2016 KICKS OFF WITH CONTINUED RECORD BREAKING GROWTH

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1 International Market Update 2016 KICKS OFF WITH CONTINUED RECORD BREAKING GROWTH > > The Australian Bureau of Statistics (ABS) showed that there were 7.7 million short term visitor arrivals to Australia in the 12 months ending March 2016, an increase of nine per cent compared to the previous year. > > The latest International Visitor Survey (IVS) results showed that international expenditure for the 12 months ending March 2016 grew 17 per cent, reaching a total of $37.9 billion. Escalating growth in international arrivals and expenditure continues International arrivals to Australia increased nine per cent in the 12 months to March While arrivals from the majority of markets grew in the year ending March 2016, some markets were flat or showed declines; Brazil (down six per cent), Indonesia (down one per cent) and Italy (down two per cent). The boost in direct aviation capacity continues to benefit arrivals from Japan, up 10 per cent in the last 12 months (and up 27 per cent in the first quarter of 2016). The Leisure segment remains strong with Holiday arrivals up 16 per cent and Visiting Friends and Relatives (VFR) arrivals up three per cent over the 12 month period. Robust growth in Holiday arrivals was recorded in many markets in the year ending March 2016, with double digit increases of 32 per cent in China, 21 per cent in Hong Kong, 24 per cent in South Korea, 13 per cent in Malaysia, 16 per cent in Singapore, 16 per cent in the UK and 24 per cent in the USA. Overall visitor expenditure was positive in the 12 months to March 2016, up 17 per cent with an additional $5.4 billion in expenditure compared to the previous year, reaching $37.9 billion. China continues to be the strongest performing market, up 38 per cent to reach $8.9 billion in the year ending March Expenditure by Japanese visitors recorded strong growth, up 10 per cent in the year ending March 2016 (the highest growth achieved since March 2013). Other markets that recorded double digit growth in expenditure in the year ending March 2016 were the UK (up 10 per cent), USA (up 22 per cent), Canada (up 11 per cent), Singapore (up 24 per cent), Malaysia (up 11 per cent), Korea (up 21 per cent), India (up 19 per cent), Indonesia (up 10 per cent) and Germany (up 14 per cent). Overall, spend by leisure visitors recorded 17 per cent growth during the past 12 months, on par with overall growth. Tourism Australia s 2016 Market Profiles Released In May 2016, Tourism Australia released updated Market Profiles for 16 priority source markets. For a snapshot of market performance, aviation data, consumer insights and distribution trends in each market refer to Tourism Australia s corporate website here. New Research Publication Tourism Research Australia (TRA) published the Tourism Satellite Account ) in April The report provides an overview of the economic contribution of the tourism sector to the Australian economy. In , direct tourism Gross Domestic Product (GDP) was up by five per cent reaching $47.5 billion and tourism s share of total GDP increased (up 0.2 percentage points) to three per cent. For the same period, direct tourism employment was up by six per cent to 580,800 people working in tourism related roles. Total tourism consumption in Australia was up four per cent to $121.2 billion in Click here for the full report. Global consumer confidence The latest Nielsen s Consumer Confidence report (Q1, 2016) shows that global consumer confidence was stable, up one index point to 98 from the fourth quarter of In the USA, consumer confidence remained strong with declines in unemployment and sound wage growth. Across Asia, India and Indonesia stood out as buoyant growth markets, while confidence declined in Hong Kong and Japan. In Europe, the majority of advanced economies recorded confidence declines due to geopolitical issues. Click here for the full report. Business Events Update Business Events Australia (BEA) continues to support Australian industry and raise awareness for Australia in the international incentive and association sectors, with activity to date including; hosting the Australia stand at IMEX Frankfurt, Germany (19-21 April); Associations World Congress in Berlin (10-12 April); SITE Americas Summit in Colorado, USA (31 Mar-3 Apr); Incentive Travel Exchange in Las Vegas, USA (2-5 March); Asia-Pacific Incentives and Meetings Expo in Melbourne (AIME, Feb); and PCMA Convening Leaders Conference in Vancouver, Canada (Jan-16). The educational programme, run by BEA in partnership with industry, has also provided industry with an opportunity to meet and showcase their products to key decision makers from NZ, USA and China. In 2016, educational visits have held in Sydney, Uluru, the Gold Coast, Brisbane, Tropical North Queensland, the Hunter Valley and the Whitsundays. In March 2016, six association buyers and trade media travelled to Brisbane during the World Science Festival as part of an educational program delivered by Brisbane Marketing in partnership with BEA and Etihad Airways. This activity marked the first-ever association focussed educational visit, and supported Brisbane Marketing s event bids, with discussions taking place on events in a pipeline to In addition, Dreamtime 2015, held in Adelaide in December 2015 continues to deliver results for Australian industry, with 30 leads generated to date, including three confirmed events from the Greater China market for Adelaide, and 145 media articles with a 1 Tourism Australia s International Market Update

2 International Market Update reach of over 22 million people. Satisfaction with Dreamtime was high with 94 per cent of international buyers stating they were satisfied to extremely satisfied with the event, and 95 per cent saying they were more likely to send business to Australia as a result of attending Dreamtime. Highlights from the Marketing and Communications strategy for BEA to date in 2016 include the delivery of a new association focussed magazine, Australia Innovates, as well as over 150 pages of editorial content for Australia in international publications, and six media visits to Australia. For more information about BEA s activities click here. Tourist arrivals to Australia (rolling annual) and monthly percentage change on previous year 7,900,000 7,400,000 Flooding and Cyclone Yasi in Queensland in February 2011 Grounding of flights due to Chilean ash cloud June 2011 Reverse impact from declines in arrivals out of NZ during RWC 2011 British Lions tour of Australia Jun-Jul 2013 Ashes Series Dec 2013 ICC Cricket World Cup Feb-Mar % 15% 10% 6,900,000 5% 0% 6,400,000-5% 5,900,000 Monthly % change year-on-year (RHS) Annual tourist arrivals (LHS) -10% -15% 5,400,000 Source: TA & ABS, Overseas Arrivals and Departures, Australia -20% Mar 2008 Jun 2008 Sep 2008 Dec 2008 Mar 2009 Jun 2009 Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Volcanic eruption in Iceland impacted air transport Apr-May 2010 Japan earthquake and series of aftermaths March 2011 RWC 2011 in NZ slowed outbound Kiwi travel in Sep and Oct 2 Tourism Australia s International Market Update

