Tuesday, May 21, 2024

Chinese tourism restarts. Is the U.S. on the itinerary?

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Arnie Weissmann

Before the pandemic, Robert Li, director of the U.S.-Asia Center for Tourism and Hospitality Research and a professor at Temple University, was the go-to consultant for destinations and travel companies interested in breaking into the Chinese market.

Disney called on him. CLIA invited him to Seatrade to address its public affairs committee. He was commissioned to conduct a large study as the U.S. government and the Travel Industry Association of America (now U.S. Travel) were preparing to sign a memorandum of understanding with the Chinese government to facilitate outbound tourist group travel from China to the U.S.

But at some point during the pandemic, Li stopped following developments regarding China outbound tourism.

“My heart was broken,” he told me earlier this week. “So many talented and passionate friends were leaving the Chinese outbound travel business.”

He joined many in the U.S. travel industry who had pressed “pause” on China tourism after travel to and from the country had all but ceased once the pandemic was declared. And because China was one of the last countries to open its borders after the pandemic, interest in re-establishing tourism with the country remained on the back burner for much of 2023.

That travel freeze, however, is thawing at a sharply increasing rate in almost all sectors of the industry.

In January, Marriott International CEO Anthony Capuano told Travel Weekly that “Our China business has fully recovered in terms of RevPAR. And as you see more both inbound and outbound Chinese travel, that should drive both our China business and our regional and global business.”

At the end of February, the U.S. DOT approved a 30% increase in the number of roundtrip, weekly passenger flights by Chinese airlines.

And last week, Royal Caribbean joined MSC Cruises in announcing its return to the country, sailing outbound itineraries designed for Chinese citizens

Prior to the pandemic, Chinese travelers to the U.S. held the record for lengthiest stays and highest spend (though not highest spend per day) of any inbound visitors.

Will they be back?

The public relations company Finn Partners, working with CSG Research, surveyed affluent Chinese travelers to measure sentiment on a number of travel-related issues. They published their findings in a report titled “Outbound Rebound 2023: The Return of Chinese Travelers.”

The results painted a relatively rosy outlook. “Prepandemic, Chinese tourists were the world’s biggest travel spenders. Now, they plan to spend even more,” it reported. “Chinese travelers are budgeting an average of 15% higher than average actual spend in 2019.”

And in what would seem to be good news for inbound U.S. travel, which has been losing market share to competitive destinations since the pandemic, the U.S. was rated at the top of long-haul destinations that Chinese travelers said they plan to visit in the next 12 months. “Affluent Chinese travelers want to revisit places they enjoyed in past trips,” the report said. “They will prioritize evergreen destinations … [that] they have already been to.”

Nonetheless, when asked to rank satisfaction among the six long-haul countries on that list, the U.S. tied for last place with the U.K.

This is not to say there was high dissatisfaction — all countries listed scored between 83% and 89% satisfied — but it’s somewhat paradoxical that the country that affluent Chinese most want to visit is that one they feel provided the least satisfaction.

I wonder whether this split reflects a rise in tensions between the two countries. If asked where they want to go, affluent Chinese probably do want to see the U.S.; having been here once, they know there’s a lot left to see in this country. But voicing satisfaction (versus a desire to go) may be viewed as a stamp of approval, and there may be, out of a sense of loyalty to country, a reflex to withhold that approval fully.

When I asked Li when he thought Chinese travelers would return, he began, “I don’t have a crystal ball. But I believe a strong indicator of their likelihood to return will be when we see Chinese students going back to American universities. When they come back full scale, we’ll see the Chinese tourist back.”

He said he believes that demand to study in the U.S. is still there, but in talking with parents looking at U.S. schools, he finds the biggest concern is safety. “Every big shooting gets headlines,” he said. “But not data showing crime is down in big cities.”

Indeed, the Finn/CSG report cites five “deal breakers” that would keep an affluent Chinese traveler from a destination. Topping that list, chosen by 56% of respondents, is “poor safety.”

Geoff Freeman, CEO of U.S. Travel, acknowledged that research indicates gun violence is a “growing concern” among those considering coming to the U.S. but that Brand USA reported that “there is a gap between what people say and what they do.”

“Pent-up demand is still there,” Li said. “The market potential is still there. The American market will have to go through another learning curve. Both sides will need patience.” 

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