International border reopening: What it means for hospitality

International borders reopening for hospitality businesses

Hospitality operators across Australia were thrilled when the Government announced the reopening of international borders to tourists in February this year.

Hospitality operators across Australia were thrilled when the Government announced the reopening of international borders to tourists in February this year.

Australian hospitality businesses rely significantly on international tourism to bring in customers, skilled workers and general hospitality staff.

  • Roughly of every international tourist dollar is spent on food and accommodation services in Australia on average.
  • Hotel occupancy rates dropped by an average of 50% compared to the previous year, during 2020, due to the pandemic and associated border closures and travel restrictions.
  • According to job data from earlier this year, applicants for hospitality jobs hit a two-year low, whereas jobs advertised hit a two-year-high, jumping 20% in February alone.

Since borders reopened the number of international arrivals entering Australia has been thankfully growing rapidly month-on-month, from around 16,000 arrivals in October 2021, to 271,000 in February, 374,000 in March and then 575,000 arrivals in April 2022.

This growth represents a hopeful turnaround for many hospitality businesses relying on tourism that have struggled through the last several years of the pandemic.

For those in the industry who are hoping for some clarity on what the rest of 2022 holds, however, these numbers don’t tell the whole story.

What the resumption of international arrivals means for hospitality businesses in 2022

Overall, many in the industry are optimistic about the rest of the year, but expect that it will take some time and effort for business activity to fully return to pre-pandemic levels.

Different types of travel will resume at different rates

Right now, many of the arrivals flying into airports around the country are returning expats and long-term residents, such as foreign workers or international students, as opposed to short-term visitors. ‘Visiting Friends and Relatives’ or VFR travel is coming back rapidly, while obstacles, such as confusion over airline regulations, consumer hesitancy and ongoing COVID restrictions, continue to present challenges to the return of leisure tourists.

Expats, family members and other long-term residents have waited patiently for borders to reopen, and the numbers reflect their rush to come back. On the other hand, short-term visitors, including tourists arriving in May 2022 are still at only 21% the rate of pre-COVID 19 levels for the same month.

However, this number is still better than expected, according to some. Australian Federation of Travel Agents CEO Dean Long said in a recent interview that the rate of short-term arrivals so far actually indicates a strong start, and signals further growth later in the year.

"The recovery is going as we expected. We expected to really see those numbers really move up to 60 per cent by the time we get to October. So, it’s a very strong start considering we were at close to one per cent at the beginning of last year," he said.

Short-term travellers to Australia are expected to pick up later in the year as:

  • Airlines add new routes and lift restrictions, such as testing requirements
  • Other countries ease travel restrictions
  • The northern hemisphere enters into longer-term school holiday periods

Aviation consultancy ASM Australasia has conducted a detailed forecast, predicting that international tourism will steadily climb back up over the next few years, reaching a full recovery to 2019 levels by approximately 2026.

Travellers from different countries are returning at different rates

Looking at the data on arrivals it’s clear that national restrictions and current events in other countries, particularly ongoing COVID-19 restrictions in China, are having an impact on who is travelling to Australia.

  • International tourists from China are at 4% of pre-pandemic levels
  • American visitors are at 20% of pre-pandemic levels
  • Indian visitors are at 58% of pre-pandemic levels
  • Visitors from the UK are at 38% of pre-pandemic levels

Regions or businesses that rely on tourism from specific national markets, such as organised tours of Chinese visitors, may have to continue to diversify and encourage domestic customers until barriers to tourism are further lifted.

Tourism Australia, aware of the ongoing loss of Chinese tourists, invested heavily in marketing campaigns earlier this year targeting US and UK citizens. So the early numbers indicating growth of visitors from these places may be a good indication that the campaign is working.

Ongoing hospitality staff shortages and the return of international tourism

Hospitality businesses in Australia don’t just rely on international travellers as customers, they also form a significant part of the skilled workforce. As a result of border closures, hospitality businesses around the country have experienced ongoing staff shortages that have constrained their opening hours.

Since the border reopening, some restaurateurs have attempted to bring in talent by recruiting overseas and paying for chefs and other skilled staff to fly to Australia. Rockpool Dining Group recently hired 125 recruits from the Middle East, Europe and the United States at a cost of $10,000 to $20,000 per employee. Other restaurateurs, such as Sydney’s Luke Mangan, are publicly lobbying the government for help, while some wait for the numbers of international visitors to grow to fill the gaps in their roster.

For small hospitality businesses, the cost of importing foreign staff is prohibitive. In the immediate future, recruiting unskilled local staff and providing training on the job, or incentives and support to help them get an education remains a more viable alternative for many in the industry.

Industry Australia Chief Executive Innes Willox has called for a boost in skilled migration along with an urgent upskilling of the workforce to ensure hospitality and other businesses have the staff they need.

It’s an excellent time to develop a career in hospitality

If you are considering upskilling or getting a hospitality management education, now would be the perfect time to enter into a leadership career in the hospitality industry. With big shortages of skilled hospitality professionals nationally, the industry can offer unprecedented opportunities for fast promotion. If you like the idea of managing a restaurant or hotel within just a few years, consider upskilling now.

With a or similar course under your belt, you would quickly climb the ladder and be able to pick from a smorgasbord of senior roles soon after graduation.

You can explore different career options in the hospitality industry here.

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