3 Aviation Summary International aviation capacity International aviation capacity to Australia grew 4 per cent in the 12 months to March Markets which registered significant capacity growth include Japan (up 19 per cent), China (up 26 per cent) and USA (up 11 per cent). Capacity from Malaysia remained in the decline, down 19 per cent over the 12 months to March Both Malaysia Airlines and Air Asia have announced improved conditions to their businesses, which indicate possible expansion of their services to Australia after substantial cutbacks in Inbound passenger movements are growing faster than capacity, resulting in an improvement in average load factors over the period. Global aviation environment Global air travel demand increased in the first four months of 2016, with 6.4 per cent year on year growth according to the International Air Transport Association (IATA). Average global load factors have eased due to a slight acceleration in capacity growth. European traffic was impacted in April, following the Brussels terrorist attacks. Traffic carried by Asia Pacific airlines grew 8.4 per cent in the first four months of the year, outstripping the global growth rate. The fastest growth was registered by Middle Eastern carriers with 11 per cent year on year growth in international RPKs (Revenue passenger kilometres) for the first four months of IATA reports that consumers will continue to benefit from lower fuel prices resulting in lower airfares in Airlines fuel costs are forecast to fall by 30 per cent in 2016, representing under 20 per cent of total operating costs for the first time since Load factors are forecast to dip slightly as capacity growth accelerates. More services from Chinese secondary cities In the last quarter, more Chinese carriers have announced plans to commence services to Australia from non-capital Chinese cities. Hainan Airlines have filed applications to operate twice weekly Xi-an to Melbourne and Changsha to Melbourne services from October Beijing Capital Airlines has also announced plans to start thrice weekly Shenyang (via Qingdao) to Melbourne services from end of September 2016, while Air China has filed application to start daily Shenzhen to Melbourne services from October Virgin Australia to capitalise on growing Chinese travel market China s largest private airline operator, HNA Aviation Group announced it will buy 13 per cent of Virgin Australia. Virgin and HNA will coordinate code-sharing, frequent flyer programs, lounge access and promotion of leisure and business travel. The new partnership will enable Virgin Australia to quickly tap into the fast growing outbound Chinese travel market. Pending regulatory approvals, Virgin Australia is also planning to fly from Hong Kong and Beijing next year as part of its new alliance with HNA. In June 2016, Chinese conglomerate Nanshan Group also emerged as a major shareholder in Virgin Australia after agreeing to purchase a 19.9 per cent stake from Air New Zealand. 3 Tourism Australia s International Market Update

4 Aviation Summary Domestic aviation environment in Australia Capacity in the Australian domestic aviation market grew 2.1 per cent for the 12 months to March Domestic passenger movements grew 2.9 per cent over the same period, slightly ahead of capacity, hence resulting in a slight improvement in industry wide load factors. Mining routes continue to see cutbacks in capacity. Change in international and domestic seats for the year ended September 2015 for selected airports % change on same month previous year Sydney Melbourne Brisbane Gold Coast Cairns Adelaide Perth Darwin Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 YE Mar 16 Domestic -2% -1% 3% 2% 3% 2% 0% 4% 5% 3% 9% 4% 3% International -3% -4% 0% 2% -1% 0% 1% 4% 8% 8% 13% 12% 4% Domestic 3% 1% 4% 5% 5% 4% 2% 5% 4% 3% 8% 3% 4% International 3% 1% 1% 2% 1% 3% 6% 9% 9% 9% 12% 10% 5% Domestic -4% -5% -2% -2% -1% 0% -2% 5% 2% 1% 5% 3% 0% International 1% 3% -1% -2% -1% 0% 4% -2% 3% 2% 4% 0% 1% Domestic -1% 2% 6% 2% 3% 5% 2% 6% 5% 8% 13% 7% 5% International 5% 5% 4% 17% 2% 9% 10% 4% 8% 12% 18% 27% 10% Domestic -2% -3% -1% 0% 3% 2% 1% 7% 11% 10% 10% 7% 4% International 21% 6% 10% 17% 21% 15% 3% 6% 14% 36% 28% 44% 19% Domestic 2% 0% 1% 3% 1% 0% 1% 6% 3% 4% 10% 6% 3% International -26% -24% -27% -29% -29% -19% -18% -22% -17% -15% -10% -6% -21% Domestic -3% -4% -1% -1% -3% -3% -5% -2% -4% -6% 0% -3% -3% International -11% 2% 5% -6% -7% -9% -6% -5% 0% 0% 5% 8% -2% Domestic -5% -6% -2% 1% -3% -2% -3% -1% 0% 6% 11% 10% 0% International -11% -12% 10% -1% -9% -11% -11% -3% 1% 1% -1% -3% -4% 4 Tourism Australia s International Market Update

5 South and South East Asia Market Arrivals (Jan to Mar 2016) Spend (A$000) Singapore 407,800 9% 15% $1,431,460 24% Malaysia 350,400 8% 17% $1,206,708 11% India 231,900 8% -3% $1,136,568 19% Indonesia 151,900-1% -4% $647,671 10% Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia) > > Arrivals growth from Singapore and Malaysia strengthened to double-digit levels at the start of > > Visitor arrivals from Singapore broke through the 400,000 mark for the first time in a 12 month period in the year ending March 2016, while arrivals from Malaysia also hit a new record of more than over 350,000. > > India and Indonesia have seen a slower start to 2016, however expenditure from these markets remains positive off the back of recent increases in yield. Singapore remains Australia s fifth largest inbound market based on visitor arrivals and is the sixth largest market when ranked on total expenditure for the year ending March 2016, ahead of South Korea (seventh) and behind Japan (fifth). Annual arrivals from Singapore remain at record breaking levels and surpassed the 400,000 milestone in the 12 months to February The first quarter of 2016 was particularly strong with 15 per cent overall arrivals growth driven by a very strong Holiday segment; Singaporean Holiday arrivals were up 42 per cent in the March Quarter. Overall expenditure growth from Singapore gathered momentum, up 24 per cent in the 12 months to March 2016, resulting in an increase in yield from the market off the back of a favourable exchange rate. Since November 2015, uncertainty in Europe is cited as a key reason Singaporean travellers have been more likely to choose an Australia holiday. Although Visiting Friends and Relatives (VFR) segment arrivals declined four per cent in arrivals in the year ending March 2016, VFR expenditure was up eight per cent. According to Nielsen s Consumer Confidence 1 Q report, Singaporeans were less optimistic with a continued slide toward a more recessionary sentiment in the first quarter. Consumer confidence slid six index points to a level of 88 in Q1, significantly below the neutral baseline of 100 (click here for Nielsen s latest consumer confidence series report). Malaysia was Australia s seventh largest inbound market based on visitor arrivals in the year ending March 2016, and was the ninth largest market when ranked on total visitor expenditure. Performance from Malaysia has continued to be strong despite a 1 reduction in aviation capacity to Australia and soft local currency. Overall arrivals grew eight per cent and spend was up 11 per cent in the 12 months to March Holiday arrivals grew 13 per cent, while VFR arrivals were flat and Leisure expenditure was down one per cent in the 12 month period. During the year, 70 per cent of visitors from Malaysia to Australia were repeat visitors; stable on last year s level. Consumer Confidence remained subdued at an index of 79 in Q1 2016, well below the 100 level baseline in pessimistic territory. The highest cause for concern in Malaysia is the state of the economy, according to research by Nielsen. In the year ending March 2016, India was Australia s ninth largest inbound market based on visitor arrivals and 11th largest market when ranked on total visitor expenditure, behind Germany. Visitor arrivals from India grew eight per cent in the 12 months to March 2016, however arrivals growth was down three per cent in the first quarter of Given the ICC Cricket World Cup event occurred in the comparison period in the first quarter of 2015, the soft start to the year is no cause for alarm. Expenditure from India remained strong, up 19 per cent, driven by 41 per cent growth in Holiday segment spend off the back of 41 per cent growth in visitor nights. The average Indian Holiday visitor s spend per trip to Australia rose to its highest level yet at $4,654 (up from $3,438 in the previous year). This reflects a continuous improvement to yield from the market since Less than half of all Indian visitors to Australia were repeat visitors (47 per cent) indicating the enormous potential of this market. India topped Nielsen s Consumer Confidence charts once again in Q1 2016, increasing its substantial lead with an index of 134 points 1 (the highest score of any of the 61 countries measured). According to the latest report: an improvement in various macroeconomic indicators was evident, and the government seems to be on its way to achieving its objectives of low inflation, low interest rates and high GDP growth a scenario optimal for improved consumer spending. Indonesia remained steady as Australia s 12th largest visitor market for arrivals and 15th largest inbound market when ranked on total visitor expenditure in the year to March Arrivals remained flat from Indonesia (down one per cent) however expenditure growth was more positive, up 10 per cent in the year ending March Average spend per trip to Australia increased 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, Tourism Australia s International Market Update

6 South and South East Asia by more than $500 to $4,790 (up from $4,280 last year) which is encouraging given a volatile local currency. Travel agents in Indonesia are reporting strong growth in both the incentive market and among free independent travellers (FIT), with the outlook for the rest of the year more positive than the first quarter. Like India, Indonesia continues to be one of the more buoyant markets in Asia in terms of consumer confidence. Consumer confidence increased two points in Q1 2016, to an index of Nielsen indicated that job sentiment, personal finances and immediate spending intentions are optimistic in Indonesia. Aviation news > > During the year ending March 2016, direct capacity to Australia from Singapore and India increased one per cent. Direct capacity from Malaysia to Australia declined 21 per cent and capacity from Indonesia declined one per cent. 2 > > Singapore Airlines will commence a four weekly Singapore- Canberra-Wellington return services starting 20 September The new Capital Express service marks Canberra s first international flights and effectively connects Canberra to two international destinations at once. > > In May 2016, Singapore Airlines commenced a fourth Singapore- Brisbane service, operating three days a week, with possibility of increasing to daily later in the year. > > Tigerair Australia commenced daily flights from Denpasar to Melbourne and Perth, and five flights per week from Denpasar to Adelaide in March These are the first international flights for Tigerair Australia which replaced selected Virgin Australia flights on these routes. Industry news > > Tourism Australia will stage Corroboree Asia 2016 in Perth, Western Australia from 4 to 8 September It is planned that 300 frontline travel sellers from Australia s key markets in Asia will attend Corroboree Asia, Tourism Australia s premier event for Aussie Specialists. More than 100 Australian tourism operators will educate the qualified Aussie Specialist agents about their products over three days of workshop appointments. The agents will also have the opportunity to experience Australia through famils that take place in every State and Territory following the event. > > Applications have now closed for India Travel Mission (ITM) 2016, which is taking place in Chennai, India from 18 to 21 August > > Starting 1 December 2015, Australian immigration changes commenced providing greater flexibility for repeat visitors from Indonesia. Indonesians now have the option to apply for three-year multi-entry visitor visas which will enhance travel and business links to Australia. By 2017 an online applications process will be available for Indonesian citizens to obtain visas for Australia. > > Halal Trip, a leading authority on Muslim travellers, launched a new Muslim Travellers guide to Australia in cooperation with Tourism Australia. To download the guide click here. The timing of Ramadan in is favourable for an extended holiday season which should assist travel to Australia in July and August this year. 2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation 6 Tourism Australia s International Market Update

