Things are starting to look up for Australia's tourism industry, thanks to the lower exchange rate and steady stream of Chinese travellers, the Reserve Bank says.
Conditions in the industry appear to have improved last year after several challenging years, when the high Australian dollar encouraged Australians to travel overseas instead of domestically.
Although the exchange rate remains high relative to history, its decline since 2013 saw the number of Australians travelling overseas fall in 2013/14, for the first time in at least eight years, the RBA said.
In its quarterly bulletin on Thursday, RBA analysts Corrine Dobson and Karen Hooper said the falling Australian dollar was lifting the spirits of tourism-related businesses.
Cheap petrol was another beacon of hope for the industry, encouraging Australians to do road trips at home, while slow wages growth, courtesy of the sluggish economy, could also see more people travelling domestically rather than embarking on more costly overseas trips, the analysts said.
"In short, the fundamental conditions for domestic leisure tourism appear more favourable than they have been for some time," they said.
Meanwhile, the influx of Chinese tourists which bolstered the industry during its rough patch would continue to strengthen, as incomes and living standards in the world's second largest economy continued to rise, the analysts said.
They said China had displaced the UK as Australia's most valuable market for leisure travel exports, after generating $1.9 billion in 2013/14.
By 2022/23, China would displace New Zealand as Australia's largest source of visitor arrivals.
Tourism is Australia's third most valuable export after iron ore and coal, reaping $18 billion in 2013/14, the RBA said.
But the wind-down of the mining investment boom could continue to weigh on business travel in resource-exposed regions of Queensland, Western Australia and New South Wales, they said.
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