China is Slowly Restarting International Travel. Here’s How It’s Playing Out.
As we near the one-year anniversary of the world’s catastrophic courtship with COVID-19 on December 30th, something strange is happening that spells a sign of hope for global travel. Travel bubbles are emerging across the world, with Latin America, Oceania and Europe establishing regional travel zones, but with few places on earth having reached the success of China and her neighbours. Airport extensions, duty free industry booms, man-made tourist islands that blow The Palm in Dubai out of the water and domestic travel booms are some of the highlights in China’s post-COVID recovery story.
Last month saw a spate of Chinese travellers visiting Thailand, despite having to quarantine for 14 days. Thailand, for whom 20% of their GDP consists of tourism, is anxious to establish travel bubbles with low-risk neighbours such as China. With China’s domestic tourism market showing 80% recovery, Trip.com co-founder Liang Jianzhang projects a full recovery of the domestic market by the end of 2020. As 2020 China’s Golden Week travel boom saw US$68.5 billion in domestic consumer spend, Thailand looked on as much of its previous visitor base discovered new ways of spending the holidays within China’s borders. As recent domestic developments in China suggest, previous favourites like Thailand will need to work hard to re-secure their former glory in the China market.
Travel has changed in 2020, with a few unique trends emerging. For one, Trip.com insights show that China’s domestic travellers opted far more for family travel than ever before, with a strong preference for evening tours of destinations and culinary tours in domestic Chinese destinations. Chinese travellers, now more than ever, prefer to treat a hotel as a destination, primarily enjoying the events and experiences that the hotel provides rather than the larger destination.
This has had outsized impacts on China’s regional consumer economy development, with Hainan’s Ocean Flower Island recently grabbing headlines for its ambitions as the largest man-made tourist island in the world — bigger still than The Palm in Dubai. Hainan is leveraging policy to supercharge consumption on China’s southernmost island province, lifting annual duty-free spend limits on the island from 30,000 Yuan (US$4,570) to 100,000 Yuan (US$15,220) per person — exempting also previously-excluded liquor and consumer electronics. The island’s duty-free shopping registered 228% year-on-year growth in the third quarter as a result, boosting China Tourism’s (the nation’s biggest duty-free shop operator) red hot stock market performance.
Hong Kong wants in on the action, as they rolled out (and later rolled back) their Hong Kong-Singapore air travel corridor this week as an experiment in keeping COVID case numbers under control while facilitating travel. Though not realistic at present, over the medium term Hong Kong will aim at launching initiatives to facilitate easier travel between the city and Mainland China’s Greater Bay Area, due to family and business ties in the region. Meanwhile, regional developments in Southeast Asia are even going as far as to upset incumbent international players in the region.
In a move that seems to be spelling difficulties for the French-controlled Cambodia Airports Group, the Metallurgical Corporation of China (MCC) recently won a US$405 million contract to design and construct a major portion of Phnom Penh’s new international airport. The new airport is being almost entirely financed by Beijing, and forms part of an ever-growing list of Chinese-financed infrastructure in the country as Cambodia begins to rise to potential Southeast Asian tourism powerhouse status.
What does the future hold? Beyond a shadow of a doubt, China’s growing middle class and relatively inexperienced travellers will be courted with a whole new depth of experiences right at their front door. The Chinese domestic tourism and lifestyle economy is set for incredible innovation, as COVID-conscious caution at the border and Beijing’s policy consensus is aimed squarely at one thing: growing domestic consumer markets. Overseas destinations — who have often catered to Chinese tourists in a fairly ham-fisted way due to a lack of insights — will be provided with a wealth of Chinese travel case studies and data in the coming years. Southeast Asian destinations, just by virtue of their historic and geographic ties with China, will be the first to tweak strategy and reap rewards as the market matures. Niche and high-end destinations overseas can still bank on highly experienced Chinese travellers who are just sick of the crowds, but will also need to base strategy on keen observation of what China is doing in the domestic high-end and niche travel space.
