Research Insights A growing gap between arrivals and departures

A growing gap between arrivals and departures

September 2022
Phocuswright Research

As restrictions eased in Australia and New Zealand, hotels and other forms of accommodation - particularly in rural areas - saw higher average rates and increased occupancies. According to the latest Phocuswright research report Australia-New Zealand Travel Market Report 2021-2025, this was fueled to some extent by urbanites retreating to the countryside to escape the confines of their day-to-day, work-from-home routines.

Recovery in the airline sector was more gradual and concentrated in the latter part of 2021, following the easing of restrictions on domestic travel. Despite the appearance of Omicron variant toward the end of the year, consumer confidence remained strong, with the result that ANZ travel market gross revenue gained 13% in the year (see figure below).

Phocuswright Chart: Total Travel Gross Bookings and YOY Change
(Click image to view a larger version.)

While growth is projected to accelerate (25%) in 2022, further recovery is being limited by a variety of macro level and travel-related factors. These include:

Rising inflation and exploding interest rates, both of which are dampening consumer confidence and domestic demand

Strained relations with China which will likely severely limit this key international market

And operational challenges in the airline, hotel and car rental segment that are restricting supply and hampering service levels

Although both countries remain highly desirable to foreign visitors, distance from key markets, rising prices and logistical issues such as visa processing times and flight availability/cost will limit the return of inbound travelers. Despite efforts to target higher-spending international clients rather than more traditional budget-oriented visitors, this growing gap between arrivals and departures will slow recovery in the short term. Overall, ANZ gross bookings will only recover to 2019 levels in 2025.

Looking ahead, there’s a lot that hinges on an international rebound and sufficient and suitable supply. This full report helps companies and executives understand what factors will help or hinder longer term sustained recovery in the ANZ market. Expect insights on the travel distribution landscape, the state of suppliers in the region and more.

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