Chinese tourists shift to local travel amid rising costs, visa woes

A shift in Chinese travel preferences is reshaping the global tourism landscape. Rising costs and visa challenges are driving Chinese tourists to opt for local and short-haul destinations instead of international travel.

The slower-than-expected revival of China’s outbound travel market, which was the world’s top spender on international tourism pre-pandemic, is impacting travel-related businesses, hotels, and retailers worldwide.

Eighteen months after China lifted its strict zero-covid policies and reopened its borders, the recovery in overseas travel remains below market expectations. Instead, there has been a significant increase in domestic travel.

Chinese consumers, facing a prolonged property crisis, high unemployment, and a bleak economic outlook, have become more frugal. This has led to discount wars across various sectors, including travel, cars, coffee, and clothing.

Last year, Chinese citizens made 87 million trips abroad, a 40% decrease from 2019. Industry experts note that the pace has slowed since the Lunar New Year in February. Chinese tourists spent 24% less in 2022 compared to 2019, while US tourists spending increased by 14%, according to UN Tourism data.

Countries like France, Australia, and the United States, previously top destinations for Chinese travellers, are feeling the impact of this decline.

Pre-pandemic

The vice president of the tourism branch of the China Society for Futures Studies research institute, Liu Simin, predicts it may take another five years for China’s international travel to return to pre-pandemic levels.

The recovery is a lot slower than expected, as said by Liu. The devaluation of the Chinese yuan, combined with inflation in the US and Europe, is a double blow.

Since the beginning of the year, the Chinese yuan has depreciated by more than 2% against the dollar, increasing travel costs for Chinese tourists abroad.

Consultancy firm Oliver Wyman recently revised its estimates for China’s international travel recovery to late 2025, six months later than its previous forecast.

A Hong Kong-based partner at Oliver Wyman, Imke Wouters, believes that consumers are even more cost-conscious than last year, and you’ll also see that feed into travel trends.

Despite the challenges, overseas travel is showing signs of rebounding. Chinese tourists reclaimed their position as the world’s top spenders on international tourism last year, surpassing US tourists, according to UN Tourism data.

Chinese airports

This summer, 8% of flights at Chinese airports were international, a significant increase from just 1% in 2022, according to aviation data provider OAG.

However, this recovery is overshadowed by the surge in domestic travel. During the five-day May Day holiday, domestic trips reached a record 295 million, up more than 20% from 2019, according to official data.

Domestic airline seats increased by 16% in May compared to the same month in 2019, while international flights were down 30%, according to Cirium data.

Wouters from Oliver Wyman noted that 40% of those who travelled abroad for the first time since borders reopened in 2023 decided not to travel internationally again this year, mainly due to the inconvenience and long visa processing times for many European destinations.

Beijing resident Wang Shu cancelled a trip to France because he could not secure a visa, despite trying to book an appointment months in advance.

“I tried booking the interview in late March, as I planned to attend the French Open tennis in late May, but the earliest date that I could book was June 19.”

Spicy cuisine

Instead, Wang vacationed in Changsha, the capital of Hunan Province, known for its spicy cuisine.

He said that the food was great, he watched a concert and he spent one-tenth of the money I would have spent in France.

Australia, which was the top source of tourists from China before Covid, has now dropped to number four, with arrivals down 53% in March compared to March 2019, said Margy Osmond, chief executive of Tourism & Transport Forum Australia.

Chinese tourists to France, the most visited country in the world, reached only 28.5% of 2019 levels, according to airport operator ADP.

Capacity on US-China routes remains down more than 80% from 2019 levels due to intensifying bilateral political tensions. The US National Travel and Tourism Office expects Chinese tourism to the US to fully recover only by 2026.

Conversely, countries with visa-free policies have seen strong growth in Chinese visitors. These include Singapore, Malaysia, Thailand, the United Arab Emirates, Qatar, and Saudi Arabia, where flight capacity has also increased.

Visa process

Switzerland, which is growing in popularity with high-end travellers on Trip.com, offers a seven-day visa process, said Jane Sun, CEO of Trip.com Group.

Japan has also experienced a surge in Chinese visitors this year, boosted by a decline in the yen’s value.

Gary Bowerman, director of tourism intelligence firm Check-In Asia, said during an OAG webinar they are not just seeing a market re-growing, they are seeing a market re-shaping, reported Bangkok Post.