Chinese travel fell 5.7 percent in 2018, its first drop in 15 years

Travelers from China are seeking alternative destinations amid the trade war with the United States, as travel industry insiders keep a close eye on the decline in the number of those visitors.

China is the third-largest source of overseas travel to the US, producing 3.2 million visitors in 2017 and accounting for 8.2 percent of all overseas travel to the country, according to the US Travel Association.

Travel is the top US industry export to China, generating a $29.8 billion trade surplus with the country in 2017 and accounting for 19 percent of all exports. In addition, Chinese tourists spend an average of $6,700 per trip, about 50 percent more than the average for international visitors.

Chinese travel to the US fell by 5.7 percent last year to 2.9 million visitors, the first fall in 15 years, according to the National Travel and Tourism Office.

"The US government's restrictive policies for travelers and students are not supported by many companies and most people in the US," said Gideon Salzman-Gubbay, chief operating officer of ACE89, a company that helps businesses engage with Chinese audiences.

"Countries succeed by having open systems, not closed borders," he said. "The US has long thrived through openness and diversity. China, of course, has conducted business and cultural exchanges with openness for thousands of years, as exemplified by the Silk Road.

"Travel, communication and exchanges can be forces for good in the world. People have sought travel and learning experiences since time immemorial. Countries that stay static, and people with closed minds, cannot succeed."

During the 2019 IPW, a travel industry trade show staged from June 1 to 5 in Anaheim, California, US Travel Association president and CEO Roger Dow acknowledged a decline in the US' share of global long-haul travel－even as the sector expanded.

"When we met last year, I told you that the US was losing international travel market share. Unfortunately, that is still the case," he said.

Dow cited US Department of Commerce figures showing that international travel to the country grew by just 3.5 percent last year.

According to the association, the US' share of the global travel market dropped from 13.7 percent in 2015 to 11.7 percent last year.

Research company Tourism Economics reported that the US overseas market grew by only 2 percent last year. "This tepid performance is somewhat more concerning as visits to the US slowed in the second half of 2018, with notable weakness for Germany and key Asian markets－particularly China, South Korea and Japan," the company said.

The trend was also noted in a report released in November by ForwardKeys, a European travel research agency. It found that weekly bookings from China to the US rose by 2 percent from the last week of February to March 23 last year, when the first tariffs imposed in the trade war took effect. Since then, the year-on-year figure to November fell by 7.2 percent, reflecting the escalation of trade tensions and the announcement of new tariffs by the two countries.

The negative impact on the yuan, which has fallen by 8.7 percent against the US dollar since tariffs were introduced－meaning that Chinese tourists' money buys less－and warnings from Beijing about US travel security risks, have likely further influenced the trend, the report said.

Significant impact

ForwardKeys CEO and cofounder Olivier Jager said the company's findings strongly suggest that the trade war has had a significant impact on Chinese tourism to the US. "We estimate that the cost to the US economy will be north of half a billion dollars in 2018. Chinese spending in this sector is significant－it amounts to the largest category of US services exports to China," he said.

David Tarsh, a spokesman for the company, said the majority of Chinese outbound tourists visit countries in Asia such as Japan or South Korea, and fewer than 10 percent of them venture as far as the Americas.

He said Chinese outbound tourism is "very healthy", with this market growing from January to April.

"America is actually losing business, compared with the same first four months of last year, and that's in the context of travel to other parts of the world from China rising," he said.

"So if you are responsible for attracting Chinese to the Americas, you wouldn't be feeling very pleased with yourself," he added.

Christopher Heywood, executive vice-president at NYC & Company, the official tourism marketing organization for New York City, noted an 11.9 percent decline in spending from Chinese travelers during the first quarter of this year.

"We understand that the Chinese government first of all has issued some warnings, (about) frequent shootings, and also they've issued, I think, a warning that visa processing is taking longer. But more than anything, we are concerned about the trade war in general, and just what that's doing to the economy, and whether that's restricting travel and deterring people from coming to the US," Heywood said.

China is an important and lucrative market for New York, Heywood added. Chinese travelers comprise the second-largest international market for the city, behind the United Kingdom.

In 2016, New York welcomed 951,000 Chinese visitors, a 9.3 percent rise from 2015. In 2017, the city received 1,038,000 Chinese, surpassing 1 million visitors for the first time.

