Dry New Year

The BOM weather station at Cairns Aero is now on the verge of reporting 13 straight dry days to end 2017. While there have been some fleeting sprinkles around the suburbs these have not been enough to trouble the Cairns City scorer.

In context: December average = 178mm. December 2017 = 26.8. This is how the seasonality works:


What it looks like in a longer term perspective with an annual moving average:


Meanwhile, in the northern hemisphere: Typhoon Tembin

It’s an interesting situation and consistent with the most recent BOM Weekly Tropical Climate Note due to be updated again this week after a festive break.

Update at Weekly Tropical Climate Note:

Australian monsoon onset unlikely in next week
While the monsoon trough briefly influenced the north Western Australia coast in association with tropical cyclone Hilda, northern Australia is yet to experience broadscale monsoonal flow this wet season. By convention, the Australian monsoon onset date occurs when the onset is observed at Darwin. Therefore, by this definition, the Australian monsoon onset has yet to occur—the last time the onset date was this late was during the 2011–12 wet season.
One factor contributing to the delayed start of the Australian monsoon is the continuing tropical activity in the northern hemisphere. A late-season near-equatorial trough persists in the northern hemisphere, extending from a developing low near the Philippines to another weaker tropical low in the Bay of Bengal. This trough lessens the likelihood of monsoonal flow developing in the Australian region, by deflecting energy associated with cross-equatorial flow from the South China Sea. This flow from the South China Sea ideally would energise a southern hemisphere monsoon trough and thereby assist in initiating the northern Australian monsoon onset.
The tropical depression near the Philippines may reach tropical cyclone strength in the next few days as it moves towards Vietnam. For tropical cyclone information in this region please see the Japan Meteorological Agency webpage here.


Airport: low altitude, low turbulence

November is typically an unexceptional month falling between peak season and Christmas and it was mostly unexceptional again this year. Domestic was up 2.1% on the previous year while International was up 0.6%.

Airport Nov 2Airport Nov 1

Commentary from Cairns Airport:

Interstate passenger growth of 0.5% was moderated by reductions on Adelaide, Darwin and Perth. Intra Queensland routes increased 6% due to strong Brisbane and regional growth, particularly on routes in support of mine operations and construction projects.

The Airport has previously commented on increased activity to Weipa. Some of this would fall in transits which are excluded in my numbers. Transits and transfers are lumped together both domestic and international. This was actually down -2% for the month and changes to the Cathay Pacific service may also be having some impact here.

Recent monthly numbers have been quite stable compared to the seasonally volatile first half. Chinese New Year moves a few weeks later into February in 2018 while Easter moves a few weeks earlier to the start of April.

Source: Cairns Airport


IVS fails to impress

The International Visitor Survey for the September 2017 quarter has failed to impress: IVS highlights problems for QLD and TNQ .

This is annual growth in international numbers for the leading 24 tourism regions with visitor numbers above 100,000 p.a.


This is also where we should post a warning on sample sizes and margins for error as regions get smaller. Number of international visitors by region:


Central Queensland is particularly interesting. Visitor nights allegedly increased by 37.8% while expenditure decreased by 34.7%. This leaves CQ a distant last on spend per night to an extent which could imply international visitors to CQ are living in poverty during their stay. Perhaps they are backpacking fruit pickers? Fraser Coast was second last.

Bigger is better in sample numbers so I think it is the key numbers for Queensland and Australia which highlight the problem. International visitors by category:


Queensland is actually doing ok in the fast growing education sector up 18%. Where it is not doing ok is in the dominant tourism holiday sector with growth at 3.0% well below national growth at 5.1%. Also concerning is that while holiday numbers are growing at 5.1% for Australia, expenditure per trip is actually down -0.3%.

Kate Jones remains tourism minister. Apparently there is a new political policy in Brisbane to make cabinet appointments based on performance and not factions.


Gordonvale too far away

To follow up on the previous post and comment on employment accessibility by car, geographical factors could also come into play. The regional cities in the framework report are defined by the SUA (Significant Urban Area) from the ABS. While the Gordonvale SA2 in included in the Cairns-South SA3 it is excluded from the Cairns SUA.

