Economy and Tourism Investment in Australia

Australian economy continuously grow since 23 year but in the year 2014 growth rate of Australia is lower than average economic growth as average economic growth rate is 2.8% against the Australian growth rate of 2.7%. Whereas Australia ranked third in the real estate development, fourth in the ability to access credit, seventh in the ease of begin business. Moreover Australia tourism industry       is attractive for the domestic as well as foreign investor. Continue growth of the tourism increase the national income with the increment in the employment. Australian tourism performs well in the year 2014 with the continued growth from the past years. In the year 2014 direct tourism contribute 2.7% of the GDP i.e. $43.4 billion. Tourism employed 534000 people in the year 2014 which are 4.6% of the total employment. In the year 2014 arrival of international visitor broke record and it has reach to 6.8 million arrivals in the end of September 2014 and they have spent $30.7 billion which is increased by 8.6% from the previous year. Forecast shows that international arrival from 2012- 13 to 2022-23 increased by 4.5% per annum and reach to the 9.6 million. Hence we can say that tourism investment in Australia increased day by day. That has help to growth in the country’s economy with the employment as well. But at the same time other factor of tourism investment is accommodation in decreasing effect in the revenue as well as occupancies. Investment in the tourism industry helps to the country for the growth of infrastructure and improvement of quality of service to the visitors. There is continuous growth in the size and value of the tourism investment project in pipeline with total of 168 projects of valued $53.7 billion which is more than the 8.7% from the year 2013 in value. With comparing to the first investment monitor there is increment of tourism investment counted $ 17.5 billion. Of total project which is in pipeline includes aviation investment for $31.3 billion for the13 airport development of valued $10.9 billion, arts recreation and business service of $13.9 billion and accommodation investment of $8.5 billion. As we know for investment in arts, recreation and business is difficult to attract but by providing a qualitative service we can improve the experience of visitor hence there is in Australia continuous organise the conference, exhibition, indoor and outdoor recreation for encourage investor towards Australia.  Accommodation sector is considered as necessary for development of infrastructure of the country. Total of $13.2 billion of service in accommodation consumed by the visitor of domestic and international visitors from which country generate $7.0 billion. There is 21 accommodation project completed in the year 2014 which add 3000 new room. Transfer transaction in accommodation infrastructure is also good sign for the country’s growth as it reflects investor potential to invest in accommodation. In the year 2014 accommodation infrastructure transaction break record as in year 2014 there are total$ 2.8 billion transactions for transfer of 34 major assets it includes sunshine insurance group from Sheraton on park Sydney of $463 million, Frasers property group from Sofitel Sydney Wentworth of $201 million.

There is one of major opportunities in the mixed use development which have a solid growth in the year 2014.  It represent three times growth in the year 2014 compared to 2013. As standalone development of hotel is difficult and more risky for any venture hence there increasing mixed use development where  more than one organisation come together for development of hotel and other tourism investment service as it generate higher profit on investment, attracting to the purchaser and enable developer to diversify their income. In the year 2014 there is $1.3 billion valued mixed use project has completed. Maximum of mixed use project lead by the Asian investors. Some  of the example related to investment from the Asian investor is $8.15 billion investment by Aquis China, $0.97 billion investment in gold cast Wanda commercial properties and $1 billion investment in residential hotel development in Melbourne by Far east construction. In the same way there is growth in volume of new projects into the pipeline. Hence we can say that Australian tourism development is growing with the continued improvement. Year 2014 is very good for the development of tourism investment of Australia. Each sector which is encouraged to the investor is also improve with the qualitative service for encouragement of the investors. There is also one of the targets fixed by the country name as “Tourism 2020” and they have tried to achieve that target within period. Growth in this kind of investment is considered as good news for the Australian economy.

 Australian tourism investment is now boom due to the environmental and good quality of service in the county. As the economic growth of the country are depend on the GDP, Infrastructure development, employment and revenue to the country therefore tourism investment is also one of the factor which help to country’s growth as tourism investment itself contribute 2.7% to the GDP of the country at the same time due to tourism investment high level of infrastructure are developed for the hotels and other infrastructure. Tourism investment employ to the 534000 people in the year 2014 which reveals that 4.6% employment are developed due to the tourism investment only. Revenue of the country is also help to the growth of economic development of country as countries earn $6.8 million in the year 2014. Hence tourism investment contributes to the economic development in the all field of economic growth.

