Accommodation and tourism sectors react to mixed Federal Budget measures

Australia’s accommodation sector has described the Federal Budget as a “mixed bag”, with industry groups welcoming support for workforce and sustainability initiatives while raising concerns about reduced tourism funding, rising travel costs and slowing international recovery momentum.

Accommodation Australia (AA) CEO James Goodwin said the sector welcomed the Government’s decision to maintain permanent migration levels, describing skilled migration as critical for accommodation operators facing ongoing labour shortages.

“The entire industry is calling out for skilled migrants so we are pleased the Albanese Government has listened to the concerns of industry here and retained the settings for permanent migration,” Mr Goodwin said.

However, he warned tighter controls on Working Holiday Makers and the introduction of ballot systems could create further staffing challenges for operators already struggling to source workers.

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“But the tightening of controls on Working Holiday Makers – and the introduction of ballots to control numbers – at a time when the industry is desperate for workers is concerning,” he said.

Australian Hotels Association (AHA) CEO Stephen Ferguson also welcomed the Government’s migration settings.

“We commend the Albanese Government for confirming the permanent migration program will remain capped at 185,000 places moving forward, with over 70 per cent of places reserved for skilled migrants,” Mr Ferguson said.

“We also support the government prioritising applications from migrants already onshore here in Australia.”

Mr Goodwin expressed concern over reduced funding for Tourism Australia and the increase to the Passenger Movement Charge on international travellers.

“This comes at a time when we really should be increasing efforts to market Australia to the rest of the world as a safe travel destination,” he said.

“Funding will be cut by a significant $10 million next financial year, putting pressure on the organisation to be able to promote our amazing country to overseas markets.”

Accommodation Australia also criticised the additional $10 increase to the Passenger Movement Charge, although Mr Goodwin said any additional revenue collected should be directed toward improving airport processing and border modernisation.

“Obviously we are also frustrated about the $10 increase to the passenger movement charge on international travellers, and will be calling for any additional revenue collected to fund urgent border modernisation for more seamless processing at airports,” he said.

At the same time, the organisation welcomed $4.5 million over four years for the Australian Competition and Consumer Commission to continue monitoring competition within the domestic airline sector, including airline prices, costs and profits.

Mr Goodwin said the lack of confirmation around extending the fuel excise cut beyond June 30 was disappointing, particularly for regional tourism operators and the drive market.

“This would be an important confidence boost for regional tourism and the ‘drive’ market,” he said.

On housing policy, Mr Goodwin said proposed changes to negative gearing and capital gains tax settings could impact the short-term rental market and potentially ease pressure on housing supply in some regional and coastal communities.

The response from Accommodation Australia comes as tourism industry bodies also delivered mixed reactions to the Budget.

The Australian Tourism Industry Council (ATIC) welcomed the Government’s $2 million, two-year extension of funding for the Quality Tourism Framework (QTF), which supports tourism businesses in sustainability, accessibility and emissions reduction initiatives.

ATIC CEO Erin McLeod said the extension would help at least another 1,000 tourism businesses achieve national standards and access e-learning programs.

“The funding extension will support at least an additional 1,000 tourism businesses to reach national standards in sustainability, accessibility and emissions reduction and provide e-learning courses to tourism businesses throughout metro and regional Australia,” Ms McLeod said.

The Quality Tourism Framework has already supported more than 7,000 businesses through Sustainable Tourism Accreditation, Accessible Tourism and Tourism Emissions Reduction programs and other national tourism quality standards. Ms McLeod said the programs help tourism businesses improve sustainability, assess accessibility and emissions, and provide accurate information to guests.

Concerns have emerged from other parts of the tourism sector, particularly around international visitor recovery and Australia’s global competitiveness.

The Australian Tourism Export Council (ATEC) described the Budget as disappointing for inbound tourism operators, warning that reduced Tourism Australia funding and an increase to the Passenger Movement Charge could hamper recovery.

ATEC Managing Director Peter Shelley said the reduction in Tourism Australia funding and the increased Passenger Movement Charge sent the wrong signal about the value placed on tourism as a $40 billion export sector.

He said the Budget would reduce funding for Tourism Australia by more than $50 million over the next four years while also increasing the Passenger Movement Charge by $10 for international travellers.

“This Budget reduces support for an industry that is still stabilising post the pandemic, and facing growing pressure around traveller affordability, aviation costs and booking conversion as a result of the Middle East conflict,” Mr Shelley said.

He said international tourism marketing should be viewed as a strategic export investment rather than an area for savings, particularly as global competition for visitors intensifies.

Mr Shelley also pointed to recent international arrivals data which he said suggested inbound tourism momentum may already be softening.

“March arrivals have seen the impact of conflict in the Middle East suggesting the momentum seen earlier this year beginning to soften as international travellers become more sensitive to flight costs, global uncertainty and affordability pressures,” he said.

ATEC’s latest member pulse survey found 57 percent of tourism exporters identified traveller hesitation as the biggest emerging risk facing their businesses and distribution networks.