CHINA: Chinese Citizens Warned Against Traveling To US, Airlines Face Hard Times

China has issued a travel warning against the U.S. through the end of 2019, the latest shot amid the worsening trade war. While the overall impact on the U.S. tourism would be manageable, it could pose a threat to some airline companies as well as casinos.

While Chinese tourists spend heavily around the world, contributing to $270 billion abroad last year alone, they only accounted for 3% of the $1.1 trillion U.S. travel market in 2018, according to the U.S. Travel Association.

In a worst-case scenario, the number of Chinese tourists to the U.S. could drop by nearly 50%, resulting in an $18 billion hit to travel spend, Bank of America Merrill Lynch estimated.

Chinese tourism is a big prize in global trade. On this front, the U.S. has more to lose than China, Robin Winkler, foreign exchange strategist at Deutsche Bank, said in a note.

The trade war would likely take a severe dent to household income growth to squash the new middle class’s appetite for passports and foreign travel. A weaker exchange rate could make foreign travel somewhat less affordable, Winkler added.

Chinese travel to the U.S. has already declined by 5.7% in 2018 from a year ago, compared to a 4% gain in 2017 and a 15% increase in 2016, according to the U.S. Travel Association.

The number is only going lower after the Chinese government issued an alert for Chinese tourists traveling to America, citing shootings, robberies and theft that have occurred frequently in the U.S.

Since only legacy airline companies offer flights to China, the negative impact from declining Chinese tourists would fall mostly on United Continental, Delta Air Lines and American Airlines, according to Bank of America.

United carries the most flights to China with 47% of U.S. airline capacity, compared to about 25% for American Airlines and Delta, Bank of America analyst Andrew Didora said.

In the bank’s worst case scenario which involves a 50% drop in Chinese tourists, United’s unit revenues could see a 140 basis point drag and the impact would be 70 basis points for American Airline and Delta, Didora said.

Chinese travelers, who are big customers for casinos, might now turn their backs on gaming in the U.S. amid the travel advisory and intensified trade tensions. The casinos in Las Vegas are already feeling the pinch.

Las Vegas has already noted weaker Asian gambling trends. Baccarat gross gaming revenues are often a barometer for the health of the Asian consumer and are down 26% year to date, Didora said.

The weakness could weigh on casinos including MGM, Las Vegas Sands and Wynn Resorts that have an exposure to baccarat, the analyst noted.

Luxury retailers could also take a hit. Tiffany & Co. on Wednesday blamed disappointing quarterly results on a sharp decline in Chinese tourism
because of the trade war.


Tourism Observer

CHINA: Importance Of Chinese Tourism

Accordingly, spending by Chinese tourists abroad has increased. Various sources place their expenditures in 2016 at $261 billion. Today, China has become the world’s largest outbound tourism market in terms of volume and spending, surpassing the United States and European countries.

Millennials and senior citizens make up the bulk of the travellers. By 2020, 300 million millennials are predicted to avail of leisure tours to foreign countries. These young adults were born between 1980 to the 1990s, when the one-child policy was still in effect. Having no siblings to compete with for their parents’ and grandparents’ affection and money, they have the means to travel the world with no monetary restrictions.

In Asia, Europe and the Americas, Chinese tourists have now become an ubiquitous presence. Their number has more than doubled in the last seven years, from 57.38 million in 2010 to 122 million in 2016, according to the its government's tourism administration.

China’s phenomenal growth in international travel has been attributed to its booming economy, the massive expansion of its middle class, the government’s moves to lessen restrictions and simplify certain processes, and the easing of visa restrictions specifically for them in many countries.

In the past decade, its average annual GDP growth has reached a high of 14.2% in 2007. (The ideal GDP growth to sustain a good economy is 2-3 percent.) China is now the second top economy after the US, with a nominal GDP of $11 trillion (the US’ nominal GDP is $18 trillion.) But in terms of purchasing power parity (PPP) China has overtaken the US and is expected to be the number one by 2050, as a study by Pricewaterhouse Cooper shows.

As a result of the country’s robust economy, millions of its people have been lifted from poverty to gain a middle-class status. Although more than half of its population of 1.388 billion are still in the low-income class, 31 percent now belong to the middle class, earning from $10 to $50 per day. That amount is more than enough to provide for the basic needs, leaving extra money for travelling.

The top destinations for these new globetrotting Asian travellers shift periodically. Most first-time travellers visit Asian nations before venturing farther out west. Hong Kong, Thailand, Japan, Taiwan, Singapore, Vietnam and Malaysia remain the favourites while the United States, France and Germany are the most visited in the western world. In 2016, South Korea saw an increase of Chinese tourists while Europe experienced a decline in incoming travellers because of recent terrorist attacks.

