The Challenges Facing Australia’s Domestic Tourism Sector

The good news for the tourism sector in Australia is that the number of international tourist arrivals to the country has been increasing year on year, by roughly 2% per annum since 2001. International tourists are great for the economy, though often their stays are focused on the major urban and tourism resort areas of the country, so their spending does not always benefit the wider market. This is the gap that domestic tourists have filled in the past by visiting some of the smaller urban centres and resort towns, however, this is now changing.

Domestic tourism has remained fairly static over the past 20 years, but is now showing signs of declining. There are three telling signs of this decline: 

Points 2 and 3 really highlight the change in tourism and consumer behaviour over the past decade. Consumers are spending more money on travelling abroad, and the number of residents who are travelling abroad is increasing too. There are both push and pull factors contributing to this trend.

Pull: Where are Tourists Going?

The main factor that is pulling Australian residents away from domestic tourism is the opening up of more affordable tourism markets. Residents have a greater propensity to travel longer distances because increased competition means that flights are more reasonable. Accommodation is more abundant and hence more reasonable too. The general trend for low cost holidays in places like Bali, and across Asia, has been attracting tourists who may not have had the spending power to consider these in the past.

Push: Why Aren’t the Tourists Staying in Australia?

When combined with the ‘pull’ (the lure of low cost holidays), domestic tourism in Australia is bound to feel less attractive. Perceptions of value have been changed by the opportunity to travel to a more exotic location for a lower cost, where the tourists can enjoy different and new experiences and cultures. The fact that residents perceive Australia to be very homogenous is pushing them away.

What is the Solution?

The problem is that there is no quick and easy solution that will suddenly have residents taking up domestic tourism again. Perceptions need to be changed, allowing residents to take another look at what Australia can offer in terms of natural and cultural diversity, and it has been suggested that a distinct ‘brand’ needs to be established.

The perceived tangible value of a destination or specific attraction needs to convince residents that Australia can offer value for money in terms of the experiences tourists can have. This does not necessarily mean that businesses in the tourism sector have to lower their prices, but one suggestion is to sell packages where numerous elements are included under one price, therefore offering good value for money.

The youth market is also an important sector to target, as it is realised that this generation should be encouraged from an earlier age that Australia offers so much, and by instilling a sense of national pride the youth market may be more prone to travel domestically. 

For regional towns and attractions the answer may be to re-invent caravanning and camping – the affordable holiday. To attract those people with caravans, camper trailers, tents and recreation vehicles, such as motorhomes and campervans, more need to be done than just promoting individual caravan parks and campgrounds or even destinations. Getting there can also be fun.

Targeting key markets with holiday packages that describe and plan touring routes with interesting stopovers on the way to exciting destinations and attractions is a good way of getting people back on the road. Small towns have a host of interesting things that travellers normally just pass by – art centres, museums, local industry, specialty shopping and of course natural attractions.  The journey is half the fun!

Caravan parks and campgrounds need to assess their potential markets and provide products so that everyone can enjoy the camping experience. Budget and luxury cabins, safari tents and backpacker facilities are just a few of the possibilities. Encouraging tour operators to work in conjunction with caravan parks to provide access to interesting places and activities will improve the visitor experience.

Some of these initiatives will need be kick started by government funding for this important tourism sector, but for the small businesses who serve the tourism industry there is a lot you can do to market yourselves and use the benefits of the lifestyle that has been recognised by generations of Australians to get people back to travel within Australia. 


  1. ‘Through the Looking Glass: the future of domestic tourism in Australia, 2008’
  2. ‘Tourism Industry Facts and Figures At A Glance, May 2011’.

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