TOURISM ACCOMMODATION AND TRAINING PART B Chapters 1 The Inquiry 2 The tourism industry 3 The economic impact of tourism 4 The stock of tourism accommodation in Australia 5 Tourism accommodation segments 6 Accommodation provision and the natural environment 7 Approvals and standards 8 Tax and tourism accommodation 9 The accommodation market fundamentals 10 Investment during the last decade 11 Profitability of tourism accommodation 12 Future investment in tourism accommodation 13 Employment in tourism 14 The tourism labour market 15 Institutional arrangements for the delivery of tourism training 16 Tourism training 1 THE INQUIRY The main purpose of this chapter is to explain the nature of the inquiry and the procedures adopted in conducting it. There is a brief description of the scope of the inquiry and the terms of reference. It also explains how the two elements of the inquiry, accommodation and training, have been interpreted in the report. The chapter concludes by outlining the report structure. 1.1 Introduction The terms of reference for the inquiry direct the Commission to report on among other things: • the structure and competitiveness of accommodation providers; • cost structures compared with competing destinations; • impediments to access to capital for industry investment; • the impact of institutional, regulatory and taxation measures; • the effect of industrial awards and agreements on costs and flexibility; • the appropriateness and adequacy of existing training programs; and • the level and effectiveness of any government support measures. The terms of reference also request that the Commission report on examples of past successes and failures by way of case studies. The identification of strengths and weaknesses and the use of case studies, as required by the terms of reference, are useful approaches in undertaking an industry study and are used where appropriate. However, the overall thrust of the inquiry is to identify the relevant factors underlying industry performance and competitiveness. Governments have limited direct involvement with the tourism industry. The main support provided by governments is for marketing and training. The former is not included in the terms of reference for the inquiry. The complete terms of reference for the inquiry are reproduced facing page 1 of the Overview. 43 TOURISM ACCOMMODATION AND TRAINING 1.2 Scope of the inquiry The reference does not explicitly specify the scope of the inquiry, but it is clear that the two elements of the inquiry, tourism accommodation and training, are the subject of the inquiry, rather than the tourism industry as a whole. Nevertheless, it is the growth of the tourism industry as a whole, that provides the context in which the inquiry has been conducted. As an industry development reference, the inquiry is concerned with opportunities for, and impediments to, growth — specifically, the extent to which existing tourism accommodation and training arrangements are assisting or impeding the development of a competitive tourism industry. The inquiry is therefore forward-looking. Before looking at the future, the first and not insignificant task of the inquiry, has been to describe the industry as it is at present. As will become obvious during the report, certain elements of the recent history of the industry also have a bearing on the prospects for the industry’s future growth. A recent over- supply of accommodation in some key destinations has led to what the industry calls ‘profitless growth’. For the time being at least, this particular piece of history seems to be dampening new investment in some destinations. From the perspective of the Australian economy, tourism accommodation and training are not so much interesting for their own sake, but because a world competitive tourism industry can generate increased economic development. From this perspective, the task of the inquiry is to identify sources of competitive advantage and how tourism accommodation and training can contribute to the competitiveness of the tourism industry. 1.2.1 What is tourism? Although most people have a mental picture of what tourism is, the nature of the ‘industry’ can be unclear in a definitional sense. Tourism is not so much an industry as a collection of activities or a pattern of demands. The World Tourism Organisation (WTO) has defined tourism as: ... the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. (WTO, 1991, p.8) Australian bodies, in particular, agencies responsible for gathering and analysing data on tourists, use similar definitions. Although tourism is described in a definitional sense by what people do and where they travel, its economic impact is determined by how much tourists 44 1 THE INQUIRY spend. There is in turn a link between what tourists spend on accommodation and the requirements for trained staff to meet their needs. In this sense, there is an inter-dependency between the two elements of the inquiry. Each element however has its own definitional aspects as discussed below. For definitional purposes, accommodation is considered to have one boundary and training another. 1.2.2 Tourism accommodation The definition of a tourist (given above) determines what is tourism accommodation: any accommodation used by a tourist. However, given there are no public policy issues pertaining to the use of friends’ and relatives’ houses by tourists (which is not an insignificant source of accommodation for tourists), such accommodation is omitted from discussion. To analyse tourism accommodation, the sector is best thought of not as a single entity, but as comprising many different segments, from 4 and 5 star hotels to backpacker hostels and caravan parks. The inquiry therefore focuses on the factors that contribute to or detract from the competitiveness of some or all of these different accommodation segments. 