July 11, 2020
AliExpress WW
China reports another drop in tourism revenue as recovery from coronavirus shock is delayed

China reports another drop in tourism revenue as recovery from coronavirus shock is delayed

AliExpress WW

A China Eastern Airlines plane stands on the pavement at Pudong International Airport in Shanghai, China, on Monday, June 8, 2020.

AliExpress WW

Tsilai Shen | Bloomberg via Getty Images

China’s struggle with the economic advantage of coronavirus is far from over.

The resumption of restrictions on social activities slowed the pace of recovery, as evidenced by a 69% drop in tourism revenue during the three-day Dragon Boat Festival, which officially ended on Saturday.

The restrictions mainly relate to Beijing, where authorities increased social distance measures and tightened control over trips to and from the capital after a group of cases of Covid-19 arose two weeks before the holiday. Across the country, many scenic spots still limit the number of visitors.

This year, about 48.81 million tourist trips during the festival generated revenue of 12.28 billion yuan ($ 1.73 billion), according to Ministry of Culture and Tourism of China. This led to a 68.8% decrease compared to 39.33 billion yuan in tourism revenue during the festival last year, which fell in early June. Then it was made about 95.98 million tourist trips. official numbers.

“Data on tourism and other activities over the past weekend of the Dragon Boat Festival (June 25–27) suggest that the recovery in the service sector remains weak for a number of obvious reasons,” said Tin Lu, chief economist at Nomura Chinese. He pointed to increased measures of social distancing and consumer confidence, “overshadowed by increased uncertainty and high unemployment.”

“Because of travel bans (a), there were almost no cross-border trips during this year’s Dragon Boat Festival,” said Lu. “These data indicate that, compared with the Labor Day holiday (in May), there were no significant improvements.”

Covid-19 first appeared at the end of last year in the Chinese city of Wuhan. In an attempt to control the spread of the disease, more than half of the country extended the closure of New Year holidays for at least a week in February.

Although the outbreak stopped within a few weeks, and by April most of the country had resumed work, China was faced with a new problem for travelers who brought the virus into the country from abroad. The proliferation of Covid-19 in major economies in a global pandemic that currently affects more than 10 million people and kills more than half a million, has also affected the demand for Chinese exports.

The country is trying to shift its dependence on exports to domestic consumption for growth. Since international borders are largely closed, the hope that billions of dollars spent on foreign tourism last year will now be redirected to China. According to official figures, only in the first half of last year, Chinese tourists spent 127.5 billion dollars abroad, primarily in other parts of Asia.

Less confident if most Chinese consumers have the income and confidence to spend at that level this year, given the shock of coronavirus. According to the National Bureau of Statistics, retail sales of consumer goods in China in the first five months of the year fell by 13.5% compared with the same period last year and amounted to about 13.87 billion yuan ($ 1.95 billion).

Ctrip, a Chinese travel booking site, said in a report that tourism recovery has slowed during the last festival compared to two other public holidays in the past three months.

Demand for travel remains

But the numbers show that the Chinese still want to spend on vacation, even if restrictions make travel to the capital and vice versa more difficult. A two-day walk to the nearest destination within the country also usually costs less than a week-long trip abroad for shopping.

For example:

  • According to Ctrip, airline searches and ticket reservations for the last Dragon Boat Festival have recovered to 70% of the levels observed last year.
  • Hotel bookings rose 15% in June from the previous month, and more than 60% of travelers booked products at four or five star hotels, Ctrip said.
  • Supported by Tencent Mafengwo reported an increase in demand for individual travel packages and local travel destinations, while noting looking for “camping” and related conditions rose 122% in June compared with the previous month, according to state media.
  • According to Ctrip, Shanghai, the southern city of Guangzhou, the southwestern city of Chengdu and the city of Sanya on Hainan, were the four main departure and arrival points for air travel.
  • According to Ctrip, the Shanghai Disney Resort and Emperor Qinsihuang Mausoleum Museum in Xi’an were among the 20 most popular destinations.

McKinsey expects that if all tourism spending moves to domestic markets, revenue for China will be $ 238 billion, compared to $ 52 billion for the United States.

Slow recovery ahead

“We see the journey coming back,” said Steve Saxon, partner at McKinsey, in a telephone interview last week. But for the full restoration of demand for air travel, it may take at least three years, the company predicts.

Beijing Daxing International Airport opened in the fall of 2019 on the southern edge of the capital of China.

Evelyn Cheng | CNBC

With regard to Chinese infrastructure built to connect overseas, such as Beijing Daxing International Airport, which opened last fall, it will take longer to see a return on investment, especially since business travel is expected to be reduced.

“Beijing Daxing and the new Guangzhou Terminal 2 are actually very well designed for international travelers,” Saxon said. “This feature will not be used in the next two years.”

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