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Practical Guide to the Chinese Outbound Travel Industry

After almost three years of COVID-19 restrictions and mandatory quarantines, Chinese citizens are slowly feeling comfortable to travel again. Before the pandemic, China had the largest outbound travel market in the world. In 2019, Chinese tourists took 155 million outbound trips, totaling US$255 billion in travel spending.

After enduring the impacts of the pandemic, China’s tourism sector is gearing up for a strong resurgence in 2023. Projections indicate that the total revenue from domestic tourism is expected to exceed RMB 4 trillion (approximately US$580.96 billion), marking an impressive 96% growth.

Tourism providers can expect to welcome travelers with diverse interests who are willing to spend money, are seeking out exciting experiences, and choosing high-quality products and services. The returning Chinese traveler is digitally savvy and favors functionality over branding, factors that providers can translate into authentic, seamless, and unique offerings.

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China is an important source market for some major destinations. For instance, Chinese travelers made up 28% of inbound tourism in Thailand, 30% in Japan, and 16% of non-EU visitors to Germany. Leisure travel was the biggest driver of China’s outbound travel, representing 65% of travelers in 2019.

In the same year, 29% of travelers ventured out for business, and 6% journeyed to visit friends and relatives.

A McKinsey Survey of Chinese Tourist Attitudes, conducted in November 2022, shows that Chinese tourists have retained their keen desire to explore international destinations. About 40% of respondents reported that they expect to undertake outbound travel for their next leisure trip.

As reported by CNBC, the desire to travel abroad has surged from 28% to 52% among Chinese leisure travelers since last year, nearly doubling.

Business travel intentions have tripled, and interest in education, family visits, and medical tourism abroad is also on the rise. Other findings align, revealing that about 50% of Chinese travelers plan to journey internationally within the next year.

A significant shift has also occurred in travel fears, particularly concerning COVID. While it topped travelers’ concerns in 2022, it has diminished to the least worrisome aspect this year, as per Morning Consult’s survey. This shift reflects growing traveler confidence.

According to recent data from Alipay’s Overseas Spending Platform, the average expenditure per user for outbound travel in the first half of 2023 grew by 24% compared to 2019. Among popular destinations, the top 10 outbound travel places in terms of transaction volume for the first half of 2023 were Hong Kong; Macao; Japan; Thailand; France; South Korea; Australia; Canada; United Kingdom; and Singapore.

This data is supported by several favorable policies. Since the beginning of the year, the National Immigration Administration has continuously optimized and adjusted inbound and outbound management policies.

Chinese tourists are eager to resume traveling, however many prefer domestic trips, even if all outbound travel restrictions are lifted. A COVID-19 safe environment in destination countries will likely boost travelers’ confidence and encourage them to book trips again.

Another difficulty has been the slow process to get or renew a passport. Many Chinese travelers—about 20%— had passports expire during the COVID-19 period, and the government has currently a significant backlog. Furthermore, travel visas for destination countries can take some time to be processed and issued.

The government’s support in revitalizing the tourism sector is evident through subsidies and tax exemptions provided to tourism enterprises. The robust resurgence of China’s tourism industry also serves as a positive indicator for the nation’s economy, with tourism being a significant driver of economic growth and expected to contribute notably to the country’s GDP.

Overall, 2023 has seen a continuous stream of new policies, products, technologies, concepts, trends, and opportunities impacting the tourism sector.

The recent Chinese New Year holidays saw 308 million domestic trips, generating almost RMB 376 billion (aprox US$ 52.6 billion) in tourism revenue. This numbers indicates that domestic travel volume has recovered to over 90% of 2019 figures, and spending has bounced back to around 70% of pre-pandemic levels.

Given the demand for international travel (and the upswing in domestic tourism) the travel industry should prepare to welcome back Chinese tourists.

Travel recovery is dependent on airline capacity. Some international carriers are still trying to restore capacity as fleets were retired during COVID-19 and airlines face a shortage of crew, particularly pilots. Before the start of the summer, international airline seat capacity had only recovered to around 37% of pre-pandemic levels, while travelers faced elevated prices.

Ticket prices for travel to popular overseas destinations such as Japan and Thailand are double what they were in 2019. Price-sensitive travelers might wait for prices to level out before booking their overseas trips.

Chinese airlines, however, appear to be better prepared to resume full service compared to their international counterparts—fewer pilots left the industry and aircrafts are available. Chinese carriers’ widebody fleets are mostly in service or ready to be redeployed.

Overall, China is opening to travel, both inbound and outbound—all types of visas are being issued to foreign visitors, and locals are getting ready to travel abroad.

The post-COVID-19 Chinese traveler is more digitally savvy, has high expectations, and seeks novel experiences.

When it comes to where travelers plan to spend their money on their next trip, entertainment activities, food, and shopping are the most popular categories. These are also the most flexible and variable spending segments, and there are opportunities to up-sell—attractions, food and beverage, and retail players are well positioned to create unique and unexpected offerings to stimulate spending in this area.

