Australia's backpacker tourism industry is facing the biggest crisis in its history, with many tour operators struggling to survive following big falls in young travelers.
The number of people staying in hostels has fallen by nearly seven per cent over the past two years, down from 593,000 per year in March 2010.
The numbers of international backpackers staying in hostels were down in every state in the year ending March 2012, Tourism Research Australia figures show.
There was a 20 per cent fall in backpackers from the UK - Australia's largest source market - since 2010.
Tour operators blamed the strong Australian dollar, global economic uncertainty and increased competition from cheap Asian destinations for the fall.
Australia's unpredictable weather and tight regulations were also contributing factors, while miners were taking up beds in some areas and pushing up prices.
Terry Ramsay, from Red Earth Safaris in Western Australia, said the number of companies operating on the Perth to Exmouth route had fallen from nine to three over the past five years and others were amalgamating.
"Tour companies are dying - we are 40 per cent down over the last three years as there have been less and less arrivals into the country,'' he said.
"A lot of people are hurting.
"The German market has saved me, but the Western Australian government has not spent a cent on German backpackers.
"They don't care about the backpacker market. We worry there won't be any tours soon - it will be interesting to see how many more go under this year.''
Brendan McKenna, from Base Backpackers, said this year was extremely tough.
"Sydney is very quiet,'' he said. "If Sydney is empty it is very worrying.''
Mr McKenna said fly-in, fly-out miners were taking up beds in Perth hostels.
"Perth is the gateway to Western Australia but it is very hard to access as there is nowhere to sleep and it is so expensive it puts off backpackers going there at all,'' he said.
"The industry feels overlooked. Backpackers can be viewed badly but they spend a lot of money.
"The youth market did help pull Australia through the GFC.''
Backpacker Youth Tourism Council chairman Peter Ovenden said the industry was facing its most challenging time in 20 years.
But he said it could pull through with new, innovative tours and more marketing help from state governments.
The exchange rate is pegged against the industry but small operators are very entrepreneurial and we hope they will tap into new countries for business.
Craig Haslam, from tour company Nullarbor Traveller, said the industry was `"scared witless''.
"Everyone wants to do the Rock, Reef and Harbour,'' he said.
"They all spend their money on the east coast. It is a constant struggle.''
Tourism Australia managing director Andrew McEvoy said backpackers were a very important part of the country's visitor mix.
"These people tend to stay for long periods, which is great in terms of the tourism dollars they spend here,'' he said.
"Importantly, today's backpackers are often tomorrow's high rollers, coming back to Australia down the track, often with their families, so it is critical that we work hard now to deliver the best of first impressions.''
Backpackers spend an average $5578 on a trip to Australia
Contribute $3 billion to the economy each year
Spent $71 per night on average
Stay 78 nights in Australia on average