Dragon Trail Research underlines erosion of Chinese travel shopping

Dragon Trail International Chinese Outbound Travel Trade Survey: July 2024 indicates that price sensitivity and a preference for personalised travel experiences are key factors influencing current consumer trends. We examine some of the key findings and also report on Dragon Trail’s recent ‘Post-pandemic Trends in Chinese Travel Shopping’ webinar, which confirmed that shopping continues to ease as a priority for many Chinese outbound travellers.

Photo by Ryutaro Tsukata

One of the key findings in Dragon Trail International’s newly published survey of Chinese travel agents’ opinions on the outbound travel market won’t make comfortable reading for travel retailers.

Asked which travel themes are most popular for outbound trips in 2024, the 295 respondents collectively ranked 14 answers (see table below). ‘Nature’ came in a comfortable first with a 54% score, ahead of the closely related theme of ‘Beach and Island’ (43%).

‘Shopping’ ranked a lowly 11th with a score of just 13% while ‘luxury’ fared even worse, occupying last place with a 9% rating.

Speak to just about any travel retailer with a substantial pre-pandemic Chinese business and they will confirm that things have changed drastically. On a Dragon Trail webinar in June Themed ‘Post-pandemic Trends in Chinese Travel Shopping’, UnionPay International Marketing Department representative Zhang Yifan referred to recent transactions trends on the UnionPay network.

“Previously, it was perceived that Chinese people are keen on purchasing luxury, and go to shopping centres and duty-free shops or outlets to buy luxury goods such as bags or cosmetics,” she said.

“However, after the pandemic we noticed a polarising trend. The very wealthy still purchase high-end luxury items, but many others are not so keen on luxury goods anymore.

“They feel luxury items are not a must buy when travelling abroad. Instead, they prefer to spend more money trying local delicacies, getting massages, beauty treatments, going to a concert, or visiting tourist attractions to take photos and sharing them on their social media platforms.

“They value the emotional benefits that travel bring more than happiness derived from shopping.”

Snapshots from the latest Dragon Trail research series

Zhang added: “Previously, Chinese tourists would consider shopping as the core purpose of their outbound trips. However, now they are more inclined to prioritise the experimental and spiritual reaction as the key goal of your travels, leading to a decrease in shopping desire and consumption. For example, department stores in Hong Kong and Thailand have recovered much better than duty-free shops.

In some markets the transactions in department stores have even outperformed the overall transaction recovery. The era when duty-free shop ruled overall transactions has passed.”

A sombre message indeed and one that is being felt very much across traditional downtown duty-free heartlands such as South Korea, Hong Kong, Macau and Thailand.

During the same webinar, Dragon Trail International Sienna Parulis-Cook Director of Marketing & Communications added: “There has been a major shift in Chinese luxury shopping since 2019. This has been impacted by two factors in particular.

“First was COVID and its ensuing travel restrictions. The second is the development of Hainan as a tax-free shopping destination. Comparing 2019 and 2023, it used to be that 70% of Chinese luxury shopping happened overseas and 30% happened domestically.

“By last year this had flipped with 70% of luxury spending happening domestically and 30% overseas. Now, obviously as outbound travel continues to recover, we will continue to see a change in this balance but it’s very unlikely that we’re going to return to 70% of luxury shopping overseas.”

Such fundamental changes to market conditions and sentiment are underscored by some of the other findings in the Dragon Trail International Chinese Outbound Travel Trade Survey.

Amid economic insecurity in China, consumers have become more demanding about outbound travel products’ value for money.

According to Dragon Trail Research, customers may be deterred by prices higher than their expectations. Over half (57%) of survey respondents stated that the majority of customers choose the most cost-effective outbound travel products and services.

However, another 34% stated that customers are willing to pay a premium for better travel experiences. Demand for personalised, customised and small group tour products has shot up, with 92% of travel agents noting that a group size of 20 people or fewer is the most popular choice.

Chinese travel agents can now sell group and packaged travel to more than 130 countries, up from 60 countries this time last year.

This creates a greater need for global destinations and travel businesses to develop bespoke products to support the recovery and growth of the Chinese market.

At the same time, concerns about safety are higher than they were pre-pandemic. This includes personal property protection, health and hygiene, as well as environmental safety.

The survey reveals that even though more destinations are easing visa rules for Chinese visitors, the visa application process for many popular countries is still cumbersome.

Chinese Outbound Travel Trade Survey: July 2024 also reveals the types of outbound travel with the highest potential for growth. Nature and beaches are especially popular now, while family travel continues to be a top theme.

Travelling with friends was identified as having the highest growth potential – the travel agents who chose this option are focused mainly on customers born in the 1990s.

All infographics courtesy of Dragon Trail International

The Moodie Davitt eZine

Issue 336 | 20 August 2024

The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com

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