This second part of EHL Institutional Visibility’s three-part series on China looks into the long-awaited return of Chinese tourists. It also addresses shifting trends in Chinese travel. We turn to Dr Yong Chen, Associate Professor of Economics at EHL Hospitality Business School, for insights.
The halcyon days of Chinese tourism
China’s ascension to the World Trade Organization in 2001 fueled optimism for further economic and cultural openness. This period was marked by significantly higher volumes in both outbound and incoming tourism. For Prof. Chen, we may look back in a few years’ time and view the period from 2010 to 2019 as the “golden age” of Chinese tourism. That rosy decade has ceded to a degree of morosity, for Chen. Indeed, a host of factors have curtailed outbound Chinese tourism. The pandemic, China’s zero Covid policy, the Hong Kong protests of 2019-20, the ongoing U.S.-China trade war, and China’s further slide into authoritarianism are contributing to isolationism, which affects tourism. “Is hostility trickling down to tourism?” Chen asks rhetorically, “Absolutely”. He added, “Tourism is one aspect of globalization, the flow of people is a good like any other, creating links among people. Those connections don’t exist anymore.”
“We are backsliding”
This change is visible on the streets of Beijing. “There are fewer foreigners in China than before”, Chen offered, “even a taxi driver will tell you that.” Why? For starters, everyone in China needs a smartphone with a local phone number to pay with WeChat or Alipay, as Visa and Mastercard are not accepted by most businesses. Despite 5,000 years of history and stunning landscapes to share with the world, these restrictions “block foreigners from coming to China”, Chen lamented. “We in China are backsliding on the road to prosperity.”
Travelling abroad for the Chinese population has been made more difficult, as well. Bureaucracy has slowed the visa process considerably. According to Reuters, visa applications are just 35% of their pre-Covid levels. In a study conducted by McKinsey, the consulting firm, some 20% of Chinese passports expired during the pandemic, meaning a lengthy backlog and delayed travel plans. While the government eased travel restrictions in January 2023, the number of flights in and out of China hasn’t roared back to pre-Covid levels. Airlines are skittish when it comes to adding more flights, which has kept prices high.
“Conflict is replacing cooperation”
The very essence of tourism in China and for the Chinese who still venture abroad is shifting. The basic covenant of the host/guest relationship is in jeopardy. For Chen, “Tourism from China is not only about income levels but now it’s so different because of other factors such as geopolitics. Global protectionism is substituting for cooperation and mutual understanding, which underpins hospitality.” Issues such as Taiwan and the war in Ukraine are stoking mistrust: “the atmosphere in Western countries isn’t as welcoming for the Chinese. Conflict is replacing cooperation,” Chen concluded.
So where are we headed? “Given the tone of the present decade, tourism cannot thrive or survive in an environment when there is so much tension. And it would be unrealistic for Chinese tourist numbers to return to pre-Covid levels in the next four or five years,” cautioned Prof. Chen. How about hospitality? “This unfriendly atmosphere is really bad for tourism, not for all industries, but all those that require human interaction, and I don’t think that will change anytime soon,” he continued.
What about business travel?
As global trade shrinks, distrust will “obviously” undermine business travel, according to Chen. Comparing the boom times of the 1990s where multinationals, as well as smaller companies, rushed into China, on the back of the country’s increasing openness to globalization, “My long-term outlook is not optimistic, Chen warned, policy can change so fast, creating uncertainty.” Even though the Chinese market remains appealing, with a population on par with that of all of Europe, “2020-2030 could be a very difficult time for China, it could be the worst of times for China,” Chen concluded.
Not your parents’ European vacation
Outbound travel trends are also shifting. Younger Chinese tourists, many of whom have already travelled abroad with their parents, are going it alone now that they’re adults. In a nutshell, no more tacky tour groups! According to the aforementioned McKinsey study, Chinese tourists are eschewing destinations they’ve already visited in favor of discovering new sites. Mirroring global trends, Chinese tourists are in search of an experience, including (in order of importance) outdoor and scenic trips, sightseeing, food-related experiences, history, beaches/resorts, health/wellness, and—on the heal of the Beijing Olympic games—even winter sports. How are they researching potential destinations? In this age of hyper-digitalization, they are, of course, watching short videos: 30% of mobile internet time was spent on TikTok-like videos, according to a Chinese newspaper.
Tourism volumes halved from 2019 to 2024
According to the UNWTO World Tourism Barometer published in July 2020, China was by far the largest source of international travel spending in the world, with $254.6bn in spending in 2019 followed by the United States ($152.3bn), Germany ($93.2bn), and the United Kingdom ($71.0bn). But that was before Covid. According to an article published in September, the number of Chinese visiting the United States dropped from 2.8 million in 2019 to a mere 192,000 during the height of Covid lockdowns in 2021. The U.S. National Travel & Tourism Office has estimated that this number will increase to 850,000 in 2023 and nearly 1.4 million in 2024.
Mckinsey urged hoteliers in May 2023 to get ready as “Chinese tourists are returning soon”. Hmm hmm. Regardless, their research suggests that the Chinese have less interest in travelling to Europe and are directing their travel intentions to Asia-Pacific, namely Australia/New Zealand, Southeast Asia and Japan – although this finding does not hold for wealthier travelers.
In the third installment of this series, we will take an in-depth look at how the drop-off in Chinese outbound tourism and shifting trends are affecting certain holiday destinations.