New Oliver Wyman Research Shows Economic Uncertainty Slowing Down Chinese International Travel, Impacting Luxury Spending Overseas
September 24, 2023
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Hong Kong, September 25, 2023 – New research from Oliver Wyman shows that many experienced Chinese international travelers are delaying their travel plans due to economic uncertainty. In June, 62% of experienced international travelers planned to travel in 2023, but this dropped to 54% in September. Almost 40% now want to wait at least two years before they will travel internationally again, which was only 30% in June.
Imke Wouters, a Partner at Oliver Wyman who led the research, said: “While the Chinese travelers are returning, it takes longer than we expected when the border reopened. Economic uncertainty has also impacted Chinese tourists’ luxury spending overseas.”
Casual luxury shoppers are becoming more cautious while core groups continue spending, and a bigger part is expected to move offshore again in the coming years. The research shows that only 16% of casual luxury shoppers (who spent less than ¥40,000 in 2023) expected to increase their luxury spending this year, while 24% of core luxury shoppers (who spent over ¥40,000 in 2023) continue to indulge in luxury shopping experiences (Exhibit 1). Key reasons for reducing luxury spending for casual luxury shoppers include concerns over the economic outlook and overspending in 2022.
Part of the luxury spending of Chinese shoppers will move overseas now that they are traveling internationally again, with shopping still an essential part of their overseas travel experience. While half of the core luxury shoppers who travel overseas in 2023 expect to spend less than 25% of their total luxury shopping overseas, the other half expects it to be a more significant part.
“With the number of Chinese international travelers getting back to 2019 by the end of 2024 or 2025, we expect the share of overseas luxury spending to increase in the coming years,” said Wouters. “However, we believe that Chinese luxury shoppers will continue to purchase the far majority domestically given the strong offering onshore and their preference to buy whenever they want it.”
Hainan is poised to capture an even greater share of domestic luxury spending in the future, with its attractive scenery, hotels, convenient location, and shopping prices making it a clear favorite among Chinese travelers. The survey shows that 47% of core luxury shoppers see Hainan as their top domestic destination compared to 33% of total respondents and only 22% of non-luxury shoppers. There’s also a higher interest among families with kids. For those who don’t see Hainan as their top destination today, the main reason is the limited availability of top brands and product selection.
“We continue to believe in the strong potential of Hainan. Even with borders reopened, Hainan has a clear advantage for many Chinese travelers. As Hainan becomes fully duty-free, we expect to see more luxury shoppers shopping there. Brand offerings will be enriched with premium malls like MixC and Taikoo opening, offering top-end luxury brands the opportunity to operate their own stores in a more premium environment,” said Wouters.
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About the Survey
Oliver Wyman’s research is based on a survey of 3,495 affluent mainland Chinese consumers (those with a minimal monthly household income of RMB 30,000, representing about 5% of China’s total population in 2022) in June and 3,858 in September. The research aims to check how the current economic situation has impacted the appetite of Chinese travelers for international travel as well as their spending on luxury products.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 6,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on X/Twitter @OliverWyman.