In our opinion for the short term, we forecast that domestic visitation in terms of holiday and friends and family visits have peaked in 2022 and will be similar in 2023. Thus it will not be till 2024 and 2025 till there is probable potential to exceed historic highs of domestic travel in 2019.
This is due to the natural urge for interstate, intrastate travel after the lockdowns of 2020 and 2021 resulting in an explosion in immediate holiday travel and family visits in 2022. We believe that the majority of the “revenge travel urge” has passed and domestic travel resumes to norm.
Recession possibility, rate hikes and inflation need to be factored in as decreasing the appetite of record breaking spend per visit. However, that will also drive Australian residents to decrease in international travel overseas and instead continue to spend domestically. Another factor to take note is that macroeconomic factors will curb upper tier accommodation choices but drive domestic travel toward low to mid tier accommodation and in our opinion, upper luxury market will not be affected.
Ultimately, we see 2023 as matching 2022 or slightly lower in YoY domestic expenditure. However as a whole, the closing of the international travel gap to Australia will make up for accommodation revenues as a complete picture. Low to mid tier accommodation and luxury accommodation will experience growth from domestic expenditure but upper mid to upper tier shall remain flat throughout 2023.
(Charts 1-5) During 2022, Australian domestic visitor sector experienced a strong recovery overall of 22.9% over 2021 with 101.6m overnight visitors, recovering to within 86.5% of 2019’s domestic travel highs. In terms of expenditure, spending reached a record 87.5B, 8.5% above previous highs in 2019 of 81B. Spending levels per visitor well exceeding 2019 from $688 per visitor to $861 per visitor in 2022.
The strong performance in expenditure’s main contribution is from the holiday category, exceeding 2019 by 34.4% producing 45.1B in 2022, with domestic holiday visitations at 98% of 2019 levels. As well, visiting friends and relatives category also experienced significant growth compared to 2019 by 8.7%, totalling 13.7B in spending, with travel in that category 16.1% below 2019. Domestic business travel is recovering the slowest and underperformed. Expenditure was 11.6B, 24.1% under 2019 and visitation was under by 29.3% with 19.1M domestic business visitors.
Analysing state by state (charts6-9), QLD had the highest outperformance. Expenditures was 25.9% above 2019 with a record domestic expenditure of 24.5B, contributed by 24.5M visitors, 5.6% below 2019 record, a record of $1,000 spend per visitor which is the highest performing out of all states. The other two big states also outperformed slightly with NSW 2.7% above 2019, at 24.3B, contributed over 32.3M visitors at $754 per visitor. Victoria matched 2019 spending at 17.1B with 24.2M visitors (18.6% below 2019) with $706 spend per visitor. In aggregate other smaller states also outperformed 2019 by 5%, totalling 21.6B in expenditures.
(charts 10-14) Domestic visitor nights (visitor x nights spent interstate / intrastate travelling), has been overall trending down since 2020 due to covid. Current levels are similar to 2016 levels at 327.1m domestic nights travelled, 82% of 2019 peak at 400m nights. Domestic visitor nights state wise, WA has recovered to 97% of 2019 levels, NT to 90%, QLD to 89% and TAS to 85%. NSW, VIC and ACT are still at 75% or below 2019 levels.
For the capital cities, there is still a huge gap to be closed, with only Darwin performing at 90% of 2019’s peak, all the other capital cities at 80% or lower. Of particular to note there is much more potential to be captured in Sydney and Melbourne, at 58% and 57% of domestic visitor nights from 2019 levels.
Charts 15-16 shows the trend in accommodation category over the past 10 years. There is a gradual decline in friends and family accommodation and an obvious uptick in the other category, which we suspect is the rise of disruptors such as Airbnb. Hotel has traditionally remained at about 25% share of the domestic visitation accommodation and has remained relatively flat except during ’20-’21, and is seeing an uptick. Commercial camping / holiday parks have stayed relatively flat at 9-10% and guest house / bread and breakfast also have always remained at about 1% of domestic accommodation throughout the years.
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All raw data is sourced from: Australian Bureau of Statistics, Tourism Research Australia, STR, STA, Statistica and each Australia State's individual tourism statistics site.
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