From the beaches of Oahu to the bustling streets of Manhattan, American tourist hotspots now face a significant economic challenge: a sharp decline in Chinese tourists, a critical demographic known for its substantial spending power.
Before Covid-19, as many as three million Chinese travelers visited the US annually, contributing more than $30 billion to the country’s economy. In 2019, the US welcomed 2.8 million Chinese visitors, who made up just 4% of all inbound foreign travelers, yet generated 13% of tourism revenue.
This year, fewer than 850,000 Chinese tourists are expected to visit the US, a drop of nearly 70 percent from four years ago, translating to more than $20 billion in lost revenue.
This is giving the US tourism industry even greater motivation to regain its pre-Covid momentum in critical markets like mainland China. While the US should see nearly 63 million international arrivals this year, around 20% less than it saw in 2019, but a little more than 20% than in 2022, the country does not expect a full inbound tourism recovery until 2025.
According to Renee Hartmann, Founder of CLA and co-author of Next Generation Retail: How to Use New Technology to Innovate for the Future, “In 2023 the rebound [in Chinese tourist arrivals to the U.S] was slower than many anticipated due to continued reduced flight capacity, time to re-start the issuance of passports, visas and other infrastructure needed to support tourism between the two countries, and the overall deterioration of the political ties between the countries.”
Looking to more rapidly boost Chinese tourist arrivals in 2024, the US is looking to quickly increase the number of direct flights to China. To this end, one outcome of the recent high-profile meeting between US President Biden and Chinese President Xi was a promise to substantially increase scheduled passenger flights in the early part of next year. This is an important step, as the volume of flights between the two countries is only about a fifth of what it was before the pandemic.
More direct flights do not necessarily translate to a recovery across-the-board for tourist destinations across the US. Even if there is a surge of Chinese tourist arrivals to the US in the next couple of years, the places that Chinese tourists choose to visit, study, and work will have evolved.
As Hartmann of CLA notes, “As the number of Chinese tourists to the United States increases, we expect Chinese tourists to behave differently than they did in 2019. We expect there to be more individual travelers and fewer groups, an increase in interest in cultural attractions and natural destinations and a desire to get ‘off the beaten track’ of the typical tourist attractions.”
More room at the Hotel California#
This shift is already being felt in places like San Gabriel, California, a city formerly thriving on Chinese tourism and student influx. Today, it grapples with an economic downturn, reflective of a broader trend: Chinese tourists aren't returning in their pre-pandemic numbers, and Chinese students are quickly returning home post-graduation, a notable departure from previous years.
The drying-up of Chinese tourists, students, and workers has hit a large number of businesses in and around San Gabriel, from realtors to car dealerships, restaurants and high-end boutiques, as Chinese nationals were a heavily relied-upon consumer base.
This issue is not specific to San Gabriel; it is a concern across California.
In 2019, about a third of the roughly 3 million mainland Chinese travelers who visited the US chose Los Angeles as their top destination. Last year, Los Angeles welcomed just 110,000 Chinese tourists, although that number is expected to nearly quadruple to 410,000 this year. Similarly, around half a million Chinese tourists visited San Francisco in 2019, contributing an estimated $1.2 billion to the local economy. This year, the San Francisco Travel Association expects that number to have crashed down to only around 100,000.
Considering global travelers have largely put the pandemic behind them, the reasons for the decline in Chinese tourists in cities like Los Angeles and San Francisco are more complex. According to recent data from Morning Consult, just 19% of Chinese adults planning international leisure trips within the next 12 months intend to visit North America, a sharp decrease from 37% last year. This decline in interest boils down to a lack of flights, visa challenges, concerns about crime, and general geopolitical tensions.
Opportunities on the horizon#
If, as the US government and tourist destinations hope, more direct flights and slightly warmer bilateral relations can entice more Chinese tourists to give the US a shot, we could see a major realignment in US tourism, bringing opportunities to lesser-known destinations. Industry experts predict a surge in Chinese outbound tourism by the middle of next year, and Trip.com has noted a growing demand for flights and visas beyond the usual spots in Southeast Asia, Japan, and South Korea and encompassing more unique global destinations.
With China's burgeoning interest in adventure sports and activities like camping, hiking, and skiing, states known for their natural beauty and outdoor amenities, such as Colorado, could see a rise in popularity. This trend is backed by the rapid growth of China’s outdoor sports industry, which is expected to surpass 3 trillion RMB ($421 billion) by 2025, and a changing demographic profile of the Chinese outdoor enthusiast – younger, affluent, and increasingly drawn to high-end, boutique experiences.
The US (along with Canada) could also benefit from a relatively new trend among Chinese outbound tourists: an interest in ski tourism. While China boasts hundreds of ski resorts, many Chinese skiers are looking abroad for new experiences in destinations like Japan, the US, and Canada. This presents a unique opportunity for US ski resorts to cater to this new wave of luxury-oriented travelers. However, attracting Chinese skiers presents its challenges; many are beginners and would benefit from Mandarin-speaking instructors and information on various non-ski activities available at these destinations.
This means US tourism officials and destinations need to take it upon themselves to leverage the platforms used by this digitally savvy cohort.
Changing tourist desires and preferences#
Says Hartmann of CLA, “Chinese tourists will want to explore each destination more deeply and discover unique experiences that are highly shareable on social media. They are doing more of their own research and turning to platforms like Little Red Book (Xiaohongshu) for travel inspiration, making positive word of mouth and traveler reviews more important than ever for destinations seeking to build a sustainable flow of Chinese tourists.”
Chinese tourists' strong interest in travel is undeniable, as evidenced by the Golden Week holiday statistics showing inbound and outbound passenger trips nearing 85% of pre-pandemic levels. This upward trend hints at a recovering outbound travel sector. However, there's a notable shift in preferences among China's affluent travelers.
Namely, there is less of an indication that the most affluent Chinese travelers are in a hurry to get back in line at luxury boutiques on the Champs-Élysées, or pose for selfies at the Statue of Liberty.
Rather, a 2022 survey by Altiant noted a growing interest among wealthy Chinese tourists in mental wellness trips and self-care, a trend that aligns with a broader health and self-care boom in China. Notably, while these travelers are opting for more relaxed and wellness-oriented travel, they are open to lavish spending. This could bode well for five-star hotels and spas with a health-and-wellness focus in the US.
The US tourism sector anticipates a resurgence of Chinese visitors in the coming years, contingent on increased direct flight availability. This anticipated recovery, however, might see a transformation from volume-based tourism to a preference for bespoke experiences. Mainland Chinese tourists are expected to increasingly seek unique, personalized travel experiences, exploring a diverse range of American locales.
This evolution presents a significant opportunity for varied US state tourism boards and businesses to engage with this emerging market segment – younger, wealthier, and more adventurous Chinese tourists, poised to invest in new experiences.