Where are Chinese tourists traveling after ‘zero-COVID’?

Much to the relief of the global tourism industry, Chinese citizens are once again traveling internationally. But, after three years of restrictions, rising geopolitical tensions, and volatile economies, their buying behaviors may have changed since their last trip.

At the end of 2022, China began rolling back its zero-COVID policy, which aimed to minimize domestic cases of coronavirus through strict prevention and containment measures, including closing the country’s borders to most international travel.

In short: Chinese citizens can explore the globe without restrictions for the first time in nearly three years. This is a massive victory for the global tourism industry because, the year before the pandemic, 155 million Chinese tourists went abroad and spent $245.6 billion.

But, like so many things, the preferences and buying behaviors of Chinese tourists have meaningfully changed since the onset of COVID.

The impact of geopolitical tensions

Despite the official end of COVID-19 as a global public health emergency, travel in and out of China is still being influenced by a number of geopolitical tensions.

For starters, while the US used to be a top destination for Chinese travelers, non-stop flights between these countries have been severely restricted since the zero-COVID policy went into effect. Even as these regulations are rolled back, the relationship between the nations remains strained, contributing to an ongoing cap of only 48 total flights allowed between the US and China each week–a far cry from the more than 350 weekly flights taking off before the pandemic. However, that number is likely to begin increasing slowly.

But there are other hurdles to overcome. In particular, Russia’s airspace remains closed to many global airlines as part of the fallout from its invasion of Ukraine–with some experts predicting the closure will last for years to come. Subsequently, direct routes between China and North America are now longer and more expensive for carriers–not to mention consumers–and options for connecting flights are limited, both of which are hampering airlines’ enthusiasm for restoring flight routes.

The new normal

Historically, Chinese travelers bring billions of dollars to the countries they visit. For example, before COVID, as many as three million Chinese travelers came to the US annually and contributed more than $30 billion to the economy.

And though Chinese tourists previously preferred to visit other Asian countries, including Thailand, Japan, and Vietnam, as well as the US, they are increasingly favoring the Middle East and North Africa.

There are a number of variables contributing to this change, including the influence of state-run media outlets as well as the cost and availability of flights. However, Chinese tourists are not alone in flocking to these destinations. In fact, according to HSBC, the Middle East has achieved the largest post-pandemic tourist rebound of any region globally.

And, as of now, it looks like this is no passing fad. In recent years, governments in the region have been investing heavily in tourism as a way to diversify their economies away from oil. And the industry is following suit. The Radisson Hotel Group, for example, currently has 52 properties in the Middle East and is planning on expanding that portfolio to 150 properties by 2030.

Chinese citizens are also increasingly interested in visiting Latin America. And, in August, China’s Ministry of Culture and Tourism reinstated organized group travel for a number of these countries, including El Salvador, the Dominican Republic, Peru, Brazil, and Venezuela. This is a significant win–in 2019, group tours accounted for 60% of the spending done by Chinese tourists.

No matter their destination, however, it may be too soon to bank on the economic impact of these travelers. In recent months, Chinese consumer confidence has been declining, making many hesitant to make big purchases, which could include flights, accommodations, experiences, and/or souvenirs.

Similarly, before the pandemic, Chinese shoppers accounted for a third of the world’s luxury purchases, with two-thirds of that shopping done abroad. But, during lockdown, luxury goods in China became more sophisticated, varied, and appealing–particularly as prices soared across the globe. Despite the end of zero-COVID, wealthy citizens have continued to prefer buying their high-end products domestically.

For many reasons, I am excited to see Chinese travelers once again exploring the globe. Even more so, I am thrilled that they are bringing stimulation and attention to areas that may have been previously overlooked. However, as global cases of COVID-19 rise, and economic uncertainty and geopolitical tensions remain unresolved, we should not take for granted that this relief may be short-lived.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.