Is TTNQ still being too optimistic?

A while ago we completed a Strategic Plan for a FNQ Tourism body and in it made note of the wildly optimistic forecast embedded within the TTNQ Strategic Plan 2011-15. At the time TTNQ were forecasting expenditure to hit $3.2bn by 2015 which, at the time, represented a compound annual growth rate  from 2010 of 7.8% (or a real increase of 5.3% if we assume CPI around 2.5%). This at a time when the independent Tourism Forecast Committee (TFC) were forecasting real expenditure to increase by 2.6% over the same period.

Looking further out TTNQ were forecasting expenditures of $4.4bn by 2020; a compound growth rate of 7.2% (real 4.7%) over the 10 year. TFC at the time was forecasting real growth at 1.8% to 2022.

Our report highlighted these wide differences and suggested that the TTNQ forecasts were “well in excess” of the independent forecasts and that “extreme caution” should be used when considering them. It is therefore no surprise to see today that TTNQ have admitted that the targets were unattainable and a more “realistic” target of $4.1bn has been set for 2020 (see the story from the Cairns Post here). In addition TTNQ have revised down their 2015 forecast (by $500m) to $2.69bn; although they admit that even this will require a “not insignificant” improvement in the last 7 months of this financial year. Given that their own figures show expenditure trending to $2.6bn in 2015 this equates to a 6% annualised growth required in the last half of the year; certainly not “insignificant”.

However, even with the 2020 target revised down TTNQ appear to still be expecting some very strong growth. If their 2015 target is hit, annualised growth of 8.8% (or 6.3% real) per year will be required until 2020 to reach the new lower target. If 2015 actually eventuates at $2.6bn, the required growth rate rises to 9.5% (or about 7% real). The TFC are yet to issue a more recent forecast so are still suggesting real expenditure growth of 1.8% to 2022.

Since 2010 (and assuming the higher TTNQ 2015 target is hit) TTNQ has seen annualised expenditure growth of just 4.1% (or real 1.6%). This is well below the TFC forecast of real annualised growth of 2.6% to 2015. And yet from 2015 to 2020 TTNQ are now forecasting real expenditure growth at about 3.5 times the rate the TFC are expecting.

We’re all for setting ambitious targets to shoot at, but it makes no sense to set targets which would appear to be simply unattainable. It might make everyone feel good now, but simply sets them up for a bigger fall later. We expect to see TTNQ revise these forecasts down further in future.

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