TTF-MASTERCARD TOURISM INDUSTRY SENTIMENT SURVEY AUGUST Q2

Transcription

1 TTF-MASTERCARD TOURISM INDUSTRY SENTIMENT SURVEY AUGUST Q2

2 COMPETITIVENESS A CRITICAL CONCERN QUARTER The challenge for Australia to remain internationally competitive has been highlighted in this edition of the TTF MasterCard Tourism Industry Sentiment Survey, with a spike in concern around taxes and charges on visitors, now rating second among business impediments. There has also been a significant jump in concern over accommodation supply and the shortage of unskilled labour. Also rising to new prominence is concern over access to bank financing, which hampers the ability of tourism businesses to invest in new and refreshed products and experiences. TOURISM PERFORMANCE Overall industry performance at 85 points was slightly below expectations (87 points). While international performance fell 8 points from last quarter, domestic performance improved and expectations for Q3 are up across the board. PASSENGER MOVEMENT CHARGE There are significant concerns about the effect of the increased PMC on arrivals from Australia s key source markets. Almost 60 per cent of respondents believe the rise will negatively impact arrivals from New Zealand, our number one source market, with about half expecting a fall in arrivals from China and Japan. BUSINESS IMPEDIMENTS While the exchange rate continues to dominate as the number one concern facing the industry, fewer tourism executives count it among their top three business impediments than a year ago, down 11 percentage points to 61 per cent of respondents. Taxes and charges on visitors have surged to second place, up nine points from a year ago with a quarter of executives citing this area as a top concern. The lack of convention/exhibition space and a shortage of skilled labour remain top concerns, with around a quarter of respondents citing both. The shortage of unskilled labour jumped eight percentage points, with almost one in five indicating this is among their top three concerns. Other top impediments of note include: Inadequate room supply (, +5pts); Govt support for business events bids (, 1pt); Ability to attract business events (1, +2pts); and Access to banking finance (14%, +12pts). In addition to the impediments in the chart below, other issues commonly nominated by respondents this quarter included the regulatory and IR environment, a lack of government buy in and poor consumer confidence driven by the current political environment. Q: Which are the three most significant impediments for your business or organisation at this time? TOP 3 BUSINESS IMPEDIMENTS IN THE TOURISM SECTOR 2011 Q Q Exchange rate 61% 72% Taxes and charges on tourists Lack of convention and exhibition space/facilities 21% Shortage of skilled labour Inadequate room supply Government support to win business events bids 19% Shortage of unskilled labour 11% Ability to attract business events 1 Tourism Australia Kangaroo Island, South Australia Reputation as a desirable tourist destination Abnormal weather and/or natural disasters 19% 1 1 Access to bank financing 2% 14% Policy makers need to recognise the importance of tourism as a diversification opportunity. Marketing & communications sector Quality/frequency of major events Adequacy of transport links to/from airports Reputation as a business events destination 11% 9% The survey was conducted among senior executives of leading Australian tourism businesses, including airlines and airports, hotels and hostels, travel and tour operators, and cultural and nature based attractions. Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)