7 Greater China Market Arrivals (Jan to Mar 2016) Spend (A$000) China 1,095,500 22% 21% 8,890,395 38% Hong Kong 236,900 14% 32% 1,243,593 18% Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia) > > China delivered 1.1 million visitors to Australia in the 12 months to March 2016, with expenditure reaching $8.9 billion, when counting the latest Lunar New Year peak holiday period in February > > Visitor arrivals growth from Hong Kong accelerated by 32 per cent in the first three months of 2016 compared to last year. After surpassing one million Chinese visitor arrivals to Australia in 2015, the China market continues to grow at a blistering pace off an already large base. Arrivals reached just shy of 1.1 million in the year ending March 2016, an increase of 22 per cent. While arrivals during the February Lunar New Year period grew just six percent, this growth deliviered 174,000 visitors which was all-time monthly record in visitation to Australia. China remained Australia s second largest inbound market based on visitor arrivals, edging ever closer to New Zealand s 1.3 million arrivals level in the 12 months to March. China was Australia s largest market based on total expenditure at $8.9 billion, ahead of the United Kingdom ($3.9 billion). In the year ending March 2016, Chinese Leisure visitor expenditure grew 42 per cent, with Holiday visitor spend up 51 per cent and VFR spend up 19 per cent. Chinese Holiday visitor spend reached an average of $5,400 per trip to Australia, up from $4,760 last year, based on a steady duration of stay of just nine nights. Just 31 per cent of Chinese Holiday visitors to Australia were repeat visitors in the 12 month period, up from 27 per cent in the previous year. Consumer confidence in China remained positive in the first quarter of 2016, with an index of With considerable new direct China-Australia aviation capacity being planned for later in the year, growth from the market is showing no signs of slowing down. Hainan Airlines have filed applications to operate twice weekly Xi-an to Melbourne and Changsha to Melbourne services from October Beijing Capital Airlines has also announced plans to start thrice weekly Shenyang (via Qingdao) to Melbourne services from end of September 2016, while Air China has filed application to start daily Shenzhen to Melbourne services from October. Pending regulatory approval, Virgin Australia is also planning to fly from Beijing and Hong Kong next year as part of its new alliance with Chinese group HNA. Hong Kong remains Australia s 10th largest inbound market based on visitor arrivals and was the eighth largest market when ranked on total visitor expenditure. Visitor arrivals and expenditure growth from Hong Kong to Australia moved into double digit territory in the year ending March 2016, off the back of a very strong first quarter of 2016 when arrivals increased 32 per cent. Hong Kong Airlines launched triangulated Hong Kong-Gold Coast-Cairns-Hong Kong services in January 2016; it is the first Australian route for the airline who have announced that the route will be a year-round twice weekly service (following the seasonal flights which were slated to finish at the end of March). The growth out of the Hong Kong market is being driven by strong performance from the Leisure segment, with Holiday arrivals up 21 per cent and Holiday spend up 20 per cent in year ending March The promising growth, however, came despite a significant slide in consumer confidence in Hong Kong in Q1 2016, which fell 11 points to an index of Nielsen reported, In Hong Kong, the continued drop in mainland visitors is impacting retail sales, which were down 14 per cent in January from a year ago, and citizens are concerned about job security, said Angel Young, managing director, Nielsen Hong Kong. As a result, consumer confidence is more cautious, and spare cash spending intentions have declined for out-of-home entertainment expenses, new clothes and new technology products. Business Events > > In April 2016, as part of Australia Week in China, Business Events Australia (BEA) delivered the Greater China Showcase in Shanghai. Over 120 Chinese incentive buyers had business sessions with 30 Australian industry to develop their knowledge of Australia and secure business. To date, 80 leads have been generated for Australia as a result of the Showcase. > > In April 2016, training events in Shanghai and Beijing delivered Australian business events information to over 150 incentive agents from 15 agencies. The seminars included presentations from five convention bureau, an airline, and relevant products catering specifically to the incentive sector. > > In February 2016, Chinese incentive decision makers were hosted on an educational to Sydney, Australia, focussing on Australia s food and wine incentive offering and including a visit to the NOMA Australia restaurant. > > In May 2016, BEA hosted an educational visit to Uluru and Brisbane with key incentive agencies, broadening their understanding of Australian destinations and their offering. 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, Tourism Australia s International Market Update

