Is North Queensland being dudded by Brisbane? Not according to the data.

A fascinating post from Gene Tunny at Adept Economics over the weekend which attempts to dispel the (widely held) view that the North of the state has received less than its “fair share” of capital expenditure from Brisbane.

Is North Qld under-funded by the State Government relative to the South East?

I would point out that the imbalance, as evidenced by Gene’s data, is greater for the Rest of Queensland (approx +45%) as a whole than it is for North Queensland (approx +32%). Also, within Gene’s definition of North Queensland, the imbalance comes largely from a significant overspend in the Fitzroy region where capital expenditure appears to be some 60% above that justified by population levels. A similar level of overspend is also seen in Inner Brisbane. One might also argue that Darling Downs-Maranoa would be considered as SEQ (certainly by those in the North) where the “overspend” seems to be close to double that justified by population.

A problem with any analysis of capital expenditure is that during any one year expenditures are inevitably very lumpy; large scale expenditure projects tend to be like that. Even considering for a longer period, as Gene has done (in this case 5 years), is unlikely to smooth out all this lumpiness; mining related infrastructure in the Fitzroy region could well be a case in point here.

Nevertheless, however one wishes to cut the cake, the data seems to show clearly that over the period analysed (the past 5 years) the North of the state certainly hasn’t done badly from State government spending; no matter what the received wisdom seems to suggest.

Significant revisions muddy the data but Domestic Tourism numbers not looking good for TNQ

As we have been expecting for some time, today saw the release of some major revisions to domestic tourism numbers for TNQ. Tourism Research Australia have released the National Visitor Survey report for the March 2017 quarter (available here) along with revisions to data going back to the 2014 year (see here for details). The main point of the revisions is a roughly 15% decline in the original estimate of overnight trips to TNQ in 2015. While details of the revisions are sketchy at this stage (TRA are only providing data for year end, and March 2016, rather than individual quarters) it is clear that they remove much of the increases previously reported for TNQ which many (ourselves included) had queried at the time.

Despite a degree of uncertainty about the revisions this new data clearly confirms the ongoing slide in domestic tourism to the Far North.

Australia saw an increase of overnight trips of 3.1% for the year to March 2017; Queensland was up 4.3%. In TNQ however we saw a 6.9% decline in visits and a 8.4% reduction in expenditure over the year.

Even with international tourism expenditure having increased over the year, the drop in domestic expenditure sees the total for the region fall 4.9% since March 2016.

Given the support that the tourism recovery has given to the TNQ economy it will be worrying many to see this degree of a slow-down seemingly now confirmed. There had been hope within the tourism sector that the long-awaited revisions from TRA would confirm that growth remained in place (albeit at a slower pace than originally estimated); that hope appears now to have been misplaced.

Pete talking TNQ tourism numbers on ABC Far North & 4CA

Kier Shorey at ABC Far North, and John MacKenzie from 4CA, both spoke to Pete this morning about yesterday’s International Visitor Survey and what it held for TNQ. You can listen below, and read yesterday’s analysis on the IVS here.

Yesterday also saw the GDP release and, as usual, this coincided with the release of our quarterly regional economic roundup in The CONUS Quarterly. You can download your own copy of that full report here….CONUS Quarterly June 2017

ABC Far North

4CA

International tourism grows but QLD and TNQ are both falling behind

Today’s release by TRA of the International Visitor Survey for March 2017 (available here) shows international visitors up by 9.2% y/y with expenditure up 8.1%.

Numbers to Queensland were also up strongly (+6.8%), although expenditure rose just 2.6% y/y. However, as a result the Sunshine State’s share of the international visitor market has fallen to an all-time low of just 33.4%.

In Tropical North Queensland things were somewhat better with visitors up 7.2%, although expenditure managed to drop by 0.8% on the back of significantly lower average regional expenditure per visit (down from $1,310 a year ago to just $1,212 now). TNQ also saw its share of the international market drop top 11.5%. Growth in key areas such as China and the US have slowed while Japan and the UK remained static.

Domestic tourism continues to dive in TNQ

Tourism Research Australia’s National Visitor Survey for the December quarter (available here) does not make happy reading for the industry in the Far North. While total overnight domestic visitors in Australia rose by 4.2% from the previous year, and were up by 3.4% in Queensland, the TNQ region saw a decline of 11.3%. Overnight domestic visitors to the region fell to 1.9 million for the year to end Dec 2016 from 2.14 million the previous year.

Last quarter we posed the question “is the domestic tourism boom in the Far North coming to an end?” (see here) and concluded that it was probably too early to say. We wanted to see more data. Well, that data’s now in and it doesn’t look good.

Expenditure from domestic overnight visitors to TNQ has fallen by 15.5% from the previous year; this equates to almost $400 million less being spent in the region. Day visits have never played a large part in the TNQ story, but here too we see weakness (down 0.4%) in the face of stronger national and Queensland numbers (both up about 5.5%). Combining both overnight and day visits we see expenditure in TNQ down by 14.4% over the year.

As the chart below makes clear, the solid growth in international visitors (which continues unabated…see here from a fortnight ago) is not enough to make up for the large decline in the (much larger) domestic market. Total visitor expenditure in the region for the 2016 year fell 7.5% from 2015.

The reasons for such a decline over the past three quarters is not yet clear, but anecdotal evidence suggests that the heavily negative media regarding the bleaching event on the northern GBR last year (unfortunately being repeated again this year in the tourist hot-spots further south) may be deterring Aussies from making the trip to the north. Clearly TTNQ, and its soon-to-be-appointed new CEO, will be keen to reverse this worrying slide.