3 Q: Are the activities of your business/organisation impeded by difficulties in any of the following areas? Please indicate the level of impact. GENERAL BUSINESS IMPEDIMENTS IN THE TOURISM SECTOR Medium High 10 % % % 41% 53% 48% 4 63% 1 8% 51% 12% 13% 41% 8% 14% 13% 11% 1 Exchange rate Taxes and charges on tourists Shortage of skilled labour Shortage of unskilled labour Access to bank financing Abnormal weather / natural disasters Quality of retail offering Opening hours of bars / restaurants NB: Ranked by sum of Medium and High impact for latest quarter. GENERAL TOURISM IMPEDIMENTS The exchange rate remains the industry s top concern, though ratings of its impact have declined. The share of executives who say the Australian dollar is having a medium to high impact on their businesses has fallen 14 points from a year ago to 84 per cent. The second most pressing issue from Q extreme weather events has dropped in importance, down 28 points. In its place are concerns regarding taxes and charges on tourists, previously ranked fourth, up 6 points to 78 per cent. Labour supply issues remain at the fore, with a shortage of skilled labour still in third place, on par with a year ago at 76 per cent, while a shortage of unskilled labour is becoming an increasing concern, up 13 points to 68 per cent. Access to banking finance has also crept up, from 47 per cent in Q to 54 per cent of respondents of particular note is the shift towards high impact responses. Concern over the quality of Australia s retail offering fell 7 points from a year ago to 45 per cent, while concern around opening hours of bars and restaurants remained consistent. Tourism in Australia is currently struggling against a government focused on resources. Business & major events sector Q: Specifically relating to the business tourism sector, are the activities of your business/organisation impeded by difficulties in any of the following areas? Please indicate the level of impact. [There is] concern that investment in tourism infrastructure is not being encouraged. Rental vehicle sector BUSINESS TOURISM IMPEDIMENTS Concerns around winning business events top the list of impediments in the business travel sector, with three in four surveyed executives citing both the ability to attract new events and government support for bids as mediumor high impact issues. Concerns regarding Australia s reputation as a business events destination have declined from a year ago, down 14 points to 69 per cent but up markedly on recent quarters. Sentiment regarding a lack of business events space remains on par with a year ago (69%) as do concerns regarding airport transport links (64%). LEISURE TOURISM IMPEDIMENTS The quality and frequency of major events is the key concern for leisure tourism, up 7 points from Q with 76 per cent of respondents citing medium/high impact. Other leisure tourism impediments have decreased in importance over the same period, with notably lower levels of concern over in Australia s reputation as a leisure destination ( 14pts) and excess room supply ( 11pts). Q: Specifically relating to the leisure tourism sector, are the activities of your business/organisation impeded by difficulties in any of the following areas? Please indicate the level of impact. BUSINESS IMPEDIMENTS IN THE BUSINESS TOURISM SECTOR BUSINESS IMPEDIMENTS IN THE LEISURE TOURISM SECTOR 10 Medium High 10 Medium High % % % 42% 49% 48% 48% 42% % Ability to attract business events Government support to Lack of convention win business events bids and exhibition space Reputation as a business events destination Adequacy of airport transport links Quality / frequency of major events Reputation as a desirable tourist destination Lack of attractions in the vincinity Inadequate room supply Excess room supply NB: Ranked by sum of Medium and High impact for latest quarter. NB: Ranked by sum of Medium and High impact for latest quarter. Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)

4 TOURISM PERFORMANCE INDEX INTERNATIONAL TOURISM Industry sentiment about the performance of international tourism dipped after three consecutive quarters of improvements and an especially strong surge in Q1. The index is down 8 points to 82 for the June quarter, on par with expectations at the beginning of the quarter. This positions Q as the second best performing period in 18 months. ABS data for Q2 show overseas arrivals up 3.4 per cent on June quarter 2011 to 1.3 million, with increased arrivals from key markets, led in particular by China (+22,000), New Zealand (+9,800), Japan (+6,400), Malaysia (+4,600) and the US (+4,000). Arrivals from the UK, however, were down 17,200, echoing declines in other northwest European markets and some Southeast Asian markets including Thailand ( 2,800) and Indonesia ( 1,0). Industry is optimistic regarding continued recovery ahead, with a performance rating of 87 expected for the September quarter. This is still 13 points below the baseline rating of 100, which indicates what could be reasonably expected for this time of year, but marks the fourth consecutive quarter of improving sentiment. Q: What is your assessment of international tourism performance in your destination/business for the current quarter and your expectation for future performance for the next quarter compared with what you would reasonably expect for this time of year? The momentum in the first quarter has stalled. Accommodation sector INTERNATIONAL TOURISM PERFORMANCE INDEX Expected Actual Tourism Australia Sydney, New South Wales DOMESTIC TOURISM Industry sentiment about domestic tourism performance shows a better than expected Q2, with the index 6 points above expectations for the quarter and up 2 points on Q1 to. This is the third consecutive quarter of improvements in the domestic performance index, following six quarters of decline. Buoyed by recent performance, industry is predicting a 10 point surge in the coming quarter, with the expectations index at 94, nearing baseline performance last seen more than two years ago. Q: What is your assessment of domestic tourism performance in your destination/business for the current quarter and your expectation for future performance for the next quarter compared with what you would reasonably expect for this time of year? DOMESTIC TOURISM PERFORMANCE INDEX Expected Actual Value proposition for international visitors is less appealling given quality competition from other regional destinations. Attraction sector The Tourism Sentiment Index is derived by assigning a value of 0 to much worse responses, 50 to worse, 100 to equal, 150 to better and 200 to much better. A value of 100 therefore means that the performance across businesses is equal to what could reasonably be expected for this time of year. Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)

