Ep 34: 12 Months of Travel Trauma in Australia & No End in Sight

It’s been a traumatic year for travel Down Under. The 2019/20 summer season brought devastating bush fires nationwide, with COVID-19 following immediately after. With borders closed for most of 2020, inter-state politics and disagreements are now preventing a domestic travel rebound as summer approaches.

This week, Gary and Hannah discuss the combination of factors suffocating inbound, outbound and domestic tourism, and the prospects for an Asian-led recovery in future.

We also hear from three experts in business travel, hospitality and inbound operations who provide revealing insights about the broad-ranging reforms needed to breathe new life into Australia’s ailing tourism industry.

Q&A with the Australian travel trade

John P Staub, Regional Sales Manager – VIC / TAS / SA / NZL, AirPlus International (based in Sydney)

Q: After a brutal 12 months, Australia’s travel sector is facing multiple challenges – what do you see as the stand-out issues for business travel, both for the rest of 2020, and into 2021?

A: Unfortunately, most of our internal (state) borders remain closed, and international travel is not possible due to the closure of our borders. This is the first time in Australia’s history that our borders have been closed to departing passengers.

The situation remains challenging; however we are optimistic that the strengthened measures introduced over the past few months will provide optimism for the future. Other than the health impacts of this crisis, I think that the challenges that we face in Australia are largely structural. There seems to be very little cooperation or communication between the leaders of our states, which is causing confusion as to what the ‘end-game’ of this current crisis is. Although I do believe that we are being well supported by the federal government, for the most part.

Another challenge faced is the exodus of great talent that is leaving the travel industry, largely due to redundancies, furloughs, reduced working hours and lack of confidence in a short-term recovery. We need good people in this industry if we are to quickly recover from the current situation. Government support will play a role in this, however the broader reopening of our economies will provide longer term stability and a way out of this crisis.

The biggest challenge is the uncertainty of how long this crisis will last. We need to instill confidence in travelers, to get them travelling again, and confidence in suppliers to be able to grow with increased demand.

Q: How important would a travel bubble between Australia and New Zealand be, and do you think economic necessity may drive this to become a reality this year?

A: I see travel bubbles as an interim solution, but one that it extremely important. Along with the short-term benefits to the tourism industry, travel bubbles will help with a ‘blueprint’ for the longer term re-opening of the industry. As we saw in Wednesday’s quarterly GDP figures, we need to restore some sort of normality in terms of trade and our visitor economies as soon as it is practical to do so. The notion that some geographic locations can have their own self-supporting economic bubble is far-fetched and short-sighted, particularly with the dilution of Jobkeeper over coming months.

In addition to travel bubbles, ‘travel corridors’ between participating markets will provide some assurance and confidence for all sectors of the industry. One would think that economic necessity and sanity would prevail with regard to the decisions that are made regarding a re-opening of the industry, however I don’t have a crystal ball as to the decisions that will be made by the authorities.

David Perry, Experienced Hotel leader who has managed leading hotels in Melbourne and Sydney as well as Singapore and Jakarta.

Q: After a brutal 12 months, Australia’s travel sector faces multiple challenges - what are the key issues for the hotel sector, both for the rest of 2020 and into 2021? Is Australia’s hospitality sector changed forever?

A: The first nine months of 2020 have been brutal to the Australian hotel sector with countless properties having to close their doors.

It is hard to imagine ‘business as usual’ until COVID is under control in Australia and only then will domestic tourism have the opportunity to rebound.

Keeping great teams of people together would have been harder than ever this year.

Hope of a vaccine is gaining strength every day and once the world has access to a vaccine we may well see a very strong global rebound.

As for changes to the sector:

• A pandemic is very efficient at eliminating traces of complacency and super charges the need to innovate. The hotel sector was in some danger of succumbing to a little complacency with state capitol city hotels registering record occupancy rates for the three years pre-pandemic. The industry can only reemerge in a stronger and fitter way.

