There are few industries which have taken a hit like tourism since COVID-19. Whilst the ramifications have been hardest on airlines, hotels and tourism operators, many other categories are likely to feel the impact. As we’ve noted before, international travel increases exposure to, and affinities with, foreign products and lifestyles, strengthening the likelihood of buying those products and services down the line.
With Chinese international travel grinding to a halt since the outbreak, brands selling everything from food to cosmetics to education may have to work a little harder until Chinese consumers are back jet-setting again. It could be years before travelling is back to the free-flow, virus-free ways of pre-COVID, but last week’s loosening of travel between China and 36 European countries point to a Beijing opening up to slightly-freer travel as it tries to get on with the new normal.
The good news is that Chinese travel is recovering and will continue to over a number of stages. The first stage happened around April, mainly driven by the Qing Ming (Tomb Sweeping) Festival long weekend, when many Chinese shook off the cabin fever to visit tourist sites – mainly in their home cities or cities close by.
The second stage is happening as you read, where travellers are zigging and zagging across China – but they are travelling differently from a year ago. Travel providers are increasingly promoting their clean environment and sanitation, alongside flexible cancellation policies. The top-2 destinations in Labour Day holiday in May 2019 were Sanya and Xiamen. But they both dropped off the 10-most visited list this year, with 9th-placed Zhuhai, as they are typically reached by plane. Whereas the top cities in 2020 were all easily got to by the ‘safer’ high speed rail or roads: Shanghai took the top-spot this year up from number 6 in 2019, and Shenzhen, Nanjing and Changsha, were new to the top-10.
On paper, it looks like domestic travel has bounced back to pre-COVID rates, with hotel vacancies similar to January levels and domestic air travel at 90%. Yet many of these travellers have been tempted by significant discounts meaning full hotels and planes aren’t realising the revenue that they were making a year ago. Airlines such as China Eastern have offered all-you-can-fly deals every weekend for the rest of the year for as little as ¥3,322 ($479). Budget airline Spring has gone one better selling all-you-can-eat flights every day for 2020 from ¥2,999 ($433), with an additional ¥50 ($7) per flight for airport tax. And while you’re away, with the Everywhere Journey offer, you can stay weekends and holidays in over 300 quality brand hotels in 100+ cities in China for the next two years for the absurd combined rate of ¥668 ($96) – although consumer comments hint that you may have to wait a couple of months for an available room.
China’s leading online travel agent Trip.com (Ctrip) is also stoking Chinese consumers’ travel bug by tapping into the livestream buzz. Chairman and co-founder Liang Jianzhang has done numerous regionally-themed livestreams (complete with costumes) offering cheap rates on domestic travel, but he is now moving into international destinations.
Short-haul and ‘safe’ destinations are likely to be the next stage of China’s post-covid travel evolution. Trip.com’s livestreams are showing some early promise that Chinese travellers are keen to fly abroad again. Although they still don’t know when they will be able to travel overseas, Chinese have been prepaying for travel deals overseas. Trip.com’s July livestreams saw 1,000 rooms at Singapore’s Marina Bay Sands hotel sell out in 7 seconds. Similarly, 9,000 rooms in Japanese hotels and 23,000 rooms in Thailand were sold, with flexible, no-risk booking conditions. Last week, over ¥1 billion worth of travel was booked in the Maldives, alongside some healthy reservations in Fiji and Mexico through the livestream.
Although there is likely to be latent demand for overseas travel when it is allowed, its fair to say that Chinese are currently doing limited research in far flung locales at this stage. As this destination exploration data on Trip.com illustrates, search volume for most long haul destinations is well under a tenth of what it was in December 2019, having plateaued since April. Interestingly, even though a Global Times poll found 90% Chinese netizens disfavour US amid tensions, and its likely tourists won’t be able use WeChat or WeChat Pay when they visit the country, the US has overtaken New Zealand and Australia to become the most-searched long haul destination on Trip.com since February.
The final stage of the Chinese traveller return, will be longer-haul, more adventurous trips. The world is likely to be a different place by then and tourist behaviour will not be the same as before. We can look to domestic travel for some clues into what may be important for the future Chinese traveller abroad, and marry that up with lifestyle, food, entertainment, shopping and other wider consumer trends to ensure that we can connect with the travellers when they start considering their overseas trips. Get in touch with China Skinny to discuss how we can assist.
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