Chinese tourism spending set to hit $1.2tn by 2020

The booming travel sector in the world's biggest economy has already surpassed that of the US and is slated to accelerate.

Jingshan Park overlooking the Forbidden City in Beijing. China’s tourism is expected to contribute 10.5 per cent to the GDP by 2020. Rolex Pena / EPA

BEIJING // China’s tourism industry will emerge as an economic powerhouse contributing 10.5 per cent to the GDP by 2020, according to a report released by China national tourism administration yesterday.

Tourists spending will rise to a colossal US$1.22 trillion from about $500 billion in just five years, it said.

While that is a huge figure, it is not unfeasible given the domestic tourism industry has grown at an average 22.4 per cent per year since 1985 when it was a mere $1.3bn, the administration said in its China Tourism Development Report, which was released at the four-day First World Conference on Tourism for Development, which will end in Beijing tomorrow.

The revelations came soon after the Global Business Travel Association (GBTA) reported that China’s business travel market has overtaken the United States as the world’s biggest. Chinese spending in this segment came to $291.2bn, just topping US spending of $290.2bn in 2015.

“China surpassing the United States in business travel spending marks a major inflection point and truly demonstrates the global nature of today’s economy,” said Michael McCormick, the GBTA executive director.

The US is likely to fall further behind this year as Chinese business travel spend is expected to grow 10.1 per cent to $320.7bn compared with 1.9 per cent growth in the US, which will notch up $295.7bn, the GBTA said.

It predicted a 9.8 per cent growth in Chinese business travel in 2017. China business travel is dominated by domestic travel, which accounts for 95 per cent of total business travel spending.

"We have also found that business travel for MICE [meeting, incentive, convention, and exhibition] activity comprises 42 per cent of total domestic business travel volume in China and 45 per cent of total business travel spending," Colleen Lerro Gallagher, the GBTA's communications director, told The National.

China ranks ahead of all other countries in terms of domestic tourist trips, outbound trips and tourism revenue, said Li Jinzao, the chairman of the administration, boosted by the country’s economic reforms and rapid development since late 1970s.

Official data indicates an average of three trips were made by each of the 1.4 billion Chinese of all ages in 2015.

The official report said that a total of 4.1 billion trips were made by domestic tourists in 2015. The represents a 10.2 per cent annual growth since 1984 when a total of 200 million trips were made.

More than 70 per cent of hotel construction in the Asia Pacific over the past two years has taken place in China, industry analysts said.

Foreign travel is a major source of luxury goods used by Chinese although most of the major international brands have opened outlets in Beijing, Shanghai, Guangzhou and other cities in the country.

"This is driven by a new generation – the Millennials – that spend more and travel more freely [independently and not in groups]. Therefore the impact on luxury by Chinese travellers is growing – and as long as price differences will exist between Europe and China it will drive the spending," the China Europe International Business School adjunct professor of marketing, Michel Gutsatz, told The National.

Tourism is also boosting the domestic service economy. There were 27,300 travel agencies in China by 2015 end compared with a 7,355 in 1999.

Tourism and related sectors last year employed 79.1 million people, accounting for 10.2 per cent of the country’s total working population.

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