Chinese Travelers' Evolving Preferences and Global Impact

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?Although LVMH (Mo?t Hennessy Louis Vuitton)’s latest results point to weakening demand in China, with third-quarter sales down 3% year-over-year, the surge in outbound travel indicates that affluent Chinese consumers remain eager to spend, especially when traveling abroad. This suggests a shift from domestic luxury consumption to international spending, a trend gaining momentum as global travel restrictions ease.

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?2024 National Day Holiday Travel Surge

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This year’s National Day holiday (October 1 to 7), traditionally a peak period for domestic tourism, witnessed a significant increase in outbound travel. According to the National Immigration Administration, outbound trips by mainland Chinese residents reached 7.59 million, up 33.2% year-over-year, with the Civil Aviation Administration of China reporting a 38.2% year-over-year increase in international passenger flights.

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Online travel platforms, such as Fliggy (Alibaba’s travel platform), reported a 50% rise in outbound bookings during the National Day period compared to the previous year. International hotel bookings even surpassed pre-pandemic levels by 20%. Popular destinations like Japan, Thailand, and Singapore benefited from this trend, partly due to more relaxed visa policies and competitive travel packages.

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?A New Wave of Travelers: The Demographic Shift

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While high-net-worth individuals from China’s major cities (Beijing, Shanghai, Guangzhou) continue to lead outbound travel trends, smaller cities are contributing significantly to this surge. According to Ctrip’s 2024 National Day Tourism Report, bookings from fourth- and fifth-tier cities have doubled compared to the previous year. This broadening market base points to a shift in the spending power and travel aspirations of Chinese citizens in lower-tier cities.

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?Spending Habits and Global Destinations

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Affluent Chinese travelers are pursuing unique experiences abroad, often driven by more competitive pricing compared to domestic markets. In Japan, for example, Chinese tourists spent an average of 283,900 Japanese yen ($1,900) per tourist in the second quarter of 2024, the highest spend among all foreign visitors. This trend reflects China’s shift from domestic high-end tourism to international luxury travel, creating opportunities for global destinations but also posing challenges for Chinese domestic attractions.

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?Impact on China’s Domestic Tourism

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Despite the uptick in outbound travel, domestic tourism during the National Day holiday saw robust participation, with 7.65 billion domestic trips, up 5.9% year-over-year. However, the average spending per domestic trip was only 916 renminbi ($129), far less than that of outbound travelers. This contrast underscores the appeal of international experiences for affluent Chinese consumers, posing a challenge for regions like Hainan, known for its duty-free shopping. Hainan saw a significant decline in sales, with offshore duty-free sales dropping 41% year-over-year during the National Day holiday, from 1.33 billion renminbi ($182.4 million) in 2023 to 785 million renminbi ($111 million) this year.

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?Future Trends in Outbound and Inbound Tourism

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China’s outbound travel industry has been a dominant player in global tourism, accounting for 26.7% of China’s overall service trade as of mid-2024. However, the country faces a growing trade deficit in tourism, exceeding 1 trillion renminbi ($140.5 billion), largely driven by outbound spending. To address this imbalance, China has introduced favorable inbound travel policies, such as the 144-hour visa-free transit for certain nationalities and visa waivers for European travelers. Inbound tourism during the 2024 National Day holiday reached 1.01 million foreign visitors, a 37.2% year-over-year increase, indicating potential growth but still lagging behind outbound numbers.

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?Growing Demand for Wellness and Nature Tourism

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The quarterly Travel Sentiment Survey by China Trading Desk, which polled 15,000 Chinese travelers, reveals that the demand for wellness and nature tourism is rising. Travelers are increasingly seeking destinations that offer natural landscapes and wellness activities, aligning with global health-conscious travel trends. This shift presents opportunities for destinations to tap into the evolving preferences of Chinese tourists.

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?European Destinations See Renewed Interest

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One of the standout trends for 2024 is the growing interest among Chinese travelers in Europe. According to the Long Haul Travel Barometer, 83% of Chinese respondents plan to visit Europe in the coming year, up from 74% in 2023. This increase is largely due to more flight options and relaxed visa requirements. Popular destinations include France (37% of respondents), Italy (29%), and the United Kingdom (23%), signaling a recovery for Europe’s tourism industry.

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This increased demand for European destinations presents exciting opportunities for the region’s luxury, hospitality, and retail sectors, particularly as travel from regions like the United States has seen a decline.

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?Generation Z and Female Travelers Leading the Charge

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The survey by China Trading Desk also highlights a significant role played by younger travelers and women in this resurgence. In the second quarter of 2024, 59% of outbound travelers were female, with 63% aged 18 to 29. Additionally, 58% were first-time international travelers, signaling a growing wave of adventurous, younger Chinese tourists eager to explore new destinations.

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As more of these travelers opt for personalized, independent experiences over traditional group tours, destinations that cater to flexible, unique travel itineraries will have the upper hand. For example, nearly 41% of travelers aged 18-24 prefer independent trips, compared to 53.8% of overall respondents who seek customized travel experiences.

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?Digital Platforms as Key Travel Planners

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Chinese travelers rely heavily on digital platforms to plan their trips. Travel apps like Ctrip and Qunar are popular among 20.4% of respondents, while Xiaohongshu (Little Red Book) and Douyin (China’s version of TikTok) are favored by 18.4% and 12.2% of travelers, respectively. This trend underscores the importance of a robust online presence and strategic influencer partnerships in reaching Chinese consumers.

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?Outlook and Opportunities

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The rise of affluent Chinese outbound travelers and their shifting preferences, such as increased demand for wellness tourism and Europe as a destination of choice, presents both opportunities and challenges for the global travel and luxury sectors.

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- For Destinations: Offering unique experiences and targeting high-spending, independent travelers will be key to attracting Chinese tourists. Destinations must adapt to their evolving preferences, from wellness tourism to digital engagement.

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- For Retailers and Brands: Emphasizing competitive pricing, exclusive products, and personalized shopping experiences can entice affluent Chinese consumers who prefer shopping overseas.

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- For China: Addressing the growing outbound travel trend with strategies to boost inbound tourism, such as improved visa policies and targeted marketing, could help balance the country’s tourism trade deficit and support the domestic economy.

As the global travel market continues to recover post-pandemic, these trends highlight the dynamic role Chinese travelers will play in shaping the future of tourism. The challenge for both global and domestic stakeholders is to stay ahead of these shifts and create compelling, tailored experiences that resonate with this influential traveler segment.

From Shanghai.....

Alexander Glos