Chinese Tourists: What Should Tourism-Related Businesses in Europe Expect after Covid-19?

Ripe for Picking: The Chinese consumer market explained

Despite what may feel like a backwards step recently with new restrictions in force due to the corona crisis, it’s not all doom and gloom as there are signs that the Chinese economy is well on its way to recovery. This presents tremendous opportunities for European luxury goods and tourism businesses.

Will travelling to Europe and European luxury products still be in demand by Chinese consumers after the Corona Crisis?

If we look at consumption indicators from the Chinese market for March and April 2020, there are promising signs that there wil be a recovery after the corona crisis ends, and that we will see both an upsurge in demand from Chinese consumers for European luxury products and for increased travel to Europe by high spending Chinese tourists.

We can draw conclusions from the spending patterns of Chinese luxury consumers during and after the corona crisis. For example, according to Reuters, the Chinese accumulated demand for luxury products resulted in Tesla selling a record number of cars in China during March 2020. In fact, sales grew by 450 percent month over month, while the rest of the car market plummeted.

In addition, the luxury European brand Hermes made a record-breaking 2.7 million dollars at its second-largest flagship store in Guangzhou the day the store reopened after the COVID-19 pandemic. That was in one 24 hour period, a sure sign that the demand for luxury goods in China is still high.

Luis Vuitton, another European luxury brand, also reported a 50% rise in sales in mainland China in April 2020. And it was not just in shopping at home that we saw demand increase. Chinese travelers looking for that special trip were responsible for a 40% rise in luxury travel bookings in April 2020 compared to April 2019.

All these signs point to a thriving interest by Chinese luxury consumers in travel to Europe and in European luxury products. An analysis of past crises tells us that the luxury market suffered less than others, and bounced back faster and on a larger scale than non-luxury sectors. In fact, almost all luxury categories have outperfomed non-luxury segements since the 2008 recession.

First Takeaway: All the signs indicate that the demand for luxury travel and shopping in Europe by Chinese consumers and Chinese outbound tourists will bounce back with a vengeance when the European market reopens after the COVID-19 crisis.

Second Takeaway: The demand for outbound trips by Chinese tourists is expcted to make a strong recovery after the COVID-19 crisis is over and Europe is once more open for business.

Third Takeaway: There is very promising news for European companies selling luxury products and European hotel and tourism companies operating 4 and 5 star hotels and luxury tours, as the resugent Chinese outbound tourist market is expected to help them recover financial losses resulting from the corona crisis.

How has COVID affected the Travel Preferences of Chinese Tourists?

A recent survey carried out by Oliver Wyman into the travel behaviours and preferences of Chinese people after COVID-19 produced some interesting and promising results which highlight the emerging business opportunities that exist.

1. Travel plans are unaffected. The first piece of good news from the survey is that the travel plans of Chinese tourists and independent travellers have not been fundamentally affected by the Corona crisis and it is reported that nearly 60% will not change their plans. In fact, they may plan even more trips.
2. Europe is still a very popular destination. The survey also reports that Europe is still the second most preferred outbound destination of Chinese people after Asia. This means that as soon as the doors to Europe are open once again, the demand from Chinese tourists and consumers will be strong so the opportunities for European luxury good retailers and tourism business operators are immense.
3. Travel budgets will increase. According to the survey, almost two-thirds of Chinese outbound tourists are willing to and will increase their travel budgets, especially in these four categories: food and beverage, local entertainment, shopping and hotels. All the signs indicate that Chinese tourists abroad are ready to spend in Europe and to spend well and European businesses operating in these 4 key areas will be able to experience strong recoveries post COVID-19.
4. There are new trends emerging. The final area highlighted by the survey is emerging trends. Although the signs for a strong recovery are very promising, one area in which Chinese tourists report increased caution is in the area of touring, citing a preference for self-driving tours rather than tour buses. This is unsurprising in a world emerging from the effects of COVID-19 where physical distancing has become the norm. As a result, the demand for car rentals and customised tour services is expected to increase along with a preference for outoors-based activities.

First Takeaway: New opportunities will arise because of COVID-19. Due to the effects of the corona crisis, Chinese travellers are now demanding a higher level of personal safety during their travels and linked to this, are looking for increased opportunities for outdoor experiences from the tourist industry. The expectations are that Chinese tourists abroad will show an increased appreciation for nature-based activities and will look for trips which include cycling or hiking as well as eco-tourism experiences. This opens up new possibilities for the European tourism industry.

Second Takeaway: The signs for the recovery of the European tourism industry are very positive with the survey reflecting Chinese optimism that the domestic epidemic is under control, and more importantly, highlighting Chinese consumers’ willingness and eagerness to travel to Europe as soon as they are able to.

Third Takeaway: The Chinese outbound tourist market is an interesting and lucrative one with high demand for luxury travel and shopping anticipated when the European market opens again after the COVID-19 crisis. In this climate, the opportunities for European luxury goods and tourism businesses are immense and those who are poised and ready to seize these opportunities will be the ones who benefit the most.

If you operate a European luxury tourism business, the Chinese outbound market is one you should look to focus on in the months and weeks ahead, to be ready to meet the demand arising from Chinese tourists for luxury goods and travel, so that you can capitalise on it as soon as market conditions allow.

I am here to support European luxury goods and luxury travel companies to seize the opportunities that the Chinese market presents and would love to hear from you if you would like help to enter into or refocus on the soon-to-be-booming Chinese tourism and ecommerce market.

If you are interested in unlocking the financial potential of Chinese tourists for your business and are willing to invest in a proven marketing strategy, please get in touch. Just click here to find out how I can help your business to become a “must see highlight” for Chinese luxury consumers.

Wishing you all the best,

Rossella