The number of inbound and outbound travelers during the Mid-Autumn Festival holiday this year reached a new peak. Among them, the number of inbound and outbound travelers in Hainan reached 16,000, an increase of 85% year-on-year, with an average daily number of inbound and outbound travelers exceeding 5,900 and a single-day peak exceeding 7,600. Hainan's ports are seeing a "two-way rush" of inbound and outbound passengers.

Just after the warm-up for the Mid-Autumn Festival, the "steps" of the National Day holiday are approaching. Tencent and Ali have also successively detected signs and stepped up their efforts in the outbound tourism market in advance. Currently, the WeChat HK and Alipay HK mini-programs have been integrated with the products of Tongcheng Travel's international travel platform, HopeGoo, to meet the demand of overseas tourists and tourists from Hong Kong, Macao, and Taiwan for booking flights, hotels, and purchasing tickets to attractions.

The 144-hour visa-free transit policy, which the market attaches great importance to, will undoubtedly have a secondary catalytic effect. With the surge in numbers, the strengthening of platforms, and the boost from policies, outbound tourism has truly entered a new stage.

Outbound tourism enters a new transformation phase

FlightMaster big data shows that the number of flight bookings for inbound and outbound routes during the Mid-Autumn Festival holiday has exceeded 570,000, a significant increase of approximately 15% compared to a week ago. Among them, routes such as Shanghai-Tokyo, Shanghai-Osaka, Beijing-Tokyo, and Qingdao-Seoul have become popular choices for inbound and outbound travel during the Mid-Autumn Festival holiday, demonstrating the strong recovery momentum of the outbound tourism market.

Specifically, the robust recovery is the result of multiple factors working together.

Firstly, the expansion of the visa-free "circle of friends" and the relaxation of visa policies in many countries have significantly simplified visa procedures and processes for inbound and outbound travel, reducing travel costs and reigniting demand for outbound tourism.

In terms of the number of visa-free countries, as of now, there are already 24 countries that have fully reciprocal visa exemptions with China for ordinary passports. Moreover, according to data from Fliggy, within one hour of the announcement of the new visa-free policy, flight searches to Thailand instantly increased by more than 200%. It is evident that under the support of the new visa-free policy, cross-border tourism consumption between the two countries will enter a stage of accelerated growth.

Secondly, there has been a change in the consumer psychology towards travel. With the relaxation of visa-free policies, outbound tourism destinations have become more diverse. In recent years, domestic consumers have increasingly preferred niche and personalized travel destinations, which stem from cultural and geographical differences between China and other countries, making overseas destinations naturally "unknown" and highly attractive.

Upon closer inspection, a large number of outbound tourists choose to attend cultural performances abroad or even embark on a "pilgrimage" to the locations where their favorite works are set.

Behind this series of phenomena, on the one hand, it is because foreign performances can provide a more immersive cultural atmosphere, which is relatively lacking in domestic performances.

On the other hand, young people today are not only deeply influenced by social media but also exposed to a more diverse range of cultural works. A "pilgrimage" is essentially an extended experience of cultural IPs in physical space and a personalized way for tourists to experience fictional works in the real world.

It must be said that social media platforms, represented by Xiaohongshu, have played a crucial role in promoting this travel style. By pushing content based on user preferences, the derivative value of cultural IPs can be transferred to the behavior of "pilgrimage," thus forming a closed loop of "reading notes - checking in - sharing."

Furthermore, the significant reduction in transportation costs has reignited the enthusiasm of Chinese people to travel. Ctrip Group's "2024 National Day Travel Forecast Report" shows that domestic and outbound flight prices during the "National Day" holiday are more than 20% lower than the same period last year.

OAG Aviation also points out that the share of international capacity carried by Chinese airlines between China and overseas destinations is increasing. In January 2024, it was 63%, higher than 47% in January 2023 and 53% in January 2019.

This year, the outbound tourism market, which had been dormant for a long time, finally regained its vitality. The combination of visa-free convenience, changing consumer psychology, and reduced transportation costs was indispensable. At the same time, it also means that Chinese outbound tourism has entered a new transformation phase.

The market is recovering and "changing""Although outbound tourism in China has entered a new transformation phase with a noticeable increase in travel demand, the focus of that demand has changed significantly. The fundamental reason for this change is that the underlying logic of outbound tourism has been completely overturned, and the previously prevalent "blockbuster formula" no longer exists.

In the past, travel service providers could capitalize on information asymmetry and high communication costs between China and other countries. On the one hand, they could accurately capture and refine the core commonalities in the growing and diversifying outbound travel demands of domestic tourists. On the other hand, they could carefully integrate top resources at overseas travel destinations.

