Many of the eye-catching projects around Perth promised a tourism benefit. Will they lift visitor spending?
INVESTMENT in tourism-boosting infrastructure has been one of the major consequences to flow from Western Australia’s resources riches of the past decade.
Six big projects received more than $4 billion of private and public capital, while more than $3 billion was spent on hotel facilities.
Those flagship investments comprise Perth Stadium, Elizabeth Quay, Yagan Square, WA Museum Boola Bardip, Crown Towers and the redevelopment of Perth Airport, all previously cited by the tourism sector as key pieces of Destination Perth.
Add to that ongoing spending, including destination marketing and event attraction, with the $185 million Reconnect WA program the latest iteration.
State government spending on Tourism WA has totalled $786 million over nine years, according to annual reports.
Photo: Construction of Perth Stadium cost $1.4bn.
Results flowing from those investments have been mixed so far.
In 2012, the state government launched its WA Tourism 2020 strategy, a plan to double visitor spending in the decade to 2020.
Data from Austrade’s Tourism Research Australia shows gross state product from tourism lifted 74 per cent from 2010 to almost $6.1 billion in the 2019 financial year, the last full period before the borders were shut due to COVID.
That’s the second highest rise of any state or territory, although the state’s numbers peaked in 2016.
Conversely, WA returned the second lowest increase in direct output driven by international visitors over this period.
About $2.3 billion was generated, up just 17 per cent.
Australia wide, direct output from international tourists was up 70 per cent to be $30.2 billion in that same timeframe.
WA’s growth was particularly driven by intrastate tourism, which more than doubled.
Over the period of the WA Tourism 2020 strategy, therefore, the state’s tourism grew significantly, but less than target and was driven more by locals than overseas visitors.
Tourism Council of WA chief executive Evan Hall said the most significant investment during the period had been by the private sector in new and upgraded hotels.
More than 4,000 new hotel rooms were brought online, with at least $3 billion spent, the council has previously estimated.
“There was a huge shortfall of rooms in the last resources boom,” Mr Hall said.
“The net effect of the shortage was we [the industry] were simply turning visitors away.”
Photo: Crown Towers was a $650m development.
The Barnett government’s Hotel Incentive Scheme had supported the developments, he said, and the hotel boom also boosted quality across the market.
“The other really effective investments were the [Perth] Arena and the stadium,” Mr Hall said.
Those venues attracted tourists and lifted local hospitality spending and visits by those from regional WA to the city, he said.
“The State of Origin, international rugby [union], [English] Premier League teams, they always bring interstate and sometimes international visitors,” Mr Hall said.
He said the next step for the state was for private investment to build the next generation of resorts and other facilities to drive demand.
This would also balance out the need for government advertising campaigns, with private operators such as ferry companies to Rottnest Island already contributing to marketing through their own channels.
The city needed attractions, Mr Hall said.
A zip line from Kings Park to South Perth, wave park, and hot springs have all been proposed and hit trouble with red tape.
“We’d certainly get worldwide attention with an experience like [the zipline],” he said.
But a project would typically need approval from a dozen agencies, Mr Hall said.
“There’s no-one who can approve [a project], but plenty of agencies that can say no,” he said.
“We don’t get it done in WA, it’s our major failing.”
Impact
The difficulty assessing the economic impact of intrastate tourism is that major events compete for dollars in the family budget with other local spending options.
Part of the income of an event or new facility is generated through attracting spending from alternative products.
This can be seen in the declining attendance at horse, trotting and greyhound racing meets over decades as Western Australians avail themselves of a broader choice of leisure options.
A highly visible example is Subiaco after the closure of the oval.
Vacancies on the Subiaco retail strip jumped from about 6 per cent in 2017 to roughly 15 per cent in September 2020, according to Ray White data.
That eased to 11 per cent in the most recent, September 2021 numbers.
There’s much debate as to the factors contributing to this pressure, but the demolition of the old Subiaco Oval has been frequently cited as one contributor.
The Irish Club of WA was one organisation affected when football games moved to Optus Stadium, with 40,000 potential customers no longer visiting Subiaco each week.
Manager David Tennant told Business News the impact was still being felt, but the club was working to move on through increased use of its upstairs event space and its Townshend Theatre.
“We might be an Irish Club, but we’re a club looking to share community connections; you don’t need to be Irish to enjoy the space,” he said.
Work by Deloitte in 2019 estimated the new stadium would generate $19.8 million in gross state product annually through construction and 30 years of life.
Deloitte assessed the incremental impact of attracting new visitors, warning the result would be exaggerated if the analysis didn’t factor in that many guests would still have come to Perth if a new stadium had not been built.
On the flip side, the benefits include visits supported by the stadium’s higher capacity, and through events that would not have happened in Perth without the stadium.
The previous state government raised some eyebrows in 2017 when it said Elizabeth Quay had attracted 6.6 million people in its first year, nudging above Rome’s famous Colosseum as a destination.
Perth families and office workers may visit the Quay more frequently than a tourist might visit the Italian landmark, however.
A Deloitte assessment released at the same time predicted the fully developed precinct would generate $637 million of gross state product over a decade and would boost tourism spending by $348 million.
Sky high
Among the ongoing industry desires is a redevelopment of the Perth Convention and Exhibition Centre.
Others have called for Perth to bid for the Commonwealth Games or host the world’s biggest drone show.
The McGowan government has been working to secure more direct flight routes to Perth, with air travel to London restarting and to Rome having commenced.
Tourists in the 10 months of the Qantas route linking Melbourne, Perth and London spent $101.4 million in WA, according to a 2019 Deloitte study.
International passengers on the QF9 route stayed 22 nights in Perth on average, and a further six in the rest of the state.
That’s against an average length of stay of 25 days for overseas visitors in 2019, according to Tourism WA data.
What’s not clear is how many of those passengers would have visited Perth if they were travelling on an existing indirect route.
Despite the direct flight, the Tourism WA data also shows spending by UK tourists to WA in the year to March 2019 was 12 per cent lower than the corresponding period in 2018.
The report’s numbers imply about 2,000 interstate travellers stayed in Perth, averaging eight nights each.
