Chinese Tourists’ Budget-Conscious Return

Almost a year after China bid farewell to its stringent zero-COVID policy, a policy characterized by rigorous lockdowns and quarantines, Chinese citizens are once again embarking on international travels. The first half of 2023 saw a remarkable surge in the number of outbound tourists from mainland China, with official statistics recording 40.3 million such tourists. This figure, while impressive, pales in comparison to the pre-pandemic levels of 2019, when mainland Chinese tourists made 155 million outbound trips, underscoring the profound impact of the pandemic on global travel.

The resurgence of Chinese tourists is a significant development for the global tourism industry. Historically, Chinese tourists have been known for their high spending habits, patronizing luxury hotels, indulging in lavish tours, and purchasing designer brands and souvenirs. In 2019 alone, they spent a staggering $255 billion overseas, dwarfing the expenditures of tourists from other major countries like the United States, Germany, and the United Kingdom.

However, the landscape of Chinese outbound tourism is undergoing a transformation. The economic repercussions of the pandemic, compounded by a real estate crisis depleting household savings and a concerning 20% youth unemployment rate, have prompted a shift towards more cost-conscious travel behaviors among Chinese tourists. A survey conducted in London earlier this month revealed a near-recovery in the number of Chinese tourists to the UK capital compared to 2019 figures. However, their spending had plummeted by 58%, indicating a marked change in their consumption patterns.

This shift in spending behavior is partly attributed to the growing trend of independent travel among Chinese tourists, replacing the traditional large tour groups. Market research firm Tourism Economics views this change as a temporary adjustment rather than a permanent shift, suggesting that the decline in average spending per visit may not be a lasting trend.

Despite the current frugality, the outlook for Chinese tourism remains robust. Tourism Economics forecasts a substantial rise in Chinese household incomes over the next decade, potentially adding 60 million households to the pool of international travelers each year. This growth is expected to propel China to the forefront of long-haul travel growth to Europe, surpassing the United States as the most significant contributor to this sector.

The concept of “revenge travel,” where consumers prioritize overseas travel after prolonged COVID lockdowns, has buoyed tourism hotspots in Europe and the United States. However, long-haul trips to European destinations remain significantly below pre-pandemic levels, with the absence of Asian travelers, particularly from China, being noticeably felt. Tourism Economics predicts that the full recovery of Chinese tourists to European destinations could take up to two years, with recovery to long-haul destinations like Europe not expected until 2026. This forecast is influenced by factors such as the ongoing war in Ukraine and the Middle East, which continue to impact global travel patterns.

In regions like Thailand, which historically have been popular destinations for Chinese tourists, there has been a keen interest in reviving tourist arrivals from China. Thailand welcomed 11 million Chinese nationals in 2019, but the first nine months of 2023 saw less than 2.5 million arrivals, falling short of the Thai government’s expectations. In response, Thailand has waived visa requirements for Chinese nationals and proposed joint Thai-Chinese police patrols to bolster the safety and confidence of tourists, especially following incidents that negatively affected the perception of safety for Chinese tourists abroad.

Concerns about safety and anti-Chinese sentiment have also been influential in shaping the travel decisions of Chinese tourists. The emergence of COVID-19 in China and subsequent Sinophobia, coupled with the need for COVID tests for entry into many countries, have contributed to hesitancy among Chinese travelers to venture abroad. Additionally, backlogs in visa and passport applications have been a hindrance, despite a staggered reopening of outbound travel by Beijing.

The recovery of international travel from Chinese airports is also progressing slowly. Data from OAG, a global travel data provider, shows a 43% decline in seats on international flights from China compared to pre-COVID levels in November 2019. While flights to destinations like South Korea, Japan, Hong Kong, and Taiwan are recovering more rapidly, they still lag behind their pre-pandemic levels, as do flights to Western countries like France, Italy, and the United States.

In summary, while the return of Chinese tourists to the international travel scene is a positive development, their spending patterns have evolved, reflecting the broader economic challenges and safety concerns. The future of Chinese outbound tourism is poised for growth, but the path to full recovery remains contingent on a range of economic, political, and health-related factors.