Tourism braces for brave new world

THE tourism industry was underwhelmed last month when Geoff Carmody described his report on the impact of the global financial crisis on the sector as one of the most downbeat since his first analysis in 1984.

Forecasting a slowdown in inbound tourism as consumers cut back on discretionary spending, the Access Economics co-founder warned the local industry to prepare for the worst in 2009 as the global downturn would start to take its toll on tourist numbers and spending.

Long-haul tourism is likely to be the most affected, with the impact to be felt over the next six months.

Short-haul will also be impacted, but on a lesser scale, with a cocooning effect likely; that is, people will be more prone to take holidays closer to home, benefiting some of the state's regional destinations.

In investment terms, Mr Carmody believes tourism operators should look to improve their current capacity and not increase capacity during the downturn.

"Don't focus on increasing capacity, cut capacity if it makes sense to coincide with level of demand," Mr Carmody said.

"Sharpen up the quality of service in existing capacity...keep a close eye on the capacity you've already got. Think of investment to improve assets you've already got, upgrade quality and service quality."

The impacts of the global financial situation on the WA tourism industry are already beginning to show.

Discover West Holidays managing director Nathan Harding believes the flow-on effects from the downturn in the state's resources boom are being reflected in the hotel market.

"The biggest problem for the past year or two is that tourism has been the victim of the mining boom in that there's been no accommodation available. Perth's been full, the Pilbara and other parts have been full," Mr Harding said.

"We're finding greater access to rooms because the corporate market has come back a little bit. In the past we've had to turn away people because hotels have been full."

Discover West, which deals solely in the leisure market, brings in one in five interstate tourists and one in 10 international tourists.

"We're talking to a lot of tourism operators. People saying they're down 10 per cent in some regions. One major regional hotel was down 25 per cent over the winter period," Mr Harding said.

He said the economic situation had changed the way people travelled. And, he believes, there could be winners and losers in the changing marketplace. "People are holding off on their big holidays, their two to three week, once-in-a lifetime trips costing $10,000-$20,000, that has really slowed down," Mr Harding told Business Class.

"We're seeing more short holidays, we're seeing week or two-week holidays, spending less.

"For Perth people, if they can't go to Bali or Thailand they will go to Margaret River, but they might only go for a few nights."

Hyatt Regency Perth general manager Robert Dawson said to date there had not been a significant downturn in guest numbers.

Mr Dawson said he was expecting a softening in demand but not a steep drop for the city's hotels.

"We haven't seen a major change as yet," he said.

"It would be naïve for anyone to believe business will continue at the levels it's been doing for the past couple of years.

"The slowdown we see won't be as pronounced as many other locations, particularly the eastern states."

Corporate travel agency Travelcorp business manager, Vanessa Weigall, said she had noticed a change in travel behaviour, signalling a cutback by the corporate sector.

"What we are noticing is changes in travel policy. People who would usually travel business class won't necessarily sit in that part of the plane," Ms Weigall told Business Class.

The airline sector has been one of the first to respond to the shift, launching aggressive discounting campaigns to encourage people to travel.

"Qantas has been doing a lot of sales, we saw the Qantas special two for one, and that was for business class economy class," Ms Weigall said.

"We will start to see more discounting, even on business class which traditionally shies away from sales or discounts."

She said there had been lay-offs among some agencies.

"It was difficult getting staff. Now we have recruitment agencies ringing us with candidates coming through from other agencies."