Financing international tourism businesses

Tourism into Australia is booming, with international visitor numbers climbing year on year. This means opportunities for Australian businesses looking to leverage this expanding sector.

One of the key challenges Australian tourism businesses face is getting access to the finance needed to help grow international customers.

The information contained in this guide should provide insights into:

9 Who we are and how we can help Australian tourism businesses

9 Growing your business to attract international tourists

9 Finance solutions available for your business

9 Other support your business can access.

Financing international

tourism businesses

Australian tourism continues to grow with spending by international visitors reaching a new high of $41.3 billion for the year ending December 2017. This represents an increase of six percent from the previous year.

About Australia's international tourism industry

5%6%Total international

arrivals8.8 million

Total international visitor spend

$41.3 billion

Total international aviation capacity

25.9 million

Top 3 growth markets

1.35m visitor arrival

up 12%

$10.4b visitor spend

up 14%

282k visitor arrival

up 14%

$1.3b visitor spend

up 6%

302k visitor arrival

up 15%

$1.4b visitor spend

up 16%

1

2 3

Source: Tourism Australia (statistics for calendar year 2017)

7%

We are the Australian Government's export credit agency. We have helped hundreds of Australian businesses access a range of finance solutions to help them take their goods and/or services globally. We provide support when financing is not available through banks.

How we can help Australian tourism businesses

If you're a business that provides tourism services directly, or through the supply chain, to international tourists and you need finance to help you grow the international side of your business, we could help.

Some examples of businesses we can support include:

For more information about how Export Finance Australia could help your tourism business take on international opportunities, visit our website.

Wine business with a cellar door

Tour operatorTourist attraction operator

Ecotourism

About Export Finance Australia

Inbound tourism is big business in Australia, representing 10 per cent of Australia's exports.

With China now overtaking New Zealand to become Australia's largest inbound visitor market, this growth is expected to continue and is forecast to fuel growth over the next decade to 3.9 million inbound visitors by 2026-27.

With the introduction of non-stop flights from Australia to the United Kingdom, UK visitors are expected to be worth between $5.5 billion and $6.7 billion to the Australian economy in 2020.

How can you take advantage of these opportunities?

Taking advantage of inbound tourism

Decide which market you want to target and focus on▪ It’s important to tailor your business or product to your customer, this means understanding

the cultural background of your customers and how your offering will appeal to them.

▪ Once you've decided on the market you will target and understand your competitive advantage, make sure you tailor your offering, marketing and promotional activities to attract the right customers.

▪ Understand the key time periods your customers will be booking in their visit and travelling. This way you can manage your activities and cashflow to ensure your business is in the best possible position to take on growth opportunities.

Seek advice▪ As with any business venture, receiving good quality legal, tax and professional advice is

critical before making important decisions.

▪ Contact your State and Territory Tourism Organisation for advice. They have a wealth of information and resources to help you make the best decision for your growing tourism business.

Develop relationships▪ Distribution channels and purchasing behaviour changes depending on the market.

Understanding the structure of the distribution system specific to your target market is critical before you market internationally.

▪ Travel distributors open up your customer base beyond the reach of a limited marketing budget. Overseas customers still rely on travel experts when planning and booking their Australian holiday.

▪ Different distribution channels include inbound tour operators, retail travel agents, wholesalers, online travel agents, and meeting and incentives planners. Consider your options.

Need more help? Download The Tourism Export Toolkit, produced by the Australian Tourism Export Council (ATEC) in partnership with Tourism Australia and as a result of collaborative participation from all state and territory tourism offices.

The information on this page was sourced from the Tourism Australia and Australian Tourism Export Council's 'The Tourism Export Toolkit'.

Preparing your business for international growthBefore you start growing your international tourism business, get a clear understanding of where your domestic business operations stand. By undertaking an audit on your current business strategy, you’ll know what resources you need for your international visitor growth – and be able to identify any funding gaps.

A key consideration when growing your international visitor numbers is whether you have a viable market. Your international visitor growth strategy should align with your overall business plan, outlining your international objectives and action plan, and include your budget, operational model and any distribution channel partners you may have. You should also create a cashflow forecast to help you identify potential cashflow gaps.

Create a cashflow forecastA cashflow forecast helps you find out if your tourism business can cover its running costs when targeting new international markets, and identify any periods when you will have more cash going out than coming in. You can then decide if you need finance to cover funding gaps.

Build your creditworthinessA cornerstone of building your business’ credit profile is to establish strong financial systems, so it is simpler to get finance when the time comes.

Taking steps to grow your international visitor business may mean taking on more financial risks, making it harder to secure financing through your bank.

Developing a good relationship with your accountant or financial advsior will help you understand your financial position.

Develop strong financial systems for your tourism business Ensureyouhavearobustinternationalgrowthstrategythatincludesyourfinancialresources,foreignexchangerateconsiderations,andthesustainabilityofyourbudget.

Use a reliable accounting system.

Build a strong relationship with your business banker by keeping them informed of any developments in your business.

Consideranaccountingfirmthathasexperienceworkingwithtourismbusinesses.

Ifyouhaveafinancialadviser,askthemtoreviewyourgrowthstrategyregularly.

