key takeaways from 2020 for Australia's travel industry, and how can these lessons be applied in 2021?"
I asked 2 travel industry insiders, Rebecca Esterhuizen and Simon Bernardi, the above question. Here are their compelling responses…
Rebecca Esterhuizen
“2020 has demonstrated that both large and small travel agencies; OTAs, wholesalers, tour operators and even suppliers, have needed to pivot, adapt and rearrange their businesses rapidly.
Due to COVID-19, and the direct impact this has had on consumer behaviour, a previously successful business model is no longer suitable for 2021 and beyond.
We have witnessed travel agencies with a strong brick-and-mortar presence reduce their footprint and move more content online, selling quick-to-market products such as domestic flights, hotels and day tours. Companies that have been able to get these products out quickly are reaping the rewards from pent-up demand following intra-state border openings.
“Businesses are expanding their product offerings to take advantage of domestic demand.”
Companies who had a successful niche product offering, let’s take a cruise travel agency as an example, are having to look at other products outside of cruise to stay afloat and relevant. Businesses are expanding their product offerings to take advantage of domestic demand, tapping into new revenue streams and new distribution channels (online and virtually) to meet the change in consumer behaviour.
Customers will be apprehensive on travelling again. They will need an extra level of assurance beyond the brand’s marketing.
Businesses that innovated and adapted during the pandemic will thrive in the recovery period. Innovation is critical in building a foundation to remain competitive and identifying new opportunity areas as the landscape of travel and tourism changes.
Moving into 2021 and beyond, businesses must look at flexibility in their models, diversify their product offerings and adapt to new consumer behaviours. Those that do this will emerge stronger and ride the wave of #revengespend in travel.”
Rebecca is Head of APAC for Traveltek, which has over 20 years’ experience of working in partnership with travel agents, tour operators, consortia, cruise specialists and airlines.
Simon Bernardi
“It’s been a truly shocking year in travel, with most travel agents recording little or no sales since March. At the same time, they are having to pay staff to process supplier refunds which were increasingly difficult to recover.
The industry will rebound quicker than expected when people are able to travel. Pent-up demand will create pressure on finding availability and may drive costs up in the short term for travellers. We currently have travellers “queuing up” to travel, but can’t.
The key learnings for the industry are:
Diversify. You cannot focus on one type of sale, such as Domestic versus International. You need to have a portfolio approach to the products you sell to insulate your business from external threats.
“The industry will rebound quicker than expected when people are able to travel.”
Be agile and think differently. The world has changed forever. Many agents struggled by relying on existing clients and doing things the same way as they have for many years. Now they need to think how to attract new customers and develop new markets.
Suppliers can be unreliable. Many suppliers and airlines are not processing refunds during the pandemic. Some airlines are refunding customers in full, but recalling the travel agents’ commission. Agents should rewrite their terms and conditions to take into consideration some of the above from suppliers. They also must ensure they charge enough in fees to cover their costs should this situation re-occur. Look after the suppliers that look after you, and avoid those that don’t.
All that aside, never give up.”
Simon is Managing Partner of Australia & Beyond Holidays, a leading Australian inbound travel management company. It holds an ADS accreditation for itineraries from China.
“It's been a devastating year - and will take Australia upwards of 5 years to recover.”
Interview With Simon Westaway, Executive Director of the Australian Tourism Industry Council, which represents tourism businesses nationwide.
Simon counts a varied career, including strategy roles at Impulse Airlines, Jetstar Airways and Tourism Australia, where he worked on the successful China inbound strategy.
On this week’s The South East Asia Travel Show, we chatted with Simon about the 2020 travel year, and the outlook for 2021 and beyond. Here are some of the key takeaways:
One year ago, Australia was struggling to contain the deadly ‘Black Summer’ bushfires. How much damage did that do, psychologically as well as physically, to Australian tourism?
The bushfires had a devastating effect. In mid-January, Melbourne was the hottest city on the planet, with temperatures towards 50 degrees, and the worst air quality.