The regions of the SUA structure are constructed from whole SA2s. They are clusters of one or more contiguous SA2s containing one or more related Urban Centres joined using the following criteria:
they are in the same labour market
they contain related Urban Centres where the edges of the Urban Centres are less than 5km apart defined by road distance
they have an aggregate urban population exceeding 10,000 persons
at least one of the related Urban Centres has an urban population of 7,000 persons or more.

Measured by the road distance criteria Gordonvale Urban UCL (which starts at Draper Rd) is 7km from the Edmonton boundary so is 2k too far away.


The SA2 boundary is the green line. So the exclusion of Gordonvale leaves out one of the faster growing suburbs and the entire Mt Peter planned precinct. Gordonvale SA2 was second only to Trinity Beach – Smithfield for residential building approvals in 2016/2017. I would have thought this a not insignificant (sic) problem in the context of the objectives.

This situation appears not to apply in this way to other regional centres like Townsville and Toowoomba where the contiguous SA2’s can extend well beyond the urban area. Yes, I am cynical (as always) about the position of Townsville in the traffic and jobs analysis. I’m sure getting in and out of the city from the suburbs at peak times can be an issue just as it is here and elsewhere. However, Google Maps tells me a keen worker can get from outer southern Kelso up to Rollingstone to pick pineapples faster than you can drive from one end of Cairns to the other. Consequently I am sceptical of the methodology and its value.

While the regional cities are ahead of the capitals for car accessibility they are often lacking in public transport.  The geography of Cairns and location of facilities can also come into play here. This is the Sunbus journey planner to get from Gordonvale to the JCU campus at Smithfield:


Hmmm. Best to drive which Google Maps says will only take 41 minutes along the western arterial route in normal traffic.

Previous Post: National Cities Performance Framework,

Reef recovery ….. sort of

Reef Casino Trust (RCT) have updated guidance and estimated distribution for 2H17:

Update on operating results
With still slightly more than 3 weeks’ trading to go before the end of the financial year, our current estimate of the distributable profit* for the full year 2017 is approximately $11.5 million, compared to 2016’s distributable profit of $11.9 million.
While the Trust’s distributable profit for first half of the 2017 financial year was 38.2% below that of 2016, the second half is estimated to be about 30% better than that of 2016.
The Trust has already reported on its first half results on 23 August 2017.
So far in the second half of 2017, the refurbishment of level 1 of the Reef Hotel Casino complex which was completed in the first quarter of 2017 positively contributed to the performance of the Reef Hotel Casino. Overall hotel operations performed well. Overall casino operations also performed well with electronic gaming taking on the local competition more effectively.

This represents a good recovery in 2H however it still leaves RCT struggling to match the 2013 – 2015 performance:

RCT 2h17

Will await full results in new year. Still waiting for updated November gaming stats for hotels and clubs.

Wet, and not so wet?

Townsville Bulletin: Big summer rains forecast in North Queensland

PREPARE to get wet.
A ocean-atmosphere phenomenon associated with more rainfall and cooler conditions is taking place in the tropical Pacific Ocean.
The Bureau of Meteorology announced today that the El Nino-Southern Oscillation had been raised to La Niña.
The latest modelling shows the Pacific Ocean and overlying atmosphere have reached La Niña thresholds.

Observations suggest the ocean and atmosphere have coupled — which means they are reinforcing each other.
“It is therefore likely that the tropical Pacific will persist at La Niña thresholds over the southern summer; long enough for 2017-18 to be classified as a La Niña year,” a spokesman said in a statement.
“Climate models suggest further cooling of the tropical Pacific is likely during the early southern summer.
“Most models suggest a transition back to ENSO neutral by April 2018.
“Bureau climatologists will continue to closely monitor developments in the tropical Pacific over the next fortnight.”
It’s unclear how much the event will affect Australia but the outlook means there is an increased chance of rain for North Queensland, and Townsville.

There have been 18 La Niña events since 1900 and 12 have led to widespread wet conditions.
Australia’s wettest two-year period was during the 2010-12 La Niña.
Usually La Niña events develop in autumn or winter and have lasted two or three years.

