Regional Travel is Booming

Australia’s visitor economy has continued to recover strongly since the pandemic, with regional travel emerging as one of the major beneficiaries. While international tourism and CBD hotel markets were heavily disrupted during COVID-19, many regional destinations proved more resilient, supported by domestic leisure travel, essential worker movement, infrastructure projects, government stays, and the rediscovery of regional Australia by local travellers.

Australia’s visitor economy began to recover in 2022 after the devastating impact of the pandemic. By the end of that year, demand for domestic travel had returned to around pre-pandemic levels. Domestic overnight trips in 2023 were 4.1% higher than the previous year and only 3.8% below pre-pandemic levels, while domestic overnight spending was 7.9% higher than the previous year and 35.4% above pre-pandemic levels. These elevated spending patterns reflected pent-up demand for travel experiences, elevated savings accumulated during the pandemic, and government travel vouchers.

Although cost-of-living pressures and the return of outbound international travel moderated domestic tourism growth during 2024, Australians continued to prioritise travel. Tourism Research Australia reported that there were 2.4 million more domestic overnight trips in 2024 than in 2023, an increase of 2.1%. This suggests that while travellers became more cautious with spending, the underlying desire to travel domestically remained strong.

Domestic tourism remains particularly important for regional accommodation markets. Regional motels are generally more exposed to Australian domestic travellers than international tourists, which can be an advantage during periods of global volatility. Domestic guests include leisure travellers, sporting groups, families, retirees, tradespeople, government workers, contractors, healthcare workers, and people travelling for regional events. This creates a broad base of recurring demand rather than relying on one single travel segment.

Regional tourism has also continued to perform strongly because of support from state government initiatives, changing consumer preferences, and the long-term appeal of nature-based and experience-led travel. The pandemic reintroduced many Australians to regional destinations, particularly as international borders closed and people looked for accessible, lower-cost travel options within driving distance. Trends such as nature-based tourism, Indigenous tourism, food and wine experiences, regional events, and short-break travel have all supported demand for regional destinations.

This strength is evident in NSW. In regional NSW, expenditure on domestic travel in 2024 was 42.0% higher than pre-COVID levels. This compares with domestic travel expenditure in Sydney being 30.1% higher over the same period. This shows that regional travel has not simply recovered — in many areas, it has outperformed major metropolitan markets.

Another important driver is infrastructure investment. Regional Australia continues to benefit from road upgrades, renewable energy projects, mining activity, logistics investment, health infrastructure, defence projects, and regional industrial development. These projects generate accommodation demand from construction crews, engineers, consultants, contractors, government employees, and visiting management teams. For regional motels, this type of demand can be particularly valuable because it is often recurring, mid-week, and less discretionary than pure holiday travel.

Tourism investment is also significant. Tourism Research Australia’s Tourism Investment Monitor reported that in 2023–24, Australia’s tourism investment pipeline included 346 projects worth $63.4 billion, an increase of $7.3 billion, or 13%, from the previous year. This included $11.4 billion of accommodation projects with the potential to add 23,700 rooms nationally. While not all of this investment is in regional areas, it demonstrates confidence in the long-term growth of Australia’s visitor economy.

At the same time, new motel supply in many regional markets remains limited. Rising construction costs, higher interest rates, planning constraints, and labour shortages make new motel development difficult to justify in many towns. This means existing motel assets can benefit from improving demand without facing the same level of new supply competition often seen in larger city hotel markets.

ABS-linked tourism data also supports the scale of the recovery. Tourism consumption reached $211.1 billion in 2024–25, up 3.4% on the previous year and 43% above the pre-pandemic level in 2018–19. Tourism GDP reached $81.1 billion, while tourism filled jobs increased to 696,000, which was 23% higher than in 2018–19.

For regional motels, these trends are important. The demand base is not just tourists on holidays. It includes domestic road travellers, infrastructure workers, regional business travel, government travel, sporting groups, event visitors, insurance accommodation, healthcare-related stays, and contractors supporting local industries. This diversified demand profile helps explain why many well-located regional motels can remain resilient across different economic cycles.

Regional travel is therefore not a short-term post-COVID trend. It is being supported by deeper structural factors: domestic tourism growth, infrastructure spending, workforce mobility, regional events, limited new accommodation supply, and Australians’ continued preference for accessible local travel. For motel owners and investors, this creates a favourable backdrop for well-located assets with strong operational management, disciplined pricing, and modern online distribution.