Australia’s tourism industry is grappling with a surge in marketing costs as it fights to regain its once-strong position in the global travel market. Despite a gradual recovery from the COVID-19 pandemic, international visitor numbers have yet to reach pre-2019 levels. Consequently, Australian tourism businesses spend up to twice their pre-pandemic budgets on marketing efforts to attract international visitors.

Peter Shelley, Managing Director of the Australian Tourism Export Council (ATEC), remarked on the formidable challenges faced by the sector. “We always knew the restart of tourism would be tough. Shutting borders effectively closed many tourism businesses servicing international markets, and more than two years on, we are still working hard to revive our visitor markets,” he said.

The situation has been exacerbated by recent geopolitical, environmental, aviation, and economic concerns, which have further complicated travel decisions. “For Australian tourism businesses in particular, the costs of marketing their product in Europe or the US have increased significantly, and this is really showing in our ability to hold space in the international travel marketplace,” Shelley added.

A recent ATEC survey highlighted the financial strain on export tourism businesses, with over three-quarters reporting a rise in marketing budgets of over 20%. Alarmingly, a quarter of these businesses now face marketing expenses double those of 2019. Key factors driving these costs include increased spending by competitor destinations, unfavourable exchange rates, the high cost of attending trade shows, rising advertising costs, and overall business travel expenses.

“While we are seeing pressures on individual businesses, the cost of marketing Australia to a global audience has also increased for our marketing agencies, who are now needing to significantly increase their advertising spend to maintain ‘top of mind’ awareness for intending international travellers,” Shelley stated.

As the Federal Budget approaches, agencies like Tourism Australia are pressured to deliver more with limited resources. Despite operating with a budget that has remained relatively unchanged for the past decade, they strive to keep Australia at the forefront of potential travellers’ minds. Meanwhile, many competitor countries have significantly increased their tourism marketing expenditures, leaving Australia at a competitive disadvantage.

“While many of our competitors have doubled down on their tourism marketing spend, Australia has seen state tourism budgets trimmed, and the collective pool of marketing funds to promote Australia to high-spending international travellers has shrunk in real terms,” Shelley explained.

Shelley is advocating for increased funding for Tourism Australia in the upcoming Federal Budget, emphasizing the economic benefits of a robust tourism sector. “Failing to invest in tourism is failing to invest in an Australian success story. We should not forget that in 2019, tourism’s GDP grew by 3.5%, outpacing the national GDP. That is an economic benefit we are currently missing out on.”

He called on the Federal Government to recognize export tourism’s return on investment and provide the necessary support to help the industry recover. “We call on the federal government to support tourism and the economy by helping tourism businesses across Australia get back into the market and get back to doing what they do best.”

The Australian tourism industry’s plea for increased government support underscores tourism’s critical role in the national economy. As the sector navigates the post-pandemic landscape, the need for strategic investment in marketing and promotional activities is more urgent than ever. With adequate support, Australia’s tourism industry can again thrive and contribute significantly to the nation’s economic recovery.

Written by: Jill Walsh

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