Are you prepared? That was the question on everyone’s mind after China’s surprise announcement to reopen its borders at the end of 2022. Many people expected a surge in travelers eager to explore destinations outside of China after three years of strict “zero-Covid” policies. However, the reality is that many residents chose to stay home, either by choice or due to the difficulties and expenses associated with international travel.
The slow recovery of China’s outbound tourism can be attributed to a number of factors. One major issue is the lack of affordable flights and long waiting times for travel visas. While domestic airline capacity has fully recovered in China, international flight capacity remains at less than half of what it was before the pandemic, resulting in a decrease of nearly 5 million seats, according to Skift Research’s “State of Travel 2023” report. Wolfgang Georg Arlt, founder and CEO of the Chinese Outbound Tourism Research Institute, explains that another reason for the slow recovery is the success and appeal of domestic tourism in China. Domestic tourism has regained its prestige and quality, with holiday seasons seeing a return to 2019 levels. In contrast, outbound travel is only at about one-third of its 2019 levels in terms of the number of trips made.
The reopening of China’s borders was expected to benefit the Asia-Pacific region the most. However, Chinese visitors to countries such as Thailand, Singapore, Indonesia, and the Philippines have decreased by at least 60% compared to May 2019, according to Reuters. Chinese travelers are now looking beyond the Asia-Pacific region, showing increased interest in visiting Europe, Central America, and Antarctica, according to a survey by Morning Consult. Plans to visit the Middle East and Northern Africa, particularly Egypt, have also risen significantly. On the other hand, travel plans to other destinations, notably the United States, have dropped due to the limited recovery in flight capacity and worsening ties between China and the West.
Another factor affecting travel trends is the economic slowdown in China. Chinese tourists are becoming more cautious with their spending, prioritizing dining out and fitness and wellness activities over travel. Skift’s report shows that travel ranked third on the list of expenditures where Chinese travelers planned to increase their spending this year, but only 8% of respondents said they intended to do so. The high employment rate among Chinese youth also plays a role, as Millennials and Gen Zs in other countries are leading the way in international travel bookings.
Despite the challenges, there is a growing interest among Chinese leisure travelers to go abroad. Morning Consult’s data shows that the number of Chinese travelers who express a desire to travel internationally has nearly doubled since last year. Interest in business travel, overseas education, visiting family, and medical tourism is also on the rise. Skift’s report indicates that 50% of Chinese travelers plan to travel internationally in the next year. Furthermore, travel fears related to Covid-19 are diminishing, with contracting the virus being less of a concern compared to last year.
The Mastercard Economics Institute predicts a shift in spending habits among Chinese residents, with a move towards discretionary services like travel. Despite the ongoing economic instability, David Mann, Mastercard’s Asia-Pacific chief economist, expects the travel recovery in the Asia-Pacific region to continue. He believes that as capacity increases and costs come down, more people will be encouraged to travel. Rather than experiencing a sudden boom, international travel in China is slowly but steadily getting back on track, with the recovery expected to span throughout 2023-2024.
In conclusion, China’s reopening of borders has not led to an immediate surge in outbound travel as anticipated. Various factors, including flight capacity limitations, geopolitical tensions, economic slowdown, and the appeal of domestic tourism, have contributed to the slow recovery. Nonetheless, there is a growing interest in international travel among Chinese leisure travelers, and as conditions improve, the industry is expected to see a steady recovery in the coming years.
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