The value of inbound tourism is forecast to fall more than 3 and a half % to $24 billion in 2009, reflecting the large falls in the rate of economic growth in many of Australia's leading inbound markets, a new report issued today by the Australia Tourism Forecasting Committee (TFC).

Offsetting this decrease, is a small forecast increase in the value of the larger domestic tourism segment (up 1.8%), which will drive overall tourism spending in Australia marginally higher to a forecast $90.6 billion (up 0.3%) in 2009.

The TFC has developed this set of forecasts in a period of heightened uncertainty about world economic growth, particularly the depth and timing of the recovery. Significant revisions have been made to previous TFC forecasts four months ago, as key assumptions, notably economic growth and exchange rates, have changed dramatically.

Chair of the Tourism Forecasting Committee, Bernard Salt said in preparing the latest tourism forecasts, the TFC had used the most up-to-date economic information available to make the report as accurate as possible but, as the industry had seen this year, external factors can quickly change the landscape.

"In this period of heightened uncertainty in global economic terms, it is extremely important that the forecasts provide a balanced view for the whole of the tourism industry in the coming year and beyond, particularly for investment and policy development," Mr Salt said.

"There is no doubt that tourism operators who are heavily reliant on international tourism are in for a tough time in 2009, particularly in the first-half of the year.

"However, if the Australian dollar stays low, growth in aviation capacity servicing Australia remains solid and consumer confidence returns, Australia's inbound tourism segment is well placed to rebound strongly in 2010," Mr Salt said.

International visitor arrivals to Australia are forecast to decrease by 1.5% in 2008 and 4.1% in 2009 before increasing by 5.3% to 5.6 million in 2010. The large downward revision to the 2009 forecast arrivals reflects changes to the core forecasts of Consensus Economics for deteriorating economic growth for many of Australia's leading inbound markets in 2009, with an economic recovery assumed to begin in early 2010.

The short term outlook for travel by Australians is mixed. According to Mr Salt, "The lower Australian dollar and slower Australian economy will lead to a fall of 2.9% in the number of Australians travelling abroad. This will be the first fall in outbound travel since 2003, with more impact felt in the longer haul European destinations". 

Although it is expected that some Australians will switch from overseas to Australian destinations, domestic tourism will also be affected by Australia's slower economic growth. Despite most domestic tourism indicators at near record lows, the low Australian dollar and low petrol prices will support domestic travel, particularly day trips. However, domestic travel is still forecast to decline by 0.9% in 2009.  

"Domestic spending is forecast to increase in 2009 by 1.8% to $67 billion, with higher average spend on a domestic trip," Mr Salt said.

"We anticipate some revenue benefits from the switching from outbound travel as Australians spend on average around eight times more on an overseas trip than on domestic overnight travel.

"Another positive for domestic tourism is the low Australian dollar, which makes domestic travel more price competitive, particularly against competing imported consumables," Mr Salt said.

The TFC's membership draws on the combined expertise of the private and public sectors in the tourism and finance industries.  Chaired by Bernard Salt (KPMG) Committee members are from the Australian Bankers' Association, the Australian Standing Committee on Tourism, the Australian Tourism Export Council, the Department of Resources, Energy and Tourism, the Property Council of Australia, Qantas, Queensland Tourism Industry Council, Tourism Australia and TTF Australia. Other organisations are also consulted with as required.