They occur on average every three to seven years.
The new outlook comes with Townsville suffering through a dry period.
The bureau is predicting at least 522mm of rain will fall over the summer in Townsville.

Do you notice how the bit about increased chance of rain is not in quotation marks? Amateur weather sleuths may even think that the predicted precise to the millimetre  522mm minimum appears to be somewhat below both mean and median historical rainfall in Townsville over the summer months?

Australian Bureau of Meteorology: Weekly Tropical Climate Note

La Niña in tropical Pacific Ocean
The Bureau’s ENSO Outlook has been raised to LA NIÑA status, indicating that the tropical Pacific has reached La Niña levels. Climate models suggest this La Niña will be weak and short-lived, persisting until early southern autumn 2018. Most oceanic and atmospheric indicators show clear signs of La Niña. These include sea-surface temperature (SST) anomalies over the central tropical Pacific Ocean, the Southern Oscillation Index and cloudiness near the Date Line.
La Niña is typically associated with above-average rainfall during the northern wet season, average or above-average tropical cyclone numbers across the Australian region and an earlier onset of the Australian monsoon. Impacts associated with the current late-developing and relatively weak La Niña are not expected to be typical. Near-average SSTs are expected to persist across waters to the north and west of northern Australia (atypical during La Niña), and current rainfall outlooks do not indicate above-average rainfall for December to February for northern Australia.

Given that mostly the BOM outlooks are probabilities rather than predictions I would guess confidence may be lower around an atypical La Nina event?


Rainfall Probability



An eye on Experience

Following my recent post on Experience Co (EXP) formerly Skydive the Beach (SKB) there are further acquisitions announced in FNQ:






Experience Co Limited (‘EXP’, ‘the Company’, ‘Experience Co’), Australia and New Zealand’s leading adventure tourism company, is pleased to announce the acquisition of Big Cat Green Island Reef Cruises (BC) in Cairns, and Tropical Journeys (TJ) in Port Douglas, Far North Queensland.


 Experience Co (ASX: EXP) has executed an agreement to purchase Big Cat Green Island Reef Cruises and Tropical Journeys;  BC is one of Far North Queensland’s leading Great Barrier Reef outer-reef operators, based out of Cairns;  TJ is one of Far North Queensland’s leading Great Barrier Reef inner and outer-reef operators, based in Port Douglas, and one of the most reputable Daintree rainforest tour companies in the region;  Under the agreements EXP will acquire 100% of the shares in BC and TJ for a consideration of AUD$56.07m which includes the acquisition of the businesses, land and buildings, vessels, moorings and permits, vehicles, and all other assets and the repayment of loans, so the businesses will be acquired debt free;  The acquisition is a continuation and extension of EXP’s strategy to ultimately become the largest and most respected adventure tourism company in the world;  The acquisition will add $11.1 EBITDA in FY19 and will also be accretive in FY19 the first full year of ownership;  The acquisition will be 100% funded by a fully underwritten A$60.9m equity raising via a 3 for 17 pro-rated accelerated non-renounceable entitlement offer at $0.74 per share, also announced today;  Subject to completion, the BC vendors will be issued 6.7m fully paid ordinary shares in EXP at a deemed issue price of $0.74, as part consideration for the acquisition. The BC vendors have agreed for these shares to be subject to escrow for 12 months from the date of issue;  The BC transaction is expected to complete by 13th December 2017;  The TJ transaction is expected to complete by 18th December 2017;  Certain retention amounts will be held in escrow for various periods supporting warranties.

I’m not sure when Big Cat became “adventure tourism” but never mind. Perhaps my concept of adventure does not align with the mass market. I haven’t looked further through the details and the presentation but this would probably take FNQ based business to 50% or so of group revenue or beyond. The completion times here are also very short.

It does make me wonder whether further acquisitions of similar businesses in Cairns would become a competition issue for EXP?

To be updated after further perusal and analysis.

Note: To reiterate from the previous post this is NOT investment advice on EXP but general comment related to Cairns and FNQ. This is particularly so if you don’t understand the consequence of dilution in a compulsively acquisitive company.