There appears to be a resurgence in Chinese tourism, but tourists are leaving their money at home. During the nearly week-long Labour Day celebrations, more than 240 million people are travelling domestically to places like Shanghai and Hong Kong. It’s up a little from where it was before Covid, but people are having less enjoyment overall because they’re spending less.
This weekend marked the beginning of the country’s first fully open travel season since the 2009 pandemic, which was the May holiday. Popular Chinese resorts have seen record crowds as a result of the paucity of international flights. Over the weekend, Beijing’s Badaling Great Wall and Shanghai Disney Resort both sold out of tickets while Macau, the world capital of gambling, saw an influx of around 100,000 visitors per day. According to an online travel operator, domestic holiday bookings increased eight times compared to the same period a year ago, reaching levels not seen since before the pandemic.
At home and abroad, the return of Chinese vacationers should come as a welcome relief. Fitch estimates that domestic tourism accounted for 11% of GDP and 10% of employment before the pandemic. United Nations World Tourism Organisation data from 2019 shows that tourists from the People’s Republic spent $255 billion on trips abroad. This represents 17% of all outbound travel spending worldwide.
However, it appears that any hope is premature. According to official predictions, domestic tourism income will be only 83% of 2019 levels, at 120 billion yuan ($17.4 billion), showing customers are opting for less expensive excursions. For example, Zibo, a relatively unknown city in coastal Shandong province, had the highest hotel occupancy rates in the country for the Labour Day holiday, according to Bloomberg, and its BBQ skewer lunches went viral on Chinese social media.
Meanwhile, international tourism is down. Travellers from mainland China aren’t flocking to other popular Asian destinations like Thailand, Japan, and South Korea. According to figures provided by Cirium, the percentage of April 2019 flights that originated in China was slightly more than a third. High oil prices, a weak yuan, and geopolitical concerns are causing problems for China’s Big 3 airlines, namely Air China (601111.SS), China Southern (600029.SS), and China Eastern (600115.SS). Spending may not increase even if international travel increases.