Op-Ed | Despite Global Political Happenings, Security and Currency Rates Most Likely to Affect Chinese Tourist Behavior

Political happenings in the United States and Europe including the election of Donald Trump and Brexit have taken center stage on the world landscape in recent months, leaving experts wondering how these changes will affect the global business climate. China has been a particular focus of speculation, as political changes will affect both the overall balance of power over the long term, and global trade in the short term. One area that is often overlooked in the media is China’s economic impact on the global economy resulting from Chinese tourism expenditures. Chinese tourists overtook both the United States and Germany years ago to become the number one spending group globally—spending more than US$137 billion outside of China in 2015—a number that is expected to increase to more than US$255 billion by 2025, making it more than double that of the United States, and more than Germany, the UK, and Russia combined. As experts look to predict how political happenings will affect this massive powerhouse of global spending, they must take into account ease of travel, visa policies, and airlift to specific locations. However, perhaps the most important factor in understanding how Chinese tourism behavior will change in the future is Chinese consumer behavior and preferences as it relates to travel. In order to more accurately predict changes in this behavior, China Luxury Advisors turned to the foremost experts in Chinese tourism—the Chinese travel trade, and interviewed Chinese tour operators around the globe, as well as Chinese tour guides on the ground in the United States and Europe. These operators are on the front lines of Chinese tourist behavior on a daily basis, and the most attuned to shifts in behaviors. We asked them how the political climate is shifting consumer tourism behavior, and what they expect to happen in the future. United States When asked about the potential impact of the U.S. election on Chinese tourism, many tour operators were skeptical that it would have much of an impact on the prevailing Chinese tourism trend favoring the United States, unless tourism visa policies were to change. As David Wang from Galaxy Tour commented, “whoever becomes the president doesn't matter a lot to Chinese tourists. Chinese still want to travel to the United States.” Benny Feng from NSA International agreed, adding, “Sino-China tourism is the irresistible trend,” and Ma Jie of Lucky Tour said, “Chinese tourism can contribute to the American economy a lot. The trend of Chinese tourism will not stop.” What is yet to be seen, however, is how Donald Trump’s rhetoric on immigration and recent provocations on Taiwan will affect China-U.S. relations and their reciprocal 10-year visa agreement. According to Wang, “if the tourist visa policy becomes very strict to Chinese, the Chinese tourists won't be able to come to the United States.” According to the operators, the top two concerns for continued strength in Chinese tourism to the United States are the impact on the value of the RMB/U.S. dollar exchange rate, and any future security concerns in the United States. David Li from Blue Connection commented, “the election itself doesn't affect tourism, but the currency does. Now it's more expensive to convert CNY to USD, so it will be more expensive for Chinese tourists to travel to the U.S. If this trend continues, the number of the tourists coming to the United States will decrease.” The issue of China’s currency devaluation has been front and center in Trump’s comments on China throughout the U.S. election, and experts have said that his tweets critical of China have contributed to a falling yuan since his win. Deming Zhu from Shanghai Airlines Travel reiterated the point that the the value of the currency would be a critical factor, stating, “Chinese consumers are more concerned about the exchange rate than the election results. If the policy of the new president is driving RMB down, then it will be bad news for Chinese tourism to the United States.” Meanwhile, safety is always the number one concern for Chinese tourists, and any perceived instability will have a negative impact on growth. Europe While Western Europe is awaiting the results of its continually shifting political landscape with the recent election in Austria, upcoming elections in Germany and France, and continued political unrest in Italy, Chinese tourists have already changed their behavior significantly in Europe. A tour operator from the company Comfort Travel explained, “While Western Europe still dominates the market, Eastern European destinations are gaining popularity.” Security issues in France, Belgium, and other Western European countries have caused a dramatic shift in European itineraries, to favor locations in Eastern Europe, Northern Europe, and the UK. Several tour operators cited the growing popularity of the Nordic countries, especially Denmark and Iceland. In particular, Northern Lights tours are hot products among the tour operators in China right now. Chinese online travel agent Ctrip recently called Iceland and Hungary the “dark horses” of today’s Chinese tourism market. Chinese tour operator Spring Tour, agreed, with a representative stating, “Eastern European countries like the Czech Republic and Russia are growing quickly. We are also seeing secondary European destinations such as Spain gaining in popularity, mostly due to the security issues in France and Belgium.” Tour operator UTour also commented that Eastern European destinations, Croatia, Serbia, and the Czech Republic are all increasing among individual travelers. The Brexit decision has not had a negative impact on Chinese tourism behavior, as the UK has experienced a recent increase in Chinese tourism since the decision as Chinese tourists look to take advantage of the weaker pound. Other trends that the tour operators are seeing in Europe include a rise in honeymoon tours, increases in family trips, growing popularity of self-drive trips in Europe, and the rise of photography tours. Looking forward, there will be continued scrutiny on the effects of the refugee crisis. A representative from Comfort Travel commented, “The European market is expected to perform better next year, however, the refugee crisis is likely to cause instability in the region and halt any major growth.” A representative from UTour echoed these comments, “Chinese travelers are likely to avoid areas hit most by the refugee crisis, despite the weak Euro.” Chinese tourists will continue to keep a keen eye on security and the euro/RMB exchange rate, both of which will have the primary impact on short-term gains and losses to countries in Europe. A representative from Spring Tour explained, “if Europe can improve regional security, the Europe market will rebound in 2017.” A representative from UTour added, “the exchange rate has a significant impact on travel decisions. A weak RMB is likely to slow down outbound travel.” Renee Hartmann is the Los Angeles-based co-founder of China Luxury Advisors. For any questions and media inquiries, please email renee@chinaluxuryadvisors.com.

Op-Ed | Despite Global Political Happenings, Security and Currency Rates Most Likely to Affect Chinese Tourist Behavior

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Published December 13, 2016

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Op-Ed | Despite Global Political Happenings, Security and Currency Rates Most Likely to Affect Chinese Tourist Behavior