The economy in places visited by these alien visitors has been enormously benefitted. Retail shops, luxury brands, restaurants, hotels, the transportation industry and entertainment stand to gain much from catering to them. In turn, many of these businesses are modifying their services to please their free-spending Chinese clients, earn their praise and goodwill and spread the word about them for future patronage.

The travelling Chinese are quite sensitive when on foreign land. They see discrimination and disrespect in simple acts from the non-Chinese, such as when they are told to queue the line or not to smoke in hotel rooms. They are also protective of their country’s history, and perception of alleged revisions in significant events like the Nanking Massacre can have a negative effect on business.

On the other hand, they are also typecast as lacking in manners, and are rude and uncouth. Cultural differences are not only apparent in their trips to the US and Europe; even their Asian neighbours have complained about them.

The first half of 2016 saw a 7% drop in outbound Chinese tourists to Hong Kong, Macau and Taiwan. But elsewhere, it is still increasing, albeit not as much as in the previous years. Optimistic forecasts say that the outbound Chinese tourists will be twice as many as the 122 million in 2016. Goldman Sachs predicts that overseas spending by the tourists will reach $450 billion by 2025.

The older population in China is increasing, too. Thanks to improved healthcare, they live longer and stay healthier into their 50s and 60s. Done with their parental responsibility to only one child, they are now enjoying a lifestyle that gives them time and enough cash for leisure travel.

China and the host countries should take advantage of the gains to be had from each other. The communist country’s government through its China National Tourism Administration (CNTA) recently published a guidebook educating its citizens on proper behaviour and social graces to observe when travelling abroad. Tour agencies booking Chinese travellers must also help in the education.

Countries receiving Chinese tourists are learning to recognise their cultural distinctiveness and respond accordingly by putting up signs in Chinese and teaching them the local ways and customs in a non-offensive manner.

If both parties are open to a change in mindset that leads to improved relationships, global economy will grow and an understanding of the differences in cultures will promote friendship that will bring about mutual benefits.



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AUSTRALIA: Australian Economy Benefiting From Chinese Tourists

The boom in Chinese tourism to Australia is continuing to provide a huge boost to the Australian economy, an economist at the Commonwealth Bank of Australia said on Friday.

Senior economist at the Commonwealth Bank of Australia said that even as the Australian dollar strengthens, the tourist levels should continue to rise.

I think we have seen signs of the growth rate easing compared to twelve or fifteen months ago, with growth rates now at 8 to 10 percent per annum.

The pace of acceleration has certainly slowed, but the quantum in terms of the number of tourists will continue to grow," Sebastian said.

The economist said inflow of tourists have significant knock-on effects for the overall Australian economy.

It feeds a lot of different sectors, from transport to retail, to cafes and restaurants, even the support sectors around food and deliveries.

It is providing a big win, and you can see it in a couple of the key capital cities across the eastern seaboard.

But, it was not just the major capital cities in Australia that are benefiting the most economically from this tourism boom, and Sebastian identified one city in particular where tourists from China have had one of the biggest positive impacts of all.

If you look at Hobart, which is a smaller eco-system and any sort of tourism impact is felt in an even bigger fashion, because it just feeds through the economy a lot quicker.

So, I think its Chinese tourism a very big positive, and I think it is supporting a lot of the capital cities, particularly on the eastern seaboard.



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CHILE: Tourism Boom In Chile

International tourist arrivals to Chile reached a historic high last year with 5.64 million visitors in 2016. According to data provided by the Research Division of the Tourism Department, tourism grew by 26% from 2015.

In 2016, most international tourists came from Argentina, a 49% boost from the previous year (2.9 million entries). Meanwhile, tourism from Europe increased by 9%, totaling 449,667 visitors.

The European market provided the greatest influx of travelers to Chile, 41,523 tourists came from Italy, a 24% rise from the previous year. Tourism from England increased by 11%, totaling 51,611 visitors; the rate of arrivals from France also grew by 10.2%, with 77,129 visitors. Arrivals from Spain rose by 6.3% with 77,987 arrivals.

Among the other important tourism markets for Chile, the United States is noted for 208,000 arrivals, representing a 12% growth rate; as well as Australia, from which Chile received 50,968 visitors, indicating an 11% increase. Significantly, Chinese tourism has spiked by 49%, closing out 2016 with 22,992 arrivals.

