Chinese tourists will start travelling again soon as the country moves towards a full reopen status quickly. Citi Research analysts suggest a solid recovery in outbound premium tourism from 1Q23 and mass tourism from 2Q23.
Middle-class families, often already passport holders, from cities like Beijing, Tianjin, Guangzhou, and Chengdu, where the first wave of infections after reopening has peaked off, are already rushing to book travel abroad for the upcoming Chinese New Year holiday (January 21-27) after three years of isolation.
Only a half-hour after the Covid-19 downgrade announcement, the search count for overseas travel destinations jumped 10x in Ctrip from the same period one year earlier. The number of outbound flight bookings surged >250% on the same platform in just one day.
Premium tourists, ready and hungry for travel, may flock to nearby sites for leisure, shopping, and even mRNA vaccines as soon as 1Q23.
However, countries like the US, Japan, India, Korea, and Italy have imposed new curbs on travel from China amid public health concerns. It will also take time for Chinese consumers to regain confidence and plan long-haul travel.
How much do Chinese tourists spend abroad?
Before Covid, 155mn Chinese people travelled abroad in 2019.They spent $254.6bn in total, close to Vietnam’s GDP in 2019. The spending accounted for 17% of global outbound travel market. That said, China’s outbound travel spending per departure remained low at US$1647 and only ranked No. 10 globally in 2019.
Where do they go?
Hong Kong (51mn visits or 34% of total overseas trips in 2018) and Macau (25mn, 17%) were the top destinations for mainland Chinese people before Covid. Thailand (10mn, 7%), Japan (9mn, 6%), and Vietnam (8mn, 5%) were the top 3 among foreign countries, followed by Korea, the US, ASEAN countries, and Russia.
What do they spend on?
A joint report by the World Tourism Organization (UNWTO) and Chinese Tourism Academy showed that Chinese overseas tourists spent most on shopping in 2018, followed by food & beverage (18%), cultural activity & entertainment (12%), transport (11%), and accommodations (10%). In 2019, Chinese shoppers bought luxury goods worth $153bn, including $105bn (69% of the total) abroad. Their overseas luxury spending halved under dynamic zero Covid (DZC) to $52bn in 2021 and is now set to bounce back after reopening.
The resumption of outbound tourism is likely to put pressure on China’s current account (CA). Net outbound tourist spending accounted for >80% of China’s service deficit before the pandemic. It shrank sharply from $219bn in 2019 to $94bn in 2021.
Besides sightseeing and shopping, the pent-up demand for outbound business travel, overseas investments, and hidden capital outflows could also be unleashed with the exit from zero-Covid conditions.
155mn Chinese travelled abroad in the pre-Covid 2019 |
They spent US$254.6bn in total or US$1647 per departure |
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© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: UNWTO, Citi Research |
© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: UNWTO, Citi Research |
China was the largest contributor to the global travel market in 2019, with a market share of 17% |
Hong Kong, Macau, Thailand, Japan, and Vietnam were the top 5 destinations for Chinese tourists in 2018 |
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© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: UNWTO, Citi Research |
© 2022 Citigroup Inc. No redistribution without Citigroup’s written permission. Source: UNWTO, China Tourism Academy, Hong Kong Tourism Board, Macau Statistics and Census Service, Taiwan Tourism Bureau, Citi Research |
With Macau the second favourite destination for Chinese tourists, as seen above, Macau’s recent investment in hotel and gambling infrastructure could coincide fortuitously with this return of tourists from China. Citi Research analysts reckon Macau’s Mass GGR is set to grow as a function of greater visitation, gaming budget, and time spent at casinos. Also, an increase in hotel room supply and a more efficient border will help grow Macau’s gaming volumes, as both will increase time spent at those all-important tables.
For more information on this subject, please see China Economics - The Coming Revival of A Trillion-Yuan Market and for more on Macau gaming, please see Macau Gaming - Expect the Wounded Beast to Feast in Mid-2023
Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.
