This year is shaping up as a big one for tourism in the Asia Pacific. Travel started recovering in 2022, with more and more countries throwing open their borders - and now China, with its zero-Covid policy left behind, is ready for Chinese group travel tours to start heading overseas from February 6 to a handful of countries including New Zealand. Gary Bowerman has more.
The travel and tourism outlook for Asia Pacific was recast in the evening of 26 December 2022. The Chinese government decreed that, from 8 January 2023, Chinese travellers would no longer need to undertake quarantine when re-entering China.
Few other details were released, but the announcement delivered what the travel industry had coveted for almost three years: the return of the world’s largest outbound market.
The timing was apposite. After Covid-blighted years in 2020 and 2021, during which Asia Pacific mostly shut down tourism, 2022 was a piecemeal recovery year.
Australia reopened its borders in late February. South East Asia fully reopened in the second quarter. Tourism in New Zealand commenced in earnest in May. However, the key North East Asian markets of Japan, Hong Kong and Taiwan, stayed closed until the fourth quarter.
The elephant outside of the airport lounge remained China.
The Chinese government banned the sale of group travel packages in late January 2020, and shut most of its airspace. By the end of 2022, China operated less than 10 percent of its pre-pandemic international air capacity. The few flights available were highly priced, and Chinese returnees needed to undergo quarantine. Visitor economies across Asia Pacific counted the mounting financial impact of China’s isolation.
And then came a 360-degree turnaround. The swift dismantling of China’s Zero-Covid policy in December, followed by the reopening of its borders, took the world by surprise.
Tourism & International Relations
Two elements about China’s reopening are unique. Firstly, China swung open its airport gates amid its worst Covid-19 surge. No other country had done this. While officially reopen, it bought time to plan the scaling up of international air services. The spring and summer airline schedules, which are yet to be published by China’s Civil Administration of Aviation, will set a course for significant travel expansion.
Secondly, the focus of China’s reopening is on its outbound market. This contrasts with most countries in Asia Pacific, which are focused on rebuilding inbound travel to support economic growth after the pandemic.
China views tourism differently. In 2015, Xi Jinping became the first Chinese leader to proclaim the role of Chinese overseas tourism to support Asian trade and economic growth. Since then, China has openly leveraged its outbound tourism market in trade and diplomatic relations. Outbound trips from China (including to Hong Kong and Macau) totalled 170 million in 2019, providing China with a powerful negotiating tool.
200 Million Travellers in 2028
From 6 February, Chinese group tour travel will commence to 20 countries. Eleven of these, Thailand, Indonesia, Cambodia, Maldives, Sri Lanka, Philippines, Malaysia, Singapore, Laos, New Zealand and Fiji, are in Asia Pacific. While an acceleration of the pre-pandemic trend towards independent travel from China, and away from group tours is likely, restoring group package bookings will influence the near-term strategies of Chinese airlines.
The rebound prognosis for Chinese tourism is strong. Analysts expect outbound travel to pick up rapidly in the second half of 2023. In 2025, China will surpass its 2019 total with 179 million outbound trips, says the China Outbound Tourism Research Institute (COTRI). By 2028, China will reach 200 million annual outbound trips – just 14 years after it recorded 100 million outbound trips in 2014. During three of the intervening years, China was closed.
Rebuilding Regional Travel Demand
So, what does China’s reopening mean for the travel economies of Asia Pacific.
Firstly, it will stimulate much-needed demand in what will be the most important year for travel and tourism in Asia Pacific in recent memory.
A swift statistical trip around the region shows that in 2019 China was the number one visitor market for Australia, Japan and South Korea. In South East Asia, it was the top visitor market for Cambodia, Singapore, Thailand and Vietnam, and number two for five other nations. China also ranked second for New Zealand.
While 2022 set Asia Pacific on course for a recovery, results were patchy. Behind the upbeat tourism board spin, most regional destinations reported underwhelming 2022 arrivals figures.
With a global economic slowdown forecast to crystalize in the second quarter, intra-Asian travel will be vital for building a strong recovery. There is plenty of catching up to do.
According to the UNWTO, more than 900 million tourists travelled internationally in 2022, representing 63 percent of the 2019 level. However, Asia Pacific only achieved a 23 percent recovery from 2019, compared to 79 percent in Europe and 65 percent in the Americas.
Competition Among Destinations Will Intensify
For the first time since 2019, Asia Pacific is looking forward to a full year of travel activity – with all countries open. Destinations will be marketing hard to attract travellers from across the region – not just from China.
An interesting rivalry to watch is between Thailand and Japan. They will battle to be the region’s top tourist destination in 2023, which could draw tourists away from other destinations. Both will be beneficiaries of China’s reopening, particularly once Japan removes its current entry restrictions for Chinese visitors.
Japan and Thailand welcomed record visitor arrivals in 2019: 31.9 million in Japan and 39.9 million in Thailand. Neither is likely to recreate those volumes in 2023, but impressive growth is forecast. Thailand, which received 11.2 million visitors in 2022 will likely double that tally. Japan, which only reopened in October 2022, should surpass 20 million visitors this year.
More Flights to More Destinations
Rebuilding travel demand across Asia Pacific requires more flight options and frequencies. Airlines will restore more short and mid-haul services now that the region is fully open.
There is plenty of room for regrowth. Airline data from OAG reveals that international flight seat capacity in the week commencing 30 January 2023 was down 59.9 percent in North East Asia and 35.5 percent in South East Asia from the same week in 2019. Southwest Pacific, which includes Australia and New Zealand, was down 26.7 percent from 2019.
A constraining factor for airlines in 2022 was the high price of jet fuel, particularly during the northern hemisphere summer. Although volatile, the jet fuel price dropped from July onward. Strong demand for travel from China could, however, drive upward fluctuations.
New Challenges Will Emerge
The forecast rebound of travel activity across Asia Pacific could cause challenges. The travel industry remains under-staffed and under-resourced. We are yet to see in Asia Pacific how airports, transport hubs and destinations will cope with a surge in visitor volumes.
The return of mass tourism will be overlaid by issues around climate impact and sustainable economic development. The Quality versus Quantity debate will resurface in some destinations, particularly where tourism has a high environmental and community impact.
For Asia Pacific, a new era of travel and tourism starts now. New travel patterns will emerge. Forecasts and predictions will be regularly revised.
But, as the Chinese Year of the Water Rabbit begins, China once again takes centre stage.
- Asia Media Centre