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Hotel &
Accommodation Management - March/April 2003
A
New World Order for Australian Tourism?
With the gloom and horror of the war in Iraq as a
background and while the world has been waiting out one of the worst
periods of economic uncertainty, there has been a major Australian
tourism and economic success story developing. It is a success
story that it is likely to produce some very positive, enduring
and still not fully predictable benefits to Australian tourism and
to our society and economy in general. The public face of
this new success is Australian Airlines. But there seems to
be a great deal more to this exciting new development than just
the activities of Australia’s new International carrier.
In the past 2 to 3 years, Cairns and the Tropical
North Queensland region in general have been experiencing growth
levels well above the Australian and Queensland averages.
Bill Calderwood, the CEO of Tourism Tropical North Queensland (TTNQ),
said recently that “The average annual growth rate in international
visitation to our region for the past two years was while Queensland
overall declined an average of 2% for the past 2 years.”
As anyone in the tourism and
hospitality industry who relies on international visitors can attest
the broader global picture has been negatively impacting the Australian
inbound market for some time. According to the ATC, “The global
tourism industry has been operating in an uncertain environment for
the past 18 months, due to political and economic factors. There
are indications that the current global environment and the ongoing
tension in Iraq are impacting global travel with consumers and businesses
delaying or canceling their travel plans. The Australian tourism
industry has now seen two years of flat performance with visitor arrivals
down 0.3% in the year 2002 and down 2% in
However, it is not all negative. Australians are now looking
to domestic destinations as alternatives for their holidays.
According to the Australian Bureau of Statistics, in the year ended
31 December 2001, overseas departures by Australian residents were
down by 1.6%, undoubtedly as a result of September 11th
2001, and recorded only a 0.5% increase in the year ended 31 December
2002. In the past 12 months to the end of January 2003, overseas
departures by Australian residents were up by 1.5% over the same
period the previous year. However, this rate of growth is
expected to turn negative as a result of the outbreak of hostilities
in Iraq.
Cairns and Tropical North Queensland region are benefiting
significantly from this trend towards domestic destinations.
Statistics released in January 2003 in the National Visitor Survey,
for the year ended September 2002, show that the Cairns region experienced
6.7% growth in domestic holiday visitors over the previous year.
According to Bill Calderwood at TTNQ, “Statistics
to mid-2002 had shown that (Tropical North Queensland) was attaining
an average of about 6% growth and that upward trend has continued
at about that rate, with 6.7% growth recorded for the September
end-year. We have clearly outperformed Queensland overall,
with the state recording a decline of 1.1% during the same period”.
The Australian tourism industry is now more resilient,
more professional and more focused than ever before. Gone
is the ”knee jerk” reactionary style of management that was evident
during the Pilot’s Dispute of the late 1980’s. The industry
now has a more mature and sophisticated view of its role and place
in the global tourism market and in the Australian economy.
Businesses in the tourism sector are, in general terms, better managed
by more qualified and experienced managers, than ever before.
The boom mentality if the 1980’s is far behind us and a more realistic
and determined attitude seems to have permeated in the industry.
The tourism industry is among the leaders in the adoption and effective
use of this aspect of our industry for granted.
As an industry we still have difficulties attracting
capital. This seems to be mainly a result of the inevitable
and seemingly inherent turbulence that the industry suffers.
The world is a very uncertain place and travel and tourism are at
the leading edge (often also known as the “bleeding edge”), of the
evolution of the global economy.
The degree to which the tourism industry has had
to weather economic turbulence has equipped the industry to handle
sudden and dramatic changes in business conditions that re now commonplace
for all industries. The Australian tourism community understands
the linkages between global uncertainty and the impact of the unexpected
disruptive global events and can respond extremely quickly.
This allows for a rapid bounce back after trying times and underscores
the tenacity in our industry.
The scale of the tourism industry is such that it
can certainly not be ignored. In Tropical North Queensland,
tourism is clearly the largest and most important sector of the
regional economy. According to Advance Cairns, the peak body
formed by a series of private sector organizations and local, state
and federal government agencies to promote the economic development
of the Cairns region, tourism now accounts for 31.6% of the value
of the economy in the Cairns region. This compares to 28.4%
for the retail sector (much of which is tourism related), 15.8%
for manufacturing, 6.3% for mining and 17.9% for all other sectors
of the regional economy combined. But what about Australian
Airlines you say?
