The world's largest outbound market is still not travelling: how to adapt to this absence?

28-11-22

China's continued absence from the international tourism market, one of the last major obstacles to a full global travel recovery, has left many destinations facing a huge shortage of tourist arrivals. 

Although international travel to and from China has been restricted since the advent of COVID-19, domestic travel has been permitted for some time. However, continued closures of major population centres such as Shanghai and Chengdu in the wake of new coronavirus outbreaks have created a volatile domestic travel landscape. Recovery is rapid when restrictions are lifted, but changes are frequent and sudden, and each closure has a significant effect on demand.

 Given the problems facing China's domestic travel market, and the government's recent assertion that it would maintain its cautious approach to COVID-19, the chances of the country reopening to international tourism in the short term seem slim.

However, it is worth recalling that similar policies, including travel bans, were widespread throughout Asia-Pacific until recently. Now that much of the region has reopened, it will be interesting to see whether local markets can keep COVID-19 rates in check. If they can, it may encourage China to reopen, gradually, in 2023, as it will be increasingly difficult for the country to keep its borders closed when the rest of the region has returned to normal.

However, even if China were to reopen next year, the economic challenges currently facing the country - including the housing market crisis and pandemic-related problems - would result in a slow recovery in travel, especially in the long-haul segment.

Until China's outbound travel market fully revives, regional destinations that had developed a dependence on Chinese tourists in the years prior to the pandemic will have to divert their attention to other major markets.

Among the top five outbound markets in Asia-Pacific prior to the global health crisis, India holds particular promise. While India's size as an international outbound market is largely due to its significant global diaspora, its middle-class population is growing, and the number of outbound leisure travellers from the country is increasing as a result.

Moreover, although India's intra-regional outbound travel market is relatively small, it has experienced higher growth (+10.4%) than any of the other major Asia-Pacific outbound markets - both international and intra-regional - during the five years prior to the pandemic. Now that the country has fully reopened, ForwardKeys expects its development as an inter-regional outbound market to accelerate.

The economic situation is also improving in Thailand, allowing more of its residents to travel abroad and thus making the country an increasingly valuable outbound market for regional destinations.

Meanwhile, Japan and South Korea, the two best performing outbound markets in Asia-Pacific (excluding China) prior to COVID-19, have recently reopened their doors to travel and are expected to re-establish themselves as important outbound markets.

As China's reopening seems likely to take some time, regional destinations need to adapt to the new environment, identifying markets and traveller audiences to fill the gap left by China and contribute to a long-term sustainable tourism model. Travel information based on reliable data is central to this approach.