China’s deep-pocketed tourists are staying home, for now

  • As borders reopen, many Chinese consumers are holding back.
  • Many consumers are not mentally ready to travel and airlines are in no rush to add capacity either.
  • China’s 1.4 billion residents suffered the strictest mobility restrictions of the pandemic, largely cut off from the world for 3 years.
  • For more financial news, go to News24 company front page.

During the last year of the Covid lockdown in Shanghai, Qin Bing dreamed of traveling abroad. As China reopens its border on Sunday after three years of Covid isolation, the 36-year-old marketing director is holding on.

Indeed, the $280 billion (~R4.8 trillion) powerhouse that is Chinese tourism may not re-emerge for months, thanks to lingering infections, restrictions on new arrivals and rising costs linked to a disruption of the global travel infrastructure.

“Ticket prices are going crazy,” said Qin, who before the pandemic flew abroad at least three times a year but now fears re-infection with Covid and high flight costs. “Package trips are only for people with money to burn – definitely not for me.”

China’s 1.4 billion residents suffered the strictest mobility restrictions of the pandemic, largely cut off from the world for three years as the government pursued a zero-tolerance approach. The pent-up demand was expected to trigger a surge in travel and spending after China lifted its quarantine from this Sunday.

However, the tenor of its much-anticipated reopening boom seems to diverge from the revenge trip — a full-on, bucket-list trip to make up for lost time — that many expected. The follow-on boost for businesses hungry for China’s high-spending tourists is likely to be delayed, as a full recovery to pre-pandemic levels could take months.

Covid explosion

One obstacle that limits the door is the Covid explosion in China. Millions of people are sick or recovering, and the numbers are expected to remain high for weeks as the virus migrates from big cities to rural and outlying areas.

The size and scope of the outbreak prompted other countries to tighten border rules, including popular destinations such as Japan, South Korea and the US.

“Most consumers are not mentally prepared to travel to another country right after recovering from Covid,” said Chen Xin, head of China travel and leisure research at UBS. “We may have to wait until next year at the earliest to see outbound travel return to pre-Covid levels.”

Airlines are also in no rush to add capacity.

Flights out of China in the first quarter are at 10.7% of pre-pandemic levels, although they are more than double the anemic rates of a year ago, according to the data analytics firm Cirium aviation. The lack of options means it’s expensive to fly almost anywhere abroad. As of January 3, according to data from Tongcheng Travel, outbound tickets cost 3,822 yuan ($556), up 18% since Christmas.

International flights are unlikely to increase significantly before the Lunar New Year in two weeks, and travel visas and passports may take longer to obtain, UBS’s Chen said.

There are no reservations

Indeed, belying concerns that tourist hotspots from the Eiffel Tower to the Grand Canyon will once again be strained by Chinese revelers, travel agencies say they are struggling to persuade people to book trips. Agents are worried that the low prices of the last decade will not return soon.

While a seven-day trip from southwest China to the Thai capital of Bangkok would have cost 1,880 yuan ($274) in 2018, a similar trip now starts at 7,580 yuan ($1,103), according to Zhao Ling, a from Deyang. travel agent working for Chengdu Everbright International Tour Co.

“A lot of people have been asking about packages, but no one is booking,” Zhao said.

Tourist meccas are tempering expectations. Thailand expects 300,000 visitors from China in the first quarter of this year, less than 10% of pre-pandemic levels, according to Health Minister Anutin Charnvirakul. Only 60,000 visitors are expected in January.

Hoteliers in Phuket, the southern island famous for its white-sand beaches, are anticipating a slow Lunar New Year. Mainland tourists are not expected to arrive in large numbers, said Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association and chief executive of Deevana Hotels and Resorts.

There are few scheduled flights and his hotel has yet to see an increase in advanced bookings from Chinese tourists, Suksit said.

Mistreated meccas

Even if Chinese tourists do arrive, the once bustling tourist centers, attractions and night markets may not be ready. Many hot spots have been affected by the pandemic, and by the continued absence of the once ubiquitous and higher-spending visitors, whose money had an outsized impact on local economies.

The global supply chain that kept Chinese visitors happy, from buses to Chinese restaurants to Mandarin-speaking tour guides, has largely collapsed. Labor shortages are playing out in places like Singapore and Thailand, where most companies can’t hire workers or upgrade facilities quickly enough after years of drought. Millions of workers once in the hospitality industry have changed jobs.

“Singapore is not ready to deal with the sudden influx,” said Stanley Foo, founder and managing partner of Oriental Travel & Tours in Singapore. “I’m more concerned about the labor shortage at the attractions. We can’t even handle the current number of visitors.”

Also concerned are Chinese operators of so-called “zero dollar” packages, prepaid tours in which tourists are guided through shopping and sightseeing itineraries, often with bespoke stops at expensive souvenir shops.

“It took us 10 years to get Thailand tour packages down from 10,000 yuan ($1,455) to 2,000 yuan ($291), years of effort and relationships, a lot of buying from airlines, hotels, local shops,” he said. said Zhao, who used to lead a group of 30 people every month before the pandemic. “There was a whole supply chain. Now that chain is completely broken.”

Internal demand

Since then, Zhao has focused on offering domestic tour packages, mainly to Xinjiang and Tibet.

Chinese tourists may prefer skiing in Harbin or shopping in Hainan’s duty-free malls to traveling abroad during the Lunar New Year, according to UBS’s Chen. Domestic flights have recovered much faster than international flights, with 12,216 trips scheduled on January 8. That’s nearly 100 percent of domestic capacity in 2019, VariFlight data shows.

Still, the return of Chinese tourists after a three-year absence, if only a trickle for now, is boosting spirits in the global tourism industry. According to Trip.com, international travel bookings during the Lunar New Year increased more than 540% from the near-zero level a year ago.

“We miss them,” said Foo of Singapore.

– With the assistance of Pathom Sangwongwanich, Danny Lee, Chunying Zhang and Thomas Kutty Abraham.

Leave a Reply

Your email address will not be published. Required fields are marked *