Travelbrief: China. April 2023. It's been 3 months since China removed quarantine requirements and reopened their borders for travel, and 2 months since the first outbound group and package trips. And yet there is still a great deal of caution, and observers are waiting for the much-heralded recovery of Chinese outbound tourism to generate real momentum. However, there is good news. Airlift is steadily increasing, and the list of countries that travel agencies can sell tours to are at 60…
More than half of travellers want to go abroad in 2023 but haven’t booked yet or remain unsure over fears of safety outside the country. Before the pandemic, the Chinese outbound tourism market was the largest and highest spending in the world. It will be back, geo-political issues notwithstanding. The extended isolation means confidence will take a little longer to recover than expected.
The second half of 2023 should see progress as more flight routes are reinstated. Chinese tourism will grow at a slower pace than before, but travel firms could experience growth if they consider how domestic travel and consumer trends might transfer into global tourism.
The China Outbound Tourism Research Institute forecasts 179 million trips (including to Hong Kong and Macau) from China in 2025. This would surpass the 2019 total. China’s travel recovery is a work in progress. Its travel, aviation and hospitality sectors were savaged by three years of isolation. Rebuilding demand and supply will take time.
WE NEED TO REBUILD MOMENTUM
For two decades, outbound travel from China has been a major catalyst for rising global travel, an economic engine spurred by the emerging middle class in the country of 1.4 billion people. Chinese travel could be felt from Vancouver to Dubai to Singapore with destinations becoming reliant on the steady stream of free-spending tourists.
Accounting for almost one-fifth of global tourism spending, Chinese tourists spent $255 billion overseas and made 166 million overseas trips in 2019, according to the United Nations’ World Tourism Organization. Between 2009 and 2019, the number of outbound Chinese tourists rose 12.8% a year on average, compared to the global average of 5.1%.
Today, after 3 years in isolation, the world should prepare for a new kind of Chinese traveller, more reticent and guarded, that may not be as willing to hop on a plane and fly across the world as readily as in 2019.
To even attract Chinese tourists, destinations need to be more welcoming with easier entry rules for Chinese travellers, according to Steve Saxon, partner in McKinsey Shenzhen and leader of Asia travel practice. “Thailand now offers straightforward e-visas for Chinese. Middle East and Singapore are also performing strongly,” Saxon said.
CHINESE TOURISTS ARE RETURNING
Fliggy, Alibaba Group’s online travel platform, saw the number of outbound and inbound flight bookings increase more than 4.5 x YOY in the first two months of 2023, according to Simeon Shi, CSO Fliggy at ITB Berlin. Fliggy also noted a 190% YOY increase in outbound tour products, including local rides, scenic spot tickets, and online visa processing services during the same period.
With China’s outbound tourism industry on a firm trajectory of recovery, tourism destinations and businesses would be amiss to imagine there is just one type of Chinese traveller. Professor Wolfgang Arlt, CEO Chinese Outbound Tourism Research Institute, says that trying to answers to questions about defining “the” Chinese traveller would be wrong.
The key point is to understand there are various types of travellers with different demands and behavior patterns. Arlt explained;
The 28-year-old foodie from Hangzhou may want to eat local food and do a cooking class, the couple with a 10-year-old from Shanghai may want educational activities, the affluent elderly couple from Beijing a wine tasting tour.
At the Skift Global Forum East in Dubai last year, Schubert Lou, COO of Trip.com said that previous ways of marketing to Chinese travellers won’t work as well today as their preferences have changed during the pandemic.
SPEND MORE, SPEND BETTER
Morgan Stanley found muted appetites for shopping, despite ranking as the top expense for travellers. The shopping budget was 9,405 yuan ($1,387), higher than 2020 but far below 2017 level of 13,782 yuan. “The majority of the consumers expect to keep their overall spending unchanged in the next six months (70% vs. 73%),” the report said. But 24% planned to spend more to “upgrade their lifestyles” – an attitude typically resulting in higher quality purchases, up from 20% a month ago.
According to Global Blue data, mainland Chinese shoppers were the leading tax-free shoppers globally in 2019. They accounted for a total of 4.25 million shoppers, spending an average of 1,600 euros per shopper, compared to 950 euros for other nationalities.
