1.2 million Chinese tourists tip the balance

April 13, 2017

Tourism is booming in Australia, driven by a significant uptick in in the number of Chinese visitors.

Australians are travelling overseas in record numbers, but there’s now a major shift taking place in the tourism industry. Thanks largely to a strong and growing influx of visitors from China the tables have been turned on a long held statistical trend: people holidaying in Australia are now spending more money than Australians taking their leisure overseas.

Last year, for the first time on record, incoming visitors spent more than Australians on overseas holidays: $39.1 billion compared to $38.5 billion – a difference of $600 million.

Tourism Australia’s group managing director, John O’Sullivan, says this is primarily being driven by Chinese inbound tourism which is growing at a compound annual rate of 20 per cent. “That’s phenomenal,’’ O’Sullivan says, “and it’s also behind a really sustained wave of investment in tourist infrastructure.”

While annual Chinese tourist numbers have grown from a mere 500 in 1976 to 190,000 in 2002 to 1.2 million today, having broken through the benchmark of 1 million annual visitors, set in 2015, for the first time, they’re still not at the top in terms of visitor numbers. That title still goes to New Zealanders, with no less than 1.34 million Kiwis coming to Australia in 2016.

The significant difference is that Chinese visitors spend more per head than Kiwis, which is driving the surge in tourism outlays.

The United Kingdom and United States are still steady suppliers of tourists: in 2016, the UK was third on Australia’s source of visitors list, while the US was fourth. Singapore rounded out the top five while visitors from Japan and South Korea also registered significant growth in tourist numbers in 2016, up almost 25 per cent from previous years.

Spending spree

Tourism Australia calculates that, thanks to the 8.3 million international visitors who holidayed in Australia in 2016, $39.1 billion was injected into the economy. A quarter of this – some $9.2 billion – came from Chinese tourists. Spending by Chinese visitors jumped 43 per cent in the year to December 2015 after the Australian dollar weakened, making inbound travel cheaper.

Overall, the tourism story is hugely positive for our economy with locals, plus international tourists, spending a combined $119.8 billion within Australia during 2016.

Tourism Australia says every dollar spent on tourism generates 81 cents in other parts of the economy – more than mining, agriculture or financial services. Of that 81 cents, more than half goes to regional Australia in areas such as hospitality and retail. While other sectors face increasing headwinds, the Australian tourism industry is growing at three times the rate of the economy in general.

Part of that growth story is due to the constantly evolving regulatory environment that shadows the changing nature of inbound tourism. For example, in 1999, the Australian and Chinese governments devised the Approved Destination Status (ADS) category that allowed Chinese visitors to come to Australia on organised tours. Then, in 2013, the Gillard government liberalised those rules to cater for more fully independent travellers (FITs) and Australia is now reaping the benefits, with higher-spending visitors coming for second and third visits.

Enriching infrastructure

O’Sullivan says big Chinese companies have been developing resorts and hotel accommodation in Australia aimed very much at higher-yielding, smaller groups. He points to the Wanda group, which is building Jewel, a $1.2 billion hotel and apartment project on the Gold Coast, and spending between $400 million and $500 million to rebuild Gold Fields House, on Sydney’s Circular Quay, as a five-star hotel complex plus apartments and retail space.

He says it became clear in 2010 that Australia needed to promote improved accommodation to cope with the influx, but “with a market growing this fast, you’ll never be 100 per cent China-ready”.

This constant change also means it is critical for providers to keep up with all aspects of their product and service delivery. “For instance, Chinese visitors used to pay cash, then they moved to using the China Union pay card,” says O’Sullivan, “Most recently they use the Alipay app on their mobile phones to pay.” (Alipay now claims to have 400 million users.)

Visiting students

International students – primarily Chinese students but followed closely by students from India – make up the single biggest, longest-staying cohort of visitors to Australia. The large number of Chinese students is another factor in the boom of Chinese tourism. The managing director of the Australian Tourism Export Council, Peter Shelley, says there’s been a big increase in the number of Chinese families visiting their many young relatives studying in Australia.

“These students become very proud of the destination and act as guides,’’ Shelley says. “A recent check of the many bookings in Port Douglas over Chinese New Year found most were made via travel agencies in Sydney’s Chatswood [home to a large Chinese population].’’

Capitals and coast

The kind of travel Chinese tourists are opting for is also changing. They may originally have come here as part of large groups, but they are gradually becoming more independent. Many now like to go to coastal areas within easy reach of the capital cities such as Port Stephens, north of Sydney, and the Great Ocean Road in Victoria. The latter, in particular, means day trips by bus and minibus from Melbourne, usually run by Chinese-speaking operators.

O’Sullivan says most FITs want “aquatic and coastal experiences”, along with a good exposure to high-quality Australian food and wine. It’s a long way from Paul Hogan’s famous “I’ll slip an extra shrimp on the barbie” campaign, which ran from 1984 to 1990 and was aimed at the US and UK markets. These days, with numbers and spending up from markets across Asia, especially China, South Korea and Japan, it’s little wonder that the latest tagline is “Where the ocean tickles your taste buds and your toes.”

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