Volume has flattened, the destination mix is rotating hard, and reporting season shows where the value went… and where it is going next.

Australian travel has reached an inflection point. Outbound volume has stopped delivering the easy growth of the post-pandemic recovery, but that does not mean demand has weakened. It has redistributed. Australians are changing where they travel, spend is growing faster than trip volumes, and the FY26 reporting season shows a widening gap between businesses that monetise each traveller across supply, corporate, loyalty and ancillary economics and those that remain primarily dependent on transaction growth.

For three years, rising volume disguised some of those differences. Borders reopened, capacity returned and pent-up demand pushed the market forward. That tailwind forgave blunt forecasting, average product, weak ancillary conversion and operating models built around transaction count. The June data is the clearest signal yet that this period is ending. From here, growth has to be engineered, and the FY26 results give a useful indication of where the next layer of value is likely to come from.

The implication for FY27 planning is not that Australian travel has stopped growing. It is that the unit of growth has changed. A national volume forecast is becoming less useful when destinations are moving at double-digit rates in opposite directions, and transaction counts tell less of the commercial story when expenditure per trip is rising. The businesses best positioned for the next phase will be those that understand where demand is moving, what different travellers are worth and how much of that value they capture.

A flat market is concealing a significant rotation

At headline level, Australian outbound travel increasingly looks like a market reaching its post-recovery plateau. ABS short-term resident returns grew 7.8% year on year in January 2026, fell 4.9% in May and were up just 0.4% in June at 917,500 trips. June volumes were only 9.0% above June 2019, compared with a premium of approximately 19–20% earlier in the year. Read as a curve rather than a series of isolated monthly movements, the direction is clear: the reopening surge has largely been absorbed and the market is settling into a much slower growth environment.

Underneath that national number, however, the destination mix is moving sharply. In May, Vietnam grew 22.1% year on year to 48,960 trips and New Zealand grew 14.0% to 94,680, while the United States fell 16.7% to 57,800 and Japan declined 5.6% to 78,270. April showed the same pattern, with Indonesia up approximately 16%, China 34%, Vietnam 24%, India 15% and Fiji 13%. Indonesia, which displaced New Zealand as Australia’s leading outbound destination in 2023, accounted for 17.0% of resident returns in June.

The significance of that rotation is commercial, not simply geographic. A trip to Vietnam and a trip to the United States are different economic events for a travel business. They carry different ticket and accommodation values, commission pools, insurance premiums, ancillary opportunities, medical exposure and servicing requirements. When those destinations are moving at double-digit rates in opposite directions, a business can forecast total traveller volume accurately and still materially miss revenue, margin and risk assumptions.

That is the planning trap inside a flat market. Growth forgives forecasting error because rising demand can mask an imperfect mix assumption. Rotation punishes it because the total can remain exactly where expected while the economics underneath it change. The resulting variance tends to appear later in the revenue or margin line, even though its cause sits much earlier in the forecast.

It also creates assumption debt. Product architecture, pricing tables, marketing allocation, capacity and underwriting assumptions are inevitably influenced by historical travel patterns. For decades, New Zealand sat at the top of Australia’s outbound destination table and the major long-haul corridors into North America, Europe and Japan shaped a significant part of the industry’s commercial model. Indonesia now leads, while some of the strongest growth is coming from Vietnam, China and India. If the traveller changes faster than the proposition built around them, that proposition becomes progressively less relevant.

For FY27, the implication is that the corridor increasingly matters more than the national total. Forecasting demand without forecasting where that demand is going risks getting the easiest number right and the important numbers wrong.

The consumer is still spending, but the value is concentrating

The second shift is visible in expenditure. Australian travellers have not stopped spending as trip growth has moderated; rather, the value attached to each travel decision is becoming more important. Tourism Research Australia data for the year ending March 2026 shows domestic overnight trips falling 2.3% to 113.1 million while expenditure increased 0.7% to $107.6 billion. Domestic day trips increased 9% to 283.2 million, but expenditure jumped 27% to $49.4 billion. International visitor trips to Australia grew 10%, while expenditure grew twice as quickly at 20% to $40.9 billion.

Across each measure, spend is outperforming volume. That changes the commercial question from how many travellers a business can touch to how much value it can capture from each traveller it already has. In a recovery market, transaction growth can carry the P&L. In a mature or flatter market, revenue per traveller, margin per traveller, ancillary attachment and repeat behaviour become much more consequential.

