Invest in tourism | Inside Franchise Business

Is it the right time to invest in a tourism business?

Sarah Stowe

What’s the prospect for businesses in the Australian tourism sector?

If there’s one industry that has been heavily impacted by the Covid pandemic it’s tourism. The good news is the sector is looking up, so now might be the perfect time to investigate options to fulfil that business dream.

In its report published in March 2021, analysis firm IBISWorld anticipated industry revenue would decrease this year by 38.1 per cent.

Report author Nathan Cloutman tells Inside Franchise Business, “As a result of renewed lockdowns in Australia, the projected recovery of the tourism industry is expected to be slower than initially forecast earlier in 2021.”

However, there will be a rise in fortunes as we move into 2022, he suggests.

“Despite the ongoing negative effects of the Covid-19 pandemic, tourism demand is projected to rise later on in 2021–22. The Australian population is becoming increasingly vaccinated for Covid-19, which is reducing the potential for further outbreaks and lockdowns. “

The good news from the analysis firm is the sector is projected to recover over the next five years although this bounce-back may be less of a bounce and more of a gradual rise.

“A recovery in tourism activity is likely to encourage increased investment across the industry over the coming decades,” wrote Nathan.

“Overall, industry revenue is projected to rise at an annualised 15.9 per cent over the five years through 202526, to $149.1 billion.”

On a financial front, the five-year forecast of a relatively weak Australian dollar is likely to encourage international visitors while more Aussies are likely to skip the overseas trips and spend vacations in Australia.

Increasing tourism activity in Australia is forecast to lift industry profitability over the next five years, predicts IBISWorld.

The serviced apartments sector is projected to remain a strong challenger to traditional hotels over the next five years – there’s more investment in and continued construction of new serviced apartments. 

Budget accommodation is likely to be impacted by the continual popularity of Airbnb, and hotels are likely to seek alternatives to low prices to attract guests.

This is an edited extract of an article in the Nov/Jan edition of Inside Franchise Business magazine. Find out more here.