🚧 From pause to progress: China's outbound tourism market and the road to recovery | Following the yuan

5 consumers and 2 tourism professionals tell me how they see the market and its outlook.

Key takeaways:

1. Unlike domestic tourism, outbound travel hasn’t resumed to pre-pandemic figures during the just-passed national holiday. The number of trips reached 85% compared with 2019 levels as international flight capacity returned to ~50%.

2. Researchers at the Tourism Research Center (TRC) of the Chinese Academy of Social Sciences said the outbound market continues to grapple with challenges including supply chain disruptions, talent shortages and limited flight capacity.

3. Despite an economic downturn, Chinese travelers are setting aside their 'thrifting' mindset domestically and placing greater value on the quality of experiences during their outbound trips.

Shuyi Tan, a 35-year-old marketer in Beijing, set foot in Europe for the first time after Covid, a trip she meticulously started planning six months in advance. “I had already traveled within Asia this year…for the long holiday, I craved the traditional European experience,” she said.

She waited for two months to secure a Schengen visa appointment for Italy, while her friend had to spend 1,000 yuan (US$137) to book via an agent. Both flights and accommodation were slightly more expensive than pre-Covid-times, she said. “I haven’t run into many fellow Chinese visitors there,” she added.

Tan’s journey was among the 5.95 million outbound trips taken over the extended 8-day holiday, which, while substantial, was still 15% lower than the over 7 million recorded in 2019, as reported by the National Immigration Administration. However, not every traveller in 2023 has the level of commitment with visa and spending, or go that far.

Reuters/Tingshu Wang via CGTN

“We run very few outbound trips these days; they've been reduced by at least 95%,” said Li Jun, founder of a tourism agency with a decade of history in southern Jiangsu province. She added that this equates to a revenue loss of several hundred thousand yuan, primarily from routes to Southeast Asia, Europe, Japan, and South Korea.

While domestic travel has resumed to pre-pandemic levels, the outbound market continues to grapple with a myriad of challenges, ranging from supply chain disruptions to talent shortages and limited flight capacity, according to researchers at the Tourism Research Center (TRC) of the Chinese Academy of Social Sciences. The Civil Aviation Administration of China noted that the flight capacity of July and August stands at 43.83% of 2019 levels. TRC suggests that this might be attributed to various factors, including market demand, air travel freedoms, and scheduling concerns.

While some large companies are beginning to see a glimmer of hope, others have already run out of time for a market recovery. UTour Group Co (002707), which owns around 20 outbound online travel agencies, reported marginal profits in H1 2023 for the first time after H2 2019. Caissa Tosun Development (000796), a Shenzhen-listed tourism group focused on outbound travel, applied for a bankruptcy this June.

Fear and Loathing for Southeast Asia

The Governments in Southeast Asian countries, especially Thailand, are anticipating a post-Covid rebound. The country rank No.1 for Chinese tourists, according to a 2019 report by the China Tourism Association that focuses on the golden week.