Impact Of Brexit On Australian Tourism Industry And A Sustainable Plan To Overcome The Issue

Significance of Tourism Industry in Australia

With the help of development of the world infrastructure, people are getting access to every corner of the world. Easy access is encouraging the tourism industry, as people can travel to a number of places in less time (Edgell Sr, 2015). The increasing significance of tourism has the potential to contribute significantly to the growth of an economy and environment conservation of a nation (De Grosbois, 2016). In developing countries, the economic and environmental conservation have been regarded as the driving force for tourism (Hingtgen, et. al, 2015). As per the United Nations Development Programme, tourism has been identified as a powerful engine that accelerates the safeguarding of bio-diversity, leads to socio-economic development, and promotes cultural heritage of developing countries (UNDP, 2011). It is observed that tourism has been regarded as a means of achieving the sustainable development goals by many development organizations, like the Department of International Development, World Bank, United Nations World Tourism Organization, and the Asian Development Bank. With an annual growth of 7.4%, tourism has been considered as the most significant phenomena for the socio-economic development of nations of the 20^th century (Asker, et al. 2011).

Economic changes of one nation may sometimes affect the tourism industry of another nation. For instance, the economic crisis of the UK, popularly known as Brexit, affected the Australian tourism as well. In 2016, UK had decided to withdraw its membership from the European Union. The move was later defined as the British Exit (Brexit). This decision has made the country’s economy to fall at to lowest ever stage. Such economic crisis may affect various industries in the other nations too, including the tourism industry. Australian tourism has also been affected with this huge economic crisis of UK. This report describes the impact of the exit of Britain from the European Union in 2016 on the Australian Tourism industry. In addition to the above, the report presents a sustainable plan to overcome issues created by such events. 

The Tourism industry plays an important role in the development of the country’s economy (Dredge & Jamal, 2015). In the year 2016, the Australian tourism industry had made a total contribution of AUD 183.2 billion. This accounted for 10.9% of the total GDP of the country. In terms of the industry, the tourism sector had employed around 890,000 people directly or indirectly in the year 2015-16 (Tourism Australia, 2018). As per the latest statistics, the tourism industry of Australia comprises around 279,000 businesses across different sectors such as accommodation, restaurants, takeaway services, transportation and retail trade.

Impact of Brexit on Australian Tourism Industry

In the year 2018, Australian tourism industry has welcomed around 9 million visitors until the ending of the March month. This shows a relative increase of 6.2% from the same data of the same month of the previous year. The number of visitors in the month of May 2018 was 609,300, showing an increase of 5.2% from that of the previous year data of the same month (Tourism Australia, 2018).

The term “Brexit” stands for the British Exit. This refers to the decision for the UK to leave the European Union (EU). The majority of the voters in the UK had supported the decision of the country to leave the EU in a referendum passed on 23 June 2016. The UK government had invoked the Article 50 of the European Union Treaty for the same on 29 June 2017. The European Union (withdrawal) Act, 2018, has fixed the period ending on the 21^st January 2019, for the UK government to decide on how to proceed with the scheduled exit on 29 March 2019, at 11 p.m. (UTC). This decision will have a collective impact on the economy of various nations, including that of Australia. The decision would have an impact on the movement of people among the EU nations, because of the cross-border barriers. This will further affect the tourism industry across the nations of the EU and others. As the tourism industry is a significant part of the Australian economy, the impact of the Brexit would touch the Australian economy as well.

The monumental vote of UK to leave the European Union had an immediate impact on the financial market of nations across the globe along with that of Australia (Beirman, 2017). The decision reflected the large shift in the sentiments. As a result, the Australian market immediately fell by 3.2 %. However, the actual downfall was only of 1 %. The drastic fall was the result of an incorrect bet that was about the confirmation of the UK’s decision of leaving the EU (Dickson & Bolongaro, 2017). The Australian Dollar also experienced a similar impact of the decision with a loss of 4.0 % on the day of the decision itself. In order to establish healthy relations with the UK, with the motive to regain the trading strength of the country, the Australian government has been pursuing a separate free trade agreement with both the EU, as well as the UK (Rumbens, 2016).

Megatrends affecting Australian Tourism Industry

Tourism, being the one of the largest, as well as the fastest growing industry of Australia, had contributed $ 47.5 billion to the total GDP in the year 2014-15. The same accounted for around 3% of the total GDP. Moreover, the industry had employed around 580,800 people that was around 5% of total employment. The country had earned $ 30.7 billion in export business, which accounted for the 9.6% of total export earnings. According to the Australian government, it is expected that the Brexit would impede the tourism sector of Australia, in particular.

