Ta Corporate Plan

The overall outlook for 2010-13 appears positive for Australian tourism. According to Consensus Economics the economies of Australia's major source markets of USA, China, Japan, UK and New Zealand will rebound more rapidly than initially forecast.

On the aviation front, the international aviation sector in Australia is likely to continue to be a positive factor for inbound tourism with airline investment

now translating into more available seats. In 2009 international seat capacity on Australian routes increased and Tourism Australia expects similar growth

in 2010.

The Australian Government recognizes the importance of aviation in driving industry growth as outlined in the Aviation White Paper. Examples of this policy in action include more liberal and comprehensive approaches to air service agreements negotiations, and the expansion of commercial opportunities for Australia's international airlines (for example, encouraging increased services to Australia's secondary international gateways including Cairns, Darwin and Broome). These initiatives combined with improved systems for booking domestic airfares from overseas, will assist in promoting the accessibility of regional Australia and enable greater levels of dispersal of travellers into regional areas. In addition, the global aviation environment continues to open up through initiatives including ASEAN liberalisation, IATA's multilateral agreement, and US-EU Open Skies. The competitive environment also continues to strengthen as airlines jostle for the air travel dollar.

While there are opportunities ahead, there will also be challenges. Australia is regularly rated as one of the most desired tourism destinations in the world, but less than 1% of the world's international tourists actually visit here. A key strategic challenge for Tourism Australia is to convert this strong interest into a decision to actually visit.

Over the period 2010-13, Australian tourism faces an increasingly competitive marketing environment, with increased marketing by competitor destinations, changing distribution channels, and broadening media options such as online, blogs, multiple digital and cable TV channels. Cutting through the noise of the crowded market place and finding a unique selling proposition that will entice the consumer to choose Australia will be essential.

Australia is a niche, long haul market for the majority of our overseas visitors. This places hurdles of distance, time and cost in the way of many potential visitors. In some markets it is also leading to a questioning of the environmental appropriateness of long haul travel, most particularly for business event travel. Over the longer term, global concerns by consumers over tourism's impact on climate change could also lead to some impact on demand, but this could be offset by advantages for Australia due to many local tourism products having environmental sustainability credentials.

DOMESTIC

Australia's economic outlook remains more positive than for many other global inbound markets. However, despite better than expected performance of the economy over 2009, domestic tourism demand continued to decline and has been relatively flat for the past ten years. This is partly due to a reduction in competitiveness associated with increasing petrol prices, the appreciation of the Australian dollar and the emergence of a wide range of new competing goods and services (TFC, Dec 2009).

The Tourism Forecasting Committee predicts a rebound in domestic tourism in 2010 as the economy continues to recover and there is release of pent-up demand for domestic travel. Domestic trips are forecast to increase by 4% on 2009 levels, with modest increases through to 2013. While these forecasts are acknowledged, Tourism Australia believes the target of 4% increase in trips in 2010 is challenging given long term trends and that achievement of any positive growth would be a good outcome.

Domestic tourism accounts for 60% of Australian tourism visitor nights but a sustained period of a strong Australian dollar has driven an increase in outbound travel, contributing to stagnant demand for domestic tourism. Over the period 2010-13, outbound departures are forecast to increase 4.1% in 2010 and 3% in 2013 (TFC, Dec 2009). Increased marketing by rival outbound destinations and discounting of international airfares has made the international travel option very competitive for Australians and has fuelled perceptions that an Australian holiday is expensive, can be taken later in life and holds less status and value than a holiday in an overseas destination. Changes in the social environment will also continue to have an impact, with people working longer hours, more couples working, concerns