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Decorative

Chapter 8: Visitor economy

Key points

  • By 2040, an estimated 181 million Southeast Asians are predicted to travel overseas each year, up from 40.69 million outbound travellers in 2022.163
  • Australian businesses are well placed to capitalise on this major opportunity.
  • The visitor economy contributes significantly to two-way trade, investment and people-to-people links between Australia and Southeast Asia, adding A$2.3 billion and A$4.5 billion to the respective economies in 2022 from visitor spend alone.164
  • Continued investment in marketing, aviation connectivity, infrastructure, visa processing, and training will facilitate increased two-way tourism.

Sector overview

There is a major opportunity to grow two-way tourism between Australia and Southeast Asia. Geographical proximity, people-to-people links, education, and unique cultural and natural environment offerings all reinforce the attractions of two-way travel. By 2040, 181 million Southeast Asians are expected to travel overseas each year, quadrupling current numbers.165 Australia is well placed to capitalise on the projected growth in traveller numbers in Southeast Asia. Post-pandemic, travel proximity has become a more important factor for travellers, presenting an opportunity for Australia to take advantage of its location relative to competitor destinations.166

Pre-pandemic, the visitor economy in Southeast Asia employed 42 million workers and contributed 12.1 per cent of the region's GDP.167 In 2022, Southeast Asia was the most popular destination for Australian travellers overseas (28 per cent), contributing A$4.5 billion to Southeast Asian economies.168 In its current Tourism Marketing Strategy 2021–2025, ASEAN identified Australia as its primary target market for inbound travellers, based on its proximity and high spending.169

Tourism (including recreational travel and education-related travel) has traditionally been Australia's fourth-largest export, and a major employer across Australia with over 725,000 jobs.170 In 2019, Southeast Asian visitor arrivals peaked at 1.5 million visitors,171 and added an estimated A$4.2 billion to the Australian economy.172 Numbers and income are recovering following the impact of the pandemic, and in 2022, Southeast Asian visitors contributed A$2.3 billion to the economy.173 Australia is expected to capture 3.8 per cent (1.2 million visitors) of the total number of Southeast Asians travelling outside of Southeast Asia in 2023.174

Education and those visiting friends and relatives have traditionally been strong drivers for travel from Southeast Asia to Australia. Pre-pandemic, 20 per cent of all Southeast Asian visitors to Australia were visiting international students, spending an estimated A$206 million.175 Australian diaspora communities also attract a significant number of visits by friends and relatives.

While the attractiveness of Australia's tourism offering remains high, we face stiff competition to attract a greater proportion of the outbound Southeast Asian tourism market. Australia will need a targeted approach from both industry and government to realise the opportunity that greater tourism connections with Southeast Asia presents. The visitor economy's high concentration of SMEs in Australia (around 95 per cent)176 means peak bodies and governments have a role to play in supporting product development, building industry capability and driving demand through marketing.

“Australian businesses should consider Southeast Asia because this region is one of the fastest-growing… We just need to know how to enter the market and personalise our approach to meet their needs.” (Dream Tours and Incentives Management)

High-income leisure and business travellers are another significant cohort of Southeast Asian travellers to attract to Australia, with 4.6 million Indonesian, Malaysian and Singaporean interested travellers in this category.177 Nationals from these countries made up 72 per cent of Southeast Asian leisure travellers to Australia in 2022.178

The natural environment will remain one of the key attractions for tourism in Australia and Southeast Asia and there is increasing demand for nature-based experiences.179 Similarly, Australia's unique First Nations history will be a growing source of interest for tourists, as visitors increasingly value local authenticity, vibrant cultures and a sharing of knowledge (see Sand Dune Adventures case study).180

Case study: Supporting visitors to 'connect to Country' through Sand Dune Adventures

Sand Dune Adventures (SDA) is owned and operated by the Worimi Local Aboriginal Land Council and is located at the Murrook Cultural Centre in Port Stephens, New South Wales. Its mission is to help visitors connect to Country' through a cultural quad-bike riding experience across the Southern Hemisphere's largest coastal moving sand mass with experienced local Aboriginal guides.

