Chinese tourists continue to spend despite economic turmoil
09/06/2015|10:41:45 PM|WSJ

While there are some signs that China’s economic turmoil may be damping Chinese tourists spending slightly in the region, tourism-related businesses in such destinations as Japan, Thailand and Australia said business is still booming.

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One place where Chinese tourism has been slowing is Hong Kong, long a favorite destination of mainland visitors, where China’s crackdown on corruption and extravagant spending were taking a toll even before Beijing devalued its currency on Aug. 11. Retail sales fell 2.8% in July, the fifth straight month of decline, the Hong Kong Retail Management Association said this week. The number of mainland Chinese visitors to Hong Kong fell almost 10% in July, faster than the overall decline of 8.4% for the month, compared with growth of 11.2% a year earlier, according to data from the Hong Kong Tourism Board released Monday.

China’s importance in the tourism industry has boomed along with its economy: The share of Chinese households with annual disposable income above $55,000 tripled in just five years, according to data provider Euromonitor. That led to millions of middle-class Chinese consumers traveling abroad. China has been the world’s No.1 source of cross-border tourists since 2012, according to the World Tourism Organization, which estimates the total number of trips abroad from China rose by 11 million to 109 million last year.

In 2013, the organization said, Chinese outbound travelers spent a total of $129 billion. The top destinations for Chinese travelers last year were Hong Kong, Thailand, Macau, South Korea and Japan, according to a survey from brokerage CLSA.

China’s outbound tourist growth outlook is robust, thanks to the yuan’s strength relative to currencies in popular tourist destinations, low fuel prices and increased airline capacity, said CAPA-Centre for Aviation in a report last week.

The Japan National Tourism Organization said 576,900 people from mainland China visited Japan in July, more than double the year-earlier number.

A spokesman for Kamome Tourist Co., which operates sightseeing tours in Japan that cater to Chinese and other foreign visitors, said the company had seen a drop in bookings for September, but added that it was unclear whether the economy or seasonal factors were to blame.

Yuping Woo, 40 years old, from Guizhou province in China, was waiting for a bus recently outside a duty-free store in the Akihabara electronics district of Tokyo. Ms. Woo, on her first visit to Japan, said she stocked up on eye drops and other health-care products, adding that she didn’t care that they had become slightly more expensive since the devaluation of the Chinese currency.

“Chinese people trust Japanese medicine,” she said. “We don’t trust Chinese medicine.”

Analysts at Goldman Sachs calculated that even if Shanghai stocks fall a further 10%, Chinese per capita economic growth falls 2 percentage points short of International Monetary Fund forecasts and the yuan declines another 5% against the yen, the economic benefits of Chinese tourism in Japan will ease only slightly.

Yuthasak Supasorn, governor of the Tourism Authority of Thailand, said the impact of the Chinese slowdown was expected to be minimal in the short term, though China’s National Day on Oct. 1, which starts its twice-a-year Golden Week holiday-travel period, would be a better indicator.

Thailand is forecasting a 60% year-to-year rise in Chinese arrivals in 2015, when more than 7.5 million are expected to visit the country and bring in about 350 billion baht ($9.7 billion) in tourist revenue, a 75% increase. During the first seven months of 2015, the number of Chinese tourists more than doubled to 4.7 million arrivals, Mr. Yuthasak said.

Mr. Yuthasak said initial indications showed the number of Thai visa applications by the Chinese had dropped slightly, though he added that the deadly bombing at a shrine in Bangkok last month likely also contributed to that decline.

He said he expects China’s economic woes will lead Chinese tourists to be more cautious about spending, adding that the Tourism Authority was working on a new marketing campaign targeting high-income Chinese travelers, who would be less price-sensitive.

Australia’s statistics bureau said Friday that the number of visits from mainland China jumped by 16% to 84,200 in July from the same month a year earlier, meaning more Chinese flew into Australia than any other nationality apart from New Zealanders.

Spending by Chinese tourists in Australia increased by 32% to almost 7 billion Australian dollars (US$4.9 billion) in the year ended June, a separate government report earlier in the week showed, placing the Chinese at the top of the list of vacation spenders. Chinese tourist spending contributed 6% to Australia’s economic growth last year, according to research from Australia & New Zealand Banking Group.

Some tour operators have already had the most profitable Australian winter season in years. Michael Healy, a sales director at Quicksilver Cruises, which runs diving and sailing trips in the waters along the Great Barrier Reef, said the past three months were the company’s most successful in more than a decade.

“We’ve seen a significant escalation in domestic numbers, but Chinese numbers have been unprecedented, really,” said Mr. Healy, who has employed several Chinese-speaking dive instructors to help with the surge in tourists from China.

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