Is tourism Australia's next best thing?

John Phillips | Digital Editor | CNBC

Australia's economy is struggling as it grapples with the imminent end to its commodities boom, but one industry is flourishing thanks to China: tourism.

"As the mining boom enters the final cyclical phase, a rebalancing in favor of the non-mining sector is critical. The declining Australian dollar is facilitating this transition, and one sector that is strongly linked to the currency is tourism," ANZ's senior economist Jo Masters and co-head of Australian economics Felicity Emmett said in a note published on Friday.

Chinese tourist arrivals in Australia jumped 10 percent on-year to 736,000 in the year to September 2014, overtaking the United Kingdom to become Australia's second largest source of tourists, according to a Tourism Research Australia report published in December 2014.

And they should help the tourism industry continue to grow.

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"The total contribution of travel and tourism is forecast to rise by 3.1 percent every year [going forward] to 216.4 billion, or 10.5 percent of gross domestic product (GDP) by 2024," according to a 2014 World Travel & Tourism Council report.

Weaker currency

Chinese tourists are behind the surge in tourism to record highs in Australia, as they increasingly opt away from traditional destinations like Hong Kong for countries with weak currencies.

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"Short-term visitor arrivals started to trend higher after the Australian dollar peaked in 2011 and were up 5.7 percent seasonally adjusted in the year to September," said the ANZ note.

The Australian dollar has depreciated 27.6 percent against the U.S. dollar over the past two years and a "proxy survey in actual terms indicates further strength in the final quarter of 2014, with arrivals up 4.8 percent compared to the same period a year earlier," according to the note.

Not only are more Chinese going to Australia, they are spending more too.

The Chinese spent an average of 5,416 Australian dollars ($4,107) each, up 15.8 percent on-year in 2014, and nearly 50 percent more than the British - the second biggest spenders - whoaveraged 3,652 Australian dollars .

More to come

The increasingly prosperous and adventurous Chinese middle class will continue to take holidays abroad, mainly in big cities, according to analysts.

The number of Chinese tourists is expected to grow by 5.1 percent a year over the next ten years to total nearly 97 million by 2023, according to an Oxford Economics report on the future of Chinese travel published in March.

And some of them will head to Australia: the number of new Chinese visitors to Sydney alonecould nearly double to 386,000 by 2023.

With the Australian dollar under further pressure as iron ore prices skid to their lowest level in seven years, an even weaker Aussie dollar may lure more Chinese tourists.

"The coming months could see a continuation of, or even acceleration in, these strong trends", according to the ANZ note.