Chinese tourists stay away – from the US

Chinese tourists stay away – from the US (DW.com)

·         The number of arrivals from China to the US fell last year (2018) for the first time in 15 years, down 5.5% y/y. Industry analysts say the decline appears to be deepening as we go through 2019.

·         Chinese tourists matter, as they spend $36.2 billion – much of it on luxury goods, higher end hotels and fine dining. Plus they spend a lot more per head. The $36 billion plus came from only 3m tourists. This compares with $22.1 billion from 21.2m Canadian tourists (No 2 spenders) and is well above the $16 billion from 3.5m Japanese tourists (No 4)

·         Tourism chiefs point to rising trade pressures plus the recent moves against Huawei as being part of the reason for the slide.

·         This comes at a time when a record number of Chinese are travelling aboard – with over 100m travelling in 2018.

Analysis and Comments

·         The travelling Chinese consumer is one of the key drivers for growth in sectors such as Luxury & Premium Cosmetics.

·         However, while there will clearly be a US impact from the falling Chinese tourism, the fact that overall departures continue to rise is a big positive – this is not about big spending Chinese tourists not travelling, its more a US specific issue. For global luxury and premium cosmetics companies this is not an issue – they just sell the same goods in different markets

·         The Chinese National Tourism Administration is still expecting Chinese outbound travel to be up 11% in 2019 (y/y).

·         The Administration is reporting that in the first quarter, while travel to the US (via travel agencies) was down a massive 20%, travel to Japan & Korea is up strongly.