8 Greater China > > Australia and Tourism Australia s campaign for business events continues to resonate with incentive agents and corporates, picking up four awards in 2016 including; China BT MICE Best International MICE Destination and Best International MICE Destination Marketing Campaign, the, TTG China Award for Best Overseas NTO in China promoting MICE, and the MICE Magazine Award for Best International MICE Destination. > > Online tour operators in China such as Baicheng, Ctrip, and JD.com are aggressively investing in their MICE divisions and have shown success in securing relatively small incentive groups of 100 to 300 passengers. Aviation news > > For the year ending March 2016, direct capacity to Australia from China increased by 26 per cent. Seat capacity between Hong Kong and Australia increased by seven per cent in the 12 months to March. 2 > > Hainan Airlines have filed applications to operate twice weekly Xi-an to Melbourne and Changsha to Melbourne services from October > > Hainan Airlines operated a seasonal twice weekly service from Xi an to Sydney between December 2015 and March > > Beijing Capital Airlines has also announced plans to start thrice weekly Shenyang (via Qingdao) to Melbourne services from end of September > > Air China has filed an application to start daily Shenzhen to Melbourne services from October. > > Pending regulatory approval, Virgin Australia is also planning to fly from Beijing and Hong Kong next year as part of its new alliance with Chinese group HNA. > > China Eastern announced it will commence daily Shanghai- Brisbane services from December 2016, following its successful thrice-weekly seasonal service in Jan/Feb > > China Eastern Airlines operated Shanghai-Cairns services three times per week between 22 February and 30 April > > China Southern commenced three weekly Shenzhen-Sydney services on 28 January > > Cathay Pacific operated a special service to the Gold Coast in February 2016 for Chinese New Year. 3 Industry news > > Tourism Australia will stage Corroboree Asia 2016 in Perth, Western Australia, from 4-8 September It is planned that 300 frontline travel sellers from Australia s key markets in Asia will attend Corroboree Asia, Tourism Australia s premier event for Aussie Specialists. More than 100 Australian tourism operators will educate the qualified Aussie Specialist agents about their products over three days of workshop appointments. The agents will also have the opportunity to experience Australia through famils that take place in every State and Territory following the event. > > Tourism Australia s China team held destination training sessions with Australia immigration staff in Guangzhou and Shanghai in June, with a sessions in Beijing planned for July. The aim of these sessions is to help immigration staff better understand how the Chinese travel in Australia which will ultimately assist in visa application assessments. > > The Australia Week in China event in April 2016, attracted more than 100 tourism delegates as part of the 1,000 strong trade delegation head to China. Tourism Australia held Premium and Business Events showcases as part of the program and also launched the Aquatic & Coastal themed marketing campaign. > > Six Aussie Specialist Program (ASP) staff are in place in Greater China; with Jennifer Lou appointed as the ASP Program Manager for China. The ASP online travel agent training site relaunched in Hong Kong in English and traditional Chinese in February 2016 and in China in March In the first quarter of 2016, 134 training sessions across 20 cities were attended by 6,600 agents from 167 agencies. > > The Australia Week in China event in April 2016, saw over 100 tourism delegates as part of the 1,000 strong trade delegation head to China. Tourism Australia held Premium and the Business Events Greater China showcases as part of the program and launched the Aquatic & Coastal themed marketing campaign with Minister Colbeck and Prime Minister Turnbull. > > Air China increased its Beijing-Melbourne services to daily in January 2016, up from four flights per week. > > Hong Kong Airlines launched triangulated Hong Kong-Gold Coast-Cairns-Hong Kong services in January 2016; it is the first Australian route for the airline who have announced that the route will be a year-round twice weekly service (following the seasonal flights which were slated to finish at the end of March). 2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation 8 Tourism Australia s International Market Update

9 Japan & South Korea Market Arrivals (Jan to Mar 2016) Spend (A$000) Japan 360,400 10% 27% 1,467,080 10% South Korea 247,200 17% 27% 1,418,780 21% Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia) > > The Japan market has returned to growth with 10 per cent growth in arrivals and expenditure. > > South Korean arrivals and expenditure growth has peaked to the strongest level seen in seven years. Japan reasserted itself as Australia s sixth largest inbound market based on visitor arrivals and fifth largest market for total expenditure in the year ending March Japan clawed back its expenditure ranking ahead of South Korea and Singapore after momentarily slipping behind in Japanese arrivals were up 27 per cent in the first three months of 2016, largely as a result of the recent increases in air capacity. All Nippon Airways (ANA) commenced its new Tokyo (Haneda)-Sydney service on 11 December, 2015 effectively adding 78,000 seats into Australia from Japan in The introduction of Qantas daily Tokyo (Narita)-Brisbane service in August 2015 has also greatly assisted the market. Growth from Japan is now being seen across the major segments of Holiday, Visiting Friends and Relatives (VFR) and Education however arrivals for Business purposes are yet to move into positive territory. Consumer Confidence in Japan is somewhat subdued at an index of 73 in Q1 2016, down from a 10- year peak index level of 88 in Q Travel companies in Japan report that safety concerns surrounding travelling to European destinations may be effecting outbound travel, however those who are intending to travel long haul are likely to switch to safer alternatives such as Australia. Within Australia, Tropical North Queensland is one of the most popular destinations for Japanese travellers and received approximately 100,000 Japanese visitors in the year ending March South Korea is currently Australia s eighth largest inbound market based on visitor arrivals and seventh largest market when ranked on total visitor expenditure. Korean expenditure exceeded $1.4 billion in the year ending March Growth from South Korea accelerated throughout the year and eventuated as the most positive end of year performance in seven years. The growth was driven by the Leisure segment with 21 per cent growth in arrivals and 26 per cent growth in Leisure spend. The Holiday segment has received a boost by the combination