“450 million Chinese trips were expected to occur during 2020 Chinese New Year,” according to Ctrip forecasts in the beginning of the year. Due to the sudden outbreak of the novel coronavirus, the majority of Chinese citizens were grounded, taking refuge in their homes in hope of staying safe. The Government’s CNY holiday “extension” did not see travel rates spike, in fact, millions of travel plans were cancelled as result of the outbreak. Disney believes it will lose $175 million if its parks remain closed for two months. Thailand expects to lose $9.7 billion in tourist income from Chinese travellers through June. US airlines alone, will lose $1.6 billion this year because of lost business to and from China.
The similarities of the virus’s severity and timing brings the all-too infamous 2003 SARS outbreak back into memory. From April to June 2003, China’s inbound, outbound and domestic travel markets faced a challenging time. However, shortly after the end of the epidemic, an explosive rebound happened as Chinese consumers could finally unbottle their long, built-up passions to travel. The whole market quickly recovered as a result.
Similar to the current decline in travel bookings that we are witnessing due to the novel coronavirus, flight and hotel bookings experienced a significant decline during the 2003 SARS outbreak. Flight and hotel bookings on Ctrip in 2003 suffered a 33.4% and 25.1% decline respectively over the outbreak, compared to the same period in 2002. Ctrip reported a loss of ¥29.2 million income within the 6-month period ending September 2003, solely as a result of the SARS outbreak.
However, a surprising pattern emerged as the battle against SARS was gradually being won. What began as a strong recovery in China’s travel industry, turned into a surge in sales. In July 2003, Ctrip flight bookings saw a 200% increase in sales from the same month in 2002 , an 82% increase since June 2003, and a 31% increase compared to the month right before the outbreak.
China’s enthusiasm for travel did not stop there. During October’s “Golden Week” in 2003, the first major national holiday after SARS, Ctrip’s flight bookings continued to maintain its 200% increase compared to the same period of time in 2002. During the 2004 Chinese New Year, flight bookings increased once again by 201% compared to the month before the 2003 outbreak. And just when people thought this “post-trauma reaction surge” was over, Chinese consumers surprised the world once again. For the Labour Day holiday in May 2004, travels skyrocketed one more time. Ctrip’s flight booking alone had increased 511% from than the year before. For 2004, the 1.1 billion travellers had generated an income of ¥471.1 billion setting a new record for China travel.
The current period has been difficult and taxing on the travel operators and most other businesses, however, we can try focus on some positive aspects to take from this. First and foremost, these surprising statistics demonstrate Chinese consumers’ strong, positive optimism during a tough period – compounding their need and desire to travel. As we closely follow the outbreak, Beijing’s response and consumer sentiment, China Skinny believes the spring bloom after this wintery period in the China travel industry will come and a similar surge is likely.
According to Ctrip, the travel boom that ensued following the 2003 epidemic was largely contributed by male, post-70s consumers who had most of the purchasing power at the time, followed closely by the post-60s and the first generation of post-80s who had just entered the work force. Now with females born in the 80s and 90s being the new force of Chinese travellers, we expect them to lead the bounce back post-coronavirus. Japan, Thailand, South Korea, Singapore, France, the United States, Maldives, Indonesia, Malaysia and Canada were the most popular international destinations during the 2003 rush.
China has changed dramatically in the 17 years since SARS, and tourism operators will need to play by a whole new set of rules to connect with and appeal to Chinese travellers. Understanding these changes and characteristics will help prepare operators to best take advantage of the expected surge and advocacy that will follow.
At China Skinny, we aim to provide answers to these questions as we continue to closely monitor this period and provide latest updates and insights through our weekly newsletter, research and strategic projects. Please contact us to find out more.