Commencing in 2008 with only eight quad bikes, SDA has trained numerous local Aboriginal community members and currently consists of 15 staff, all of whom are local community members, and 100 quad bikes. Among SDA's first international customers was a group from Malaysia, and their enthusiasm and connection to the experience encouraged SDA to explore further relationships with Southeast Asian businesses and customers. Despite tough years during the global pandemic, SDA is working with state and federal tourism bodies to rebuild and expand these connections, including by joining Tourism Australia's Australia Marketplace events in Southeast Asia.

CEO Andrew Smith credits this success in building connections with Southeast Asia to SDA's cultural governance of valuing relationships. It is about people, not a monetary exchange', he said. This is reflected by the numerous times returning customers bring back friends and relatives to the SDA experience. As one visitor said, I rode out and all I saw were sand dunes, but when I rode back in, I saw and understood Country.' This is the very same eye-opening cultural contact that SDA hopes to share with all who visit.

SDA also partners with and supports other initiatives of the Murrook Cultural Centre, including cultural education, landcare, and its conferencing and catering businesses, providing greater employment opportunities for the local community.

A line of nine quad bikes travelling through sand dunes.

Cultural quad-bike riding experience at the Murrook Cultural Centre, New South Wales. Source: Andrew Smith, CEO, Sand Dune Adventures

Australia's national strategy for the long-term sustainable growth of the visitor economy – THRIVE 2030: The Re-Imagined Visitor Economy – outlines the importance of ensuring tourism offerings are sustainable and climate-aware to meet demand. Some Southeast Asian visitors will also place importance on sustainable practices and will be willing to pay for such experiences.181

Growth in visitor numbers also offers opportunities for two-way investment. Southeast Asian companies, such as Minor International Group from Thailand (see case study), are investing in Australian accommodation projects. The Tourism Investment Monitor 2021–22 values the current investment pipeline of tourism projects in Australia at A$44.3 billion across aviation, arts, recreation and business services, and accommodation.182 Recent consultations on the International Diversification Strategy for the Visitor Economy revealed Southeast Asian travellers' preference for large family travel, which presents an opportunity for targeted infrastructure development.183

There is also a need for culturally relevant infrastructure. Building broader industry awareness and capability, as well as expanding the number of multilingual guides and service staff will be required to support increased traveller numbers, traveller satisfaction and return visitation. The development of worship spaces, halal food options for Muslim travellers, and more signage in Southeast Asian languages are some examples. The Tourism Training Hub is working to build industry capability through its e-learning courses, including its Tourism Trade Ready and Muslim Host courses (see Muslim Host training program case study).

Australia and Southeast Asia can deepen existing collaboration on common issues, share knowledge of best practice tourism and benefit from each other's experiences. Australia and Vietnam, for example, are working together under the Australia–Vietnam Enhanced Economic Engagement Strategy to strengthen bilateral tourism cooperation and support increased two-way visitation. Australia's longstanding development cooperation programs in Southeast Asia are also supporting tourism projects, including skills training, to ensure the economic dividend from the visitor economy is shared.

Case study: Minor International Group's investments in Australia's visitor economy infrastructure

Thailand's Minor International Group (MINT) is one of the largest hospitality and leisure companies in Southeast Asia, with investments in 63 markets worldwide.

MINT's hotel group, Minor Hotels, first invested in Australia with the acquisition of Oaks Hotels and Resorts in 2011. They now employ around 8,000 Australians and have expanded their tourism investment portfolio to include Avani Residences in Adelaide, Melbourne and the Gold Coast. MINT's other investments in Australia include a majority stake in Australia's largest home-grown cafe group, The Coffee Club, which has grown to over 400 stores across eight countries. It has also invested in Australian coffee manufacturer Veneziano Roasters and now showcases Veneziano Roasters' coffee products across its Minor Hotel operations worldwide.

Minor Hotels' successful business model is built on a foundation of solid international experience, powered by local expertise,' said Chief Financial Officer Wayne Williams. The company combines its corporate expertise with the insights of its in-country partners to create products, services and experiences that meet the specific needs of each market. This approach has allowed Minor Hotels to adapt its business models to suit local cultures and overcome regulatory hurdles by harnessing the knowledge and skills of local partners. As a result, Minor Hotels has established a strong reputation for providing high-quality hospitality and lifestyle services in a variety of markets around the world.

