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The latest Victorian Tourism Industry Council (VTIC) survey of tourism operators across the State reveal a generally improved trading performance in the quarter ending February 2007, with improved sales growth and increasing profitability.
“However, the industry has also experienced its share of difficulties, with drought and bushfires having a major impact on tourism operators in affected regions”, says VTIC Chairman Jeremy Johnson.
“Of rural-based respondents, 56 per cent indicated that environmental factors, including drought and bushfires, were ‘significant’ or ‘critical’ constraint on their business, compared with 34 per cent of respondents located in regional centres and 18 per cent of those in the metropolitan area.
“We therefore welcome the State Government’s decision to provide a $138 million recovery and response package to assist the recovery of tourism in bushfire-affected areas of Victoria as advocated by VTIC.
“Respondents are also positive about trading prospects over the next twelve months, with 53 per cent of those surveyed indicating that they anticipate their business performance will be ‘much stronger’ or ‘somewhat stronger’. This figure is similar to the results of the previous survey (54 per cent) but slightly lower than the corresponding period in 2006 (60 per cent).
“Looking forward, we are looking to boost confidence in the sector to drive further investment and yield from the tourism dollar – we will continue to lobby on behalf of the industry, with our recent State Budget submission highlighting the need for future long-term investment in the sector in order to continue to drive growth and competitiveness, and increase the yield of the tourism dollar.
“Our recent lobbying efforts highlighting the importance of improved international air access to Melbourne have been extremely successful, with the Federal Government recently announcing approval for new or additional flights for Emirates, Etihad and Qatar Airways.
“If business and leisure travellers cannot get direct flights to Victoria they will not come – the recent Federal Government decisions on foreign carrier access to Melbourne will help underpin tourism growth over the medium term.
“Given the recent debates over the value of major events to Victoria, it is timely that a sister organisation for VTIC is being launched at today’s VTIC Forum.
“The Victorian Events Industry Council (VEIC) represents event organisers, venues and suppliers and its formation is recognition of the growth of this industry in Victoria and its economic significance to the State”, says Mr Johnson.
Survey Results in Detail
Business conditions remain strong over the February quarter 2007
On a net balance basis, 28 per cent of respondents reported an improvement in general business conditions in the three months to February 2007 (comprising 47 percent of respondents who reported an improvement and 19 per cent who reported deterioration). This followed a similar result in the November 2006 quarter, and the corresponding period in 2006. However, it represents a strong improvement on August 2006, when only a net balance of 4 per cent reported an improvement, amid higher fuel prices and lower consumer confidence.
Sales growth remained strong over the three months to February 2007, with a net balance of 33 per cent of respondents reporting an increase. Average selling prices also increased, and as a result, profitability growth was widespread, with a net balance 22 per cent of respondents reporting an improvement. Business investment in buildings and structures continued apace, with a net balance of 19 per cent increasing capital expenditure on buildings and structures and 21 per cent on plant and equipment.
Looking forward, the industry is expecting continuing strong conditions in the three months to May 2007. General business conditions are expected to improve, with expectations for continued growth in sales, selling prices and profitability. However, wage costs are also expected to continue to rise over this period, despite employment remaining static.
Respondents are positive about trading prospects over the next twelve months, with 53 per cent of those surveyed indicating that they anticipate their business performance will be ‘much stronger’ or ‘somewhat stronger’. This figure is similar to the results of the previous survey (54 per cent) but slightly lower than the corresponding period in 2006 (60 per cent).
Environmental factors constraining business growth
Environmental factors (including drought and bushfires) were identified as a ‘significant’ or ‘critical’ constraint by 39 per cent of respondents. This is an increase on the previous quarterly survey, when it was identified as a key constraint by 36 per cent of respondents. Over the survey period, Victoria continued to be affected by the drought, and large areas of the Gippsland and North East regions were also affected by major bushfires, particularly over the peak summer season of December and January.
The impact of environmental factors differed considerably depending on the location of the respondent. Of rural-based respondents, 56 per cent indicated that environmental factors were ‘significant’ or ‘critical’ constraint on their business, compared with 34 per cent of respondents located in regional centres and 18 per cent of those in the metropolitan area.
Background - what is VTIC
The Victorian Tourism Industry Council (VTIC) is the peak policy council for the Victorian tourism industry. Jeremy Johnson chairs the Council, which represents key industry associations and operators, providing one united industry voice. |