The attack happened at Shelley’s Backpackers hostel in Home Hill, popular with young people picking sugar cane.
It has been alleged that a man shouted “Allahu Akbar” as he attacked the young woman.
Two men were also injured, including a 30-year-old British man reportedly in a critical condition.
A dog was also killed in the attack.
Police have arrested a 29-year-old Frenchman and seized a knife, which they believe was used in the attack.
Police are investigating possible extremist links, mental health issues and drug use.
