Most reports have already predicted that 2019 will continue to be another record-breaking year for Chinese outbound travel, though it may be difficult to top the number of trips taken as well as the amount of money spent by Chinese travelers in 2018.
There are many factors, however, that could affect how Chinese tourists travel in 2019. One of the most important is the Chinese government’s push for increased domestic consumption that extends to domestic tourism.
Here are three more that travel industry should watch in 2019.
1. Trade War, Macroeconomics, and International Relations
The Trump administration opened a trade war with China last year, slapping tariffs on a variety of imported goods. China retaliated with tariffs of its own on U.S. goods. Both sides came to an agreement late in 2018 to at least place no further tariffs on goods for 90 days, which will expire on March 1st.
Exacerbating the effects of the trade war is the global economic slowdown. Stock markets ended the year on a low note, with the Dow Jones down 5.6 percent in 2018 and the S&P 500 suffering its worst year in a decade. Analysts have warned of an impending economic crisis, though the severity of it depends on political action in the U.S. as well as China.
Whether the global economy suffers a significant setback in 2019, or just a minor hiccup, the situation does not bode well for the Chinese outbound travel industry. More importantly, an extended trade war could send more outbound tourists to destinations other than the U.S. Greater economic uncertainty will lead to fewer outbound travelers as more people look to save money.
Somewhat related to the economic conditions is China’s diplomatic relationship with other nations. China opened diplomatic relations with Panama and El Salvador last year, which raised interest in travel to both. There were also controversies involving Sweden, South Korea, and others that generated backlash in the form of fewer tourists. Most notably, the year ended with the arrest of Huawei CFO Meng Wanzhou, in Vancouver, which has sparked significant backlash against Canada — the country has halted new tourism campaigns in China until the situation is resolved.
2. Mobile Payment Expansion
2018 saw a huge expansion in Chinese mobile payment use overseas with Alipay and WeChat Pay being the major beneficiaries of the trend. China UnionPay is still playing catch up, but it also gained a wider acceptance of its mobile payment option in 2018.
A wider acceptance of the most popular mobile payment options abroad will entice more Chinese tourists to spend more while on vacation. With the yuan losing value against most major currencies over the course of last year, Chinese travelers spent less during their trips; adding foreign exchange fees into the mix may have been a factor for some travelers as well.
Chinese mobile payments aren’t only about convenience for travelers — they also reduce the fees charged by banks and credit cards for purchases abroad. Given this, overseas businesses looking to capitalize on Chinese tourists spending need to adopt at least one mobile payment option in 2019.
3. Travel Activities Market Competition
One of the biggest trends in Chinese tourism last year was the travel activities market, which is set to expand in 2019. Online travel agencies have determined that it’s not enough to offer flights and hotels — they also need to offer tickets to attractions in addition to day tours as more Chinese travelers are ditching group tour packages while traveling overseas.
Meituan-Dianping, an online food delivery-to-ticketing services platform, which launched its IPO in Hong Kong in late September 2018, entered the travel space and forced online travel agencies like Ctrip.com International and Alibaba’s Fliggy to offer their own travel activities services to compete. Then, there are smaller but influential players like Taiwan-based travel activities provider KKday, which entered the Chinese market in late 2018 with the backing of Alibaba, as well as Mafengwo, which has an edge with user-generated content and reviews.
The competition among the above tech companies for a majority share of the Chinese outbound travel market will continue to heat up in the coming year. But it will be difficult to forecast the winners and losers in the travel activities market with so many players, each with their own niche attempting to move into each other’s space.