China outbound travel is booming and has a long way to go before maturity. Individual destinations should pursue the market, but be cognizant of the risks. South Korea serves as an example of what can happen when the Chinese government changes course.
Last week we launched the latest report in our Skift Research service, A Deep Dive Into Ctrip and the China Online Travel Market 2017.
Below is an excerpt from our Skift Research Report. Get the full report here to stay ahead of this trend.
South Korea inbound travel from China had been flourishing as recently as early 2017 with average monthly growth in the 40-50 percent range and share of travelers at 45 percent. However, on March 2, 2017, China stated it would ban group travel to South Korea in response to South Korea deploying the U.S. THAAD missile system.
After this happened, travel to South Korea from China plunged with it down 40% and 67% in March and April. The Korea Tourism Organization (KTO) has not yet released data for May and June, but we suspect a similar pattern of steep year/year declines.
There is justifiably a lot of excitement about the outbound China travel opportunity. As a whole, it is immense and growing, but individual destinations must be careful relying on China for sustainable growth as a macro or geopolitical shock can change things quite quickly. The opportunity should be pursued, but investments should be made carefully in sustainable and variable cost areas.
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Photo credit: A tourist from China takes pictures Air China