Outbound Chinese tourists are evolving rapidly, becoming increasingly diverse in their travel preferences, behaviors, and spending patterns. Chinese travelers are not homogeneous, and their needs and preferences continue to evolve. Therefore, serving each group of tourists may require different product offerings, sales channels, or marketing techniques.

Chinese tourists are discerning and looking for high-quality accommodation, offerings, and service. As boutique hotels are becoming more popular, international hotel brands could try to stand out by leveraging their experience in service excellence.

With renewed travel demand, now is the time for international travel and tourism businesses to invest in better product offerings—on an infrastructural and service level. Chinese travelers are now looking to enjoy high-quality experiences.

They also want to do more than shopping and sightseeing. They have expressed willingness to spend their money on entertainment and experiences. This includes activities such as theme parks, snow sports, water sports, shows, and cultural activities. Authentic experiences can satisfy their desire for an immersive foreign visit, but they often want the experience to be familiar and accessible.

Tourism companies should have a deeper knowledge of their customers to be able to design the right product. Chinese travelers prefer offerings that are accessible, within a comfortable and familiar setting, yet are still authentic and exciting.

Social media is currently one of the most important sources of inspiration for travel. Short videos are a major influence channel across all age groups and types of consumers.

Tourist destinations have begun to leverage social media, and short video campaigns, to maximize exposure. For example, Tourism Australia recently launched a video campaign with a kangaroo character on TikTok, and overall views soon reached around 1.67 billion.

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Social media is a good way to reach consumers. Early in the pandemic, took advantage of the upward trend in livestreaming. The company’s co-founder and chairman of the board, James Liang, hosted weekly livestreams where he dressed up in costume or chatted to guests at various destinations. Between March and October 2020, Liang’s livestreams sold around $294 million’s worth of travel packages and hotel room reservations.

Livestreaming is being used by tourism boards, too. The Tourism Authority of Thailand (TAT) collaborated with to launch a new campaign to attract Chinese tourists as cross-border travel resumed. The broadcast, joined by TAT Governor Yuthasak Supasorn, recorded sales of more than 20,000 room nights amounting to a gross merchandise value of over RMB 40 million (aprox US$5.6 million).

The China National Tourist Office uses VR (virtual reality) to transport potential travelers to iconic destinations. Through immersive VR experiences, individuals can virtually explore the Great Wall, the Terracotta Army, and other renowned sites, sparking interest and encouraging travel planning.

The city of Hangzhou offers a glimpse into the future of tech-enabled tourism. Hangzhou’s West Lake, a UNESCO World Heritage site, now features interactive kiosks that provide historical context, virtual guides, and navigation assistance to visitors. These digital enhancements blend seamlessly with the serene natural landscape, enriching the cultural experience.

China’s tech-driven tourism trend showcases the integration of smart applications and the Internet of Things (IoT) into the travel journey. Travelers now wield the power to personalize their environment and encounters via smartphone apps. Innovations range from smart hotel rooms adjusting lighting, temperature, and ambiance to IoT-enabled transportation providing real-time updates, enhancing comfort and efficiency.

Contactless services and digital payments have become integral to China’s tech-enhanced tourism scene. Travelers can navigate touchpoints like check-in, security, dining, and shopping with minimal physical interaction. QR codes have revolutionized payment methods, enabling transactions through smartphones, and eliminating the need for physical currency or cards, in alignment with the country’s cashless society drive.

Travel distribution in China has evolved into a complex, fragmented, and Chinese-dominated ecosystem, making scaling an increasingly difficult task. Travel companies need to understand the key characteristics of each channel type, including online travel agencies (OTAs), online travel portals (OTPs), and traditional travel agencies as each target different customer segments, and offer different levels of control to brands. Different sets of capabilities are necessary to manage each type of distribution channel.

Travel companies can prioritize the channels they wish to use and set clear roles. One challenge when choosing the right channel partner is to avoid ultra-low prices that may encourage volume but could ultimately damage a brand.

In the post COVID-19 industry landscape, travel companies should consider direct-to-consumer (D2C) channels. The first step would be selecting the appropriate D2C positioning and strategy, according to the company’s needs.

In China, D2C is a complicated market involving both public domains (such as social media and OTA platforms) and private domains (such as official brand platforms). To make the most of D2C, travel companies need a clear value proposition for their D2C strategy, whether it be focused on branding or on commercial/sales.

China’s population is one of the most digitally savvy in the world. Chinese travelers are mobile-driven, wallet-less, and impatient—and frequently feel “digitally homesick” while abroad. Overseas destinations and tourism service providers could offer tech-savvy Chinese travelers digitally enhanced services.

