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Unlike the export of tangible products, the services that open up markets overseas and bring visitors to this country are not always so visible. Tim Harcourt takes a close look at export and the tourism industry.

Active ImageIn the 1960s the Australian social commentator, the late Donald Horne wrote a book called The Lucky Country. Although the title was apparently meant to be ironic, Australians took it literally. After all, we thought, Australia is blessed with national wealth, a benign climate, a clean environment, and a growing population. And so ‘the lucky country’ became a phrase that stuck, no matter what Horne had originally intended.

Our luck has continued. We have enjoyed almost 15 years of uninterrupted economic growth, low inflation, low unemployment, and our economy has been the envy of the industrialised world. Of course this was not just a result of luck but also hard work. Productivity gains don’t fall out of the sky. Economic reform is always difficult in a democracy and Australia has done well to achieve economic gains together with strong social cohesion.

The future looks bright for the lucky country. Even the famous ‘tyranny of distance’ (a phrase coined by historian Geoffrey Blainey) now seems to be working for rather than against us. The tyranny of distance referred to Australia’s isolation from major economies in Europe and North America. However, with the economic rise of East Asia our geography is working in our favour. For example, the industrial development of China is prompting an insatiable thirst for our resource exports and expertise and we are also seeing promising signs coming out of India and South East Asia.

Australia now seems to be in the right place at the right time. In fact, there’s no better example of the lucky country ethos than in the Australian tourism industry. It is not that the tourism industry is lucky but that it continually makes its own luck. Like all good exporters, the Australian tourism industry knows how to take advantage of Australia’s ‘comparative advantage’. Our tourism operators take advantage of nature’s gifts in Australia by building an industry around our climate and our unique environment. Increasingly, they are helping overseas visitors to understand the unique civilisation of our indigenous people and the attractiveness of our outback communities as well as the benefits of our cosmopolitan coastal cities. The industry builds on and protects Australia’s natural strengths, instead of building fake castles and monuments that belong elsewhere.

The Australian tourism industry is also ‘lucky’ in terms of its view of the future. Tourism exporters, on average, are a relatively optimistic lot. In the recent past, Australian tourism has done it pretty tough. From 2001, the industry has had to face a number of ‘external shocks’ or ‘x-factors’, as we economists call them. The industry has been adversely affected by terrorism, SARS and the Iraq conflict all in the space of three or so years. The combination of these shocks had the most adverse impact on overseas arrivals than any event since the 1989 pilots’ strike. They have also had to cope with a strong Australian dollar and some weakness in the world economy over 2001-2003 (but with improvement since).

Despite the recent past, according to the DHL Export Barometer of May 2005, they are on average more upbeat about future prospects than many other exporters in commodity sectors like mining and farming. For example, 56 percent of tourism exporters believe their export business will improve in the coming 12 months, compared with 51 percent of agricultural exporters and 53 percent of miners (although they came below manufacturing on 70 percent).

Tourism exporters are also less worried about the exchange rate—despite not benefiting from higher commodity prices like the resource sector—and less concerned about capacity constraints and infrastructure than the average exporter in the survey.

Around 56 percent of tourism exporters think the high Aussie dollar has hurt their business compared with 84 percent of agricultural exporters and 65 percent of mining (but higher than manufacturing and services).
Tourism exporters are also pretty good at taking advantage of government assistance—such as the Export Market Development Grants (EMDG) scheme—and are well-informed about government sources of information and related services.

So, what does the future hold for Australian tourism exporters? There’s been a big emphasis on market diversification. According to the DHL Export Barometer, tourism exporters are more likely to have customers from multiple destinations than other exporters. This is reflected in the focus on emerging markets. In its history, Australian tourism has gone through many ‘waves’; from Commonwealth countries like the UK and New Zealand, to the emphasis on Europe, Japan and North America, and on to the rest of Asia (particularly China). Now we are seeing new markets emerging with visitors from the Middle East (especially the United Arab Emirates), Eastern Europe and Latin America.

Niche Markets

Active ImageQueensland based company, Lizid Travel, specialises in bringing Middle Eastern tourists to the sunshine state. According to Lizid Travel’s general manager, Elizabeth Smith, there were “over 20,000 visitors from the Gulf States who were willing to make the 18- to 20-hour flight to Australia in 2004, with plenty more to come.

“Travel agents in Dubai at first thought coming to Australia for a holiday was a joke, because of the travelling time involved. I suggested that if the Middle Eastern tourists stopped off in Asia for a few days it would be like travelling to the United States or the UK, and the idea took off,” she says. Most of her clients are from Dubai and Kuwait, and there is still work to be done in bringing tourists from Jordan, Syria, Qatar and Saudi Arabia.

Other successful operators in Australia include Dining Downunder, which promotes food-based tourism targeting Eastern Europe. According to its co-founder and Sydney chef, Vic Cherikoff, the company is as much about promoting Australian cuisine as it is about promoting landmarks such as Bondi Beach, the Blue Mountains and Margaret River.

“We’ve held Australian food promotions in Prague and a cooking demonstration for an event venue in Essen, north of Dusseldorf, after which distributors were enlisted for both the Czech Republic and Germany. We have standing invitations to hold promotions in St Petersburg, Budapest, Malta, Belgium, the Netherlands, as well as in South East Asia,” he says.

Australian outbound tourism operators are also looking at emerging markets. In China, domestic tourism is opening up, as many Chinese people are able to travel and engage in tourism and leisure activities for the first time. According to Zhang Guangrui, professor of tourism at the prestigious Chinese Academy of the Social Sciences (CASS): “The government wants people to travel more and to spend more to raise consumption levels. While it is hard to get Chinese families to take holidays to travel even within China, once they get a taste of it they want to do more abroad too.”

Tourism is certainly a new experience for many Chinese people. In Shanghai, I visited a successful aquarium owned by Australian company, Oceanis 21. “You have got to remember many of these people coming in from the provinces have never seen an escalator before, let alone a shark!” says Bob Adams, the Australian manager.

In Latin America eco-tourism is booming and drawing on Australian expertise and skills. For example, in the ‘trekker-mecca’ of Peru, Dr Fausto Salinas, president of the Cuzco Chamber of Commerce, believes the Cuzco commercial area will bring ne
w opportunities due to the development of Choquequiro—the ‘Golden Cradle’. “This will be like a new Machu Picchu,” he says. “But it’s much further from Cuzco [than Machu Picchu] and we will need investment in infrastructure. We want to make Cuzco the centre of adventure and eco-tourism—as well as Inca culture—and we know Australia has skills and strengths in those areas.”

It’s good to hear that after years of developing skills for the inbound market, the Australian tourist industry is now able to export its expertise overseas as well. Like a true lucky country, we are able and willing to let others share our luck.

* Tim Harcourt is chief economist for Austrade, Sydney.

Thank you to Kerri Anderson, Hala Shash, Heidi Bajpe and Karla Davies for comments and assistance with this article.

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