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CHINA. Chinese outbound tourism remains on track to reach 200 million trips by 2020, but the impressive growth rate seen in recent times will slow significantly over the next five years.
These findings come from a new CLSA report called “˜2016 Chinese Tourists: Expanding Cultural Horizons’ which analyses the key growth drivers of Chinese outbound travel as well as the destinations, sectors and stocks that will benefit.
CLSA said Chinese outbound tourist growth would slow to +9% in the next five years from the +17% recorded over the past five. Travel to Hong Kong and Macau is expected to average just +3% growth, but trips to other locations are forecast to increase by +16%.
The number of Chinese tourists to Hong Kong fell by -2% between January and November 2015, with a lack of new attractions, increased competition, capacity constraints, a strengthening HK Dollar, tension against mainlanders and a reduction on import tariffs in China all contributing to the decline, according to CLSA. The figure compares very unfavourably to the +16-26% annual growth recorded between 2010 and 2014.
Factors driving the “stellar” overall growth of Chinese outbound tourism include improved affordability, easing travel restrictions and increasing desire to travel.
However, the survey of more than 400 travellers suggested they were now more focused on cultural destinations and experiences rather than shopping, which CLSA said had long been “the main priority”. Those travellers with culture in mind are most likely to visit South Korea, Japan, Thailand or the USA in the next three years. South Korea remains attractive for its relatively cheap luxury goods and cosmetics, CLSA noted.
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Chinese travellers are now seeking cultural experiences rather than shopping destinations |
The report also found that key risks to growth of outbound travel were safety, lower income growth and a weaker Yuan. The report showed 75% of survey participants said safety was the primary factor influencing their choice of destination in 2015, up from 63% in 2014 and 41% in 2013.
If family income were to be lower than anticipated, 60% of respondents said they would reduce their outbound trips and 68% would cut their travel-related shopping spend. A weaker Yuan would also affect travel plans with 43% indicating they might 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.
CLSA said it expected China’s share of the global outbound travel total to reach 14% by 2020, up from 10% today.
Outlook for popular Asian destinations
Mainland Chinese travellers make up the second-largest source of inbound arrivals to Australia, with more than one million visiting between January and November 2015, a new annual record and a +21.6% year-on-year increase.
Constraints to airline seat capacity growth have been removed, CLSA said, while visa requirements have been loosened, although it noted they are still “relatively strict” on a regional basis. With the extent of cross-border investment activity at a business and personal level, CLSA said it expected continued strong growth of Chinese inbound arrivals.
The number of Chinese inbound arrivals to Japan doubled from 2.4 million in 2014 to 5 million in 2015. CLSA is predicting this figure will more than double again by 2020 to 11.4 million. China became the biggest contributor of foreign tourists in Japan in 2015.
CLSA expects Chinese inbound traffic growth to Korea to increase by +28% year-on-year in 2016 driven by organic growth and Mers recovery. It said Korea would be one of the top three destinations for Chinese tourists over the next three years, with shopping the major reason for visiting.
One in four tourists now visiting Thailand is from China, according to CLSA. An annualised growth rate of +47.7% in inbound tourism has been recorded over the past five years, outpacing non-Chinese tourist annualised growth of +7.6%. The report noted that Thailand would be one of the top three destinations for future outbound trips.
