11 Jul 2022
Words
Blair Macdonald Informer 103
The State of Play in WA
But Western Australians are also some of the most resilient people around the globe and in many ways, the isolation was business as usual.
Western Australians are traditionally isolationists and are less concerned with the eastern states since we are largely self-sufficient thanks to the strong economic foundations of the mining and oil and gas industries.
Life went on largely as normal for the majority of Western Australians behind the closed borders, particularly with limited mask requirements and virtually no lockdowns or restrictions.
With the mining and oil and gas industries now booming due to a commodity super cycle, the economic conditions in Western Australia have been excellent, although the COVID impact has largely being felt in the tight labour market conditions.
The closed borders have meant Western Australia has been unable to draw from eastern states’ workers which has resulted in staffing shortages across most industries. This has been particularly pronounced in the accommodation sector where difficulties in finding staff for cleaning has been acute.
An immediate impact that COVID had on the hospitality accommodation sector was that the wealth spent by Western Australians on travel and tourism was focused internally within our borders.
This intrastate tourism has resulted in windfall revenues for regional accommodation operators, particularly in the far-flung corners of the state which are traditionally more difficult to access. Caravanning, camping, and four-wheel drive businesses have flourished as Western Australians explore their own state.
Locations such as Broome, which has been in a long-running battle with Bali as the preferred winter destination for Western Australians, have enjoyed boom times again and remote areas such as Esperance, which is a 7.5-hour drive from Perth, and Exmouth, a 13-hour drive from the capital, have all benefited from the international and national travel restrictions.
When Western Australia’s commodity sector is booming, the state performs immensely well, however when downturns occur, the state enters a mini recession which can be outside of the economic cycles of the rest of Australia. In 2014, when the mining and oil and gas construction boom ended, the residential property prices for Perth fell 17 per cent over the next five years and the commercial/industrial property sector collapsed, while in the rest of Australia the property values generally increased during this time.
Western Australia’s economy is truly boom and bust however it appears that for the foreseeable future, particularly given the sanctions against Russia (a large competing commodity/energy producer) and the voracious demand for battery minerals worldwide, the mining sector will remain in a growth phase.
WA is diverse with temperate climates in the southern regions through to desert and tropical climates in its north. Our Indian Ocean coastline boasts some of the best beaches in the world.
State of the accommodation market
The accommodation sector continues to perform strongly, however operators are keeping a close eye on the impact that the reopening of the borders will have for future bookings. Western Australians are keen to start travelling nationally and internationally again and the immediate impact will most likely be a decline in revenues for accommodation businesses, particularly if those businesses are heavily tourism reliant.
In the Western Australian motel accommodation sector, most motels service the corporate and business market with clients such as road working crews, utility companies, and mining workers who are traditionally long stay weekday clients.
The Busselton, Dunsborough and Margaret River regions will continue to benefit from Perth residents seeking an easy driving holiday just over two hours from Perth. The cooler climate, fantastic beaches, and the abundance of tourism-related activities, means that the south-west will remain the equivalent of the Gold Coast/Sunshine Coast for Perth residents, and we anticipate little decline, if any, in business revenues from properties in this region.
All in all, there is some uncertainty surrounding the reopening of Western Australia to the rest of the world, however our outstanding COVID response will hopefully draw international and national tourism back to the state, while maintaining the majority of the intrastate tourism generated over the past two years.
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