With greater spending power than tourists from New Zealand and the United Kingdom, the rapidly increasing number of Chinese tourist is expected to boost Australia’s tourism revenue further in the coming years. However, the sector’s overall growth may be thwarted by the severe skills shortage facing the hospitality industry.

A record 953,200 Chinese tourists visited Australian shores in the year to August, according to the Australian Bureau of Statistics, nudging close to New Zealand’s 1.29 million. Coupled with the 212,400 travellers from Hong Kong, CommSec economist Savanth Sebastian predicts New Zealand may be bumped from the top spot in mid-2016.

He told The Australian that Chinese holiday makers are more economically valuable than their New Zealand counterparts because of their spending habits.

“I think the spending power of Chinese and Hong Kong tourists far exceeds what we see out of New Zealand,” he says.

“We’ve seen ongoing strength in incomes in China, a shift from a low income economy to a middle income economy and that’s probably the key driver, coupled with the fall in currency of the Australian dollar.”

According to the report, one of Australia’s busiest airports, Sydney Airport, saw a six per cent rise in international traffic in August, with travellers from China up 14.1 per cent and Hong Kong 10.2 per cent.

Tourism is Australia’s third largest export, and now that the resources boom is over it is seen as key driver of economic growth. “We need other parts of the economy to lift with the pull back in the mining boom,” Mr Sebastian says.

“We are well placed to provide significant services to Asia that comes from tourism and education.”

As a sector, tourism contributes $34 billion in GDP – that’s 2.6% of Australia’s total GDP. Tourism is Australia’s largest services export earner and provides around half a million jobs.

However, a Tourism Australia report warned that over the past decade, Australia’s international competitiveness has not kept pace with global trends and this has translated into a decline in international market share in tourism.

Labour and skills are seen as the greatest supply side challenge in terms of growing the Australian tourism industry. Significant growth in capacity and productivity is required. It is estimated that jobs growth of between 12% and 32% will be needed for the industry to grow; that is between 56,000 to 152,000 additional jobs (or between 1 and 3 times industry’s long run average growth).

The Productivity Commission is currently looking at labour force mobility. Austrade believes that any changes to wage floors for 457 visa workers could have sweeping effects on Australia’s hotels, restaurants and cafes by making it easier for owners to hire staff from overseas and attract workers to regional tourist hubs.