Tourism Australia calculated that the collective brand damage was AUD7-8 billion. It wasn't just the peak summer season for travel, it was also the peak booking window particularly in North America and Europe.
“Tourism Australia calculated that the collective brand damage was AUD7-8 billion.”
From the bushfires, we literally moved straight into the coronavirus. The industry has lost over half of our collective value in a sector valued at around AUD150 billion. It's been a devastating year, and will take us upwards of 5 years to recover.
When did you start to see the impact of COVID-19 on Australia’s tourism sector?
In recent years, Australia has done very well out of Chinese New Year - and we’ve increasingly seen direct charter services as well as the capacity scheduled flights by China Southern and China Eastern. At the back end of the Chinese New Year celebrations, the day after Australia Day, our federal government confirmed we would close the border to visitors from mainland China from 1 February.
That's when it start to hit. The Chinese market was delivering AUD12.5 billion to our national economy.
We then saw closures to other markets, and in March the borders were closed.
Australia and New Zealand bequeathed the term ‘Travel Bubble’ in late April - and it has become a travel industry buzzword. Were you always hopeful it could succeed?
We had two countries that are very close geographically with a lot of mutual connections, so it seemed logical.
Although the two countries had slightly different COVD strategies, we’d got to about the same place by mid year - and it looked like we could get the Trans-Tasman Bubble going by the third quarter of the year.
“Our prediction is that we'll see a proper two-way bubble occur by April next year.”
Then Australia had the second wave of the virus which took hold in Victoria, and for a
number of weeks we had trouble getting on top of it. It also coincided with state elections in Australia and the New Zealand general election - and strong border policies saw incumbent governments strengthen their majorities.
So, it began in mid-October as a 1-way Micro Bubble, for New Zealand residents to visit Australia without undergoing quarantine, which was a shame.
Our prediction is that we'll see a proper 2-way bubble occur by April next year.
— Click HERE to listen to the full interview with Simon Westaway —
It’s coming up to the summer holidays in Australia. A recent research paper said 3-quarters of Australians will travel in their own state. Is that looking how it will pan out?
In most parts of Australia, where community transmission has been nailed, we've seen people getting in their cars and camper vans and doing day or overnight trips in regional or costal Australia. Many businesses are reporting takings that are as strong as it's ever been.
States and territories have been tough on border closures this year, and they've been politicised. People realise that's not going to occur any more, so we are seeing more
inter-state bookings. But I think a lot of people will stay close to home this Christmas and New Year.
What’s the travel outlook for 2021?
A vaccine will be very important, but we also need a rapid upgrade on antigen testing and we need to rethink our hard 14-day quarantine. We've got to seriously look at how we reopen our economy, and reopen our borders to international business.
Australia is so well placed in terms of safety and security in a post COVID-world - but once you open the borders again, people will be nervous.
“We've got to seriously look at how we reopen our economy, and reopen our borders to international business.”
I'm not that optimistic about the international return, but I am optimistic that we can work on some cohorts, such as backpackers and working holidaymakers.
I'd also love to see some leisure bubbles beyond New Zealand, maybe the Pacific Islands, or Japan, South Korea, Taiwan and China, perhaps with specific provinces. But I don't think these would be likely until the second half of 2021.
For outbound travel from Australia, it will be done on a phased basis. At present, we can’t travel overseas until 17 March 2021.
We do need to encourage the two-way flow of travel. We had around 9.5 million short-term inbound arrivals last year, and around 12.5 million outbound departures.
I hope we think a bit outside the box. Pick a market, pick some cohorts and see how it works - and then look to expand it relatively quickly.
And, that’s a wrap for Issue 20.
Next Sunday’s edition will be the final one of 2020. Until then, you can catch me on Twitter and LinkedIn, and at Check-in Asia.
Feel free to send thoughts and feedback to gary@check-in.asia
The website is starting to take shape (the holding page is at www.asiatravelreset.com) and will be properly launched in January 2021.
Speak soon,
Gary