Does Australia need more casinos to boost tourism?

25 Oct 2013

Recently James Packer commented that the Chinese middle class is going to change the world and that Australia’s flagging tourism industry can be saved by large casinos. He warned that Australia can’t rely on its natural beauty alone and a lot of Chinese tourists like man-made attractions as well as natural attractions.

Dr James Laurenceson
Senior Lecturer UQ School of Economics
President, Chinese Economics Society of Australia (CESA)

Why the existence of more large casinos in Australia would significantly impact on Chinese demand for tourism in Australia is not clear. If the availability of casinos were an important determinant of the decision-making of the leisure-seeking Chinese middle class, they would, after all, have to look no further than the casino capital of the world, Macao.

The latest data from Tourism Research Australia show that Chinese visitor arrivals were up 14.5% for the year to March 31st, 2012.

This was actually the second fastest annual rate of growth recorded in the past five years. In short, for all the problems currently being faced by the tourism industry, addressing a slump in Chinese demand is not one of them. Like manufacturing and education, tourism is wrestling with the structural adjustment caused by a strong Australian dollar. Against this larger story, the marginal benefit from additional casinos strikes me as being negligible.

Associate Professor

As a marketer, I would be keen to understand how offering ‘more casinos’ would influence international consumers’ perceptions of brand Australia and Australia’s brand equity.

International marketers know that a country’s brand equity can be affected positively/negatively by a range of factors including what type of products the country offers in the international markets.

Managing the country’s brand equity is very important for nations like Australia. We have a small domestic population and moreover the domestic market is saturated. Therefore, increasingly our economic prosperity relies on the ability to offer products and services to consumers in fast growing international markets (this would include attracting tourists, students and foreign direct investment).

How do we convince international consumers that our products and services offer better value? We can not compete on price since we do not have the same price advantage that countries like China or India offer in the form of inexpensive labour. So, we have to differentiate (offer something special) to succeed in the international markets! Branding (the country) is an important means of differentiation. Coming back to the issue of casinos and tourism, it is important to understand how brand Australia’s value can be affected with such initiatives. Understanding this is very easy – do research!

Associate Professor,
T.C Beirne School of Law

Australia wants to be smart about casinos and gambling more generally. The USA has much of its key gaming activity in the Las Vegas desert, far away from daily life: China has Macau. Australia does not “need” more crime, financial hardship and social dysfunction, evident in our cities where foolishly placed casinos operate. The lucrative and pervasive poker machine lobby throughout Australian suburbia has thus far outbid all stakeholder attempts to reduce its predatory behaviour towards the elderly and the unemployed. Attempts to redress the balance by changing the law have so far failed as has shareholder activism directed at the Woolworths supermarket company that owns 12,000 gaming machines.

Australia has its own identity and its own way of doing things. That is why tourists, from all parts of the world visit. Our laws and legal institutions exist to serve all Australians, rather than the short-term interests of the highly profitable and widespread gambling lobby. If Mr Packer can provide real evidence that gambling is good for all Australians and their financial decisions and that the incidence of consumer bankruptcy reduces with gambling then maybe the place to demonstrate this is a remote island location or other isolated non-inhabited part of the Australian desert.

Associate Professor
UQ School of Business

Mr Packer owns a casino or two and so there may be an element of self-interest in his suggestions but let’s put this aside. Around the world, Australia is seen as a nature-based destination with lots of cuddly wildlife. Australians also see themselves as outdoor people and much tourism marketing is partly designed to reinforce national image. To move away from this position to better cater to one segment of Chinese travellers is risky and means we would be putting all our tourism eggs in one basket. The Chinese market may suffer a downturn as Japan has done in the past, increased competition may develop in Asia (Singapore now offers casino gambling), or there may be confusion about the image of Australia in other markets (backpackers and Americans won’t come to Australia to see casinos). It’s easier for Australia’s tourism competitors to build casinos than to repair their natural environments.

Mr Packer’s suggestion would be best accommodated through use of a specific targeted co-operative marketing campaign rather than a change to the image of Australia as a whole. This would involve Australian casinos jointly promoting themselves to the gambling market in China (and potentially other countries). Perhaps we will find that Australia’s flagging casino industry can be saved by Australia’s natural beauty.