Today, Chinese travellers are hungry for newness: to reconnect – with destinations, retailers and brands. 90% of shoppers plan to shop as much or more as pre-COVID-19 on their next overseas trip.
The Morgan Stanley report found, “Consumers appear more willing to increase spending on hotel accommodation vs. pre-Covid, with 20% citing it the top travel expense compared to 17% in 2017 and 2020,” Morgan Stanley analysts said. “37% prefer higher star-rated hotels, up from 18% in 2020, with higher-income consumers showing even stronger appetites for luxury hotel stays (47% vs. 31% in 2020).”
SENTIMENT
TRAVEL INDECISION
Only 3 months into reopening, there is still great uncertainty – and an opportunity for travel brands to still influence travellers’ decisions. 26% say they hope to travel abroad but haven’t booked yet, a further 27% remain unsure if they will travel abroad in 2023.
SAFETY IS THE BIGGETS CONCERN
Unlike limited time or money, safety concerns are something that can be addressed directly by tourism brands. Safety, stability, and friendliness are core messages to both consumer and trade marketing that will help assuage fears about venturing abroad.
FOOD, LANDMARKS, LOCAL EXPERIENCES
56% chose trying local food and visiting local landmarks as top priorities, while 52% want to experience local life.
ASIA LEADS BUT TRAVELLERS WANT THE WORLD
75% planned to visit Asian destinations in 2023, with Hong Kong, Macau and Thailand topping the list. Altogether travellers named 44 destinations around the world, on every continent. The diversity of the list shows interest is well beyond regional favourites.
NORTHEAST ASIAN DESTINATIONS STILL HOT
Japan and South Korea are 4th and 5th on the list of top travel destinations for 2023. Japan and Korea did their best sabotage this with restrictions on Chinese travellers that were widely discussed in January but they retain their appeal.
FULL SERVICE DEMAND
Although independent travel has been on the rise for some time, 61% would now opt for full-service products that include visas, flights, accommodation, tour guide. There is opportunity for agents and operators to attract the Chinese market with the right products
TRIED AND TESTED
Many recommendations for hotels catering to the Chinese market remain the same as in years or past. Consumers place value on hotels with Chinese-speaking staff (51%) and provide electric kettles or hot water (50%). Chinese breakfasts are important to 31% of travellers.
BEHAVIOUR
THE PSYCHE OF THE CHINESE TRAVELLER
To understand travel demand from China, it’s important to understand the Chinese traveller’s psyche. “Travel isn’t just about exploring but about living and maintaining the outward appearance a lifestyle that’s reflective of one’s financial success,” according to Glos. With travel symbolic of success, it’s logical high-end travellers are the likeliest to return faster.
“You can expect a segment that has very strong pent-up demand, spending power, but is also quite savvy in distinguishing what’s quality and good in travel choices,” says Jackey Yu of McKinsey Hong Kong.
The new Chinese traveller wants customized travel products and experiences, as well as high-quality products that offer added value. They watch live streams, purchase online though content marketing and choose content for travel inspiration.
TRAVEL FOR EXPERIENCE
While they still look for bang for their buck, many Chinese tourists are looking at relaxation as a goal of travel, particularly in Southeast Asian destinations with beaches and resorts. Family travel is also picking up, including traveling with young children and older parents.
China’s travel consumption trend has shifted from destination-focused to experience-oriented and interest-driven, fragmenting demand significantly.
Simon Shi, Fliggy.com
According to Trip.com Group, the younger generation of travellers is showing interest in small group tours, with more flexible arrangements, high-quality services and varied experiences.
Glos noted that the periodic international traveller, going abroad once every two or three years, is the least likely to return in the coming 12 months, while Dragon Trail’s Cook said that tour groups keen to check off bucket-list destinations with packed travel itineraries are here to stay.
Dragon Trail International’s Chinese Traveller Sentiment Report of January 2023.
Cook noted there has been strong growth in outdoor activities, particularly camping, hiking, and water sports such as surfing. However, a lot of these top “new” trends had already started before Covid and have been accelerated by the pandemic with its impact on travel plans and preferences.
