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Australia's short-term visitor numbers may be up and ahead of pre-COVID levels, but the tourism industry warns that the momentum is unlikely to be maintained with demand expected to soften in the second half of 2026.
The latest Inbound Tourism Pulse and forward sentiment surveys from the Australian Tourism Export Council (ATEC) reveal that while inquiry levels remain strong across key markets including the US, China, India and Southeast Asia, 64 per cent of tourism exporters now expect demand to soften from July onwards.
This is despite Australia recording 943,220 short-term visitor arrivals in February 2026, up 19.7 per cent year-on-year and 1.7 per cent above the pre-COVID benchmark of 927,240 set in February 2019, according to Australian Bureau of Statistics data.
China was the largest source country, accounting for 23.3 per cent of all arrivals with 220,170 trips in the month.
ATEC managing director Peter Shelley says the latest industry surveys highlights a shift in market conditions rather than a decreased appetite for Australia's tourism offering.
“This is not a collapse in demand, people still want to come to Australia, but they are taking longer to commit and are more sensitive to price and global conditions driven by the Middle East conflict,” he says.
“That hesitation is now flowing through to forward bookings, and that’s where our members are starting to see less certainty.”
The data shows traveller hesitation is the single biggest emerging risk, cited by 56 per cent of operators, while broader global pressures are also weighing on sentiment.
Cost-of-living pressures in key markets (35 per cent), reduced confidence in international travel (19 per cent) and challenges converting demand (16 per cent) were all identified as major concerns heading into the peak season.
Fuel uncertainty and aviation costs are adding further pressure, with 65 per cent of operators reporting concerns around future fuel supply and pricing, and flight costs continuing to impact Australia’s competitiveness.
Despite this, the industry continues to hold together operationally, with 79 per cent of businesses remaining confident in their ability to deliver.
“Operators are working hard to keep bookings moving but are absorbing increasing operational costs, adjusting schedules and maintaining relationships with their international partners to protect demand,” says Shelley.
“But that comes at a cost, and there is increasing pressure building behind the scenes.”
ATEC says the findings reinforce that current market conditions are being shaped by "conversion, competitiveness and global affordability" rather than demand alone.
Industry respondents identified aviation pricing, government support and sustained international marketing as the most important levers to support recovery.
“With global competition for the international visitor dollar intense, staying visible in market, and being competitive on price will be critical as the industry manages its way through this period of global uncertainty,” says Shelley.
The weaker industry sentiment lands as the federal government ramps up its spending commitments to the sector, launching the next action plan under its THRIVE 2030 strategy in February with a target of $230 billion in annual visitor expenditure by the end of the decade.
The plan is backed by $130 million allocated to Tourism Australia's "Come and Say G'day" global campaign and $18.5 million earmarked for the Red Centre and Great Barrier Reef destinations.
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