China’s Great Reopening: Take 2

On January 8, 2023, China reopened its borders for travel, ending a three-year closure during the Covid pandemic. Most analysts predicted a surge in travel. It didn’t happen. And one year later, the world is still waiting. 

But many in the industry say this will finally be the year. In the words of Michael Jones, co-founder of China Create Consulting, “2023 was the year of China reopening to the world, while 2024 will be the year of consolidating and growing outbound tourism.”

Really, they have no choice but to be optimistic. Let’s remember how important China is to travel.

Prior to the pandemic, China was the world’s largest outbound tourism market. Chinese tourists accounted for a total of 20% of total spending in international tourism. They spent around $277 billion in 2018 and $255 billion in 2019. That’s huge.

“By virtue of being the world’s largest economy, based on purchasing power parity, the financial capacity of the average Chinese citizen contributes significantly (to global travel sales),” says Alexander Glos, CEO of China i2i Group.

Will the rebound we hoped would start a year ago, finally take hold? 

In this story, we’ll cover:

• Why its recovery has taken the path it has
• China’s path to reviving outbound tourism
• China’s effort to revive inbound tourism
• The new Chinese traveler
• The stay-at-home Chinese

China’s Road to Recovery

China’s travel rebound has been impacted by three issues: Limited flights, exorbitant prices and difficulty obtaining visas.

Things are now moving in the right direction. 

2023 was the year of China reopening to the world, while 2024 will be the year of consolidating and growing outbound tourism.

Michael Jones, co-founder of China Create Consulting

China’s international seat capacity in December 2023 was just 62% of December 2019 levels, according to aviation analyst firm OAG. But the key is the trend.

“A year ago we were somewhere around 10% of pre-pandemic levels, and by the end of the year we had reached 62%. At that speed, we should be back to normal in the near future,” said Oliver Sedlinger, CEO of China-based tourism marketing consultancy Sedlinger and Associates.

Glos notes that in many destinations, Chinese arrivals are now almost close to 100% of pre-Covid levels. The latest data from Dubai suggests that arrivals from China are already there and will exceed 100% in December and January.

The economic rebound plays a pivotal role in driving leisure travel, especially as the Chinese outbound tourism landscape transitions from being dominated by pensioners to a broader demographic, according to Jones.

“China has issued over 200 million passports and this is only 13% to 14% of the population. As Chinese become more middle class in their economic capability and behavior patterns, comparable to Europe and North America, the growth in global Chinese travel is guaranteed to continue and accelerate,” Glos notes.

The Outbound Prospects

The pandemic’s impact on the outbound travel industry is evident in the registration of new travel-related companies. In 2019, China saw nearly a 10-year peak in new outbound travel-related companies, at 33,500. The number dwindled and even with a rebound, only 26,000 were added in 2023. There are now 118,500 outbound travel-related companies in China.

China outbound tourism is expected to continue to grow in 2024, as foreign visas become more accessible and pre-pandemic flights are restored.

Countries like Thailand, Malaysia, and Singapore, which are waiving or planning to waive visa requirements for Chinese tourists, are among the top destinations based on booking data, notes Boon Sian Chai, managing director and vice president of international markets for Trip.com Group. It’s a point he had highlighted while speaking at the Skift Global Forum East in Dubai in December.

There are many differing views and projections on how quickly the Chinese outbound travel market will fully recover. Some experts are more optimistic, others are more cautious — but what all agree on is that the market is crucial for global tourism and that it is coming back strongly.

Oliver Sedlinger, CEO of Sedlinger and Associates

“The search volume for Singapore on our site jumped 80% the hour after the announcement that China and Singapore would soon put in place a 30-day mutual visa exemption,” Chai said. “Our outbound hotel and air reservations in the third quarter recovered to around 80% of pre-Covid levels.”

As Sedlinger puts it, “There are many differing views and projections on how quickly the Chinese outbound travel market will fully recover. Some experts are more optimistic, others are more cautious — but what all agree on is that the market is crucial for global tourism and that it is coming back strongly.”

Sedlinger is also keen to see which of the recent domestic lifestyle trends and consumption changes will spill over into outbound travel.