Income from foreign exchange and projections

Foreign revenue from tourism is projected at a total of USD $3.130 billion. This figure corresponds to an 8% increase as compared to revenue from 2015.

In addition, authorities have set forth their projections and estimates produced by the Department of Tourism Research Division, this year will see a 14% rise in international tourism from 2016, which may mean between 5.6 and 6.4 million international arrivals to Chile.

This international influx continues to be marked by an increase in Argentinian visitors, which is estimated to grow by 28%, climbing to 3.7 million arrivals.

Meanwhile, it is estimated that tourism from the United States will increase by 1%, totaling 205 thousand tourists. It is expected that the number of European tourists will show a 4% increase, totaling 465 thousand tourists.

CHINA: Hainan Airlines, SilkAir, Who’s Flying Where?

Hainan Airlines adds double Laos link
Where? Haikou (China) to Vientiane and Luang Prabang (Laos)
When? Three times a week (twice to Vientiane, once to Luang Prabang), effective immediately
Who? Hainan Airlines
Why? Rising Chinese tourism and investment in Laos
Anything else? These are the first direct links between Laos and Hainan, China’s island province

Across the Sea of Japan
Where? Vladivostok (Russia) to Osaka Kansai (Japan)
When? Twice a week (reduced to once a week in May-June)
Who? S7 Airlines
Why? Reflects improved relations between Russia and Japan
Anything else? Vladivostok is only 1,020km from Osaka, but 9,100km from Moscow

SilkAir to make debut in Sri Lanka
Where? Singapore to Colombo (Sri Lanka)
When? Three times a week from April 2017
Who? SilkAir
Why? Subsidiary continues to take over more of Singapore Airlines’ regional services
Anything else? SIA will continue to operate daily flights on the route

Russian city gets international link
Where? Petropavlovsk-Kamchatsky, pictured (Russia) to Tokyo Narita (Japan)
When? Twice a week in summer 2017
Who? Yakutia Airlines
Why? Long-awaited international connection for city located north of Japan
Anything else? Located on the remote Kamchatka Peninsula, Petropavlovsk-Kamchatsky has no road links to the rest of the world

Cultural Tourism Ambassador For New York Is Lang Lang

New York City, already a top international tourist destination, has a message for visitors from China: There’s more to see than the Empire State Building and Times Square.

To spread that message and appeal to the growing number of Chinese tourists heading abroad, the city has named the superstar Chinese pianist Lang Lang as its first “cultural tourism ambassador.”

At a ceremony outside Steinway Hall in Manhattan on Tuesday — or “Lang Lang Day,” as proclaimed by Mayor Bill de Blasio — the musician was presented with a personalized double-decker bus featuring his photo in front. The event was timed to coincide with the release last week of Mr. Lang’s latest album, “New York Rhapsody,” billed as a love letter to the city where Mr. Lang, 34, maintains a residence.

“This is part of an effort to grow Chinese travelers coming to New York,” said Christopher Heywood, senior vice president of global communications for NYC & Company, the city’s tourism promotion agency. “Many cities in the U.S. are courting this market, and we want to make sure we are remaining competitive.”

For New York, that means encouraging travelers to venture beyond the standard-issue tourist sights and seek different experiences in the city’s boroughs outside Manhattan.

“Each neighborhood has its own sound and rhythm,” Mr. Lang says in a promotional video for the city. To accompany the video, Mr. Lang released a list of some of his favorite things in the city. It includes familiar spots — Carnegie Hall, Broadway and, yes, the Empire State Building — but also attractions that might not show up on the typical tour group circuit: Chinese food and the Steinway piano factory in Queens and the Dumbo neighborhood in Brooklyn.

Next to Dumbo, Mr. Lang wrote: “It’s an awesome neighborhood for dating, because there are so many restaurants and coffee shops.”

In highlighting what Mr. Heywood called “off-the-beaten-path” experiences, the city is responding to a shift in Chinese tourism away from whirlwind, multicity group tours toward individual travelers who set their own itineraries.

This shift is happening as Chinese tourism in the city has grown. In July, NYC & Company announced a two-year partnership with the Shanghai Municipal Tourism Administration to bolster tourism between the two cities, part of a broader effort that has been labeled the “U.S.-China Tourism Year.”

About 850,000 visitors from China went to New York last year, according to NYC & Company. The agency predicts that number will increase to around 920,000 this year and that China will soon overtake Brazil as the second-largest source of foreign visitors to New York, behind Britain.

While some New Yorkers may say that their city does not lack for tourists, local officials say there is still room for growth.

