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Australians cut their spending on overseas travel by 13.9% in the June quarter, a fall of $2,547 million, and the ABS notes that imports of travel services (Aussies travelling overseas) are now at their lowest level since the recovery from the COVID-19 border closures. This is not a price effect: on a chain volume basis the fall is 12.7%. The ABS puts it down to the conflict in the Middle East disrupting travel to the northern hemisphere, and the number of Australians going overseas for the northern summer fell for the first time since the pandemic.
For a region that sells holidays like TNQ, the question is where that money went. It did not go on a domestic trip. Household consumption of transport services fell 2.6% in the quarter and is down 1.4% over the year, the weakest of the discretionary consumption categories, and the ABS describes domestic and international tourism alike as “particularly weak”. It also attributes part of the quarter’s softer consumption prices to price falls for accommodation services on weak travel demand. The substitution that regional tourism has been counting on did not happen.
Hospitality itself held up, and that distinction matters. Spending on hotels, cafes and restaurants rose 0.4% in the quarter and 2.2% over the year, and Accommodation and Food Services gross value added rose 0.6% and 1.4% on the same basis. What fell is the ‘getting-there’ half of a holiday, not the ‘eating-out’ half.
Nor did the inbound travel market take up the slack. Exports of travel services, which is what international visitors spend while they are here, fell 2.2%, down $483 million, on reduced business, personal and education related travel to Australia. Both directions are down, and not equally: outbound travel spending fell 6.3 times faster than inbound did. Travel more than accounted for the entire fall in both services imports and services exports, so every other services category rose or held flat while travel dragged both aggregates down.
These are national figures and there is no regional breakdown that we can assess. However, the inference is still not a comfortable one for the region. The argument that a weak outbound market pushes Australian holidaymakers into domestic destinations has been doing a lot of work in regional tourism forecasting, our own included. The June quarter is the cleanest test of it in four years and it did not hold up to scrutiny. The real scorecard arrives at the end of this month when Tourism Research Australia publishes the International Visitor Survey for the year ending June. Our own estimates (detailed in this month’s Cairns Economic Monitor) has total TNQ overnight expenditure essentially flat at around $4.1 billion.
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