Advertisement
Canada markets open in 8 hours 13 minutes
  • S&P/TSX

    22,373.38
    +52.51 (+0.24%)
     
  • S&P 500

    5,304.72
    +36.88 (+0.70%)
     
  • DOW

    39,069.59
    +4.29 (+0.01%)
     
  • CAD/USD

    0.7341
    +0.0004 (+0.06%)
     
  • CRUDE OIL

    78.89
    +1.17 (+1.51%)
     
  • Bitcoin CAD

    92,400.20
    -1,205.66 (-1.29%)
     
  • CMC Crypto 200

    1,470.99
    -13.20 (-0.89%)
     
  • GOLD FUTURES

    2,353.90
    +19.40 (+0.83%)
     
  • RUSSELL 2000

    2,069.67
    +21.26 (+1.04%)
     
  • 10-Yr Bond

    4.4670
    0.0000 (0.00%)
     
  • NASDAQ futures

    18,921.00
    +45.00 (+0.24%)
     
  • VOLATILITY

    12.36
    +0.43 (+3.60%)
     
  • FTSE

    8,317.59
    -21.64 (-0.26%)
     
  • NIKKEI 225

    38,811.56
    -88.46 (-0.23%)
     
  • CAD/EUR

    0.6747
    -0.0005 (-0.07%)
     

US travel sector faces long wait for China tourism to hit 2019 highs

FILE PHOTO: A group of tourists walk on Hollywood Boulevard during an ongoing rain storm in Los Angeles

By Aishwarya Jain

(Reuters) - The U.S. travel sector will have to wait at least two more years for lucrative Chinese tourism to recover to pre-pandemic levels as slow growth and high costs in the Asian country keep its tourists away from America.

The slower-than-expected China travel rebound may further pressure earnings for hotel operators in the U.S. even as they grapple with normalizing domestic travel driven by persistent inflation.

"There was an expectation that as COVID restrictions eased, travel between the U.S. and China, especially tourist travel, would show large demand growth and a return at least to the pre-COVID levels. No such rebound has occurred," said Ryan Yonk, senior research faculty at American Institute for Economic Research.

ADVERTISEMENT

China gradually began lifting travel-related restrictions from January 2023 and fully lifted group tour restrictions in August last year, but the resultant rise in Chinese arrivals to nearly 1.1 million remains 60% below 2019 levels, according to data from the U.S. National Travel and Tourism Office (NTTO).

That's largely because Chinese tourists are still grappling with an uncertain economy, prioritizing savings and turning to domestic travel or visiting nearby countries to save money.

The Asian American Hotel Owners Association (AAHOA), which represents about 20,000 U.S. hoteliers, said the decline in Chinese tourism has decreased revenue and profitability.

"This, in turn, has led to job losses and financial strain for employees and related workers who rely on international tourism for their livelihoods," the AAHOA said in a statement to Reuters.

Chinese tourists in the U.S. spent a whopping $15 billion in 2019, more than any other market, according the U.S. travel association.

International Trade Administration (ITA) data for 2023 shows that Chinese tourist spending, which stands at an average of $4,137 per visitor, is 123.6% above the average overseas tourist spending at $1,850 per visitor.

Tourists from China also spend about 30% of the total trip budget on accommodations and lodgings, ITA data shows.

The U.S. economy stands to gain $30 billion and 50,000 jobs if China returned to 2019 tourism levels, Commerce Secretary Gina Raimondo said last year.

Analysts have also said rising geopolitical tensions and the high cost of flying between the U.S. and China are weighing on travel as the number of flights between the two countries remains below pre-pandemic levels.

"The generally negative political climate between the U.S. and China does not help with tourism between the two countries," said Patrick Scholes, analyst at Truist Securities.

Nearby countries in Southeast Asia have incentivized Chinese visitors by lifting visa requirements.

Chinese arrivals to Thailand and Singapore jumped 1,187.1% and 942.2% in 2023, remaining below pre-pandemic levels but far higher than a 192.9% gain in the U.S.

While China's outbound tourism to the U.S. is expected to grow in 2024, it is expected to cross pre-pandemic levels only in 2026, the NTTO said.

A report from Economist Intelligence said the overall number of Chinese outbound travelers will remain short of pre‑pandemic levels until 2025.

(Reporting by Aishwarya Jain in Bengaluru; Editing by Devika Syamnath)