China’s internet giants can provide a shortcut to getting digital services off the ground. Rather than building digital capabilities from scratch, foreign tourism providers could engage Chinese travelers through a popular platform that is already being used daily.

For example, Amsterdam’s Schiphol Airport provides a WeChat Mini Program with four modules: duty-free shopping, flight inquiry, information transfer, and travel planning. This contains information about all aspects of the airport, including ground transportation and tax refund procedures.

Alibaba’s Alipay, a third-party mobile and online payment platform, is also innovating in this space. The service provider has cooperated with various tax refund agencies, such as Global Blue, to enable a seamless digitized tax refund experience. Travelers scan completed tax refund forms at automated kiosks in the airport, and within a few hours, the refunded amount is transferred directly to their Alipay accounts.

According to recent data released by the National Immigration Administration, the first half of 2023 witnessed a total of 168 million inbound and outbound individuals passing through China’s immigration, marking a year-on-year increase of 169.6 percent.

At the same time, approximately 42.798 million entry and exit permits for travel to and from Hong Kong, Macao, and Taiwan were issued, indicating a significant 1509 percent increase compared to the same period in 2022.

These numbers underline China’s promising revival in outbound tourism, as Chinese tourists once again become a significant force driving global tourism and offline consumption.

In terms of outbound travel, the top 10 departure cities were: Shenzhen, Shanghai, Guangzhou, Beijing, Hangzhou, Foshan, Dongguan, Zhuhai, Chengdu, and Wuhan. Outbound travel is mainly concentrated in first-tier and new first-tier cities, with the “Guangzhou-Shenzhen-Foshan-Dongguan-Zhuhai” Greater Bay Area cities also playing an important role in outbound tourism.

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The rapid expansion of outbound tourism from China can be attributed to the rising incomes of the middle class, the growing desire among Chinese travelers to explore diverse countries and cultures, and the ease of obtaining visas and fulfilling entry criteria for various destinations.

The retail sector captures the largest portion of Chinese tourists’ spending when traveling abroad and is anticipated to retain its dominant position in terms of outbound tourism expenditure.

Known for their shopping inclination, there’s a rising trend toward investing in experiences over possessions, particularly in a post COVID environment. Despite global economic uncertainties, Asia-Pacific’s, including China’s, travel recovery remains steady. As travel capacity grows, costs are anticipated to decrease, fueling a more dynamic travel landscape.

Contrary to an instant “boom,” China’s international travel revival is unfolding steadily. Though not as swift as initially projected, the evolving interests, changing attitudes, and gradual shift toward experiential spending all point to a growing and adaptive outbound tourism sector, offering a promising glimpse into the future.

China’s Ministry of Culture and Tourism recently expanded outbound group tour destinations, including popular places like Japan and the US. A recent analysis provided by the EIU indicates that this move will aid global tourism recovery, benefiting countries with simplified visa procedures.

Despite the lifting of most restrictions, obstacles and cautious spending persist. Challenges such as limited flights and labor shortages could hinder outbound tourism’s full recovery. A complete relaxation of restrictions is predicted in late 2023, but pre-pandemic outbound levels might not return until 2025.

In 2023, a shift in travel preferences among Chinese tourists has propelled wellness and health tourism to the forefront. As observed by Rung Kanjanaviroj, Director of the Tourism Authority of Thailand’s Chengdu office, Chinese travelers are displaying a distinct preference for destinations that offer a blend of sunny beaches and holistic well-being experiences.

This evolving trend has prompted destinations like Thailand to proactively adapt by refining their offerings. Through the enhancement of health tourism services and a focus on engaging student and youth travelers, Thailand has positioned itself as a prime destination for those seeking rejuvenation and self-care during their journeys.

The rise in wellness and health tourism reflects a broader shift in Chinese travelers’ priorities, as they seek destinations that not only provide scenic beauty but also nurture their physical and mental well-being.

Eco-tourism and meaningful tourism have also grown in popularity, as travelers seek sustainable and ethical travel experiences that promote engagement with local communities and the protection of the environment.

The trend of slow travel has also been growing, with many tourists choosing to stay longer in one location, immersing themselves in the local culture and lifestyle at a more leisurely pace, rather than rushing through a list of popular tourist attractions.

As Chinese tourists return in greater numbers, they will likely play a crucial role in the recovery and development of the tourism industry. It is imperative that businesses and destinations understand the needs and preferences of travelers to attract them.

Embracing the opportunities presented by Chinese tourism can enable companies and destinations to position themselves for long-term growth and success in the competitive global travel industry.

In order to do so, businesses should consider investing in technology and sustainability, while diversifying and exploring new destinations, and partnering with local businesses and industry associations.

The travel industry is known for its unpredictability, and the pandemic has further emphasized the need for flexibility and innovation. Despite the potential challenges such as travel restrictions, rising costs and competition, the tourism sector must remain open and adaptable to changing circumstances to ensure success going forward.


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