Many small businesses which operate in the tourism sector do not realise they are considered exporters – yet if you provide services for inbound tourists, then you are in fact an exporter.
As Australia transitions to a more service-based economy, it’s important to emphasise the opportunities for small businesses to tap into a sector that has the potential to become Australia’s top performer in 2018: tourism.
The importance of tourism
Tourism businesses make up 13% of the total 2.2 million small businesses in Australia. The industry generates $94 billion annually, and contributes nearly $34 billion to the country’s GDP.
According to the National Visitor Survey, Australian tourists spent a record $61.7 billion for the year ending March 2017, an increase of $3.7 billion on last year. Combined with the record spending of international tourists for the same period, up five per cent to $39.8 billion, total spending by tourists reached a new record of $101.6 billion.
Tourism also supports economic infrastructure such as airports, roads and hotels. It also plays an important role in the economic development of regional Australia, with 46 cents of every tourist dollar spent in regional Australia. Add to this the fact that the tourism industry employs roughly one in every 12 Australians, and the importance of the industry is clear.
Australia’s competitive advantage
Australia is uniquely placed to take advantage of the growth in world tourism. This is because the country is blessed with a range of assets most other countries can’t compete with. These include unique and diverse landscapes, indigenous culture and heritage, modern cities, and a diverse and welcoming culture.
According to the Tourism 2020 Strategy, Australia has a unique opportunity to drive demand from Asia. Over the 2010-20 period, Asia is expected to contribute more than half of the projected growth in international visitation to Australia, with 42 per cent of that growth expected to come from China alone. Other countries in Asia such as India and Indonesia are also expected to contribute to this growing tourism. As the middle class grows in these countries, Australia’s tourism exporters should target their marketing efforts on these markets to help turbo charge growth.
Support for tourism exporters
Tourism Research Australia indicates in its report that medium businesses during 2012 to 2016 suffered a decline in revenue per business due to the investment required to make the leap from a small business to a medium business, a well as the difficulties involved in finding skilled workers in the industry to accommodate for tourist growth.
Furthermore, the 2020 Tourism Strategy report highlights that increased competition of the global tourism business is another key challenge Australian tourism businesses face, requiring local businesses to produce innovative ways to improve the level of service quality.
Tourism small businesses often don’t realise the support that is on offer to help grow their businesses. Two government agencies – Efic and Austrade – support small business exporters across Australia.
Efic is the Australian government’s export credit agency, and can assist tourism operators with access to export finance when their bank is unable to help. Austrade has a network of specialists around the world who can provide comprehensive assistance, and connect tourism operators with business networks and strategic partners in new markets. Efic works closely with tourism businesses to help them win business and grow internationally.
With 2018 forecast to be another growth year for Australia’s tourism industry, businesses that provide services for inbound tourists have a great opportunity to take advantage and set their businesses up for the next growth phase.
Andrew Watson is Executive Director, Export Finance, Efic