The COVID-19 pandemic continues to impact Chinese tourism, more so because of the country's zero-Covid policy. New trends have emerged - which has seen a surge in domestic tourism and changing travel preferences among various demographic categories. In this article, we explore how China's indigenous tourism market is diversifying, successfully catering to the lifestyles of Gen Z and young families, and touch on the prospects for the return of China outbound tourism. We also offer insights for foreign businesses interested in China's tourism sector and its allied service industries like retail and sustainability.
As more countries open their borders to international tourism, the absence of Chinese visitors is causing more than a little economic pain. From Phuket to Paris, major tourist destinations have relied on an average of 150 million Chinese travelers spending up to US$255 billion yearly on sightseeing. Now three years into the COVID-19 pandemic, many of these destinations are starting to realize that it will be a while till the Chinese tourists return. Some analysts believe that this could impose serious economic consequences on affected countries.
Despite the rest of the world moving toward an endemic approach to the virus, China continues to implement a zero-Covid policy. As of August 2022, China has a quarantine system in place for inbound travelers as well as rigorous￼ measures that get promptly activated in case of outbreaks. Yet, it is precisely such measures that allow Chinese tourists to feel safer when traveling across provinces and have fueled the growth of the country’s domestic tourism industry.
Nevertheless, tourism market data from China in the first quarter of 2022 showed a significant dip when compared to the same period in the previous year. Data from the Ministry of Culture and Tourism, for example, revealed that, during the New Year's Day and Spring Festival, 52 million and 251 million people traveled across the country between the two holidays, showing a year-on-year decrease of 5.3 percent and 2.0 percent, respectively. This of course can be put down to the resurgence of Covid-19 with multiple regional and global outbreaks due to more infectious variants. However, with the beginning of the summer holiday season, the slowdown appears to have once again reversed as ticket sales are noticeably on the rise. This presents us with a unique opportunity to zoom in on China’s tourism market and explore how it has transformed since the pandemic. We discuss who is the new Chinese traveler, look at destination trends, as well as the types of services required by the tourism market.
The Chinese tourist profile at a glance
Family traveling at its peakThe pandemic has caused the decline in popularity of destinations previously famous for group travel, a revenue mainstay for the tourism industry. Chinese travelers are instead opting for different plans based on needs and preferences, giving rise to more family vacations, healthcare tours, and research trips. In particular, "parent-child tourism" has gained momentum throughout 2021 and 2022, along with the steady revival of the national tourism industry.
The 2022 Summer Travel Market Trend Report released by Ctrip (one of China's leading travel companies) showed that family travel packages have reached a peak in the 2022 summer booking spree. In July 2022, the number of family air tickets sold increased by 804 percent, compared to the previous month. Similarly, bookings of family-friendly hotels grew 80 percent, compared to the same period in 2021, and were up by 20 percent from 2019 – most of these bookings being concentrated in four- and five-star hotels.
Moreover, in July, the number of families traveling from Shanghai and Beijing, as well as from other big cities in China, increased significantly compared to previous holiday periods, such as the Labor Day Holiday or the Dragon Boat Festival. The backlog of travel demand from these places was primarily due to the impact of the epidemic response in the first half of the year, which gradually eased at the beginning of summer.
Looking at the preferred travel destinations, families with children in primary or junior high schools prefer island tours to Sanya, Haikou, Qingdao, and Xiamen, among others, largely because of their family-friendly services. These two groups of travelers have also turned their attention to the tours to the northwestern provinces of Qinghai, Gansu, and Xinjiang.
The Ctrip air ticket data also showed that younger travelers were accompanied by more family members. For example, primary and junior high school students travel with 3.5 and 3.2 people in summer vacations, respectively. On the other hand, college students are more independent in their travel habits.
Gen Z: The online buyersAs Gen Z's purchasing power increases, travel has become a significant avenue for them to seek leisure and enjoyment. Survey data showed that over half (52.7 percent) of the Gen Z travelers surveyed looked for travel information on social media and short video platforms, including Xiaohongshu, Kuaishou, Weibo, and Bilibili. About 49 percent of those surveyed chose online travel agencies (OTAs) like Trip.com, Qunar, and Meituan. According to the research, just 16.7 percent of the tourists used offline services to obtain information.
As of 2022, prices and budget remained the main deciding factors for Gen Z when planning their tours, followed by other elements such as transit convenience and safety. 62.5 percent of Gen Z use OTAs to book their travel, with official supplier websites coming in second, followed by social media and e-commerce sites like Xiaohongshu, Douyin, and Taobao.
Data also revealed that natural landscapes were the main draw for Gen Z tourists in 2022. Despite higher spending power, these Chinese travelers had little interest in visiting popular retail malls or luxury sites.
Corporate travelAccording to data from the Global Business Travel Association (GBTA), China took the top spot globally for business travel expenditure in 2021. Indeed, following a 38 percent drop in that same category over the previous year, China's corporate travel expenditure increased by 31.7 percent in 2021 as the local market rebounded – more than doubling the worldwide growth rate.
