Fitch Ratings has reported that domestic tourism in China is on the rise after a period of low activity due to the nation’s strict lockdowns. The measured restrictions have seen the tourism sector rebound strongly in July, with tourist numbers jumping by 62.2% month-on-month, according to official data.
China’s tourism revenue and tourist numbers reached a low level in 1H22 amid stringent pandemic controls, dropping by 28% and 22% year-over-year, respectively, to around 42% and 47% of 1H19 pre-pandemic levels. A slow recovery in the tourism sector has put a drag on the economy given its large contribution, accounting for around 11% of GDP and 10% of national employment in 2019.
The government has relaxed inter-provincial group travel bans at the end of May and introduced guidance in June to prevent local governments from implementing excessive mobility controls that stopped people from low-risk areas from traveling freely. Students and employees of government-affiliated institutions are also subject to less inter-provincial travel restrictions from schools and employers than previously.
Online travel agency, Tuniu Corporation reported strong tourism data, with orders and tourist numbers surging 112% and 146%, respectively, during the month. Data from some popular tourism regions showed an even stronger recovery. The daily average tourists hosted by Xinjiang’s 5A-level scenic areas skyrocketed to 110,000 in July, against 19,000 in May, while Yunnan’s Dali city, a famous tourist spot, attracted 6.9 million tourists, a 46% jump from pre-pandemic level in 2019.
The World Travel & Tourism Council (WTTC) has revealed the Travel & Tourism sector in China is expected to create more than 30 million jobs over the next decade, representing a quarter of all new jobs globally. The forecast from WTTC’s latest Economic Impact Report (EIR) shows the sector will reach more than 107 million employed within the sector by 2032.
According to the global Tourism body’s latest data, Travel & Tourism’s GDP is expected to grow at an average of 9.7% over the next 10 years, more than twice the 4.4% growth rate of the national overall economy, making it one of the fastest growing countries.
Local governments in China have taken a more reserved approach towards pandemic-related lockdowns. Several cities, including Xi’an and Chengdu, only imposed district-level lockdowns to contain the spread of the virus last month, rather than locking down the entire cities. However, lockdown measures may escalate if the spreading of the virus cannot be kept under control. For example, Lanzhou city in Gansu province initially imposed controls in main-city districts before putting the whole city under lockdown.
According to Fitch, recent virus outbreaks in some tourist destinations, including Hainan, Xinjiang and Tibet, will have limited impact on the summer travel market, as the three provincial-level regions only accounted for 3.3%, 1.4% and 0.7%, respectively, of total national tourists in 2019. The ratings agency also expect travelers to seek alternative holiday routes for the remainder of August.
The pace of recovery is likely to be remain uneven across regions and performance improvement will vary among tourism companies, with scenic spot operators continue to exhibit the most volatility. Such operators target national visitors and rely on ticket sales and hotel operations for revenue, exposing them to the impact of inter-provincial travel restrictions. Short-haul travel providers should continue to recover steadily, benefiting from changed travel patterns towards nearby trips amid the pandemic.
