Tourism Assignment: Literature Review on Impact of Pandemic on Australian Tourism Industry

Question

Task: You are required to write a well-researched tourism assignment presenting a literature review on the impact of COVID-19 on Australian Tourism Industry.

Answer

Introduction
As per the research on tourism assignment, the tourism industry across the globe has been going through a very tough time owing to the spread of the COVID 19 pandemic. Tourism in Australia is a big industry and a large number of people are dependent on this industry for earning their bread and butter. The outbreak of such a pandemic has created a very uncertain scenario and as a result of which local tourist companies like “Under Down Under’s Tours” is facing huge challenges in sustaining their business.The outcome of the pandemic has undoubtedly impacted the value chain of the entire tourism industry in Australia. The current situation demands better measures of support and recovery for the entire tourism sector of Australia. The level of anxiety caused by the spread of this virus has resulted to a lot of cancellation of foreign and domestic trips.

Reflection
The pandemic situation has given rise to a great level of crisis in the Australian tourism industry. A large number of foreign tourists have already cancelled their trips to Australia. In the absence of any proper resolution to this crisis the tourism industry of the nation is becoming disable and the local tourist companies are the worst sufferers of such a critical situation. Additionally, it is also imposing a great deal of cost to the tourism industry as well. The existing image of the pandemic has badly affected the mentality of foreign and domestic tourists for a considerable period of time. In addition to that there are various other side effects like traffic reduction in the hotel industry, airlines, handicrafts and also the transportation system at the domestic level had been affected in a very worst manner as well.

Review of Literature
Uncertainty of Australian Tourism Industry
The different researches and studies related to the impact of COVID 19 pandemic on the Australian tourism industry has shown that the resultant travel restrictions have reduced the demand of tourism among the travellers coming from across the world. Various records like the data shared by the UN World Tourism Organization have shown that the arrival of global tourists have already reduced by 20 to 30 percent in the year 2020 itself. The resultant loss to the tourism industry has been estimated nothing less than US$ 50 billion. In most of the famous tourist destinations of the world including those in Australia the volume of planned travel has already been reduced by almost 90 percent.

Australia is famous for unconventional tourist destinations as well, which includes sports and adventure tourism. Various conflicting restrictions on unilateral travel has badly impacted the regional level of tourism activities and the most sought-after tourist venues of the nation like jungles, sea beaches or similar other venues of amusement has been closed due to the pandemic. Due to the pandemic various protective measures like quarantine, ban on entry and similar types of restrictions have been imposed on travellers arriving from abroad. Most of the nations from which tourists fly down to Australia have also imposed similar restrictions on their citizens thus restricting them from travelling freely abroad (Polyzos, et al., 2020).

In the present world of globalization uncertainty plays a very vital role in shaping the decisions related to economic policy of a nation and Australia is no exception to that. According to most of the researches and studies majority of households tend to postpone their decisions of procuring commodities which are non-essential in nature whenever they perceive any chances of uncertainty impacting their earning capacity. Such postponement of consumption decisions exerts a great shock on the production capacity of the nation. This ultimately causes a decline in the GDP of the nation. So, the policy decisions of the country get highly impacted by such uncertainty and has an adverse impact on consumer decisions which results further decline in economic development of the country (Zhang, et al., 2021).

Impact of EPU on Australian Tourism Industry
Lot of scholars argue that there is a robust underpinning related to uncertainty and risk linked with the tourism industry in Australia. Various studies argue that the influence of uncertainty on the Australian tourism industry varies widely across different income groups and economies (Khalid, et al., 2021). Policy analysts have been considering a wide range of behaviour which is based on travel decisions made on individual assessments under such uncertain circumstances. Economic Policy Uncertainty or EPU has a great effect on the current situation of the Australian tourism industry. Such EPU had a huge adverse impact on the business tourism sector of Australia including other significant factors like flight seats and distance to be covered. Such findings played a very vital role in making the necessary policy interventions for meeting the need of tourism business in Australia (Pham, et al., 2021).

The uncertainty caused by the global economic slowdown has already caused a negative impact on the travel expenses made by individuals for the sake of travel and tourism purpose. It has already been seen from various studies that EPU has been a very strong determinantin forecasting the volume of tourist arrivals in Australia. Some of the recent studies have already shown that tourists arriving from Canada are more influenced by the rising rate of EPU while compared to the tourists arriving from Mexico to Australia (Nguyen, et al., 2020). Various studies have already shown that the impact of EPU on receipts from tourism has a single directional causal link in the short run whereas in the long run the impact is both ways, involving tourism in Australia and EPU (Nguyen & Valadkhani, 2020).

