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Katoomba is the chief town of the City of the Blue Mountains and is its administrative headquarters. Possibly some of the towns of the lower mountains are now larger in population.

Katoomba's main industry is tourism based on spectacular mountain scenery. A rock formation called the "Three sisters" is the most famous feature. Also famous are the "scenic railway" which was originally built for extracting coal and oil shale from the valleys, and the "scenic skyway" which is a gondola-like conveyance built across a valley. The gullies and creeks around Katoomba are in many places lined by rainforest or swamp and there are a series of spectacular waterfalls (albeit with a relatively low water volume).

Katoomba peaked during the interwar years (1920s and '30s) with a series of grand and ornate hotels (notably "The Carrington" and the "Hydro Majestic"). Lilianfels House is also a magnificent building but this dates to an earlier time near the turn of the 19th century.

There were also numerous guest houses. In the 1960s Katoomba declined and many of the guest houses were converted to convalescent hospitals. Some even succumbed to suspicious fires. Housing was cheap. In the 1980s however the guest houses and hotels again became fashionable and many were restored. Housing became more expensive in keeping with the prices in Sydney.

The beautiful scenery combined, until recently, with cheap housing attracted an alternative and eccentric subculture. Poets, artists, old hippies and eccentric characters are quite frequent. Rex Gilroy is famous for his belief in the "Yowie" or hairy man-like monster that leaves large footprints in the bush from time to time. The "Cat Man" is also famous for his belief that feral cats have killed off much of the native fauna. He wears a cap made of cat skin and has bought bushland with fences in order to keep the cats out.

Eleanor Dark is a well-known historian who wrote "The Storm of Time". Her husband Dr Dark was a communist and was concerned about persecution in the 1950s. The Darks are reputed to have built a refuge in the Grose Valley to the north of Katoomba.

In addition to the economically challenged population, there are also many very wealthy people who have built houses with magnificent views, especially in Leura, just to the east of Katoomba.

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