Plunge In Chinese Yuan Impacts Outbound Tourism, Sees New Surge In Domestic Travel Sector

Reading Time: 3 minutes The revival of Chinese international travel post-COVID-19 is losing momentum, as rising costs and visa procurement challenges enhance the preference for local and nearby destinations. The post Plunge In Chinese Yuan Impacts Outbound Tourism, Sees New Surge In Domestic Travel Sector appeared first on Travel And Tour World.

Plunge In Chinese Yuan Impacts Outbound Tourism, Sees New Surge In Domestic Travel Sector
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Reading Time: 3 minutes
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The revival of Chinese international travel post-COVID-19 is losing momentum, as rising costs and visa procurement challenges enhance the preference for local and nearby destinations.

Over a year since China lifted its strict zero-COVID policies and reopened its borders, the anticipated rebound in international tourism has been lackluster. This has had a significant impact on global travel enterprises, hospitality providers, and retailers, as outbound Chinese tourists—previously the top international spenders—are now more cautious with their spending.

The economic environment in China, marked by a persistent real estate slump, higher unemployment rates, and a bleak economic forecast, has prompted Chinese consumers to adopt more economical behaviors. This shift has led to widespread price reductions across sectors, including automobiles, apparel, and lifestyle products.

In the previous year, trips abroad by Chinese nationals dropped to 87 million, marking a 40% decline from the 2019 figures. According to data from U.N. Tourism, there was a 24% reduction in spending by Chinese tourists compared to 2019, in stark contrast to a 14% increase in spending by U.S. tourists.

This downturn poses significant challenges for popular destinations such as France, Australia, and the U.S., which were among the top choices for Chinese tourists before the pandemic. The depreciation of the Chinese yuan by over 2% against the dollar since the beginning of the year has further escalated the cost of traveling abroad for Chinese nationals.

Despite these challenges, China regained its status as the top spender in international tourism last year, after briefly falling behind the U.S. in 2022. Current data shows that 8% of all flights from Chinese airports are now international, a considerable increase from just 1% the previous year, as reported by aviation data provider OAG.

However, this modest improvement in international travel is overshadowed by a significant surge in domestic tourism, which reached an all-time high of 295 million trips during the five-day May Day holiday, an increase of over 20% from 2019 levels. According to data from Cirium, while domestic airline seat capacity in May was up by 16% compared to 2019, international flights were still down by 30%.

Interestingly, 40% of Chinese who traveled abroad in 2023 after the borders reopened have decided against international travel this year, mainly due to the cumbersome visa procedures and other travel inconveniences, particularly to European destinations.

The decline in Chinese tourists is evident with Australia, which has fallen from the top tourist source market to fourth place, experiencing a 53% drop in visitor numbers in March compared to March 2019. Visits to France have also plummeted, reaching only 28.5% of the 2019 levels.

The capacity on U.S.-China flight routes remains more than 80% below 2019 levels, affected by growing political tensions. Full recovery of Chinese tourism to the U.S. is not expected until 2026, as projected by the U.S. National Travel and Tourism Office.

On a brighter note, countries with visa-free entry policies have seen robust growth in visits from Chinese tourists. These include Singapore, Malaysia, Thailand, the United Arab Emirates, Qatar, and Saudi Arabia, where flight capacities have also increased.

For higher-end Chinese travelers, Switzerland is becoming increasingly popular, offering a rapid seven-day visa process, as highlighted by Officials of Trip.com Group. Japan has also experienced a surge in visits from Chinese tourists this year, aided by a significant depreciation in the yen’s value.

In 2023, Chinese domestic citizen undertook 101 million cross-border trips, achieving only 60% of the 2019 levels. More than 70% of these trips were to nearby locations such as Hong Kong, Macau, and Taiwan. Trips to other international destinations totaled just 2.4 million, recovering to only 36.3% of the 2019 levels. In contrast, countries that reopened their borders earlier, such as South Korea, Australia, and Singapore, have seen their outbound tourism levels recover to over 65% of pre-pandemic levels within a year of reopening, despite ongoing COVID-19 restrictions elsewhere.

Furthermore, the Chinese passport, which ranks 51st globally, allows for visa-free travel to 86 countries, though this has not been enough to significantly boost international travel.

The volume of domestic tourism in China is expected to surpass pre-pandemic levels in 2024. Recent data from the National Bureau of Statistics reveals that approximately 489 million domestic trips were taken in 2023, resulting in Rmb4.9 trillion (US$679 billion) in tourism revenue. Notably, the average spending per domestic tourist in 2023 has already exceeded pre-pandemic figures, hitting a five-year peak.

Looking ahead to 2024, domestic tourism in China is expected to surpass pre-pandemic levels. According to the latest statistics from the National Bureau of Statistics, around 489 million domestic trips were made in 2023, generating approximately Rmb4.9 trillion (US$679 billion) in tourism revenue. The spending per domestic tourist in 2023 exceeded pre-pandemic figures, reaching a five-year high, signaling a robust recovery and perhaps a lasting shift towards more localized travel among Chinese tourists.

The post Plunge In Chinese Yuan Impacts Outbound Tourism, Sees New Surge In Domestic Travel Sector appeared first on Travel And Tour World.

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