China lifts ban on group tours abroad sparking luxury stock surge

As of August 10, China has lifted a ban on group tours to 78 countries and regions spanning five continents, featuring popular tourist havens such as South Korea, Japan, Germany, England, and the United States.

News of the ban lift subsequently sent ripples of optimism through the tourism, retail, and hospitality sectors, which had weathered restrictions over the past three years due to the pandemic. In fact, Chinese travel service provider Ctrip reported a more than 20-fold surge in searches for outbound travel, with the highest searches for Japan and South Korea. The resurgence of outbound tourism, a market valued at a staggering 270 billion USD, is expected to infuse renewed vigour into these industries.

The luxury goods and cosmetics sector also witnessed a notable uptick in stock prices globally following the announcement. Hermès Group’s shares climbed 3.2% to 2,138.80 USD per share, while LVMH’s shares rose by 3.43% to 910.67 USD per share. Similarly, in the cosmetics sector, L’Oréal Group’s shares rose by 3.2%, reaching 457.29 USD per share, while Estée Lauder Group’s shares increased by 2.26%, closing at 169.94 USD per share.

According to the World Tourism Organization, China led the world in outbound tourism in 2019, with 166 million Chinese tourists contributing to a staggering 270 billion USD in total consumption. The resumption of group travel holds profound implications for international and domestic travel agencies, with industry experts anticipating a robust revival. Xu Xiaolei, Chief Brand Officer of CYTS, predicted that Chinese outbound group tours in 2023 could reach 60% to 80% of the levels witnessed in 2019.

In a McKinsey report titled “China’s Tourism Industry Outlook 2023”, Australia, New Zealand, and Southeast Asia topped the list of Chinese respondents’ preferred travel locations. Meanwhile, European tourism experienced a decline in interest compared to previous years, except among affluent individuals with monthly household incomes exceeding 38,000 RMB (5,234.66).

With this landmark announcement, China is poised to propel its outbound tourism industry to greater heights, fostering economic recovery and strengthening global tourism markets. However, this outcome hinges on whether the now-liberalised group travel steers Chinese citizens away from the swiftly burgeoning trend of domestic travel.


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