Cost of living pressures are encouraging Australians to travel closer to home, and have shorter holidays.
In 2023, domestic tourists took 112.6 million trips, a four per cent rise on the previous year, according to data from Tourism Research Australia.
But holidaymakers opted for shorter, cheaper trips, closer to home in 2023.
Interstate tourism spending dropped by four per cent, while spending for travel intrastate rose by 11 per cent.
Travellers were also spending less time away than in previous years, with stays between one to four nights increasing, and trips of five nights and over decreasing.
International travel across the country is recovering following the COVID-19 pandemic, with 2.6 million holiday trips to Australia in 2023.
This is two-thirds the amount of holiday travel recorded in 2019, before the pandemic.
International visitors spent an overall $28 billion in Australia, with holiday travel accounting for $8.3 billion of this.
NSW welcomed the most international visitors, with Sydney crowned the most popular city for overseas tourists.
Destination NSW chief executive Steve Cox said the state is leading Australia's recovery from the pandemic.
"The diversity of natural and cultural experiences in NSW is unrivalled and puts our state in a unique position to attract visitors from around the world," he said.
"These results are a testament to the world-class visitor experiences on offer in NSW from Ballina to Broken Hill and Narooma to Newcastle."
Victoria reached a record $37.8 billion in tourism spending in 2023 - $5.4 billion higher compared to 2019.
"This record tourism spend is proof that visitors come from across the globe to see our blockbuster events, experiences and destinations," Victorian Tourism Minister Steve Dimopoulos said.
''We don't have a rock, a reef and a harbour so we have to work twice as hard as Victorian tourism businesses and the government to achieve international and national prominence."
Mr Dimopoulos released the figures on the same day as unveiling the Dinos at the Zoo experience at Melbourne Zoo.
The new adventure will allow kids to walk among life-sized, animatronic dinosaurs.
Domestic tourism spending in Queensland dropped in the last quarter of 2023, down 11 per cent compared to the same period in 2022.
Visitor numbers also fell, following the impacts of Tropical Cyclone Jasper in the state's far north and storms in the southeast - including a cyclone on the Gold Coast - in December.
Tourism and Events Queensland chief executive Patricia O'Callaghan said she expects to see the impacts of Queensland's summer of natural disasters continuing into the next quarter.
"We know visitors cancelled their upcoming bookings as a result of these weather events, on top of Cyclone Kirrily then impacting North Queensland later in January," she said.
"So these and future results will reflect those impacts we've known about since those events occurred."
There is some good news for the state, with Brisbane, the Sunshine Coast and southern Great Barrier Reef regions all reaching record international tourist spending.
