Why the California Tourism Industry Is Courting Australia

Australian vacationers flock to the U.S., especially the Golden State, and more are on the way.

May 16, 2014 at 10:00AM

Travel and tourism are big business—and getting bigger, growing at a projected worldwide rate of 4% per year for the next decade. Globally, the industry represents 8.7% of total employment. In the U.S., travel is directly or indirectly responsible for one out of every nine jobs, according to the U.S. Travel Association trade group. This year, The Motley Fool is taking a closer look at the industry to see where travelers are going, how much they're spending, and who's profiting.

For Australian vacationers, the U.S. is No. 1

The first stop on our itinerary is Australia, where leisure travelers rate the U.S. as their most popular vacation destination. Some 1.2 million Aussies came to the States in 2013, placing Australia in the top 10 markets for international travel to the U.S. Folks coming over from Down Under spent $5.4 billion here in 2012, supporting 41,000 American jobs and making travel spending the country's third-largest export to Oz.

California tops Aussie travelers' lists

New York and Nevada are popular stops for stateside Australians, but California leads the pack. For the past 10 years, roughly half of all Australian visitors to the U.S. have gone to California. That makes Australia the fourth-largest market worldwide for California tourism—especially impressive when the distance and travel time are factored in.

Hawaii, while not the biggest destination for U.S.-bound Aussie travelers, is a very popular place to spend some time en route to the mainland. Hawaiian Holdings (NASDAQ:HA) subsidiary Hawaiian Airlines has been flying between Sydney and Honolulu for 10 years this month and claims credit for bringing more visitors to the islands.

"Prior to our service, in 2002 Hawaii received only 91,911 visitors from Australia compared to 305,783 Australians visiting Hawaii in 2013," said Alison Croyle, Hawaiian's external communications director. Many of those visitors continue on from Honolulu to Los Angeles and San Francisco.

How Aussie travelers stand out from the crowd

Not surprisingly, the tourism industry in California has crunched a lot of numbers on the Australian market. The state's VisitCalifornia website highlights four big reasons why Australian vacationers are so desirable.

1. Australians are more likely to come for fun, not work

77% of Aussie visitors to the state are taking a leisure trip, compared to 50% of all visitors from other countries. This means they're more likely to spend their time shopping, visiting landmarks, and spending big on entertainment. They're also more likely to travel with a spouse, other family members, and friends.

Theme parks are especially popular with Australian tourists, with nearly 60% of those in California visiting attractions such as Universal Studios and The Walt Disney Company's (NYSE:DIS) Disneyland. While Disney doesn't break out visitor numbers by country of origin, Suzi Brown, Disneyland's media relations and external communications director, said that Australia is "one of the fastest growing international markets for Disneyland Resort."

2. Aussie tourists spend more per day

A day or three at a theme park is not for the frugal at heart, so it shouldn't be surprising that Australian travelers to California spend more per day than the average international tourist. Australians are also much more likely to put up in a hotel or motel instead of a private home, pumping even more money into the state's travel industry.

3. They love L.A.

The city of angels is by far the leading Golden State destination for visitors from Oz. In 2012, three-quarters of the 350,000 Australian leisure travelers who came to California visited Los Angeles, where shopping, sightseeing, package tours, and theme parks were among their top pastimes. San Francisco hosted 42% of Australian vacationers in the state that year, comparable to the number who also visited New York and fewer than the number who went to Las Vegas.

4. A growing market for air travel

Several carriers fly Australia-West Coast routes, including Delta (NYSE:DAL), which offers daily nonstop service between Sydney and Los Angeles, and United (NYSE:UAL), which flies between Sydney and San Francisco. Hawaiian Airlines, meanwhile, flies daily nonstop from Sydney to Honolulu and is the only U.S. airline serving Brisbane. Hawaiian's recent addition of a fourth weekly run between Brisbane and Honolulu is expected to increase the westward flow of vacationing Australians even more.

"The additional flight will add more than 20,000 seats to the Australia-Honolulu travel markets in 2014," Croyle told The Motley Fool. "We expect to up-gauge our service to Brisbane from the Boeing 767 to the Airbus A330 in the near future."

A forecast for strong Australian travel growth

The number of annual visitors from Australia to the U.S. is forecast to grow by 25% by 2018, per the U.S. Department of Commerce. California's government and travel industry aren't taking the expected increase for granted. In December, VisitCalifonia formed its first Australia and New Zealand California Advisory Board to promote the state to prospective travelers from Down Under. Board members include representatives of United Airlines, Qantas Airlines, Hertz (NYSE:HTZ), and four Australia-based travel agencies—a smart move since Australians are about twice as likely as other worldwide travelers to plan their getaways with the help of an agent.

Oz-based opportunities for tourism companies

With the number of Australian visitors projected to rise in the next few years, now's the time for car rental companies, theme parks, hotel chains, and—of course—airlines to court those travelers. There's also an opening for travel groups in other states to show Australians why they should spend some of their vacation time and dollars seeing more sights while they're visiting the U.S.

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Casey Kelly Barton has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Hertz Global Holdings and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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