Tourism

Outlook

Growth in the tourism industry is expected to slow in 2024 as outbound travel rises and household budgets tighten. Over the medium term, the industry is expected to be supported by international and domestic visitation to the Territory.

Tourism is an important economic driver for the Territory and a significant industry in regional areas. In 2022-23, the tourism sector accounted for 3.8% of GSP and 5% of total employment. The number of visitors to the Territory decreased by 3.8% to 1.6 million in 2023, reflecting a change in consumer travel preferences in the domestic market. Visitor expenditure in the Territory decreased by 4.7% from the previous year to $2.6 billion, reflecting a decline in domestic expenditure relating to households restricting leisure travel amid increased living costs (Chart 14). Compared to 2019, domestic and international overnight visitations were 17.2% and 36.1% below pre-pandemic levels, respectively. During 2022-23 international visitation more than doubled, supported by marketing activities to rebuild global tourism and a recovery in inbound aviation capacity to Australia. The outlook for tourism remains positive over the long term as the industry continues to recover.

Chart 14: International and domestic visitation and expenditure in the Territory¹

LHS: left-hand side; RHS: right-hand side
1 Moving annual total.

Source: Tourism Research Australia, National Visitor Survey

On average, visitors stayed 6.7 nights in the Territory (down by 0.6 nights) and spent $1,622 per stay (down by 0.8%). Year-on-year decreases reflect less visitors willing to spend in the Territory, with fewer visitors overall.

While international visitation is recovering, some markets in Asia have been slower to return to travel. Growth in domestic spending is expected to moderate as increasing cost of living pressures weigh on discretionary spending, and Australians are exposed to a range of holiday choices as international travel returns. A full recovery to pre-pandemic levels of visitation is anticipated from 2025 when international travellers return and aviation supply issues have moderated.

International visitation

There were 191,000 international visitors to the Territory in 2023 (101,000 more than the previous year). Despite the strong year-on-year increase, international visitation numbers are only 64% of the 2019 figures. The recovery of international visitation to pre-pandemic levels remains challenging due to limited flight routes to the Territory and increased competition from other tourism destinations globally.

From 2009 to 2019, the Territory averaged 293,000 international visitors per year. As a result of the pandemic, this number dropped to a low of 5000 in 2021. The closure of international borders was particularly damaging to the Central Australian tourism industry, which traditionally has been more reliant on international visitors than the Top End. Affordability issues in the Territory have been exacerbated due to airplane and crew shortages, the high cost of jet fuel and inflationary pressures. The effects of the pandemic still impact the tourism industry, and the Northern Territory’s Tourism Industry Strategy 2030 has recently been updated to reflect the adjusted operating environment.

In 2023, 146,000 international visitors came to the Territory for holiday, while 21,000 came to visit a friend or relative. About 8000 visitors came for business purposes, while 21,000 visited for other reasons. Holiday visitation is a key driver in the Territory, comprising about 77% of total international visitation. Tourism marketing is paramount to increasing international awareness of the Territory as a destination to attract and enhance the Territory’s brand.

The Territory’s international visitor revival lags the national recovery, which is largely due to the Territory’s placement on international itineraries for Australia. While forward occupancy rates for Darwin indicate strong visitation during the traditional peak season, significant capacity remains available outside this period when the tourism industry relies more heavily on international visitors.

Domestic visitation

In 2023, there were 1.4 million domestic visitors to the Territory, down 10.5% from 2022 and the average domestic visitor spent $1,521 per trip, down 5.7% from 2022. Lower domestic visitor numbers reflect shifts in consumer behaviour and higher airfares. In addition, competition is high in the global market for tourism, with a range of competing destinations ramping up their investment to attract potential travellers.

Domestic visitation to the Territory is continuing to recover from the pandemic period, however remains below pre-pandemic levels. The number of domestic visitors increased by 10.2% from 2021 to 2023, while average visitor expenditure has improved by 22.7%. About 700,000 travellers visited the Territory for holiday in 2023, accounting for 49.7% of total domestic visitors, which is expected to grow through the Territory’s peak season from April to October 2024. Optimism remains strong in the tourism industry with more positive forward bookings and domestic visitors continuing to support recovery across the sector.

In 2023, the number of interstate visitors decreased by 19.4% to 766,000, which is 29% below pre-pandemic levels. The number of intra-state visitors increased by 3.2% to 643,000 mainly driven by residents seeking experiences within the Territory.

Business travel to the Territory is recovering at a steady pace, however the rate of recovery has been slower than holiday travel. In 2023, there were 459,000 business travellers to the Territory, down 7.9% from 2022, and 33% below pre-pandemic levels. Many businesses have maintained practices that were adopted during COVID-19 such as virtual conferences instead of face-to-face meetings, dampening the demand for business travel.

Despite year-on-year decreases, the outlook for tourism in the long term is positive. New airline routes secured during 2023-24 are placing downward pressure on airfares, however the Territory is challenged by competition from international destinations for visitation. In the long term, the tourism industry is expected to be supported by domestic visitation as more frequent flight routes are established and inflationary pressures decrease.

Government initiatives

The Northern Territory Tourism Industry Strategy 2030 sets out the strategic direction for industry development over the next decade. The strategy includes specific actions to achieve identified goals in the short, medium and long term to attract more visitors to the Territory, and help the tourism sector deliver increasingly diverse, quality tourism experiences.

