The economic impacts of a changing visa fee for Chinese tourists to Australia

Chinese tourism demands in Australia have increased exponentially in recent time, driven largely by increases in the number of visitors. The hidden important fact of this market is its high price sensitivity, which is vital to the growth of the dominant Chinese tourism segment in the total inbound sector of the country. This paper addresses a concern of the tourism industry regarding a possible policy change on tourist visa fee for Chinese nationals that potentially has adverse impacts on the economy. The paper demonstrates that the revenue objective of increases in visa fee for Chinese visitors is unlikely to be a successful policy, as it will take a long time for the visa revenue to compensate for the losses of gross domestic product. In the extreme, the GDP losses may never be compensated adequately by the increased visa revenue.