A high rise building in a city at dusk.

Oaks Brisbane. Source: MINT Group

During consultations on the strategy, some stakeholders noted that Australia's visa arrangements and processing times are inhibiting spontaneous leisure and business travel. A competitive and efficient system of tourism visas, with a stronger focus on electronic processing and accessibility, will be necessary to ensure Australia is competitive in attracting Southeast Asian visitors.

Australia and Southeast Asia's visitor economies will need a stable supply of skilled workers to deliver high-quality experiences. Feedback received in consultations suggested Australia's labour shortages were impacting the ability of tour operators to provide tourism experiences at scale.184 Increasing the workforce and its capability will be vital for the future success of the visitor economy sector. Attracting students to study tourism and hospitality will be an important element for building the necessary workforce. Australia has education providers with expertise in visitor economy workforce development operating in Australia and Southeast Asia. Expanding opportunities for internships and professional exchanges as part of the vocational education experience in the visitor economy sector could enhance offerings for students.

Case study: Understanding growing markets and target audiences through the 'Muslim Host' training program

Tourism Australia and the Australian Tourism Export Council have supported industry with the development of the Tourism Training Hub, which provides industry training programs such as the Muslim Host' specialist training program.

This program worked with visitor economy SMEs to support their workforce to better understand the needs and interests of Muslim visitors and utilise relevant trade and marketing opportunities.

Dream Tours and Incentives Management (DTIM) founder Doddy Purwoko was central to the development of the Muslim Host' program. He has been an accredited inbound tour operator based in Melbourne for 20 years, assisting Southeast Asian travellers, both leisure and business, to arrange their Australian travel itineraries to suit their language, cultural and travel preferences. DTIM has expanded operations in Southeast Asia by setting up an office in Indonesia, which was key to building deeper relationships with travel agents in market. DTIM is also investing in an enhanced web presence to capitalise on interest by digital-savvy Southeast Asian customers.

The global pandemic was disruptive to the visitor economy, but Mr Purwoko sees great potential in the rebounding Southeast Asian market. He said, Australian businesses should consider Southeast Asia because this region is one of the fastest-growing [for] middle-income earners. Their geographical location is so close to Australia and the market size is huge with a lot of potential to do business with, in every sector. We just need to know how to enter the market and personalise our approach to meet their needs.'

DTIM has accessed support through the Export Market Development Grants program and built industry connections through trade shows, such as the Australian Tourism Exchange, which is hosted by Tourism Australia and provides direct exposure for Australian operators to buyers from a wide range of markets, including from Southeast Asia.

A man and a woman walking next to the water in front of the Sydney cityscape.

Visitors to the Royal Botanic Gardens, Sydney. Source: Tourism Australia

Pathways to 2040

In addition to the cross-cutting recommendations outlined in Chapter 2, which will have a broad economic impact, this chapter has additional specific recommendations on the visitor economy.

Raise awareness

Given strong international competition and the need to grow awareness of Australia's diverse offerings, targeted investment in enhanced marketing will be key to increasing the share of Southeast Asian travellers to Australia. There are opportunities to attract high-income travellers by pitching our marketing efforts at industries with relevant appeal, while also working with industry to ensure visitors have a positive experience and promote Australia when they return home. Artistic, cultural (including sports) and business events are also effective at driving high-revenue visitation.185 The Green and Gold Decade' of major sporting events, culminating in the Brisbane 2032 Olympics and Paralympics, will be a drawcard for additional visits.

Increased government-to-government links can support greater two-way visitor flows, facilitate investment in new enabling infrastructure, and support industry to undertake innovative product development. In Tourism Australia's efforts to boost tourism from India, in-market teams, advertising and engagement with airlines to increase direct aviation capacity have all assisted to deliver shifts in market share.

Travel companies play an important role in attracting leisure tourists and there are further opportunities to work with travel agents in Southeast Asia to raise awareness of Australia. Educating agents on how to sell Australia, extend travellers' length of stay and promote Australia over other destinations helps improve yield. Tourism Australia's Aussie Specialistprogram builds knowledge and skills of agents on Australia's product offerings, which could be further expanded and promoted in Southeast Asian markets.186

Recommendation

  1. Expand tourism promotion and build industry capability to meet Southeast Asian demand.

Access to international tourism data is key to understanding current and future market trends. Data on Southeast Asia travel can be impacted by the quality and capability of in-country statistical agencies reporting outbound travel. There are opportunities for Australia to assist building data capability with its regional partners to improve traveller statistics across a broader spread of countries in Southeast Asia.