Some of the highlights of the UK tourism industry with respect to Australia are as follows. UK is one of the largest source markets for Australia for short-term visitors. This is depicted with the help of the following facts. In 2015-16, UK had following statistics.

• The nation had third largest market with 706,200 visitors. The same accounted for around 9% of the total number of visitors in that period.
• The country had second largest market for visitor nights which was around 10% of total visitor nights, and
• The second largest market in terms of total trip spend, spending $3.8 billion which was almost 10% of the total visitor spend in that time.

The Tourism industry is relying mostly on two elements namely, the human resource and the infrastructure of the country. Over the past few years, industry has been the good news sector for the country’s economy (Asker, et al. 2018). For the future sustainability of tourism industry in Australia, narrative of the future sustainability has been presented or constructed from six megatrends that are interlinked. These megatrends are representing a significant shift in the economic, environmental and social conditions that will be affected in the coming years (Hajkowicz, Cook & Littleboy, 2012). These megatrends are listed and described as follows.

Trends show that the stock or supply of natural resources like minerals, water, energy, and food resources is getting limited. Australian tourism is mostly known for its beaches. Thus, the various environmental concerns will significantly affect the industry. Some of the global issues are affecting the natural resources that are a major source of the tourism industry. These sources are depleting at an alarming rate. In this context, many issues are affecting the tourism industry of the world as well as Australia. Increasing energy demands, increasing domestic water demands, low energy investments are some of them (World Travel and Tourism Council, 2018). The resources being depleted at alarming rates are one among the major issues for the Australian tourism industry. Some other issues for Australian tourism are increased biofuel production, high and volatile food prices, and increasing carbon emission.

Unlike the resources that are discussed in the above megatrend, some of the natural resources do not trade directly in the market. Along with these resources, it is seen that humans have also disturbed the biodiversity in the last few decades. The elements of bio diversity also have a significant indirect impact in the industry. Deforestation is making the environment polluted, and increasing sea level is contracting the beach areas for which Australian tourism is mostly known. Such elements are becoming major hindrances for Australian tourism on the lines of the long-term sustainability of the industry.

Sustainable Plan to Overcome the Issues in Australian Tourism Industry

Youth is the best asset that a nation can possess to achieve the high accelerated development. Today, the whole world is getting older and likewise is the effect on the people of Australia. With an efficient utilisation of youth wisdom and their energy, industry can grow dramatically fast but governments are not using the young energy efficiently. This poor use of young energy is becoming a major issue for the Australian tourism industry. The industry is going through a lack of skilled tourism employees. This is making the industry growth slow.

With the digital advancements, the world has turned out to be virtually connected. This digitalization is connecting the people across the various corners of the world. This transformation is making is easy to get the best for the job. With this facility, the Australian tourism industry is seeking skilled people from a different country that is not good for the long-term sustainability of the industry (World Travel and Tourism Council, 2018). The government needs to look after the drawbacks that are making this industry less reliable. Mostly, this virtual world is enhancing the offshoring in the industry that is becoming an issue for the industry.

All the issue discussed above are a major issue that is concerned for the long-term sustainability of the Australian Tourism Industry. To overcome all such issues industry needs a plan that involves all the stakeholders of the industry to make it sustainable. All the stakeholders from government to the tourists are important in sustainable planning for the industry (Lew 2014).

Tourism planning is a dynamic process of a tourism industry’s consideration of people’s expectation from the tourism. Tourism is associated with the trans-national travel of people, but sometimes this may refer to the travel to a new location within the same country. Tourism planning considers all the need that people want while travelling to other nations (Jovicic  2016). This recognition of a nation’s culture and heritage give different advantages to the country, especially to the developing countries. Tourism planning is basically intended for local residents and businesses of the country locality as well as tourists. The planning process of tourism involves different stakeholders like the government, businesses, and local residents (Mistilis, Buhalis & Gretzel 2014). These stakeholders play their individual role in the process of planning for a sustainable tourism.

