Southeast Asia’s hopes for a quick rebound in travel and tourism following China’s reopening have hit a speed bump this year over an unexpected snag – fewer Chinese tourists want to venture outside the country’s borders.
During the five-day “golden week” period from April 29 to May 3, Chinese tourists flocked to domestic destinations, but few have embraced international travel as enthusiastically as they did pre-pandemic, when they were the world’s largest outbound travel market by departure numbers and spending.
“The recovery of Chinese tourists’ demand for domestic travel is much stronger than that of travelling abroad,” said Haiyan Song, a professor of tourism at The Hong Kong Polytechnic University.
“This is a demand and supply issue.” Travel experts say China’s outbound travel is expected to recover gradually and reach pre-Covid levels by early 2024 after the Lunar New Year on February 10, or the first half of the year.
That is proving to be a drag on Southeast Asia’s recovery, after an initial burst of growth when China eased its tough border measures in January, following three years of its strict zero-Covid policy.
Southeast Asia’s international seat capacity – a proxy for demand – trailed most regions and was down 22.3 per cent below the week commencing May 2 compared to the same week in 2019, according to travel data provider OAG. Overall international seat capacity is 10.1 per cent lower than the same comparative period.
“It’s a slower growth rate because China has not recovered as much,” Mayur Patel, head of Asia at OAG Aviation, told This Week in Asia, warning that the sector should brace for a slow recovery as airlines would need to train their cabin crews and pilots and reactivate idled aircraft capacity, which will take several months.
Chinese tourists appear reluctant to venture abroad after three years of being encouraged to only travel domestically, Patel said.
China’s international seat capacity in April was 37 per cent below that of April 2019 and accounted for 4 per cent of all Chinese airline capacity. Domestic capacity, meanwhile, was 18 per cent above April 2019’s figures.
On a brighter note, Chinese carriers increased their international capacity by 44 per cent in April, month on month, to bring the total number of seats to 3 million.
"The importance of China to the whole Asia market cannot be underestimated. It is some three-and-a-half-times larger than the Indian market, and accounts for half of all capacity in the region,” Patel said.
Malaysia and Singapore have been leading the recovery in aircraft capacity since the end of last summer, according to OAG.
Last month, China scrapped a mandatory PCR Covid test requirement for inbound travellers, a step that is likely to infuse greater confidence among overseas travellers – but experts cautioned against expectations of a sharp turnaround.
"There are a lot of hurdles to cross – bureaucratic, logistical, et cetera – to get back to ‘normal’ air travel levels.
Most people’s expectations have been too high, what is happening is what could be expected from a realistic point of view,” said Wolfgang Georg Arlt, CEO of the China Outbound Tourism Research Institute.
“Don’t blame reality for not following your wishful thinking,” he said, underscoring that China’s domestic demand has been growing at a faster pace because it is easier to manage.
Besides China’s outsize impact, a looming global economic slowdown is also weighing on Southeast Asia’s recovery as there are fewer business travellers, Arlt said.
In 2019, Chinese travellers made 155 million trips abroad and spent nearly US$250 billion – close to Vietnam’s entire gross domestic product – but the number of tourists shrank to 26 million amid the pandemic, a year-on-year drop of 83 per cent.
China’s domestic travel sector grabbed “the golden chance to develop” and “short-distance trips brought many local cities into consideration” during the pandemic, said Jessie Wu, international innovation consultancy R/GA Shanghai’s strategy director.
"As a response to such shifts, we have also seen improvements in domestic trip-related facilities and services,” she said.
Chinese consumers’ spending habits also changed in the climate of uncertainty, with younger generations becoming pioneers in making long-term plans for financial security, Wu said.
While China’s border reopening has reawakened consumer spending, leading to a surge of searches and enquiries for outbound travel – with Asia-Pacific nations being the top choice – the actual recovery might take longer to play out due to visa delays and changing policies, Wu said.
High ticket prices and a slow build-up of international capacity are also hindering the process, experts say.
Hong Kong Polytechnic University’s Professor Song said a full recovery in international travel among Chinese tourists would hinge upon “travel risk perception and confidence building”.
“The Chinese tourists have not fully recovered from the risk perception of international travel, but their confidence in international travel will be gradually built over time when more and more Chinese tourists travel abroad,” he said.
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