Cruise is one of the clearest examples of this dynamic. CLIA recorded 37.2 million global ocean cruise passengers in 2025, up 7.5%, with Australia retaining its position as one of the world’s largest source markets. The category also increasingly challenges its traditional demographic stereotype: new-to-cruise customers are entering the market, around a third of passengers are under 40, multigenerational travel represents a substantial share of sailings and repeat intent remains exceptionally high. Flight Centre’s cruise-only TTV is now running at approximately $2 billion annually.

The significance is not simply that cruise is growing. It is that the category combines acquisition, high-value transactions, repeat behaviour and multigenerational demand. Those characteristics make it a useful illustration of the economics that become more valuable when aggregate trip growth slows. The opportunity is no longer simply to acquire another booking, but to build propositions capable of capturing more of a traveller’s spend and retaining that traveller over time.

The FY26 corporate results reinforce the same point from another direction. Web Travel Group grew TTV 20% to approximately $5.82 billion, revenue 20% to $394.1 million and WebBeds EBITDA 24% to $172.7 million. Flight Centre grew TTV to approximately $25.7 billion, but the more revealing movement occurred inside the mix: corporate delivered record ANZ TTV and profit while corporate revenue margin improved, whereas leisure margin declined. Virgin Australia lifted underlying EBIT 13.4% to $753 million and expanded margin through transformation benefits and capacity discipline rather than relying solely on passenger growth. Qantas Loyalty grew earnings 12% and now operates across a membership base approaching 19 million.

These are different businesses with different economic models, so their margins should not be compared directly. What can be compared is the source of earnings quality. Supply economics, contracted corporate relationships, loyalty, repeat behaviour and disciplined capacity provide multiple ways to monetise a customer or unit of demand. Pure consumer transaction models have fewer levers and must repeatedly compete for the next booking.

That distinction matters in a flat-volume market. Consumer retail distribution does not become structurally unattractive, but transaction count becomes a weaker proxy for value. The businesses that can increase the economics of the relationship after acquisition have more options available to them than those that need another transaction to create another unit of revenue. For leadership teams, that means bookings remain important, but they increasingly need to sit beside revenue per traveller, margin per traveller, ancillary attachment, repeat rate and customer lifetime value on the executive scorecard.

FY26 also showed how quickly the buffer can disappear

The third signal from reporting season is less about growth than resilience. FY26 demonstrated how quickly external disruption can consume a year of operating momentum, and how differently that impact is absorbed depending on the economics of the underlying business.

Qantas reported FY26 underlying profit before tax of approximately $2.06 billion while absorbing a significant increase in fuel costs and the impact of Middle East disruption. Flight Centre estimated that the Middle East conflict materially affected leisure profit after the business had tracked ahead earlier in the year. Helloworld revised its FY26 EBITDA guidance in June before ultimately reporting EBITDA of $60.2 million, while WebBeds experienced booking and TTV pressure during the disruption period.

The lesson is not that geopolitical shocks happen; every board already knows that. The more useful observation is how little room some business models have when they do. Scale, diversification and multiple earnings pools give a business more capacity to absorb disruption. Businesses closer to the consumer transaction have fewer places from which to recover a sudden shortfall, particularly when aggregate market growth is no longer providing an automatic offset.

For FY27, resilience therefore belongs inside the commercial plan rather than beside it as a risk exercise. A forecast that works only if twelve months behave broadly as expected is not a robust forecast. FY26 provided a live stress test of what happens when three months do not, and leadership teams should use it to test how much earnings buffer their own operating models genuinely contain.

The insurance gap is an unclaimed margin pool already inside the customer base

The shift in traveller economics becomes particularly important when travel insurance is overlaid on the market. Research commissioned by the Insurance Council of Australia and Smartraveller found that 14% of Australians travelled overseas uninsured on their most recent trip, rising to 23% among travellers under 30. The more important commercial finding is that 65% of uninsured travellers had considered buying travel insurance before deciding against it, with a common reason being the belief that they were travelling somewhere safe.

That distinction changes the diagnosis. If travellers do not know insurance exists, the industry has an awareness problem. If they know it exists, consider buying it and deliberately decline, the industry has a proposition and conversion problem. The latter sits much closer to the control of insurers and distributors because the traveller has already been acquired, the itinerary is known, the purchase intent has been established and the cost of acquiring the customer has already been incurred.

This becomes more significant as outbound demand rotates towards Asia and younger travellers remain materially more likely to travel uninsured. The insurance proposition has to keep pace with the itinerary and the customer. Product architecture, pricing, merchandising and the point-of-sale conversation all need to reflect the travel patterns that exist now rather than those that historically dominated the portfolio.

There is also a broader commercial lesson. Ancillary has traditionally been treated as incremental revenue around the core travel transaction. In a slower-volume environment, that distinction becomes increasingly artificial. If acquiring another traveller is harder or more expensive, capturing more value from an existing traveller becomes one of the cleanest sources of margin available because it does not require another customer acquisition event.