5 KEY BUSINESS INDICATORS The share of respondents reporting business and capacity indicators as being equal to or better than what could be reasonably expected dipped in the June quarter, following a year of consecutive improvements. 68 per cent of executives reported equal or better sales from what would be reasonable for Q2 ( 6 percentage points), while 66 per cent reported the same for forward bookings and 59 per cent for profitability (both 3 points). SECTORAL PERFORMANCE Assessments of business events performance have fallen sharply in the current quarter, with 36 per cent of respondents now reporting conditions as good or very good, down 13 points from Q1 and 9 points below the same quarter last year. Q: How would you rate the performance of the following sectors? PERFORMANCE BY SECTOR 'GOOD' OR 'VERY GOOD' 75% 2011 Q Q Q Q Q2 Q: How would you rate the current status of your business in the following categories compared with what you would reasonably expect for this time of year? KEY BUSINESS INDICATORS 'EQUAL OR BETTER' 10 % 8 Forward Bookings Sales Profitability 49% Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Fewer respondents indicated that their capacity to invest was equal or better than usual, with the capacity to refurbish existing product down to 61 per cent ( 4 points), the capacity to make major refurbishments down 6 points to 58 per cent and the capacity to employ more staff down to 52 per cent ( 14 points). While these indicators are tracking better than they did a year ago, the downturn is nonetheless worrying, particularly the increased share of respondents that cited business indicators as worse or much worse. Business events Major events Drive tourism Backpacker / Youth The share of respondents reporting positive performance in the major events sector was down 12 per cent on Q1 and on par with Q The drive and backpacker/youth sectors performed better, up 4 and 6 points respectively from the previous quarter, with over a quarter of surveyed executives citing positive performance. Both sectors have also remained relatively stable over recent consecutive quarters. PERFORMANCE BY SECTOR 'GOOD' OR 'VERY GOOD' 75% 2011 Q Q Q Q Q2 49% Luxury travel Mid range travel Budget travel Performance in the luxury and mid range travel sectors has fallen sharply, down 14 and 18 points respectively, with budget travel stable. Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)

6 PMC INCREASE IMPACTS Q. The federal government in its May budget announced an increase in the passenger movement charge (PMC) from $47 to $55 starting on 1 July Do you believe that the increase in the PMC will impact on arrivals from the following countries? WILL THE INCREASE IN THE PMC IMPACT ON ARRIVALS FROM THE FOLLOWING COUNTRIES? 7 Domestic tourism has improved significantly however, outbound is still a worry. Marketing & communications sector % respondents answering affirmative % NZ China Japan UK USA Nearly three in five tourism executives believe the July 1 increase in Australia s departure tax will impact arrivals from New Zealand, our largest source market by visitors. The short haul nature of trans Tasman travel means the increased PMC will constitute a greater share of the airfare than for other markets. Almost half of executives also anticipate impacts on arrivals from China, our largest source market by expenditure, and Japan, which appears to be in a recovery phase. More than 40 per cent of respondents also expect the PMC rise to negatively impact arrivals from the UK and the US, Australia s other top five source markets. Tourism Australia Esperance, Western Australia [There is concern regarding] cost of overheads as a result of overregulation comparative to other international destinations. Convention centre & stadia sector ABOUT THE SURVEY The TTF MasterCard Tourism Industry Sentiment Survey is an independent measure of key industry themes and trends. The survey is distributed to senior staff within TTF s membership organisations and other leading tourism businesses around Australia. Participation in the survey was voluntary and we cannot disclose the identity of those organisations who responded. However, the survey was made available across the tourism industry, to airports, airlines, hotels, attractions, hospitality, business events, government organisations and investors. TTF is a national, member funded CEO forum, advocating the public policy interests of the 200 most important corporations and institutions in the Australian tourism, transport, aviation and investment sectors. Tourism Australia Queensland International growth opportunities exciting... [however,] robust domestic market required to provide stability throughout the year. Transport operations sector MasterCard Worldwide is one of the world's leading payments companies. Through relationships with more than 22,000 financial institutions, MasterCard offers products and solutions that feature state of the art security and convenience. MasterCard payment products are at the Heart of Commerce, bringing innovative solutions and comprehensive benefits and services to consumers, merchants, and businesses in more than 210 countries and territories throughout the world. As a facilitator of international commerce and tourism, MasterCard Worldwide is proud to support the Tourism Industry Sentiment Survey. Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)

7 Adele Labine Romain Director, Research & Strategy E alabine romain@ttf.org.au P (02)