Introduction
The COVID-19 pandemic has undoubtedly had a significant impact on the global tourism industry, with countless travel restrictions and border closures causing tourism numbers to plummet. However, with the gradual easing of restrictions there is a glimmer of hope for the industry and the adjacent luxury retail industry which thrives on being able to sell to tourists. This is especially true for Chinese tourists, who have been one of the biggest drivers of global tourism and especially luxury retail in recent years.
The Chinese tourism industry has seen a significant rebound in recent months, with more and more Chinese tourists starting to venture overseas once again. However, reading many of the mainstream points of view on this topic, one might think that the return may happen almost instantaneously – from the data we have collected in the following article this appears to not be the case.
One of the biggest barriers to travel for Chinese tourists is the high cost of flights. Many airlines have significantly increased their prices in response to the pandemic, making it more difficult for budget-conscious Chinese tourists to travel overseas.
Another challenge facing Chinese tourists is a sense of caution when it comes to returning to international travel, there is still a sense of uncertainty surrounding international travel. As a result, many Chinese tourists are choosing to stay closer to home and explore domestic travel destinations instead.
Methodology
In this study we looked at the number of posts on XiaoHongShu (RED) that mention specific city names (in both Chinese and English) along with the keywords (travel and/or shopping). The number of posts regarding each city is counted monthly from September 2022 until the 23rd of April 2023 – in turn giving us a dynamic evolution of consideration towards different destinations.
While this methodology has its flaws, we believe that directionally it can help brands and businesses understand what may be more or less likely to happen in terms of scenario planning for tourism resumption.
We included a list of 30 top cities, covering key domestic destinations, as well as key international destinations in both Asia, Europe,and America.
Overall Trends
To understand how the market is reacting, it is important to look at the overall trends in terms of posts.
From the graph we can see that the number of posts has significantly increased starting from January in 2023, and the total posts we tracked from 2022 was nearly 60,000 while in 2023 up until 23rd April was over 110,000.
This represents an 86% growth in overall conversations regarding our top 30 destinations and is a promising sign of the overall rebound and willingness (at least from the limited scope of our study) to resume travel and spending.
Share of Posts – The Top 30
Looking at the top ten destinations by share of the total top 30 posts we can see some interesting insights:
- Greater China dominates – the first appearance of non-China city only comes at the fifth position with Singapore, only taking 6.4% of the total posts. The Chinese cities within the top 10 represent 65.9% of the total number of posts in the Top 30.
- Macau comes out on top – as we will show later, it dominates the conversation earlier – from September until the end of 2022, this is likely due to the easing of restrictions earlier in the city for mainland tourists
- Sanya* (which is shown as a combination of both Sanya and Hainan to ensure completeness) comes in at a strong second place. The number of posts significantly peaked during the Chinese New Year, when there will still a lot of uncertainty about wider travel.
- Chengdu comes on top in terms of mainland cities– surprisingly beating out Beijing and Shanghai. Also worth of note is that Beijing came out above Shanghai in 7th and 8th place respectively
- Bangkok appears at sixth, which is unsurprising given that Thailand was one of the first countries to ease health check and travel restrictions from the mainland
- London is the only non-Asian city on the list appearing at 9th, perhaps also surprisingly beating Paris which is down in 13th place
Outside of the top 10, we also see some interesting insights:
- Cities in the USA, Italy and Australia all appear, but do not seem to show a significant SOV, at least currently, these further afield destinations do not appear to a country of choice for the Chinese consumer to spend their hard-earned money
- Seoul comes a surprising 28th in the list, however we do see an increase in the posts since the start of 2023 as restrictions ease
- Taipei comes last at 30th, even given its proximity
Risers / Fallers
Given the significant change in circumstances between the start of our data period (September 2022) and the end of the period (April 23rd,2023), the total may give us some misleading findings, and the dynamism of the preferences should also be considered.
We looked at the average share of the top posts for 2022 against that of 2023 (Sept-Dec vs Jan-Apr) and identified which were the biggest risers and fallers in terms of the conversation.
Risers:
- Hong Kong comes out as the biggest riser, gaining a 7.7 percentage point bump in its share of voice, from an average 3.3% in 2022 to 11% in 2023. With the gradual easing of restrictions and increases in travel permit allocations it comes as no surprise that tourists will be flocking back to the city.
- Bangkok has also enjoyed a rise in popularity into 2023, with a 3.5 percentage point increase from 3.7% to 7.3%. It may be safe to say that Thailand may be the country to watch in terms of tourism resumption as we head into the summer
- The other significant risers were Sanya, Beijing, and Dubai – all potential spots to focus on capturing consumer spending over the coming months.
Fallers:
- Macau is the most significant faller in the list, dropped a whopping 12.6 percentage points from a share of 36.9% to 24.3%. While it would still top the list even if we only consider 2023, the trend is not favoring spending in Macau
- London has also seen a drop of 1.8 percentage points, and if we only considered March and April, would be almost neck and neck with Paris as a talked about destination
- Other fallers include Chengdu, Guangzhou, and Shanghai, this is likely due to the relative increase of discussions around international destinations, that shifted their relative share of voice lower.
Conclusions
From our data we can see promising signs of recovery when it comes to travel. At least for the next few months, there should be a considerable focus on domestic travel for Chinese consumers (including markets such as Macau and Hong Kong), and the rebound internationally may take time some time.
We expect that if the resumption of travel routes, and thereby the decrease in average ticket prices decrease, we should see some more favorable share of the conversation shifting to international destinations, and locations a bit further a field should benefit from this such as Paris, Milan,and New York.
However, the elephant in the room is that if, as a brand or retailer, you are expecting a return to the pre-pandemic status quo in terms of allocation of Chinese consumer spending in your market, you may end up disappointed.
