Asia Pacific’s Reign as Top Travel Region Coming to an End
Asia Pacific's Reign as Top Travel Region Coming to an End - Domestic Travel Declines as Outbound Soars
For decades, Asia Pacific travelers have preferred domestic destinations over international ones. Large countries like China, India, and Indonesia provide ample opportunities for locals to explore their own backyards. But this long-standing trend is shifting.
As Asia Pacific incomes rise, so does the appetite for international travel. Citizens now have the means to venture beyond their borders. Outbound trips from Asia Pacific grew by 9% in 2018 according to the UNWTO. This increase far outpaced the more modest 6% growth in domestic travel that same year.
China is a prime example of this shift. Domestic trips still dominate, accounting for an enormous 5.5 billion trips in 2018. But outbound travel is skyrocketing. Chinese made 150 million outbound trips in 2018, a 15% jump from the previous year. As the middle class expands, Chinese travelers gain the skills and confidence to navigate foreign cultures. Already the world's largest outbound market, China's global forays will only intensify.
Similar trends are reshaping travel preferences across Asia. In India, a population of 1.4 billion took just 2 billion domestic trips in 2017. But outbound trips grew by 11% that same year. Now at just 30 million, this number will swell as the country prospers.
Southeast Asians are also spreading their wings en masse. Thailand saw outbound trips grow 7% in 2018, reaching 10.6 million. Vietnamese made 6 million outbound trips that same year. Even smaller markets like Cambodia and Laos posted double digit outbound growth.
Proximity plays a key role in this shift. Short-haul flights make regional destinations easily accessible to Asia Pacific travelers. The lure of visa-free travel in Southeast Asia, advanced infrastructure in Singapore and Korea, and natural wonders across Australia and New Zealand entice newly mobile Asians.
But long-haul travel is rising sharply too. Asians made over 17 million trips to Europe in 2017, a nearly 10% jump. Canada and the US welcomed over 15 million visitors from Asia Pacific that same year.
What else is in this post?
- Asia Pacific's Reign as Top Travel Region Coming to an End - Domestic Travel Declines as Outbound Soars
- Asia Pacific's Reign as Top Travel Region Coming to an End - Chinese Outbound Travel Plateaus
- Asia Pacific's Reign as Top Travel Region Coming to an End - Southeast Asia Reliant on Chinese Arrivals
- Asia Pacific's Reign as Top Travel Region Coming to an End - Australia & New Zealand Losing Allure
- Asia Pacific's Reign as Top Travel Region Coming to an End - Indian Outbound Travel Surges
- Asia Pacific's Reign as Top Travel Region Coming to an End - Middle East and Africa Rising Stars
- Asia Pacific's Reign as Top Travel Region Coming to an End - Europe Reclaims Lost Asian Travelers
- Asia Pacific's Reign as Top Travel Region Coming to an End - North America Attracts High-Spending Asians
Asia Pacific's Reign as Top Travel Region Coming to an End - Chinese Outbound Travel Plateaus
China was once the poster child for runaway outbound travel growth. Double digit expansions year after year cemented China's status as the world's largest outbound market. But this growth is plateauing as headwinds at home and abroad transform the market.
For one, China's economy is cooling. GDP expanded just 6.6% in 2018, the slowest rate in nearly three decades. Housing sales are sluggish and consumer spending is weakening. This economic uncertainty makes some Chinese wary of splurging on luxuries like international travel. Already outbound growth slowed to just 3% in 2018, down from 15% the prior year.
Travel preferences are shifting too. Mass-market package tours lost appeal as experienced travelers sought more sophisticated options. Customized and niche trips, especially for special interest groups, are now popular. Chinese also travel more independently, often cobbling together DIY adventures. These trends favor quality over quantity.
Adding to this, the strong yuan boosted traveler purchasing power in recent years. Now, China's currency is facing pressure, making international travel pricier. Outbound trips get put on hold when global shopping and dining suddenly bear higher price tags.
Natural disasters and global uncertainties give Chinese travelers cold feet as well. The 2018 Lombok earthquake in Indonesia, forest fires across Southeast Asia, and civil unrest in Hong Kong all discouraged travel. Safety is now top-of-mind given these destabilizing events.
