Bushfires and weather hurt SA tourism activity, while coronavirus dampens the outlook

people relaxing on the beach

Eighty per cent of South Australian tourism businesses were impacted by the recent summer bushfires, with a slight majority (51 per cent) reporting they have been impacted to a moderate or significant extent.

These results come from the December 2019 quarter edition of the SA Tourism Barometer report – a quarterly survey of Tourism Industry Council South Australia members designed to measure recent activity levels and expectations regarding the outlook. The latest survey, which was analysed by SACES, included questions designed to gauge the impact of recent bushfires in South Australia and elsewhere in Australia on local tourism organisations.

The bushfires have primarily affected tourism businesses through the cancellation of bookings, with 61 per cent of survey respondents reporting such effects, while 40 per cent reported reduced walk-ins. The net effect from these reductions in activity was that half of surveyed businesses reported reductions in turnover or cash-flow as a consequence of the bushfires.

The other major forms of impact attributed to the bushfires were damage to tourism attractions that complement tourism businesses (18 per cent of respondents) and interrupted access to attractions (14 per cent).

Not all businesses have been negatively impacted, with a handful noting increases in visitation, in part because they are located in regions not affected by bushfires.

Business activity falls sharply
The bushfires contributed to a large decline in the Business Activity index for the December quarter, which contracted by 34 per cent to 86 points (an index below 100 indicates more businesses reported weaker activity than stronger activity). The index is now at its lowest level since mid-2012, a period when the South Australian economy slowed sharply and the Australian dollar was trading at a very high level, dampening international visitor activity.

Beyond bushfires, unfavourable weather was identified as the next most common factor impacting activity during the December quarter. A number of respondents noted that extreme hot weather discouraged visitation and led to the cancellation of events and services. Several respondents also noted that drought continued to have a negative impact on their business.

Other factors that were identified as negatively impacting business activity during the December quarter include general low demand, the weak state of economic conditions, enhanced competition, and internal factors, such as staffing issues. A couple of respondents also noted, respectively, the snapper ban and the closure of the Uluru climb, as having negative influences.

On the other hand, a smaller but significant number of businesses (32 per cent) reported positive developments in activity compared to a year earlier. Factors that contributed to improvements in recent activity were varied and included increased marketing and promotion activity, a natural increase in event and conference bookings with the move into the peak season, redevelopment of facilities, provision of new and diversified visitor services, and positive reviews or experiences for customers.

In terms of market segment performance, respondents reported significant deteriorations in activity for ‘holiday / leisure’ and ‘business’ travel for the December quarter. Although activity generally held up in relation to ‘conferences and business meetings’ and ‘festivals and events’, a slightly larger proportion of respondents reported weaker rather than stronger activity for each of these market segments.

Business outlook takes a significant hit in response to bushfires and coronavirus
The Business Outlook index, which measures net sentiment regarding the outlook over the next three months, has deteriorated sharply in response to the effects of bushfires across Australia on visitor activity. The Business Outlook index fell by 51 per cent to a record low of 64 points.

Approximately 61 per cent of respondents were expecting weaker activity over the first three months of 2020 compared to a year earlier, while almost one-quarter of respondents were expecting stronger activity.

Beyond the lingering impact of the bushfires, the outbreak of coronavirus in China has emerged as another major threat to the tourism sector. The latest survey was conducted in late January and early February, the period when coronavirus came to widespread global attention. Some of the more recent respondents noted that coronavirus had led to cancelled bookings. A travel ban on non-Australian residents travelling from China is expected to have a significant impact given that China is a major emerging international market for some tourism businesses.

Paradoxically, some respondents from regions unaffected by the recent bushfires were expecting that conditions would soften as a consequence of a shift in focus to support bushfire affected regions. Other factors identified as contributing to the weaker outlook included general economic weakness and pressure on household budgets.


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