Reality bites! High cost of living has become a plague upon the tourism industry

The 2024 June Quarter Tourism Barometer showed activity fell back below the neutral level in the quarter following a sharp rebound in activity in the March Quarter. The Business Activity Index has now been below the neutral level for four of the last five quarters, reflecting the ongoing impact of higher interest rates, elevated inflation and lower household disposable incomes.

Unfortunately, the Business Outlook Index remained below the neutral level in the June Quarter, reinforcing that the tourism industry is likely to continue to face significant challenges in the near-term. The sharp fall in the Employment Index and the very elevated level of the Wages Bill Index suggests the tourism industry is still being impacted by labour shortages and rising labour costs.

On a positive note, business investment levels remain elevated despite the uncertain economic outlook. Visitor expenditure in South Australia also continues to grow and visitor yields are increasing, however, these outcomes are due to businesses having to increase prices to pay for increasing costs.