The Lunar New Year, which begins on February 5th this year, is the largest annual human migration, as millions of Chinese citizens are on the move, mainly to their hometowns to celebrate the holiday with family. The holiday, which is officially a week long, is a major revenue source for online travel agencies, China’s domestic airlines, as well as retailers.
Last year’s Lunar New Year holiday generated $70.2 billion (RMB 475 billion) in revenue, in China and abroad, and will likely exceed that total this year. Ctrip.com International reported that per capita consumption abroad totaled $1,400 (RMB 9,500) and contributed $9.1 billion (RMB 61.75 billion) to other countries’ economies during last year’s holiday.
More than 6.5 million Chinese traveled abroad during the Lunar New Year holiday, compared to about 386 million domestic travelers in the same period. This year, closer to 7 million Chinese tourists are expected to travel abroad, with another 400 million traveling domestically. This forecast from China’s largest online travel agency, Ctrip, should quiet the skeptics who predicted a slowdown in travel consumption this year.
Chinese travelers, particularly those traveling abroad, are more willing to splurge on the experience during the Lunar New Year than at other times, according to a report this month from Ctrip, which added that about 91 percent of its customers have booked four- and five-star products, including hotels, on their platform for this upcoming holiday, an increase of four percentage points from the previous Lunar New Year. This indicates that Chinese travelers are not concerned about spending on vacation during the economic slowdown, or at least on the Lunar New Year celebration.
At this auspicious time of year, Chinese tourists are more likely to go all out on their vacations, bucking the trend that they are spending less on more frequent trips abroad. Whether the travel spending spree extends to duty-free shopping and luxury retailers may depend on the companies’ campaigns and sales offered.
The top destinations, particularly the U.S., Australia, Italy, and the U.K., will all benefit from Chinese tourist spending spree for the holiday. But they will also have to find more ways to bring those tourists into retailers. Accepting Chinese mobile payments like Alipay and WeChat Pay are a start, but brands need to more than just making transactions easier.