Outlook for short term visitor arrivals from Latin America

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Outlook for short term visitor arrivals from Latin America

? Tourism Australia, 2009.

    Tourism Australia and Tourism Research Australia permit copies to be made of this publication for the purpose of promoting Australian tourism, provided that Tourism Research Australia is recognised on any copies as the author of the report and the material is reproduced in its current form and a statement similar to the one listed below is included on any copy. However, copies may not be made for a commercial purpose, that is, for sale without the permission of Tourism Research Australia.

This work should be referenced as: Outlook for short term visitor arrivals from Latin America,

    Tourism Research Australia, Canberra.

    This publication is funded by the Commonwealth through the Council on Australia Latin America Relations part of the Department of Foreign Affairs and Trade.

Tourism Research Australia Level 3 11-17 Swanson Plaza Belconnen Canberra ACT 2617 GPO Box 1110 Canberra ACT 2616 Telephone: +61 6228 6100 Fax: +61 6228 6180 Email: Web: ABN 99 657 548 712

Image courtesy of Tourism New South Wales

Publication date: September 2009

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    Contents Summary 1

     Introduction 3

     Trends in visitor arrivals 3

     Purpose of visit 7

     The tourism environment 8

     Competition for international tourism 8

     Policy environment 9

     Cost of travelling to Australia 11

     Other factors 11

     Economic outlook for Latin America 12

     Arrivals forecasts 14

     Conclusion 17

     Appendix A: Methodology 19

     Appendix B: List of Latin American countries 21

     Glossary 22

     References 23 Tables

     Table 1 Main countries’ share of outbound travel in 2008 3

     Table 2 Annual growth rate of visitor arrivals to Australia 5

     Table 3 Macroeconomic assumptions 13 Table 4 Forecast inbound visitor arrivals from Latin America to Australia 16 Figures

     Figure 1 Outbound travel from Latin America and arrivals to Australia from

     Latin America 4

     Figure 2 Visitors to Australia from Latin America and all countries 5

     Figure 3 Arrivals from Argentina 6

     Figure 4 Arrivals from Brazil 6

     Figure 5 Arrivals from Chile and Mexico 6 Figure 6 Visitor arrivals by purpose from Latin America and World 2008 7

     Figure 7 Latin American visitors by purpose of visit 8

     Figure 8 Forecast visitor arrivals from Latin America 16

     Figure 9 Forecast visitor arrivals from main Latin American countries

     2009 to 2012 17 Page | iii

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    Latin America is a small but rapidly growing inbound market for Australia. Arrivals from Latin America account for only 1% of visitor arrivals but have more than doubled in the past five years: rising from 25,200 in 2003 to 62,000 in 2008. In 2008, visitor arrivals from Latin America grew 21% over the previous year and the economic value to Australia of these arrivals was $323 million. Each arrival, on average, contributed $7,024 to the Australian economy, 60% more than the average for all visitor arrivals.

    Tourism Research Australia forecasts visitor arrivals from Latin America to Australia will increase at a rate much higher than arrivals from the rest of the world. Latin American visitor arrivals are forecast to grow by 6% in 2009, with the highest growth rates to come from Argentina (40%) and Chile (10%), followed by Brazil (7%). Arrivals from Mexico and ‘Other’ Latin American countries are forecast to fall 14% and 5% respectively, in 2009.

    A gradual economic recovery in Latin America is forecast to support growth in arrivals of 15% in 2010. From 2008 to 2012, growth is forecast to average 14% a year to reach 106,000 in 2012; 71% higher than in 2008.

    Although the forecast growth is modest compared with trends of recent years, these projected growth rates still outstrip that for total arrivals in Australia (2.9% a year on average between 2008 and 2012). This compares with annual averages for:

Argentina, Brazil and Chile: over 17% ;;

     Mexico: 2% ;;

     ‘Other’ Latin American countries: 10% ;

    The positive outlook for inbound arrivals from Latin America is underpinned by:

     improving economic conditions in 2010 ;;

     favourable exchange rate movements ;;

     increasing airline seat capacity between the two regions ;;

     the increased awareness of Australia’s tourist attractions ;;

     increasing trade and cultural links ;;

     education policies in Brazil and Chile requiring students to be bilingual. ;

    Four Latin American countries account for 78% of total visitors from the region: Brazil, Argentina, Chile and Mexico. These countries are expected to continue providing the bulk of visitor arrivals, but high growth is also expected from other countries such as Colombia, Peru and Venezuela.