Australian Airlines new direct service into Cairns
are of critical importance to the growth of tourism and other sectors
of the visitor industry in Far North Queensland. However,
viewed in the context of the regional role of tourism, the establishment,
growth and apparent success of Australian Airlines has a much broader
and more important impact than at first may be appreciated.
For those of you who are not aware of the details
– and that may include a large number of us who spend most of our
time in south eastern Australia – Australian Airlines is the new,
full service, single class all economy international leisure carrier
that has been established by Qantas. Australian commenced
operation in October 2002, flying non-stop between Cairns and Nagoya
and Cairns and Osaka.
Since November 2002, Australian Airlines has been
flying direct services between Nagoya, Osaka, Fukuoka, Hong Kong,
Singapore and Taipei and Cairns and the Gold Coast. Starting
in July 2003, Australian will operate a series of new routes flying
non-stop between Sydney and Bali, Melbourne and Bali, Bali and Singapore
and Cairns and Sydney. Later in 2003 and most likely depending
on the timing of the conclusion of hostilities in Iraq, Australian
is considering adding services to Shanghai, China, Sahah and Malaysia.
Australian Airlines and wholly owned by Qantas but
is managed separately and operated independently. It is applying
a new and different “business model” to its activities that seems
more like that of Virgin Blue than that of its parent company.
Many overseas carriers are watching closely to assess
the merit of this new business model, that may be the blueprint
for many new airline operations in the future and the beginning
of a broader transformation of more traditional multiple class full
service carriers.
One beneficiary of the new Australian Airline service
is The Reef Hotel Casino in Cairns. This casino recorded a
37.5% increase in profits for the last six months of 2002, due to
a serge in big spending Asian tourists. The Reef Casino Trust,
the owner of the Reef Hotel Casino, recently announced a net profit
of $8.4 million for the year ended December 2002. This was
two percent up on the previous year. However, the majority
of this profit was made after Australian Airlines commenced operations
in October.
Australian Airlines is taking advantage of the excellent
infrastructure that now exists in Cairns. Their activities
have brought a new degree of confidence to Cairns and have reinforced
that city’s northward focus.
The new connections now available between Cairns
and many of the most important cities and economies in Asia are
underpinning both existing economic activity and opening up a wide
range of new business opportunities. Some of these opportunities
are shown the graphic above.
Cairns is now the second largest airport in Queensland
and is fast approaching number 5 position on a national basis.
Cairns International Airport is itself now a major
employer and source of new jobs. Some of the key aviation
related driven future business growth in Cairns that has been identified
by Advance Cairns is in addition to Australian Airlines new operations,
are:
The
planned expansion of Hawker Pacific’s maintenance operations;
The
expansion of Virgin Blue Airlines network, with additional flights
into and beyond Cairns; and
The
establishment of Corporate Services/Milne Bay Airlines headquarters
in Cairns.
The importance of aviation to the Cairns economy
and the strategic role that aviation will play in capitalizing on
growth opportunities in the future has prompted a cluster of regional
companies to collaborate in the establishment of the Cairns Aviation
Skills Centre. This Centre will provide training in aircraft
maintenance. It has received initial funding of $1 million
from Federal Government and has recently received Queensland State
Government approval to proceed.
The first stage of the Centre will include the selection
of 20 students to start a nine month course in March 2003.
Initially classes will be held at the Cairns TAFE College.
In 2004, classes will be held in the new Aviation Skills Centre
being constructed at Cairns InternationalAirport
and which is expected to be completed by late
Aviation Australia’s Cairns campus manager David Adams said this
would be the “first step of making Cairns an international aviation
training centre”.
We had to prove to the Government that we would find
employment for 20 graduates, Mr Adams said.
“That turned out to be no problem with local aircraft
firms supporting the training centre and some unexpected expansion”.
So good aviation and tourism live, lower costs than
capital cities and a strategic geographical location as the getaway
to Asia has lead to the establishment of a new airline in Cairns.
This has, in turn, spurred on a new educational facility that will
support further growth of aviation which can be used to ship more
goods to overseas markets and bring more visitors to Australia.
That sounds like a success story to me and a great example of what
can be achieved in today’s new world order for the tourism industry.
For More Information:
Geoff Donaghy
Managing Director
Cairns Convention Centre
Telephone: 07-4042 4200
Facsimile: 07-4052 1152
Email:
gdonaghy@cairnsconvention.com.au
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