Overseas destinations sense this plateau and sweeten offers to attract Chinese guests. Thailand waived visa fees, Malaysia launched a "Visit China 2020" campaign, and Singapore encouraged Chinese to visit during low seasons. Australia partnered with Flight Centre to promote trips beyond Gateway cities.
Still, targets get missed. Thailand expected 11 million Chinese visitors in 2019 but only welcomed 10.6 million. In South Korea, duty-free shops geared up for record Chinese arrivals that never materialized. Chinese tourists stayed home in unprecedented numbers over the 2019 Lunar New Year holiday.
For Chinese millennials, wanderlust remains strong. But this generation travels differently than their elders. Independence, adventure, and discovery motivate their trips. Patriotic youth also heed Xi Jinping's call to boost domestic consumption. This drives growth in local destinations across China.
So while overall numbers stagnate, certain niches still surge. More Chinese travelers visit Antarctica, Africa, and the Middle East. Senior traveler segments and kid-focused trips also thrive. And the appetite for niche tours like photography workshops remains robust.
For all its talk of openness, China still imposes tight travel restrictions. Sensitive anniversaries and Party Congresses shut down outbound travel. Sudden visa crackdowns strand travelers overseas. State media furnishes negative coverage of transit hubs like South Korea, Taiwan, and Hong Kong to curb travel. Outbound growth sputters when politics override wanderlust.
Asia Pacific's Reign as Top Travel Region Coming to an End - Southeast Asia Reliant on Chinese Arrivals
A symbiotic relationship exists between Southeast Asia and Chinese travelers. On the one hand, Southeast Asians rely heavily on Chinese visitor arrivals to support their tourism economies. But Chinese also depend on Southeast Asia’s close proximity, affordability, and tropical allure as an oasis for leisure and adventure. This interdependence spans borders, with nearly every country in the region profiting from Chinese patronage.
Thailand stands out for its success in wooing Chinese. After Japan relaxed visa rules in 2011, Thailand followed suit in an effort to divert Chinese travelers. The influx was swift and staggering – from 1.7 million visits in 2011 to over 10 million in 2018. Now China ranks as Thailand’s top source of arrivals. According to Vichit Prakobgosol, president of the Association of Thai Travel Agents, Chinese tourists account for 28 percent of Thailand's total tourism revenue.
Beaches may lure Westerners, but it’s Thai shopping that seduces Chinese. Buyer-friendly policies like tax refunds and special offers give Chinese travelers ample incentive for sprees in Bangkok. Chinese filled their bags with $11.4 billion worth of goods in Thailand in 2017. And since Chinese New Year 2019 fell in February, Thai officials extended holiday hours to capture sales.
Malaysia is also banking on China for tourism growth. Chinese arrivals leapt from 1.2 million in 2011 to 3.2 million in 2018. Melaka and Penang top the list of sites favorited by Chinese, who relish the fusion of Chinese and Malay cultures. Like Thailand, Malaysia's China tourism strategy revolves around shopping. Hotels, retailers, and malls now accept Alipay and WeChat Pay to facilitate Chinese purchases.
More niche destinations in Southeast Asia also recognize Chinese potential. Laos drew 160,000 Chinese in 2011, but nearly 800,000 by 2018. Luang Prabang’s quaint charms and access to the outdoors attract Chinese fleeing congested cities. Plunging fiber costs enabled Laos to offer Chinese visitors free WiFi in 2018. Cambodia also courts Chinese with discounted hotels and requests to increase flights. The inducements work – Chinese tourists in Siem Reap outnumber Americans five to one.
But Southeast Asia’s dependence on China leaves the region exposed. When China’s economy slows, travel follows suit. The SARS crisis of 2003 devastated Asian tourism for months. Political tensions, travel warnings, and natural disasters all give Chinese travelers cold feet. And currency fluctuations alter outbound traveler purchasing power in Southeast Asia.
No country highlights the volatility like Vietnam. Chinese arrivals doubled from 2013 to 2018, becoming Vietnam’s second largest market. But in 2019, border disputes flared over the South China Sea. Anti-Chinese protests broke out, and worried Chinese stayed home. Yet geopolitical tensions can swing both ways. Filipinos steered clear of mainland China when maritime conflicts arose, instead opting for vacations in Southeast Asia.
