China’s overseas travel has never significantly recovered since the COVID-19 pandemic. Although the country lifted all pandemic measures over a year ago, foreign tourism remained substantially lower than pre-pandemic levels.
Data from aviation analytics firm Cirium, reported by Bloomberg, showed outbound airline capacity in 2023 stood at just 60% of 2019 levels.
Trips by Chinese tourists to the U.S. have fallen dramatically. Data from Statista showed that in 2023, just 850,000 Chinese visitors entered the U.S. Although this was more than double the 2022 numbers, it remained substantially lower than the 2.83 million visitors welcomed in 2019.
Globally in 2019, Chinese travellers made 170 million foreign trips in 2019 and spent $248 billion on plane tickets, hotel rooms and luxury items. China’s post-pandemic pullback cut $129 billion from global tourism, according to the Cirium data.
Other forces are at work too. Russia’s invasion of Ukraine and the subsequent sanctions and measures mean that U.S. flights to Asia can no longer travel over Russia. This has led many airlines to cut U.S./Asia links in half.
Meanwhile, China’s economic slowdown means that much of the population simply doesn’t have funds to spend on extras such as foreign travel.
So, what does this mean for companies with exposure to China tourism?
Airlines
In a recent note on the airline industry, analysts at Bank of America wrote: “The recovery in internationaltravel in China is showing a mixed picture, as China to North America capacity is lagging far behind China to Europe capacity.”
Looking at Delta Air Lines (NYSE:DAL) fourth-quarter results, the company didn’t see a significant impact, beating forecasts on all metrics with record full-year revenues.
The shares were down around 8% in January, however, after the company trimmed its outlook for 2024.
Other airline stocks also fell: American Airlines Group Inc (NYSE:AAL) was down 1.3% so far in January, while United Airlines Holdings Inc (NASDAQ:UAL) fell nearly 6%, with UAL hit by the grounding of its Boeing 737 MAX 9 fleet.
Also Read: China Property Slump: New Home Prices Fall At Fastest Pace In Nine Years
The BofA analysts saw a strong recovery of Chinese travellers in 2024 as more air routes opened up.
“The return of airlift should support the recovery…
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