Value-seeking travellers choose international over domestic holidays, says TRA report

Cost-of-living pressures are hitting domestic tourism operators, as travellers save their money for trips abroad.

An increase in international travel has weakened local tourism with the number of domestic visitor nights forecast to fall 4.1 per cent this year.

Cost of living pressures are having more impact on domestic tourism than international, as travellers save their money for trips abroad.

Tourism Research Australia’s annual five-year forecast, released on Tuesday, says domestic travel has gone backwards in 2023 after a strong rebound in 2022.

The number of domestic visitor nights is forecast to fall 4.1 per cent this year compared to last year and still be down 2.6 per cent on 2022 levels by 2027.

Increased competition from international outbound travel, and cost of living pressures leading to reduced discretionary spending are considered the main barriers to domestic travel.

In contrast, international travel continued to climb with numbers tipped to reach record highs in 2025, when more than 10 ­million overseas arrivals are ­expected.

To date visitors from Asia have returned the fastest, with arrivals from Vietnam, Thailand, The Philippines and India already exceeding pre-pandemic levels.

Other international markets such as New Zealand, China, Japan, Singapore, Canada, the US and Britain are forecast to return to 2019 numbers in 2025, while visitors from Europe are likely to take longer.

Tourism Australia’s Come and Say G’Day campaign is helping lure travellers down under. Picture: Tourism Australia

That is attributed to negative consumer sentiment towards long haul flights in Europe, where concern about carbon emissions and global warming is highest.

Tourism Minister Don Farrell said it was great to see the rapid increase in international visitors to Australia this year, with almost twice as many short-term arrivals from overseas (7.3 million) than last year (3.7 million).

“A thriving tourism industry is crucial to our economic prosperity, with every dollar spent in the visitor economy generating a further 81c for other parts of the economy,” said Senator Farrell. “Tourism is a major export earner and employer. One in eight Australian businesses is tourism-related and it is the lifeblood of so many Australian communities.”

Australian Travel Industry Association chief executive Dean Long said members were certainly seeing a slowdown in domestic travel, largely as a result of competition from international markets.

He said budget-conscious travellers were often finding better value in overseas destinations.

“(2022) was actually the high water mark for domestic tourism, because you had this moment when the (international) border was still ‘closed’ even when it was open because it was cost-prohibitive to travel overseas,” Mr Long said. “As we’ve had more airline capacity added, and some of the airfares are coming off the record highs we had. People are looking at value and they’re looking at price. Those two things for international travel are now as attractive as they’ve ever been.”

At the same time, domestic tourism operators were grappling with high interest rates and inflation, resulting in higher prices and ongoing staff shortages, he said.

Australian Tourism Export Council managing director Peter Shelley said regional areas were being hit hardest by the slowdown in domestic tourism, and as yet international visitors were not making up for the shortfall.

There has been a rapid increase in international visitors to Australia this year. Picture: Tourism Australia

Although international arrivals continued to climb, month on month, many of those were “visiting family and relatives” and the holiday travel segment remained at 57 per cent of 2019 levels, which was the most important to tourism operators, he said. “That’s the high-spending, high-yield, long-stay travel into regions segment,” Mr Shelley said. “Meanwhile we have people who still have enough cash (to travel), but they’re being more selective in how they’re wanting to travel.

“Therefore international outbound is still strong, domestic tourism is weakening and inbound tourism which would normally balance out that weakening of domestic tourism is still sluggish or slow to recover compared to 2019.”

Spending by domestic and international travellers is up, at an estimated $169.9bn in 2023, up from $138.5m pre-Covid 2019.

International visitors alone were projected to splash out $28.6bn in Australia this year, or about $4000 each.

Originally published as Value-seeking travellers choose international over domestic holidays, says TRA report