The region must phase dependence by broadening its appeal beyond Chinese tourists. Global recognition for local cuisines provides one opportunity. Culinary tourism lures Indian, Japanese, and Western palates to sample underrated Lao, Malaysian, and Vietnamese fare. Millennial markets, Muslim segments, and developing countries all offer sources to offset reliance on Chinese arrivals. Partnerships with travel platforms like Ctrip and Fliggy also help Southeast Asian destinations stay top of mind.
Asia Pacific's Reign as Top Travel Region Coming to an End - Australia & New Zealand Losing Allure
Australia and New Zealand built world-class reputations as must-see destinations. Their natural wonders lure travelers from across the globe seeking adventure and Instagramworthy backdrops. As Asia Pacific travelers gain the means and motivation to roam abroad, Australia and New Zealand beckoned as idyllic and accessible destinations.
Chinese travelers in particular flocked to these countries thanks to their proximity. By 2016, China became the number one source of visitors to Australia. New Zealand also reported Chinese as their second largest market after Australia.
But this flood of arrivals from China is slowing. Growth dropped from double digits to just 2.5% in 2018 for Chinese visitors to Australia. Forward bookings are sluggish as well. According to ForwardKeys, future bookings from China to Australia fell by 6.4% in the first half of 2019. New Zealand follows suit, with stats forecasting a reduction in Chinese arrivals for 2019.
Why the sudden drop in interest? Australia and New Zealand face stiff competition from emerging destinations closer to home. Southeast Asia offers similar tropical beaches, hiking trails, and appealing cities at lower price points. And new routes make South Pacific islands quicker to access than Australasia for time-pressed Chinese travelers.
Reputational issues also dent Australia and New Zealand’s dominance. Chinese travelers expressed dismay at Australia’s scrutiny of foreign political interference. New Zealand attracted ire as well by limiting foreign purchasers of real estate. Chinese expect a warm welcome when traveling abroad. But recent political tensions undermine this hospitality.
Safety concerns arise too. A series of assaults on Chinese students in Australia received widespread media coverage. And Chinese worry that natural disasters make travel to this region too risky. Bushfires threatened popular spots like Kangaroo Island. The White Island eruption stunned those already wary of New Zealand’s volatile seismic activity.
Fickle millennial travelers prioritize brag-worthy destinations over established favorites. Australia and New Zealand pale in comparison to exotic locales in Africa, the Middle East, and the Americas. Even industrial heritage sites in Germany and Korea dazzle more on Chinese social media. Australasia simply seems stale rather than cutting edge.
Local businesses feel these visitor declines. Sydney Airport statistics revealed a 6% drop in Chinese passengers in 2019. Chinese visitors account for 15% of annual sales at Chemist Warehouse duty-free stores, but these shoppers spent 20% less per transaction in 2019. Restaurants and hotels courting Chinese diners and guests found bookings down over New Years.
Asia Pacific's Reign as Top Travel Region Coming to an End - Indian Outbound Travel Surges
Amid Asia Pacific's shifts, India stands out for its immense growth potential. This country of 1.4 billion residents already dominates world statistics. It is the fastest growing economy. It boasts the world's largest youth population. And it stands poised to become the most populous country by 2030. But India's outbound travel, while growing fast, still lags far behind Asian peers. Just 30 million outbound trips were made by Indians in 2018 compared to 150 million by Chinese.
Multiple factors explain India's low outbound rates. Limited passport penetration constrains Indian's global forays. Over 70% of Indian citizens lack passports, the essential ticket for international travel. Outbound trips also remain a luxury for India's middle class. Prices still feel out of reach for many Indian households. And those with means often opt for domestic holidays or visits to relatives within India over discretionary leisure trips abroad.
But new realities are rapidly transforming this scenario. India's middle class is forecast to triple between 2010 and 2030. Disposable incomes will rise, putting global vacations within financial grasp. Already Dubai highlights its affordability by advertising shopping festivals and seats on luxury cruises for the price of budget hotel stays. Exposure through television and social media also fuels ambitions to roam beyond Indian borders.
The New Indian Traveler, a report by Agoda, reveals these changing attitudes. Indian millennials prioritize experiences over possessions. Adventure travel, sustainable tourism, and travel bragging rights motivate this demographic. Women especially demonstrate a willingness to venture further abroad, often signing up for group tours catering specifically to female travelers. Indian parents traveling with family and Indian retirees traveling solo also represent growth markets.