    The number of Brazilian visitors to Australia has increased substantially over the past 20 years and they now account for over 40% of visitors from Latin America. Page | 1

    Australia faces strong competition from the traditional destinations for Latin American outbound travel (Europe and North America). Tourism Australia’s

    marketing efforts are focused on Argentina and Brazil. These countries accounted for around half the inbound visitor arrivals from Latin America in 2008.

    Growth in visitor numbers will also be constrained by distance, relatively underdeveloped cultural and trade links and limited direct air services between the two regions.

    However, Australia is well placed to attract tourists seeking experiences different to those offered by Europe and North America, and could benefit from growth in the youth, education and luxury markets.

    The education market is a feature of the Latin American inbound market. Education visitors account for 28% of arrivals from Latin America but only 7% of all visitors to Australia. This lucrative Latin American market was valued at $163 million in 2008, up 18% from the previous year. These visitors, on average, each contributed 50% more than the average of all visitors to Australia.

The Latin American ‘luxury’ segment, which has traditionally favoured Europe,

    is seeking experiences that Australia is well placed to offer, for example, Indigenous, nature and outback experiences.

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    This report analyses and forecasts short term visitor arrivals from Latin America to Australia drawing on information from various sources including: United Nations World Tourism Organisation, Australian Bureau of Statistics, Euromonitor, Economist Intelligence Unit, OANDA, Consensus Economics and Tourism Research Australia databases.

    The analysis discusses trends in Latin American visitor arrivals to Australia and Australia’s competitive position in the Latin American market. The forecasts to 2012 provide a perspective on the potential growth on arrivals from Latin America.

Latin America includes Central and South America covering a land mass of over

    20 million square kilometres, comprising 22 countries with a total population of some 522 million (Source: International Monetary Fund, IMF, 2008).

Trends in visitor arrivals

    Four of the wealthiest Latin American nations (Brazil, Argentina, Chile and Mexico) account for 78% of Latin American visitors to Australia (Table 1). In 2008, residents from these same countries represented 71% of total departures from Latin America.

Table 1: Main countries’ share of outbound travel in 2008

     Departures from Arrivals to

    Latin America Australia ('000)

    Visitors Share of Visitors Share of

    (Million) total (%) ('000) total (%) Market

    Argentina 4.5 10.7 5.8 9.4

    Brazil 6.2 14.6 25.0 40.3

    Chile 3.5 8.2 10.3 16.6

    Mexico 15.9 37.5 7.5 12.1

    Rest of Latin America 12.3 29.0 13.4 21.6

    Total Latin America 42.3 100.0 62.0 100.0

Source: Euromonitor 2008, Tourism Research Australia OAD database

    The number of Latin American visitor arrivals to Australia has increased at a faster rate than total outbound travel from Latin America, indicating an increasing market share for travel to Australia (Figure 1). Page | 3

Figure 1: Outbound travel from Latin America and arrivals to Australia from Latin America

    220 220

     200 200

     Visitors to Australia 180 180 100 = 160 160 1999

     140 140 base Outbound from Latin America

     120 Index120

     100 100

     80 80 99 00 01 02 03 04 05 06 07 08

    Similarly, the growth rate in Latin American arrivals to Australia since 1986 has been stronger than growth in total arrivals to Australia (Figure 2). Arrivals from Latin America fell abruptly following the 2000 Sydney Olympic Games. This decline can also be attributed to events such as the:

collapse of the Argentinean economy at the end of 2001 ;


     September 11 terrorist attacks in the US, and to some extent the October 2002

    Bali bombings and the SARS epidemic in 2002 and 2003 ;


     the departure of Qantas from the Buenos Aires route following the drastic fall

    in demand for long haul travel. ;

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Figure 2: Visitors to Australia from Latin America and World

    220 220

     200 200

     180 180 100 = 160 160 Visitors from Latin America 1999

     140 140 base

     120 Index120 World

     100 100

     80 80

    99 00 01 02 03 04 05 06 07 08

Rapid growth resumed in arrivals from Latin America to Australia after 2003, with

    growth averaging 20% a year between 2003 and 2008 (Table 2). Despite this high

    rate of growth the Latin American market remains small, representing only 1.1% of

    all visitors to Australia.

Table 2: Annual growth rate of visitor arrivals to Australia

    Latin America World


    198695 11.5 11.6

    199500 18.6 5.8

    200003 -14.7 -1.3

    200308 19.7 3.3 Page | 5

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