China’s outbound market is vast. It spans everything from backpacking to ultra-high-end luxury, Gen Zs to seniors and business travellers to extended families.
Before 2020, the Chinese market was rapidly diversifying. Then, the constraint of domestic-only travel created new booking behaviours, trip motivations and segmentation challenges.
Travel planners should expect shifting tourist expectations, and sometimes seemingly contradictory travel patterns, as the recovery builds. Here are eight factors to consider when evaluating what the return of Chinese tourists means for the global tourism industry.
WANDERLUST
One in two affluent Chinese travellers are making plans for at least five trips in 2023! On average, they are planning 5.9 trips this year, up from 5.6 trips in 2019. While the 26 to 36-year-old demographic shows the most significant increase in number of trips, younger affluent Chinese travellers aged 21 to 25 years continue to be the most frequent travellers.
Aside from more frequent leisure trips, a majority want to stay longer per trip. 72% plan to stay from six to over 10 days in 2023, bringing the average duration per trip to 8.7 days versus 8.4 days in 2019. Indulgence in longer vacations is prevalent in the 21 to 25 age group.
READY TO SPLURGE
The affluent segment plans to increase spending by 15% to 102,500 yuan (US$15,299) in 2023, 22% more than the budget set aside by Hong Kong travellers. The increase in travel budget is more evident in the 36+ age group, as well as those from Tier-1 cities. Meanwhile, the well-heeled segment (survey respondents in the top 20%) is willing to spend an average of 284,000 yuan (US$42,388).
More than a third of affluent Chinese travellers plan to fly in first or business class, while one in two choose to stay in upscale or luxury hotels on their next leisure trip.
SLOW TRAVEL
Gone are the rushed, major attractions-packed tours as the affluent Chinese evolve from tourists to travellers. Over 70% of travellers want slow, recuperative travel over an itinerary filled with activities. Travellers plan to immerse themselves like locals (58%), take more road trips (56%), take better care of themselves (56%), and attend more events (51%) in their future holidays.
Eight out of ten travellers are more willing to pay for experiences over tangible products, particularly those from Tier-3 cities (86%). This points to the growing potential of authentic and personalised travel experiences, where one savours the local sights, sounds and culture.
What we are seeing among more affluent and experienced travellers are different mindsets and habits. We are seeing less desire for a frenetic pace of travel and itineraries that are deliberate. Millennials and Gen Z are more laid-back, they prefer experiences where they can interact with locals in meaningful and authentic ways.
Simon Tye, Consumer Search Group.
EXPERIENCE DRIVES LOYALTY
Chinese travellers long to revisit destinations where they had positive experiences and fond memories, after missing out on travel for more than three years. They are keen to repeat the good times and pleasant experiences hence prioritise all-time favourite destinations including Japan, Singapore, Thailand, South Korea, the US, New Zealand and Canada.
Affluent Chinese travellers also tend to choose hotel or resort brands where they had good personal experiences in the past. Star-ratings and positive word-of-mouth also carry great potential for repeated visits.
CULINARY TOURISM
A generation of independent Chinese travellers identify as “foodies.” They want to sample (and photograph) local foods, alongside Chinese breakfasts, lunches and dinners.
Fine dining is important when choosing a destination. Gourmet travellers check a destination’s Michelin guide for inspiration. Young foodies want to know the story of dishes new to them by visiting places where ingredients are cultivated and speaking with artisanal producers.
LIVE TO EAT BUT LOVE NATURE
While culinary experience remains a strong driver of leisure travel, 60% of travellers consider natural scenery as their first priority, especially among those aged 36+ (69%).
Chinese outbound travellers are also keen to incorporate wellness in their holidays (56%), where one-third prefer experiences including camping, hiking, outdoor adventures and cultural immersion. While shopping remains popular among them, interest in this activity wanes in younger age groups.
HUNGRY FOR ADVENTURE
China’s still-developing adventure market covers a broad spectrum, from gentle trekking to speed skating. China’s dramatic landscapes provide adventurous challenges, from skiing and snowboarding in the northern Alps to traversing more than 2,000 glass-panelled bridges stretching over river valleys. Thrill-seeking experiences captured on video go viral very quickly on Chinese social media.
