Post-pandemic recovery hits setback, but travel appetite remains resilient
Just as tourism arrival numbers were in touching distance of pre-pandemic levels, along came the Middle East crisis, which created a new disruption.
Nearly three-quarters of inbound Australian operators report that they’ve been affected by the disruption to Middle East transit hubs1.
However the overall outlook is still positive. The tourism sector is on track to enjoy record arrivals by 2027 - and the Middle East conflict may even offer a silver lining for some operators, says Grant Jones, the editor of Travel Weekly.
“Analysts say the majority of Australians are delaying overseas holidays, which could provide a short-term boom for domestic destinations, such as Queensland, Tasmania, the Top End and tropical north.”
In the meantime, value remains an important focus for most travellers - and therefore most operators, says Margy Osmond, the CEO of Tourism and Transport Forum.
“Consumers are looking harder for value, but they're still prepared to spend on experiences that feel worthwhile. The businesses that will win the next quarter are those that make travel easier, more flexible and more affordable.”
The businesses that win the next quarter are those that make travel easier."
Margy Osmond, CEO Tourism and Transport Forum
Key travel figures
70%
The share of Australian inbound operators impacted by the Middle East conflict2
Nearly three-quarters of inbound tour operators have suffered cancellations or postponements or managed heightened client concern thanks to the Middle East conflict, according to a survey by the Australian Tourism Export Council. Many Australian suppliers are waiving cancellation fees when flights are changed, to help protect operator relationships.
100,000+
The number of Australians still heading to Europe this winter
‘Do not travel’ warnings might be in place for key transit hubs including Dubai and Doha - voiding many travellers’ insurance policies – but that won’t stop at least 100,000 Aussies holidaying in Europe this winter.
33%
The number of luxury travellers interested in a ‘sleep vacations’3
Pillow menus, AI-powered smart mattresses, in-room aromatherapy and blackout curtains are becoming the norm at many hotels. But others are taking it even further with “sleep serenity menus”, sleep therapists on speed dial and melatonin-boosting drinks. The trend comes as 33 per cent of luxury travellers reported they would consider a “sleep vacation”.
95%
Of pre-pandemic international visitor levels have returned4
International tourism continues to recover, with Australia welcoming 95 per cent as many overseas visitors in December 2025 as it did in December 2019 before the pandemic. As international arrivals edge closer to full recovery, retailers in tourism hotspots have an opportunity to capture growing demand from overseas shoppers.
Trends
Pets welcome
In the US and Europe, a growing number of hotels are introducing gourmet dog menus, luxury pet bedding and concierge services for travellers who want to bring their pets on holiday, Here, in Australia, Virgin Australia has recently introduced in-cabin pet travel and Queensland Tourism has released dog-friendy guide for travellers.
AI bookings
With 40 per cent of travellers already using AI to book travel, more operators are taking tech in house. Webjet has launched a ChatGPT-powered booking app allowing travellers to search and compare flights and hotels directly within a chat interface, while Virgin Australia has introduced an Australian-first all-in-one flight search tool combining cash fares, points and reward seats in a single calendar view.
Nostalgia travel
What’s old is new again, according to a new study5 that shows that nostalgia is shaping many young travellers’ plans. Half of Americans say that 2026 will be a “year of nostalgia travel” according to a new survey. Driven by a desire to return to a “happier time”, Gen Z want to relive 2012, while Millennials are yearning for 20026 and Gen X are looking back fondly on 1985.
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