Various research papers have already shown the need of uninterrupted government support in Australia to expand and improve the current state of tourism. Extensive studies have been made on the influence of inbound tourism in Australia, which shows that how Australian tourism has been affected negatively by the geopolitical factors associated with the recent pandemic (Kreiner & Ram, 2020). Various studies have also suggested that nations like Australia who are having bidirectional connection between EPU and tourism should probe more to create effective feedback about its impact on Australian tourism. (Uzuner & Ghosh, 2020)

Some researchers have already pointed out that under such uncertain conditions people might travel frequently to those destinations which are closer but the same set of people will minimize spending money on travelling and tourism purpose when the income starts falling as is happening currently (Moghimi & Muenjohn, 2021). Such studies clearly shows that the impact of EPU on Australian tourism is manifold. The observations based on various research papers have indicated that reflection of policy measures should be used to accurately estimate and predict the arrivals of tourist in Australia (Ghosh, 2021).

Similarly, other studies have also shown that how the flow of inbound tourism is adversely impacted by factors like financial crisis and recent pandemic (O’Sullivan, et al., 2020). Such studies have shown that different crisis categories will negatively influence the Australian tourism industry in varying degrees. Being a part of the Australian tourist industry companies like “Under Down Under’s Tours” will have to bear with such consequences without any choice (Rowlands, et al., 2021). It clearly shows the need of policymakers to act in a very cautious manner while handling the different affects of such uncertainty on the tourism industry. Additionally, they also need to ensure an increased flow of inbound tourists to the various popular Australian tourist destinations during the favourable times.

Globalization and Australian Tourism
Australia gets visited by large number of tourists coming from rich nations like USA and China. The increased level of per capita income of such tourists arriving in Australia is always expected to enhance the revenue from tourism in Australia by increasing the purchasing power of the Australian market. Whereas, an increased level of relative price in Australia, when compared to such nations like the US and China will indicate an increase in the expenditure bringing negative affect on the flow of tourists in Australia (Wen, et al., 2020). It clearly shows the close relation of tourism economy that exists between the economic standard of the originating nation from where tourists are coming and the nation which is their destination, as is Australia in this case.

Various studies have already shown the existence of a reciprocal relationship between globalization and tourism. Tourism acts as a very vital influencing factor on globalization (Chen, et al., 2020). At the same time the demand of tourism is greatly influenced by the subtleties of globalization. Hence it is always expected that globalization will have a favourable influence on tourism, particularly on Australian tourism in this case. Any type of uncertainty particularly at the global level will dampen the tourism industry everywhere. The same has happened in case of Australia as well. There has been a huge drop in the number of foreign tourists coming to Australia. The current level of uncertainty caused by COVID 19 have affected almost all aspects of human livelihood.

Containment has been an integral part of fighting this pandemic and is closely linked to the effectiveness of other practices like lockdowns, social distancing, proper availability of vaccinations and other similar type of strategies associated with the prevention of such large-scale health disorders (Lim, 2021). At this juncture it is very uncertain to predict the success rate of short-term policies that has been adopted by the Australian government as a response to the ongoing pandemic. It can only be measured based on its impact on uncertainty related to consumer spending as and when the pandemic retracts.

Impact of Global Shock on Australian Tourism Industry
Lot of studies have already shown that volatility of exchange rate in the international market is closely linked to global uncertainty as a result of which it will have a negative impact on the inflow of tourists in Australia (Grozinger & Parsons, 2020). Such volatility is one of the outcomes of the recent pandemic and how it has impacted the global economy across all levels. This clearly indicates the risk averting tendency of the tourists reaffirming the fact that the tourism sector has a high flexibility of demand and is extremely vulnerable to such global shocks like pandemic or war. The current order of globalization indicates that such global shocks will have a whirlpool impact on both Australian economy and showing the vulnerability of tourism during such challenging periods.

The complementary policies covering the macro-economic guidelines of Australian tourism can prove to be extremely helpful in rebuilding the level of confidence among global travellers and will attract them to visit Australia. Such a revival in the demand of tourism can be achieved only when the curve of the pandemic flattens (Munawar, et al., 2021). As tourism in Australia relies greatly on the state of affairs of competing economies of other nations as well hence the negative significances of the pandemic can be felt very strongly. The huge downfall in global travel has penetrated into the global financial markets as well. Such factors are playing an important role in increasing the tendency of consumers for risk aversion. However, in the long run this reduces the confidence level of the international travellers.

