Australians still want to travel, but they are making decisions a little differently.
That is one of the clearest takeaways from Southern Cross Travel Insurance’s Future of Travel 2026 report, which explores how Australians travelled in 2025, what is shaping their choices now, and where the travel industry may need to adapt next.
The headline numbers are encouraging. Travel demand remains strong, with 92 per cent of Australians having travelled in the past 12 months and 86 per cent planning to travel in the year ahead. But underneath that healthy appetite for holidays is a more layered picture – one shaped by cost-of-living pressure, political and safety concerns, changing destination preferences, growing use of AI, and rising awareness of travel insurance.
For travel advisors, tourism boards, suppliers, operators and travel brands, this is not just another consumer trends report. It is a useful snapshot of how Australian travellers are thinking right now and what that means for the industry in 2026.
Travel demand is still strong, but travellers are becoming more selective
Despite ongoing economic pressure, Australians have not lost their appetite for travel.
According to the report, 51 per cent are planning an overseas trip in the next 12 months, while 73 per cent intend to travel within their own state and 65 per cent plan to travel interstate. That points to continued opportunity across both domestic and international sectors.
What appears to be shifting, however, is not whether Australians want to travel, but how they approach it. The report suggests travellers may be taking fewer trips or consolidating travel plans, potentially as a way to manage cost, time and competing priorities.
This matters for the industry because in a market where people are still keen to travel but more careful about how they spend, brands need to do more than inspire. They need to give travellers a clear reason to choose their destination, product or experience over everything else competing for attention.
Family holidays are still leading the way
Family holidays remain the most preferred trip type among Australians, with 48 per cent selecting them as their top choice. Beach holidays follow, along with road trips, which continue to hold strong appeal.
That has clear implications for the industry.
Family travel may sound like a broad category, but in practice it affects everything from room configuration and package design through to marketing language, destination infrastructure and content strategy. Families are not just looking for somewhere that says it is “family-friendly”. They want travel that feels manageable, worthwhile and genuinely enjoyable for different ages.
For tourism operators, accommodation providers and travel advisors, that means there is value in being more specific. The brands that make family travel feel easier – whether through better inclusions, more practical room setups, simpler logistics or stronger value – are likely to stand out.
The continued strength of beach holidays and road trips is also good news for regional destinations, coastal tourism operators and drive-market businesses, particularly within Australia.
Japan continues to surge
If there is one destination that clearly stands out in the report, it’s Japan.
Nearly one in three Australians surveyed said Japan is the destination they most want to visit in the next 12 months, placing it ahead of Europe and New Zealand. For anyone working in travel, that is one of the most commercially relevant findings in the report.
Japan’s appeal has been building for some time, but this data confirms it remains one of the strongest destination opportunities in the Australian market right now. It offers broad appeal across ski travel, food, culture, family travel, rail journeys and city breaks, making it particularly flexible for the industry.
Europe remains highly desirable, while New Zealand continues to perform strongly as an accessible short-haul option. South-East Asia also remains firmly in the mix, showing Australians are still drawn to destinations that combine value, familiarity and ease.
For travel businesses, this helps clarify where demand is likely to be strongest. For media and content brands, it also signals where audience interest may be highest – especially when it comes to destination guides, accommodation content, itineraries and family-focused planning resources.
The US may be losing momentum with Australian travellers
One of the more striking findings in the report is the apparent shift in sentiment around the United States.
Among Australians who had always wanted to visit the US, 51 per cent now say they feel less inclined to go. More broadly, political and safety concerns are influencing travel plans, with many respondents indicating that those concerns are making them less likely to choose certain destinations.
The US has traditionally held strong appeal for Australian travellers thanks to its big cities, entertainment, national parks, major events, skiing and family attractions. But when political uncertainty, perceptions of safety, and costs begin to affect consumer confidence, even well-established destinations can start to lose ground.
That creates both a challenge and an opportunity. US-focused sellers may need to work harder to reassure and inform potential travellers, while competing destinations that are seen as safer, more stable or better value may be in a stronger position to win market share.
Cost of living is changing how Australians travel
The cost of living may not be stopping Australians from travelling, but it is clearly changing behaviour.
