China has the largest outbound tourism market in the world. Where they go, what they do and what they buy offers great data for understanding how the travel industry will change in the year ahead. The travel market adapts to respond to needs and drivers from consumers. What Chinese travelers want they’ll get. So let’s understand their needs and then we can anticipate how your travel experiences will change in the year ahead.
The Chinese Outbound Tourism Research Institute (COTRI) released its latest Chinese outbound tourism data for Q3 2018, revealing strong year-on-year growth compared with Q3 2017, albeit at a slower rate than seen in the first two quarters of 2018. It’ll be a while before the year end report is ready.
Among this figure, 20 million arrivals were recorded within the Greater China region (Hong Kong SAR, Macau SAR and Taiwan), while the remaining 23 million – 53% of the total – were made in destinations around the rest of the world.
Overall, Q3 2018’s 43 million border crossings represent a 10% year-on-year increase against 2017’s results, while Q1 and Q2 2018’s year-on-year growth rates were 17% and 16% respectively.
COTRI’s recent results bring the total for the first three quarters of 2018 to a combined 123 million border crossings worldwide, a figure 14% higher than 2017’s equivalent. Should Q4 2017’s 37 million Chinese arrivals be matched, COTRI’s forecast total of 160 million annual border crossings for 2018 will be reached. However, factoring in a year-on-year increase of 10% as seen in Q3 2018, this total becomes 164 million.
The most-recent quarter’s lower growth in comparison to the figures posted in the first two quarters of the year can be attributed in part to a gradual slowdown in year-on-year increases in Hong Kong following its strong start to 2018, but weak growth in key destinations including Thailand, Australia, Singapore and Germany among others has also impacted results. The US and UK notably have seen dropoffs in Chinese arrivals, with increased political stability and the fear of potential visa issues exacerbating problems.
Among destinations to have seen success in attracting Chinese arrivals in Q3 2018, Nepal stands out as a leading example having recorded 40,000 arrivals for the quarter (YoY +77%) and a total of 110,000 for the year so far. Should the country be able to maintain its positive course, Nepal could well exceed its record high annual arrivals total of 123,000 set in 2014 before the impact of the 2015 earthquake and recent political instability affected its destination image among the Chinese outbound market.
While traveller expenditure data is not yet available for the period, trends suggest that overseas spending has plateaued, if not decreased. This can be attributed to the fact that long-haul destinations have not been able to grow their market share, while shopping is losing its importance as a key activity for Chinese outbound travellers. Furthermore, the continuation of Beijing’s anti-graft campaigns means that growth in expensive overseas purchases such as on luxury goods and real estate is slowing as many travellers exercise caution in their spending.
Further analysis of growth trends in the Chinese outbound travel market, as well as dissection of traveller demographics, purpose of travel, residence and other characteristics can be found within COTRI Analytics.
What Chinese travelers want matters because your travel experience will change as the market reacts to its most important consumer’s demands. In the year ahead we think this will translate to fewer Chinese visitors to the US, more to Southeast Asia, less luxury goods purchases and more desires to have a real, authentic experience. For travelers this means there may be bargains in the US but the beaches in Thailand are going to be more crowded.