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China’s domestic tourism on the right track to rebound from pandemic: Fitch Rankings

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China’s domestic tourism — a key indicator of retail spending — is on the right track to make a comeback after dipping to an all-time low in the course of the nation’s worst lockdowns, in line with official data and analysts. 

Because the mainland’s biggest lockdown in Shanghai led to late May, the rise in holiday bookings has indicated that tourism spending could be recovering within the second half of the yr, Fitch Rankings said. 

This buoyancy comes after tourism revenue and numbers in China hit a trough in the primary half of 2022 and fell by nearly half in comparison with the identical period in 2019 before the pandemic struck, Fitch added.

“China’s relaxed Covid-19 pandemic-related travel restrictions and more targeted pandemic control measures have fueled an increase in tourism demand, despite ongoing scattered outbreaks,” China-based Fitch Rankings analysts Flora Zhu and Jenny Huang said in a note late last week.

“A slow recovery within the tourism sector has put a drag on the economy given its large contribution, accounting for around 11% of GDP and 10% of national employment in 2019.”

Tourists walk under the complete bloomed cherry blossom trees at Jimingsi Road on March 22, 2016 in Nanjing, Jiangsu Province of China.

VCG

After a series of relaxations by Beijing — including the easing of inter-provincial group travel bans and the curb of excessive local government mobility controls in June — traveler numbers leapt by over 62% month-on-month in July, Fitch Rankings said, citing official Chinese data. 

Data from online travel agencies reminiscent of Tuniu Corporation showed bookings surging 112% over July, Fitch said. 

The day by day average tourists at Xinjiang’s top-rated, or “5A-level,” tourist attractions skyrocketed to 110,000 in July compared with 19,000 in May, the Fitch analysts said. Yunnan’s Dali city, a famous tourist spot, attracted 6.9 million tourists — a 46% jump from pre-pandemic levels in 2019, they said.

The recent outbreaks in Hainan, Xinjiang and Tibet are unlikely to tug back the recovery in tourism as there are fewer travelers in these regions in comparison with the remainder of the nation, the Fitch report said.

But recovery, while robust, stays patchy across regions, specifically, short haul travel operators will do higher than national scenic spot tourist corporations which goal national visitors, it added.

Chinese consumers will proceed to favor local and shorter trips amid the pandemic, the report said.

The pandemic has also altered domestic Chinese tourism, business consultancy China Briefing said in a note last week.

Group-travel destinations have lost a few of their popularity as  Chinese travelers steer toward family vacations, health-care tours and research trips, it said.

CTrip, China’s leading online travel agent, said in its summer tourism report last month that “parent-child” or family travel, versus traditional Chinese big bus tours, has increased.

Signs of recovery have appeared across Chinese retail spending including tourism.

Latest data on Monday shows July’s retail spending increased 2.7% year-on-year following an unexpected 3.1% rise in June, although the most recent result for July fell wanting analysts’ expectations of an increase of between 4% and 5%.

These were the primary increases in retail spending since February, as consumption picked up after Covid-19 infections and restrictions eased. 

In May, as Shanghai battled its worst lockdown, retail sales were down 6.7% year-on-year.

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