Thematic Report

Chinese Outbound Tourism – New 2017 report

by Oliver Matthew / Jul 19, 2017

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While 2016 was challenging, impacted by terrorist attacks in Europe and weaker spending in the US, the tide turned in 3Q16, we believe largely driven by the wealth effect among Chinese consumers. Other driving factors affecting Chinese tourist ambitions include extra holidays, easing travel restrictions and greater desire for experiencing different cultures and activities.

CLSA’s proprietary survey of more than 400 Chinese travellers reveals that the top two most visited destinations were Hong Kong and Macau, followed by Thailand and Japan. China tourist arrivals to South Korea and Taiwan slowed due to political tensions, while Singapore, Indonesia, Malaysia, the Philippines and Australia see growth in popularity over the past three years.

After two years of decline in total mainland visitor arrivals, Hong Kong is experiencing a rebound, helped by a new rail link and more appealing event-based tourism. CLSA forecasts the territory’s inbound tourism to rise from 57 million in 2016 to 66 million in 2020, with mainland tourists increasing by around 3.7% annually.

CLSA’s research reveals Japan, Thailand and the United States voted as top leisure destinations in the coming three years. In 2017 Australia ranks fourth most desirable destination; a significant rise from the 2015 Chinese traveller ‘wish list’, where Australia ranked tenth. CLSA’s proprietary survey also reveals that if money is no object, the two most desired destinations for Chinese tourists are the US followed by France.

Chinese international tourism spend has more than tripled since the US$73 billion recorded in 2011, reaching US$261 billion in 2016. CLSA anticipates Chinese tourists will continue spending overseas to reach US$429 billion in 2021. Yuan depreciation and stricter customs checks are among factors weighing on overseas shopping, but as Chinese travellers become more sophisticated, shopping continues to be a less important tourism driver than in the past. Some survey participants commented that shopping for others while on holiday has lost its appeal, with many international goods now available on the mainland due to the rise of cross-border e-commerce.

While Chinese tourists express a stronger desire for new experiences, safety remains a key concern. CLSA’s 2017 survey findings indicate that 70% of respondents claim safety as the most important factor influencing destination choices, followed by travel costs and sightseeing. Events such as the terrorist attacks in Europe and political instability on the Korean Peninsula greatly impacted travel decisions, with Korea especially suffering the loss in visitor numbers to other regional destinations such as Vietnam.

CLSA expects gaming, cosmetics, luxury and online sectors to benefit most from the multi-decade Chinese tourism theme. Luxury sales to Chinese tourists are estimated to reach 35% of global sales by 2020. CLSA’s long-time view that online travel remains a direct play of the Chinese tourism theme is supported by a very high 80% share of Chinese outbound travellers making their travel bookings online.

The 235-page report reveals research findings from 409 experienced Chinese outbound travellers across 25 cities, with an average age of 35 years and average monthly income of Rmb20K.

View our interactive minisite

Selected market-specific notes:

Australia
In 2017, thanks to the 10-year, frequent-traveller visas that are available to mainlanders, Australia now ranks fourth most desirable destination; a significant rise from the 2015 Chinese traveller ‘wish list’, where Australia ranked tenth. The changing preferences of Chinese tourists to experience nature also helps Australia to better capture an increasing share of Chinese tourism.

Hong Kong
After two years of decline in total mainland visitor arrivals, Hong Kong is experiencing a rebound, helped by a new rail link and more appealing event-based tourism. CLSA forecasts the territory’s inbound tourism to rise from 57 million in 2016 to 66 million in 2020, with mainland tourists increasing by around 3.7% annually.

Japan
For Japan, tourism is a key policy. The biggest contributor to growth is Chinese tourists, which we expect to hit 11m by 2020 versus 2.4m in 2014. CLSA sees key beneficiaries in leisure companies; Japan is home to three of the world’s five most popular theme parks and is building more, and skincare. In 2016, some 79% of Chinese tourists purchased cosmetics while visiting Japan.

Korea
South Korea had been one of the top travel destinations for Chinese tourists thanks to their demands for shopping, close proximity and cheap travel costs. However Chinese inbound traffic decreased -40% and -67% YoY in March and April 2017 due to diplomatic tensions. We believe Korea will rebound once political tensions ease with a new more pro-China president in place.

Singapore
China is now Singapore’s second-largest country for tourist arrivals and the largest contributor towards tourist receipts. Chinese tourists are also staying longer and spending more in Singapore than past Chinese visitors to the island state. The continued recovery in tourism arrivals since 2016 and 3Q17 bodes well for Singapore retail and integrated resorts.

Thailand
In September 2016 the Thai government executed a major crackdown on zero-dollar tour group operators from China; Thailand has seen a drastic slowdown in YoY growth in Chinese tourist arrivals, from 70% in 2015 to 11% in 2016. Over January-May 2017, growth in such arrivals dropped 5.6% YoY. Fortunately for Thailand, the country is seeing an increase in tourists from other destinations, which more than offsets the drop in Chinese tourists.