The next 12 months will be a mixed bag for tourism operators, with stronger employment and consumer confidence set to increase demand for domestic tourism, while the higher Australian dollar and low airfares will push more people overseas.
The Australian dollar is one of the main factors here. After hitting parity late last year, economists expect the dollar to keep increasing through the first half of the year and then settle in the mid 90c range during the last six months, pushing more people overseas.
According to Tourism Australia’s latest forecasts, outbound departures will grow by 15% to 7.2 million in 2010 and outbound travel will rise by an average of 4.5% each year between now and 2020. And increased competition within both the trans-Pacific and south-east Asian routes will keep airfares down.
This will mean domestic tourism operators such as those on the Gold Coast will continue to struggle, and more collapses can be expected.
However, there is reason to believe 2011 will also be a year of recovery for tourism operators. According to TA figures, domestic visitor nights will rise to 261 million in 2011 as employment growth allows travellers to stay on longer holidays.
Inbound tourism will also become much more popular, especially from Asia, with Chinese visitor arrivals set to increase by 21.9% over the year. Overall Asian inbound arrivals will increase from 38% to 42%.
It’s no secret the property market has slowed down over the past six months. But due to rising interest rates and an abundance of listings continuing to flood the market, experts say we shouldn’t expect any capital gains – in fact, we should brace ourselves for a fall.
The most recent figures from RP Data-Rismark show prices fell by 0.2% in November and only managed to grow by 5.2% over the year. And Rismark managing director Christopher Joye says if interest rates keep increasing, (which economists say is quite likely), then “our central case is that there will be little-to-no nominal dwelling price growth over 2011”.
Market prices will also be affected by a huge number of listings coming onto the market in the first few months of the year. With auctions in Melbourne topping 1,000 every weekend in late 2010, many of those listings will come back onto the market soon and sellers will adjust their prices.
But construction isn’t set to improve soon either. The Housing Industry Association released figures last month showing that Australia fell short of the 184,000 dwellings needed in 2010 by over 22,000, and that shortfall is set to be at 16,800 in 2010-11 and 21,000 in 2011-12.
Commercial property, on the other hand, is a different story. The larger properties buyers have been waiting for will spring up in the second half of the year, increasing prices, and the same is true for industrial property as well.
Office space will also become more valuable as jobs growth continues.
With more consumers buying smartphones and broadband quota limits increasing, the telecommunications industry is becoming a battleground between old and new ways of doing business.
The National Broadband Network has been a major point of discussion over the past few months but it is unlikely the network will have a major impact for consumers this year as only a small amount of users will be connected in test sites.
However, the arrival of the NBN will drive business behaviour. ISPs will need to gain customer volumes, so they will market services with higher download limits for cheaper prices – most major telcos now offer a 1TB plan.
But the biggest changes this year will be found in the mobile sector. Mobile data is now becoming incredibly cheap and it may be possible that users take-up data-only plans for smartphones as well as tablets.
Telco analyst Paul Budde wrote recently on his website that this year will see more competition between mobile operators, “resulting in lower mobile call charges for customers”. Budde also says more telcos will offer “add-on” services such as IPTV programs.
This isn’t good news for some larger companies such as Telstra that are struggling to innovate in a new competitive market.
In August the company said fixed internet revenue fell by 0.7% as “competition intensifies”, while PSTN revenues fell by 7.4% to $3.4 billion.
This year could also be another of consolidation. Perth-based iiNet has previously said it is keen on finding new acquisition targets, and if it continues buying smaller players the industry will see power consolidated in the hands of four or five major companies.
The increased competition will definitely benefit consumers, but for some larger organisations some restructuring is on the way.
The retail industry has been one of the hardest hit by the downturn and that disappointing trend isn’t set to improve… at least, straight away.
Rising interest rates and utility costs mean consumers will keep their wallets shut during the first few months of the year, economists are predicting. And the weak retail sales over Christmas indicate the discounting war will continue.
But all hope isn’t lost. Recently, Access Economics director David Rumbens predicted that while spending will remain thin in the first half of the year, employment growth and a predicted upswing in housing construction, in certain areas, will help out struggling retailers.
“I think the higher dollar will favour those who have a high importing component, so you’re looking at a lot of clothing and household goods stores. The improvement in housing is not what we had hoped, but that area is still doing well, so furniture and so on will come alongside that.”
Overall, Access says spending will grow from 3.2% during 2010-11 to 3.7% in 2011-12. Spending in major categories including clothing, household goods and restaurants and takeaway food will remain strong.
Western Australia and Queensland will record the largest increases of 2.7% and 2.1% respectively.
The key is jobs – if unemployment continues to fall as the government and several economists believe it will, then retailers will start experiencing a recovery in the second half of the year.
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