Among those planning overseas trips, 62 per cent said cost-of-living pressures had affected their plans. Half said they are avoiding peak season to save money, while others are choosing cheaper airfares or cutting back on dining and entertainment while away.
This is one of the most useful sections of the report for travel businesses because it reinforces a point many operators are already feeling on the ground: travellers are more price-conscious, but they are not necessarily looking for the cheapest option. They are looking for value.
The distinction matters because it indicates that Australians are still willing to spend in areas they consider worthwhile, including longer stays, boutique accommodation, shopping and once-in-a-lifetime experiences. This means the opportunity is not just in discounting, but in presenting offers that feel smarter, more rewarding and easier to justify.
For destinations, hotels, advisors and tour operators, the sweet spot may lie in shoulder-season promotions, practical inclusions, bundled value and experience-led packages that help travellers feel they are spending well rather than simply spending less.
Travel insurance is becoming more important
Another notable finding is the growing priority Australians are placing on travel insurance.
The report found 81 per cent now see travel insurance as a high priority for international travel, while 44 per cent say the same for domestic travel. Both figures are up on the previous year.
That increase reflects a broader shift in traveller mindset. Australians appear more conscious of disruption, whether it comes from extreme weather, natural disasters, political instability, conflict or unexpected medical issues.
For the wider travel industry, this is not only relevant to insurers. It also points to a traveller who is increasingly asking practical questions around flexibility, risk and protection. In other words, people are not just wondering where to go. They are also thinking more carefully about what could go wrong, how exposed they are, and whether their plans are properly protected.
That makes trust, transparency and clear communication even more important for travel brands. The businesses that can make travellers feel informed and supported may have a competitive advantage in a market where peace of mind is becoming part of the purchase decision.
Generational differences are becoming harder to ignore
The report also highlights some useful generational divides.
Gen Z and Millennials are more likely to use AI tools, compare options carefully and make budget-conscious trade-offs in order to save for bigger travel goals. Millennials were also more likely to seek out authentic and luxury experiences, while Gen Z showed especially strong interest in Japan, Europe and family holidays.
That matters because the term “younger traveller” is often used too broadly in marketing. This report is a reminder that different age groups are motivated by different things – whether that is price, comfort, convenience, authenticity, aspiration or technology.
For the industry, that means more thoughtful segmentation is needed. Messaging that resonates with Gen Z may not be the same as what works for Millennials, Gen X or Baby Boomers. Brands that understand those differences and communicate accordingly are likely to be in a stronger position.
AI is now part of the planning journey
One of the most relevant findings for travel marketers and digital businesses is the continued rise of AI in trip planning.
According to the report, two in five Australians who travelled in the last 12 months used AI for travel planning in some form. Common uses included comparing hotels, airlines and insurance, building itineraries, getting recommendations and using chatbots for support.
That is significant because it suggests AI is moving from novelty to normal behaviour.
For travel brands, it raises some important questions. Is your content clear enough for AI-assisted discovery? Are your products explained in a way that makes them easy to compare? Are your differentiators obvious? Are you visible in the places where travellers are increasingly doing their research?
For media brands and travel websites, this also reinforces the value of useful, structured, high-intent content. If travellers are turning to AI for help narrowing down their options, then clarity and authority matter more than ever.
What the industry should take from this
Southern Cross Travel Insurance’s Future of Travel 2026 report paints a picture of an Australian traveller who is still highly motivated to travel, but increasingly deliberate in how they choose, compare and book.
They still want holidays, international experiences, memorable trips with family, adventure and/or cultural depth. But they are also watching costs more closely, weighing safety more carefully, and using digital tools more often to help them make decisions.
For the travel industry, that means success in 2026 may rely less on broad inspiration alone and more on relevance, clarity and trust. The brands likely to perform best are the ones that understand where demand is building, recognise where sentiment is shifting, and make it easier for travellers to feel confident in their choice.
The good news
The good news for the travel industry is that Australians are still eager to get away. The challenge is that they are becoming more intentional about how, where and why they travel. That does not mean demand is weakening; it means expectations are evolving.
And for travel businesses willing to respond with smarter products, stronger positioning and clearer communication, that evolution could potentially bring just as much opportunity as it does change.
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