New | Japan, Korea to benefit from Chinese tourist spending over Lunar New Year
Seoul and Tokyo are hot new destinations as mainland Chinese tourists look beyond Macau and Hong Kong this Lunar New Year
Japan and Korea are expected to be the new darlings of Chinese tourism this Lunar New Year, as Hong Kong, Macau and Singapore drop further down the list of must go holiday destinations.
The year of the goat will be ushered in on Thursday, setting off a global week-long spike in China's travel spending. While Hong Kong benefited greatly over the past decade from being the first port of call, its share of Chinese tourist spending is inevitably shifting as the Chinese populace becomes more experienced and worldly travellers.
"In 2014, the Hong Kong Tourism Board saw a 1.8 per cent drop in per capita tourist spending to HK$7,975," Nomura's retail analyst Katherine Chan said. "It was also the first drop in per capita spending of overnight visitors in eight years, while the number of tourists visiting Hong Kong increased 12 per cent year on year to 60.84 million visitors in 2014."
The lingering negative sentiment from Occupy protests last year, continuing anti-China activity in the New Territories this month and a general sense of visitor fatigue means mainland Chinese are looking elsewhere to do their holidaying. Meanwhile Macau's fortunes are complicated by the anti-graft campaign and little to offer visitors other than gambling, although the government and casino operators are working together to remedy that.
HSBC is banking on what it calls the "new TST". Mainland Chinese shoppers have moved on from Kowloon's shopping mecca of Tsim Sha Tsui to Tokyo, Seoul, and Taipei. Seoul is a clear winner, thanks to the Korean wave of cool, especially in fashion and cosmetics, HSBC's head of consumer goods and luxury Erwan Rambourg writes.
"We think Chinese nationals could represent close to a third of luxury sales in Korea, a staggering figure as this means the Chinese share will have virtually doubled in 12 months' time," Rambourg said. "The 'Korean wave', a social/cultural trend supported by K-pop and soap operas, is helpful in solidifying Asian opinion around the idea that 'Korean equals cool' but the products are also technically undeniably very high quality now, especially in cosmetics."
Brokerage CLSA shares this view. In a report that surveyed 401 experienced outbound Chinese travellers, it ranked Japan and Korea as Chinese's top desired destinations due to a strong supply and range of hotel rooms, cuisine, natural scenery and cultural attractions, shopping, and its proximity to major Chinese cities.
Weakened currencies play a major role in the desirability of destinations. The depreciation of the euro means European cities like Paris, which were always desirable to the Chinese though perhaps not as accessible, are now within the means of a larger tourist base and Japan continues to benefit from a low yen.
"Our checks indicate luxury handbags are available at an average 37 per cent discount in Europe versus Hong Kong (if tourists claim VAT back). Prices are also cheaper in countries with depreciated currencies such as Japan. We also find the price difference between buying handbags in Hong Kong versus China is only 13 per cent," Barclays said.
Meanwhile, a strong Singapore dollar is hurting the city state's Chinese inbound tourism. Singapore, which is usually tied into a Malaysian itinerary, is also experiencing some of the blowback from the aviation accidents involving Malaysia Airlines and AirAsia. From January to October last year, there was a 28 per cent year on year drop in Chinese arrivals to the city state, CLSA found.
"One thing that we are certain of is that Chinese tourists are unlikely to go back to places where they have been already," CLSA said. "Hong Kong, Thailand and Macau are the three most popular destinations … over the past three years. But Chinese dream of visiting other places and they highlight France, US and Australia as the top travel destinations if money is no object."
Koreans lead Lunar New Year holiday rush
Guess who are travelling the most this Lunar New Year? No, it is not the Chinese but the Koreans.
A Citibank research on airline capacity over the Lunar New Year shows flights to and from South Korea are having the most capacity increases during the holiday week. Korean Airlines, the country's flag carrier responsible for 29 per cent of those seats, is also among the top three seat suppliers serving the Japanese and Vietnamese markets.
There will be 749,853 seats on flights to and from Korea in the Lunar New Year week, 12.5 per cent more than the 666,698 last year, research based on scheduled seat numbers on international flights serving 12 key Asian markets shows.
The Chinese market, the largest by absolute numbers, is having the second-largest capacity increase of 11 per cent.
Vietnam, also having an 11 per cent increase, is followed by Taiwan and Japan, which are seeing 10.4 per cent and 9.5 per cent more seats, respectively.
While national carriers are in general the top seat suppliers for their home markets, Korean Airlines is also the second-biggest for Vietnam, providing 9,100 seats, or 3.8 per cent of the total. It is also the third-largest supplier for Japan, with 52,944 seats, or 5.9 per cent of the total.
Such enthusiasm for travel on the part of Koreans is matched by the country's increasing popularity as a destination with Chinese tourists.
Sijia Jiang
