For Ma Liang, a travel agent in Chengdu, China, bookings for group trips abroad are almost full. “That’s because we hardly offer any travel,” he said in an interview.
Demand for travel outside China is so low that many services have been disrupted, from airline routes to sightseeing tours and shopping districts in cities such as Paris, Rome and New York – where hordes of Chinese flocked, spending $255 billion in 2019 d. and becoming a lucrative cohort internationally.
This all changed during Covid and still hasn’t recovered.
As of December, the capacity of flights leaving and entering China had reached just over half of the same period in 2019, according to flight analytics company OAG Aviation Worldwide.
The routes themselves paint a striking picture. Domestic flights – or destinations, to be precise – made up 92.6% last month, while flights to or from China made up just 7.4%, less than half the pre-pandemic level, according to the OAG.
Advertisement – Scroll to continue
Analysts are becoming more realistic than their wildly optimistic predictions that Chinese leisure spending – including overseas travel – will soar after the lifting of Covid restrictions. Much of the pessimism now rests on the continued failure of consumer spending to pick up.
“The recovery in demand outside the domestic market remains uncertain,” Morgan Stanley analysts wrote last month. “Recovering demand to 70-80% of pre-Covid levels may take longer than expected.”
Consultancy Oliver Wyman surveyed nearly 4,000 “affluent” Chinese and found that “many experienced mainland Chinese international travelers – namely those who had already traveled abroad before the Covid-19 pandemic – are delaying their travel plans due to economic uncertainty”.
Advertisement – Scroll to continue
Retailers are struggling, especially luxury brands that have become increasingly dependent on high-spending Chinese tourists in the 2010s. In 2019, luxury spending by Chinese consumers accounted for about a third of the global market for high-end goods, according to Bain & Co. In 2023, that share has shrunk to just under a quarter.
This has weighed on top-line growth for the sector in the peak years of the pandemic, affecting everyone from industrial giants such as LVMH Moët Hennessy Louis Vuitton and Kering to smaller specialist companies such as Burberry Group and Canada Goose Holdings
.
Many companies have begun to note the recovery of tourism, but the recovery is slow. LVMH said on Jan. 25 that the company’s sales for the fourth quarter ended Dec. 31 to Chinese consumers in France were still about 30 percent lower than in the same quarter of 2019, although LVMH’s business in China is booming.
“We are not particularly concerned, neither pessimistic nor optimistic, but we do not see the big busloads of Chinese customers coming in groups,” LVMH Chief Executive Bernard Arnault said on a call with analysts.
Advertisement – Scroll to continue
Another factor—albeit a smaller one—seems to be personal exhaustion. China’s young people are experiencing an unprecedented unemployment crisis that has given employers leverage to overwork employees.
Unemployed Yang Qi, 28, from Shanghai, said two of her friends told her they were both not traveling due to exhaustion from work. “They are completely burned,” she said Barron’s. And younger people who travel don’t spend as much as they used to.
For the small number of Chinese who travel abroad, Asian countries are the main beneficiaries. Most outbound flights from China this month were to South Korea, but seat capacity was still 22% lower than the same period in 2019.
Advertisement – Scroll to continue
Japan and Thailand were next, but their numbers were a fraction of pre-pandemic levels. Destinations like the US and once shopping havens for wealthy Chinese like France and Italy no longer have regular direct flights, according to the World Travel and Tourism Council.
Observers are waiting to see how the numbers develop for this month’s Lunar New Year holiday, long known as the world’s largest annual human migration. Although traditionally most people return home to feast together and visit family, before the pandemic there has been an increase in outbound travel. Li Yin, 29, from Beijing, said financial considerations influenced her decision not to return home for the holiday.
Governments are struggling to boost tourism. One problem: China’s passport and visa processing centers are overwhelmed — 20 million Chinese passports have expired since 2020, according to travel management company BCD Travel China.
Advertisement – Scroll to continue
In November, in a rare move for a visa-restricted country like China, Beijing said it would allow visa-free entry for citizens of France, Italy, Germany, Spain, the Netherlands and Malaysia from December 1. Ireland and Switzerland were recently added to the list.
Malaysia has reciprocated the visa-free policy for China. A similar mutual agreement was reached between China and Thailand, and China and Singapore said their reciprocal visa-free plan would begin sometime in early 2024.
Time will tell whether the visa move will affect travel, but Chinese consumer sentiment has repeatedly disappointed over the past year, with large numbers saving for what they see as an uncertain future.
—Sabrina Escobar contributed to this article.
Write to [email protected]