Inbound Pivot

An interesting aspect of China’s reopening story lies in its focus on inbound tourism. It has extended the visa-free policy to citizens from six countries — France, Germany, Italy, the Netherlands, Spain, and Malaysia — and established a mutual 30-day visa-free travel arrangement with Singapore.

This has been a surprising development according to Jones, who sees it as a “more practical program” showcasing China’s growing flexibility in encouraging economic recovery.

The visa-related announcements have stirred up interest. Trip.com’s data reveals a significant surge in flight searches for China among travelers from the impacted countries, according to Chai.

Approximately 214,000 people from the specified countries entered China in December 2023, reflecting an almost 28% increase compared to November, according to the National Immigration Administration.

The search volume for Singapore on our site jumped 80% the hour after the announcement that China and Singapore would soon put in place a 30-day mutual visa exemption

Boon Sian Chai, managing director and vice president of international markets, Trip.com Group

Last week, China also announced the easing of entry restrictions for tourists from U.S. Then came the announcement from Thai Prime Minister Srettha Thavisin of China and Thailand agreeing to implement a permanent visa waiver for citizens of the two countries from March onwards.

Collaborative efforts between the government and industry players, such as the country’s largest travel company, Trip.com Group, are aimed at enhancing the experience for international visitors. Initiatives like the “Nihao! China” program, China Travel Guide, and partnerships with e-payment service providers highlight China’s effort to make inbound travel more accessible and appealing.

Highlighting China’s increased efforts in tourism promotion, Sedlinger says, “The product is there, it just needs to be promoted well.”

The New Chinese Traveler

Pointing out the noteworthy trends, Chai lists the rise of “special-forces travel” among Gen-Z travelers, contributing to the growth of rural tourism in China.

The desire to travel, coupled with the expression of independence through exploration, remains robust in China. Glos emphasizes that Chinese travelers have sought unique experiences domestically, a trend expected to transfer to international travel in 2024.

Post-Covid spending patterns reveal a shift towards experiential travel, with an increased focus on hotels as an integral part of the overall travel experience. The conventional emphasis on shopping has notably diminished in the average Chinese traveler’s budget, signaling a transformation in travel priorities.

The changing face of the new Chinese traveler, as Glos notes, is younger, primarily in their 30s, characterized as Free Independent Travelers (FIT).

“Exhibiting a nuanced understanding of global travel dynamics, these individuals align more closely with their European and North American counterparts.”

While Glos notes that the decline of large group travel has been evident in 2023, this year will witness the resurgence of group tours.

Consumer habits that developed during the pandemic have also changed how people plan and share their travel experiences.

In the past few years, Trip.com Group has expanded its content offerings, such as livestream series, the community travel sharing space, and the Star Hub channel, which supports partner marketing activities.

The Stay-at-Home Chinese

The China Tourism Research Institute estimates that in 2023, annual domestic tourist volume will reach 5.4 billion trips, and tourism revenue will recover to 90% of the 2019 peak, indicating a robust revival.

In December 2022, domestic Chinese tourism was at approximately 15% of pre-Covid levels, and international tourism was at about 1% of pre-Covid levels, points out Glos.

Travel is an important part of the Chinese consumer’s lifestyle. Our projections for 2024 are that global travel will not just rebound to pre-Covid levels but will shatter those 2019 numbers by the end of the coming year.

Alexander Glos, CEO of China i2i Group

Following the October national day holidays, the latest data suggests that domestic tourism has rebounded to approximately 100% of pre-Covid levels, with domestic travel spending having exceeded pre-Covid levels by about 10-15%.

Reflecting on the tourism boom, Chai notes that domestic hotel bookings in the third quarter of 2023 grew by over 90% year-on-year, while outbound hotel and air reservations recovered to around 80% of pre-Covid levels.

According to Trip.com Group data, by December 15, overall bookings for domestic travel for the New Year holiday increased by more than three times year-on-year, with search volumes for domestic flights and hotels both exceeding 2019 levels.

In the careful dance of economic recovery, the Chinese consumer has tip-toed through the past year. But as Glos mentions, “Travel is an important part of the Chinese consumer’s lifestyle. Our projections for 2024 are that global travel will not just rebound to pre-Covid levels but will shatter those 2019 numbers by the end of the coming year.”

Get ready for a travel extravaganza, where caution gives way to the exuberant footsteps of a resurgent Chinese wanderlust.