Problems Facing Tourism And Hospitality Sector In Australia – Report

Information Gathering

Discuss about the Problems Facing Tourism and Hospitality Sector in Australia Report.

The chief problem explained in this report is some of the setbacks encountered in the Australian tourism and hospitality market, particularly about concerning quick evolution within the accommodation and air travel sector and the establishment of affordable airfare and an economical variety of hotels in the nation.  There is need to mitigate the hiccups faced by this industry since it is one of the major contributors to the country`s economy.  As such, I have employed several research sources and materials particularly books and journal articles to identify some of these aspects and the challenges emanating from them.

In the recent past, the aviation and accommodation sectors in the country have experienced tremendous growth and expansion.  The aviation industry in Australia is projected to grow at a rate of 4-5% per year (Susan, 2017).  The rapid growth of the two sectors is greatly attributed to the remarkable increase in both domestic and international tourism over the past several years.  The international tourism to Australia has grown by a yearly average of 12.3% over the 1992-1997 period (Sharma, 2005).  He adds that domestic travel in Australia has been growing at a rate of 3% per year.  This means that a blend of the two has contributed immensely to the above-experienced growth.  However, the growth in the country`s aviation sector has caused increased carbon emissions into the atmosphere due to jet fuel usage, and it may escalate into the near future (Susan, 2017).  This is attributed to the high number of tourists using the low-cost carrier services in the nation all year round.  This is an environmental problem.  Although environmental legislation in Australia controls tourism development, it is less efficacious in operational areas due to the reliance on the tourism on environmental resources which are not managed by operators (Carter, 2004).

The other evident reason is the low-cost airfare in the nation and the great distances across the country, which requires air transport for convenience.  Australia is largely dependent on its air transport industry because of the immense distances across the nation and between urban centres (Panarat, 2014).  He further says that due to the deregulation of domestic air travel market in Australia on the 30^th October in the year 1990, low-cost carriers have come into the market and the LCC market has occurred in three phases.  According to him, low-cost carriers had captivated about 64% of the market by the year 2010.  He says that, however, the evolution of the Virgin Australia model of business from a low-cost carrier to a full-service network, starting in 2011, has caused a consequent decline in the low-cost carriers’ market share to around 31% currently.  He adds that Tiger Airways and Jet Star are the only major carriers currently operating in the market segment.  This means that the LCC is facing the threat of being phased out by the full-service networks.  The possibility of adverse effects of shifts in consumer demand is also of great concern.  The potential for changing consumer demand patterns should concern for the Australian tourism industry (Lisa, 2013).

Reasons for the Rapid Growth

Increased competition in the hotel accommodation industry is another key cause of its boom.  Increasingly competitive settings have directed hotel managers` attention on reaping competitive advantage by optimizing the potential of their customer base (Lisa, 2013).  She adds that according to findings of a survey of 165 Australian hotel managers, there is evidence that huge, highly market headed hotels with a decentralized structure employ more customer focused and marketing accounting practices.  However, this stiff competition is causing the problem of hiked and ever fluctuating prices.

There are many worldwide hotel brands which impact either directly or indirectly on the Australian economy.  Some of the brands have branches in the country too.  The major effect is the creation of competition in the sector, which in turn causes improved services hence increased customer base.  This then translates into high earnings thus economic growth.  Globalization occurs, and consequently, national economies are integrated into one global economy with share features, and this implies that decisions made in one part of the globe impact other parts too (Andrew & Martyn, 2004).  They add that it has created opportunities for innovative entrepreneurs to enter the market and compete efficaciously.  This has however led to the challenge of relaxed state regulation of the ethics and operations within this industry.

There has been cooperation between the stakeholders in the two sectors.  This is especially evidenced when airline companies, agencies, and tours enter into an agreement with hoteliers to transport their customers to their hotels and lodges.  For some outdoor adventure lodges and game lodges, there is a linkage between them and the air transport operators, for instance, a gateway airport (Ralf, 2009).  This serves the interests of the stakeholders in both these sectors since it is a win-win business deal.  The teamwork is, however, facing the problem of selfish interests among some stakeholders in either or both of the sectors and this has a negative effect on the services provided.

It is evident that the two sectors have something in common namely the pricing.  Trends in one sector causing alterations in prices impacts the other sector`s prices too.  Hotel accommodation is frequently clustered based on different pricing regimes involving airline discounting and supplemented with organized tours among other aspects (Norma, et al., 2004).  As such, a fluctuation in the prices in the aviation sector impacts either directly or indirectly on the prices in the accommodation sectors.  As a result, this poses the challenge of occasional loses for either of the two sectors

Effect of Global Brands on the Local economy

In the recent, there has been the emergence of contemporary construction programs concerning key hotels in the country.  This is especially in line with the growing industry and change in customer preferences.  There is need to affirm the essence of local property markets in the building of hotels (Donald, 2011).  The Asian-Pacific region is rising as possessing the greatest tourism growth rate in the world and is a critical part of the Australian hotel industry (Norma, et al., 2004).  They go on to say that, with the rising popularity of Australia as a destination attracting overseas travelers and the establishment of the long-haul and considerably low-cost flights on 747 jumbos, there was a significant increase in inbound tourists accompanied by a vast building program involving the building of large, integrated hotels including four-to-five-star accommodation.  This means that the modern building program for the large hotels is ideally the above-mentioned stars hotels.  The main challenge here is the expensive nature of executing such programs, which weighs heavily on investors.

