Australia markets open in 5 hours 49 minutes

    +19.10 (+0.26%)

    -0.0022 (-0.31%)
  • ASX 200

    +9.20 (+0.13%)
  • OIL

    -0.07 (-0.08%)
  • GOLD

    +5.90 (+0.33%)

    -1,416.15 (-4.10%)
  • CMC Crypto 200

    -21.14 (-3.79%)

Australia braces for $1.3 billion tourism hit

The USA has warned travellers about visiting Australia in the midst of the country's bushfire crisis. Image: Getty
The USA has warned travellers about visiting Australia in the midst of the country's bushfire crisis. Image: Getty

The United States has raised its travel alert level for those travelling to Australia, urging tourists to “exercise increased caution” and consider delaying travel as the country battles an unprecedented bushfire crisis.

"Tourists should consider postponing their trip to affected areas until the danger of natural disaster has passed," the alert reads, warning that fires could continue until April.

"Even in areas not directly affected by bushfires, smoke is causing poor air quality."

This warning places Australia in the same danger category as Hong Kong and Papua New Guinea.

The announcement is the latest blow for Australian tourism, with the UK also warning tourists about the bushfire threat.

And, the United States’ upgrade comes just days after Tourism Australia paused its controversial $15 million advertising campaign, citing the bushfire crisis.

Billion-dollar risk

According to the director of the Griffith Institute for Tourism, Sarah Gardner, the increased warning level will have an impact on Americans’ decisions to travel to Australia, and when.

“Australia is a major tourism market for the USA,” she told Yahoo Finance, noting that the country is sold as a “once-in-a-lifetime experience”.

This could be damaged by the warning, although Gardner said Tourism Australia efforts to educate travellers about fire-stricken areas could mitigate this.

In fact, only two key tourism regions are impacted by the flames: the Blue Mountains in NSW and Kangaroo Island in South Australia.

While Gardner believes it’s too early to say what kind of financial hit awaits, tourism operators believe they lost nearly $30 million from cancellations following the 2013 Blue Mountains fires.

UBS economists George Tharenou, Carlos Cacho and Jim Xu also predict a hit to tourism from the current bushfires.

“We estimate that a 10 per cent reduction in tourism for impacted regions could be worth $1.3 billion,” the economists wrote in a briefing note on Thursday.

They predict the lower tourism numbers will contribute to a 0.2 per cent GDP hit.

However, they also issued a disclaimer: it’s too early too say what the ongoing impact will be, given the bushfire danger period will continue until the end of March.

AMP chief economist Shane Oliver believes the economic hit will be higher. He suggests the bushfires will result in a 0.4 per cent hit to GDP in the March quarter, with tourism dragging lower for a longer period.

“Inbound tourism is… likely to be impacted by the heavy coverage of the bushfires globally,” Oliver said, pointing the finger at “ridiculous” and inaccurate maps depicting the extent of the fires.

Pictured: Fake Australia bushfires map shared by Rihanna.
This artist's depiction of the fires was wrongly thought to be a NASA photograph, but was shared widely, including by singer Rihanna to her 95 million followers.

“This [impact] may be short lived but it could last a year or so.”

The Australian Tourism Industry Council executive director, Simon Westaway, has also estimated that potential costs from the current fire crisis will be hundreds of millions of dollars.

“The summer school holiday period [from December - January] is the high peak season for many of our regional and rural tourism hotspots,” he told The Guardian.

“It is still too early to fully know and assess the commercial impact but it will clearly run into hundreds of millions of dollars over the near term.”

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, property and tech news.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting