The latest Victorian Tourism Industry Council (VTIC) survey of tourism operators across the State reveals a generally improved trading performance in the quarter ending November 2006.
"Compared with the previous quarter, respondents reported improved general business conditions, sales, selling prices, profitability and investment," says VTIC Chairman Jeremy Johnson at the launch of the Survey at the VTIC Industry Forum, held at VECCI.
"Looking forward, the industry is expecting stronger conditions in the three months to February 2007, although it must be borne in mind that the survey was taken before the current bushfires in Gippsland and North East Victoria. General business conditions are expected to improve, with expectations for growth in sales, selling prices and profitability. However, wage costs are also expected to continue to rise over this period.
"Tourism operators remain optimistic that this performance will improve further over the next 12 months, with 54 per cent of all businesses surveyed indicating that they anticipate an improvement in business performance. This figure is up on the previous survey (49 per cent).
"Oil price increases (and the corresponding rise in petrol prices) were listed as the most common perceived constraint to business growth in the three months to August 2006. This issue was rated as a 'significant' or 'critical' constraint by 42 per cent of respondents, down from 57 per cent of respondents in the previous quarterly survey. This indicates that concern has eased as prices have moderated in recent times.
"Environmental factors (including drought, bushfires, etc), was identified as a 'significant' or 'critical' constraint by 36 per cent of respondents. Respondents to the survey were asked whether they believed the drought has impacted on their business performance over the quarter. Twenty-nine percent of respondents indicated that the drought had a 'critical' or 'moderate' impact on their business revenue, while 35 per cent indicated it had a 'critical' or 'moderate' impact on their business costs. Thirty-six reported a 'moderate' or 'critical' impact on business profitability.
"As expected, the effect of the drought has been more pronounced among rural tourism operators. A greater proportion of rural respondents, compared to their regional and metropolitan counterparts, reported that the impact of the drought on business revenue (20%), business costs (19%) and profitability (21%) was critical.
"In terms of the current bushfires, while the immediate crisis must be dealt with now, there must also be a swift follow-up response to support operators and restore visitor confidence. Once the bushfire threat has receded, VTIC calls upon the Government to consider tourism promotion measure to regions devastated by the bushfires.
At the time of the devastating bushfires of the summer of 2002/03, it was estimated that the cost to the Victorian Alpine region alone was in the order of $25 million. In response, the Victorian Government announced a $10.6 million package developed through the Victorian Government's Bushfire Recovery Taskforce, including a $2 million tourism campaign, aimed at bringing people back to north east Victoria and East Gippsland. A similarly swift response occurred after the devastating Grampians bushfires of early 2006.
"While VTIC recognises that the Government's first priority must be the protection of life and property, such assistance will help promote tourism in areas desolated by bushfires and will help to restore visitor confidence throughout the State", says Mr Johnson.
Survey Results in Detail:
- Business conditions improve over the November quarter On a net balance basis, 33 per cent of respondents reported an improvement in general business conditions in the three months to November 2006 (comprising 50 percent of respondents who reported an improvement and 17 per cent who reported deterioration). This followed a difficult quarter in August 2006, when only a net balance of 4 per cent reported an improvement, amid higher fuel prices and lower consumer confidence.
- Sales growth strengthened over the three months to November 2006, with a net balance of 37 per cent of respondents reporting an increase. Average selling prices also increased, and as a result, profitability improved, with a net balance 18 per cent of respondents reporting growth. Business investment in buildings and structures continued apace, with a net balance of 21 per cent increasing capital expenditure on buildings and structures and 20 per cent on plant and equipment.
- Looking forward, the industry is expecting stronger conditions in the three months to February 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.
- Businesses remain positive about trading prospects over the next twelve months, with 54 per cent of those surveyed indicating that they anticipate their business performance will be 'much stronger' or 'somewhat stronger'. This figure is up on the previous survey (45 per cent) but slightly lower than the corresponding period in 2005 (59 per cent).
- High petrol prices and environmental factors constraining business growth The earlier increase in oil prices (and the corresponding rise in petrol prices) was listed as the most common perceived constraint to business growth in the three months to November 2006, and was rated as a 'significant' or 'critical' constraint by 42 per cent of respondents. This was down from 57 per cent in the previous quarter, including a fall in the 'critical' component from 23 per cent to 7 per cent, and indicates concern has eased as prices have moderated in recent times.
- Environmental factors (including drought, bushfires, etc), was identified as a 'significant' or 'critical' constraint by 36 per cent of respondents. Respondents to the survey were asked whether they believed the drought has impacted on their business performance over the quarter. Twenty-nine percent of respondents indicated that the drought had a 'critical' or 'moderate' impact on their business revenue, while 35 per cent indicated it had a 'critical' or 'moderate' impact on their business costs. Thirty-six reported a 'moderate' or 'critical' impact on business profitability.
- A greater proportion of rural respondents, compared to their regional and metropolitan counterparts, reported that the impact of the drought on business revenue (20%), business costs (19%) and profitability (21%) was critical.
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.
To arrange media interviews with VTIC Chairman Jeremy Johnson, contact VECCI Strategic Communications |
