MEGATREND ON ‘PAUSE’
Experts remain upbeat on Chinese visitor forecasts
ABOUT a quarter (206,000) of all international tourists visiting Cairns in the last financial year were from China.
No other market comes close. The second placed (US) Americans add about half (113,000) as many tourists to the local economy.
In the 1970s only a few hundred Chinese tourists visited Australia every year. Two decades of slow and steady growth meant we saw arrivals from China reach around 80,000 by the late 1990s.
Around the new millennium economic growth in China sped up.
The biggest urban middleclass in history is being forged. The Chinese middle-class, just like their counterparts around the globe, show their wealth, status and social sophistication by travelling and showcasing their worldliness.
Australia is an attractive, safe and yet exotic enough travel destination, in a similar time zone and only a short flight away. Add to this the demand for an English-speaking tertiary education and it’s no surprise that we saw Chinese tourist numbers climb to well over 1.4 million in the last year.
In short, the tourism sector in Cairns and the rest of Australia is rising and falling with the number of Chinese visitors.
This rising and falling has over the last for decades been limited to rising. We must not think of China as an unlimited and ever-growing income source for our local tourism industry.
We can control the quality of hotels and services that we offer international tourists, but we cannot control global forces.
The growth of the Chinese middle-class was never in our control. Demographically speaking we know that China will, due to its low birth rate, stop growing by the end of this decade. Due to the economic transition towards higher paid service jobs and urbanisation we can be pretty certain that the end of growth of the Chinese middleclass is easily another two or three decades out.
The confidence in this prediction is reflected in the forecasted tourism figures.
Tourism Research Australia estimates the number of Chinese visitors to Australia to reach 2.5 million by 2029 in their latest dataset.
What a windfall this would be for tourist towns across Australia. Cairns would certainly grab a fair share of this growth.
Such a forecast makes an awful lot of assumptions about the future. While the number of 2.5 million Chinese visitors means we will see an additional million compared to today, many people in the industry didn’t look at these figures favourably.
Previous forecasts suggested we might see as many as 3.5 million Chinese visitors by the end of this decade.
What had changed between these forecasts? The assumption about the future have changed. The 2.5 million figure factors in the potentially negative effects of a trade war between China and the US. In such a scenario the Chinese middle-class is assumed to be growing at a much lower rate, resulting in fewer Chinese being rich enough to go snorkelling on the Reef.
Future tourism forecasts will likely be more optimistic about the trade war but will have to factor in the impacts of the coronavirus.
In uncertain times like this the Australian tourism industry, from international hotel chains to small local vendors, must prepare for future growth instead of turning their back on China. While China is managing the virus outbreak, tourist numbers at the Australian end will likely go down significantly. This will undoubtably hurt most businesses in our local tourism industry.
In the coming months we must not assume that a dip in
IN THE COMING MONTHS WE MUST NOT ASSUME THAT A DIP IN CHINESE VISITOR NUMBERS INDICATES AN END OF THE GROWTH.
Chinese visitor numbers indicates an end of the growth.
An extraordinary event like the coronavirus pauses growth but it isn’t damaging enough in the long run to undo demographic megatrends.
The largest middle-class in history will ultimately continue to grow, will continue to seek out foreign education for their kids and will continue to showcase their social sophistication through international travel.
To reap these future benefits, Australian tourism businesses (large and small alike) are well advised to compassionately show their support to the Chinese population.
Gestures large and small, such as messages of support to previous customers, will not be forgotten by the Chinese middle-class and will seriously help the local tourism industry.