And annual inbound arrivals deliver solid growth despite a weaker last quarter
The lure of a Euro Summer for Australian travellers has not been tempered by the conflict in the Middle East with more Aussies poised to flock to destinations across the continent for the last day of the summer and the popular shoulder season according to online search data.
Despite more expensive airfares earlier in the season, route uncertainty and the now-resolved insurance gap that came with the Level 4 Smartraveller advisory, the desire to experience a European summer remains deeply embedded in the Australian travel psyche.
YouTrip data shows 30% of Australians still rank Europe as a top bucket-list destination for 2026. And just 1.5% of Australians under 30 have cancelled a European trip this year despite global instability – with a combined 25% of Gen Z and Millennial travellers saying they are going “no matter what.”
The June 17 Smartraveller downgrade for UAE and Qatar from Level 4 to Level 3 – restoring travel insurance for Australians transiting through Dubai and Doha – was a significant turning point.
Expedia data captured the response to the downgrade almost immediately: with searches for Milan surging 80% year-on-year in the following week, London was also up 40%, Amsterdam 35% and Barcelona 25%. And travel agents are now reporting that the demand is converting into actual bookings. Travel Weekly reported last week that agents are seeing an unexpected surge in September departures, with one agent saying: “I wasn’t expecting it. So it looks like September departures are going to be above average.” Europe’s record summer heatwave is also playing a role – with some travellers actively choosing the cooler shoulder months over peak summer, a trend that is working in the industry’s favour.
And while none of the demand recovery is evident in the latest ABS Overseas Arrivals and Departures (OAD) data for June released last Thursday, the July and August numbers – covering the peak of the northern hemisphere summer – are expected to reveal a significant spike in actual departures.
The June OAD data confirms what the search numbers are indicating – Australians are still travelling. And in record numbers.
Total outbound is up 3.7% year-on-year and up 13.2% on pre-COVID at 12.7 million trips for the 2025-26 financial year. Asia was a clear winner with Indonesia the top destination for Australian travellers at 156,190 in June. Meanwhile Vietnam doubled its pre-COVID numbers and Japan was close to doubling its pre-COVID visitor numbers as the destination continues to grow in stature with Aussies lured by its culture, food, cleanliness, friendly people and an attractive exchange rate.
Europe outbound is still down but clearly recovering from the April lows – Middle East routing down 33% in June versus 61% in April, confirming Gulf hub restoration is working.
Overall outbound departures remain positive: with May up 0.3% and June up 1.1% year-on-year revealing Australians are still flocking to overseas destinations at close to normal volumes.
The US outbound market however continues to decline, plunging 39.8% on pre-COVID for the full year and it’s not conflict-related but reflects a broader shift away from North America. And the FIFA World Cup was not the golden goose expected to lift the US out of its tourism slump. (I’ll cover the decline and its impact on the US tourism industry in more detail in my next blog.)
Shift your gaze to the inbound numbers and a different picture emerges.
In what was the fifth consecutive year of growth, arrivals at 9.1 million were up 8.3 per cent and critically just 2.6 per cent below the pre-COVID peak of 9.34 million signalling all but full recovery.
Despite the annual growth the numbers have been trending downwards for the quarter ending 30 June 2026 – a concerning trend but not surprising given the impact of the conflict in the Middle East on airline routes and flight prices.
Our top five source markets were New Zealand (98,960), China (58,970), Singapore (54,260), USA (48,440), India (33,440).
The standouts were Korea up 5.4% in June and 45.2% above pre-COVID year to date – the strongest recovery of any major market. Japan was also up 5.4% with China coming closest to holding firm – down just 2% despite ongoing carrier capacity constraints.
Interestingly, 25-29 year olds were the largest visitor cohort for the full year, led by Chinese Gen Z at 15% of that age group – a strong structural signal for forward demand.
There were also some reasons for concern with Australia’s largest source market New Zealand down 17.3% for the month but that may have been driven by cost of living challenges exacerbated by higher fuel prices.
India recorded its third consecutive monthly decline in June – down 9.1% – following a 6.6% fall in April and an 18.7% plunge in May that pushed monthly arrivals below pre-pandemic levels for the first time. While Middle East routing disruption has played a role, the decline appears to have deeper structural significance. A 25% increase in Australia’s visitor visa fee from 1 July adds further cost pressure on a market already navigating a visa rejection rate nearly three times the global average. And according to outbound travel research featured in India Outbound magazine, Indian travellers are increasingly gravitating toward closer, cheaper and easier destinations across Southeast Asia. This matters because India was one of our fastest-growing inbound markets with TRA projecting arrivals of 523,000 this year. Three consecutive monthly declines – for reasons that go beyond the conflict – warrant closer Federal Government attention.
Remarkably Tasmania – with no direct international flights – was the only state to record inbound growth in June at +2.2%.
The first real test will be the July OAD release, due 11 September, which will be the first data covering the peak Euro summer departure period and the full month post the Smartraveller change. August numbers follow in October.
The June quarter International Visitor Survey results, due to be released in September, will provide further insights on spending trends and allow full financial year comparisons for the first time. The June IVS will also be the first spend data capturing the full impact of the conflict in the Middle East. China’s share of spend will be watched closely given its historical inbound resilience and capacity to act as a buffer for other weakening source markets.
The numbers confirm Australian tourism is navigating a challenging set of headwinds. But there are clearly green shoots. For outbound travellers the Euro summer lure remains as strong as ever – the routes, the insurance and the confidence are all returning. Meanwhile the annual result for international arrivals remains solid despite a softening in monthly trends for some key source markets. The structural signals however show real forward momentum, from Korea’s record recovery to Chinese Gen Z leading the visitor cohort. When the July and August OAD data lands, we will have a much clearer indication of how the Australian tourism sector is tracking as we head into the peak summer holiday period.
