Australia’s tourism industry rallied in early 2026 with international visitors spending $13.0 billion in Australia in the quarter ending 31 March 2026 – up 15.2% on the same period last year according to Tourism Research Australia’s latest International Visitor Survey data released on 24 June 2026.
Importantly the new data heralded the return of a close to fully recovered Chinese market which alone accounted for nearly $4.4 billion (one third at 33.9 per cent) of all international spend in Australia. And while visitor numbers from our largest inbound market before Covid, and the slowest to return, are yet to achieve their 2019 peak, the high yielding Chinese visitors who are coming are spending big with their expenditure up 6% on the March 2019 benchmark.
The full year results paint an even more compelling picture with total international spend reaching $40.9 billion, up 20 per cent year on year. For the year ending March 2026, international visitors made 8.5 million trips to Australia – up 10% on the prior year while nights spent in Australia reached 321.9 million, up 9%. The results were largely replicated across the nation with every state and territory recording significant spend growth. The standouts were Queensland which posted a record $8.2 billion in international visitor spend, up 35%, with 2.4 million international arrivals up 13%. Tasmania recorded the largest percentage spend increase of any state, up 36%.
Spending surged across all five of our top inbound markets – New Zealand, China, the United Kingdom, the United States and India. It was Hong Kong however that led the charge with proportional growth at 47%, followed by the UK at 35% and China at 30%.
These numbers were only released last Wednesday. But they confirm what the industry already knew – that momentum was building strongly when February 28 arrived and war erupted in the Middle East.
A tale of two markets
The April ABS Overseas Arrivals and Departures data, released on June 12 – two weeks before last Wednesday’s IVS results – provided the first full month of data since the conflict began and told a more nuanced story than the headlines might suggest.
Inbound visitation held up with short-term visitor arrivals up 0.6% year-on-year – modest growth, but growth, nonetheless. China continued its recovery, up 10.6% despite ongoing carrier capacity constraints. Japan and Korea were both strongly positive. The major concerns, however, were the UK, down 21.8% – the sharpest decline of any major source market, and India recording its first monthly decline in over two years at -6.6%. Not surprisingly Middle East source markets were down 18.1%, directly reflecting the conflict’s impact on that corridor.
The outbound picture was more telling. Total departures fell 5.7% year-on-year, the first decline since the post-COVID recovery began. The breakdown reveals Australians didn’t stop travelling. Many simply diverted their flights via major Asian hubs. Flights through the Middle East were down 61.3%, dragging European destinations down with them. The UK was down 28.2%, northwestern Europe was down 23% while southern and eastern Europe were also down by 22%. Meanwhile Southeast Asia was up 12.9% with popular Asian destinations for Australians such as Indonesia up 15.6%, Vietnam up 23.8% and China up 33.8%.
And critically, aviation analytics experts Cirium’s forward booking data from March showed Australian bookings to Europe – travelling via Asia instead of the Middle East – were up 24% year-on-year. The demand for Europe had not collapsed. The flight path had just changed.
Budget throws another curve ball
Then the May 12 Federal Budget unexpectedly delivered another kick in the guts for the tourism and aviation sectors. The Albanese Government slashed funding to Tourism Australia and the nation’s marketing budget by more than $50 million over four years and for the second time since 2024 announced another $10 price hike for the Passenger Movement Charge, taking it to $80 from January 1, 2027. Not surprisingly the industry response was a mix of outrage and disappointment.
Industry bodies were united in condemning both measures as poorly timed – pointing out that cutting the nation’s international marketing budget at the precise moment inbound booking conversion is the critical challenge defies commercial logic. The PMC increase drew equally sharp criticism, with the sector noting that Australia already charges among the highest departure taxes in the world and that adding further cost to international travel sends entirely the wrong signal to both visitors and the aviation industry.
The government, however, was about to make one decision that the industry would welcome.
The Smartraveller change – late, but significant
On June 17 DFAT eased the risk rating for critical transit hubs in the UAE and Qatar from Level 4 (‘Do Not Travel’) to Level 3 (‘Reconsider your need to travel’). The decision was the most significant policy intervention for Australian outbound travel since the conflict began. And it was overdue.
Under Level 4, standard Australian travel insurance was voided for the entire duration of a traveller’s time in those countries – including airside transit. That meant an Australian connecting through Dubai or Doha on the way to Rome, remaining entirely within the terminal, had no insurance coverage for the journey. Travel agents warned clients that even a minor medical incident during an airside connection in a Level 4 country would likely leave them without cover.
These restrictions were out of step with the rest of the world, putting Australian travellers and the aviation industry at a distinct disadvantage to other countries. Germany, France, the UK and the United States had all adopted Level 3 or equivalent for the major Middle East transit hubs weeks earlier. Australia was the exception, and the industry said so repeatedly. Travel agents reported clients – particularly families and mid-market travellers for whom comprehensive coverage is non-negotiable – holding off on their travel plans specifically because of the insurance issue.
Under Level 3 that gap closes. Gulf-routed bookings to Europe become insurable again. Emirates, Etihad and Qatar Airways – which offer significantly more competitive pricing than the more expensive Asian hub alternatives – are back as viable options. Whether the change came early enough to drive meaningful July-August peak season bookings is the question. The May OAD data, due mid-July, will start to answer it.
What comes next
Three things will determine the shape of Australian tourism through the rest of 2026. Firstly, whether the Smartraveller Level 3 change translates to a forward booking uplift. The May overseas arrivals and departures numbers will provide the first indication. Secondly will be if the Gulf hubs return to reliable full capacity before the July-August peak. And lastly while the US-Iran peace talks are continuing can they produce a lasting ceasefire agreement that restores confidence in Middle East aviation routes more broadly.
The June quarter IVS, due in September, will be of particular interest. It will provide the first complete quarterly picture of the conflict’s impact – on spend, nights and trips. The March quarter IVS showed how strong the momentum was. September will show how much of it held.
Australian tourism was building its best numbers since before the pandemic when February 28 arrived. That momentum was real. The headwinds since have been significant. But Australia’s ever resilient visitor economy has navigated worse – and the smart money says it will again.
