Australia is experiencing a tourism boom with latest figures underscoring the industry’s position as an important pillar of the nation’s economy. The weak Australian dollar is driving domestic demand, as well as increasing the appeal of Australia as a travel destination for overseas visitors. Spending by international travellers has surged, fuelled by tourists from China where a burgeoning middle class has growing discretionary income and a desire to travel abroad.

In the 12 months to December 2015, domestic and international tourism contributed $94.5 billion to Australia’s economy with Tourism Research Australia (TRA) estimating approximately 925,000 people are employed either directly or indirectly in the sector.

Over the period, both domestic and international tourism has experienced strong growth with expenditure growth of 10 per cent. As international visitor numbers reach a record 7.4 million, spending is also at record levels with overseas visitors pumping $36.6 billion (up 18 per cent) into the local economy.

With 1.2 million Kiwis arriving each year, New Zealand remains the top tourist market for Australia followed by China, the United Kingdom, the United States, Singapore and Japan. Significantly, Chinese tourists are the biggest spenders among our overseas visitors outlaying $8.3 billion during their trips last year equating to 23 per cent of all international visitor spending. This compares with $3.8 billion spent by second-ranked UK tourists.

Buoyed by a lower Australian dollar, domestic tourism is also booming with Australians travelling within the country for a total of 322 million nights (up 4 per cent) and spending $57.9 billion, an increase of 6 per cent.

Weaker currency effect

For almost five years, Australia’s currency was at or around parity with the US dollar. After peaking at $1.10 in July 2011, the Aussie  has fallen 32 per cent.

The strong dollar made Australia an expensive destination for overseas travellers and lured Australians to international locations like Hawaii. In the eight years to 2014, Australians taking overseas trips grew at a rate of 132 per cent. However, from early 2014 this trend abated with the number of Australians holidaying overseas for the year to September 2015 falling 1 per cent – the first fall since 2003.

For the 2015 calendar year there was very modest growth with latest figures showing the number of Australians holidaying abroad grew by just 1 per cent. TRA anticipates only modest growth in outbound tourism noting the “dampening effect” of the weaker currency.

With the Australian dollar now fetching around $0.76, our weaker currency is a critical factor contributing to the rise in both domestic and international tourist numbers.

Chinese tourism takes-off

Australia’s Chinese tourist market is thriving. Between 2010 and 2015, the total number of Chinese visitors to Australia more than doubled and official figures released in January revealed that for the first time annual visitors from China reached the critical one million milestone. Predictions are that China will become our biggest international tourism market by 2019-20. The expansion in Chinese visitor numbers is overwhelmingly due to China’s growing middle class and its consumer boom. As China’s population urbanises becoming more affluent, greater value is being placed on overseas travel.

This trend, coupled with the relaxation of travel restrictions and greater affordability, resulted in around 125 million Chinese travelling overseas last year. Australia is popular among some of those Chinese travellers as the dollar has declined making it a cheaper destination. Following overseas terrorist attacks, safety has recently become a more important factor when China’s travellers are deciding on a destination and Australia meets the criteria.

Growth from government initiatives

Government policies have also helped contribute to the boom with the federal government naming tourism infrastructure as one of five “National Investment Priorities”. Specific initiatives include reforming visa requirements to make it easier to travel to Australia and investment in international marketing.

The federal government hailed the new China-Australia Free Trade Agreement as a positive for Chinese tourism announcing that, “ChAFTA will provide unprecedented opportunities for the Australian tourism sector … [including to] encourage Chinese investment in Australia’s tourism sector”. In addition, the federal government has announced plans to boost flight capacity between Australia and China by around 50 per cent by October this year.

Getting aboard

Several ASX-listed companies offer exposure for investors keen on positioning themselves to take advantage of Australia’s tourist boom.

Qantas Airways Limited: The Flying Kangaroo is an obvious beneficiary of the tourism boom. As part of its recent results announcement, the company noted the lower Australian dollar was creating steady growth in domestic and inbound tourism and that they are adding capacity to meet demand.

Mantra Group Limited: Australia’s second largest accommodation operator and marketer, Mantra is also well placed as growth in tourist numbers outstrips the growth in new hotel rooms. The company recently reported a 27 per cent increase in its interim half yearly profit and its share price has risen 140 per cent over the last two years.

Treasury Wine Estates Limited: As well as growth from direct exports to China, the wine-maker and distributor stands to benefit from the big-spending Chinese tourists. The company recently reported a 42 per cent increase in its half-year profit.

Village Roadshow Limited: In addition to distributing films and operating cinemas, Village Roadshow is Australia’s largest operator of theme parks, including Warner Bros. Movie World and Wet’n’Wild on the Gold Coast which attracts large tourist numbers. As Australia’s second-largest tourist market, Queensland’s economy will likely get a welcome boost from boom in visitor numbers which is expected to grow 6.1 per cent this financial year. The 2018 Commonwealth Games should further stimulate the state’s tourism, particularly in the south-east where Village assets are located. Latest domestic figures show Queensland tourism rose six per cent last year. With Queensland assets in its portfolio, Ardent Leisure Group is also set to benefit.


The drivers of Australia’s tourism sector show no immediate signs of abating. The federal government describes tourism as a “super-growth sector” forecasting it will contribute more than $145 billion to the economy by 2024-25.

Australia is likely to experience a sustained Chinese tourist boom for a range of reasons. A recent survey reported that Chinese travellers ranked Australia as the ninth most desirable destination to visit in the next five years and, further, if money was no object, Australia ranked fourth.

As the factors fuelling the growth of China’s middle class continue, overseas travel will become a priority with Chinese outbound trips forecast to swell from around 125 million in 2015 to more than 200 million by 2020.

Currently, Australia captures less than 1 per cent of those travellers. It is a notable fact that only 6 per cent of China’s almost 1.4 billion nationals currently hold a passport.

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