How to ride the tourism revival

With visitor numbers back up after the pandemic slump, there are opportunities for investors

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The tourism industry was hit hard by Covid-19 lockdowns but is now recovering strongly. In particular, spending on domestic tourism is above pre-pandemic levels. And international tourism is also starting to bounce back.

This is good news for investors in the tourism accommodation sector.

In the three months to December 2022, spending by domestic overnight tourists increased by 34%, to $27.5 billion, compared with the same period in 2019, according to Tourism Research Australia. Of this, $7.7 billion was spent on accommodation, up 49% from the 2019 December quarter.

International tourism is taking longer to recover, with total spending in the December 2022 quarter of $12.7 billion, 41% of the amount spent in the December 2019 quarter. But it’s now gathering pace and Tourism Research Australia predicts spending by international visitors will pass pre-pandemic levels in 2024.

Investors wanting to benefit from tourism recovery could consider the holiday property sector. There are several ways – some requiring only a small outlay – for retail investors to access this sector.

Provide short-stay accommodation in your own home

This is not an option for everyone – even if you have the space. But if you are up for it and have suitable spare space, this can be a lucrative way to increase your income, usually with minimum outlay.

Before you go ahead, make sure you understand any rules that apply in your area as well as insurance and capital gains tax (CGT) implications. Most people list on a short-stay platform such as Airbnb. To do this, you’ll need to provide proof of identity and banking information.