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New survey shows businesses need targeted support to survive

Wednesday 17, Feb 2021

New research from VTIC highlights the urgent need for further support to the tourism and events sector, with more than a third of businesses poised to cut jobs and a further 13 per cent expecting to close their doors.

VTIC, the peak body representing the state’s $32 billion visitor economy, collected data from more than 550 operators on business performance in the period November 2020 to January 2021, business outlook and confidence, and access to support programs.

VTIC CEO, Felicia Mariani, said the survey demonstrated the urgent need for continued support for a sector that has not been able to reactivate at the same pace or scale as other industries in Victoria.

The VTIC State of the Industry Survey – which collected data prior to Victoria’s latest five-day lockdown – revealed that only 58 per cent of tourism businesses were trading as usual at the time of the survey, and 42 per cent of businesses were open with reduced hours or remained closed.

While about a quarter (27 per cent) of the industry saw stronger performance in the period November to January, nearly two-thirds (63 per cent) experienced weaker business activity over that time.

When asked what was contributing to weaker outcomes, 81 per cent indicated that snap state border closures were seriously affecting their operations, 63 per cent noted the lack of consumer confidence to travel, and 60 per cent said it was due to events being cancelled across the state.

“What is more concerning is that, over the next three months, nearly half of our operators are expecting business activity to weaken further. Overall business confidence is poor, with most respondents saying they are fairly or extremely concerned about the outlook for their operations,” Ms Mariani said.

The survey shows that 88 per cent of respondents accessed some form of government support over the past year. Of that group, 93 per cent accessed JobKeeper, with 57 per cent still relying on the Federal program to support employment. JobKeeper is due to end in late March.

In Victoria, the State Government’s Business Support Fund was vital in sustaining industry, with 45 per cent of respondents benefiting from this Fund; 22 per cent receiving payroll tax relief; and 20 per cent using the various Hospitality Grants that were made available by Government.

Asked about current business challenges, respondents said a lack of forward bookings, cashflow and dealing with cancellations were top concerns. Mental health and wellbeing, the need to adapt products and services, and to redefine target markets also ranked highly on the list of issues.

“All of this points to the absolute need for a targeted package of support for the tourism and events industry, which will be vital to saving our sector and the 250,000 jobs we underpin in the state – including 110,000 jobs in our regional towns and centres,” Ms Mariani said.

“Our survey demonstrates that without further support from the State and Federal Governments post-March, 37 per cent of businesses will need to reduce staff and 13 per cent of businesses will close altogether.”

Recent projections indicate that Victoria could lose over 85,000 jobs from the tourism sector by September 2021 without extended Government support.

“The end of March will be a flashpoint for our sector, which has only been exacerbated by this recent snap lockdown in Victoria. It is critical that governments engage with industry right now to shape packages that will sustain the industry,” Ms Mariani said.

“The tourism and events sector was the first industry to be impacted by this global pandemic, and will be the last industry to come out from under the weight of its restrictions.

“Our survey, which was conducted prior to the latest lockdown, has clearly identified the damaging impacts on business confidence eventuating from the prolonged closure of rolling lockdowns last year, and the outlook for many operators in our sector remains bleak.”

The VTIC State of the Industry Survey Top Line Summary is available here (PDF 176 KB)