of a lower Australian dollar and an increase in air capacity between Korea and Australia. Korean Air increased their frequencies on the Seoul-Brisbane route to daily in December 2015, and upgauged their aircraft during the high season until March Significant Australian marketing activity has taken place in South Korea with Korean Airlines and 10 trade partners, with partners reporting double digit forward bookings into the first quarter of Jin Air, Korean Airlines sister carrier, announced it will operate seasonal Seoul-Cairns flights between December 2016 and March 2017 for the first time. Pending a successful operation there is a possibility that this route could become a permanently scheduled route for Jin Air later in Despite the recent positivity in Korean travel to Australia, consumer confidence in South Korea remained the lowest index out of the 61 countries tested by Nielsen at Recessionary sentiment levels remain among the highest in the world in South Korea with 92 per cent of respondents thinking they were in a recession at the moment. Aviation news > > For the year ending March 2016, direct capacity to Australia from Japan increased 19 per cent. Seat capacity between South Korea and Australia increased three per cent over the 12 months to March. 2 > > On 28, Jin Air (Korean Airlines sister carrier) announced it will operate seasonal Seoul-Cairns flights between December 2016 and March 2017 for the first time. > > Korean Air increased capacity on the Seoul-Sydney route by utilising larger aircraft, including B s starting in November 2015 and A380s between December 2015 and March > > All Nippon Airways (ANA) new Tokyo (Haneda)-Sydney service, commenced on 11 December, 2015, effectively adding 78,000 seats per year to Australia from Japan. > > Jetstar Japan increased its Cairns services to six days a week from December Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation 9 Tourism Australia s International Market Update

10 Japan & South Korea Industry news > > Tourism Australia will stage its Corroboree Asia 2016 event in Perth, Western Australia from 4 to 8 September It is planned that 300 frontline travel sellers from Australia s key markets in Asia will attend Corroboree Asia, Tourism Australia s premier event for Aussie Specialists. More than 100 Australian tourism operators will educate the qualified Aussie Specialist agents about their products over three days of workshop appointments. The agents will also have the opportunity to experience Australia through famils that take place in every State and Territory following the event. > > The new Aussie Specialist Program (ASP) website relaunched in Korea in February 2016 and in Japan in March Tourism Australia hosted a launch event with 100 industry guests at the Peninsula hotel in Tokyo on 2 June. In Korea, ASP training has been conducted with Interpark Tour, Hana Tour, Mode Tour, and Lotte JTB agents among others. 10 Tourism Australia s International Market Update

11 Americas Market Arrivals (Jan to Mar 2016) Spend (A$000) USA 637,200 13% 15% $3,597,206 22% Canada 143,100 1% 2% $877,396 11% Brazil 43,400-6% -13% Data not reliable for Brazil (sample size too small) Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia) - > > Market performance from the USA to Australia continues to boom. > > Arrivals from Canada continue to grow, while expenditure growth has shifted gears into doubledigit territory. > > Inbound indicators from Brazil are weakening off the back of a weakening home economy. In the year ending March 2016, the United States of America (USA) was Australia s fourth largest inbound market based on visitor arrivals and third largest market when ranked on total expenditure. Annual arrivals from the USA exceeded 637,000, compared to 567,000 in the previous year. Holiday visitor arrivals were up 24 per cent and Holiday spend increased 20 per cent to $1.65 billion. Visiting Friends and Relatives (VFR) arrivals grew 9 per cent and spend was up 15 per cent. Growth from the Leisure segment was however offset by a seven per cent decline in Business arrivals in the year ending March The average spend US Leisure visitors per trip was $5,300 based on an average 19 day duration. It is anticipated that the USA market will build its momentum in 2016 with the introduction of significant new aviation capacity between the two countries and a weaker Australian dollar benefiting American tourists once they arrive. With the full impact of recent air capacity increases now in effect (110 flights per week between North American departure ports and Australia) continued growth is highly likely. However, history has shown that outbound travel from the USA often slows during presidential elections and it is expected to have most impact in the period leading up to the election on 8 November. Consumer Confidence in the USA increased 10 points to an index of 110 in Q However, Nielsen reported that: confidence is subject to influence by overall political and economic volatility that Americans experience: The U.S. is in the midst of a presidential election cycle and there is global economic uncertainty as well as recent terrorism concerns. Canada is currently Australia s 13th largest inbound market based on visitor arrivals and 12th largest market when ranked on total visitor expenditure. While in 2015 a resilient VFR segment held up Canadian inbound performance for Australia, in the year ending March 2016, it s the Holiday and Education segments that are driving the increase in visitors and expenditure. A weaker Australian dollar is in-part responsible for the greater increase in overall expenditure than visitor numbers. As with the performance from the USA, however, Business arrivals from Canada to Australia were down 12 per cent in the year ending March The outlook is cautious, with Consumer Confidence in Canada declining six points to an index of 93 in Q1, 2016, the lowest level since Brazil was Australia s 26th ranked inbound market based on visitor arrivals in the year ending March Visitor arrivals to Australia decreased six per cent in the year to 43,400. The Brazilian market began to experience substantial challenges the past year with an economic slowdown, devaluation of the currency, high inflation, political turmoil and rising unemployment. Brazil s consumer confidence fell for the sixth consecutive quarter. Confidence declined two points in Q1, 2016 to the