UPDATE. TTNQ have cast doubt on the data (see here) and TRA accept that the data from 2014 and 2015 could have over-stated the position for TNQ. If that is the case then the stellar results in past quarters (that TTNQ were happy to agree with) could have been an illusion…we shall have to see what TRA decide once they’ve completed their work on the data. Good coverage on this issue fro Mark Beath at Cairns Economy…see here.

China helps TNQ beat the international visitor pack

The Tourism Research Australia International Visitor Survey for the quarter to Dec 2016 (available here) shows international visitor numbers continuing to improve; although visitors are staying for less time.

Total visitors for the year hit a new record high of 7.625 million; an increase of 11.2% from the previous year. Expenditures rose by 8.1% to $26.2 bn which saw the average expenditure per night fall by 2.8% while the average length of stay dropped by 8.5%.

Queensland fared not quite as well with total visitors up 10.1%, expenditure up 4.0% and average expenditure per visit falling by 5.6%.

Tropical North Queensland, lead by the surge in Chinese visitors, was a stand-out performer. Total visitor numbers were up 15.4% to 901,000. Despite expenditure rising strongly (up 10.2% to $1.12 bn) the average spend per visit fell 4.5%. As a result TNQ’s share of the international visitor market has started to climb back from the lows seen in 2012, although there’s still a very long way to go to return to the heady days of a decade ago when 17% of all international visitors were coming to the Far North.

But make no mistake, the solid TNQ performance isn’t all down to China. While China saw a huge 32.1% gain in total visitors to the region (to 229,000) Japan also experienced very good growth (up 21.2%) , as did the US (up 14.6%). As we can see from the chart below, the US and Japan have now pulled well clear of the pack behind China.

The tourism picture for 2016 will be completed in a fortnight’s time when we see TRA’s National Visitor Survey released.

 

Has the TNQ domestic tourism boom come to an end?

Today saw the release of Tourism Australia’s National Visitor Survey for the Sept quarter (available for download here). It shows domestic tourism growing at almost 5% nationally but QLD, and TNQ in particular, not performing as well.

Nation-wide domestic overnight visitors increased by 4.8% on the year to Sept to exceed 89 million. In QLD the increase, to 20 million, was just 1.6%. In our own region we saw overnight domestic visitor numbers to TNQ actually decline by 7.3% over the year to less than 1.9 million. When we consider just holiday visitors the decline is even greater at -12.4%. This takes the region’s share of the domestic market back to 2.1%, having hit recent record highs of almost 2.5% just 6 months ago. Total domestic expenditure in the Tropical North fell by 3.4% (to $2 billion) as the average spent per visitor increased by more than double the rate of inflation, 4.1%.

In answer to the question posed in the post title, I think it’s probably too early to suggest the boom is over. As we can see from the chart below domestic tourism expenditure in the region remains well above the levels seen just a few years ago. Nevertheless, it is also clear that we have come well off the peaks seen earlier this year. A few more quarters of data should confirm one way or the other but I would certainly want to see TTNQ making some moves to address the significant decline in the TNQ domestic market which has come as total domestic tourism numbers nation-wide hit new record highs.

International Visitors Survey is more good news for TNQ

Tourism continues to be a bright star in the economic firmament of Queensland, and TNQ in particular.
International visitors to the state were up 13.1% for the year to Sept 2016; better than the national average of 11.5%. Even better, the growth into the Tropical North Queensland region was higher still at 16%. This takes us to a new high for the region and we now sit 1.3% above the previous high seen in June 2006. When combined with booming domestic tourism numbers we are seeing the industry having its best spell for many years.

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Domestic tourism is by far and away the more important for the region bringing in 2 million visitors compared to 876,000 from overseas (domestic data is up to June 2016; the Sept 2016 data is due for release in a fortnight). Domestic tourists spend some $2.3 billion in the region while the international visitors spend just over $1.1 billion.
Even more dramatic is the rate of growth in the domestic sector. Visitor numbers are up 13.6% for the year with expenditure up 24%. Domestic visitor numbers to the region are now close to record highs after a slight dip from the March quarter.
International growth has been solid (visitors up 16% with expenditure increasing 11.7%) which when combined with the domestic sector is seeing the region’s tourism industry having its best spell for many years.
Within the international market Chinese visitors continue to grow very strongly. Visitors from China now account for a record high of 14.7% of all international visitors to the country, and an even higher 25% of all visitors to TNQ.
Chinese visitor numbers to TNQ grew by over 32% for the year to Sept. But the growth hasn’t been limited to China. We’ve also seen solid growth from the more “traditional” markets of the US (up 23.6%) and Japan (up 27.8%). Clearly this growth from Japan is very welcome but, as the chart below makes clear, numbers remain well below those we saw in the heydays of 2004 and 2005.
Indeed it’s worth noting that despite the exponential growth in visitations from China they are yet to reach the heights we saw from Japan over a decade ago.

161207
A decade ago another significant market for the region was the UK. Unfortunately we have seen very little recovery from that market since the gradual declines seen from the GFC through to 2012 (up just 1.9% this year). Back in 2003 the UK accounted for over 14% Australia’s visitors; today that has fallen to 9%.
While the domestic sector has reached new highs in terms of visitor numbers and share of the market, the international sector is only slowly making up lost ground when we consider its share of the total international visitor market in Australia.
A decade ago over 17% of all international visitors were coming to TNQ; today that rate is still below 12% (although it has recovered from lows close to 11%). To put that loss of market share into some context; had TNQ maintained a 17% share of the total Australian international market our international visitor numbers for the year to Sept 2016 would have been over 1.2 million instead of the actual 876,000. These are enormous differences and give us some idea of how much more can be done to improve the region’s performance in the international market.
If the domestic market gains continue, and we can be more successful tapping into the growth in the international sector (in particular into some of the non-Chinese markets) then the future for the industry in the region looks rosy indeed.