A time series analysis of Chinese outbound tourism to Australia

Abstract

Economic development and improvement in living standards, as well as political liberation in China have contributed to the growth in international travel demand. Additionally, the supportive role of the Chinese government in outbound tourism development and China's inclusion in the World Trade Organisation have and will ensure a continuing ease on travel restrictions, and enhance the opportunities for Chinese citizens to travel overseas. Since the implementation of the open door policy in 1982, tourism development in China has experienced rapid growth, making the country the fifth largest international tourism destination in terms of both tourist arrivals and tourism receipt in 2003 (WTO, 2004). In the meantime, China has also become an important international tourism source market, especially for countries in the Asia Pacific region. Chinese outbound tourism has been managed and regulated by the Approved Destination Status (ADS) system, which is based on bilateral tourism agreement between China and overseas destinations. The ADS system restricts the overseas destinations Chinese nationals can travel to, monitors the travel balance account, and also restricts which foreign tour company is allowed to operate in the Chinese market. It has only taken a decade for China's outbound tourist numbers to increase at an annual growth rate of 19.4 percent from 3.7 million in 1993 to 20.2 million in 2003. China has emerged as one of the most significant tourist source countries for Australia. This market has been growing at an average rate of 23.7 percent per year between 1993 and 2003 (see Figure 1). In particular, the dramatic increase in the number of Chinese tourists to Australia has taken place after 1999 when Australia became the first western country to be granted Approved Destination Status by the Chinese government. In 2002, China was ranked 7th in the world's top spenders on international tourism. The total expenditure by Chinese outbound travellers reached US$15.4 billions, a 10.7 percent increase over 2001 (WTO, 2004). Even though a very small percentage of Chinese citizens travels abroad, this is considered by many destinations to be a lucrative market, outspending many major markets in the Asian and Western countries. This paper describes the development of Chinese outbound tourism in general, and to Australia in particular. Box-Jenkins (1970) univariate time series modelling is used to analyse Chinese tourist arrival patterns to Australia for the period 1984-2004. This approach provides two simple and useful models for representing the behaviour of observed time series processes, namely the autoregressive (AR) and moving average (MA) models. Tests for stationarity in the time series of tourist arrivals are also conducted.