Op-Ed: A different approach to tourism funding – time to invest in Australia’s regional economies

Drought, bushfires, floods and now Covid-19.

FY2020 is almost over and what a year we’d like to forget for those of us involved in the Visitor Economy.

Cruel just doesn’t begin to describe it. Leisure tourism is reeling; there was no Summer trade in bushfire affected regions and there’s been no Easter/April school holiday trade right across the country. Corporate and government travel is near non-existent and capital cities and regions relying heavily on inbound travel have suffered greatly.

These are confusing times, yet one thing is clear – the Visitor Economy in Australia now needs serious help. The accommodation industry has seen a phenomenal and distressing change that happened almost overnight. Who really knows how long it will last?

Our industry is resilient, but it’s also fairly rigid by design – we can’t home deliver a hotel room for the night, or “bring it out to your car for you”. The international borders are closed and domestic travellers simply couldn’t travel. Some hotels took on quarantine roles, a few others assisted with emergency temporary housing, but the majority have been mothballed. That’s a couple of hundred thousand hotel rooms across the country sitting empty.

Planes around the world might be grounded, however we actually see a strong rebound for travel into Australia “when all this is over”. With the very low AUD, inbound travel to Australia remains very attractive and we will continue to enjoy direct air routes from the burgeoning populations of the world… just not for quite a while yet. Our international borders will remain closed for an extended period – other than New Zealand, which will be very welcome of course.

All this highlights the hugely important role of domestic tourism for Australia. This means road trips, family holidays, couples and grey nomads, sporting events, coach tours – largely and broadly it means travel to regional cities and towns across Australia. Surely regional travel is about to be more important to the Australian economy than it’s ever been before.

There is no doubt that Australian state and federal governments will look to employ an unprecedented funding campaign to help the heavily hit Visitor Economy. I doubt Australians will need much encouragement to get out of the house and with the low AUD and very slow re-introduction of outbound travel, the domestic market stands to recover with gusto.

Obviously a tourism funding package must focus immediately on domestic tourism and regional cities and towns must get their fair share. Just in NSW alone, regional tourist accommodation makes up around 75% of the establishments and around 50% of the rooms in the state. But sadly, and it really pains me to say it, many regional cities and towns suffer dated and poor quality tourist accommodation and now is well and truly the right time to do something about this. There are some fundamental reasons for this long term decline in quality and I’ll write about that another day. For now, the accommodation industry needs to come together and push hard for governments to support funding on the “supply-side” of the Visitor Economy.

The standard tourism funding model is “demand side”, which basically means to throw all the money at marketing. We now have the chance to properly invest in the long term survival of regional tourism and should take this opportunity to properly fund regional tourism infrastructure, matched by industry, to improve regional Visitor Economies. There will never be another opportunity to take such a bold move.

Now more than ever, Australians won’t leave the comfort and safety of their homes to travel and stay in a regional three star motel and call that a holiday. I don’t care how much money you spend on marketing – it just won’t happen.

The conversation of how to invest in regional tourism is always the same. We sweat and debate over what I call the “marketing minutia” – logos, colours, brands, copy, emotions, keywords, agency, blah blah blah. The truth is we have never had a serious “supply side” investment program for the tourism industry and this would have a far greater long term impact for regional tourism.

I’m advocating for a substantial government investment into a regional accommodation renovation scheme. Matched dollar-for-dollar by industry and funding to be spent with local trades, suppliers and services. This needs to be on a scale never seen before – millions of dollars per regional city and town.

The model is simple enough – supply side funding increases the quality of the product to unlock increased revenue, which flows back into the local economy. This allows the industry to increase their own marketing and critically, keep up with the ongoing capital expenditure that’s been lacking for so long. The problem is, supply-side funding has just never been done before – unless you count toilet blocks and council footpaths as tourism infrastructure, I know I certainly don’t.

Accommodation is the backbone of regional tourism, which in many locations is the backbone of the economy. Domestic overnight travel will be critical to driving a recovery in regional economies. Overnight stays are far more valuable than just day trips. Dinner, drinks, breakfast, coffee, shopping, activities, petrol, groceries – it all helps keep regional economies going.

So, as we move into an obviously necessary and unprecedented tourism funding environment, it must be time to do something more than just marketing. The long term sustainability of regional tourism is in the balance here and we’ll never see a more motivated potential customer base for regional travel.

Covid-19 has without doubt been the biggest shock ever seen in the Australian Visitor Economy. The industry employs millions of Australians and must be supported. The industry is not saved with Australians taking day trips for the June long weekend. It won’t be saved when families travel in the September school holidays. The problems won’t be solved with a hopefully bumper ski season this Winter, or even with an amazing Summer this year

Regional tourism needs a massive investment and this must be lead by government. We have to do so much more than just offer regions marketing dollars – let’s actually help the regions create something to market and an ability to compete long term for a fair share of Australia’s $80 billion domestic travel spend.

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Karen Fry
3 years ago

Absolutely spot on Matt!! But how long before the tourism bodies & governments see a way to change their thinking & implement this before we all go under????????

Matthew Davidson
Reply to  Karen Fry
3 years ago

Hi Karen,

Thanks for the kind words. I’ve been spruiking supply-side funding for many years, hopefully it will eventually catch on!?

Best of luck for the re-opening.

Terry and Penny Boyle
3 years ago

Well written, Matt.
Whilst we personally consider ourselves to be very fortunate, we are acutely aware of the suffering around us and wonder how some will survive.
So many businesses are at the whim of local government – and whether or not, at any particular point in time, tourism is seen as a curse; a necessary evil; just another local business sector; or something that is so important to the local economy that it is to be encouraged and supported.
To commit one’s energy; finances and very future to redeveloping and improving a business without any certainty of government support (at all levels) may simply be “a bridge too far” for so many small business operators….and who could blame them?
We can only hope someone in government hears – and acts upon – your message. We, at least, appreciate your effort.

Matthew Davidson
Reply to  Terry and Penny Boyle
3 years ago

Hi Terry and Penny,
Nice to hear from you and thanks for the kind words. Best of luck with the re-opening, things can only get better from here.

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