Demand for China outbound travel picking up

Source: TTGAsia

China’s addition of 78 more countries for outbound group travel on August 10 brings the number with approved destination status (ADS) to 138, and Trip.com Group is pulling out all the stops to launch some 1,000 products following the Ministry of Culture and Tourism’s announcement.

Destinations the Shanghai-based global travel company is eyeing include Japan, Australia, the UK, Germany, Israel, the US, Morocco and India. The first tour to Japan is scheduled for September, followed by the first tours to Australia, Morocco and Israel departing around the October National Day holiday.

Demand has been picking up according to Trip.com Group, with outbound travel bookings by Chinese mainland users in July increased by 44 per cent compared to June – Hong Kong, Tokyo, Singapore, Macau, Bangkok, Osaka, Phuket, Seoul, Kuala Lumpur and London have been popular summer destinations.

As of August 7, the average weekly outbound flight volume had recovered to over 50 per cent of the same period in 2019, a Trip.com Group spokesperson said.

Its data shows the average price of cross-border flights had decreased by nearly 80 per cent compared to the same period last year, but was still higher than 2019 by between 10 and 20 per cent.

There is also uneven distribution of flight capacity and visa availability, with supply still lagging behind demand, according to Trip.com Group.

Alexander Glos, CEO, China i2i Group, noted that China’s outbound travel recovery has picked up: “In January, when the market officially reopened, international travel from China was merely two per cent of its 2019 volume. Presently, outbound has seen a rebound ranging from 40 to 60 per cent of pre-Covid numbers, a fairly commendable recovery within a couple of months.”

However, Wolfgang Georg Arlt, CEO, China Outbound Tourism Research Institute (COTRI) and Meaningful Tourism Center, observed first-half numbers were far below expectations after the reopening of borders was announced on December 26 last year.

COTRI’s data shows only about 26 million outbound trips from China were registered in 1H2023, with more than 17 million ending up in Hong Kong and Macau.

Arlt shared: “The restart was impacted by a lack of passports, a lack of air connections and high ticket prices and, for many destinations, by the very slow processing of visa applications.

“On top of this, Chinese consumers have become more careful with their spending, and many are waiting for lower prices, especially for air tickets.”

He said the August 10 news was less important as many Chinese want to travel as FITs and in small, self-organised groups, which they could do since January, if they could get a visa.

Arlt opined the Chinese had become less optimistic compared to the past and the more affluent were less secure about the future.

He predicted that once the main visa hurdle is resolved, 2024 will be back to 2019 levels.

Gary Bowerman, director, Check-in Asia, a travel and tourism research firm with bases in Hong Kong, Shanghai and Kuala Lumpur, explained the Chinese government made it clear that it would phase the return of group travel to give Chinese airlines, OTAs, travel agencies and tour operators time to scale up operations after three years of domestic-only focus.

Bowerman added the three lists of ADS countries for Chinese group travel issued at calibrated stages over the past eight months – January, March and August – had shaped Chinese airline capacity planning and traveller choice.

He commented: “Although regional destinations are noting comparatively low visitor volumes so far in 2023, this was to be expected because demand and supply are recalibrating across the Chinese outbound market.

“China is a huge, complex market which was heavily disrupted by the impacts of Covid-19. Some OTAs don’t expect international air capacity to reach the 2019 level until mid-2025, although capacity recovery to some key markets will be faster.”

Bowerman noted the expansion of group tour destinations should see increased air capacity for popular travel destinations, citing the US as a good example, and those flights would be filled by both package tour and FIT travellers.

The “four-hour flight radius” that Chinese OTAs refer to, he pointed out, would be a vital metric to watch, adding that “Chinese domestic destinations and the Asia-Pacific will drive China’s travel recovery this year for FIT and group travel”.

China i2i Group’s Glos believes China’s strategy of connecting second-tier cities with global hubs remains pivotal as these cities offer significant growth potential due to rising disposable incomes.

Glos continued: “Currently, business travel and higher-end FIT segments dominate Chinese outbound travel, a trend likely to persist through 2023 and the first-half of 2024. By mid-2024, larger-scale group travel is anticipated.

“It’s unlikely China will reach pre-Covid travel levels until 2H2024. The return of mass market group travel, along with total traveller numbers and spending, will dictate the pace of recovery.”

Sienna Parulis-Cook, director of marketing and communications, Dragon Trail International, a marketing solutions company, observed each time China’s National Immigration Authority released new border crossing data for certain dates or holiday periods, the number inched closer and closer to the 2019 baseline, reaching nearly 65 per cent recovery by June’s Dragon Boat Festival.

Parulis-Cook noted the August 10 news had the potential to stimulate and facilitate increased travel for a number of different demographics and market segments.

“The policy change allows for the resumption of group tours, but it also allows for the resumption of travel packages, which start from a minimum of a flight plus hotel booking together.

“That can significantly expand the volume of travel sales made to FITs as well as group tourists, and make the sale and purchase of outbound travel much simpler than a traveller needing to book each part of their trip separately,” she explained.