1.2.3 Tourism training A vast range of occupations are involved in providing goods and services to tourists, not only those associated with accommodation but with such activities as tour guiding, travel bookings and restaurant meals. Improved staff training can improve competitive advantage through higher productivity and customer enjoyment of the tourism experience. Such training can lead to additional business through word of mouth and an increase in repeat business. 1.3 Why investigate tourism accommodation and training? A century ago, travel for pleasure was an experience largely confined to the wealthy and there was far less business travel than there is now. With the advent of mass tourism this has changed dramatically and tourism is now a fast- growing industry worldwide. The tourism industry is also growing rapidly in Australia and is generally considered to be a success story. Tourism accommodation and training are important for the ongoing development of an economically viable tourism industry from which the benefits will flow through the economy generally. 45 TOURISM ACCOMMODATION AND TRAINING 1.4 Conduct of the inquiry Following receipt of the terms of reference the Commissioners commenced a round of informal visits to seek the views of a wide range of people. Accommodation owners, financiers, trade union officials, trainers, workers and representatives of industry and government agencies were consulted. An issues paper was subsequently prepared and distributed to interested parties. Initial public hearings were held in May, June and July 1995 in Sydney, Melbourne, Darwin, Adelaide, Perth, Brisbane, Hobart, Cairns and Canberra. Following release of the Draft Report in November 1995 a second round of public hearings was held. At this time representatives of the major industry interest groups wrote to the Minister seeking an extension of time to make submissions and for a delay in the date by which the Commission should present its report. The Minister agreed to industry’s request and a new reporting date of 23 April 1996 was set. A total of 184 submissions were received. Organisations and individuals who made submissions to the inquiry and participated in industry visits or at public hearings are listed in Appendix A. 1.5 Structure of the report The report is in four parts, A to D. Part A contains the terms of reference and the overview. Part B contains the chapters. There are four case studies in Part C and the appendices are in the final part of the report, Part D. 46 2 THE TOURISM INDUSTRY Tourism to and within Australia is a high profile industry, forecast to grow until the year 2000 and beyond. The purpose of this chapter is to present an overview of Australian tourism and put it in a worldwide context. The Chapter defines tourism and presents a brief history of it in Australia. It then discusses worldwide and regional trends in tourism, comparing them with Australian trends. The Chapter discusses some of the main influences on tourism in Australia and concludes with a discussion of the role of the government in supporting tourism. 2.1 Measuring tourism as an industry It is pertinent to this inquiry to have a clear understanding of what tourism is. As will become evident, how tourism is defined and measured has implications for the two distinct elements of this inquiry — accommodation and training. Industries are typically thought of in terms of their output (for example bales of wool) and measuring and assessing them involves aggregating activities that produce similar products. However, tourism does not conform to this model. It is not possible to measure tourism as the supply of a particular product: ... tourism supply is defined in terms of the demand (of the buyer) rather than, as usual in other industries, in terms of the properties of the product and its production. (Morley 1990, p. 4) The reason is that tourists buy products which are also bought by the rest of the community. Examples are local transport and restaurant meals. The extent to which taxis are part of the tourism industry depends not on the service they provide but on who buys it. In Australia, official data on tourists, tourism activities, expenditure and accommodation are provided by three major bodies — the Australian Bureau of Statistics (ABS), the Bureau of Tourism Research (BTR) and the Tourism Forecasting Council (TFC). The states and territories also produce official data for their jurisdictions. The measures used for tourists in statistical publications are shown in Box 2.1. 47 TOURISM ACCOMMODATION AND TRAINING Box 2.1 Statistical measures of tourists and tourist trips The term tourist is used to describe overseas visitors, domestic overnight visitors and domestic day-trippers. The following definitions are important in understanding the statistical data. • Short-term inbound arrivals of overseas visitors. This term is used for overseas visitors whose intended stay in Australia is less than 12 months. It is often shortened to inbound arrivals or overseas visitors. This classification also includes students and others who intend to stay less than twelve months. The BTR survey only includes those over the age 15 years, but the ABS survey includes all visitors. • Domestic overnight trips. In BTR statistical collections, a domestic tourism journey is referred to as a trip. The main destination of the trip is recorded as the place where the most nights on the journey were spent. Any place where one or more nights were spent whilst on a trip is recorded as a visit; hence, domestic tourism