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As destinations worldwide, from the US to Saudi Arabia, ramp up efforts to attract Chinese tourists, China’s outbound tourism sector is showing signs of a robust rebound, a development that could transform the global travel landscape.
A recent report by marketing agency China Trading Desk highlights this trend, revealing an elevenfold increase in Chinese tourists venturing abroad in 2023, with a notable surge of interest in destinations like South Korea, and a waning enthusiasm for the US. Last year, just 439,000 Chinese tourists visited the US, down from more than 4.4 million pre-pandemic.
China Trading Desk expects the number of Chinese tourists to the US will exceed 1.3 million in 2024, a threefold rise over 2023 levels, but still 70% below 2019’s figures. The agency’s founder Subramania Bhatt attributed Chinese tourists’ muted interest in the US to the increasingly negative image of the country in the Chinese press and on social media.
“Reports of mass shootings and videos of city streets overrun by homeless people have played a factor in keeping Chinese travel to the US low,” says Bhatt. “Geopolitical tensions, the high cost of travel to the US and the unfavorable exchange rate haven’t helped either.”
Safety concerns have also dented Chinese interest in visiting nearby countries, stemming from the portrayal of crime in Southeast Asia in Chinese-language films, which has significantly impacted travel from China to Thailand and Cambodia. This cultural influence contributed to a decline in Chinese visitors to these regions, with less than 4 million traveling to Thailand in 2023, versus over 10 million who visited in 2019. This change underscores the powerful role media perceptions play in shaping travel decisions.
The growth areas of China’s outbound tourism market are perhaps the most interesting. In particular, the increasing spending power of millennial and Gen Z tourists is changing the top destinations for Chinese tourists. For example, influenced by social media trends and the desire for unique experiences, this younger cohort prefers countries like South Korea over the likes of the US.
Chinese tourists also increasingly seek out culturally enriching experiences, even in places like Hong Kong that have long been more associated with luxury shopping. Hong Kong, in response, has invested heavily in offering more experiential tourism opportunities, for example blending art and retail, a sector led by K11 Musea and Airside.
The question this year is to what extent Chinese outbound tourists, particularly younger travelers, will engage in overseas luxury shopping. Luxury brands, retailers, and groups like Kering and LVMH have eagerly awaited the return of big-spending Chinese tourist-shoppers since the onset of the Covid-19 pandemic four years ago. Now, it appears that these individuals might be traveling again, but will they invest in high-end items, or instead on experiences off the beaten path?
Although the China Trading Desk report seems to indicate declining interest in traditional destinations like the US and Europe, luxury brands are strategically positioning themselves to capitalize on the anticipated recovery of Chinese outbound tourism. In response to the Chinese tourism lull of 2020-2022, luxury retailers in key markets like the US have adapted, shifting their focus to accommodate the evolving preferences of high-spending Chinese consumers who are now gravitating towards more understated luxury.
This shift underscores the need for luxury brands to refine their strategies, balancing their domestic offerings in China with preparations for the eventual rebound of Chinese tourism in international markets.
A large-scale recovery of Chinese outbound tourism is not merely a return to the past, but signifies a transformative shift, marked by the changing preferences of a younger, more adventurous, and increasingly affluent Chinese demographic. This evolution opens up new opportunities for the global travel industry, and requires innovative approaches to cater to these evolving consumer needs. As the industry anticipates a further 50 percent increase in Chinese tourism this year, the focus is on adapting to these shifts to remain relevant in this new era of global travel.
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