Hong Kong – Tuesday 19 January 2016: CLSA Limited (CLSA), Asia’s leading and longest-running independent brokerage and investment group today releases 2016 Chinese Tourists: Expanding Cultural Horizons. The highly-anticipated report is CLSA’s third annual exploration of the key growth drivers to Chinese outbound travel as well as the destinations, sectors and stocks set to benefit the most from this multi-decade theme.
CLSA remains bullish on the Chinese tourist theme and maintains its long-standing forecast of 200 million Chinese overseas trips by 2020. This is despite the expectation that Chinese outbound tourist growth will slow to 9% over the next five years from 17% over the past five years. Of the 9%, CLSA expects travel to Hong Kong and Macau to average 3% growth whereas trips to other locations will grow on average by 16%. Improved affordability, easing travel restrictions and increasing desire to travel remain the key drivers underpinning the stellar Chinese outbound tourism growth story.
CLSA’s proprietary survey of more than 400 outbound travellers revealed that experiencing foreign cultures, enjoying nice environments, relaxing, and broadening horizons are increasingly more important goals for Chinese tourists compared to shopping, which has long been the main priority.
This supports CLSA’s structural negative on Hong Kong’s tourism and retail sectors. A lack of new attractions, increased competition, capacity constraints, the strengthening HK$, tension against mainlanders and a reduction on import tariffs in China saw inbound Chinese tourist numbers to Hong Kong decline dramatically in 2015. Chinese tourists, who account for almost 80% all tourists flow into Hong Kong saw a -2% growth Jan-Nov 2015 compared to 16-26% annual growth in 2010-2014.
CLSA has found that Chinese travellers looking for unique cultural experiences are most likely to head to South Korea, Japan, Thailand or the USA in the next three years. South Korea is attractive for its relatively cheap luxury goods and cosmetics, whereas Thailand offers beaches and other cultural destinations. CLSA’s proprietary survey also reveals that if money was no object, the most highly desired destinations for Chinese tourists are the USA, France, Maldives and Australia, in that order.
The key risks to growth of outbound Chinese travel figures are safety, lower income growth and a weaker Yuan. Safety is always a significant concern for Chinese travellers and 75% of survey participants confirmed it was the No.1 factor influencing their choice of destination in 2015, up from 63% in 2014 and 41% in 2013.
Lower income growth in China in 2016 may impact travel plans for mainland Chinese with 60% of respondents saying they would reduce their outbound trips and 68% said they would cut their travel-related shopping spend if their family income is lower than anticipated.
A weaker Yuan will also affect travel plans with 43% indicating they may reduce the number of trips they take if the Yuan depreciates by 10% in the next year. While 35% said they would cut shopping spending. Only 14% said there would be no impact to their travel plans.
China, the No.1 contributor to global outbound travel currently comprises 10% of total global outbound travel and CLSA anticipates the China’s share of the global total to reach 14% by 2020. In the current report, CLSA expects the multi-decade Chinese Tourism theme to drive structural growth in the airline, gaming, luggage, retail and internet industries.
Outlook for preferred Asian destinations
Australia: Numbers soaring
- Mainland Chinese travellers make up the second-largest source of inbound arrivals to Australia, with more than one-million Chinese tourists visiting Australia Jan-Nov 2015, surpassing the one-million mark for the first time – an increase of 21.6 percent over the same 12-month period in 2014.
- Constraints to airline-seat capacity growth have been removed and visa requirements have been loosened (albeit on a regional basis they still appear relatively strict). With the extent of cross-border investment activity at a business and personal level, CLSA expects continued strong growth of Chinese inbound arrivals.
- Chinese tourists spent AUD$7.7bn in Australia over the 12 months to September 2015, up from A$3.5bn two years prior according to Tourism Australia’s estimation. China is Australia’s most important inbound nationality by spend and is more than double the next most important country, the UK.
- CLSA’s proprietary survey found Australia ranks as a top-four destination for Chinese tourists if money was no object.
Japan: Doubling in 2015
- The number of Chinese inbound arrivals to Japan doubled in 2015 to 5 million from 2.4 million in 2014. Predicting to more than double again by 2020 to 11.4million.
- China became the biggest contributor of foreign tourists in Japan in 2015.
- Three out of five world’s most popular theme parks are located in Japan.
- Average spending per tourist in 2015 was JPY187,165 but Chinese were the biggest spenders, with an average of more than JPY280,000.
Korea: Shopping and cultural heaven
- CLSA expects Chinese inbound traffic growth to Korea will increase 28% YoY in 2016 due to organic growth and Mers recovery.
- Korea is one of the top three destinations for Chinese tourists for the next three years according to CLSA’s proprietary survey.
- Chinese tourists’ major purpose to visit Korea is shopping.
- Korea’s appeal to Chinese tourists is considerable as it meets many criteria – such as safety, moderate travel costs and great sights or culture.
Thailand: The more, the merrier
- Inbound tourism from China continues to grow and now one in four tourists visiting Thailand is from China.
- Chinese tourists have grown at an annualised rate of 47.7% over the past five years, outpacing non-Chinese tourist annualised growth of 7.6%.
- Bangkok remains the top destination followed by Phuket, Chonburi, Chiang Mai and Krabi.
- Thailand is one of the top three destinations for future outbound trips according to CLSA’s proprietary survey.