The Tourism Investment Monitor is a report of how the tourism industry of Australia performed in the year 2014. The tourism investment environment is one the main area examined by the article. The recent economic trends show that the economy of Australia grew by 2.7 per cent, which was fueled by increased exports of goods and services, household consumption, dwelling investment and non-dwelling new building construction. According to the vicious circle development theory, tourism initiates an additional demand stimulus to investment, which was experienced by the economy (Chien-Chiang and Chun-Ping, 2008). The investment environment of Australia is one of the most attractive globally, which has enabled the industry sentiment in the country’s tourism industry to remain positive. The future for Australia’s tourism industry is positive because investment in the country’s tourism industry continues to remain positive for both domestic and foreign investors. Increase in foreign investors is key for the growth of the industry as evidenced by the dependency theory, which suggests that tourism depends on foreign supplies. The industry performed well in 2014, with a very strong growth in the demand for tourism services, which resulted, to a solid economic performance (Dwyer, Forsyth, Jago, Deery & Lundie, 2007)
The Tourism Investment Monitor by the Australian Tourism Research, May 2015 is an estimate of the number and overall value of the large-scale projects in the Australia’s tourism investment pipeline in 2014. The article reveals the progression of large-scale projects and how they have improved as compared to last year, with a clear indication of the viable projects entering and progressing through the pipeline together with the number of project completions. These projects consistent of aviation, arts, recreation and business and lastly, the infrastructure projects. These three main projects make up the key tourism industries in Australia in terms of its investment and supply. The size and the value of the tourism investment pipeline experienced a continued growth with a total of 168 projects worth $53.7 in 2014. The pipeline included aviation investment of 13 airport infrastructure projects valued at $10.9 billion and aircraft fleet investment worth $20.4 billion totaling up to 31.3 billion. Investment in arts, recreation and business services included 57 infrastructure projects valued at 13.9 billion. The 8.5 billion in accommodation investment amounted to 15,915 new rooms in the accommodation supply. The Rostov economic development theory suggests that there are several factors that have an impact on tourism development; including infrastructure development and capital investment in the tourism sector. Improvement in the progress of these projects saw a growth in the tourism industry of Australia (Dwyer, Forsyth, Spurr & van Ho, 2005).
The monitor also revealed the opportunities for the Australian Tourism industry. The growth in mixed-use development was one major opportunity identified by the monitor. In addition to this, the issue of a blocked pipeline was also identified. The mixed-use development was identified as an important factor that could significantly increase the volume and value of accommodation investment. Its growth was fueled by scarcity of prime land in the central business districts making the mixed-use projects to receive increasing attention from investors especially from Asian investors. The year 2014 saw an improvement in project progression through the pipeline and the country only needs to increase the supply and improve its tourism product offering for the tourism industry to be globally competitive
Do you think increasing investment in Australian tourism industry is a prudent economic policy for the future sustainability? Why or why not?
Suppose that the Australia’s hospitality industry is perfectly competitive (i.e., many hotel and/or accommodation providers). The federal government decides to levy a buyer’s tax (specific tax) on hotel accommodations.
(a) Examine the impacts of this buyer’s tax on the equilibrium rental prices, consumer surplus, producer surplus, and total surplus (or social welfare).
(b) Can an increase in the buyer’s tax raise social welfare?
- c) Can an increase in the buyer’s tax raise the federal government’s revenue?
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