China's Domestic Tourism Rebounds to Pre-Pandemic Levels
China's recent "Golden Week" holiday showcased a significant rebound in domestic tourism, reaching levels similar to those before the pandemic. However, overseas travel has yet to fully recover, according to official figures. The eight-day holiday, which concluded on Friday, reported lower numbers than initially predicted by the government. China's Ministry of Culture and Tourism revealed that domestic tourism revenue during Golden Week reached 753.43 billion yuan ($103.24 billion), marking a 1.5% increase from 2019. Additionally, the number of domestic tourist trips rose by 4.1% to 826 million during this eight-day holiday.
Positive Signs of Recovery
While the figures fell short of earlier predictions, they still indicate a significant rebound in tourism revenue, reaching levels comparable to 2019. Morgan Stanley's Chief China Economist Robin Xing and the team highlighted that per capita spending during Golden Week reached 98% of 2019 levels, surpassing the 85% figure seen during previous holidays this year. Analysts attribute this increase to the extended eight-day holiday, which encouraged long-distance travel and subsequently boosted average spending.
Factors Influencing Travel Patterns
This year, the alignment of the traditional Chinese Mid-Autumn Festival and the Oct. 1 National Holiday resulted in an eight-day holiday from September 29 to October 6, officially designated as Golden Week. Although Saturday and Sunday were officially working days, some businesses did not resume operations until Monday. This extended break provided an opportunity for more people to choose overseas travel, despite the challenges posed by visa application wait times, which can range from two to six months for European destinations.
Shifts in Travel Preferences
During the holiday, the National Immigration Administration recorded approximately 11.8 million trips in and out of mainland China, averaging nearly 1.5 million trips per day. While this represents 85.1% of 2019 levels, it fell short of earlier state media predictions of nearly 1.6 million trips per day. Chinese travel booking site Trip.com Group reported a significant surge in outbound travel compared to the previous year, particularly among individuals in their mid-20s to early 30s, who accounted for almost 30% of travelers. Top destinations included Thailand, Singapore, Malaysia, South Korea, Switzerland, Spain, Turkey, the U.K., and France.
The revival of Chinese tourism coincides with the country's gradual recovery from the pandemic, albeit at a slower pace due to challenges in the property market. Goldman Sachs analysts noted that while the National Day golden week tourism data and the September services purchasing managers indexes indicate a deceleration in the services recovery, it continues to show positive signs. The analysts believe that additional policy easing will be necessary to further stimulate consumption and services, especially in light of the ongoing property downturn and persistently low confidence. They maintained their China GDP forecast of 5.4% for the year.
China's Tourism Revival: Implications for New Businesses
The resurgence of domestic tourism in China during the recent "Golden Week" holiday presents an interesting scenario for new businesses. Despite the pandemic, China's tourism sector demonstrated resilience, with domestic tourism revenue reaching 753.43 billion yuan ($103.24 billion), a 1.5% increase from 2019.
Recovery and Opportunities
The recovery of the tourism sector to pre-pandemic levels signals a revival of consumer confidence and spending, which bodes well for businesses in the tourism and related sectors. New businesses, particularly those in the hospitality and retail sectors, can leverage this rebound to tap into the growing domestic tourism market.
Changing Travel Patterns
The extended eight-day holiday encouraged long-distance travel, boosting average spending. This trend suggests an opportunity for new businesses to cater to the evolving travel preferences of Chinese consumers. From offering unique local experiences to providing hassle-free long-distance travel solutions, businesses can innovate to meet these changing demands.
Overseas Travel and Future Prospects
While overseas travel has yet to recover fully, the significant surge in outbound travel during the holiday indicates a pent-up demand for international travel. New businesses in the travel and tourism sector can capitalize on this trend by offering tailored services for international travel. However, they must also navigate challenges such as long visa application wait times.
The revival of Chinese tourism, coupled with the country's gradual economic recovery, presents a promising landscape for new businesses. However, they must stay attuned to the ongoing shifts in consumer behavior and market dynamics to seize these opportunities effectively.
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