A significant lift in private capital expenditure in the tourism sector could provide a tailwind for Western Australia’s struggling economy this year, according to the author of a report released by investment bank UBS.
A significant lift in private capital expenditure in the tourism sector could provide a tailwind for Western Australia’s struggling economy this year, according to the author of a report released by investment bank UBS.
Such an outcome would mirror the broader national trend, according to the ‘Australian Economic Perspectives’ report, which found that increased capital spending on tourism nationally is likely to contribute to a 0.5 percentage point increase in GDP.
Report author and UBS economist Scott Haslem said capital spending on hotels and accommodation in WA was at its highest level since at least 2001, with work on $800 million of projects under way in September quarter data.
Mr Haslem said the data likely reflected a series of hotel projects under way in Perth, including Doubletree by Hilton in Fremantle, Doubletree Perth Waterfront Hotel, and Tribe Hotel in West Perth.
The Ritz Carlton, which commenced construction in the middle of last year, also featured in the report, while another major project UBS noted was the six-star Crown Towers, which opened in December.
Those two projects alone are worth more than $1.1 billion.
Outside of hotel construction, other tourism-related investments in the pipeline included at Perth Airport, where the state government has chipped in $14 million to pay for an upgrade to allow for non-stop Qantas flights to London.
The total spending required, including customs facilities, was reportedly around $28 million.
Nationally, Mr Haslem said, tourism’s share of GDP in net terms had risen 0.6 percentage points in the past three years.
That added about 0.25 percentage points per annum to growth during that period.
“The better trend in tourism is also spilling over to private investment, reflected in a tripling of the construction capex under way in hotels and related accommodation,” Mr Haslem said
“The likely 0.5 percentage point pick-up in GDP growth from tourism, including new capital expenditure, should continue to support economy-wide growth in 2017, as the capital expenditure downdraft (in other sectors) nears its completion and housing construction passes its peak.”
He said tourism arrivals were likely to exceed departures nationally in 2019 for the first time since 2007, with arrivals to approach 12 million people per annum.
Tourism is a key political issue ahead of the March state poll, with the major parties putting tourism front and centre of their economic agenda, and Premier Colin Barnett having taken on the tourism portfolio last year.
His government has been pitching the economic impact of the $440 million Elizabeth Quay project, which it claims will deliver $2.9 billion into the state’s economy each year.
Opposition leader Mark McGowan promised to allocate $425 million on tourism marketing in his economic plan, although the details are still to be sketched out.
