Political events in the United States and Europe have taken center stage on the world landscape in recent months, leaving experts wondering how these political changes will affect the global business climate.
China has been a particular focus of speculation, as political changes will affect both the overall balance of power over the long term, and global trade in the short term.
One area that is often overlooked is China’s economic impact on the global economy resulting from Chinese tourism expenditures. Chinese tourists overtook both the United States and Germany years ago to become the number one spending tourist globally – spending more than US$137 billion outside of China in 2015 – a number that is expected to increase to more than US$255 billion by 2025, making it more than double that of the United States, and more than Germany, the UK and Russia combined. (https://jingdaily.com/report-chinese-travelers-to-spend-255-billion-abroad-by-2025/)
As experts look to predict how political cicumstances will affect this massive powerhouse of global spending, they must take into account ease of travel, visa policies and airlift to specific locations. However, perhaps the most important factor in understanding how Chinese tourism behavior will change in the future is Chinese consumer behavior and preferences as it relates to travel.
In order to more accurately predict changes in this behavior, China Luxury Advisors turned to the foremost experts in Chinese tourism – the Chinese travel trade, and interviewed Chinese tour operators around the globe, as well as Chinese tour guides on the ground in the United States and Europe. These operators are on the front lines of Chinese tourist behavior on a daily basis, and the most attuned to shifts in behaviors. We asked them how the political climate is shifting consumer tourism behavior, and what they expect to happen in the future:
When asked about the potential impact of the US election on Chinese tourism, many tour operators were skeptical that it would have much of an impact on the prevailing Chinese tourism trend favoring the United States, unless tourism visa policies were to change. As David Wang from Galaxy Tour commented, “whoever becomes the president doesn’t matter a lot to Chinese tourists. Chinese still want to travel to the United States. However, if the tourist visa policy becomes very strict to Chinese, the Chinese tourists won’t be able to come to the United States.”
Benny Feng from NSA International added, “Sino-China tourism is the irresistible trend” and Ma Jie of Lucky Tour said “Chinese tourism can contribute to the American economy a lot. The trend of Chinese tourism will not stop.”
The top two concerns for continued strength in Chinese tourism to the United States is the impact on the value of the RMB/US dollar exchange rate, and if the election would have any impact on security concerns in the United States. Safety is always the number one concern for Chinese tourists. Any perceived Instability will have a negative impact on growth.
David Li from Blue Connection commented “the election itself doesn’t affect tourism, but the currency does. Now it’s more expensive to convert CNY to USD, so it will be more expensive for Chinese tourists to travel to the U.S. If this trend continues, the number of the tourists coming to the United States will decrease.”
Deming Zhu from Shanghai Airlines Travel reiterated this point, “Chinese consumers are more concerned about the exchange rate than the election results. If the policy of the new president is driving the RMB down, then it will be bad news for Chinese tourism to the United States.”
While Western Europe is evaluating the impact of recent elections, Chinese tourists have already changed their behavior significantly in Europe.
A tour operator from the company Comfort Travel explained “while Western Europe still dominates the market, Eastern European destinations are gaining popularity.”
Security issues in France, Belgium and other Western European countries have caused a dramatic shift in European itineraries, to favor locations in Eastern Europe, Northern Europe, and the UK.
Several tour operators cited the growing popularity of the Nordic countries, especially Denmark and Iceland. In particular, Northern Lights tours are hot products among the tour operators in China right now. Chinese Online Travel Agent, CTrip, recently called Iceland and Hungary the “dark horses” of today’s Chinese tourism market.
Chinese tour operator, Spring Tour, commented “Eastern European countries like the Czech Republic and Russia are growing quickly. We are also seeing secondary European destinations such as Spain gaining in popularity, mostly due to the security issues in France and Belgium.”
Tour operator, UTour, also commented that Eastern European destinations, Croatia, Serbia and Czech Republic are all increasing among individual travelers.
The Brexit decision has not had a negative impact on Chinese tourism behavior, with the UK experiencing a recent increase in Chinese tourism since the decision as Chinese tourists look to take advantage of the weaker pound.
Other trends that the tour operators are seeing in Europe include a rise in honeymoon tours, increases in family trips, growing popularity of self-drive trips in Europe and the rise of photography tours.
Looking forward, there will be continued scrutiny on the effects of the refugee crisis. A representative from Comfort Travel commented, “the European market is expected to perform better next year, however, the refugee crisis is likely to cause instability in the region and halt any major growth.” A representative from UTour echoed these comments, “Chinese travelers are likely to avoid areas hit most by the refugee crisis, despite the weak Euro.”
Chinese tourists will continue to keep a keen eye on security and the Euro/RMB exchange rate, both of which will have the primary impact on short-term gains and losses to countries in Europe.
A representative from Spring Tour explained, “if Europe can improve regional security, the Europe market will rebound in 2017.”
A representative from UTour added “the exchange rate has a significant impact on travel decisions. A weak RMB is likely to slow down outbound travel.”
China Luxury Advisors (CLA) is a global consultancy that advises and works collaboratively with luxury brands, tourism boards, vacation destinations and upmarket retailers on their China consumer strategy. Our personalized boutique style of China market consulting defines us and lets you transcend.