Tourism investment is a critical component of a sustainable tourism sector. Investment in product and infrastructure is essential for destinations and businesses to support tourism visitation and experiences. In Australia, The Jackson Report (2009)
, suggested that greater investment in the tourism industry will drive long-term profitability, innovation and growth in the sector.
It is noted in the Jackson Report that investment in tourism as measured by private capital formation, has grown strongly in recent years and has kept pace with growth in total investment in Australian industry. However, these figures are before the impacts of the Global Financial Crisis (GFC) are evident. The authors of the Jackson report were more concerned with prospects for future investment, than recent performance (pre GFC impact).
Figure 4. Private capital formation – tourism and total industry 1998-2008
Source: The Jackson Report: On behalf of the Steering Committee (2009). Informing the National Long-Term Tourism Strategy
Public sector investment in tourism infrastructure and amenity is often constrained or under-resourced, due to a lack of understanding of the impact of tourism at the destination. Private sector investment is contingent on the potential return on capital investment compared with other sectors of the economy. In other words, capital will flow to where it is most productive.
The tourism private sector consists of businesses distributed amongst a number of the different traditional industry sectors, brought together and classified as tourism businesses because they rely in whole or part on expenditure by tourists. A large majority of these are small to medium businesses (employing fewer than 20 people). Due to this economic structure, government will inevitably have a role in providing infrastructure and facilitating planning and cooperation amongst the individual tourism businesses to develop coherent tourism destinations.
The Australian National Long Term Tourism Strategy (NLTTS), suggests the different levels of government in Australia present regulatory challenges to businesses resulting in complex and lengthy investment and development approval processes, and impediments to reinvestment. Regulatory reform is needed to provide transparency and certainty for investors and business.
Sustainable Tourism Cooperative Research Centre (STCRC) has undertaken research to scope the current issues for tourism investment in Australia. Tourism Investment in Australia – a scoping study aimed to identify impediments to tourism investment for metropolitan, regional and remote areas. A case study approach included five tourism destination regions: Melbourne, Tasmania, Townsville, Mandurah and Kakadu.
Another aim was to identify recent innovations in how the public and private sectors can cooperate in developing tourism infrastructure. Two innovation case studies are presented; representing a Public Private Partnership for tourism infrastructure development and government facilitation of land for tourism.
Ongoing research, assessment and monitoring of tourism performance and productivity will be required to support decisions to facilitate future tourism investment in Australia.