Are You Prepared? The State of China’s Outbound Travel

Introduction

In the final days of 2022, China surprised the travel industry with its reopening announcement. However, the expected surge in outbound travelers did not materialize. Many residents chose to stay home due to personal preferences or the difficulties and costs associated with leaving the country.

Challenges in Outbound Travel

According to Wolfgang Georg Arlt, founder and CEO of the Chinese Outbound Tourism Research Institute, China’s outbound recovery has been hampered by a lack of affordable flights and long waiting times for travel visas. While domestic airline capacity has fully recovered, international flight capacity is still less than half of what it was before the pandemic.

Flight Capacity and Geopolitics

Despite the assumption that the Asia-Pacific region would benefit the most from China’s border reopening, the number of Chinese visitors to countries like Thailand, Singapore, Indonesia, and the Philippines has decreased significantly. On the other hand, Chinese travelers are increasingly interested in exploring destinations beyond the region, such as Europe, Central America, and Antarctica. However, travel plans to the United States have dropped due to worsening ties between China and the West.

Spending and Economic Recovery

Chinese tourists have been more cautious with their spending this year due to the economic slowdown. Travel ranked third on a list of expenditures where Chinese travelers said they would increase spending this year, after dining out and fitness and wellness. However, only 8% of respondents actually planned to spend more on travel. Additionally, high unemployment among Chinese youth has also impacted travel bookings.

Increasing Interest and Softening Travel Fears

Despite the challenges, the number of Chinese leisure travelers who want to travel abroad has nearly doubled since last year. Interest in business travel, overseas education, visiting family, and medical tourism is also on the rise. Travel fears, particularly concerns about contracting Covid, have also softened, according to a survey by Morning Consult.

A ‘Spread Out’ Recovery

The Mastercard Economics Institute predicts that Chinese residents will shift their spending towards discretionary services like travel. As travel capacity increases and costs come down, more people are expected to travel. While the recovery may not be a sudden boom, China’s international travel is steadily getting back on track.