Any drop in the confidence level of the consumers or travellers will have an adverse impact on the economic growth of Australia. Researches have shown that when compared to the adverse impact of SARS epidemic the current pandemic has caused a greater damage due to the extension in the global chain of integration. As a result of which the impact of negative spill over gets aggravated (Dube, et al., 2021). Hence, considering the contribution of first world countries in the Australian tourist industry, the hostile shock wave arising out of the recent pandemic is maximizing the risks related to travel and tourism in Australia.

Visitor Economy in Australia
The visitor economy forms a crucial part of the Australian economy. For every dollar earned from tourism and additional income of 83 cents gets added to other parts of the Australian economy.As per various studies the Australian tourism industry has experienced a steady growth for a decade ranging from 2009 to 2019. During this period the rate of visit from international tourists increased almost up to 70 percent and the resultant spending on Australian tourism also increased by approximately 80 percent. The same positive scene was seen in domestic travel as well. Overnight trips at domestic level increased almost by 75 percent and the resultant spending on domestic travel also increased almost by 78 percent (Dean, et al., 2020).

However, the same tourism industry of Australia suffered a huge setback due to the COVID 19 pandemic. The immediate results have shown a sudden drop of visits by global tourists along with increased prohibitions on domestic movement caused by increased concerns of safety and health. As per the latest available records only 50 percent of global tourists have shown their interest in travelling to Australia in coming six months and just 15 percent of global tourists have shown their intend for booking a holiday as immediate as next month (Lindsay Smith, et al., 2021).

Short Term Changes in Australian Tourism Industry
These are mainly the result of the challenges faced by the Australian tourism industry due to the recent pandemic. Latest studies have already shown that the tourism industry of the nation is now only catering to the need of the tourism market at domestic sector only. As a result of the pandemic, spending on trips has minimized to great extent. Such domestic trips have seen a rise in frequency of travels but drop in spending. The average spending par trip for each person has reduced from AUD 650 in June 2019 to AUD 390 in June 2020 (Prideaux, et al., 2020).

Sudden closing of international borders due to pandemic has caused great damage to the tourism industry which cannot be compensated only by domestic travelling of internal travellers.Lack of global tourists have already seen a 25 percent drop in hotel occupancies across Australia. Some integral part of tourism industry has suffered from huge loss of revenue resulting out of lockdown during pandemic. Segments like conference and conventions have experienced 99 percent drop in their revenue earnings, similarly the segment of organized tour suffered a drop of 98 percent and even the taxi industry connected with tourism suffered a drop of 95 percent in their revenue earnings.

Many projects related to tourism have suffered a slowdown due to the pandemic restrictions. Some tourist projects that were under the phase of construction got halted because of social distancing norms and lockdown restrictions, some projects also got delayed due to lack of material supply. A lot of hotels which were supposed to start operating from 2019-20 had to delay their openings because of pandemic restrictions. This clearly shows that the impact of pandemic has reached every stage and every segment of the Australian tourism industry (Pak, et al., 2020). The chances of immediate revival of the tourism segment are still impacted greatly by the various restrictions of social distancing and the limitations of capacity applied on the different venues.

Conclusion
The findings accumulated from various research and studies related to the current status of the Australian tourism industry under the pandemic situation has shown the various challenges through which it is passing now. The situation has deteriorated particularly since March 2020 causing great damage to the overall landscape of Australian tourism industry. The loss in national revenue considered on year on basis has recorded a 60 percent drop, the loss in actual terms is more than AUD 20 billion as on December 2020. This is not the end; further scope of loss persists as the impact of pandemic continues and the end is not known to anyone (Bilsland, et al., 2020).

Various supports from the Australian government like the Business Support Fund has been provided to the mostly affected business segments like that of tourism and hospitality (Peters, et al., 2020). Other factors like global index of uncertainty have also compelled tourists from all over the world to restrict their expenditure on travelling as a result of which the flow of inbound tourists to Australia has suffered hugely. The globalized nature of modern world has a far-reaching effect on the tourism industry of Australia as well. This has brought in unprecedented level of hardship over the tourism sector of Australia in recent times.

This entire review is about the impact of the recent pandemic on Australian tourism industry. The affect of global economic slowdown has caused great damage to Australian economy as well (Hall & Seyfi, 2020). Considering the various facts and facets related to this aspect of Australian tourism I believe that robust support from the government and framing of new policies to suit the need of the hour is very important for reviving the health of Australian tourism industry in near future.

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