According to the study, 16.3 percent more Chinese businesses used travel management agencies in 2021 than they did in 2020. In China's top cities, including Beijing, Shanghai, and Guangzhou, this number increased by 24.6 percent.
By 2024, the business travel industry in China is predicted to recover and reach pre-pandemic levels, with total spending on business travel topping US$400 billion. The strong recovery momentum in China's business travel industry is reflected in the Trip.com Group's 2021 performance, with hotel reservations on Trip.Biz (the business-dedicated section of CTrip) increasing by almost triple digits.
China's latest tourism trends by destination
Peripheral or ‘short-distance’ tourism on the riseWith the continuous development of leisure tourism in recent years, the short-distance tourism model has gained enough market recognition and respect.
Affected by the pandemic, many people in China still have concerns about the health risks of long-distance traveling. Several primary and secondary schools still restrict the travel of students during long holiday periods, resulting in families preferring to travel short distances and explore nearby landmarks. Local tours, "rediscovering the beauty of the surroundings", have become popular. new trend as residents gets the opportunity to experience the place where they were born and raised.
The improvement of both tourist facilities and services in the hospitality sector has made it possible for this type of tourism to attract a larger pool of customers.
Rural tourismHoliday destinations have undergone an evolution from country to the city and back again. Against the background of rural revitalization, the government has appointed a series of "village +" destinations to promote tourism, such as the Yellow River Suji Village and the Jijiadun Ideal Village. Ctrip data shows that the order volume of rural hotels more than doubled in 2021 compared to the previous year, attracting visitors mainly born between the 1980s and the 1970s.
In the past, rural vacations meant spending time between mountains, rivers, and the serene scenery offered by the countryside. Today's offers are much more diversified, as enterprises combine their business models with sustainable development goals and attract tourists with higher spending capacity.
Cultural productsWith the growing enthusiasm of young people for Chinese culture, cultural tourist offers have become more popular.
Various museums, for example, have recently become a hot topic on the search list for nationwide destinations. At the beginning of 2022, the unearthing of cultural relics at the Sanxingdui Ruins site set off a boom in museum tourism. Similarly, the China Grand Canal Museum in Yangzhou (Jiangsu province) has become a popular tourist check-in place, so much so that it attracted a monthly audience of more than 250,000 visitors during its trial operation period alone.
At the same time, the organic integration of traditional folk culture has become more popular, and activities such as temple blessings and intangible cultural heritage experiences, are very popular among tourists. The rural market in northern Anhui, for example, staged wonderful performances, such as Huainan Shouxian drum, Suzhou Sixian Sizhou opera, and Taihe lion lantern, among others, attracting many tourists. Various places in Fujian have carried out splendid, themed activities around the “Fu” culture.
A sense of cultural self-confidence among young Chinese people can be attributed as the main reason for the growth of such cultural destinations and scenic spots – not to be confused with the popular “Red Tourism”.
Closer to natureThe data collected by Ctrip at the beginning of 2022, revealed that natural protected areas and national forest parks appeared in the top five popular scenic spots announced by over 22 cities on the mainland.
Indeed, Chinese travelers are paying increasing attention to nature-immersive destinations. According to the report of Qiaoyou.com, more than half of the app’s users have been to at least one of the first batch of national parks officially announced in October 2021, and 83.6 percent of the surveyed people plan to travel there in the future.
It is worth mentioning that Chinese tourists nowadays engage more with natural destinations through a variety of activities, such as photography, acquiring natural knowledge, exercising, etc. Increasing this skill set has become an important factor in attracting travelers to explore outdoor scenic spots; hiking and camping have become popular new ways to get closer to nature.
Prospects for outbound tourismAccording to recent forecasts, a 'strong wave' of outbound travel from China will start up again in 2023, returning to its pre-pandemic levels by 2024. Such predictions are backed by plans announced by the country's aviation regulator, which has issued a five-year development plan, with a strong focus on expanding domestic flights and restoring international air travel by 2025.
Chinese tourists' interest in overseas destinations has remained attractive though recovery is still a long way off. The Asia-Pacific region remains the most popular with Chinese tourists. Most desired overseas destinations are Southeast Asia, Europe, Russia, and Japan.
The lifting of international border restrictions in China and the incidence of COVID-19 cases in the destination country are key factors shaping Chinese decision-making about outbound travel. Travel patterns to destinations such as Hong Kong and Macao demonstrate how COVID-19 cases and quarantine requirements have an immediate effect on travelers' decision-making.
Innovation is key to the development of China's tourism products
FinTech for flexibilityNew payment patterns have been quietly emerging behind the scenes as the travel sector has steadily recovered from the pandemic slowdown. One of the most prominent developments in travel technology in recent years is the growing confluence of finance and travel. Whether it is new payment options offered by travel suppliers, improvements in the flow of funds among tourism market players, or travel agencies launching full-fledged fintech solutions, the way the travel sector does business is rapidly changing.
