Australian domestic tourism limited by state border closures

Australia, like many countries in the Asia-Pacific (APAC) region, has restricted entry to international travellers since the COVID-19 pandemic began. This has resulted in relatively large negative impacts on inbound travel, but also allowed the spread of the virus to be controlled relatively effectively and therefore facilitated a quicker return to some sort of normality – including domestic tourism. Indeed, the estimated decline in domestic hotel guests in APAC in 2020 (30%, and 26% excluding China) is the smallest of any region. However, Australia’s experience with domestic tourism differs from most other countries in the region, as discussed in Tourism Economics’ recent Research Briefing.

Australia’s approach to domestic travel restrictions has been very different to the rest of APAC and most of the world. Tourism Economics estimates that Australian domestic hotel guests in 2020 were at least 31% lower than in 2019 – the largest fall of all APAC countries except for China. Many of Australia’s eight states and territories closed their borders to domestic travellers from other states or cities at various stages throughout 2020 (and continuing into 2021), often in response to only a very small increase in new infections. While limiting the spread of infections outside the two largest states – New South Wales and Victoria, who receive the bulk of returned residents and therefore ‘imported’ COVID-19 cases – this has had a significant negative impact on interstate travel. This type of tourism accounted for one-third of domestic trips and more than half of domestic spending in 2019, and with state border closures severely limiting these trips for much of 2020, the impact on aggregate domestic tourism has been notable. 

The impact of state border restrictions is crucial to consider given that domestic travel – which accounted for 80% of total trips and spend in Australia in recent years – will be key to the recovery of the industry in 2021. The potential for substitution from outbound travel to domestic by Australian residents is also limited by state border closures. While baseline forecasts are for domestic tourism to recover close to 2019 levels this year, the downside risks from ongoing and recurrent state border restrictions are significant.