$40 billion worth of new tourism projects have been identified by CLSA which could provide the foundations for Australia's next big boom, helping the nation to offset the declining investment in the resources sector.
Over the coming years and decades, more and more Asian tourists are expected to travel down under. Indeed, Australia is one of the highest destinations on Chinese travellers' wish lists with The Wall Street Journal recently showing that Australia is their fourth most popular destination in 2015. Australia was seventh on the 'preferred destinations' list just last year, according to the survey.
Source: The Wall Street Journal
The incentive to visit our great land should only increase as the Australian dollar weakens and more exchange students venture over here to study.
Companies spanning several industries would stand to benefit handsomely from this boom. As highlighted by Fairfax media, here are some companies CLSA's head of Australia research, Scott Ryall, believes will be amongst the beneficiaries:
- Steel producer Arrium Ltd (ASX: ARI) and construction group Lend Lease Group (ASX: LLC) would benefit from additional development
- Sydney Airport Holdings Ltd (ASX: SYD) would benefit from greater airport traffic
- Casino operators Crown Resorts Ltd (ASX: CWN), Echo Entertainment Group Ltd (ASX: EGP) and SKYCITY Entertainment Group Limited-Ord (ASX: SKC) would benefit from greater tourist spending
Other companies such as Village Roadshow Ltd (ASX: VRL), through their theme parks, and Mantra Group Ltd (ASX: MTR), through its various hotels and resorts, could also benefit.
However, to allow the trend to play out to its maximum potential, the Australian government would likely need to reduce visa restrictions to make it easier for travellers to gain access to Australia. Chinese travellers, who are the world's largest group of outbound travellers, are also Australia's most lucrative in terms of number of dollars spent in Australia while they are the second largest inbound market, right behind New Zealand.
As a result of tight visa restrictions, more and more Chinese travellers have been travelling to other destinations such as North America and Europe with The Australian Financial Review reporting that our share among Chinese tourists has fallen from 3.8% in 2001 to 3.4% today. By easing those restrictions, we could regain some of that market share which could provide a strong foundation for growth for years to come.