Aligned with these trends, airlines, hotels, and travel agencies may seek to modify their customer loyalty programs to encourage clients to utilize their specialized services thereby entrenching their position in this high-margin market.
Smart scenic spotsNearly half of Chinese tourists cited COVID-19 prevention and control measures as the most important factor when planning a trip, according to a survey. Self-guided tours, small group tours, and customized tours with less contact with strangers are preferred. This may accelerate the pace of construction of smart scenic spots.
Through online platforms and the travel app of the scenic spot, tourists can learn about their destination, find information to support travel route planning, book tickets for scenic spots and hotel accommodation, besides online shopping for souvenirs in advance. Such services and digital products allow tourists to be informed before, during, and after their tour is completed, while also enhancing the attraction of scenic spots.
Technology empowers hospitalityWith the deepening integration of "Internet +" tourism, information communication technology has become the driving force for tourism development.
With newer applications of the Internet, big data, and artificial intelligence, which will get accelerated in the 5G era, digital technology is being fully integrated into the tourism industry. This has brought changes to tourism supply and consumption, promoting new business models, and higher quality development of the tourism industry overall.
Alibaba, China's e-commerce and technology behemoth debuted its first robotic hotel, the FlyZoo Hotel, in December 2018. This “hotel of the future” was set up in the company’s hometown, Hangzhou, by Alibaba's online travel agency (Fliggy) together with other company divisions, including Alibaba A.I. Labs and Alibaba Cloud.
This high-tech hotel's major goal is to show how artificial intelligence is already changing China's hospitality sector and how it will motivate other countries' travel and hospitality sectors to embrace innovation.
FlyZoo Hotel CEO Wang Qun has frequently said in several interviews that the company would keep developing "smart brains" for automated hotels in China as well as more specialized experiences for visitors.
Key takeaways for foreign investors
Retail shopping while travelingRetail shopping while traveling is emerging as a popular consumption trend in China. The pop-up store may not be a brand-new concept, but it is making a comeback in the Chinese travel landscape. For instance, in collaboration with China Duty-Free Group, several companies, including SK-II and Clé de Peau Beauté, have opened pop-up shops in Hainan to cater to the demands of customers who have been unable to go abroad due to the epidemic.
Clé de Peau Beauté's pop-up shop, for instance, has hosted several live-streamed events, and offered exclusive experiences in Sanya (a top-tourist city on the Chinese island of Hainan), including a simulator room, QR codes, and AR mirrors. These features have notably improved the Clé de Peau Beauté pop-up experience, with the live stream attracting a record of 6.4 million impressions and over 700,000 views on Yizhibo.
Meanwhile, an AI skin analyzer, animated shorts, a WeChat mini-program, as well as an AR video game were among the features included at SK-"Social II's Retail" pop-up store (also located in the Sanya International Duty-Free Shopping Complex).
Travel companies need to adaptThere is a clear desire to travel, and a huge pent-up demand for outbound travel. At the same time, despite intermittent COVID-19 outbreaks, interest in domestic travel has continued to increase – particularly whenever the epidemic situation stabilizes. In this fluid market scenario, travel agencies can plan for demand spikes while also considering changing travel tastes. To better serve tourists, travel agencies may need to become more flexible with their strategies. Given frequent changes in legislation, travel agencies can be more accommodating when clients adjust their plans. Additionally, they may concentrate on nearby communities that are accessible by car, diversify their product offerings to adapt to demand changes, and foster loyalty by paying closer attention to customer happiness and the distinctiveness of the tourism experience. Travel agencies may also utilize digital channels to communicate with consumers and can customize content and presentation.
Analyzing trends in the tourism industry suggests that China’s domestic market has much-untapped potential. Various opportunities exist for the travel industry to diversify its product offerings, such as through curated and immersive experiences or by responding to changing customer needs. In turn, tourism marketing strategies can incorporate insights from the dynamic experiences of the domestic market during the pandemic — enabling the domestic operating model to achieve long-term inclusive and sustainable growth.
Gen Z is the new decision-makersConsumers no longer primarily travel for shopping. Gen Z in China, which dominates the upcoming generation of tourists, seeks different experiences when traveling. Hiking, low-altitude flying, and water sports are just a few of the trending activities researched by this new group of travelers, according to recent data.
This shows that tourists now seek more than a pleasant travel experience. They are typically more specific about their travel goals and eager to meet individuals who share their interests. This opens space for companies to engage in the digital market and invest in social media apps that feature tools to connect with travel and tourism. Additionally, most young travelers looking for a variety of unique experiences. Since social media content is how many choose their specific destinations or travel activities, Gen Z tourists in China are eager to replicate some of the experiences they encounter on these apps. Therefore, the way to win these consumers' hearts, particularly in this demographic group, is to offer experiences (rather than products) – which may have more personal value.