Tourism is now a major industry in Melbourne, the city having a threefold function. First, it is a significant tourist-origin region, with Melburnians travelling extensively overseas and interstate, and regularly holidaying at nearby coastal resorts and holiday homes. Second, Melbourne is a gateway to other destinations, initially through its port, but more recently through Melbourne Airport at Tullamarine. Third, and probably most visibly, Melbourne is a significant destination. In 2003 Melbourne hosted 23 million international visitor nights and 20 million domestic visitor nights, making it the second most popular destination, behind Sydney, in Australia.
Following the gold rushes Melbourne became a major destination for domestic tourists, particularly from country Victoria. The major attractions were sporting and cultural institutions, such as the Melbourne Cup, the Agricultural Show and the Melbourne Zoo. In 1888 the Centennial Exhibition attracted two million visitors. To assist these tourists the Victorian Railways established an 'Inquiry Office' at Spencer Street Station. This became a permanent tourist bureau once the exhibition finished. For the next 70 years the Victorian Railways held the main responsibility for tourism promotion.
From the 1960s onwards, cheap air travel has made Melbourne more accessible to international markets. The majority of these holiday-makers are from East Asia, the United Kingdom, North America and Northern Europe. Reflecting this trend, the responsibility for tourism marketing shifted from the Victorian Railways to the Australian Tourist Commission (now Tourism Australia), Tourism Victoria, the Melbourne Convention and Visitors Bureau and Melbourne City.
Lacking a recognisable icon (such as the Sydney Harbour Bridge), the marketing of Melbourne as a tourist destination promotes a wide range of general attributes. These include shopping, restaurants, trams, sport, gardens, 19th-century built heritage, wineries and festivals. Melbourne's European flavour has often been emphasised, both in terms of its physical fabric and inner-city café culture. Specific major attractions include the Melbourne Zoo, Healesville Sanctuary, Puffing Billy and the Royal Botanic Gardens.
Outside of Melbourne, major attractions in regional areas, such as Sovereign Hill at Ballarat and the Penguin Parade at Phillip Island, find that many of their visitors stay overnight in Melbourne and visit them on day-trips. Indeed, in 2003, 89% of Victoria's international visitor nights were spent in Melbourne. This imbalance in revenue flows is a source of much tension between the metropolis and regional areas.
In recent years there has been a strong emphasis in Melbourne on major urban redevelopments catering for both tourists and locals. As in other major cities, these have been located in rundown precincts, such as port and railway areas, and combine shopping, restaurants and tourist attractions. Examples include Federation Square (site of Melbourne's Visitor Information Centre), Southbank and Docklands.