In our opinion, key optimizers to accommodation revenues are the return of international travel. In ‘22, international travel has only recovered 60% of ‘19’s levels, with Jan23’s traffic at 56% of Australia’s historic monthly peak traffic reached in Jan20. Whether there will be a return to 2019’s peak is further clouded by the recent macroeconomic environment and signs of possible recession.
Given the above, we do estimate a much larger contribution of international short term travel from China. In ‘22 travel from China is just at 6% of ‘19’s numbers. From ‘17 to ‘20 China accounted for 18% of all the non-Australian short term arrivals, only second place to New Zealand (19%). Thus, going forward, China will be the main factor in driving the international arrival figures return to pre covid levels. There are still large uncapped potential relative to ‘19 from the other countries such as US and UK.
Finally due to covid, international short term visits median was 18 days 80% above the norm of 10 days median. We estimate that as travel returns to normal, stays will revert to historic median.
We forecast short term international visitation to exceed that of ‘22, due to gradual opening up of particular states during early ‘22, and some various countries taking till the second half to ‘22 to fully open up international travel. However, foreign visitation will not exceed ‘19 levels. We remain optimistic as the macro factors return to stability late ‘23 to ‘24, that visitations eventually match 2019 come ‘24, ‘25.
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