Industry divided over effects of strong Aussie dollar
The backpacking industry is divided over the impact of the strong Australian dollar on tourism following the Tourism and Transport Forum’s (TTF) latest survey highlighting it as a major concern for business.
A key finding in the January Tourism Industry Sentiment Survey, which is distributed to senior staff within TTF’s membership organisations and other leading tourism businesses around the country, found the Australian dollar was a major issue for tourism businesses, hurting inbound arrivals and stimulating outbound growth to the detriment of domestic tourism.
Base Tourism Group CEO Nick Thomas said the company is seeing fewer backpackers who have less to spend this season and attributes the shortfall to the GFC and appreciating Australian dollar.
“The strong dollar is compounding the problem giving them significantly lower discretionary spending power. This is pushing operators to lower bed rates and reduced revenues in bars and stores. Sydney and Melbourne are holding up well for us but markets are softer elsewhere,” Thomas said.
Tour operator Greg Zammit, director of the Adventure Tours Australia Group, said the company’s parent company TUI has identified the Aussie dollar as one of the major threats to growth in 2010.
“From an Adventure Tours perspective and for our backpacking industry as a whole, I am definitely concerned about the continuing strength of the Aussie dollar. As myself and a small team are based internationally in the UK we get regular feedback from the industry, and they are gaining feedback from past travellers (backpacker and otherwise) that Australia was far more expensive than they imagined.” Zammit said.
I fear that we are starting to be thought of an expensive destination for basic necessities such as food, drinks and accommodation. The strong Aussie dollar is exaggerating this sentiment.
He added: “Because the Euro has also strengthened we are buffered to a certain extent on the European continent, but I believe that it will affect both Free Independent Traveller (FIT) and particularly groups travelling to Australia from the US and UK while their currencies are slow to strengthen.”
But other industry members said while the strong dollar was not ideal, it hadn’t had a direct impact on their businesses.
New Zealand-based Jucy Rentals’ CEO Tim Alpe said the campervan rental company benefits from the high Aussie dollar sending Australians to New Zealand to holiday.
He said: “While a high Aussie dollar is not ideal, we are currently not that concerned about it impacting on our business. Historically we have found that backpackers tend to be the last to react to increases in the currency.”
Travellers Auto Barn managing director Peter Burke, an Australian company which rents and sells vehicles to backpackers, said while the Australian dollar has been strong for some time, it has not had a major impact on the rental business so far.
“I raised concerns about an appreciating AUD over a year ago, but everyone I spoke to in backpacking seemed to think it would not have a major impact. I think it does impact our vehicle sales as they are a big ticket item, and the punters probably revert back to things like Greyhound and generally spend their money a little more frugally,” Burke said.
Top Deck director global sales and strategy Lance Batty said the pros of a strong Australian dollar are often forgotten. “For those businesses who have diversified into outbound, clearly it is of benefit to drive demand. It lowers the costs of fuel and hardware for example, and for businesses that proactively market overseas, it results in savings on wages, marketing support and overrides paid in foreign currency,” he said.
Batty added: “While overall the AUD is uncomfortably strong currently, people are better served focusing on the aspects of their business that they can have influence over. With the currency it’s swings and roundabouts.”
By Alice Terlikowski · February 8th, 2010 at 4:45 pm
Have your say