What Slowdown? Why Chinese Outbound Tourism Will Continue to Grow

November 16, 2015/1/0
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Following this summer’s stock market drama and currency devaluation in China, some tourism industry analysts and observers suggested that outbound travel from China could also suffer, impacting everyone from luxury brands in Europe to duty-free stores in South Korea.

But reality seems to paint a different picture.

Last month, China Daily reported that Chinese outbound tourism grew by 36.6 percent year-on-year in the first four days of Golden Week, a peak travel season for Chinese tourists. The country’s Xinhua News Agency also reported that more than 4 million Chinese tourists travelled abroad over the course of this year’s Golden Week.

Despite a drop in spending in Hong Kong, Chinese tourists spent a whopping $830 million in Japan during the seven-day holiday. (Reportedly giving the Japanese economy a 0.1 percent boost.)

Like Japan, Australia has seen a surge in Chinese visitors in 2015. In September, China overtook New Zealand as the top source of short-term visitors in Australia, leaving hotels struggling to meet demand.

Why are Chinese still traveling and spending in such strong numbers despite economic turbulence and a slowdown GDP growth in China? CLA recently posed this question to travel and tourism professionals in China.

Carole Chen, Director of Marketing and Branding, Diadema

“Most of our clients view travel as a vital part of their lifestyle. It is not a luxury but a necessity. The stock crash might have pushed some of them to make minor adjustments to their travel budgets, but it wasn’t significant enough for them to alter their lifestyles.

“We also see increasing demand from families who wish to travel on their own. Almost 60 percent of our customized business comes from family groups. Parents with kids are less likely to change their travel plans, because they consider travel an extremely beneficial experience for their kids.

Due to the worsening air pollution, China’s middle class considers travel a way to escape and improve the quality of their life. They are increasingly looking beyond price and craving unique experiences when traveling abroad. Small adjustments to the currency value alone is unlikely to force them to sacrifice their quality of life.”

Alex Li, Business Development, Caissa Travel

“Caissa has been the leading Chinese outbound travel operator to Europe for more than a decade. We didn’t see any slowdown in our Europe business as a result of the stock crash or currency devaluation. Despite the recent dip, the value of the yuan is still higher than it was five years ago. Unless the Chinese currency continues to fall at a dramatic pace, it is not likely going to deter Chinese citizens from traveling.

Visa policy has much more influence on Chinese people’s travel decisions than the exchange rate. Despite the devaluation of the yuan against the dollar, the new 10-year visa [in the United States] will likely absorb all the negative impact. The same happened with Japan. After Japan introduced a five-year multiple entry visa policy to Chinese visitors, it overtook Hong Kong to become the most popular overseas travel destinations for Chinese tourists, despite political tensions between the two countries.”

Kate Chang, China Regional Director, Los Angeles Tourism & Convention Board

“Based on research and conversations with our partners in China, we are hearing that the slowing Chinese economy and currency devaluation are not causing travelers to change their travel plans.

“During President Xi Jinping’s visit to the US, he announced that 2016 will be the U.S.-China Year of Tourism. This news has received a lot of media and industry coverage and is expected to have a positive impact on travel to the US. When combined with the increased airlift to the US. and 10 year visa extension, these factors make China even more attractive as an inbound market to the US.”

The bottom line is that the Chinese outbound tourism market still has huge potential for growth. Despite a record-breaking number of Chinese tourists traveling abroad each year, only 6 percent of the Chinese population holds passports. As China’s middle class continue to grow in size and spending power (evidenced by the recent success of Alibaba’s Singles’ Day campaign), tourism destinations only need to worry about how to attract and retain Chinese tourists and be “China Ready.”

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