Stocks that have ridden the boom in Chinese tourism are well placed to see their share price outperforming in 2018 as the number of visitors from our most important trading partner continues to soar.
Chinese arrivals through our airports has jumped by 24.8% to 3.2 million for the 12 months to January 2018, according to the latest data from the Bureau of Infrastructure Transport and Regional Economics (BITRE) that was reported in the Australian Financial Review.
I think the Chinese tourism boom will continue over the medium term at least as there is still plenty of room for growth even in the face of global trade tensions.
This is great news for the likes of Sydney Airport Holdings Pty Ltd (ASX: SYD) and Qantas Airways Limited (ASX: QAN) given their large exposure to this thematic.
While Chinese tourists are increasingly using airports in other Australia cities, Sydney is still a top arrival and departure point for these tourists.
Meanwhile, Qantas has a 16.4% hold on the international passenger market into Australia, according to BITRE. This makes it the market leader by a country mile with Jetstar (also owned by Qantas) in second place with a 9.1% share. In contrast, archrival Singapore Airlines has an 8.1% share.
But the interesting statistic that caught my eye was the total number of Chinese arrivals. While it has grown by the biggest clip compared to visitors from other countries, it only accounts for 8% of the total.
The number of visitors from much smaller countries like New Zealand is 7.1 million and Singapore is 5.4 million.
This suggests that Chinese tourists can continue growing at robust double-digits for quite a while yet, especially given that Chinese nationals consistently rate Australia among the top destinations to visit. This is unlikely to change with a Sino-American trade war unless that cripples the Chinese economy (which I think is unlikely).
I was at the Victorian town of Healesville (a tourism destination for the animal sanctuary) over the weekend and boy has it changed. It's no longer the sleepy place I remembered and I strongly suspect it may be benefiting from this very thematic.
The Chinese tourism boom could also bring much-needed relief to other tourism-related stocks that have been under significant pressure lately. This includes theme park operator Ardent Leisure Group (ASX: AAD) and casino group Crown Resorts Ltd (ASX: CWN).
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