In tourism planning, the role of local government is considered to be an important aspect. Government helps the tourism planning involving their policies and political philosophies to make the planning efficient as well as sustainable. Regardless of the form of organization and its operations, government is the only authority that must agree on overall strategy and planning. Whole planning and strategy prepared to have to be presented before the local as well as national level authorities for the approval. Similar to this World Tourism Organization (WTO) is leading the member governments and their views on tourism issue. This organization issues some planning policies for its member governments, which have to be followed by the individual government. This makes it more essential involve the local and national governments in preparing a strategic plan.

Conclusion

Different businesses are the integrated part of the tourism industry. Some business like accommodation facilities, restaurants, tourism guides, transportation, and hotels are the essential elements of the industry. Such businesses have some business policies, which have to be considered while planning for sustainable tourism. Businesses are one of the major investors in tourism planning; this makes it essential to consider their requirements in the planning process (Todd, Leask, & Ensor 2017). 

Other stakeholders of the tourism industry are institutions that are financing the tourism projects, tourism employees, professionals, and consultants, trade unions of the industry, tourism training and education centres, travellers, and local people. All these stakeholders are connected to the industry somehow. These stakeholders and their involvements affect the tourism industry significantly. Therefore, the stakeholders must be considered while planning for a sustainable tourism strategy.

The planning process helps to develop a plan which is used to achieve the objectives and goals of the planning. But planning is not enough to achieve that will make the tourism industry sustainable in long terms. An effective implementation of the developed plan is must to make it worth planning. Therefore, to make an efficient implementation of planning there must be some policies or plans which ensure the general duties of all the stakeholders in the industry. In a general context, different stakeholders recognize different sectors that must be considered in these policies.

Policies and plans in the tourism sector must reflect all the possible condition and constraints, and opportunities for each and every stakeholder at different levels. Also, if the tourism is a dominating sector for the nation’s economy, generally for developing countries, these policies must reflect development priorities and aspirations. For example, air transportation is one of the major transportation means for tourism industry, and plays an important role in the tourism development but for developing countries. The Australia government will look for the national development objectives with the help of civil aviation authority. Along with this, the government will subsequently negotiate with international aviation authorities of other nations through bilateral agreements. These policies are developed for two major reasons, i.e. firstly, to identify and evaluate the scarcity of available resource. Secondly, to allocate these scarce resources so efficiently that the best can be taken from their effective implementation. Such initiatives by the stakeholders of the tourism industry are essential to check and prove the feasibility of their proposed plan before the government authorities.

The process of the planning is the way of implementation to make the plan more effective and efficient. In this order, a proper process has to be followed by the management. This process is a systematic order of the activities to be performed with the sequence, so that with the minimum efforts most efficient implementation of the plan can be done. For tourism planning, the planning process can be described with the help of the below-given example.

(Source by Author)

Study preparation is the first step to prepare a development plan for any sector. A thorough study of facts and figures makes it easy to understand the current scenario of the individual sector and help in identifying the objectives of planning. After this, the identification of objectives is important to make a clear vision for the development plan. This vision will direct the whole planning process in the right direction to fulfil the requirements of the proposed plan. With the same vision, some surveys must be conducted to collect the figures for the current scenario along with the requirements of different stakeholders of the particular sector.

When the survey and evaluation part is completed this data has to be analysed to understand the major requirements that have to be fulfilled through this development plan. After complete understanding of vision and requirements to achieve the objectives of the development plan, policies and plan are formed. Once the plan is formulated recommendations are invited from different stakeholders to make it more efficient and feasible for all the stakeholders. Now, this plan needs to be implemented efficiently to make it effective. Implementation of the plan is very important, as this step determines outcome efficiency of the plan. When an efficient implementation is done feedbacks are collected from the users. For the tourism industry these users are the tourists, therefore, stakeholders have to collect feedback from tourists and review their development plan for essential changes to make it more efficient.

Conclusion

The above report concludes that tourism industry plays an important role in the economy of any nation and is considered the most efficient sector for economic growth in developing countries. Any economic incident affects the tourism also and the same with the economy. The tourism industry is connected with the economies of other nations as well. Although a change in an economy will make only a little impact on the economy of another country, sometimes-big economic crisis in an economy like UK’s economic crisis after BREXIT can make a significant impact on other nation’s economy. Every economy of the world including the Australian economy has experienced little or more impact of this decision of UK leaving the EU. This economic change has affected the Australian economy as well as its tourism industry significantly. Also, there are several global and national tourism issues which must be mitigated with effective tourism planning. Such tourism planning includes several steps that have to be followed essentially to make it more efficient.

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