In 2024-25, the Territory Government has invested in a number of projects that will help support the tourism sector across the Territory:

• $12.8 million for targeted tourism, business events and international education marketing activities (funding continued from 2022-23)
• $3 million for cooperative marketing with airlines to support the Territory Aviation Attraction Scheme (TAAS)
• $3 million for conversion-focussed activity to continue recover in international markets
• $1.9 million for Aboriginal tourism industry development activities (funding continued from 2022-23)
• $1.1 million in additional personnel expenses to increase digital activities and deliver enhanced marketing and development initiatives (funding continued from 2022-23)
• $500,000 for visitor information services across the Territory (funding continued from 2022-23).

To assist the tourism industry undertake projects that improve the on-ground visitor experience in the Territory, $3 million in Visitor Experience Enhancement Program grants will be provided in 2024-25. This program is intended to fast-track the delivery of new and improved visitor experiences and products, and support the general business community through a requirement to abide by ‘Buy Local’ provisions during project delivery.

Five-year partnership agreements are in place with the regional tourist associations, Tourism Top End and Tourism Central Australia, and the Katherine Town Council to support visitor information services and intra-Territory marketing initiatives. Funding in 2024-25 will support the second year of programs under these agreements.

The National Aboriginal Art Gallery project in Alice Springs is progressing. The Territory Government acquired the land for the site and opened a tender for construction in December 2023, with the gallery commencing in 2024.

The Territory Government awarded a tender for developing of a plan to seal the Mereenie Loop, also known as Red Centre Way. This project aims to enhance safety, reduce road closures, and improve the driving experience along the route connecting Alice Springs to Uluru, Kata Tjuta and Kings Canyon.

Accommodation

In 2023, the average visitor spent 6.7 nights in the Territory, down 0.6 nights from the previous year. The Northern Territory Monthly Accommodation Report outlines the accommodation sector in the Darwin and Alice Springs regions. In 2023, hotels experienced a decrease in bookings, with occupancy rates decreasing by 6.7 percentage points to 56%, relative to 2022. The hotel sector experienced an increase in supply up 3.4% to 3.4 million room nights, and a decrease in demand by 7.6% to 1.9 million room nights.

Many hotels across Australia are facing an industry-wide shortage of qualified hospitality workers, inhibiting the sector’s ability to service the recovering visitor numbers. In 2023, the accommodation sector employed 23% of hospitality workers. Attracting a workforce post-pandemic has been challenging, however is expected to improve through working holiday-maker campaigns by the Territory Government and Tourism NT. The ‘Get Paid to do this’ campaign will run from 19 March to 31 July 2024 to attract international workers and backpackers aged between 18 and 35 years, encouraging more travel to the Territory and create a stronger workforce.

Access

Aviation services directly support the Territory’s economic development and underpin essential services such as healthcare, education, social welfare and movement of time-critical freight. It also plays an important role in keeping the Territory’s remote communities connected throughout the year, particularly those experiencing road closures during the wet season. The Territory’s expansive and isolated geography means there is a high reliance on air travel when commuting intrastate, interstate and internationally.

In 2023, domestic flights to the Territory have mostly recovered to pre-pandemic levels, with over 1.6 million passengers flying through Darwin (up 31% from 2022) and 363,600 passengers through Alice Springs (up 46% from 2022) (Chart 15). Relative to 2019, flight routes are down 5.3% and are expected to recover once international markets fully return to the Territory. Aviation recovery in Central Australia has been slower than the Top End due to its higher reliance on international visitation.

Aviation access in the Territory has been challenged in recent years by frequency of flights, choice of airlines and supply-side issues due to lack of airplanes and crews. Runway works at Darwin Airport will continue throughout 2024, with the main construction element to be completed by the end of the year. Airlines have adjusted schedules and introduced other measures to mitigate impacts on operations.

The Territory Government is supporting the development of aviation services in line with key priorities outlined in the Tourism Industry Strategy 2030. In July 2023, the TAAS became available for eligible airports to apply for funding to assist with rebates on aeronautical charges, which are passed onto consumers by airlines. The TAAS has delivered new flight routes and additional capacity across the Territory by reducing the barriers to establishing new routes.

The strategy also outlines key immediate and long-term (five years onward) priorities for sustainable and affordable aviation services within the Territory including:

• using the TAAS to attract new domestic and international services to Darwin, and incremental air capacity to Central Australia
• prioritising network expansion using QantasLink’s E190 Darwin base
• continue advocating to minimise the impact of the Commonwealth’s Department of Defence runway works on civilian aviation services at Darwin Airport
• raising awareness of Darwin’s profile as an important leisure and business city among airline network and commercial planners
• connecting Darwin with an international Gulf-region aviation hub
• developing a route for non-stop Trans-Tasman flights, including consideration for seasonal operations
• destination marketing efforts to develop new markets identified in Tourism NT’s market prioritisation model.

Chart 15: Annual passenger movements

Source: Bureau of Infrastructure and Transport Research Economics, Domestic aviation activity

Encouraging visitation during the off season is important for the recovery of flight routes and visitation to the Territory. Cooperative marketing campaigns are undertaken with all domestic and international airlines to promote air routes into the Territory and drive demand in off-peak periods.

The Territory Government’s Cruise Tourism Strategy 2022–2025 aims to increase the number of both cruise liners and expedition ships over the next 3 years. The cruise sector is a key part of the tourism industry in the Top End, and expected to generate $65 million of annual expenditure within the Territory in 2023-24. Over 100 cruise and expedition ships are expected to visit Darwin over this period, with a total passenger capacity of 60,000 persons.

For the latest data on the tourism sector, refer to the Territory Economy website.