Chinese tourists (pic: file image)

Chinese tourists (pic: file image)

Prior to the pandemic, Chinese tourists were the largest source of tourism revenue globally.

The revival of Global travel retail (GTR) now hinges heavily on the return of Chinese nationals to international air travels as pandemic restrictions ease, underscoring their pivotal role in the industry’s post-Covid recovery, according to IWSR.

Prior to the pandemic, Chinese tourists were the largest source of tourism revenue globally. Tourists from China spent US$255 billion, or 17% of global outbound travel expenditure, per 2019 data from the United Nations World Tourism Organisation.

While the impact will be most keenly felt at airport hubs in the Asia-Pacific region, destinations in Europe and North America are also poised to benefit significantly from the influx of Chinese travelers, wrote the research institute in its analysis. Experts emphasize that the success of the recovery lies not only in Chinese airports but also in hub airports and departure points facilitating flights back to China, underscoring their crucial role in reviving the industry.

“GTR – not only in APAC, but around the world – is waiting a pick-up in international travel activity by Chinese nationals after pandemic rules were relaxed in early 2023,” says Jairo Lopez Suarez, Head of Global Travel Retail Insights at IWSR. “Hub airports and points of departure for flights back into China will be key – more so than Chinese airports.”

Global travel return is awaiting for the return of Chinese tourists. Duty Free shop (pic: file image)
Global travel return is awaiting for the return of Chinese tourists. (pic: file image)

However with the return of Chinese tourists, questions loom over the future of Hainan, the duty-free enclave that offset China’s GTR slump during the Covid-19 pandemic. Despite recording a decline in 2022, the diversion of value to international GTR is expected to persist in 2023, potentially impacting Hainan’s performance. However, IWSR predicts a rebound for Hainan in 2024, propelled by a resurgence in domestic traffic with less emphasis on the top-tier price segments.

The London-based research firm is confident that China’s burgeoning middle class will compensate for Chinese nationals eager to resume international travel.

“The sheer size and growth of China’s burgeoning middle class, who will be adopting Hainan as a travel destination, is believed to be fuel enough to compensate for those Chinese nationals who are now ready to rejoin the international travel circuit,” says Suarez. “There are also signs that Hainan is beginning to attract an international audience.”

In the realm of GTR, spirits have witnessed a robust recovery, led by gin, while agave spirits have surpassed 2019 sales levels in 2022. However, the larger whisky category is expected to play a pivotal role in the years ahead, driving the overall resurgence of GTR.

Champagne is poised to regain pre-pandemic levels in 2023 after GTR volumes surging by 83% in 2022. However, the return of Chinese travelers is anticipated to have a lesser impact on Champagne compared to spirits, as European travelers remain the primary consumer group. Nevertheless, industry experts caution that Champagne’s growth rates may plateau due to inflationary pressures and tightening cost-of-living conditions in Europe.

“The return of the Chinese traveller is less important for Champagne than it is for spirits – European travellers are the leading consumer group,” explains Suarez. “As Europeans are, however, particularly squeezed by inflationary pressures and the tightening of the cost-of-living situation, future growth rates of Champagne are expected to level off.”

Other than the return of Chinese tourists, the cost-of-living situation will also inevitably continue to impact both business travel and tourism – in terms of expenditure, frequency and length of trips, adds IWSR.

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