Overseas visitor numbers rose 9.8 per cent in the year to May (seasonally adjusted) to reach a record 8.5 million visitors and Chinese arrivals were up 8.2 per cent to now be almost level-pegging with New Zealand as our biggest inbound market.
Visitor numbers also rose strongly from India, Malaysia, Hong Kong and the USA, as the lower Australian dollar and our global reputation as a safe and interesting place to visit pulled in the crowds.
As a result, Sydney and Melbourne hotel occupancies are at record highs, many resorts are filling up, dozens of new hotels are in the pipeline or under construction and much of the tired old hotel stock is being refurbished.
For local investors looking for exposure to the tourism boom, Australia's second biggest hotel and resort operator Mantra Group represents arguably the best opportunity.
Other options include cinema and hotel group EVENT Hospitality and Entertainment (the old Amalgamated Holdings) and theme park and entertainment businesses Ardent Leisure and Village Roadshow.
But, according to Baillieu Holst analyst Nick Caley, the hotel industry offers the "purest leverage to the boom in domestic tourism" putting Mantra at the top of the pile.
Caley rates Mantra Group as a 'buy' with a price target of $4.05. Shares hit a calendar year peak of $3.14 earlier in July, but have traded as low as $2.59. The stock closed Friday at $3.02, up 4¢.
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