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Tourism delivers more but very small operators declining

July 28, 2016 Headline News No Comments Email Email

egtmedia59The contribution of the tourism industry to Australia’s Gross Domestic Product (GDP) has increased by almost 18%, highlighting the importance of the sector to Australia’s transitioning economy, Australia’s new Tourism Minister, Steve Ciobo, said yesterday.

Tourism Research Australia’s report, Tourism Businesses in Australia, shows the contribution of the tourism industry to GDP increased 17.8% over the past four years to reach AUD 47.5 billion. Ciobo pointed that out as one of his first statements as Tourism Minister.

Australia's Tourism Minister, Steven Ciobo

Australia’s Tourism Minister, Steven Ciobo

The tourism industry is transitioning through a process of structural consolidation, especially over the past two years. During 2013–14 and 2014–15, about 1500 non-employing businesses exited the industry.

At the same time, around 3800 micro, small, medium and large businesses entered the industry resulting in a net gain of around 2300 businesses.

This repositioning of tourism businesses coincides with additional visitor expenditure in Australia of around AUD 4.9 billion in 2014–15 (up 4.3%) compared to 2013–14.

The report shows the tourism industry comprised around 273,500 businesses in June 2015, which represented over 13% of Australia’s total 2.1 million businesses. It also shows, however, that the number of very small operators (sole traders and businesses employing fewer than four people) are declining.

While around 95% of businesses were small, employing less than 20 people, medium and large businesses also played a vital role in the industry by generating around two-thirds of total revenue.

While visitor spending continues to grow, there is still work ahead to meet the upper band of the industry’s AUD 140 billion annual target under the Tourism 2020 strategy.

Tourism businesses made up 13% (around 273,500) of the total 2.1 million businesses in Australia in June 2015. Around 95% of these businesses were non-employing, micro (1 to 4 employees), or small (5 to 19 employees) businesses.

Fast facts:

  • Tourism ranks second among all industries in Australia in terms of number of businesses – the construction services industry comes in first, holding 16% of total businesses in Australia.
  • Despite only holding around a 5% share of total tourism businesses, Australia’s medium and large businesses contributed two-thirds (66%) of total tourism revenue in Australia during 2014–15.

With the exit rate of non-employing and micro businesses (-6.2%) exceeding the entry rate of new businesses (+4.6%) in June 2015 compared to June 2011, there has been a net reduction in the number of businesses operating in the industry.

Compared to June 2011, the number of tourism businesses in June 2015 declined by around 11,000 (or 3.8%). This decline represented the majority (96%) of the total decline in businesses generally in Australia over the same period.

The decline in tourism businesses was mainly influenced by falling numbers in  non-employing and micro (employing 0 to 4 persons) businesses between June 2011 and June 2013 (down 6.6%); and non-employing businesses between June 2013 and June 2015 (down 1.3%).

However, the decrease in the number of non-employing businesses has been offset by a gradual increase in the number of employing businesses. This was due to strong growth in visitor nights and spending which motivated tourism businesses to take on more employees.

In June 2015, the majority (80%) of tourism businesses in Australia were located in three states: New South Wales, Victoria and Queensland. The contribution of these states to Australian Tourism Gross Domestic Product (GDP) was 78% in 2013−14.

Despite two-thirds of total tourism businesses being located in capital cities, 45 cents in every visitor dollar was spent in regional areas. This is due to a larger volume of visitors in regional areas (especially domestic day and domestic overnight visitors), and means that the smaller proportion (34%) of total businesses that are located in regional areas hold a larger proportion of total visitor spending.

However, average visitor spend (for both international and domestic visitors) is higher in capital city tourism regions for most states and territories.

Details (in PDF format) here.

Edited by Peter Needham

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