The fall of the mighty US dollar, and the attendant rise in the Aussie, signals ominous times for many exporting businesses – not the least of which is the Australian tourism industry.
As Henry highlighted this morning, the Nominal Broad US Dollar Index, a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners, has fallen 22% from its recent peak in February 2002. The Australian dollar, as shown in this article by Henry, has also risen sharply from the lows at the turn of the century, and has risen even further since that article was published.
Although this domestic currency strengthening is a great thing for importing goods, services and Australians travelling overseas, Australian exporters face new challenges. The tourism industry, as it involves exporting services, is therefore amongst the industries likely to endure tougher times.
New tourism research released this week at the Tourism Futures Conference in Melbourne by Roy Morgan Research showed that over the past year the amount of money spent by Australians on holidays within Australia has increased by only $2.8 billion (from $27.3 billion to $30.1 billion), while overseas travel has skyrocketed $8.2 billion (from $11.6 billion to $19.8 billion).
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This is largely due to the fact that, as the domestic currency gains strength, overseas travel has become comparatively cheaper than domestic travel. This effect is further compounded by the opposite being true for international travellers – it is far more expensive for them to travel to Australia now compared to when our dollar sat between 49-50 US cents.
The tourism industry should concentrate on making domestic tourism more easily affordable – at present a flight across the Pacific Ocean is a ridiculous cost in a world of discount travel. Australia tops the list of countries people from the US and UK would like to visit, but don’t because it is “too expensive”. The new tyranny of distance?
As Ian Macfarlane, Director of Marketing at Tourism Australia said this week: “The greatest challenge of the future is ‘can we give up the past?'” Henry says “The greatest challenge for Australian tourism is – ‘can the Coalition Government give up protecting their mates at Qantas, or do we need a change of Government?'”
Discount airlines are now flying to Asia from Australia – this must be extended to cover North America and Europe. Doing so will guarantee a viable Australian tourism industry, which will continue to be a central driving force in our economy.
Read more at Henry Thornton.