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An Australian deep-dive on BCG’s Global 2025 Report, Unpacking the $15 Trillion Opportunity in Leisure Travel, informed by consumer surveys across 11 countries.

Spending on leisure travel is set to triple, reaching $15 trillion by 2040, driven predominantly by domestic and regional travel, which will constitute over 90% of total spending. Travellers are increasingly younger and digitally savvy, and seeking richer, purpose-driven experiences such as wellness retreats, cultural exploration, culinary tourism and flexible ‘bleisure’ trips combining business and leisure. Understanding and adapting to these trends, as well as adopting AI across the travel journey, is critical for Australia’s leisure travel industry to remain globally competitive and take advantage of this growing market. We share findings from our global review of leisure travel and next steps for airlines, travel agents, agencies and tourism boards.

Australia’s $277 Billion Leisure Travel Industry

Australia’s leisure travel industry generated $277 billion in spending in 2024, representing about 10% of our GDP – and spending is expected to continue growing 3–4% per year, reaching $370 billion by 2035 (see Exhibit 1).

Australia leisure travel spending growth is expected to accelerate for international (4%) and regional (5%) trips, while domestic stalls to 1%

Australians were among the top 10 leisure travellers in 2024, with 122 million overnight stays. However, the global outlook is expected to evolve by 2040. Current projections indicate that China, South Korea and Japan will move up or enter the top 10 as their citizens increase both domestic and international travel. Growth in China is expected to be particularly strong, with projected overnight stays reaching approximately five times 2024 levels. (see Exhibit 2)

Australia is expected to drop out of the top 10 countries for leisure travel as South Korea and Japan grow

The growth in Asia Pacific provides a huge opportunity for the Australian leisure travel industry to attract more regional travellers to Australia. However this will require the industry to innovate to meet evolving traveller preferences.

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Imperative 1: Innovate and Align to the Evolving Expectations of Travellers

The next wave of global leisure travel will be driven by travellers from emerging markets like China, India, Saudi Arabia, Cambodia, the Philippines, Bolivia and Venezuela. Growth will come from Millennials and Gen Z, who are more inclined to travel and spend than older generations. And while most travel spending will be domestic (77%), followed by regional travel, international travel spending is expected to grow the fastest until 2040, at an average of 8% per year.

We observe that international travellers are increasingly expecting:

Australian travellers’ expectations are also evolving:

Australian travellers primarily take trips to relax (30%), visit family/friends (16%), and escape (13%)

Imperative 2: Use AI to Deliver Premium, Personalised Experiences

Travellers expect to make even greater use of AI when it comes to planning, booking and managing their trips. Large language models (LLMs) are evolving into comprehensive travel agents, capable of planning entire itineraries. Already, travellers are using advanced AI systems like ChatGPT’s Operator – where ChatGPT acts as an autonomous agent, orchestrating everything from itinerary recommendations to bookings. Travellers are also increasingly booking in the AI environment, whether using AI functionalities provided by online travel agents, new AI travel platforms or LLMs.

The global travel industry is swiftly leveraging AI to offer premium, personalised experiences that travellers could previously only receive in face-to-face interactions with travel agents:

Only 17% of Australian travellers are using AI tools for travel today, reflecting slower adoption by the industry. On the other hand, in emerging markets like China, India and Indonesia, 50–65% of travellers are already using AI tools for travel (see Exhibit 4).

Only 17% of Australian respondents use Al tools, while more than double (44%) say human touch remains important

Interestingly, the growing appreciation of AI does not negate the value of human interaction for travellers. In fact, in countries where AI is considered particularly valuable for travel planning, human interaction is also especially important to travellers. Smart integration and handoffs between technology and the human touch will best meet travellers’ needs. Winning platforms will combine AI-powered simplicity with personalisation, cultural relevance and hybrid engagement.

Examples of AI innovation in the travel customer journey

Mindtrip is designed to simplify and enhance the process of planning and booking travel. Using generative AI, Mindtrip creates unique itineraries for travellers, based on their preferences, combining transport, accommodation, dining and local experiences. As it evolves, it will streamline travel logistics, apply deeper personalisation and become more adaptable.

Perplexity and TripAdvisor have partnered to provide personalised hotel recommendations through a conversational AI platform, leveraging Tripadvisor’s 1 billion user reviews and contributions. Search results are intuitive, explain why a hotel has been recommended and are directly bookable. This initiative marks the beginning of a multi-year expansion into broader travel experiences.

United Airlines is using AI to proactively support travellers throughout their journey with lockscreen notifications and natural language interactions. The AI system provides timely, useful directions for navigating airports and managing disruptions such as flight delays or gate changes.

The Roadmap to Secure Australia’s Position as a Leader in Leisure Travel

Ensuring Australia remains competitive in the global leisure travel industry requires clear, actionable strategies tailored for each stakeholder in the travel ecosystem:

By embracing these strategic imperatives and swiftly adapting to evolving traveller expectations and technologies, Australia’s leisure travel industry can secure and expand its position as a global leader.