SINGAPORE, 20 June 2023: With an uncertain economy providing some cross-market turbulence, mainland China’s reopening is expected to bolster growth globally with a concentrated impact in Asia Pacific, according to Mastercard Economics Institute estimates.
Released last week, the Mastercard Economics Institute’s Travel Industry Trends 2023 delivers key insights about the global state of travel, punctuated by shifting economic landscapes, persistent consumer demands, and a reopening of mainland China.
In the face of a changing economic landscape, post-pandemic preferences for experiences over things and a consistent demand for leisure travel shape the 2023 outlook.
With an uncertain economy providing some cross-market turbulence, mainland China’s reopening is expected to bolster growth globally with a concentrated impact in Asia Pacific, according to Mastercard Economics Institute estimates.
Key findings
Leisure and business travel are growing at the same pace. Driven by the long-awaited lifting of travel restrictions in Asia, global leisure travel remains robust, with flight bookings up roughly 31% in March 2023 compared to the same month in 2019.
In the second half of 2022 into early 2023, corporate flight bookings caught up to leisure flight bookings driven by regions with a strong return to office culture.
Global leisure and business travel are now growing at the same rate. Our insights show demand for in-person meetings, with the most significant growth in commercial travel and entertainment expenses being led by Asia Pacific and Europe, up 64% and 42%, respectively, between January-March 2023.
Mainland China’s reopening benefits global and Asia Pacific tourism. China’s reopening following tight Covid regulations comes at a time when it will likely have a positive impact on the experience economy as pent-up demand for travel is expected to drive strong tailwinds.
By March 2023, spending on experiences was notably 93% of where it was in 2019 despite minimal travel last year.6 Economies in the Asia Pacific region could be obvious beneficiaries of China’s opening, given their strong ties to international trade, tourism, and geographical proximity.
Based on Mastercard Economics Institute estimates, other countries expected to benefit include northern Europe – Germany and France – and Brazil, which could boost their exports to China as the economy recovers.
Travellers establish new corridors
As consumers enjoy higher incomes and return to some level of pre-pandemic comfort, they’re also starting to venture further from home to new locations. The US and Australia remain favourite destinations for travellers from the Asia Pacific region for spring and summer journeys.
Beginning in late 2022, visitors to Hong Kong SAR started to increase, with the destination edging into the top 10 list and soaring to #3 in February 2023. Luxury experiences like high-end accommodation and luxury travel in places like France and Italy will likely entice Chinese tourists from a zero-Covid environment to rejoin the experience economy.
Tourists continue to prioritise experiences
Potentially influenced by social media and entertainment, travellers land in lesser-known destinations searching for cultural experiences. As of March 2023, global spending on experiences was up 65%, while spending on things is up 12% compared to 2019.
Experience-oriented spending is surging in certain corridors where pandemic lockdowns have expired. Still, Chinese tourists who traditionally over-index on luxury retail compared to other tourists could boost goods spending across markets.
“In 2023, travel came roaring back in Asia as China reopened its borders and other markets eased the last of their pandemic-era travel restrictions,” said Mastercard Economics Institute chief economist for Asia David Mann.
“As people worldwide prioritise experiences over things, the strong travel demand is expected to last far beyond the initial ‘revenge travel’ bump. As we look ahead to the peak summer travel season, the big question is whether flight and accommodation supply can keep up with demand.”
You can view the full Travel Industry Trends 2023 report here. Other reports and insights from the Mastercard Economics Institute can be found here.
