Chinese tourists return with lighter wallets

Trip.com

03/05/2023 03:53

(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    By Thomas Shum and Robyn Mak
       HONG KONG, May 3 (Reuters Breakingviews) - Chinese
travellers are opening their suitcases again, but not their
wallets. More than 240 million people are visiting mainly
domestic spots like Shanghai and Hong Kong during the almost
week-long Labour Day festivities. It's slightly more than
pre-Covid levels, but spending is lower as many find cheaper
ways to have fun.
    This year's May holiday, which began on Saturday, marks the
country's first post-pandemic travel season without
restrictions. Amid a shortage of international flights, popular
Chinese destinations have benefited from record crowds. Some
100,000 visitors a day poured into the gambling hub of Macau
over the weekend while tickets to Beijing's Badaling Great Wall
and Shanghai Disney have sold out. Domestic travel bookings
during the holiday surged eightfold from a year earlier,
surpassing pre-pandemic levels, according to online travel
agency Trip.com  9961.HK .
    The return of Chinese holiday-goers should be a huge relief
at home and abroad. Before the pandemic, domestic tourism
contributed a whopping 11% of GDP and 10% of national
employment, according to Fitch. Overseas, travellers from the
People's Republic spent $255 billion, or 17% of global outbound
travel expenditure, per 2019 data from the United Nations World
Tourism Organisation.
    Any optimism, however, looks premature. Domestic tourism
revenue is forecast to be just 83% of 2019 levels, at 120
billion yuan ($17.4 billion), according to official estimates,
suggesting consumers are opting for lower-cost trips. A
little-known city in coastal Shandong province, Zibo, for
instance, boasted the country's highest hotel room occupancy
rates during the Labour Day holiday, Bloomberg reported, and
went viral on Chinese social media thanks to its barbecue skewer
meals.  
   Meanwhile, overseas travel is suffering. The number of people
heading from mainland China to traditionally popular Asian
hotspots such as Thailand, Japan and South Korea, is low.
Scheduled international departures from China last month were
just over a third of April 2019 flights, according to data from
Cirium. The country's Big 3 carriers - Air China  601111.SS ,
China Southern  600029.SS , and China Eastern  600115.SS  - are
grappling with high oil prices, a weak yuan and geopolitical
tensions. Even if foreign travel picks up, spending may not. 
    All this bodes ill for the economy's already weak
consumption recovery. Luxury purchases and basic needs are
tracking well, but mid- and large-sized discretionary items like
smartphones and cars have disappointed. For now, cheap barbecue
skewers will keep ticking the right boxes for China’s tourists.
    Follow @t__shum and @mak_robyn on Twitter
    
    CONTEXT NEWS
    More than 240 million people will travel during China’s
five-day Labour Day holiday which began on April 29, according
to official estimates reported by state media CCTV, around 104%
of 2019 pre-pandemic levels.
    Bookings for domestic trips rose more than 700%
year-on-year, according to online travel agency Trip.com.
    Overseas travel for the holiday remains constrained, in part
due to a shortage of international flights. Bookings for foreign
destinations are at 50% of pre-Covid capacity, Reuters reported
on April 28, citing travel data firm ForwardKeys.
    The May holiday is shorter than the Lunar New Year and
October Golden Week holidays but is still one of China's busiest
travel seasons.

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 (Editing by Antony Currie and Katrina Hamlin)
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