It is unclear what effect a partial reopening of WA’s border will mean for the state’s beleaguered tourism sector.
If much of the media coverage in recent weeks was to be believed, Western Australia’s tourism sector is mounting a major comeback across the board.
Having backed the sector with two WA-focused marketing campaigns, the state government has put the best-possible spin on data showing a strong increase in accommodation bookings and visits to the regions.
But a broader look at the sector suggests the revival has been more scattershot, particularly with regard to niche tour operators, hotel rooms and meeting spaces in Perth.
The unpredictable nature of COVID-19’s spread was a major contributor to these issues.
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In March, the state government launched the ‘Do it in WA’ campaign, a $5.2 million push for WA locals to visit the regions to prop-up businesses in the wake of Australia’s ban on international arrivals.
Only a matter of weeks later, however, the government followed the advice of its chief health officer, Andrew Robertson, and banned inter-regional travel in WA, redirecting funding for the ‘Do it in WA’ campaign to keep tourism operators on life support.
To coincide with the lifting of most regional travel restrictions on May 29, the government launched the ‘Wander out Yonder’ campaign, which encouraged people from the metropolitan area to visit popular spots such as Broome and Margaret River.
Tourism Minister Paul Papalia promoted extraordinary occupancy rates in the South West, while data from Tourism Research Australia indicated visitation had dropped by a far smaller rate than the national average in June.
Missing peak
The perspective from observers was the industry had recovered behind WA’s hard border, much to the frustration of Tourism Council WA chief executive Evan Hall.
“We lost Easter, the school holidays, and the best part of the opening season in the north,” Mr Hall told Business News.
“While everyone moved on, a lot of businesses did not survive that period, and the reason was because tourism is so seasonal and driven by peaks and troughs.
“What you had were a lot of businesses that invested in marketing, recruiting staff and supplies for a peak period that never arrived.”
WA’s hard border has generally been seen as an effective public health policy, because the state has recorded fewer than 800 cases of COVID-19 while defying national economic headwinds to grow by 1 per cent.
Not surprisingly, while convincing Perth residents to visit the regions wasn’t the hardest sell given the pent-up demand, the government’s $500,000 pitch for ‘a Perth staycation’ had a harder time gaining traction.
In Perth, hotel occupancy rates, long heralded as a leading indicator for market performance, plummeted, despite the market adding more than 1,200 rooms in 2019, according to Business News’s Data & Insights.
“What we got was a lot of media coverage that wasn’t really representative of where the industry was at,” Mr Hall said.
“Those who are not doing well are doing very badly, and those that are busy are very busy, but that doesn’t necessarily mean they’re getting the value.
“Western Australians do not spend as much as interstate visitors.
“You’ve got volume but not necessarily the same spend.”
Hotels are illustrative of this dynamic.
Mr Hall points out that many throughout the CBD would usually rely on out-of-state businesspeople to stay in business. Now, just small handfuls operate as venues for quarantining international travellers.
Though the service meets a public health need, it is far from sustainable operating practice, given each returning traveller pays about $2,500 to quarantine in a hotel room for 14 days.
For perspective, a back-of-the-envelope calculation using results from Crown Hotel’s most recent annual report finds that, if that visitor spend was applied to the occupancy rate its three hotels in Perth recorded over the past financial year, it would earn just $4 million in revenue per month.
Without revenues from gaming and other non-accommodation services to offset those losses, that would equate to a year-on-year loss of more than $500 million for its WA businesses.
“What we’ve got is a two-speed economy,” Mr Hall said.
“The businesses that are very busy are in regional accommodation and hospitality.
“For those geared up for an out-of-state visitor who’s not self-reliant, they’re the ones in trouble.”
This was at least part of the reason why Mr Hall had so loudly campaigned for WA to reopen its border in recent months.
He’s been careful in public appearances to couch his lobbying with the caveat that any easing of restrictions should be accompanied by sound guidance from health professionals.
By this past month, WA had become a willing outlier to a national consensus that all states and territories would reopen to the rest of the country by Christmas.
Perturbed by opinion polls that showed ongoing support for a hard border, Mr Hall sought to put his thumb on the scale, commissioning his own poll with Ipsos to measure broader sentiment about the duration and nature of WA’s hard border.
“The only polling I’d seen was, ‘Do people like the border?’” he said.
“We were trying to get the sense of whether the community thought this was a long-term thing.
“For that part of the industry that fundamentally cannot operate without interstate visitors or staff from interstate … what would happen if we reach the end of March [2021], JobKeeper runs out, and the hard border is still in place?”
Mr Hall got the answer he was looking for. More than 70 per cent of respondents said they wanted the state government to set a date for the border to reopen, while a slightly smaller number said they would support travel to all states and territories, bar Victoria and NSW.
That polling and the media coverage that resulted were likely factors in the state government’s change of stance just four days after its release.
Now, as of November 14, WA will reopen its border to all states and territories that go 28 days without recording a locally transmitted case of COVID-19.
It’s a decision Mr Hall believes was well overdue.
“From August onwards, the message [the state government] was hearing was that tourism businesses were really busy,” he said.
“That’s certainly what consumers were seeing, but neither Perth customers nor ministers were visiting the tourism businesses that were empty.
“It gave a perception that was not quite real.”
Many in the industry will likely breathe a sigh of relief, as welcoming a higher volume of interstate visitors should allow the industry to try to meet the $15 billion quarter-on-quarter shortfall it finished with at the end of June.
Perth’s hotels market also stands to benefit, with TFE Hotels and Prendiville Group’s addition of 230 extra rooms to Perth’s market this year now far more realistic than it would have appeared even three months ago.
Still, few to no international visitors for the foreseeable future may yet present a challenge, given interstate visitors spent just $1,156 when they arrived in the state this past financial year, compared to a $2,286 spend by international tourists, per Tourism WA.
It would appear the public and private sectors in Australia have made peace with the indefinite disappearance of international tourists.
While the federal government has telegraphed its bullish confidence in a COVID-19 vaccine being available at some point in the next year, its own budget indicates the border isn’t likely to reopen until late 2021.
The rollout of an effective vaccine both nationally and globally may also delay the extent to which the border reopens, possibly delaying a full reopening for years.
Some, such as the nation’s beleaguered airline, Qantas, have acknowledged this pessimistic reality while pushing to at least resume business in the domestic market.
Given the reality the industry now faces, one thing Mr Hall sees as favourable to WA as a tourism destination is its diversity of geography and offerings compared to the rest of Australia.
Any success, though, will depend on WA reopening its domestic border to NSW and Victoria, where more than half of Australia’s population resides but are at present precluded from entering this state due to their rates of community transmission.
Assuming trends hold and both of those states effectively quash spread of the virus, WA should reopen to both by December, in time to infuse a struggling industry with significant cash flow.
Data from Tourism Research Australia, however, indicates WA could lose in this scenario, given it received just 9 million domestic visitors in the past financial year compared to 30 million in NSW and 23 million in Victoria.
Not that Mr Hall appears worried; if he’s learned any lesson in the past six months, it’s that expectations and perceptions hardly equate to an assured outcome.
“Most of the industry will survive and perhaps even prosper without international travel if we open to all states in Australia,” Mr Hall said.
“The reason we’ll do well is we have a north and a south; we have a winter and summer season, and there are a lot of visitors in Australia who’ve never been to WA before.
“The four -or five-hour flight might have been a barrier in the past, but it will make us seem like the international holiday [tourists] can’t otherwise have.”