trips subsume visits and comprise trips for any purpose including business trips. • Domestic day-trips. A day-trip is defined as ‘a trip away from home involving no overnight stay, at least four hours in duration where the main purpose of the trip is for pleasure’ (BTR 1995b). Both the ABS and the BTR are moving to align Australian tourism data collections with the framework and definitions developed by the United Nations Economic and Social Council (UNESC) and the World Tourism Organisation (WTO). This framework was ratified by the UNESC in February 1993 for the purpose of collecting internationally comparable tourism statistics. In this framework, tourism is defined as: ... the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. (UNESC 1992, p. 8) In addition to those travellers who stay overnight the UNESC–WTO definition of tourism includes day-trippers. 2.2 The history of tourism The Industrial Revolution brought with it technological changes that permitted relatively inexpensive transport, affordable by the emerging middle class. Increasingly these people were able to spend part of their wealth on discretionary goods such as travel for leisure. In the twentieth century, tourism, or as it was previously known, travel, has been driven by a range of factors. 48 2 THE TOURISM INDUSTRY Prior to World War I, before widespread adoption of the automobile, it was the custom to use public transport to reach leisure destinations. The most extensive transport networks were linked to major cities such as Melbourne and Sydney. The popularity of the Dandenong Ranges to Melbourne’s east and the Blue Mountains to Sydney’s west typified the recreational preferences of this period, attracting guests to the numerous guesthouses and private hotels — two dominant styles of tourism accommodation of that era. Visitation and the popularity of destinations reflected strong seasonal patterns. Coastal locations were obviously popular in summer, and northern coastal regions such as the Gold Coast and, for the more affluent, the Great Barrier Reef were drawcards in winter. Destinations beyond metropolitan areas began to achieve prominence as motor car touring increased in popularity after the depression of the 1920s. For example, the Pacific Highway from Sydney to the Gold Coast fed tourism growth on the Gold Coast, and other tourism centres that developed at various nodes in between. Australia became linked to world air travel in the 1930s as one point of connection on Imperial Airlines’ flights around the world. Australian tourism was historically linked to world leisure tourism via the preferences of the wealthy, who could afford to travel to their destination of choice. Prior to World War II, rail transport and sea travel were prominent. While representing the best transport technologies of their era, these means of travel were relatively slow. Following World War II, tourism in Australia benefited from reduced travel times, as the lower cost of commercial aviation encouraged the expansion of both the inbound and domestic markets. With the advent of jet aircraft in the late fifties, more distant destinations became accessible. Much domestic tourism was closely associated with natural attractions, such as the beach and the Australian bushland. Rapid transport facilitated expansion of tourism in remote natural areas, further increasing the appeal of Australia to the international tourist market and providing more options for domestic travellers. Changing fashions also led development as certain regions rose in popularity, then sometimes declined, or changed according to the type of tourist who visited. For example, the Gold Coast changed from a ‘sea of tents’ — mainly at Christmas time — with occasional fibro-cement beach shacks, to a near continuous strip of commercial tourism accommodation, including nodal concentrations of resorts, motels and large hotels. Tasmania has evolved from being an off-shore ‘holiday isle attraction’, appealing to all types of tourists, to a leading exponent of nature-based tourism, and more recently has diversified its appeal by providing a range of bed and breakfast accommodation. 49 TOURISM ACCOMMODATION AND TRAINING Although what we now call tourism has a long history in the northern hemisphere, mass tourism to and within Australia is a relatively recent phenomenon. While commercial travel and pleasure touring by the wealthy has been a longstanding part of Australian life, mass tourism emerged largely over the past 50 years. Since World War II tourism in Australia has continued to grow. By the mid 1980s, the rate of expansion of the Australian tourism industry was so rapid that the Organisation for Economic Development and Co-operation (OECD) identified Australia as the World’s fastest growing tourism destination (Report of the Australian Government Inquiry into Tourism, 1986). Indeed the scope of tourism now extends to all parts of Australia and caters for most types of tourist. 2.3 Tourism worldwide Tourists comprise two groups, those travelling within their own country (domestic tourists) and those travelling outside their home country (international visitors). Figure 2.1 Worldwide tourist arrivals at international borders and annual changes, 1960 to 1994 600 18 16 500 14 s) A n n o 12n m arrivals (milli 340000 6810ual change (pe Touris 200 4 r cent) 2 100 0 0 -2 01234567890123456789012345678901234 66666666667777777777888888888899999 99999999999999999999999999999999999 11111111111111111111111111111111111 Total Tourist Arrivals Percentage Change P.A. Source: WTO 1995, p. 2 The WTO publishes data on the number of tourist arrivals at international borders throughout the world. To calculate these data the WTO collate 50