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It will be two more years until the big-spending Chinese travelers return in force

The contribution of Chinese travelers to global tourism used to be No. 1 in the world. There were 155 million international trips by Chinese travelers in 2019, spending about US$245 billion in total. But because of COVID-19, Chinese international travelers have almost completely disappeared, and retailers and hospitality players across the globe are anxious to know when they will be welcoming those big spenders again.

Source: National Bureau of Statistics of China, World Travel and Tourism Council, Oliver Wyman analysis

We used Oliver Wyman’s top-rated Pandemic Navigator to forecast when different countries will achieve herd immunity and open their borders again. We then combined that with our latest consumer sentiment research to forecast when and where Chinese travelers will return to international travel.

The reopening of various national borders is not enough to convince Chinese travelers to travel again. Requirements to quarantine when visiting certain destinations are a major discouragement for many.

But even where no quarantine is in force, there is hesitation, meaning it will take time to recover to pre-COVID levels. For instance, Macau opened its borders to Chinese travelers in September 2020 and had no quarantine requirement. Still by March 2021, visitor numbers were only 29 percent of March 2019 levels.

Source: Chinese traveler recovery dashboard (Apr 26)

We forecast that outbound trips by Chinese travelers will recover to 2019 levels two years from now in the second quarter of 2023 at the earliest. The delay is caused by the requirement for herd immunity to be established in China and destinations before quarantine-free travel is allowed. China is not expected to achieve herd immunity until the second quarter of 2022, and even then, our research shows only about 15 percent of Chinese will be willing to jump on a flight right away. Most are adopting a wait-and-see approach on travel and will delay taking international trips for several weeks, if not several months, after the border opens, according to our survey.

For the travel and tourism industry, the good news is that those early travelers are the biggest spenders, eager to shop and enjoy premium services as soon as possible. That means spending is likely to recover sooner than traveler count.

But international spending on luxury is seriously threatened by the new shopping paradise, the island province of Hainan. The Chinese government has a grand plan for Hainan, which has become a welcome alternative for Chinese who travel internationally. It is now one of the top three preferred destinations, rivaling Hong Kong in popularity.

Seventy-one percent of our survey indicated they would continue to travel to Hainan to shop even once the rest of the world opens. The main motivation: It was cheaper to travel there. For the same reason, Hong Kong also has a window of opportunity to continue to hang onto being the go-to place for Chinese travelers after the pandemic.

This article was also authored by Kenneth Chow.