Trips to visit friends and relatives rose 11 per cent to 29.4 million. The number of nights away on domestic holiday trips fell 3 per cent, but the number spent visiting friends and relatives rose  11 per cent.

In contrast to the dip in domestic holidays, the number of Australians taking holidays overseas last year continued to rise. Departures rose 6 per cent to 5.5 million in the 12 months ended September 30.

In total, the number of domestic overnight trips rose 7 per cent to a record 81.4 million last year, with spending up 6 per cent to $54.4 billion. That included a 16 per cent rise in spending on business travel.

Separately, TripAdvisor's TripBarometer survey showed Australian travellers plan to spend $14,900 an adult on their domestic and international holidays this year, but they are more likely to follow through with their domestic plans more than their international ones.

The survey found 91 per cent of Australian respondents planned to take an overseas holiday last year but only 67 per cent booked it. In contrast, 90 per cent had planned domestic trips and 88 per cent took them. 

TripAdvisor said 55 per cent of Australian hotels planned to increase their room rates this year, and 77 per cent are optimistic about their profitability this year.

Richard Stephens, director of Accom Noosa on Queensland's Sunshine Coast, said Australian travellers were driving growth in accommodation rentals.

"Not only have our 2014 figures seen an increase from the domestic visitors out of Sydney and Melbourne, but we are also noting a trend of solid forward bookings into 2015," he said.

TRA general manager Spiro Kavadias said further falls in the dollar and lower petrol prices would help encourage growth in the domestic holiday sector this year.

In addition to visiting friends and relatives, the TRA data found Australians were increasingly taking domestic trips to attend festivals, fairs or cultural events, with such trips rising by 21 per cent to 2.9 million last year.

Tourism Accommodation Australia acting chief executive Carol Guiseppi said the figures clearly demonstrated the importance of governments and regional tourism groups promoting such events.

"This is particularly important in regional Australia, where some areas have had to address reductions in mining and manufacturing," she said. "Investing in tourism infrastructure and marketing can produce significant long-term returns that have multiplier effects for the whole economy."

In the domestic market, the Northern Territory performed strongly in attracting visitors, with overnight trips rising 20 per cent last year, whereas trips to the Australian Capital Territory fell  3 per cent.

Trips to Western Australia increased 18 per cent, well outpacing the 11 per cent rise to Victoria, 8 per cent to Tasmania, 6 per cent to Queensland, 5 per cent to NSW and 3 per cent to South Australia.