Mt Hay Retreat, located near Berry, won the award but manager Louise Hallum expected to come in second when she saw the competition.

"When they said we were up against QT Sydney, I just assumed that they had won. My face on the night was a picture because I was just stunned."

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NSW Minister for Tourism and Sport Stuart Ayres said that the awards were a recognition of the hard work of tourism businesses after a difficult year.

"The winners have shown a particular commitment to excellence and I congratulate them for their innovation and perseverance that these awards represent," he said.

The challenges faced by all tourism businesses have been felt at Mt Hay. The business has struggled with staff shortages and access to suppliers. As more people have chosen to eat takeaway, Mt Hay had to change how they dealt with waste.

A challenge particular to luxury accommodation providers was also changing perceptions of visitors who would normally travel overseas.

"Having to holiday at home changes people's mindset, they may not have quite as high expectations. But then when they come and they get the welcome that they get, have experiences here, they realise that they can have just as good an experience at home as they can overseas," said Louisa Hallum.

Louisa Hallum said that with the award being given to a South Coast business, the region would become more known as a luxury destination.

"It proves that you can do it here, that there is an appetite for it and that people love it."

NSW winners will go on to the Qantas Australian tourism awards, to be held on March 18, 2022.

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