  Australian Project growth

As increasing investment in the tourism investment is considered as prudent decision for future sustainability of the country as there are four major factor which are grow with the help of tourism investment of the country i.e. infrastructure, Employment, revenue and GDP which are basic necessity for the country’s growth. When we look at the tourism investment monitor of Australia there is total of 168 project are in pipeline from which 21 are completed 71 are new project and remaining project are in progress all this progress help to develop the well known infrastructure for the country. As Australia is developed country so they have generate good level of job for the job seeker therefore unemployment are reduced at Zero level. And tourism investment generates huge amount employment.

 

When we look at the world tourism investment contribution in the GDP is 2.9% against the Australia tourism investment contribution is 2.7% which is lower than the whole world hence there is need to improve GDP contribution from tourism investment though Australian tourism investment is good enough but there is chances of improvement through the providing good quality of service and attracting foreign visitor. In the same manner tourism investment

In the same manner world tourism investment contribution in the employment generation is 3.4% where as Australia’s contribution in the tourism investment contribution is amount to 2.8% only hence there is huge chances to improve in the each area of economy growth which may beneficial for the country’s growth. In the year 2014 total amount of international visitors spend in the Australia is $36 million and now Australia has fixed there target to reach at $119 million by grow at rate of 1.6% per year. When we look at the scenario of the economy of the world each country is try to improve their tourism investment by developing high level of infrastructure and providing a best quality of service. Amount spend by the international visitor is revenue for the country and that amount can be spend by country to reduce deficit. In the same manner increasing investment in the tourism industry by Australia is prudent decision for the country as tourism investment help to develop infrastructure and generate employment which help to the country economic growth.

When we try to find benefit from the tourism investment country have benefit in short and long run both. Looking to the benefit to the country in short country can develop best infrastructure which help to development of the country. In long run infrastructure develop for tourism investment help to reduce cost in terms of transportation, accommodation etc. In the same manner tourism investment generate employment which helps to reduce poverty and generate revenue for the country. Well levels of infrastructure attract foreign visitor and investors towards country.

As per OECD Australian tourism industry generate huge number of jobs and export earning which help to the country’s growth at the same time investment in tourism industry is not that much simple rather it is complex task as there no single option for the investment. But with the tourism investment assets from tourism industry in Australia increase rapidly. Income from international visitors includes foreign household income, cost of travel and amount expended by the visitor into the country.  On the basis of this Australia tourism has develop “Tourism 2020” where they planned to double the visitors from 2020.

Equilibrium rental price is the price at which demand and supply of the room is equal. As it is mentioned that Australia hospitality industry is very competitive hence even buyers tax imposed by the government though producer not try to bear some amount of tax for attract consumers.  With imposition of buyer’s tax government revenue are increased but other side total price of room rent are increased which have following impact -

a.      When we look at the diagram rental price of $200 is equilibrium price where demand and supply are equal i.e. 80 rooms. But with the imposition of buyers tax room rental price are increased but at the same time Australian hospitality industry is perfectly competitive hence if any producer bear some amount of tax portion can sale more room hence everyone try to attract more customers therefore whole tax amount are not added to the room rent and some amount of tax portion are bear by the producers. Effect of this equilibrium price is increased by some amount.

With the imposition of buyer’s tax on accommodation price of the room are increased but at the same time due to perfectly competitive market there some consumer surplus as whole amount of tax not added to the room rather some tax portion are contributed by the producers. Hence portion of tax contributed by the producers are consumer surplus as price of room increased by the some portion of tax only. In the same way in the perfectly competitive market everyone try to reduce their price but due to buyers tax some amount of tax are recovered from the consumer by increasing room rent hence amount of room rent increased due to buyers tax is considered as producers surplus. Total surplus is equal to the tax amount.

b.      One side imposition of  the buyers tax have effect on the room rent price and room rent price are increased but other side due to new levy government revenue are increased which is used for the welfare of the societies. As new levy are also imposed on the accommodation to the foreign visitors which have increased country’s revenue which help to raise social welfare in the country.

c.      If government imposed levy on accommodation as buyers tax than it will increase the federal government’s revenue. As tax levies as a buyers tax is government’s hence federal government’s revenue are increased by the amount of tax imposed on the accommodation.

