The latest international visitor arrival statistics from the Singapore Tourism Boards paints a rosy picture of the island nation’s performance in the Chinese market with a more-than-healthy 55.2 percent growth of Chinese arrivals in the first half of 2016. This follows a dramatic slump in Chinese arrivals in 2015—which to a large part was the result of concerns surrounding the 2014 Malaysia Airlines MH370 disaster and the 2015 Southeast Asian Haze that engulfed Singapore and surrounding countries in thick smog last year.
However, a more careful look at the tourism figures reveals a different story. Arrivals of Chinese nationals by sea declined by 6.3 percent in the same period—a direct contradiction to the overall growth of cruise tourism in the Chinese market. In fact, the Chinese Ministry of Transport expects the China cruise market to grow by 400–500 percent between 2015 and 2020, and all larger international cruise companies have been rushing to set sail to new ships purpose-built for the Chinese market. Another popular cruise destination, South Korea, experienced Chinese cruise arrival growth well over 100 percent in the same period—and has greatly benefited from extravagant spending on behalf of its Chinese visitors.
So where does Singapore’s remarkable Chinese tourism growth come from? One part of the equation is the 380,000 Chinese tourists the city-state welcomed by land from Malaysia in the first half of 2016, which represents 131.9 percent growth year-over-year. This brings crossings by land to 26 percent of all Chinese arrivals, and proves a significant trend shift for Chinese tourism to Singapore. If the rate of growth is sustained over a longer period of time, it may reshape Chinese tourism to Singapore as a whole.
The unfortunate truth is that Chinese visitors entering Singapore by land are disproportionately represented by low-cost, no-frills package group travelers arriving by bus for one of their stops along a greater Southeast Asia journey. A majority of land-bound visitors are likely to make a stop for shopping in Malaysia’s Johor Bahru, a city largely known as a conveniently located shopping destination for Singaporeans on a budget, before entering the significantly more expensive Singapore less than an hour’s drive away. Needless to say, Singapore risks losing out on most of these travelers’ shopping expenditures, and they may not have been the right shoppers in the first place.
Nevertheless, Chinese arrivals by air are also showing strong growth at 41 percent in the same half-year period and is largely represented by travelers more likely to spend more money in Singapore’s shopping malls and casinos. In spite of this strong performance, a large share of the growth in arrivals by air stem from China’s second and third-tier cities—again overrepresented by budget-conscious travelers. These very same travelers are also much more likely to use Singapore as a transportation hub before continuing their journeys to the nearby Indonesia or the aforementioned Malaysia which both provide more attractive tourism and shopping options for thrift travelers—and declining average lengths of stay in Singapore indicates that this shift is already underway.
In the end, Singapore is well-positioned to benefit from the untapped tourism potential from China’s second and third-tier cities, but without much to offer them, it may have to wait for their level of affluence to grow before truly benefiting from their visits. Until then, the recovery is not worth as much as the growth of Chinese arrivals would lead one to believe.