Growing interest from China and Australians wanting to explore their own backyard is set to boost tourism spending to almost $72 billion over the coming year.
A new report by IBISWorld, released today, estimated tourism expenditure in Australia to grow by 5.9 per cent to $71.9 billion in 2012/13.
The shift follows a tough five years for the industry, with spending falling in 2009 and 2011 due to the global economic downturn.
IBISWorld general manager Karen Dobie said domestic overnight trips are expected to grow by four per cent during the coming year, with spending rising 5.9 per cent.
Visitors from China, India, the United Kingdom, New Zealand and the United States would make the most significant contribution to Australia's tourism industry.
"Tourism Australia's marketing efforts in China, and the gradual rebound of the UK and US economies, will support growth," Ms Dobie said.
Low-cost airlines were increasing their range of destinations, driving competition on routes and pushing down ticket costs.
Cruise liners also were delivering lower priced and improved products.
The total spend on hotels, motels, resorts and serviced apartments is set to reach $11.4 billion in 2012/13, the report said.
Ms Dobie said Chinese and Indian visitors would provide a boost for the retail sector, particularly luxury goods, but they also presented challenges such as the provision of language services and catering to their food tastes.