China’s surprise announcement to reopen its borders in late 2022 left the travel industry wondering if they were prepared for the influx of travelers. However, the reality was different as many residents chose to stay home due to personal preferences or the difficulties and costs associated with leaving the country. Wolfgang Georg Arlt, founder and CEO of the Chinese Outbound Tourism Research Institute, explained that the slow outbound recovery can be attributed to the lack of affordable flights and long waiting times for travel visas. Domestic tourism, on the other hand, has seen a significant rebound and has gained prestige and quality. During recent holidays like the Dragon Boat race festival, domestic tourism levels were already back to 2019 levels, while outbound travel has only reached about one-third of its 2019 levels in terms of the number of trips.
Shift in Travel Destinations
Initially, Asia-Pacific was expected to benefit the most from China’s border reopening. However, the number of Chinese visitors to countries like Thailand, Singapore, Indonesia, and the Philippines has decreased by at least 60% compared to 2019. A June survey by Morning Consult revealed that Chinese travelers are now showing interest in exploring destinations beyond the region. Plans to visit Europe, Central America, and Antarctica have increased, with the Middle East and Northern Africa, particularly Egypt, experiencing the highest rise in interest. However, the survey also indicated a drop in travel plans to other destinations, notably the United States. This decline can be attributed to both reduced flight capacity and worsening geopolitical ties between China and the West. The war in Ukraine has further complicated matters as North American carriers are unable to fly through Russian airspace, making flights between China and North America longer and more expensive.
Changing Travel Spending Habits
Chinese tourists have become more cautious with their spending due to the economic slowdown caused by the pandemic. Travel ranked third on the list of expenditures where Chinese travelers said they would increase spending this year, with dining out and fitness and wellness taking the top spots. However, only 8% of respondents actually planned to increase their travel spending. Additionally, high unemployment rates among Chinese youth have impacted international travel bookings, with Millennials and Gen Zs from other countries leading the way. Despite these challenges, the number of Chinese leisure travelers expressing a desire to travel abroad has nearly doubled since last year, as per Morning Consult. Interest in business travel, overseas education, visiting family, and medical tourism is also on the rise. The Mastercard Economics Institute predicts a shift from spending on material goods to discretionary services like travel among Chinese residents in the post-Covid era.
As travel fears related to Covid-19 continue to lessen, Chinese travelers are becoming more optimistic about international travel. Concerns about contracting the virus, which topped the list in 2022, have now become the least of their worries, according to Morning Consult’s survey. The Mastercard Economics Institute expects travel recovery in the Asia-Pacific region to remain steady, with increasing capacity leading to lower costs and, in turn, stimulating more travel. While the recovery may not be a sudden boom, China’s international travel is slowly but surely getting back on track, with a positive outlook for the industry in the coming years.
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