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The changing face of Australian tourism

See all articlesAustralian tourism industry
Selling a business
By
Kevin Han
Kevin Han
Manager, Transaction Origination
October 20, 2021
4
minute read

6 interesting Australian tourism tailwinds

In just 18 short months, the landscape of Australian tourism has changed dramatically. With closed international borders and ever-changing state restrictions, new generations of Australians are holidaying closer to home and embracing our nation like never before.

Nash Advisory has years of experience working in the tourism sector. If you are looking to sell or acquire a tourism business, there's plenty of opportunity in the market today.

Baby Boomers on the move

The post-war Baby Boomer generation — born between 1946 and 1964 — is often regarded as the lucky generation. With many able to release household equity in an exploding property market, Boomers have money to spend and still have some to spare for their children’s inheritance.

Baby Boomers deem travelling overseas fraught with uncertainty for a number of reasons:

  • Ongoing uncertainty around international border restrictions
  • The risk of being stranded far from home
  • The risk of contracting COVID itself

Even with high vaccination rates and announcements that international borders will soon open, it seems likely that safe and affordable international travel options will be limited well into 2022. As a result, many Baby Boomers are taking comfort in the safe travel environment we have here at home in Australia.  It is expected that roughly 126,000 baby boomers will retire in 2021. The retirement cohort will continue to expand for another five years (see chart below), creating a huge demand for domestic holiday options.

Number of people retiring in Australia

number of people retiring in Asustralia
Source: https://www.firstlinks.com.au/turning-point-2020s-baby-boom-retirement-surge

Caravan sales are booming

Current trends point to Baby Boomers downsizing their properties and buying new mobile homes to travel Australia, but they’re not the only ones escaping Australia’s cities and chasing a nomadic lifestyle.

caravans

Locked international borders have encouraged a whole new market segment of young families and couples aged 35–54 to enter the caravan market including:

  • Young travellers
  • Families
  • Cruise enthusiasts
  • Backpackers

These segments are buying up four-wheel drives and caravans and hitting the road. The high initial capital investment required to fund these road trips suggests that travellers are likely to continue this form of travel for some time to come.

Caravan sales in Australia have increased at a 4% CAGR for the last 12 months and there are now more than 650,000 caravans on the road.

Australian Caravan and Campervan Registrations 2016-2020
Source: https://caravanstats.com.au/motor-vehicle-census/

Caravan sales by demographic

caravan sales by demographic
Source: IBIS World https://www.ibisworld.com/au/industry/trailer-caravan-dealers/436/

It appears that COVID is the biggest tailwind the caravan sector has ever experienced. Resorts and caravan friendly parks are well placed for FY22 and beyond.

Return of the Great Aussie Road Trip

Even for those who are not ready to part with their bricks and mortar, many Australians are seeking respite from city lockdowns. With international tourism all but impossible since March 2020, it is no surprise that demand for domestic tourism has skyrocketed. Frustration with frequent flight cancellations and cumbersome refund policies has fuelled the resurgence of the Great Aussie Road Trip.

State and federal governments are incentivising holidaymakers to holiday at home. The “Holiday Here This Year” campaign and travel subsidies continue to reinvigorate the domestic tourism market. COVID-related government stimulus has resulted in a total Australian tourism income increase in 2020 when compared to 2019.

Discretionary spending has almost recovered to pre-pandemic levels and money usually spent on international holidays is filtering into the domestic market.

Work From Home increases flexible weekend travel options

Stay-at-home orders imposed by state governments has forced companies to quickly adapt to a remote working environment. With flexible working arrangements now the norm and an increased awareness of employee mental health and wellbeing, travellers can take their families away for a long weekend without relying on public holidays or using annual leave.

An emerging trend to a 4-day week appearing in some professional service sectors will further increase the ability for regular domestic travel. Work from home arrangements are here to stay and domestic tourism is set to benefit long term.

Local investment in Australian tourism

As a result of the increased local demand, investment is flowing into Australian tourism destinations, as large corporates race to acquire leading tourism assets.  

  • Experience Co
  • G’Day Parks
  • Journey Beyond
  • NRMA
  • RAC
  • Sealink
  • Tattarang

It is expected that the popularity of destination tourism will continue to increase as COVID restrictions ease.

Returning international tourism

Australia’s management of the pandemic has reinforced its reputation as one of the world’s premier tourist destinations. With exceptional infrastructure and a plethora of unique experiences on offer, Australia is likely to be top of mind for many tourists once borders reopen.

Australia is a vast country, however, our transport infrastructure is excellent with good roads, airports and rail infrastructure. Tourists can have the confidence that they will be safe travelling to and from their destinations across Australia.

Many popular tourism locations known for their unique experiences (such as India, USA, Brazil, South East Asia and many parts of Africa) have had their reputations significantly damaged by the pandemic.

Our health system is one of the best in the world with available hospitals in every regional location. Tourists will have the confidence that if they get sick, they will be cared for in world-class health facilities.  

Australia is one of the last remaining options for tourists seeking an unforgettable, yet safe experience. Australia has so much to offer that it will be popular for international tourists for many years to come.

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