By: Benjamin Cooper and Philippe Healey
- International travel is rapidly emerging as an important new trend for China’s Spring Festival holiday, with 6.5 million Chinese tourists opting to go abroad this year.
- China now ranks as the world’s largest outbound tourism market, with more than 130 million people venturing overseas every year. In total, Chinese tourists spend far more than any other nationality, and their global expenditures are projected to reach a staggering US$429 billion by 2021.
- Chinese tourism money is buoying many companies and industries all over the world, with major beneficiaries including hotel chains, retailers, airports, cruise ships, railways, theme parks, luxury brands, online travel companies, and more.
- The story of outbound Chinese tourism has barely scratched the surface of its immense potential – just 5% of Chinese citizens currently hold a passport.
Every year, the world’s largest human migration is unleashed in the weeks surrounding China’s Spring Festival as hundreds of millions of people depart for the annual holiday. Although the vast majority return to their hometowns for family gatherings, a small but rising stream of travelers are increasingly being siphoned off from the homeward-bound tide, veering away from conventional domestic destinations and opting instead to take the overseas roads less traveled by. This waxing international shift in the Chinese New Year travel patterns is a microcosm of the extraordinary rise of Chinese consumption and one of its most visible expressions worldwide – the surging ranks of globetrotting Chinese tourists.
A vast new consumer class
Following decades of rapid economic growth, China has produced a vast new consumer class as the numbers of its middle-income and affluent households have continued to spiral upwards. In turn, consumption has now emerged as a major engine driving the Chinese economy, accounting for nearly 60% of growth last year. And the trend towards an ever more consumption-oriented populace shows no signs of abating, with Chinese consumption projected to rise by nearly US$2 trillion by 2021, an expansion that would be roughly equivalent to Germany’s entire consumer market.
Of wallets and wanderlust
For other countries, the rise of a new generation of well-heeled travelers has sprung up as one of the most attractive offshore green shoots of greater Chinese spending. Larger wallets tend to fuel more wanderlust, and surging Chinese demand for new travel experiences abroad eventually crowned China as the world’s largest outbound tourist market last year, with over 130 million people venturing abroad. These new holiday-makers have not been shy about splashing out their money while traveling, and the United Nations World Tourism Organization estimates that China now accounts for more than a fifth of total expenditures by outbound tourists worldwide. In 2016, Chinese tourists spent US$261 billion overseas, more than twice as much as Americans, who were the second-largest spenders.
The significance of tourism as a major driver of global economic growth is often overlooked, with the World Travel and Tourism Council estimating that the sector contributed as much as US$7.6 trillion in 2016, including its wider impact on the world economy. The council projects that nearly one in four jobs created worldwide during the next decade will be related to tourism. And the huge outflow of Chinese money carried in the pockets of mainland tourists is now one of the primary engines for this critical sector, buoying many industries all over the world. Some of the major corporate beneficiaries include hotel chains, retailers, airports, cruise ships, railways, theme parks, luxury brands, and online travel companies. Across the Asia-Pacific region, the biggest destination for Chinese travelers, China’s tourism boom is playing the leading role in pushing along more than US$100 billion in related infrastructure spending to help meet soaring demand.
The holiday hyper-drive for Chinese tourism
From February 15th to the 21st, Chinese tourism rocketed into its annual hyper-drive for the Spring Festival, which provides one of the most important benchmarks for the industry every year. As usual, the overwhelming bulk of holiday excursions took place within China, with the National Tourism Administration estimating that 386 million trips were made. Domestic tourism revenue surged 12.6%, hitting 475 billion yuan (US$75 billion).
However, the small but growing cohort which chose to avoid the mainland rush of travelers and usher in the Year of the Dog overseas showcased a rising thirst to break away from more staple domestic destinations and go off the beaten path. Ahead of the week-long holiday, Ctrip.com, China’s largest online travel agency, and the China Tourism Academy projected that outbound tourism trips would reach 6.5 million, with outbound tours having been booked to more than 700 cities across 68 countries and regions. Thailand, Japan, Singapore, and Vietnam topped out the most popular destinations, while the Nordic countries and the United Arab Emirates were also ranked among the favorites and some even chose to venture as far as Antarctica. Further highlighting the rapid diversification of travel destinations and search for more far-flung locales, travel intelligence company ForwardKeys identified New Zealand as the fastest-growing destination, with the number of trips surging by about 30% compared to last year.
On average, these international tourists are estimated to have spent 9,500 yuan (US$1,500) per person during their travels, adding up to a total of nearly US$10 billion. A report by Ctrip.com also listed Antarctica, Argentina, Brazil, Tahiti, Norway, Tanzania, Iceland, Mexico, New Zealand, and Finland as the top 10 most expensive destinations for the holiday, with the average spending for families in these locations having been anticipated to exceed 100,000 yuan.
Heading towards the half-trillion dollar milestone
As the Chinese New Year fades in the rearview mirror, it is important to bear in mind that the story of outbound Chinese tourism has barely moved beyond the opening chapter of realizing its immense potential. At present, only 5% of Chinese citizens currently hold a passport, compared to 40% in the U.S., and the Chinese government issues around 10 million new passports every year.
Looking ahead, the outbound Chinese wave will likely reach tidal proportions as the country continues to mint tens of millions of new world travelers. By 2021, investment group CLSA forecasts that Chinese international tourism spending will reach a staggering US$429 billion. Countries and companies alike will need to clearly stake out their competitive offerings along the path to that half-trillion dollar milestone and ensure they are well-positioned to not only captivate the imaginations of Chinese tourists but also service their travel needs. Failing to do so would risk losing out on the chance to carve out a bigger slice of the world’s largest and most lucrative outbound tourism market as it continues to evolve at a breathtaking pace in China’s “new era.”
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