Article19 May 2020

Locking Down Australian Tourists

A Source of Increased Domestic Spending
May 19, 2020 - The economic fallout from the COVID-19  virus is expected to be huge. Millions of people are out of work and economic activity is at a standstill while we wait for the virus curve to flatten. Although many industries are affected, one of the hardest hit sectors has been tourism, with the lockdown grounding both business and leisure travel. Restaurants are also struggling as social-distancing restrictions mean they can't open up to sit-down diners, forcing consumers to shift their spending towards at home options.

Once restrictions are eased, we expect a bounceback in spending as people venture back outside and try to shift back to normal. But the speed of any recover is still a big unknown as questions linger about safety which could potentially dampen demand. Will people get comfortable again being among large groups of people, or sitting on a crowded airplane? Until they are, the thought of traveling abroad to a busy tourist destination may not be appealing.

In addition to consumer fears, border restrictions in certain countries around the world could also limit the resumption of international travel. In the attached report, we look at Australia, where border restrictions mean international travel is suspended for the foreseeable future. This is a concern as Australians like to travel —  they made 11 million offshore trips last year. The silver lining is that a portion of the money Australians would have spent overseas — some A$50 billion — could remain in Australia and benefit the domestic economy. Overall, we expect domestic tourism in Australia to rise 7% and retail growth to be boosted by 1 percentage point as a result of this shift in spending.

Click here to view the report in full.

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