country s lowest score in Nielsen s 11-year consumer confidence history (a pessimistic index of 74). However, Rio will play host to the 2016 Olympic Games from 5 to 21 August which will potentially reignite some positivity in the market. Business events > > As part of its association strategy, the Business Events Australia (BEA) team presented Australia at the Potomac Chapter of Meetings Professionals International in February Approximately 250 association buyers attended the full day program. > > The BEA team attended the inaugural SITE Americas Summit at Snowmass in March/April, the only NTO at an event attended by 100 key buyers and senior executives from key incentive houses in the North America market. > > BEA also participated in the Exclusive Destinations roadshow, meeting with key decision makers across the USA in partnership with Australian industry. Over the course of the roadshow, 28 major corporations were reached through training sessions and one-on-one meetings. The roadshow also reached key incentive houses whose clients include Fortune 500 companies such as Microsoft & Adobe. > > For the first time ever, the BEA team attended the PCMA Convening Leaders Conference in Vancouver in January 2016 to support the Melbourne Exhibition Centre and Melbourne Convention Bureau s Citywide Auction of Melbourne activation..4,000 attendees participated in the conference program, which included presentations on Melbourne, business meetings, media interviews, and networking events. 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, Tourism Australia s International Market Update

12 Americas > > Business Events Australia has continued its work to raise awareness of Australia as a business events destination, working with key trade media publications in both the associations and incentives sectors. Marketing and editorial placements were secured in Prevue Magazine, Successful Meetings, Convene Magazine, USAE, and Corporate & Incentive Travel magazine. Aviation news > > For the year ending March 2016, direct capacity to Australia from the USA increased 11 per cent. Seat capacity between Canada and Australia increased one per cent over the 12 months to March. 2 > > As of, 110 direct flights were available per week between North America and Australia. > > Air Canada commenced three weekly Vancouver-Brisbane flights on 1 using new aircraft. Due to positive demand, starting 17 June, Air Canada shifted to daily frequencies on the route. > > American Airlines (AA) began daily Los Angeles-Auckland flights in. This new service should also benefit travel onward to Australia given AA s partnership with Qantas. > > AA commenced new daily Los Angeles-Sydney flights in December 2015; a return of AA aircraft to Australia for the first time since > > Air New Zealand increased capacity between the USA and Australia with five new weekly services departing Houston starting December > > Air New Zealand also commenced its new Buenos Aires- Auckland services in December 2015; this new service improves access to Australia from Argentina, Brazil and other Latin American markets. Industry news > > The fourth annual Australian Tourism Summit was held at The Langham Huntington hotel in Pasadena, California on 22 to 23 February Keynote speakers addressed the topics of Conversion and Ultra Luxury Partnership Strategies. More than 250 industry leaders attended representing the travel, aviation and hospitality sectors. > > The Australia Marketplace event followed the Tourism Summit at the same location from 24 to 26 February. More than 100 North American travel companies and buyers met with 95 Australian tourism products for one-on-one appointments. > > Following Australia Marketplace, Tourism Australia and its Australian State and Territory Tourism partners hosted a North American retail roadshow visiting Vancouver, San Francisco and Denver from 29 February to 2 March 2016, connecting Australian suppliers and travel advisors. > > Qantas recommenced six weekly San Francisco-Sydney departures in December 2015, however reduced Los Angeles- Sydney frequencies by four per week, as well as their Los Angeles-Melbourne frequencies by one per week. 2 Source: Department of Infrastructure and Regional Development. 3 Source: CAPA Centre for Aviation 12 Tourism Australia s International Market Update

13 UK and Europe Market Arrivals (Jan to Mar 2016) Spend (A$000) UK 5% 6% $3,871,389 10% Germany 194,200 3% 7% $1,168,836 14% France 121,100 2% 2% $712,022-4% Italy 72,500-2% -2% $500,023 1% Source: Australian Bureau of Statistics & International Visitor Survey (Tourism Research Australia) > > The UK market has continued its positive trajectory into 2016, with a five per cent increase in arrivals to Australia and a 10 per cent increase in spend. > > German arrivals edged closer to the 200,000 mark growing three per cent, while expenditure grew 14 per cent in the year ending March > > Arrivals growth from France held steady, however expenditure fell into decline. > > While Italian arrivals declined two per cent expenditure grew marginally to reach $0.5bn in the 12 month period. In the year ending March 2016, the United Kingdom (UK) was Australia s third largest inbound market based on visitor arrivals and second largest market ranked on expenditure. UK visitor arrivals have now grown clear of the 700,000 level which was the previous peak level set in Arrivals growth is showing no signs of slowing with a six per cent increase in the first quarter of 2016, which is significant given the comparison period was boosted by the ICC Cricket World Cup events held in Australia in the first quarter of Increased aviation capacity, a weaker Australian dollar and safety concerns in many popular travel destinations have led to unprecedented interest in long-haul travel out of the UK which appears to be benefiting Australia. UK spend grew at twice the rate of arrivals in the year ending March 2016, which was driven in part by the favourable exchange rate during the period, but also by an strong Holiday segment. Holiday purpose visitor arrivals increased by 18 per cent and spend grew 20 per cent in the 12 month period; Holiday spend attributed 47 per cent of all UK spend. Consumer Confidence in the UK fell four points to an index score of 97 in Q1, While the index is relatively high, many of the European nations saw lower levels of confidence in Q1 given factors such as the UK referendum