Travel insurance is particularly important because the conversion gap is measurable and the commercial and customer interests can align. Better attachment can increase revenue while reducing the number of customers travelling without financial protection. That makes attach rate more than a service metric or an optional cross-sell KPI; it becomes a strategic distribution metric with implications for revenue, customer outcomes and duty of care.

Rebuilding the FY27 planning model

Taken together, the June travel data and FY26 results point to three changes in how travel businesses should plan the next year. The first is to forecast by destination and traveller mix rather than relying on a national growth assumption. When individual corridors are moving at double-digit rates in opposite directions and carry materially different economics, the national average conceals more than it explains. Major destinations should have their own assumptions for demand, revenue, margin, ancillary attachment, acquisition cost and, where relevant, claims exposure.

The second is to move the management scorecard beyond transactions. The businesses producing stronger earnings quality in FY26 did so through supply economics, corporate relationships, loyalty, repeat behaviour and disciplined commercial execution rather than simply generating more bookings. Revenue and margin per traveller therefore need to become visible executive measures alongside transaction volume. Scorecards drive organisational behaviour, and a business that rewards booking count above value capture will continue optimising for the metric even after the economics of the market have changed.

The third is to treat ancillary conversion as core economics. The customer has already been acquired, which makes ancillary one of the few revenue pools available without finding another traveller. Travel insurance is the most obvious example because a meaningful share of Australians are travelling uninsured despite having actively considered cover. In a market where transaction growth is becoming harder, leaving that existing demand unconverted is not a peripheral merchandising issue; it is a margin problem.

The implications differ depending on where a business sits in the value chain, but the underlying question is the same. Boards and P&L owners should interrogate which destinations actually underpin the FY27 revenue forecast, how much earnings growth depends on more travellers rather than better economics, and what three disrupted months would do to the full-year result. Distribution and retail leaders should examine whether their propositions and incentives maximise the value of the traveller already in front of them. Insurers should ask whether product, pricing and conversion journeys have moved as quickly as the destination and demographic mix of the customers they are underwriting.

Five questions are worth putting on the FY27 leadership agenda. Which destinations does our revenue actually depend on, and how different is that mix from the one our product and pricing assumptions were built around? If total traveller volume remains flat, where specifically does earnings growth come from? What are our revenue and margin per traveller, which direction are they moving and who owns them? What would three months of material disruption do to the full-year result? And what proportion of our customers travel uninsured despite having had an opportunity to buy cover?

The end of growth by default

The volume era rewarded businesses capable of handling scale. The next phase will reward businesses that understand what each traveller is worth, where that value is moving and how much of it they can capture.

That is not a negative outlook for Australian travel. Flat markets are revealing markets. They stop rising demand from subsidising weak economics and make the quality of the operating model more visible. They expose where value is being created, where it is leaking and which assumptions have survived longer than the market conditions that created them.

The data required to see this shift is already public. The destination rotation is visible in the ABS numbers, the change in traveller economics is visible in expenditure data, the sources of earnings quality are visible in reporting season and the ancillary opportunity is visible in the insurance research. The differentiator in FY27 will not be access to information. It will be whether leadership teams rebuild their forecasts, propositions, distribution models and scorecards quickly enough to price that information into the business.

Matt Endycott is the Founder and Managing Director of Hartmann Advisory, a specialist advisory firm serving travel brands and travel insurance businesses across ANZ and international markets.

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If your FY27 plan still forecasts primarily on national volume, measures success in transactions or treats ancillary conversion as incremental, there is a case for pressure-testing the assumptions underneath it. Hartmann Advisory works with travel and travel insurance businesses across distribution strategy, partnerships, proposition and market execution.

hello@hartmannadvisory.com.au

Hartmann Advisory is a commercial advisory firm specialising in travel and travel insurance: distribution strategy, partnerships, proposition and market execution. Based in Sydney and Perth, working with partners across Australia, New Zealand, the USA, Canada, Europe and the UK.

Sources 
Australian Bureau of Statistics, Overseas Arrivals and Departures, Australia, April–June 2026.
Tourism Research Australia, Domestic Tourism Statistics and International Visitor Survey, year ending March 2026.
ASX and company FY26 results and investor releases: Flight Centre Travel Group, Qantas Group, Virgin Australia, Helloworld Travel, Web Travel Group, Webjet Group and Corporate Travel Management.
Cruise Lines International Association, 2026 State of the Cruise Industry Report.
Insurance Council of Australia and Smartraveller, Australian traveller insurance research.
IBISWorld, Australian travel insurance industry data, June 2026.