Asia and the Middle East reap immediate rewards as Indian outbound travel accelerates. Cultural and geographical proximity entice Indian travelers to Southeast Asian destinations like Thailand, Singapore, and Malaysia. Special incentives add appeal - Thailand offers visa on arrival and Malaysia waives visa fees. The glitz of Emirates like Dubai and Abu Dhabi provides Indians familiar services and attractions comparable to home, just amplified. Ahmedabad to Abu Dhabi is India's single busiest air route.
As Indians gain confidence, Europe follows as the next frontier. Customized tours of Italy, Greece, and Scandinavia draw new interest, especially from older andfemale segments. Air India's direct Newark to Delhi flight fuels traveler momentum to the US and Canada. Options for India's globally fluent youth even extend to exotic locales in Latin America, Oceania, and Africa.
Asia Pacific's Reign as Top Travel Region Coming to an End - Middle East and Africa Rising Stars
Asia Pacific travelers traditionally flocked to established and expected destinations in Europe, Oceania, and the Americas. But emerging regions now captivate the Asian wanderlust. The Middle East and Africa in particular entice visitors seeking cultural immersion, spectacular nature, and exotic cachet.
Dubai leads the charge to lure Asian visitors to the Middle East. This city pairs Islamic fascination with over-the-top modern amusements. Chinese relish Dubai's extravagant malls flush with international luxury brands. The Dubai Mall alone contains over 1,000 stores catering to Chinese shoppers. Indians rank Dubai their most preferred destination thanks to extensive air connections and family-friendly resorts. Dubai's beaches and Instagram-worthy skyline attract Southeast Asian millennials too.
Abu Dhabi also boasts bold architecture and lavish hotels to woo Asian travelers. Its sprawling Louvre museum provides a taste of culture with European panache. Yas Island’s Formula One events, Ferrari World theme park, and luxury marina invite affluent Asians seeking thrills. Nearby Al Ain oasis delivers a dose of nature and adventure.
Beyond the glitz, more intrepid Asian travelers journey to Oman for rugged scenery, to Bahrain for pearling history, and to Kuwait for artifacts that echo ancient civilizations. Socially conscious travelers volunteer in Jordanian refugee camps or on eco-initiatives in Lebanon and Israel. Religious pilgrims follow Buddhist trails in Sri Lanka or sacred sites in Iran. Even Saudi Arabia rolls out tourist visas to welcome Asians eager to experience the ultraconservative Kingdom.
Similar intrigue tempts Asia Pacific travelers to Africa. South Africa is the darling for its stunning vistas, from vineyards to safaris teeming with the Big Five wildlife. Outdoor adventurers summit Kilimanjaro or hike through Kruger National Park. Shoppers hunt for diamonds and souvenirs at Cape Town's Victoria & Alfred Waterfront. Foodies sample Cape Malay fusion cuisine.
Nature and wildlife lure visitors to other African destinations too. Kenyan safaris allow close encounters with giraffes, zebras, elephants and more. Zanzibar’s tropical coastline delivers turquoise waters for snorkeling and sailing. The Ngorongoro Crater in Tanzania assembles incredible density of African fauna.
Urban exploration entices visitors to Egypt. Asian millennials pose before the Great Pyramids of Giza and cruise the Nile River. Morocco charms with imperial cities like Marrakech and commanding mosques. Tunisia’s historic ruins capture imaginations too.
Asia Pacific's Reign as Top Travel Region Coming to an End - Europe Reclaims Lost Asian Travelers
Europe ceded ground to Asia Pacific destinations in recent years as newly mobile Asian travelers opted for regional vacations over long-haul journeys. But Europe is reclaiming its standing by rolling out targeted incentives and messaging to attract high-value Asian visitors back in record numbers.
Nowhere is this more apparent than with China. Chinese visitors to Europe peaked in 2015 at 12.5 million before falling to 10.6 million in 2017. Fears of terror attacks, civil unrest, and Brexit dampened enthusiasm for European trips. But visitors from China are returning, with arrivals bouncing back to 12 million in 2018. Europe promoted unified visa policies, UnionPay integration, and WeChat services to ease Chinese traveler concerns. Historic sites also launched Chinese language and mobile payment options.