Expectation of tourism department’s of Australia is fulfilled with the development of tourism industry. With that government achieved the tourism activity and investment expected in tourism industry. As it is mentioned that labour market in Australia is perfectly competitive it reveals that there is huge number of availability of the labour as required.

a.      In perfectly competitive market in terms of labour wage rate should be minimum which is not seems much more to the consumer. As in perfectly competitive market there is huge number of buyer and supplier and if price of product and quality of service not seems good than buyer may divert to other substitute. Hence in Australia it is clear that labour market are perfectly competitive hence huge number of labour are available at the same time huge number of labour service receiver are also available hence wage rate should be fixed in the manner which is not seems more compared to normal wage rate.

b.      Equilibrium wage rate is the rate at which labour service provider and labour service receiver are equals. Due to huge union pressure government sets minimum wage rate which is above equilibrium wage rate. Hence with the fixing of minimum wage rate by government there is an increase in wage rate as minimum wage rate is above equilibrium price. And no one will work below the price fixed by the government.

With the fixing of minimum wage rate by government wage rate will increase over and above price fix by the government. With the increase of minimum wage rate people who are working as labour can also earn more hence their standard of living are also improved. At the same time expense from visitors are increased which is negative effect on the social welfare but same time increase in standard of leaving of the labour and reduction of poverty is one of the main benefit for the welfare of society. As main objective of the government is to reduce poverty by providing employment to the needy people and take care of those people for any wrong done are not happen with them hence indirectly this requirement are fulfil which is good for the social welfare. Therefore we can say that government interfere in the fixing of minimum wage rate is good action for the social welfare of the society.

As per the world tourism organisation expectation reveals that international tourism are continuously growing by 4% per annum.  World top three countries in terms of tourism is France, Unite states and Spain. There total international visitor arrivals in 2014 are 83.7 million, 74.8 million and 65 million respectively to the France, U.S. and Spain. Brief discussion about all three destinations in terms of economy and tourism are as under-

·        France – France is world leading tourist destination in terms of arrival of international visitor per annum. With the 83 million visitors per annum France becomes top tourist destination in the world and remains as global leader. Tourism and travels contributes 7% of the French GDP. Continuous organisation of event in the France increase tourism revenue.  Revenue from tourism and travels is $55.4 Billion in 2014 and surplus from the tourism and travels in French economy is amount to $ 35.8 Billion. France represents itself as a cultural destination where near about 6500 events organised per annum.

More events lead to increasing selling of room day which helps to increase revenue.

·        U.S. – U.S. is the world leading economy in terms of receipts from tourism. U.S economy earns $1.5 trillion from the travels and tourism industry. And tourism industry generates 7.8 million jobs in the country which is 9% of total jobs in US. Tourism industry of U.S. contributed 2.6% of total GDP in the year 2014. Tourism industry of US is growing up by 4.3% per annum. In the same way travel and tourism are 31% of total exports. As US is one of the most developed country in the world and most of GDP are contributed by the tourism and travels in US. Best quality of infrastructure and service to the visitors attract to the visitors towards which help to grow their business.

·        Spain – Generally we heard that tourism and travels is most important assets for the Spain. Tourism and travels in Spain contributes 10.9% of total GDP. Spain tourism industry is growing with the rate of 1.8% per annum. In Spain tourism generates 12% of total employment we could say that every 8^th persons are working in the tourism industry. According to the world tourism organisation 65 million tourist visit to the Spain per annum. There are not any rules for the tourism but life style of the Spain attract to the visitor for travel. Spain have very long coastal boundary and provide best quality of service to the visitor which attract to the visitor for spend long time into Spain.

Suggestion for become best tourism destination for Australia: In the same way Australia can also become best tourism destination in the world for that they have employ good level of infrastructure as Australia also have very long coast in the way of Spain hence Australia also have to organise event for attract visitors. Their destination country has responsibility to provide security and quality to the visitors hence to improve tourism Australia has to provide security to the international visitors. Though Australia is also best in the tourism industry but Australia can also perform well in the tourism. Australia have marketed there tourism destination and also liberalisation into the policy for the visitor which attract more and more visitor towards country. Australia also has to organise some events which is related to their culture and which represents their cultural facts to the visitor. By applying some of this facts Australia also can develop themselves as world best tourist destination.