China’s domestic tourism on track to recover from pandemic: Fitch Ratings

China’s domestic tourism — a key indicator of retail spending — is on track to make a comeback after falling to an all-time low during the country’s worst lockdowns, according to official data and analysts.

Since the mainland’s biggest lockdown ended in Shanghai in late May, the surge in holiday bookings suggested tourism spending would recover in the second half of the year, Fitch Ratings said.

That boost comes after China’s tourism receipts and numbers hit a bottom in the first half of 2022, falling by almost half compared to the same period in 2019 before the pandemic, Fitch added.

“China’s eased travel restrictions related to the Covid-19 pandemic and more targeted measures to combat the pandemic have led to a surge in tourism demand despite ongoing isolated outbreaks,” Fitch Ratings China-based analysts Flora Zhu and Jenny Huang said in Ende in a statement last week.

“A slow recovery in the tourism sector has weighed on the economy given its large contribution, which accounted for around 11% of GDP and 10% of national employment in 2019.”

Tourists walk under the fully blooming cherry blossom trees along Jimingsi Road, March 22, 2016 in Nanjing, east China’s Jiangsu province.

VCG

After a series of easing measures by Beijing — including easing inter-provincial group travel bans and curbing excessive mobility controls by local governments in June — the number of travelers rose over 62% month-on-month in July, Fitch Ratings cited official Chinese data .

Data from online travel agencies such as Tuniu Corporation showed bookings rose 112% in July, Fitch said.

The average daily number of tourists visiting Xinjiang’s top-rated, or “5A-level,” tourist spots rose to 110,000 in July, compared with 19,000 in May, Fitch analysts said. Yunnan’s city of Dali, a famous tourist spot, attracted 6.9 million tourists – a 46% jump from pre-pandemic levels in 2019, they said.

Recent outbreaks in Hainan, Xinjiang and Tibet are unlikely to push back tourism recovery as those regions see fewer travelers compared to the rest of the nation, the Fitch report said.

The recovery, while robust, remains patchy across regions, with short-haul tour operators in particular doing better than national tourism companies with scenic spots targeting national visitors, she added.

Chinese consumers will continue to prefer local and shorter trips amid the pandemic, the report said.

The pandemic has also transformed Chinese domestic tourism, management consultancy China Briefing said in a note last week.

Group travel destinations have lost some of their popularity as Chinese travelers head for family vacations, health trips and research trips, it said.

CTrip, China’s leading online travel agency, said in its summer tourism report last month that “parent-child” or family trips, in contrast to traditional Chinese big bus tours, have increased.

Chinese retail spending, including tourism, is showing signs of recovery.

New data on Monday showed that retail spending rose 2.7% year-on-year in July, after an unexpected rise of 3.1% in June, although the latest reading for July fell short of analysts’ expectations for a rise of between 4% and 5 % remained.

These were the first increases in retail spending since February, when consumption picked up again after Covid-19 infections and the easing of restrictions.

In May, as Shanghai grappled with its worst lockdown, retail sales fell 6.7% year over year.

https://www.cnbc.com/2022/08/15/chinas-domestic-tourism-on-track-to-rebound-from-pandemic-fitch-ratings.html China’s domestic tourism on track to recover from pandemic: Fitch Ratings

Joshua Buckhalter

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