When creating outbound tourism products, they adopted a standardized strategy, namely "preset attractions + fixed itinerary + agreement prices covering accommodation, dining, and transportation services," thereby launching popular outbound group tours. Thanks to the large-scale production capacity of such standardized group tour products, their selling prices could be significantly reduced, making them highly attractive to consumers.

In general, the previous outbound tourism "blockbuster formula" centered on three core points: information asymmetry, standardization, and low prices.

Nowadays, as the Chinese outbound tourism market expands and deepens, the information asymmetry in outbound tourism, centered on language barriers, is visibly shrinking rapidly. Many people even repeat visits to the same destination, becoming more familiar with attractions, local culture, and travel routes than before.

Moreover, the travel concepts of young people who are keen on independent outbound travel are also evolving across the board, with the most prominent feature being non-standardized itineraries. According to Fliggy data, during the May Day and Dragon Boat Festival holidays this year, the proportion of independent outbound travel orders on Fliggy even reached over 80%, completely surpassing outbound group tours.

At the same time, Chinese tourists' preferences are gradually shifting from overseas shopping to cultural experience products. The most obvious manifestation is that the proportion of total spending by Chinese tourists on shopping in Japan has declined from 51.1% in 2019 to 37.3% in 2023. In contrast, spending on accommodation and entertainment, such as sports events, performances, concerts, etc., has increased significantly.

It is evident that travelers are increasingly pursuing personalized and social travel experiences and looking forward to richer and more refined products, especially for long-haul destinations and "new, unique, and exotic" product suppliers and customization service providers.

Overall, the phenomena of repeat visits to the same destination, the increase in the proportion of independent travel, the decrease in shopping, and the preference for entertainment activities reflect a shift in consumer behavior from the traditional "hit-and-run" style of "been there, done that" to a deeper appreciation and experience of local culture and a spiritual pursuit of a different "lifestyle." This is a new way of traveling that emphasizes a slower pace and richer experiences.

This new way of traveling undoubtedly poses a greater challenge to platform businesses in terms of their understanding of tourist destinations and their ability to accurately capture changing consumer demands. As the market recovers, it also faces new challenges. How will the market respond?

Who will ultimately reap the rewards of this "vast fortune" that tests "professionalism"?

The recovery of the outbound tourism market, coupled with changes in travel experiences, has created a trillion-dollar tourism consumption market that places even greater emphasis on professionalism. In this era of professionalism, only those who are sufficiently professional and understand destinations better than users can achieve a "harvest."

This means that platforms and businesses need to accelerate their transformation, moving from being "broad" to being "refined" and offering more competitive products, features, and services. The consumption scenarios related to cross-border travel services, such as accommodation, transportation, tourism, and entertainment, are crucial "entrances" to unlocking this trillion-dollar market.

Therefore, this is an opportunity for domestic leading internet companies that view going overseas as a "second growth curve" breakthrough. However, how to seize this opportunity is a topic worth exploring.

It must be said that achieving a rich variety of scenarios and more convenient consumption is the key. The cross-border travel and tourism market is intertwined with a wealth of online and offline scenarios, with online connections to payment, search, and science popularization, and offline connections to transportation, hotels, and other scenarios.

After the "big melee," giants have begun to divide labor and complete their areas of expertise, with clearer boundaries emerging. On one side are traditional OTA platforms, on the other are content-rich platforms, and in the middle are integrated platforms that link various details.

The emphasis on experiential content is entrusted to content platforms. Social media platforms such as Xiaohongshu and Douyin are indeed well-versed in the "personalized" label. The content community composed of numerous travel bloggers shares their experiences after completing independent and in-depth travel, not only activating the imagination of more people to "just go" but also providing excellent guidance for those who have travel ideas.

Traditional OTA platforms focus on transportation and hotel services, exerting efforts on the product and execution sides. This is because the biggest strengths of Fliggy and Ctrip lie in their "openness," which means connecting a sufficient number of merchants and users, using a large base to create richness, and establishing the shortest channels between the three parties.

More detailed functions are entrusted to comprehensive platforms such as WeChat and Alipay. After all, independent and personalized outbound travel undoubtedly requires higher convenience, such as services for ID card wallets, currency exchange and payment, and policy inquiries, which also need to be delegated to specific "roles."

As the market shifts from a melee to a clear division of labor, unhealthy competition will be weakened. Over time, no one will miss out on the outbound tourism recovery pie.

In summary, China's outbound tourism market has reached a new starting point, with the relaxation of travel restrictions, enhanced transportation capabilities at tourist destinations, increased travel budgets, and a gradual division of labor among platforms, all of which are favorable for outbound tourism. By actively facing the opportunities and challenges of recovery, understanding and adapting to new trends, and grasping consumer demand, the outbound tourism market still holds many possibilities.

Source: Hong Kong Stocks Research Society