The latest Victorian Tourism Industry Council (VTIC) survey of tourism operators across the State shows a continuing recovery in the sector, after a period of difficult trading conditions resulting from the drought, bushfires, the war in Iraq, and fears about the SARS virus.
"Respondents reported a strong improvement in general business conditions, sales, profitability, investment and employment over the past three months, suggesting the industry has continued to rebound as the impact of some severe one-off shocks has dissipated", says VTIC Chairman John Button.
"Added to this, over half of those surveyed anticipate an improved business performance over the next twelve months.
"The survey was taken before the recent terrorist attacks in Spain. More positively, however, the survey period was followed by a highly successful Melbourne Grand Prix and this week's announcement of direct flights to Melbourne by Qatar Airways and extra direct flights by Emirates, which is promising news for Victorian tourism operators.
"These developments follow the launch during the survey period of new Melbourne-based discount carrier Jetstar, which is due to begin flying in May and will provide a boost to the Geelong and Surf Coast region by flying from Avalon as well as Tullamarine.
"Despite the rosy business outlook, there is no room for complacency - the positive survey 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.
"The State Government must use its April Economic Statement 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 the fast-approaching Commonwealth Games", says Mr Button.
Survey Results in Detail:
This survey was conducted during February 2004, as the industry appeared to be recovering from a number of major domestic and international 'shocks' with significant impacts upon the tourism industry (including the SARS outbreak, rural drought, bushfires, widespread fear of international terrorism, war in Iraq, rising insurance premiums and global economic slowdown). Albeit from a low base, the current survey reveals a strong rebound in general business conditions, sales, prices, profitability, employment, wages and capital expenditure. Looking ahead, respondents are also strongly optimistic regarding all of these business indicators next quarter.
This conclusion is supported by the fact that 51 per cent of respondents anticipate an improved business performance over the next twelve months, compared with the previous twelve months.
This survey reveals that 53 per cent of businesses in the metropolitan area are satisfied with their level of capacity utilisation, unchanged from last quarter. Rural respondents have fared slightly worse since the last quarter with 52 per cent satisfied with their level of capacity utilisation, compared to 55 per cent last quarter. Similarly, 54 per cent of respondents from regional centres were satisfied with the rate of capacity utilisation of their businesses, down from 59 per cent last quarter.
Access to finance (38 per cent of respondents rated this a 'significant' or 'critical' constraint) was the single most significant factor constraining business growth during the January quarter - the increases in interest rates during late 2003 are clearly having an impact on the profitability of tourism operators.
Breaking down the aggregate results by industry sub-sector, the most optimistic sub sectors are Bed and Breakfasts (60 per cent expect their business performance to be stronger over the next 12 months) and 2-3 Star Hotels and Motels (50 per cent). Less optimistic were Caravan Parks (44 per cent) and 4-5 Star Hotels and Motels (35 per cent), possibly reflecting continuing concerns about international visitor arrivals in the latter case.
Other major constraints included business taxes and government charges (35 per cent), insufficient domestic demand (28 per cent), and insufficient international demand (27 per cent). If one adds together business taxes and government charges with government regulations then a sizeable total of 61 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 two years. Of these shocks, respondents identified the drought as the most significant constraint on business performance over the past year, with 36 percent of respondents identifying it as a moderate to critical constraint. SARS was also a major constraint, (31 percent) as were fears of international terrorism (28 percent). The entry of Virgin Blue into the domestic airline market was identified by 22 percent of respondents as a positive development.
Background - what is VTIC
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.
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