The latest Victorian Tourism Industry Council (VTIC) survey of tourism operators across the State shows a rebound in the sector, after a period of plunging confidence during which the industry suffered successive blows from drought, bushfires, the war in Iraq, and fears about the SARS virus.

 

"This survey shows that respondents are strongly optimistic about general business conditions, sales and employment, suggesting the industry has rebounded as the impact of some severe one-off shocks have dissipated", says VTIC Chairman John Button.

 

"Almost half of those surveyed anticipate an improved business performance over the next twelve months, compared with the previous twelve months.  This trend is confirmed by the latest International Visitor Survey which shows a two per cent increase in international visitors to Victoria over the year to September 2003 - the only increase of any of the States. However, neither Government nor industry should be complacent - the positive numbers are coming off a low base and much more needs to be done to convert the new-found confidence of tourism operators into real jobs and investment growth".

 

"In this context, it is particularly important that Governments seek to underpin future tourism activity by protecting Victoria's key natural assets and enhancing our tourism infrastructure".

 

"VTIC welcomes the preservation of Point Nepean as a park but urges a Government moratorium on the construction of further wind farms that could blight the coastline".

 

"Furthermore, the State Government must act quickly to establish a world-class, high capacity Plenary Hall in Melbourne that will underpin the important business tourism and conference market, an area where we have slipped badly behind our regional competitors in recent years".

 

"This is particularly so given that Melbourne will be showcased during the Commonwealth Games in less than three years' time", says Mr Button.

 

This survey was conducted during November 2003, in the aftermath of some major domestic and international 'shocks' with significant impact upon the tourism industry.  The SARS outbreak, rural drought, bushfires, widespread fear of international terrorism, war in Iraq, and fears of a global economic slowdown all coincided to generate widespread pessimism regarding likely prospects for international and domestic tourism performance. 

 

These factors explained why most indicators of business performance recorded negative net balances during the previous survey. 

 

However, looking forward to the January quarter, the current survey reveals that respondents are strongly optimistic about general business conditions, sales and employment, suggesting the industry has rebounded as these influences have dissipated.

 

This conclusion is supported by the fact that 48 per cent of respondents anticipate an improved business performance over the next twelve months, compared with the previous twelve months.

 

General business conditions in the Victorian tourism sector improved over the quarter ending October 2003, with a positive net balance of 26 per cent of respondents reporting improving general business conditions.  As indicated, this is expected to improve significantly, with a positive net balance of 42 per cent of respondents anticipating improved general business conditions in the quarter ending January 2004.  Despite this optimism, labour costs and capital expenditures have also increased over the quarter, leaving profitability and employment flat.

 

This survey reveals that 53 per cent of businesses in the metropolitan area are satisfied with their level of capacity utilisation, down from 60 per cent last quarter.  Rural respondents have also fared worse since last quarter with 55 per cent satisfied with their level of capacity utilisation, compared to 64 per cent last quarter.  However, 59 per cent of respondents from regional centres were satisfied with the rate of capacity utilisation of their businesses, slightly up from 56 per cent last quarter.

 

Access to finance (40 per cent of respondents rated this a 'significant' or 'critical' constraint) was the single most significant factor constraining business growth during the October quarter - rising interest rates have clearly begun to impact on tourism operators.  Other major constraints included insufficient domestic demand (33 per cent), wage costs (31 per cent), and business taxes and government charges (29 per cent).  If one adds together business taxes and government charges with government regulations then a sizeable total of 56 per cent of respondents consider these factors to be 'significant' or 'critical' constraints.

 

The current survey has attempted to quantify the impact of the one off 'shocks' that have impacted on the industry over the past year.  Of these shocks, respondents identified the drought as the most significant constraint on business performance over the past year, with 42 percent of respondents identifying it as a moderate to critical constraint.  Fears of international terrorism were also a major constraint (30 percent), as were the bushfires (29 percent).  The entry of Virgin Blue into the domestic airline market was identified by 20 percent of respondents as a positive development.

 

 

The Victorian Tourism Industry Council (VTIC) is the peak policy council for the Victorian tourism industry.  The Hon. John Button chairs the Council, which represents key industry associations and operators, providing one united industry voice with a special focus on small operators.