on European Union (EU) membership. It remains to be seen what impact the UK s decision to leave the EU on 24 will have on the travel industry 1 Source: Nielson, Consumer Confidence; Concerns and Spending Intentions Around The World Quarter 1, Source: CAPA Centre for Aviation in the long term, however the a sharp drop in the value of the British Pound immediately following the outcome may affect UK outbound travel. Visitor arrivals from Germany and France continue to grow, however arrivals from Italy remained down two per cent in the year ending March 2016, and down in the first three months of the year. Expenditure from Germany grew at double digit rates, suggesting good yields from the market and travellers taking advantage of the lower Australian dollar once they arrive in Australia. It has been reported that some Asia/Africa specialist tour operators are starting or increasing their Australia focus and product offerings due to additional demand. French expenditure dipped four per cent despite positive arrivals performance in the 12 month period; the expenditure decline appears to be a result of the softer performance of the Visiting Friends and Relatives segment. Conversely, Italian expenditure grew to over $0.5bn, despite a small decline in arrivals. Consumer confidence in Germany matched the UK s level with an index of 97 in Q1 of Nielsen reported; In Germany, consumer confidence showed a slight setback, but Germans remain optimistic about the future, as positive labour market developments continue and prices are stable. In France and Italy confidence remains low, indexing at 64 and 59 respectively, with no sign of improvement at the start of In Europe, concerns about safety, immigration and unemployment remain front of mind and dominate news media. Adding to those concerns, the uncertainty caused by the British vote to exit the EU on 24 June is likely to mean that consumer confidence will remain at low levels in A sharp devaluation of the Euro currency following the UK exit vote may also impact outbound travel and expenditure from Germany, France and Italy. Business Events > > Business Events Australia (BEA) hosted the Australia stand at IMEX Frankfurt, the world s largest business events trade show on April stand partners attended the event, and to date have reported over 40 business leads as a result of attending the show. > > Tourism Australia was a strategic sponsor of the Association World Congress in Berlin (10-12 April). Business Events Sydney, Melbourne Convention Bureau, Brisbane Convention Centre and Gold Coast Business Events all exhibited on the Australia stand. 13 Tourism Australia s International Market Update

14 UK and Europe > > In March 2016, six association buyers and trade media travelled to Brisbane during the World Science Festival as part of an educational program delivered by Brisbane Marketing in partnership with BEA and Etihad Airways. This activity marked the first-ever association focussed educational visit, and supported Brisbane Marketing s event bids, with discussions taking place on events in a pipeline to > > As part of its association strategy, BEA released a new publication, Australia Innovates, highlighting Australia s innovating people and their achievements. The publication was distributed at IMEX Frankfurt and also delivered to a targeted group of association decision makers in the UK and Europe > > BEA also secured editorial and media placements in key publications in 2016, including AMI and Headquarters magazines, and hosted key media to Australia to secure further editorial for Australia. Aviation news > > Emirates announced an additional daily A380 service into Perth starting August > > Emirates plans to expand their Dusseldorf-Dubai capacity on 1 July by adding a second daily A380 on the route. In, Emirates also added a second daily Geneva-Dubai service. > > Emirates deployed its 615 seat A380 aircraft on one of its daily Birmingham departures starting March 2016; this configuration added 18 per cent more seats than its current largest A380, or 190 addition seats per day. > > In June, Etihad has upgauged aircraft on their Dusseldorf-Abu Dhabi service (from B787-9s to A330-2s) thus increasing their outbound capacity by 11 per cent. Etihad also increased capacity by adding the A380 on the Abu Dhabi-Melbourne route. > > Singapore Airlines will also add Dusseldorf to its list of Germany departure cities starting 21 July 2016; this is the third city offered by the airline in Germany and initial plans are for three departures per week. > > Qatar Airways commenced daily Doha-Sydney services in March Daily Doha-Adelaide flights started soon after on 2 May The airline s Australian frequencies increased to 28 per week since these new routes commenced, adding an incremental increase of over 236,000 seats into Australia in 2016 (114,000 for Adelaide and 122,000 for Sydney based on their A s and B aircraft configurations). > > Qatar Airways also commenced an eight times weekly Birmingham-Doha service in March Birmingham is the airline s fourth departure city in the UK and the route will increase the carrier s overall UK frequencies to more than 70 per week. Industry news > > The World Travel Market (WTM) 2016 will be held at ExCel in London, the United Kingdom from 7-9 November Now in its 37th year, WTM is one of the world s leading travel exhibitions. Seller applications to attend closed on 27 May > > TTG Incontri is the most important B2B international trade fair for the tourism sector in Italy. It takes place at Rimini Fiera and will be held from 13 to 15 October Tourism Australia will be coordinating an Australia stand at this leading event. > > In March 2016, Tourism Australia exhibited at Internationale Tourismus Börse (ITB) in Berlin. Fifty-eight partners attended as part of the Tourism Australia stand, representing a record attendance from Australia in > > Tourism Australia s Indigenous Tourism Champions Roadshow travelled through Europe between 29 February and 12 March Elevent Indigenous Champions toured to France and Germany to meet with key distribution partners, media and trade. The Champions also attended scheduled appointments at ITB in Berlin. > > IBTM World (previously EIBTM) will be held in Barcelona on 28 November 2016 for the meetings and incentive industry, with attendance by Business Events Australia and industry. 14 Tourism Australia s International Market Update