Sophie Yu, Casey Hall and Lisa Barrington
BEIJING/SHANGHAI (Reuters) – China’s overseas travel recovery from the COVID-19 pandemic is fading as rising costs and visa difficulties cement a preference for local and short-haul destinations.
The delay in Chinese outbound travelers, who are the world’s largest investors in international tourism and airlines, returning to pre-Covid-19 levels is hitting travel companies, hotels and retailers around the world.
Eighteen months after China abandoned its strict zero-Covid policy and reopened its borders, the recovery in overseas travel is lagging market expectations and the shape of Chinese travel is changing with a surge in domestic travel.
Pressured by a prolonged real estate crisis, high unemployment and a bleak outlook for the world’s second-largest economy, Chinese consumers have become more frugal since the pandemic, sparking discount wars on everything from travel to cars, coffee and clothing.
Chinese took 87 million trips overseas last year, down 40% from pre-COVID 2019, and industry observers say the pace has slowed since the Lunar New Year in February. Travelers from China spent 24% less last year than in 2019, while spending by U.S. travelers rose 14%, according to the United Nations Tourism Office. China’s lagging is bad news for countries such as France, Australia and the United States, which were among the most popular destinations for Chinese travelers before the pandemic.
Liu Siming, vice president of the tourism research institute of the China Future Research Society, predicts that international travel in China may not recover to pre-pandemic levels for another five years.
“The recovery is much slower than expected,” Liu said. “The devaluation combined with inflation in the US and Europe is a double whammy.”
Since the start of the year, the Chinese currency has fallen more than 2% against the dollar, leading to increased yuan costs for Chinese travelers abroad.
Consultancy Oliver Wyman last month pushed back its estimates of China’s international tourism recovery to the end of 2025, six months later than it forecast last year.
“In fact, I would say consumers are even more frugal than they were last year, and you’ll also see that influencing travel trends,” said Imke Wouters, a Hong Kong-based partner at Oliver Wyman.
Of course, overseas travel is recovering: Last year, Chinese travelers again became the world’s top international tourism spenders after falling behind the United States in 2022, according to UN tourism data.
This summer, 8% of flights at Chinese airports were international, up from 1% in 2022, according to aviation data provider OAG.
GO TO INNER JOURNEYS
But the recovery is overshadowed by rising domestic travel, which reached a record 295 million during the five-day May Day holiday, up more than 20% from 2019, official data showed.
Domestic airline seats were up 16% in May compared with the same month in 2019, while international flights were down 30%, according to Cirium.
Oliver Wyman’s Wouters said 40% of those who traveled abroad in 2023 for the first time since borders reopened had decided not to travel abroad again this year, largely due to the inconvenience and long visa processing times for many European destinations.
Beijing resident Wang Shu, 38, went on domestic holiday after canceling a trip to France because he was unable to obtain a visa despite trying to book an appointment months in advance.
“I tried to book an interview at the end of March as I was planning to attend the French Open at the end of May, but the earliest date I could book was June 19,” Wang said.
Instead, Wang vacationed in Changsha, the capital of Hunan province, famous for its spicy food.
“The food was great, I saw the concert and spent one-tenth of the money I would have spent in France,” he said.
China, Australia’s biggest source of tourists before COVID, now ranks fourth, with arrivals down 53% in March compared with March 2019, said Margie Osmond, chief executive of Tourism & Transport Forum Australia.
The number of Chinese travelers to France, the world’s most visited country, has reached only 28.5% of 2019 levels, according to airport operator ADP.
Capacity on US-China routes remains more than 80% lower than 2019 levels, driven by heightened bilateral political tensions. The US National Travel and Tourism Administration expects Chinese tourism to the US to fully recover only in 2026.
In contrast, countries with visa-free policies have seen a significant increase in the number of visitors from China.
These include Singapore, Malaysia, Thailand, the United Arab Emirates, Qatar and Saudi Arabia, where capacity has also increased.
Switzerland, which is growing in popularity among wealthy travelers on Trip.com, boasts a seven-day visa process, said Jane Sun, CEO of Trip.com Group.
The influx of Chinese travelers to Japan has also surged this year, helped by the weakening yen.
“We’re not just seeing a resurgence of the market, we’re seeing a reshaping of the market,” Gary Bowerman, director of travel analytics firm Check-In Asia, said at an OAG webinar last month.