As China's prolonged real estate slump and economic slowdown chill consumer sentiment, demand for overseas travel is also shrinking. Even when people do travel, they are increasingly choosing nearby Asian countries instead of Europe or the Americas, where the expense is higher.
On the 14th, China Trading Desk, a Chinese travel marketing corporations, lowered its forecast for the number of overseas trips by Chinese this year to about 179 million and its forecast for overseas travel expenditure to about $258 billion (about 366 trillion won). The figures would exceed pre-pandemic levels and mark a record high, but both projections are about 3% lower than the company's previous outlook released in Jun.
As recently as 2019, Chinese tourists took about 175 million overseas trips, including to Greater China regions such as Hong Kong and Macao, and were "big spenders," with expenditure of about $255 billion (about 361 trillion won). But Bloomberg said overseas travel is slowing as the economic woes triggered by China's real estate downturn persist.
In fact, Chinese consumer sentiment has been weakening rapidly this year. In the first half, total retail sales of consumer goods rose only 1.3% from a year earlier. In particular, in May, they fell 0.6% from a year earlier, marking the first negative reading since Dec. 2022, when the impact of COVID-19 was severe.
As a result, Chinese consumers have begun to cut back on travel, especially long-haul trips that entail high expense. Bloomberg said, "Long-haul destinations such as France are seeing far fewer visitors," projecting that the number of Chinese tourists visiting France this year will be about 2.2 million.
By contrast, Hong Kong and Macao, close to mainland China, have emerged as the most popular destinations, accounting for about 40% of the Chinese overseas travel market. However, with consumer sentiment weakened, the increase in tourists is not expected to translate directly into higher tourism revenue. While the number of Chinese visitors to Hong Kong this year is expected to reach 41 million, average expenditure per person is only $310.
Japan, long favored by Chinese tourists, has seen travel demand plunge as anti-Japan sentiment mounted after Prime Minister Sanae Takaichi suggested "intervening in the event of a Taiwan contingency." The number of Chinese tourists visiting Japan this year is expected to be just 4.1 million. Thailand's popularity has also faded amid safety concerns related to Southeast Asian scam networks.
Korea is cited as the biggest beneficiary of this reshuffling in travel demand. With visa rules for Chinese tourists eased this year, the number of Chinese visitors to Korea is expected to reach 7 million. Their total expenditure is forecast at about $13 billion, with per-capita expenditure at $1,815.
Subramania Bhatt, head of China Trading Desk, said, "It's not that Chinese consumers no longer want to travel, but they are scrutinizing more carefully whether a trip is worth taking," adding, "What is weakening is the frequency of travel. That shows consumers haven't disappeared; they've become more cautious."