Our Tourism Capabilities

Tourism is Australia's largest service export and one of the nation's most significant employers. The sector experienced adverse competitive conditions throughout Australia's mining boom, but as these pressures abate, the tourism sector is growing strongly. Combined with the expected growth in Chinese visitors, the sector's prospects appear bright.

That said, tourism has traditionally faced a myriad of supply side constraints such as labour and skills shortages, infrastructure and regulatory issues. Combined with Australia being a long-haul destination for most international visitors meaning we are a relatively expensive international destination, the sector still faces a myriad of challenges.

The Cadence Economics team has undertaken a broad and extensive body of work relating to the tourism industry. We have an in-depth understanding of tourism markets, our strong links with the sector and our considerable analytical and technical capability in the tourism field. Our capabilities include the design and development of industry forecasting models, the construction of purpose-built policy analysis models and the utilisation of complex econometric techniques. These tools have enabled us to successfully contribute to some of the most complex policy aspects of the tourism sector and provide our clients with rigorous, authoritative analyses to help inform their decisions making.

Policy Advice

Our staff have been actively engaged in a range of policy issues relating to the tourism sector for over a decade. We recently assisted Tourism Australia in their submission to the Productivity Commission's review of tourism marketing arrangements.

We were actively involved in the industry analysis and economic modelling in support of the development of the National Long-Term Tourism Strategy for the (then) Commonwealth Department of Resources, Energy and Tourism as well as considering the supply side issues relating to the tourism stretch goal.

We have been influential in prosecuting the case for the benefits of tourism marketing expenditure both for Tourism Australia (TA) and various state based tourism bodies (Victoria, Western Australia and Tasmania). In addition, we undertook a significant study for TA on the impacts of exchange rate movements on the demand for Australian tourism.

We have conducted a number of economic impact assessments of tourism related investments such as convention centres, hotels and attractions such as theme parks. In addition, we have assessed ex-ante and ex-post sporting and cultural events including hosting the FIFA World Cup football, President's Cup golf, the Australian Open tennis and the Sydney Festival.

We have also been involved in considering aviation issues related to tourism. For example, we have assessed a number of airport developments including Sydney, Brisbane, Hobart and the Gold Coast and considered the economic impacts of possible costs of curfews being placed on Brisbane airport.

Other economic impact assessments include:

  • Currently undertaking an economic impact assessment of expanding cruise terminal capacity in Brisbane.
  • Report for the WA Tourism Commission (now Tourism WA) entitled The Economic Contribution of Tourism to the State of Western Australia: A Tourism Satellite Account-Based Analysis, incorporating direct and indirect contributions for the State and five regions.
  • Analysis of the economic contributions of the Great Barrier Reef and the Sydney Opera House.
  • Assessment of the strategic and economic rationale for NSW Government support of the NSW Museum of Contemporary Art.
  • Measured the economic significance of Hobart's Museum of Old and New Art to the State's economy.
  • Modelling and forecasting with the Tourist Accommodation Regional Demand, Investment and Supply ('TARDIS') model for regions across Australia, including Cairns and Port Douglas, for Queensland Tourism.

Tourism and Regional Economic Development

Cadence Economics has tailored its CGE modelling capability to enable analysis of regional economic issues. In CEGEM, our regions are represented as fully functioning economies in their own right with trade links to other regions in Australia and overseas. Our analysis frequently considers economic impacts at the local government area (LGA) level, and sometimes at finer levels of detail depending on data quality.

The liberalisation of direct international aviation access to Australia has also been an area that Cadence staff have been engaged. We prepared an influential report on the Economic Benefits to Australia from Increased Access by Middle Eastern Airlines. The analysis, prepared for the (then) Commonwealth Department of Industry, Tourism and Resources, examined the economic impacts of further liberalisation, based on a combination of detailed aviation industry analysis and multi-region, dynamic general equilibrium modelling of the flow-on effects to the tourism sector and the rest of the economy. Shortly after the report was completed, the Australian Government approved a substantial increase in airline capacity between Australia and the Middle East (with connections on to Europe), resulting in more competitive environment on a previously protected route. Our analysis has considered impacts of liberalising access at the regional level, for Cairns Airport, as well as for the Victorian government.

Members of the Cadence team have also been successful in advising the Western Australian government on the benefits of easing the hotel shortage in Perth. In this engagement we researched key issues leading to current constraint in hotel supply, and met with tourism and hotel industry stakeholders to validate issues and generate evidence of an impact. This ultimately resulted in direct action taken by the government of the day to increase the supply of hotels in Perth.

Economic Impact Assessment of Tourism Related Issues

Cadence Economics specialises in applied computable general equilibrium (CGE) modelling. We maintain and operate our own in-house CGE model called CEGEM (the Cadence Economics General Equilibrium Model). It is a large scale, dynamic, multi-region, multi-commodity CGE model of the world economy. The model allows us to undertake forecasting or assess the impacts of policy changes on key economic variables such as output, employment, consumption, imports and exports.

The ubiquitous nature of tourism makes it ideally suited to economy-wide analysis using CGE modelling, and the team at Cadence Economics has a considerable track record in economic modelling around tourism and related activities such as sport, culture and major events.

Our experience in regional economic modelling is broad as it relates to the tourism sector. Some examples of our previous work include:

  • An analysis for Tourism Victoria assessing the contribution of the tourism sector to the Victorian economy, the linkages between Victoria's tourism sector and other industries and the economic impact of Tourism Victoria's marketing expenditure.
  • Regional impact of the Ichthys LNG project on tourism and hotel accommodation in Darwin.
  • Impact of the new parallel runway at Brisbane airport on the region (both the entire regional economy and tourism sector).
  • Report for Carnival Australia estimating the economic contribution of the cruise industry to the Australian economy and recommending initiatives to support better decision making within the industry.
  • Additional analysis of the economic contribution of the cruise sector to the Sydney and NSW economies. This analysis was used by Carnival in their submission to the Defence Departments review of opening access to Garden Island.
  • A report assessing the vulnerability of Australia's Top 20 Tourism Regions to tourism-related economic shocks, including general equilibrium modelling of specific scenarios. This study was influential in informing the Department regarding those regions most at risk during the economic downturn and other adverse tourism events.