Illustration: Xia Qing/GT

Multinational companies are positioning themselves for potential gains from China's outbound tourism. In South Korea, Lotte Duty Free has strengthened cooperation with Chinese travel agencies as Seoul prepares to pilot a visa-free program for Chinese tour groups ahead of the Chinese National Day holidays, the Yonhap News Agency reported on Sunday.

According to Yonhap, Lotte Duty Free's analysis of group visitors to its stores in the first half of the year found that the proportion of tourists from Chinese second- and third-tier cities such as Qingdao, Hangzhou and Chengdu showed an upward trend.

If this trend continues, it could have practical implications for global retailers, hotel operators and airlines. Marketing strategies, product offerings and capacity planning may need to take into consideration a more diverse set of origin cities. As income levels rise and consumption patterns upgrade, travelers from these markets are likely to generate additional demand for overseas shopping and leisure, contributing new momentum to international tourism flows.

Over the past two years, China's outbound travel has regained momentum while giving rise to new patterns. Among them, young consumers from second- and lower-tier cities have drawn growing attention in the market.

In the run-up to last year's National Day holidays, the Xinhua News Agency cited data from Tongcheng Travel showing that residents of third- and lower-tier cities accounted for more than 40 percent of long-haul outbound travelers, with bookings for related products more than doubling. 

The report noted that cities such as Lhasa, Kashgar, Xining, Zhuhai and Yuncheng saw faster growth in outbound flight bookings during the holiday period than first-tier and "new first-tier" cities, creating new points of the expansion for the outbound travel market.

Data from another travel platform further highlight the demographic trend behind this shift. During last year's National Day holidays, 70 percent of outbound travel bookings from third- and lower-tier cities were made by consumers under the age of 33.

This rise in outbound demand from younger travelers in smaller cities is emblematic of China's broader consumption upgrade. Rising incomes, a stronger international outlook and the growing influence of social media have combined to foster a generation of consumers whose aspirations increasingly extend beyond domestic markets. For many of these young people, taking trips abroad during extended holidays is becoming not only affordable but also an increasingly popular form of leisure.

China's lower-tier cities are home to a substantial share of the country's 1.4 billion people. The expansion of outbound travel from these areas is therefore expected to supply the international tourism market with a significant and increasingly diverse stream of visitors. As basic needs are more readily met, households in second- and third-tier cities are channeling disposable incomes into services such as travel, entertainment and dining. This trend is set to generate fresh momentum for global tourism growth in the years ahead.

For multinational companies, a key challenge is how to seize this emerging opportunity. That requires a clear understanding of the shifting profile and preferences of these travelers. It also calls for an adjustment of product offerings and marketing strategies in a more responsive manner to better connect with a consumer base that is younger, more diverse and increasingly focused on experiences and lifestyle spending.

South Korea appears to be moving quickly on this front. According to a Yonhap report earlier this month, a temporary visa waiver program for Chinese group tourists will begin later this month. Under the program, groups of more than three travelers will be allowed to enter South Korea without visas for up to 15 days, from September 29 until June next year.

Other economies could also step up efforts to capture this demand. In addition to easing visa rules, measures such as expanding flight capacity, improving access to digital payments and tailoring retail experiences could lower barriers and make destinations more appealing to Chinese travelers from smaller cities. The growing presence of younger travelers from these regions reflects China's ongoing consumption upgrade. Practical steps - from simplifying travel procedures to adapting products and services - can help turn this emerging trend into a more sustainable source of growth.