China’s Spring Festival to boost near-bound travel
China’s Spring Festival holiday is expected to provide a boost to China’s outbound travel for 2024 which will eventually benefit Malaysia’s tourism and aviation industries, analysts observed.
In a report, the research team at AmInvestment Bank Bhd (AmInvestment) said: “We believe the Spring Festival will provide the much needed boost for China’s outbound travel for 2024.
“The holiday is one of two of the longest seasons for the China populace and will see an extra day this year. Though we have yet to see data releases on the matter, according to estimates by China’s National Immigration Administration (NIA), the daily average number of international passenger clearances is expected to reach 1.8 million people (+3.3folds y-o-y) and roughly similar to pre-pandemic levels.
“This is supportive of outbound travel bookings data for Southeast Asia, Japan and South Korea, which collectively increased by more than 10-folds, as provided by Ctrip, a popular platform in China.”
For reference, it noted that Malaysia received about 1.4 million Chinese tourists, accounting for 7.8 per cent of total tourist arrivals in 2023, according to Tourism Malaysia. The agency continues to see China as a key source market and aims to achieve a target of five million tourist for 2024F.
The research team also see encouraging signs on capacity growth to China from the 3QFY23 results briefing with Malaysia Airports Holdings Bhd (MAHB), which saw filled seat capacity recovering up to 45 per cent of pre-pandemic levels at 3.77 million pax and weekly flight frequency up to 64.7 per cent at 238 flights per week.
“Moving forward, we gather from MAVCOM that Chinarelated routes including KULHKG (Hong Kong International Airport) and KUL-PVG (Shanghai Pudong International Airport) may see the largest increases in capacity for 2024.
“In addition, we also note the
We believe the Spring Festival will provide the much needed boost for China’s outbound travel for 2024.
AmInvestment
following new routes; Loongair’s KL-HGH (Hangzhou Xiaoshan International Airport), China Eastern Airlines KCH / KUL-NKG (Nanjing Lukou International Airport); and AirAsia X KUL-XIY (Xi’an Xianyang International Airport),” it said.
Meanwhile, it noted that the latest market sentiment survey on China’s outbound tourism destination markets undertook by World Tourism Alliance (WTA) and Horwath HTL, Southeast Asia shows a positive 20 points relative to other destinations.
The survey notes the reintroduction of pilot outbound group travel in early 2023 and, more importantly, the announcement of mutual visa waiver agreements in 4Q23 between China and selected countries - Malaysia, Thailand and Singapore.
For reference, China’s passport is currently ranked 64th on the Henley Passport Index (out of 199).
“Though China has awarded visa-free policies without reciprocity for more countries, including key luxury tourism destinations such as France, Italy and Spain, we believe these regions will lag as preferred tourism destination by the general non-affluent traveller given relatively stronger foreign currency and higher associated costs.
“Following the 30-day visa free waiver announcement in November 2023, Trip.com reported that Malaysia-related searches increased by 96 per cent WoW.
“Subsequently, Malaysia saw a 35 per cent y-o-y increase in China tourist arrivals in December 2023.
“We gather that both governments are currently discussing extension of the waiver beyond November 2024, which appears likely as Malaysians made up the largest group of inbound tourism in China during the same period, according to NIA,” AmInvestment said.
All in, the research team see pockets of opportunity in nearbound tourism.
“Though the current narrative is in line with ongoing efforts by China’s government to pivot towards a domestically-driven economy, we believe the lag in outbound performance is not fully attributable to this factor as travellers do exhibit the desire for travelling abroad based on our observation. In this regard, we concur with the prevailing market view that supply side issues, particularly slower visa approvals, and limited flight capacity, play a more prominent role,” it said.