Chinese also tend to "spend big", Heywood said, with such visitors forking out $3,000 per person per trip, which translates to more than $3 billion in total spending.

"We don't want to take the trade war and have that escalate to start to include restrictions on travel from China, because it's a market that is so lucrative for the US, and certainly for New York City," he said.

Citing remarks by New York Mayor Bill de Blasio at the June 4 New York Police Department Medal Day news conference, Heywood said, "New York City is the safest big city in America."

He said many of the hotels, museums and other attractions in the city are courting the Chinese market. New York has also increased its social media presence in China by setting up WeChat and Weibo accounts.

NYC & Company will continue with its sales and marketing efforts in the Chinese market, Heywood said, adding that he is optimistic about the long-term potential for Chinese visitors.

"New York City is 'China-ready', and we warmly welcome Chinese visitors. We hope that they will overlook some of the hurdles and continue to plan their travel to New York, because we remain open for business."

Meanwhile, on the West Coast, a top Los Angeles tourism official expressed similar optimism about prospects for US-China tourism by emphasizing the importance of "people-to-people exchanges", an expression he said he borrowed from President Xi Jinping.

"What makes people-to-people relationships possible is tourism. We are not transactional in our thinking, or shortsighted. We believe that the best, smart thing to do is to look very long-term," said Ernest Wooden Jr., president and CEO of the Los Angeles Tourism and Convention Board.

"These trade tensions and what other macroeconomic voices are going to say－they will pass, but interest in traveling to Los Angeles is going to be foremost on the minds of long-haul travelers for many decades to come, and that's what we are looking forward to," Wooden said.

While the numbers of Chinese tourists to the US have declined at national level, Los Angeles has actually gained market share in these visitors, owing to the strong relationship the city has built with its travel trade partners in China, Wooden said.

"I think that our tourism is a little different. We have enjoyed a larger percentage of tourists coming to LA, and did not experience the same drop that the US experienced overall," he said. "The national number dropped by 5.7 percent for the past year, but during this time in LA, it's grown by 6.9 percent."

Last year, Los Angeles welcomed 1.2 million visitors from China, a rise of 6.9 percent from the previous year, which saw 1.12 million Chinese tourists arrive in the city.

Los Angeles has four offices in China－in Beijing, Shanghai, Guangzhou, capital of Guangdong province, and Chengdu, capital of Sichuan province. This year, more than 100 nonstop flights from 14 major Chinese cities will land in and depart from Los Angeles each week, the equivalent of 30,420 seats a week.

Wooden said: "We don't think we've scratched the surface. With 1.3 billion people there (in China), we only had 1.2 million people come ... We know now that the Chinese are just as interested, if not more interested, in traveling the world, as any other international travelers."

Genuine agreement

The importance of the Chinese market is being acknowledged by many tourism leaders in the US.

Asked during the IPW news conference how he planned to respond if China cut travel to the US, Brand USA President and CEO Christopher L. Thompson said he would continue to monitor the situation, but that the Chinese and US travel industries have developed a good relationship through the US China Tourism Leadership Summit.

"When that exact topic was addressed at last year's summit, there was a genuine agreement with the Chinese government that … travel and tourism was something that's very important to both," he said.

Kimberly Barrett, international communications manager at the Philadelphia Convention & Visitors Bureau, said the Chinese visitor market is the city's second-largest.

"In 2017, some 60,000 Chinese visitors came to Philadelphia, and they spent nearly $109 million, which is more than any other market," she said. "This was all without direct flights from China."

As the number of Chinese visitors grows, the agency is starting to focus increasingly on the Chinese market, and to reach more potential visitors, it launched a WeChat account in December.

Laura Myers, media manager for The Florida Keys and Key West, said the trade war will probably cause a temporary setback to Chinese travel to the US.

"We don't feel as if it's going to have a long-term impact," she said. "We feel that the Chinese market has great potential, especially with millennial travelers who are seeking more adventures, and the Keys are the perfect adventurous market for millennials."

She said Chinese are the fifth-largest international group visiting the Keys. The travel agency has just launched its WeChat account to encourage Chinese visitors to "get off the beaten track from major cities", she said.

Salzman-Gubbay, from ACE89, said, "While geopolitical matters could impact travel trends in the near term, people's desire to travel and to learn will not diminish."