The country`s tourism market has been growing and bringing in new customers particularly from outside the nation.  This has brought along shifts in the way the sector is organized more so with the high number of international visitors being families coming along with their kids.  By the fourth phase, international tourism will have its focus shifting from the beach to non-beach activities like theme parks and shopping at the upmarket (Caryl, et al., 2016).  They add that Gold Coast implemented the model and is now the nations` tourist capital.  The embrace of these new markets is quite slow and often causes friction in the sector.

Not everybody can afford to stay at three-to five-star hotels, and some years back, Accor Group recognized the need for budget accommodation (Gary, et al., 2014).  They add that the Group has 180 budget hotels in Australia and New Zealand under the brands of Pullman, MGallery, Sofitel, Grand Mercure, All Seasons, Formule 1, Novotel and Ibis.  The hotel sector has recently been dominated by the emergence of budget accommodation market (Stephen, 2012).  According to him, motels have come up especially in Australia and have emerged as a present feature of the accommodation sector.  However, there have been new forms of accommodation like caravan parks and holiday parks (Stephen, 2012).  Budget brand hotels offer a known consistent level standard services and amenities, all of which cannot be matched by independent hotels (Russel & Judy, 2010). 

Synergies for the Aviation and Accommodation Sectors

On the other hand, we have luxury hotels in the country.  Peppers Palm Bay is one of the luxury resorts which conceits itself on seclusion, fine food and peace and is accessible only by helicopter (Simon, 2004).  There are some other luxury hotels as follows; Cullen Bay in central Australia which charges $ 150 for dinner, Alatai Holiday Apartments, Mantra Esplanade and Feathers Sanctuary among other luxury hotels and resorts (Charles, et al., 2009). 

Australia has a wide variety of tourism attractions it offers international tourists.  This includes exquisite sandy beaches, wild animals, and music festivals like the popular annual Tamworth music festival, mountain hikes and multiple cultural heritages among many other alluring attractions.

Conclusion

The hospitality and tourism industry in Australia is thriving remarkably, but it faces some challenges which pull down its tremendous milestones this far. 

The following are the recommendations I am suggesting to mitigate the above-noted setbacks in the Australian tourism and hospitality industry.

1. There is need to ensure proper legislation to regulate the prices charged in the accommodation and aviation sectors to promote smooth running of the industry
2. There should be reduced costs and incentives to investors willing and able to venture into the luxury hotel sector to encourage more investing into the expensive yet rewarding venture
3. There should be more tourism promotions and marketing to the international community about the various tourist attractions Australia offers
4. Proper legislation is needed to protect the local investors in these sectors from unfair competition from international ones while promoting quality, affordable and competitive products and services

Reference

Andrew, C. & Martyn, G., 2004. General Studies.: Letts and Lonsdale.

Carter, R., 2004. Improving Environmental Performance in the Tourism Accommodation Sector. Journal of Ecotourism, 3(1), pp. 46-68.

Caryl, B., Aysin, D. & Andrew, L. (ed.), 2016. Off the Plan: The Urbanization of the Gold Coast.: Csiro Publishing.

Charles, R., Meg, W., Lindsay, B. & Paul, H., 2009. Central Australia: Adelaide to Darwin.: Lonely Planet.

Donald, M., 2011. `The Life and Death of Great Hotels: A Building Biography of Sydney`s The Australia`. Transactions of the Institute of British Geographers, 37(1), pp. 149-163.

Gary, A., Steward, A., Sara, D. & Philip, K., 2014. Principles of Marketing.: Pearson Australia.

Lisa, M., 2013. `Customer Accounting and Marketing Performance Measures in the Hotel Industry: Evidence from Australia`. International Journal of Hospitality Management, Volume 33, pp. 140-152.

Lisa, R., 2013. `Responding to Climate Change: Australian Tourism Industry Perspectives on Current Challenges and Future Directions`. Asia Pacific Journal of Tourism Research, 18(1-2), pp. 35-51.

Norma, D., Gillian, A. & Sandra, W. (ed.), 2004. Human Resource Management: International Perspectives in Hospitality and Tourism.: Cengage Learning EMEA.

Panarat, S., 2014. `The Evolution of Low-cost Carriers in Australia`. Aviation, 18(4), pp. 203-216.

Ralf, B., 2009. Ecotourism: Principles and Practices.: CABI.

Russel, A. & Judy, S. (ed.), 2010. Strategic Hospitality Leadership: The Asian Initiative. Singapore: Wiley.

Sharma, K., 2005. Tourism and Development. New Delhi: Sarup & Sons.

Simon, S. J., 2004. Beautiful Accommodation in Queensland, Australia.: Invermay Press.

Stephen, J., 2012. Tourism Management.: Routledge.

Susan, M., 2017. Advancing Toward Alternative Aviation Fuel Production in Australia. Industrial Biotechnology.