Chinese splurge while visiting Europe, spending over $11,000 per traveler according to a Nielsen survey. Over 70% of Chinese tourists rank shopping as a key motivation for European holidays. Cities like Paris, Milan, and Zurich lure luxury shoppers with high-end boutiques and VAT refunds. London’s West End enjoys spillover too - tax-free shopping resulted in a 23% annual jump in Chinese spending. Even high-end outlets in smaller cities like Salzburg, Vienna, and Dusseldorf field a windfall from Chinese wallets.
Cultural cachet gives Europe an edge as well. Classical music fans flock to Wagner festivals in Germany and Austria. Art aficionados queue at the Louvre's DaVinci exhibition. History buffs recreate Game of Thrones scenes in Croatia and Northern Ireland. Avant-garde art exhibits in Berlin, high fashion in Paris, and futuristic architecture in Scandinavia showcase Europe as a hub for creativity and design. This cultural vitality superbly suits Chinese millennials seeking edgy experiences.
Sophisticated hotels realize the profit potential of Chinese vacationers. Accor Hotels trains 130,000 staff in Chinese cultural cues and etiquette. Hilton streamlines booking for Chinese visitors through Fliggy and Alitrip. High end lodging in Switzerland and luxury Alpine ski resorts even refrain from assigning room number four, since the digit sounds like 'death' in Chinese.
Chinese splurges ripple across Europe’s tourism ecosystem. Restaurateurs tout Chinese food festivals, dumpling making workshops, and congee breakfasts. Retailers embrace mobile payments and reach tourists through WeChat mini programs. Airports like Heathrow, CDG, and Frankfurt employ Mandarin speakers and provide transit information in Chinese. Europe finally realizes the strategic advantages of catering to Chinese visitors over other tourist segments.
Asia Pacific's Reign as Top Travel Region Coming to an End - North America Attracts High-Spending Asians
While Asia Pacific travelers once limited their focus to regional destinations, North America now captivates Chinese, Southeast Asians, and Indians eager to explore farther afield. Savvy destination marketing convinces Asian travelers that the United States and Canada deliver exciting adventures and solid tourist infrastructure worthy of their long-haul journeys.
Chinese travelers in particular power North American tourism. Canada approved 10 year visas to entice Chinese visitors, who proceeded to spend $2.1 billion in 2018 alone. Han and Li booked a National Geographic Jasper tour, marveling at the Rockies’ raw natural beauty. Vancouver’s urban appeal convinced the Wang family to spend their entire two week vacation exploring the Pacific Northwest.
Major U.S. cities rolled out red carpets for Chinese New Year 2019 to welcome wealthy visitors. California Casinos hosted concerts with A-list performers from Hong Kong and Taiwan. Shops on Rodeo Drive featured pig themed window displays. San Francisco’s Chinatown neighborhood saw traffic jams from tourists eager to celebrate.
West coast cities like Los Angeles and Seattle particularly appeal to Chinese travelers for their proximity to Asia and sizable Asian populations. East coast locales from Boston to Miami also invest in attracting Chinese through WeChat marketing and Chinese-language guides. According to NYC & Company, Chinese tourists spend over $3,000 per person when visiting the Big Apple, galvanizing hotels, museums, and retailers to cater to this coveted market.
Southeast Asians also demonstrate strong demand for American vacations. Singaporeans view the United States as an exciting yet comfortable destination thanks to English fluency. Indonesian and Malaysian millennials anxiously await the 2020 opening of Orlando’s Star Wars: Galaxy’s Edge as their dream theme park experience. Thailand’s LANGA Travel now curates American tours from archetypal road trips to Dude Ranch adventures.
For Indians, proximity makes Canada alluring. Smita, Rajat, and their parents opted for a two week rail journey to see the Canadian Rockies after viewing a disclosure on Discovery Channel. Meera, a solo female traveler from Bangalore, satisfied her inner adventurer dog-sledding in the Yukon wilderness.
Gradually Indians gain confidence in navigating longer itineraries across the continental United States. The Sharma family explored national parks out West to fulfill their son’s childhood dreams of cowboys and rodeos. Newlyweds Arun and Priya picked New York City, Washington DC, and Las Vegas for their American honeymoon to sample diversity. Retirees increasingly choose cruises to Alaska or driving tours down Route 66.