Recommendation

  1. Australian Government to identify opportunities to help build visitor economy data capability in key tourism authorities in the region.

Build capability

Businesses in the visitor economy will need to continue to adapt and be equipped with appropriately qualified staff to meet the challenges presented by rapidly changing technology and visitor preferences. Building on the success of the Muslim Host' program, industry–government collaborations could be expanded to ensure businesses understand Southeast Asian visitor markets and can cater to the differing needs of its international travellers to ensure a high-quality visitor experience.

Recommendation

  1. Government tourism agencies to partner with industry to expand industry-led capability-building initiatives for operators and their employees so that they better understand cultural preferences and expectations of travellers from Southeast Asia.

163 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished, accessed May 2023. Note: Outbound visitors refers to Australian resident returns.

164 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

165 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

166 Tourism Australia, Future of Global Tourism Demand, Tourism Australia, 2022, p. 38, accessed 7 June 2023.

167 Asian Development Bank, 'What Southeast Asian Countries Need to Do to Shift to Sustainable Tourism', 2022, accessed 9 July 2023.

168 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

169 ASEAN Secretariat, ASEAN Tourism Marketing Strategy (ATMS) 2021–2025, ASEAN, 2020, accessed 7 June 2023.

170 Australian Bureau of Statistics (ABS), Tourism Satellite Accounts: quarterly tourism labour statistics, Australia, experimental estimates, ABS website, March 2023, accessed 9 July 2023.

171 Visitors refers to short-term visitor arrivals.

172 Australian Bureau of Statistics (ABS), Overseas Arrivals Data and Tourism Research Australia, International Visitor Survey, ABS website, April 2023, accessed 9 July 2023. For the purposes of Chapter 8 – 'Visitor economy', international visitors include international students, regardless of their length of stay, reflecting their statistical likelihood to behave more like visitors rather than residents. In 2009, there were 736,600 visitors to Australia from Southeast Asia, spending A$2.3 billion.

173 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

174 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

175 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

176 Around 95 per cent of visitor economy businesses in Australia have fewer than 20 employees. Austrade, THRIVE 2030: The Re-Imagined Visitor Economy, Austrade, Australian Government, 2023, p. 5, accessed 7 June 2023.

177 A 'high-yield' traveller includes someone who travels long haul (out-of-region) on a regular basis and may have above average trip expenditure, higher likelihood to stay longer and higher likelihood to disperse further.

178 Tourism Research Australia, Data analysis provided to DFAT, Tourism Research Australia, Australian Government, 2023, unpublished.

179 Tourism Australia, Future of Global Tourism Demand, Tourism Australia, 2022, accessed 7 June 2023.; ASEAN Secretariat, ASEAN Tourism Marketing Strategy (ATMS) 2021–2025, ASEAN, 2020, accessed 7 June 2023.

180 Tourism Australia, Future of Global Tourism Demand, Tourism Australia, 2022, p. 38, accessed 7 June 2023.

181 Tourism Australia, Future of Global Tourism Demand, Tourism Australia, 2022, p. XII, accessed 7 June 2023.

182 Tourism Research Australia, Tourism Investment Monitor 2021–22, Tourism Research Australia, Australian Government, 2023, accessed 7 June 2023.

183 Austrade, Discussion Paper: International Diversification Strategy for the Visitor Economy, Austrade, Australian Government, 2023; Tourism Australia, Future of Global Tourism Demand 2022, Tourism Australia, 2022, pp. 163, 179, 183, 185, 187 and 189, accessed 7 June 2023.

184 Dream Tours and Incentives Management, stakeholder consultations, 5 June 2023.

185 Tourism Australia, Future of Global Tourism Demand, Tourism Australia, 2022, pp. 133–136, accessed 7 June 2023.

186 Tourism Australia, Aussie Specialist, Tourism Australia website, n.d., accessed 7 June 2023.

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