Earlier this year, David Becker, CEO of Attract China, a consultancy that advises companies on how to tap into the Chinese traveler market, cautioned delegates to the NAJ* Active America China Summit in Atlanta to be aware that, although the Chinese market represents a vast and lucrative market, one should be careful, Becker said, and “stop thinking about them as walking dollar signs. Think about the immersive experience they’re searching for.”
The latest Moodie Davitt Report, citing the findings of mid-year research by Chinese online travel agency Ctrip (it is China’s largest OTA) and the China Tourism Academy (CTA)that average spending of Chinese tourists, said that—even though outbound travel volume increased—spending by Chinese travelers had once again dropped. That is, average spending by Chinese tourists per outbound trip fell by 14.2 percent in dollar terms to around $758 (5200 yuan), down from $883 for the whole of 2017.
The research results provide a context for this this phenomenon:
First, while a 14.2 percent drop in average spending per trip is no small figure, the decline is to be expected as more Chinese residents of more modest means are going abroad and act as the main driver of outbound tourism growth from China.
Second, more tourists going abroad will mean more spending overall, even it’s less on average per trip.
Third, the falling yuan has had a dramatic impact on purchasing power, and is a big factor in constraining how much Chinese tourists choose to spend on outbound tourism. Inbound did a quick study of the Yuan vs. the U.S. dollar on the global currency markets, and found that the yuan had dropped more than 8 percent against the dollar in the past six months.
Other points made in the Ctrip-CTA report include the following:
—Overall, outbound trips are up and 2018 is well on its way to blow past 2017. All in all, 71.31 million outbound trips were made by Chinese tourists in the first half of 2018, up 15 percent from 62.03 million. This fact alone will help keep overall spending by outbound Chinese tourists steady and should serve as a reminder that the fundamentals of Chinese outbound tourism will likely remain strong for the foreseeable future.
—What initiatives are working to attract Chinese tourists? The CTA cites marketing pushes by major tourist destinations, visa facilitation, tax-exemption policies which promote shopping and innovative travel products such as island hopping, parent-child tours and customized travel.
.—In dollar terms, the drop in average spending is quite dramatic. But when comparing average spending in RMB terms, average spending by Chinese tourists stood at around 5,750 yuan ($838) per outbound trip in 2017. In yuan terms, outbound spending then decreased by a more modest 9.6 percent.
—Despite lower spending power, Chinese consumers seem to be maintaining a strong appetite for travel. A 15 percent increase outbound trips is an impressive figure, especially with the yuan losing its value.
—The top 20 outbound travel departure cities are Shanghai, Beijing, Guangzhou, Chengdu, Chongqing, Shenzhen, Nanjing, Wuhan, Xi ‘an, Hangzhou, Kunming, Tianjin, Changsha, Zhengzhou, Nanchang, Guiyang, Jinan, Hefei, Nanning and Fuzhou.
—The Top10 outbound destinations for Chinese travelers are Thailand Japan, Vietnam, South Korea, Singapore, Indonesia, Malaysia, Russia, the USA and Cambodia.
—The demographics of China’s outbound travelers were 53% female and 47% male, with the post-80s the backbone of outbound tourism at 31 per cent
* NAJ (North American Journeys) is also the publisher of the INBOUND Report.