Accessing support for your international tourism businessOne of the most common problems for tourism businesses is funding international growth. Once export comes into the equation, financing requirements become even more important and many tourism businesses need support to enable them to fulfil their international growth potential. Help is available from a number of sources:

Speak to your bankSpeak to your business banker who can assess your situation and advise you on your best course of action. Your bank may be able to offer you a loan to help you with financing your international tourism growth.

Consider alternative sources of fundingIf your bank is unable to help, you still have options. Export Finance Australia may be able to provide you with the financial support you need in the form of short or longer term loans to support expenses related to attracting international visitors.

How to stay ahead Have processes in place to help you cover costs due to long payment terms or when business is slow.

Keepontopofyourfinancesandknowyourfinancialpositionatalltimes.

Workcloselywithyourbank,whichcanhelpyousecurefinancetocovergapsinworkingcapital(andremember,wecouldalsohelpyouifyourbankcan’t).

Stayinclosetouchwithyouraccountantandfinancialadviser(ifyouhaveone)tomakesureyour domestic and export business plans evolve with your business.

Access tourism grantsThere are a range of government grants available to Australian tourism businesses wanting to growth their international tourism business. From Austrade's Export Market Development Grants, to state-specific tourism grants. Make sure you contact your state or territory tourism agency to find out what support is available.

Export Finance Australia can help your tourism business with:

▪ access to fast, unsecured loans starting from $20K for small businesses;

▪ longer term loans or a line of credit to help you invest in your business; and

▪ guarantees to your bank to help you secure funding from your bank.

For example:

Finance support

Tour operatorNeed: You are an adventure tour operator and would like to purchase assets to help youexpandyourfleetandgrowyour international visitors. Solution: We can provide a term loan to support the purchase of assets.

Call Export Finance Australia todayWe can help a range of tourism businesses get the finance support they need to grow their international visitors. Call us today on 1800 093 724 to find out how we may be able to help your business.

ConferencesNeed: You are organising a conference with international delegates and need funds to help deliver the event. Solution: We can provide working capital to bridge the gap between outgoing expenses and incoming revenue.

Supply chainNeed: You are a zip line manufacturer and are contracted by an operator to provide zip lines for their international tourism growth. Solution: We can provide a loan to help with the contract delivery.

ResourcesThere is a wealth of detailed, easy to access information available to help Australian tourism businesses planning to grow their export business.

Austrade, the Australian Government’s trade and investment agency, can provide you with practical advice, support and insight into many of the countries to which you’re looking to attract visitors from.

Austrade provides information and advice to assist Australian companies to reduce the time, cost and risk associated with growing your international business, as well as Export Market Development Grants to support your export growth.

We provide finance support to Australian tourism businesses to help with international growth when their bank is unable to assist.

We also provide a number of resources for exporters, including our online Exporter Journey, which walks companies through the steps to successful exporting.

Tourism Australia is the Government of Australia agency responsible for promoting Australia to the world as a destination for business and leisure travel.

Tourism Australia’s activities include advertising, public relations and media programs, trade shows and programs for the tourism industry, consumer promotions, online communications and consumer research.

ATEC is the peak industry body representing Australia’s $40 billion tourism export sector.

Representing more than 1000 members across Australia including large national and multinational companies as well as small and medium-sized enterprises, ATEC's support includes B2B opportunities, industry advocacy and development, education and business capacity building, local and national networking events and conferences.

State and territory tourism agenciesEach state and territory within Australia has its own government tourism agency. These agencies also work in partnership with the Federal Government to promote Australia as a tourism destination internationally. Contact your local agency to find out what support is available.

Export Finance Australia's unsecured loan helped a Queensland-based tour operator purchase equipment to support an increase in Japanese visitors.

A tour operator based in Cairns was approached by a Japanese company wanting to develop a charter program of 80 days over the year. The contract would represent 30 per cent of business for the tour operator.

Toservicethecontract,newequipmentwasneeded to set up turnkey activities allowing the customer to get the most out of their experience on the tour.

One of the key challenges for the tour business wasthedifficultygettingfinancethroughtheir bank to support the growth. They found out about Export Finance Australia and made contact.

Access to funding helps fuel growth

Our Small Business Export Loan provides small exporters with an unsecured loan of up to $350,000tosupportexport-relatedcontracts,including growing international visitor numbers. Online,easytouse,achoiceofrepaymentterms,andwithfundsavailableinaslittleasninebusinessdays,theloanwasdesignedtohelpsmallbusinessesgainaccesstothefinancetheyneed fast.

The$A190,000loanallowedtheQueenslandbusiness to deliver on the Japanese charter contract. The spin off result was that businesses in the area gained an increase in Japanese business as a result of the charter program.

Cas

e st

ud

y

Fast finance for Japanese visitor growth

The information in this document is published for general information only and does not comprise advice or a recommendation of any kind. A person or entity should seek their own independent legal and financial advice. While Export Finance Australia endeavours to

ensure this information is accurate and current at the time of publication, Export Finance Australia makes no representation or warranty as to its reliability, accuracy or completeness. To the maximum extent permitted by law, Export Finance Australia will not be liable to you or any other person for any loss or damage suffered or incurred by any person arising from any act, or failure to act, on the basis of any

information or opinions contained in this document.

LDS

107

8 06

19

For more information, contact us on1800 093 724 or visit www.exportfinance.gov.au