“We have a robust hotel development pipeline,” Mr. Heywood said. “So we have capacity to fill more of these hotel rooms and we also have a seasonal need to bring more visitors to New York in the first quarter of the year, which happens to coincide with the Chinese New Year holiday.”

There is one other activity for which there appears to be insatiable demand and supply: shopping.

Mr. Heywood noted the anticipation surrounding Empire Outlets, a mall and entertainment complex scheduled to open on Staten Island next year. The outlets are expected to be a hit among the many foreign tourists who ride the ferries for views of the Statue of Liberty — in particular the Chinese, most of whom list shopping as a top priority while traveling for leisure abroad.

“Our job is to expand the horizon of the Chinese traveler to showcase the authentic experiences and the new opportunity,” Mr. Heywood said. “And Staten Island is just as much a part of New York City as Midtown.”

CUBA: Boost In Tourism With Beijing-Havana Flights

Cuban officials are anticipating a boost in tourism when direct flights begin between Beijing, China and Havana, later this year.

Cuba’s deputy Tourism Minister Mayra Alvarez says the flights, scheduled to begin on December 27, will lead to the increase of Chinese tourists to Cuba, Latin American and the Caribbean.

Alvarez, who recently participated in an Air China promotional event, said China is the 17th major source of visitors to her country.

Meanwhile, Air China’s marketing manager He Zhigang announced that the first direct flight to Havana will make a technical stop-over in Montreal before arriving here next month.

The direct connection, which will use a Boeing 777-300ER three times a week, will be key to promoting Chinese tourism to Havana, Alvarez noted.
According to official statistics, over 22,000 Chinese tourists travelled to Cuba between January to November 2014.

AUSTRALIA: One Million Visitors From China Enter Australia

Australia’s tourism industry is continuing its record breaking trend with annual Chinese visitor arrivals hitting one million for the first time.

International visitor arrivals data for the year ending November 2015 released yesterday by the Australian Bureau of Statistics shows that China continues to be our fastest growing major source market, with growth of 21.6 per cent for the same period.

The latest figures were welcomed by the Federal Minister for Tourism and International Education, Senator the Hon. Richard Colbeck, who said recently implemented Government measures, such as opening a new Australian Visa Application Centre in Chengdu, China and streamlining visa application processes, were making it easier for Chinese tourists to come to Australia and will support continued growth into the future.

Tourism Australia Managing Director, John O’Sullivan, added that key to building a market now worth $7.7 billion annually to the Australian economy had been moving away from traditional group tours and aggressively targeting China’s rapidly emerging middle class.

“Our marketing, distribution and partnership strategies are all now geared towards targeting this new breed of young, independent traveller with the desire and the financial means to explore our country. That’s where we are focusing our resources and I’m delighted to say that is what is driving these impressive results,” he said.

Tourism Australia has undertaken several recent initiatives to boost Chinese tourism such as building an elite network of travel agents in China who are specially trained to sell tour packages to high-yielding clients. In recent years, Tourism Australia has also signed major strategic marketing agreements with China's largest carriers, including China Southern, China Eastern and Air China.

Mr O’Sullivan said those Australian tourism businesses which understood and were willing to adapt to the needs of Chinese visitors would derive the biggest benefits.

“We’ve gone to significant lengths to research and improve our understanding of our target consumer – their travel preferences and behaviour and the type of tourism experiences they are most looking for. The good news is that the industry is really starting to embrace this incredible opportunity by developing experiences which better meet the needs of the many Chinese visitors now flocking to our country,” Mr O’Sullivan said.

Fast facts

Chinese visitor arrivals to Australia:
Chinese visitor arrivals have increased from 100,000 in the year 2000 to one million in January 2016, with an average annual growth rate of 18 per cent since 2010.
Chinese arrivals grew two-to-three times faster in most months in 2015 than total overall arrivals to Australia.
Arrivals breakdown – holiday (53 per cent), visiting friends and relatives (20 per cent) and education (13 per cent).

Chinese visitor spend:
China is Australia’s most valuable market, with Chinese visitors spending more than $7.7 billion annually. Spend has increased by more than 400 per cent in the past 10 years, from $1.5 billion in 2005 to $7.7 billion in 2015.
Year-on-year spending grew 43 per cent in 2015 – double the previous 12 month’s growth rate.
Under Australia’s long-term tourism strategy, the value of the China market was originally estimated to be between $7.4 billion and $9 billion a year by 2020. Annual spending has already exceeded the lower end of that original range, and more recent forecasts indicate the market could be worth up to $13 billion.
Find out more about the latest visitor arrivals figures for the year ending November 2015.

CUBA: Cuba Anticipates Boost In Tourism With Beijing-Havana Flights

Cuban officials are anticipating a boost in tourism when direct flights begin between Beijing, China and Havana, later this year.

Cuba’s deputy Tourism Minister Mayra Alvarez says the flights, scheduled to begin on December 27, will lead to the increase of Chinese tourists to Cuba, Latin American and the Caribbean.

Alvarez, who recently participated in an Air China promotional event, said China is the 17th major source of visitors to her country.

Meanwhile, Air China’s marketing manager He Zhigang announced that the first direct flight to Havana will make a technical stop-over in Montreal before arriving here next month.

The direct connection, which will use a Boeing 777-300ER three times a week, will be key to promoting Chinese tourism to Havana, Alvarez noted.

According to official statistics, over 22,000 Chinese tourists travelled to Cuba between January to November 2014.

TURKEY: Southeast Asia loses, Turkey Gains As Chinese Tourists Seek New Pastures

Thailand in the first three months of 2015 the number of Chinese visitors to Southeast Asia dropped to 1.5 million, down from 1.9 million one year before.

Encouraged by the rising tide of Chinese outbound tourists engulfing Thailand, South Korea, and Japan, Southeast Asian nations have spent heavily to attract what has become the world's largest-spending outbound tourist bloc. However, with Chinese tourist flows to countries like Malaysia, Indonesia, and the Philippines drying up, Southeast Asia is finding that putting its eggs all in the China basket may not have been the most sustainable strategy.

According to the FT, with the exception of Thailand -- which remains massively popular owing to visa-free travel, cheap flights and accommodations -- in the first three months of 2015 the number of Chinese visitors to Southeast Asia dropped to 1.5 million, down from 1.9 million one year before.

This reflects a drawn-out trend. Excluding Thailand, Chinese tourist arrivals in Southeast Asia decreased to 6.2 million in 2014 from 6.4 million in 2013.

Tourism industry observers note a range of factors discouraging Chinese travelers from heading to Southeast Asia, from political tensions (ongoing territorial disputes and occasional anti-Chinese protests in Vietnam and the Philippines) to high-profile air disasters like Malaysia Airlines’ flights MH370 and MH17 and AirAsia Indonesia’s QZ8501. Other factors also play in, connected to the preferred activities of Chinese tourists abroad -- shopping among them. Buying that coveted Louis Vuitton handbag at 161 Đồng Khởi doesn't sound quite as exotic as buying it on the Champs-Elysées.

So where are they going instead? Chiefly, North Asia and Thailand. Chinese arrivals in North Asia rose 38 percent in the first three months of the year, with Japan in particular benefiting from a weaker yen and relatively good Sino-Japanese relations. Despite a fluctuating currency and the MERS outbreak, South Korea, too, continues to be a leading draw -- the country topped famously friendly Thailand as the most welcoming country for Chinese tourists in a recent Hotels.com poll.

But Chinese tourists aren't just skipping Southeast Asia for South Korea. In addition to flocking en masse to Europe, and cities like Los Angeles and New York, more adventurous travelers are appearing in rising numbers in place like Turkey and the South Pacific.

Turkey has made strong overtures to the China tourism market in recent years, efforts that seem to be working. Despite fears that recent anti-Chinese protests would hurt the tourist trade, Turkey has seen Chinese arrivals increase 48 percent in the first five months of the year to 106,000.

But it's a surge in Chinese travel to the South Pacific that has been arguably the most surprising. In the first quarter of 2015, 41,679 Chinese visited the region, a staggering 151 percent increase year-over-year. Sixty-three percent of those travelers visited Palau, which attributed the resulting 72 percent YoY boost completely to the opening of direct flights to Hong Kong and Macau. In many ways, this "sun and sand" boom is unsurprising, as Chinese travelers are the top foreign market for the Maldives, and islands like Saipan and Guam have seen strong growth as well.

Although recent figures and spending have been good for some countries and not-so-good for others, anybody who has watched the Chinese tourism industry for any length of time knows that these trends can (and will) change on a dime. There's always the risk of a flareup in Sino-Japanese relations (or Sino-Korean relations) that causes Chinese travelers to plummet for a year or two -- as was the case in Japan three years ago. A popular Chinese movie could depict a romantic getaway to Malaysia or Vietnam, spurring a wave of doe-eyed travelers. Devastating cyclones could cool Chinese tourists on travel to the South Pacific.

What Southeast Asia is learning now is that China should remain its most important market, but not one for which it depends solely upon.