Running a small tourism business in uncertain economic and geopolitical times is not easy.
We made it through COVID, China’s cold shoulder, inflation, and 18 months of high interest rates. Then, just when a light appeared at the end of the tunnel, Donald Trump re-appeared and blew up the world economy! On top of that we’re in the middle of a Federal Election.
Hats off to every one of you small tourism operators navigating through this complex and bewildering business environment.
But I am an optimist, and I think with resilience, adaptability, and a strategic approach to your business not only can we get through this sh*#show, but we can prosper on the other side.
Turmoil and uncertainty in the global economy, and particularly in the US under the orange ‘Mad King’, and the competing and shifting policies thrown up in an election campaign, coupled with global conflicts, and talk of possible recessions significantly consumer and traveller confidence, spending habits, and hence market demand. The direct impact to small tourism operators is fluctuating international arrivals, rising operational costs from supply chain disruptions, and sudden changes in consumer behaviour.
You need to stay on top of what’s happening and be agile.
I’ve written in other blogs about the value of diversifying the audiences you are pitching to, focussing on improving your digital marketing, and micromanaging costs. In taking these actions, you should feel confident in your capability to navigate challenges and position your business for medium and long-term success despite an unpredictable global and domestic landscape.
Focussing on our local patch, Federal elections in Australia bring with them significant changes across various sectors, including tourism. Actual and proposed Government policies, economic announcements like visa restrictions, tax cuts, interest rates and cuts to spending all affect consumer confidence which can shift both ways due to election outcomes, impacting both domestic and international travel.
For small tourism businesses, these periods of uncertainty are difficult, but with the right strategies, they also present opportunities for growth and adaptation.
How will the May Federal election affect tourism?
I’ve not seen any Government or opposition support for national tourism marketing campaigns, and fair enough too with the Trump implosion yet to fully unfold. There’s been announcements around regional development, and infrastructure projects but my fear is the major take-out will be potential cost-cutting measures that reduce tourism funding.
For small tourism businesses, visa changes for example can influence visitor numbers, accessibility to key regional destinations, and available government support programs. Pay attention to party policies and what Independents say tourism funding because it will help you anticipate potential impacts and allow you to prepare accordingly.
By their very nature, elections create uncertainty, which can lead to temporary slowdowns in consumer spending. Tourists—both domestic and international—may delay travel plans until they have a clearer picture of what the impacts of Trumps tariffs on the global economy and hence Australia’s direction post-election. If there are concerns over job security, tax, inflation or reduced public spending, consumer confidence may drop, leading to fewer travel bookings.
Changes in visa regulations and immigration policies can affect the number of international tourists, particularly those from countries with strong travel ties to Australia. Policies impacting working holiday visas, student visas, and skilled migration will influence things in the tourism sector like labour availability. Election promises to tighten immigration rules, for example means businesses reliant on international visitors or foreign workers may face challenges.
Trump’s nonsensical economic announcements and new tariffs are having a massive influence on the Australian dollar (AUD). The AUD has fallen 10% since November which makes Australia a more affordable destination for international travellers, boosting inbound tourism over the next few months (due to consumer’s lag in planning and booking). It will also entice Aussies to switch from travelling overseas to domestic destinations. This impact is totally out of our control but keep an eye on the value of the AUD and adjust pricing strategies to help navigate fluctuations.
There are some practical steps you can take to navigate both Trump and the election to protect your business and potentially prosper on the other side.
In a word, diversify.
Firstly, actively expand your market and adjust your product and experiences to those markets. Don’t get caught relying on a narrow single market. For example, the Federal government has training programs to help businesses tap into growing international visitor markets, because they project significant increases in visitors from emerging markets by 2029.
Since COVID, the Ukraine war and now Trump’s tariffs we have seen how geopolitical issues can disrupt supply chains and exchange rates. This affects the cost and availability of goods and services essential for tourism operators. If you haven’t already, also consider diversifying suppliers, focus on sourcing locally, can help mitigate these risks.
In times of uncertainty, maintaining online visibility is crucial. For example, utilising TXA to engage with potential customers searching international and domestic distribution channels, including your own website, showcasing unique offerings, and creating and promoting unique experiences will help keep your business top-of-mind for domestic and international travellers planning future trips.
Stay informed on the various election promises and policies and broader geopolitical developments and their potential impact so you can adapt strategies proactively. Engage with industry associations, attending relevant seminars, and keeping in contact with peers which can provide valuable insights and support.
Importantly, develop risk management plans, including financial contingencies. Exploring options such as establishing emergency funds can provide a safety net if the sh#t really hits the fan.
Despite the chaos and craziness of Trump and the uncertainty of a federal election, if you can understand (as best you can) the current geopolitical landscape and the political ‘vibe’ locally you can move strategically to enhance your resilience, protect your operations, and position your business for sustainable growth in a topsy turvy and ever-evolving economic environment.
