TiCSA Tourism Barometer
September Quarter 2024
Is There Light at the End of the Tunnel?
The 2024 September Quarter Tourism Barometer showed activity rebounded but remained marginally below the neutral level in the quarter. The Business Activity Index has now been below the neutral level for five of the last six quarters, reflecting the ongoing impact of higher interest rates and elevated inflation on household disposable incomes and, consequently, travel intentions
The Business Outlook Index rose sharply, to move above the neutral level in the September quarter. This was a very promising development given the index had been below the neutral level for four of the previous five quarters. Taken in addition to the improvement in the Activity index, this suggests the worst may be behind the South Australian Tourism sector. However, a variety of challenges remain, including increasing costs, which are putting the squeeze on the bottom line for many tourism businesses
Figure 1: TiCSA Tourism Barometer Dashboard Readings
Business Activity (Last Three Months)
The main reasons for the positive performance in the September quarter were:
• Increased digital presence;
• Increased investment in advertising and promotion;
• Increase in interstate travel;
• Accessing new markets not previously tapped into; and
• Increased collaboration with other businesses.
The main reasons for the negative performance in the September quarter were:
• Decreased visitors to the area;
• Weaker economy;
• Rising business costs;
• Lack of consumer confidence; and
“It’s
reallyverytoughout there ” “Wehaveinvestedheavilyand areseeingthebenefits ” “We'regettinggreatsupportfromour local tourism association and businesses areworkingtogether.”
“Wearereallyhopefulthat
things improve…soon ”
• Decreased rates, prices or visitor spend in the business.
Figure 3: Business Activity in the Last Three Months
Source: Tourism Industry Council South Australia.
Business Activity by Market Segment (Last Three Months)
All market segments recorded a small net decrease in activity from the June quarter. Conditions were weakest in the business segment, with just 10% of businesses within this segment reporting an increase in activity, compared to 23% of businesses reporting a decrease.
The holiday / leisure and ‘festivals and events’ segments also remained weak in the quarter, likely driven by the recent increases in the cost of living, the uncertain economic outlook and the slow recovery in overseas travel
4: Business Activity – By Market Segment (September Quarter 2024)
Source: Tourism Industry Council South Australia
Business Outlook (Next Three Months)
The Business Outlook Index rebounded strongly to be above the neutral level in the September quarter. Before this quarter’s rebound the Index had trended lower since peaking in September quarter 2022, likely driven by uncertainty in the market However, the September rebound is a promising sign of optimism for the tourism industry.
Figure 5: Business Outlook for the Next Three Months
Source: Tourism Industry Council South Australia
Business Outlook (Next 12 Months)
The September quarter results were marginally stronger than those from the previous quarter. A majority of businesses (52%, unchanged from June quarter) are ‘extremely confident’ or ‘confident’ in the outlook for their business over the next year. At the same time, the proportion of businesses ‘extremely worried’ or ‘worried’ fell to 29% in the September quarter, down from 33% in the June quarter.
Source: Tourism Industry Council South Australia
Table 1: The Top Factors Influencing the
• Improvement in facilities upgrade;
• Improvement in guest experiences;
• High occurrence of events;
• Improvement of products; and
• High consumer spending.
Source: Tourism Industry Council South Australia
“Moreinvestmentintotourism productsand servicestoattractmorepeople”
“Wehaveseenasteadyincreasein visitors over the last 1-2yearsandexpect thingstostayonasimilartrajectory.”
“Increaseinconsumerspendingand internationaltravelersreturning. ”
• High cost of living;
• Low business investment; • Less visitors;
• Increased input costs; and
• Difficulty finding staff.
“Lownumberofforwardbookings.Weaker economy.Costoflivingfactors.More internationalflightsfromAustraliato cheaperdestinations It’sgoingtoremain challenging.”
“Staffissuesandattitudeshavechangeda lot since COVID,productivityisdownand wagesarehigh ”
Employment and Wages
The Employment Index rose marginally in the September quarter but remained below the neutral level. Only 11% of tourism businesses reporting an expectation for an increase in employment levels, just above the prior quarter which recorded the lowest proportion since September quarter 2020. While the majority (67%) of businesses reported ‘no change’ in employment, 48% of businesses reported higher wages bill, which demonstrates the increasing cost environment that exists for tourism businesses.
Data from the ABS Labour Force Survey showed total employment in the accommodation and food services industry rose 8,700 persons to 58,900 in August quarter 2024 However, since peaking in November quarter 2022, employment in the industry has now declined for five of the past seven quarters, to be cumulatively down 6,300 persons (or 10%).
Figure 9: SA Employment, Accommodation and Food Services Industry
Source: ABS Labour Force, Australia, Cat. No. 6291.055.003
Key Challenges for Tourism Businesses in SA
Despite the increase in activity in the quarter, feedback in the Barometer shows that tourism businesses are still operating in a very challenging environment. Businesses are facing increases in several operating costs including business, staff and insurance, and a lack of cash flow to pay these costs. Maintaining staff also continues to be a significant challenge.
