Australia received around 6.7 million international visitors in the year to July 2014, according to the Australian Bureau of Statistics (ABS). The number of international tourist arrivals has risen over the last two years. A large number of Australians travel overseas each year but the rate of yearly departures have slowed over the last few years.

Over the past 15 years, tourism has on average accounted for 3% of Australia’s gross domestic product each year. Tourists’ spending, one of many contributors to Australia’s economic growth, added around AUD 115 million (USD 107 million) a day to the Australian economy in 2012-13 (ABS).

Historically, New Zealand and the United Kingdom made up for the majority of international visitors to Australia. Reasons for this could be due to proximity to Australia, at least in New Zealand’s case; and Australia’s colonial ties, motivating antipodean travels from the United Kingdom.

Over the last decade, the average annual growth in international visitors from China and from India has been well ahead of the rest, at 14.4% and 14.6% per annum. In absolute numbers, India still accounts for only a small proportion of total visitors (3%). Visitor numbers from China have been increasing rapidly in the past decade, and are forecast to reach parity with New Zealand over the next ten years, increasing by an average rate of 8% per annum (Tourism Forecasts – Autumn 2014, Tourism Research Australia). The growth in tourist numbers from other Asian countries and the Middle East is also forecast to be robust over the next decade.

As the number of international visitors increases, so will the amount of spending by these visitors in Australia. Close to half of all inbound tourism expenditure is by Asian tourists, and this is forecast to increase over the next ten years (Tourism Research Australia). The growth will be led by China – spending by Chinese tourists in Australia is forecast to make up for almost 25% of total inbound tourism expenditure by 2022-2023, according to Tourism Research Australia. International retailers have been expanding their presence in Australia in recent years to capture this sector of the market, as well as to cater to local consumers. Some major international luxury retailers and fast fashion retailers expanded into Australia in 2014, increasing the retail offering, and at the same time satisfying a range of tourist budgets.

Exchange rates also bear considerable influence on international travel. If the Australian Dollar were to weaken, as many expect will, then the number of Australians travelling overseas will likely decrease and we can expect further growth in international tourist arrivals, potentially offering a dual, positive impact on the retail market. Nominal retail spending in Australia, which has been growing by an average of 3.5% per annum over the last five years (ABS), will be further boosted by an increase in inbound tourism expenditure.

Sydney – a popular travel destination for international tourists

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