Road-trippers head for southwestern provinces such as Gansu and Sichuan to take sportscars for a spin around mountain bends. Thrill-seeking experiences captured on video go viral very quickly on Chinese social media.
URBAN HEDONISM
Despite pandemic predictions that Chinese tourists would seek nature escapes, urban hedonism is in vogue. Chinese tourists want to go beyond marquee attractions to explore architectural diversity and historic backstories. The night economy is a big focus in China as tourists seek inspiring evening activities contrasting from a city’s daytime offerings.
BRANDS OVER DESTINATIONS
Majority of travellers decide on a destination first before making hotel choices, but this decision process is declining. Instead, hotel brands are becoming a deciding factor in destination choice, especially among Gen Z travellers, with 26% planning their vacations around locations where their favourite hotel brand has a property.
The expectation on the roles of a hotel or resort has also expanded. With Chinese travellers keen to engage and build social connections, they hope to meet and interact with new people in the accommodation they stay in, shifting their preference towards community-minded and design-centric hotel properties, where there is a sense of conviviality, impeccable hospitality, and aesthetics.
HOTEL EXPERIENCES
China’s three-year-long Zero-COVID-19 policy had a damaging impact on the hotel industry. In response, management teams experimented with guest concepts and experiences. Bespoke afternoon tea sets were co-created with brands such as Ferrari and Chaumet.
Chinese artists were engaged to produce exclusive exhibitions and mixed-media experiences. Culturally themed kids’ activities enabled parents to relax and enjoy spa time together. These tailored experiences raised service expectations among affluent travelers.
BUSINESS TRAVEL RETURNS
Mainland Chinese expect to resume their pre-pandemic level of international business travel this year, at an average of 2.1 trips – consistent with optimism towards post-lockdown recovery.
While globally, business travel is facing a slower return amid economic concerns, work-related trips from China are expected to rebound on the back of client servicing needs, internal engagements, conferences and industry events.
JUST DON'T MENTION ZERO-COVID-19
3 years of strict zero-tolerance policy exacted an emotional toll on many Chinese. Travel will help create distance with the past and rediscover lost pleasures. Chinese society is complex and has become more so during the strictures of COVID-19, but national pride remains intact.
Despite personal misgivings about Zero-COVID-19, Chinese tourists will not take kindly to criticism. This is a subject they will not wish to discuss – even in passing – on vacation.
RESPECT FRUGALITY
Pre-pandemic, Chinese visitors were courted as high spenders. Growing uncertainty about their economic future has seen young urban Chinese rediscovering the virtues of frugality. They cut spending and save where they can, rattled by high youth unemployment, falling salaries and a faltering property market.
PERSONAL SAFETY
In November 2019, as the coronavirus was identified in the city of Wuhan. Grounded Chinese tourists watched online incidents of “Asian hate” and aggression and references to “Chinese flu” as the virus spread. Those images have not faded.
More recently, they know anti-China sentiment is rising around trade and politics. Chinese tourists will be security conscious and retain a low profile. Demand for private limousines, pre-ordered taxis and in-room hotel dining could increase.
WHAT HNWI CHINESE WANT
Travel continued to rank as one of the top areas in which Chinese HNWIs plan to increase their spending in the next three years, with more than half of survey respondents saying they will.
Travel rose to become the No 1 hobby among Chinese HNWIs, from 2nd last year.
Camping has increased in popularity by more than 3x since last year. Campervan travel and hot springs appeared for the first time, debuting in 4th and 6th place, respectively.
In 2021/ 2022 surveys, campervan travel was the activity HNWIs wanted to try most.
Water activities are one of the top choices for sports and fitness for wealthy Chinese, among which swimming and surfing are most popular.
The Maldives, Japan, and France were the top three travel destination countries for the second year running. Dubai moved up from 10th in 2022 to 8th with an increase of 6%. South Korea also increased its score by 6%, and Canada went up by 8.
Chinese HNWIs were most likely to opt for a “shopping paradise” or a destination with the natural beauty of mountains or lakes. Luxury resorts also rank high.
