Jack Wang lights up when telling stories about the Chinese tourists he has guided along the East Coast for the past five years. From those who maintain an immovable skepticism toward American cuisine to those who refuse to step off the bus when it rains, Wang has a seemingly endless supply of humorous tales up his sleeve, but when the state of U.S. tourism comes up in conversation, he takes an altogether more serious tone.
“This year has not been a good one,” Wang says, his English marked with a gruffness emblematic of his northeastern Chinese heritage, “we have had a lot of people stuck because of visa problems and political stuff.”
The U.S. experienced a 6 percent dip of Chinese visitors in 2018 and companies such as Wang’s Jupiter Legend, which runs bus tours predominately for Chinese tourists along the east coast of the U.S., are reeling from the first decrease in 15 years. These travails are typically placed alongside the fortunes of Iowan soybean farms and Midwestern auto manufacturers — i.e. within the context of the U.S.-China trade war — but the factors hampering the $250 billion industry are more complex and predate the tariffs first levied by the Trump administration in January 2018.
Although the tirades of Chinese state media and government travel warnings citing American “shootings, robberies and thefts” certainly encourage Chinese mainlanders to reconsider stateside vacations, the U.S.’s increasingly stringent visa policy and the weakening position of the yuan against the dollar are far more dissuasive.
The rejection rate for Chinese tourist visa applications has risen steadily over the past five years and reached 17 percent in 2018, the highest level since 2012. Chinese travellers are keenly aware of this policy shift and are reacting accordingly with fewer and fewer applications. This creates a potentially vicious cycle for the U.S. tourism industry whereby ever lower application numbers see ever higher rejection rates.
U.S. visa rejections come at a time when Chinese passports hold more stock internationally than ever before. Iran and Serbia are just the latest countries to waive visas altogether, with a host of others, such as Thailand and the UAE, lowering their requirements in a bid to attract the world’s largest outbound travel market. In this context, America’s $160 visa fee — one charged irrespective of an application’s success — becomes all the more unappealing. The modern international tourism market is vast and fiercely competitive, and its customers are demanding and flexible — tomorrow’s trip to D.C. can be rerouted to Dublin or Dubrovnik in the click of a button.
U.S. museums and cultural institutions are experiencing the repercussions of Chinese visa rejections firsthand. For Melissa Rose, Group Sales Manager at the Corning Museum of Glass (CMoG), located in Upstate New York, the dwindling number of Chinese tourists is forcing a major rethink. Proximity to Niagara Falls has made CMoG an essential pit stop for Chinese bus tours, a group that until recently comprised a quarter of all visitors to the world’s foremost glass museum.
“Numbers are down,” Rose notes, “it has been in decline for the past four years due to high rejection rates for visas, from what we are hearing it is as high as 40 to 50 percent for first time visitors.” Washington D.C., a cultural hub which receives more than 20 million tourists annually, reported a 5.3 percent drop in Chinese visits in 2018 — a 25 percent decrease. “Data shows Chinese visitation is down,” said Destination DC CEO Elliot Ferguson, “especially when it comes to vacation and first-time visitors, which D.C. tends to share a bigger share of.”
For obvious reasons, the first-time traveller that Ferguson points to is particularly affected by tightening U.S. visa policy and the weakening value of the yuan against the dollar only makes an American vacation more unattractive. This may seem contrary to the ubiquitous image of high-spending Chinese travelers, but while China’s elite travelers draw headlines, the price-conscious middle-class traveler is far more numerous.
The yuan weakened below seven to the dollar in early August, continuing a downward trajectory that began in early 2018. Practically speaking, this makes an American vacation much more expensive than one in Europe or Asia. By way of example, a Chinese family of five (two parents, one child, two grandparents) joining a week-long tour along the East Coast now costs $720 more than it would have a mere 20 months ago (not including flights and shopping).
Sienna Parulis-Cook, Communications Manager at China travel analysts Dragon Trail, believes the importance of the weakening yuan has been largely overlooked as an explanation for the decline in Chinese tourists to the U.S. “The political tensions and tit-for-tat travel warnings are more exciting,” Parulis-Cook said via email, “but there are many other factors affecting Chinese tourism to the US and Chinese tourists have a lot of choices and other destinations might seem like better value for money.”
The notion of Chinese travelers finding better value elsewhere is supported by the exploding number of Chinese trips across Europe. The currencies of the United Kingdom, Iceland, and Norway all depreciated against yuan in 2018 (-3.12 percent, -9.55 percent, -5.03 percent) and all three countries experienced booming levels of Chinese tourists (34 percent, 60 percent, 84 percent). While affordability is only one factor, when joined with ever-friendly visa policies, the reasons driving strong growth across Europe seem clear.
For those in the U.S. tourism industry that look at the Chinese market as an area ripe for growth, a strong dollar and a stricter visa policy may seem like immovable impediments but, as Parulis-Cook suggests, there are positive steps DMOs and cities can take to attract Chinese tourists. “There are marketing strategies that can help soften the impact of declining Chinese visitor numbers. These include take a very targeted approach to reach the right market,” says Parulis-Cook before noting that another option is to “focus on high-end clientele, to whom a declining RMB might not matter as much.”
It is somewhat ironic that U.S. tourism might need to reprioritize highly affluent Chinese travelers, given tourism efforts in recent years have been broad-based, but in the current political and economic climate, it may be the best path forward.