Holiday crowds to the Illawarra, Shoalhaven and Southern Highlands have proven unpredictable and fleeting. Photo: Wollongong City Council.
The long weekends and school holidays might still bring a bustle of activity to the Illawarra, the Shoalhaven and the Southern Highlands — but the glow quickly fades.
Beyond the peaks, businesses across the visitor economy are grappling with rising costs, weak demand and a return to deep seasonal troughs that leave them more exposed than ever, according to Business Illawarra data.
Fresh figures show confidence in the Shoalhaven and Southern Highlands has plummeted to the lowest levels in New South Wales. According to the Q3 Business Conditions Survey, business confidence in those regions has slumped to -64.5.
This is in stark contrast to the Illawarra and statewide, which, while still in negative territory, posted the strongest results in three years.
The Highlands and Shoalhaven, by comparison, have slipped further behind.
Localised visitor economy data tells the same story. Seasonal spikes remain, but the valleys are worsening.
The King’s Birthday long weekend, once a dependable fixture for the industry, underperformed in the Highlands and Kiama-Shellharbour. Shoalhaven’s brief boost faded almost immediately. Even Wollongong’s crowds proved fleeting, with spending up only marginally compared with last year.
Operators say the cracks are widening. Costs are rising faster than demand, leaving many at breaking point. In the Shoalhaven, average room rates jumped nearly 30 per cent over the past year, but occupancy still fell. Payroll tax, workers’ compensation, higher wages and superannuation are compounding pressures.
At the same time, red tape is biting hard. Local businesses echo broader Business NSW research, pointing to regulation and compliance as their second-biggest challenge after rising costs.
Staffing shortages in accommodation and food services — the backbone of the visitor economy — are adding to the strain.
The result is a widening confidence gap. While business sentiment across NSW shows signs of recovery, Shoalhaven and the Highlands are slipping further, leaving them at the bottom of the state.
Costs, red tape and weak demand are deepening cracks in the region’s visitor economy. Photo: Kellie O’Brien.
Visitor data paints a patchwork picture across the corridor. In the Southern Highlands, visitor spending dropped 13 per cent year-on-year in June, with visitation from the ACT collapsing by more than half.
Shoalhaven, by contrast, posted an 8 per cent lift in spending, fuelled by strong growth from ACT travellers and international markets. But the gains were short-lived, with occupancy plunging below 20 per cent by September.
Wollongong managed a modest 3 per cent increase in spend, largely from international visitors, but losses from the ACT and Queensland left the city leaning heavily on weekend events and a fragile international rebound. Dapto to Port Kembla fared worst, with spending down 11 per cent and little support from interstate or international markets.
Kiama to Shellharbour held steady overall, though the long weekend disappointed.
Business Illawarra director Coralie McCarthy said the pressures were unsustainable and called on government to make meaningful change.
“Businesses in our region are being stretched to breaking point. Costs are climbing, red tape is strangling productivity and confidence in the Highlands, and Shoalhaven is now the lowest in NSW. Holiday weekends might still bring some opportunity, but it’s not enough to keep the doors open year-round,” she said.
“Government must take this seriously. That means real relief on payroll tax and workers’ compensation, cutting red tape that drains small-business time and money, and targeted investment to drive midweek and off-season visitation.
“Without urgent action, the cracks in our visitor economy will widen and more businesses will be at risk.”
Ms McCarthy also pointed to the absence of a coordinated visitor economy campaign, once a multi-million-dollar initiative that successfully drew visitors to the South Coast and Highlands beyond the peak seasons.
“State government cuts have left this region without adequate promotion and coordinated support,” she said.
“Whilst we are happy to see a new Visitor Economy strategy released, it’s time to put some real funding behind the regions and take the visitor economy seriously.”