Having overtaken the US last year, the UK remains the top pick for wealthy Chinese to send their children overseas to study.
25% said they followed a vegetarian diet, same as last year. 49% prefer to eat a light, low-fat diet, 62% buy organic food products. While Chinese cuisine feature prominently, the diversity of the list shows that Chinese HNWIs have notably international palates.
99% said they consumed alcohol, with wine and whisky the most popular types.
According to Hurun Report, HNWI wanted to be “financially free” by the age of 46. What will they do then? Traveling around the world was at the top of the list, chosen by 71%. On average, survey respondents had 23 days of vacation every year. Around 90% planned domestic travel within the next three years.
MIXED REALITY ENGAGEMENT
Mixed-reality and metaverse campaigns are transforming the way Chinese consumers interact with brands and travel providers. Chinese tea producers, mooncake bakers, beauty brands and tourism boards are all developing mixed-reality experiences to engage new customers.
Travel brands should overcome the scepticism that exists beyond Asia about metaverses. Post-1990s consumers are in for the long haul, and China will be a crucible of travel innovation in real-world and virtual realms.
EMBRACE CHANGE FOR SUCCESS
According to Dragon Trail’s Cook, destinations that want to market themselves to Chinese tourists, need to understand the market segments they appeal to the most and the ones that they most want to attract.
Travel service providers need to spend more time researching consumer behavior changes and ways to efficiently meet diverse needs, according to Fliggy’s Shi. From a content perspective, destinations should have a good idea of prevalent travel trends and how they are a good fit for these trends.
Citing China i2i Group’s survey results, CEO Alexander Glos said Chinese messaging platform WeChat is overwhelmingly the number one information source today – earlier surveys have typically showcased online travel agencies or just travel agents the most important source.
While Cook noted the approach towards marketing probably hasn’t changed substantially since the pandemic, Cook observed that a major development over the last 3 years has been the emergence of Xiaohongshu (aka Little Red Book or Red) for travel inspiration and research.
HEADWINDS
While inflation and the cost-of-living crisis have affected many destinations, many believe these aren’t impediments for Chinese tourists – China is not experiencing the same inflation and cost-of-living crisis that many western countries are facing.
That said, three years of strict zero Covid policies have had a significant impact on people and businesses in China. While financial constraints is the number one reason that respondents of a Dragon Trail survey cited for not planning an outbound trip in 2023 for many, others have saved up during this period, resulting in the so-called “revenge spending” on outbound travel.
However, with significantly lower cost of living, Chinese travellers typically have a higher disposable income compared to north American and European travellers. Trip.com Group observed that China’s inflation rate is set to stay below other major economies in 2023 amidst reopening and could be a boon for outbound travel.
Lower inflation benefits travellers as their money will retain its purchasing power over time, enabling them to take advantage of competitive prices and make their money go further. The high-end earners and booming middle-class travellers are looking to spend on travel.
However, there is no way for the market to recover fully with flight capacity as low and prices as high as they currently are. This was echoed by Trip.com Group executives while announcing their Q4 results. McKinsey’s agreed that travel is still dogged by thin airline schedules, high airfares, passport availability, slow visa renewals, approved-destination status, etc.
The constant announcements of countries dropping entry requirements for Chinese tourists and routes being resumed or increased from China are now facilitating increase in flight capacity, which would eventually lead to lower airfares, and increased outbound travel.
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Bibliography
1 March 2023, the Hurun Chinese Luxury Consumer Survey 2023 includes data from 750 HNWI Chinese, equally divided between male and female, average age 38 and household net worth was RMB45 or US$6.46 million.
https://www.ttgasia.com/2023/03/29/emerging-trends-of-the-affluent-chinese-travellers-finn-partners/
Finn Partners Outbound Rebound: The Return of Chinese Travellers, conducted from Jan 10 to 24, 2023 gathered findings from over 2,000 affluent Chinese in first-, second- and third-tier cities. The average annual household income is over 1.4 million yuan (US$209,000), with purchases of luxury travel in the past 12 months. All respondents have travelled overseas prior to the pandemic.
The Morgan Stanley Report cites a proprietary survey from Jan. 29 to 31 of 2,000 consumers in 19 cities.