10: Key Challenges Facing Tourism Businesses
Source: Tourism Industry Council South Australia
Investment Outlook
An ongoing positive for the tourism sector is the level of investment. Investment intentions remained elevated in the September quarter, rising 13 points to an index level of 132. In fact, businesses planning more future investment were almost four times higher than those planning less in the September quarter.
Figure 11: Planned Investment
Percentage Quarter ended Less No change More
Source: Tourism Industry Council South Australia
Statistical Note:
The TiCSA Tourism Barometer September quarter 2024 survey was conducted online 2-14 October 2024. A total of 183 responses were received, representing a margin of error of +/- 7.2% at a confidence level of 95%.
Airport Passengers
The Adelaide Airport has seen strong passenger numbers in June Quarter 2024 (latest data available), with 1.9 million domestic passenger movements and 235,000 international passenger movements seeing a total of over 2.0 million, up 3.6% from the June quarter 2023. However, total passenger numbers remain lower than pre-COVID levels.
Table 2: Adelaide Airport Quarterly Passenger Statistics Passengers ('000)
Note: Domestic movements include regional. Source: Adelaide Airport (2024)
Visitation and Expenditure
The strong rebound in visitor expenditure in South Australia appears to have stagnated, with visitor expenditure falling marginally to $9.9 billion in the year ending June 2024, down $96 million (or 1%) from the prior year.
The decline was primarily driven by a fall in day-trip expenditure (down $316 million, or 14%). Meanwhile, international visitor expenditure continued to rebound strongly from border closures during the COVID-19 pandemic, up $230 million (or 22%) from the previous year, to now be 21% above the pre-COVID level Ongoing weakness in the A$ exchange rate should continue to support the recovery in international visitor expenditure in the near-term.
The post-COVID rebound in domestic overnight expenditure (both interstate and intrastate) appears to be over, with expenditure virtually unchanged in the year ending June 2024 (by component, intrastate overnight expenditure fell $75 million, or 2%, while interstate overnight expenditure rose $65 million, or 2%). The loss of momentum in expenditure growth from this visitor segment is broadly mirrored nationally, and likely reflects the impact of lower household disposable incomes, due to a period of elevated inflation and rising interest rates, as well as uncertainty around the economic outlook.
Expenditure ($m)
Note: Year ending June
Source: Tourism Research Australia
Note: Year ending June % change is from previous year.
Source: Tourism Research Australia
The latest visitor data for the year ending June 2024 shows declines in visitor numbers across day-trip and intrastate domestic overnight visitors, but a continued recovery in interstate domestic overnight and international visitors
Heavy declines across each day-trip purpose of visit were the primary driver of the headline fall in visitor numbers
However, visitor nights rose 13% from the prior year, driven by the ongoing recovery in international visitor nights.
While visitor expenditure has stalled, total visitation remains 16% below pre-COVID levels. The fall in visitation compared to the pre-COVID level has been driven by significantly lower daytrip visitor numbers, down 23%, or 3.9 million visitors over this period.
Table 4: Visitors and Nights by Type, South Australia (2024)
Note: Year ending June Source: Tourism Research Australia
Total expenditure across interstate overnight and international visitors rose, with higher visitor numbers more than offsetting lower yields ($/visitor). However, the declines in expenditure for both intrastate overnight and day-trip visitors were driven by both falling visitor numbers and yields
One of the main drivers for the sharp increase in visitor yields is the increase in various input prices that has been occurring (as identified in previous Barometers). Faced with rapidly increasing costs, tourism businesses have been forced to increase their prices, which is reflected in increasing yields and record setting visitor expenditure. Findings from the September quarter Barometer show that almost half of all tourism business have increased prices recently.
However, tourism businesses may struggle to continue to pass-on these rising costs in the near-term. Recent economic data has shown household consumption nationally has softened considerably in recent quarters, with households forced to tighten their belts under the weight of rising interest repayments. While the central banks of many advanced economies have already begun cutting official interest rates, the ongoing resilience of the Australian labour market is likely to mean the RBA will not be in a position to cut the cash rate until the first quarter of 2025 at the earliest
Overall, South Australia has seen its market share sliding, after it increased greatly during and shortly after the COVID-19 pandemic.
Table 5: Expenditure and Yield, South Australia, by Type (2024)
Note: NA – not applicable. Year ending June Market share represents the historical market share currently, for the previous year and from three/ten years ago
Source: Tourism Research Australia
Report prepared in partnership with Lucid Economics.
Tourism Industry Council South Australia (TiCSA)
25 Pirie Street
Adelaide SA 5000
Ph: (08) 8110 0123
Email: info@ticsa.com.au
