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Coronavirus wiped $19.5 billion in visitor spending from the Victorian economy in 2020

Coronavirus wiped $19.5 billion in visitor spending from the Victorian economy in 2020
June 10, 2021

A new report from Victoria University and the Victoria Tourism Industry Council (VTIC) has highlighted the ongoing challenges facing the Victorian tourism industry - impacted in the last 18 months by bushfires, Coronavirus lockdowns and rising insurance costs.

Released last month, the Building the Resilience of Tourism Destinations to Disasters report shows the industry facing a challenging future, with $19.5 billion in visitor spending wiped from the Victorian economy in 2020.

Of the 323 Victorian tourism operators surveyed:

  • Two-thirds lost between 75% and 100% of their income
  • Business insurance has risen by up to 400% in bushfire-affected areas, making it unaffordable for many
  • Almost half of owners were struggling with their mental health, and had limited access to or were reluctant to seek help from health services
  • Almost half of casual staff were permanently made redundant, with many finding more secure employment, exacerbating the seasonal skills shortage in the regional tourism sector as it tries to recover
  • Only 30% feel confident of recruiting an adequately skilled workforce in the next 12 months
  • 15% were directly affected by the bushfires. However, two-thirds say their income was affected and 89% were receiving Government support.

Lead researcher Dr Joanne Pyke, Director of the School for the Visitor Economy at Victoria University, said many of those hit by the double crises were struggling, advising “the industry is depleted emotionally, financially and physically.

“At the same time, they need to quickly rebuild their businesses, often without the finances, support and workforce that they need to do so.”

Advising that Victoria must lead the way in implementing strategies to address current vulnerabilities in the tourism system and increase resilience to future crises, VTIC Chief Executive, Felicia Mariani stated “our sector is not just scrambling to recover from the double crises of the past year; we’re also looking to build resilience and plan for a next inevitable crisis.

“The sector had already been facing a challenge in attracting enough skilled seasonal workers and COVID has amplified that problem by cutting off our overseas supply of backpackers, students and other workers. This shortage of staff resource is definitely hampering the sector’s ability and pace to recover.”

Explaining that governments needed to implement targeted strategies to support industry in recovery, as many measures had not been helpful in the Victorian context, Dr Pyke went on to say “funding cheap airfares to take tourists to other states has had a negative impact on tourism recovery in Victoria, which relies heavily on people travelling within the state to fill the overseas tourist shortfall.

“But possibly one of the most significant issues is the dramatic increase in business insurance cost in bushfire areas. Businesses can’t plan for the next crisis or build resilience if they are not assured of the ability to be able fund their recovery after a disaster.”

The report did show that those who had accessed training in risk management, leadership, contingency and continuity planning as part of VTIC’s accreditation process, were fairing much better and were more likely to feel prepared for the next crisis. Those who had experienced previous disasters, such as bushfires, were also more likely to have risk management plans in place and be in a better position to recover.

It also highlighted the need for state and federal Government policy interventions to:

  • Help address the seasonal labour shortage and barriers to attracting more workers, such as the high cost of accommodation in tourist locations
  • Ensure businesses can access affordable insurance to allow them to rebuild after bushfires, flood, drought and other natural disasters
  • Transition to a low-carbon economy to attempt to reduce the frequency and severity of natural disasters
  • Provide appropriate mental health services in regional communities that meet the needs of a business community and remove barriers to access
  • Encourage businesses to take up accredited training in risk management, leadership, contingency and continuity planning
  • Support operators to innovate and develop skills in online business and marketing to allow more businesses to continue operating during a crisis
  • Engage cross-border communities to ensure workable solutions if future lockdowns are needed.

The research revealed many stories of both innovation and resilience as well as the impacts of the crises.

Images: Escape Villas at Hepburn Springs (top) and Pizzini Wines - which ramped up its online marketing during the COVID crisis (below).

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