Katoomba and nearby Medlow Bath were first developed as tourist destinations towards the end of the 19th century when a series of grand hotels, notably the Carrington and the Belgravia (later the Hydro Majestic) were built and then repeatedly extended.
Coal and shale mining was also carried out in the Jamison Valley for many years, but when the seams were completely exhausted by the early 20th century, Katoomba was an established resort town. By the 1960s, Katoomba had somewhat declined, and several of its guest houses were converted for other purposes including convalescent hospitals. Some even succumbed to arson. Housing was inexpensive, allowing many young families to establish themselves, many of whom still live there.
In the 1980s, the guest houses and hotels again became fashionable and many were restored to their former glory. However, since the late 1990s tourism to the area has once again levelled off. Housing in the Katoomba region has become more expensive, but in general housing prices in the district are still markedly lower than those in Sydney
