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Chinese Flock to Australia as Western Tourists Decline

Australia's tourism sector has been hit hard by a soaring Aussie dollar, which has dried up traffic from its core European and U.S. markets forcing the industry to look at new sources like China to boost visitor arrivals in 2012.

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The strong Aussie dollar , which is trading above parity to the greenback, resulted in historically low international tourism earnings last year. For example, spend from foreign visitors came in at A$2.41 billion ($2.6 billion) in November 2011, around A$450 million lower than in the same month in 2010, according to latest data from the Australian Bureau of Statistics.

While short-term tourist arrivals over January-November 2011 fell from all traditional markets like the U.S., Japan and Europe, the number of Chinese tourists grew 20 percent to 536,000, according to industry body Tourism Australia. Traffic from Singapore, Hong Kong and Malaysia also grew, but in single digits.

Chinese tourists contributed an estimated A$3.6 billion to the Australian economy in 2011, according to Tourism Australia, which forecasts it could rise to A$9.5 billion by 2020.

"The Chinese market will develop very much like the Japanese market did in the 1970s," Tourism Minister Martin Ferguson said in late January. "We are going to pay a lot of attention to it. The objective is to get people to come back for a second and third trip."

Out in the Northern Territory Outback, tourist operators say they are already seeing a shift in Australia's visitor mix.

Genda Campbell, who operates Kakadu 4-Wheel Drive Safaris, says the high dollar has had an impact on his traditional client base - the European "backpacker" market.

Figures from Parks Australia, a government organization administering national parks, show that tourist numbers to the Kakadu wilderness area fell 9 percent in the financial year ended June 2011.

"Backpackers are very sensitive to price and if the Aussie dollar goes up most of them are probably not going to come to this country, they will holiday in Asia," Campbell told CNBC.

"Certain nationalities have really dropped off in the last year, and I'm talking about the English, Europeans and Americans, and we've had a 50 percent fall in the number of inquiries through the website. But there has been a definite pick-up in the number of Chinese visitors,” he said.

His company has had to cut its weekly tours by 50 percent owing to a fall in tourist numbers.

Andrew McEvoy, Managing Director of Tourism Australia, says that the growth in Chinese tourism has "taken a decade to be perceived as an overnight success" because the seeds for the current influx were sown some time back.

"We were the first western country to get approved destination status from the Chinese in 1999, and we've put a network of 5,000 travel agencies into 13 key cities in China," McEvoy told CNBC.

"The big thing is that Australia is a western style economy in the heart of Asia and we are a very different place from China, and the tourists come here for the environment, the lifestyle, and the food," he said.

Tourism Australia has a strategic plan entitled China 2020 under which it hopes to attract 860,000 Chinese tourists a year by 2020.

But isn't the high Aussie dollar eating into the budgets of Chinese tourists too?

Even though most analysts expect further upside for the Aussie dollar this year, McEvoy does not think it will dissuade the Chinese. "The high Australian dollar is having a minimal impact on the Chinese market, or any of the other markets in Asia," he said.

"After all the work we've done, Australia is very much on the list of things the newly affluent Chinese travelers want to do," he added.

The COO of Melbourne-based Australian Tours Management, which focuses on in-bound tourists from Asia, Bee Ho Teow, says, “The Chinese feel confident of the future, they feel affluent. So it's not about the currency, its about how they are feeling about their own economy.”