• Working from home has been shown to be effective for many roles with two hours of daily commuting eliminated for many workers. I would expect a more flexible outlook to mixtures of working from home and on property in coming years.

• Once a vaccine is available the question will be what ambitious reform agenda will be embarked on for the tourism sector. Will there be changes to the terms of casual employment? Will Australia ween itself off an over reliance on bi-lateral air agreements, which choke international tourism growth with quotas for the number of international flights to operate between nations? Australia has a robust Open Skies agreement with China yet no Open Skies agreement made with our ASEAN neighbours. This has skewed our reliance on tourism growth towards China, yet as a nation we seem to now be mixing up our security and economic issues with China. This exposes risk to Australian agricultural exports. Australia’s higher education system and tourism sector may be caught up in such an entanglement.

Q: From a non Australian viewpoint (but someone who does visit regularly) - the interstate political frictions really seem to have hindered the domestic sector during these tough times. Were these differences an issue pre-pandemic, and do you think this will create longer term ramifications for domestic travel?

A: It is true that the independent jurisdiction of the states has not been so apparent for decades. Only history will tell us whether this has been a blessing or a curse. It would appear that the former will prevail. With international travel locked down, COVID flare ups by their very nature start in small localised areas or facilities. It makes sense that state authorities take charge here. It appears that for the most part there has been daily communication between federal and state leaders which has proved most productive. Border restrictions are incredibly frustrating but letting COVID spread nationally is the last thing the tourism industry needs.

Simon Bernardi, Managing Partner, Australia And Beyond Holidays, which is based in Docklands, Victoria

Q: After a brutal 12 months, Australia’s travel sector faces multiple challenges - what are the key issues for the inbound sector for 2021 (assuming the borders reopen at least partially) Do you think a recovery is feasible in the near future?

A: Australia has had a difficult 12 months with bush fires earlier this year and now the global pandemic impacting us now. Inbound tourism is a major Australian Export Industry and a priority for the federal government to open as soon as safe to do so.

The level of enquiry we are receiving now from inbound markets points to a strong and quick rebound post Pandemic, with many of our customers keen to travel in 2021.

The key issues for Australian Inbound Tourism right now is getting agreement from the Australian states to re-open internal Australian borders. Currently all Australian States are closed to tourism other than their own local residents. There is a great deal of pressure from the Federal Government for them to open soon.

Once we have free movement between the states it opens up the “window” of opportunity to then look at how we open international borders in a Covid-19 safe way. Key to safe opening will be ensuring that operators, airlines and suppliers are able to provide a Covid-19 safe environment for customers as well as fulfilling Australian Health requirements.

Education tourism and business is a priority and many Australian Universities are developing ways to bring international students back. We are seeing strong demand from all of the markets we serve as customers are keen to travel.

Once consumers feel it is safe to do so there will be strong demand for Travel. Australia is still seen as a safe destination and this opinion is reinforced by the way in which the Pandemic was controlled here, Similar to Singapore, Hong Kong, Malaysia and New Zealand to name some key markets.

When travel returns Strong demand will dictate that space and availability will be a key factor. It is also expected that pricing may rise as a result of strong inbound and local demand for products and services.

I am optimistic of an opening in the first quarter of next year once the appropriate protocols have been developed or a vaccine or both.

Q: Pre pandemic, were South East Asian markets important to your business? Do you think a recovery in tourism in Australia will be driven by Asian inbound markets?

A: South East Asian markets are key to our business, fortunately these markets will be the first to recover. This is because many of these markets have managed the virus with the same success as Australia and have the ability to implement like protocols to enable safe travel. Many of these markets also travel as group travellers which makes it easier to control movement and thus safety.

There is talk of opening potential “travel bubbles” in Australia to New Zealand , or between Singapore and Japan, this could see the first steps of an international open for Australia.

Inbound Asian tourism will certainly drive our tourism recovery.