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Older, Wealthier and Active: The Future of Chinese Outbound Travel, According to Liu Ren You

At the end of 2022, there were only 6,000 companies involved in outbound tourism-related businesses in China. A year later, this number has soared to 25,600. Despite inhibiting factors like insufficient flight capacity, lacking destination resources and visa difficulties, the outbound tourism market continued to thrive in 2023, with tailor-made travel emerging as one of the most prominent and eye-catching recovery trends.

Chinese domestic tourism has undergone significant changes during the pandemic years

Liu Ren You Travel, a Chinese agency that specialises in tailor-made travel for groups of six is ​​a typical example of hard work and creative thinking that has paid off in the last year since outbound travel restarted. At their recent 2024 development strategy sharing session, founder Jia Jianqiang was grinning ear to ear. "In the past, meetings were always held in cramped and uncomfortable offices," he said, referring to the tough pandemic years. "Today, we're in an elegant and refreshing tea room, indicating that the market is improving, and the budget for good people at the Liu Ren You marketing department is getting more and more 'honorable.'"

Liu Ren You can indeed look back on a very successful 2023. "Overall, our outbound tailor-made segment has recovered to 70% of 2019 levels," Jia shares. Before the pandemic, over 90% of Liu Ren You's business was outbound tourism. "Domestic tourism accounted for only 4%-5% of our business, but after outbound tourism came to a complete halt, we transitioned to domestic tourism. At first glance, it didn't seem that there was much service space for domestic tourism. However, for some more diverse and complex destinations within China, such as the country's western provinces of Qinghai and Xinjiang, customers need someone to solve 'more expensive' and 'more difficult' problems for them, acting as solution providers to maximize user value."

The popularity of Xinjiang tourism is growing, with the region's steppes, forests and scenic lake destinations drawing significant domestic numbers

At the beginning of 2022, the 2 million high-end customers from Liu Ren You's own channels secured it domestic tailor-made business income of over RMB 150 million (US$20.8 million) during the pandemic. "From 2020 to 2022, we saw a few golden years for innovation around domestic tourism, and then in 2023, we saw domestic tourism consumption explode. Currently, domestic tailor-made tours have become an important business segment for us, accounting for 30% of our overall 2023 revenue."

China Travel Trade Media was curious to find out what Jia Jianqiang thought about new growth, trends and opportunities in the 2024 China travel market:

CTTM: People have been predicting the downfall of travel agencies seemingly forever. How do you view the value of travel agencies?

JJQ: We made a call before the pandemic that the market for group tours would gradually decline. Since the market still exists, though, many companies have not made the call yet to pivot away from the group tours market. Three years after the pandemic, it suddenly became clear that the group tours industry was declining faster than anyone had anticipated. So I think the travel agency industry is facing two trends; one trend is personalisation, which is very difficult for travel agencies. Without systems in place to improve efficiency or a good customer acquisition system, it will be very difficult for travel agencies to provide more personalised services.

The other trend is an "upgrade" of the traditional group tour concept. Various tourism industry regulatory agencies are cracking down on "zero-fee" packages to make pricing transparent again. As for who will travel with groups, definitely more retirees - they have social needs, but group tours must be improved.

CTTM: Do you think outbound tourism business will do well in 2024?

JJQ: 2024 will be a relatively stable and continuous recovery year. Niche destinations such as Antarctica, South America, and Africa, which showed strong recovery momentum in 2023, will attract more outbound tourists in 2024. In addition, there is strong demand for business and educational travel, which will also support the continued recovery of the market in 2024.

From the perspective of the average length of stay for Liu Ren You's outbound routes, it increased from 7.5 days in 2019 to 10.6 days in 2023, a 41% increase. Many tourists even started to inquire about trips lasting more than 30 days, hoping to explore more types of scenery and experiences in a single trip. As tourists' travel patterns change, they focus more on travel experiences, whether it be leisure travel or an in-depth understanding of destination cultures and customs. There's also been a reshuffle in the procurement of tourism resources, so prices will also rise to varying degrees.

Destinations in the Balkans have historically enjoyed strong Chinese tourism numbers

We see that two groups, the "active retired group" and families with children, are the main buyer groups for our products, without too much fluctuation in their demand. Among the "active retired group" aged 50-80, there is strong demand for travel - not only because they have sufficient time and freedom, but also because they value the depth and value of our products, and they like to travel with peers of the same age. For these reasons, we've tailored the "light luxury small group" series of products for this group, which achieved great success in 2023, with over 50 groups sold, covering destinations such as the Balkans, Switzerland, Saudi Arabia, Iran, Georgia, etc. The "active retired group" will definitely become the cream of the outbound travel market in the future.

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