China travel industry recovery halted by coronavirus outbreaks, third-quarter trips down over 18 per cent

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China’s domestic tourism market plunged in the third quarter, setting back the recovery achieved in the first half of the year as intermittent coronavirus outbreaks put a halt to interprovincial travel.

The number of domestic trips in the third quarter fell by 18.3 per cent compared with the same period last year, deviating from the encouraging 247.1 per cent and 33 per cent growth in the first and second quarters respectively, according to the Ministry of Culture and Tourism.

Due to the strong performance in the first two quarters of the year, the total number of domestic trips taken in the January-September period rose by 39.1 per cent, year on year, to 2.69 billion.

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“It’d be a pretty optimistic prediction if the upcoming two months can reach the same performance as last year,” said Wu Liyun, a tourism professor at Beijing International Studies University.

Everyone is hanging on for dear life. All we can do for now is wait

Chen Muxiang

Wu pointed to the lack of public holidays for the remainder of the year as adding to the problems faced by tourism in the winter months, with a fourth quarter revival unlikely with coronavirus outbreaks also not yet completely stamped out.

Wang Ke, a tourism analyst with consulting firm Analysys agreed, saying that seasonally, “numbers in the fourth quarter are not good”.

Some travel agencies have been forced to suspend operations and cut costs in the third quarter due to restrictions on interprovincial travel, while others have stepped up trips closer to home or dabbled in business and conference travel to stay afloat.

Chen Muxiang used to work for one of Xiamen’s largest travel agencies, but now sells tea after the Delta outbreak hit just before the Mid-Autumn Festival in September.

“Everyone is hanging on for dear life,” she said. “All we can do for now is wait.”

Chen has not seen any improvement in the industry in Xiamen since September, including during the “Golden Week” national holiday at the beginning of October, when tourism is traditionally strong.

At least a dozen listed travel agency companies, including Caissa and Utour, recorded negative incomes in the third quarter, according to their financial reports.

Caissa and Utour announced a merger in June to combat the harsh winter travel market, but recorded a 464 million yuan (US$72.5 million) loss in the first three quarters of the year.

“Travel agencies are suffering the most, compared to other players in the travel industry, partially because this form of service has become increasingly obsolete,” added Analysys’ Wang.

“They came into being to solve the information asymmetry between travel providers and tourists. But as economic development narrows the gap of information, there’s not much necessity for travel agencies to exist.”

In the long term, the disruptions will drive up the clearance and structural upgrade in the industry

AVIC Securities

There were, though, some positive aspects away from the downturn in interprovincial travel, with local tourism in some areas hanging on.

Nanjing has seen a surge in local consumption since the summer, with a rise in the popularity of local shows and entertainment activities, said Xu Jun from Nanjing Tourism Group.

“People can’t travel long distances, so they can only spend locally,” she said.

The opening of Universal Studios in Beijing also brought large numbers of tourists to the capital and boosted local consumption.

“In the short term, the pandemic is likely to recur in the fall-winter season, companies in the tourism industry will therefore have to adjust,” an AVIC Securities report said.

“But in the long term, the disruptions will drive up the clearance and structural upgrade in the industry.”

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