Dan Tehan hints at tailored support for tourism businesses, as domestic travel fails to fill the expenditure gap

The Morrison government is considering further tailored support for tourism businesses hard-hit by the ongoing COVID-19 crisis and international border closures, as domestic tourism is unlikely to fill the expenditure gap.

In a group interview with various media outlets, newly appointed Minister for Trade, Tourism and Investment Dan Tehan reportedly said he has been engaging “heavily” with the tourism industry “to listen to their concerns and also to get thoughts, ideas and feedback from them as to how the government may be able to assist them while we wait for international tourism to come back online”.

Tehan’s comments came as he reiterated that Australia is unlikely to receive international tourists for the next nine to 12 months.

That means businesses that typically rely on such travellers remain “in a state where it is very difficult for them to succeed economically”.

Tehan’s comments come in contrast to those of Treasurer Josh Frydenberg, who has said the government will not consider extending wage subsidies for the tourism sector after the JobKeeper scheme winds up in March.

This debate comes after a difficult 2020 for the tourism sector. And, while other hard-hit businesses in hospitality and retails, for example, have been able to reopen, the ongoing closure of the international border means businesses that rely on travel are facing ongoing struggles, and yet more uncertainty.

But, with a dip in international travel comes an increase in domestic travel — something Tehan has been keen to point out.

So can domestic travellers really make up the shortfall?

Who’s spending what?

Speaking to SmartCompany, Tom Youl, a tourism analyst for IBISWorld, says that actually, in an average year, domestic tourists account for about 70% of all tourism spend in Australia.

While international tourists are more lucrative on a per-visitor basis, he explains, the volume pales in comparison to domestic travellers.

On top of that, in 2019 travellers to Australia spent about $31 million. Australians, by contrast, spent about $57 million overseas.

So, if all that money goes towards Aussie tourism instead of abroad, the sector could be in for a $26 million windfall.

Unfortunately, that’s not exactly how it works.

“We know it’s not business as usual, ” Youl says.

The COVID-19 health crisis is ongoing. People are reluctant to travel because of health concerns, and the possibility of late-notice closure of state borders looms. Aussies are still not taking any risks.

IBISWorld doesn’t have the stats for the Christmas period just yet, but it does have damning numbers on the 2019-20 financial year.

Total tourism expenditure saw “double-digit declines”, Youl notes.

“We know it hasn’t really come back.”

That’s especially true in Victoria, he notes — a state that accounts for a “pretty decent share” of domestic tourists, and that was hardest hit by strict COVID-19 lockdowns.

And, while things are improving, we’re not out of the woods yet.

“If all the border lockdowns were to stop tomorrow, and the coronavirus wasn’t a factor at all, it would be good news,” Youl explains.

“But that’s theoretical. That’s not the reality that’s facing a lot of tourism businesses.”

Not all doom and gloom for SMEs?

There’s also a case to suggest that small businesses, on average, actually might not be the worst off here. It’s those on the biggest end of town — airlines, city hotel chains, casinos — that suffer the most from a drop in international tourism.

On average, international travellers tend to fly into a capital city, and then visit one additional location, Youl explains.

Patrons of small businesses in regional areas are much more likely to be Australians.

If international borders remain closed, if COVID-19 numbers in Australia remain low, and if there’s some certainty around this, “there could be a bit of an upswing for regional tourism operators”.

But, again, this is theoretical, and Youl admits he may be being a little over-optimistic.

In a best-case scenario, things will likely improve for SMEs. But, that will require confidence among travellers, and therefore, probably a nationwide vaccine rollout.

Of course, people will only put their hands in their pockets if there’s economic certainty, too.

“Things have been really bad. We know the industry has been hard hit,” Youl says.

“But, perhaps there are some rays on the horizon.”