Chinese travel industry feels the pain as tourists are slow to return

When planning her initial overseas vacation after the pandemic, Val immediately thought of Vietnam and Japan as suitable options. These countries align with her desires for proximity, affordability, and providing a harmonious blend of nature and culture.

Val, an architect residing in Melbourne, Australia, who preferred not to disclose her last name, expressed that she had not taken into account China's efforts to entice global tourists following the eagerly anticipated relaxation of its borders in January this year.

Val stated that her lack of interest in China along with her aversion to organized tours, which she believed were necessary for a trip to China, prevented her from including the country in her travel plans.

According to her, she may experience a sense of uneasiness [when traveling solo], as well as facing difficulties due to the language barrier. Nevertheless, she expressed that the absence of visa requirements for China could potentially motivate her to plan a visit to the country at a later time.

According to Brett Mitchell, the head of Intrepid Travel's Australia-New Zealand division, which organizes group tours around the globe, their bookings for China have plummeted by almost 90% this year compared to pre-pandemic levels in 2019. Mitchell mentioned that only 130 individuals have made reservations for trips to China this year, whereas more than 1,000 people had booked their excursions four years ago.

From March 2020, China suspended international travel for a duration of three years due to the pandemic. However, in January of this current year, China eased most of its Covid-related restrictions. It became the final nation in Asia, apart from North Korea, to reopen its borders. Moreover, China reintroduced the 72/144-hour visa-free transit policy for individuals originating from numerous countries.

China excludes Canada from its decision to lift travel bans, citing the country's growing anti-China actions.

China decides to lift travel bans but deliberately leaves out Canada, citing the country's increasing anti-China behavior.

In the month of March, it also restarted granting tourist visas to individuals from all nations.

In the previous month, it eliminated all prerequisites for Covid-19 tests before entering the country for incoming individuals. This decision came after implementing various strategies to promote international travel, such as enabling businesspersons to acquire visas upon arrival and exempting tourists from providing their fingerprints.

China's tourism industry has experienced a sluggish revival, witnessing a significant decline of 70% in foreign visitors during the initial half of this year as compared to the pre-pandemic era. Chinese immigration records indicate a drop from approximately 31 million individuals who arrived or departed from the nation during this period in 2019 to around 8.44 million in 2021.

Experts and people in the industry attributed the weak numbers to the long-lasting impact caused by the pandemic, along with China's unfavorable worldwide reputation and reduced trust in business due to geopolitical tensions.

According to Liu Xiangyan, a researcher at the International Tourism Institute within the China Tourism Academy, which operates under the Ministry of Culture and Tourism in China, there are various factors deterring individuals from visiting China. These factors could comprise the quicker revival of tourism sectors in certain Asian regions that resumed earlier, as well as the reduced expenses found in certain Southeast Asian nations.

She estimated that it might require an additional three years for the volume of visitors to regain the levels seen prior to the pandemic.

The travel industry has been severely affected by the implementation of measures against China, as stated by a prominent organization.

According to her, the majority of the market has experienced a significant decline in business due to the absence of foreign or inbound tourists in the past three years. This has led to a need for the industry, along with its associated businesses, to rebuild communication and collaboration. She also mentioned that the past three months have served as a period for many travel agencies and service providers to recommence their operations.

Based on statistics provided by the Chinese Ministry of Commerce, China witnessed a significant influx of international tourists from various nations including South Korea, Russia, Japan, the United States, and Australia in 2019. However, recent booking data suggests that China might not be as appealing as a travel destination when compared to other countries.

According to Expedia, a travel booking platform in the US, Tokyo and Singapore were the top choices for Apec travelers looking to explore East and Southeast Asia during the second quarter of this year. In October 2022, Japan completely lifted its travel restrictions, allowing visitors to enter the country without any limitations. Meanwhile, Singapore resumed welcoming fully vaccinated international tourists in April of the previous year.

When looking on Expedia, you can find round-trip fares from San Francisco to Tokyo and Singapore for approximately US$2,100 and US$1,500, correspondingly, if you plan to travel in August. On the other hand, a flight to Shanghai will set you back about US$2,600.

According to Expedia's data, there was a significant rise in global travel interest for Shanghai and Beijing, the top choices for travelers visiting mainland China. Comparing the second quarter of 2023 to the previous quarter, flight demand experienced a remarkable surge, escalating by 155% for Shanghai and 205% for Beijing. Similarly, hotel demand also soared, with a whopping 270% increase for Shanghai and a noteworthy 250% increase for Beijing.

Expedia reported that although there was a 40 percent decrease in flight demand for popular destinations in China during the first half of 2023 compared to 2019, there was a positive increase in demand for both flights and hotels when comparing quarters. Hotel demand, specifically, was at 25 percent of what it was during the same period in 2019.

China CYTS Tours, a travel company located in San Francisco, has experienced a staggering decline of 95 percent in its business since the year 2019. In the past three months, the company has conducted less than 10 tours to China, in stark contrast to the approximately 200 tours it used to organize for the same time frame prior to the outbreak of the pandemic.

Charlie Zheng, the CEO, credited the decline in Chinese travel to the insufficient availability of US flights. He firmly believed that the primary cause behind this issue was the prevailing political strains between the two nations.

"There hasn't been a nonstop flight connecting San Francisco to Beijing in three years," he expressed. "We are optimistic about the possibility of resuming these flights in the near future. However, it won't be a straightforward task due to the numerous challenges and disputes between China and the United States."

Currently, there are merely 12 nonstop flights connecting the United States and China every week. Nonetheless, it is anticipated that this number will surge to 18 in September and further rise to 24 in October according to a fresh agreement disclosed by the White House.

Beijing and Washington have been in talks for several months to enhance the frequency of nonstop flights connecting the two nations. Before the pandemic, over 300 flights were operating every week. Recent developments, as reported by the US Department of Transportation via Reuters, indicate some advancement in this matter subsequent to the visit of US Secretary of State Antony Blinken to China in June.

Air China and China Eastern Airlines both submitted requests to the authority to enhance the quantity of flights from China to the US following the declaration, as per Yicai. This development comes as numerous Chinese airlines intensify their endeavors to resume additional international routes in compliance with the government's appeal to augment inbound tourism.

Scott Moskowitz, a senior analyst specializing in Asia-Pacific (APAC) region at Morning Consult, a business intelligence firm located in New York, expressed that aside from concerns about expenses and logistical challenges, the escalating conflicts between China and Western nations significantly contribute to the decline in travelers visiting China.

He mentioned aggressive actions by Beijing towards international companies working in China have gained attention and likely left travelers questioning the level of hospitality towards foreigners in China.

"In addition, our data indicates that vast majorities in both China and the United States anticipate a further deterioration in military and economic tensions between the two countries in the upcoming year. Anticipations of this nature are likely to create hesitations among individuals in making expensive future arrangements for visiting China," he stated.

Based on a survey conducted by Morning Consult in August, over half of individuals residing in both the United States and China believe there is a likelihood of experiencing military and economic conflicts between the two nations within the next year. Furthermore, more than 60 percent of respondents from each country hold negative opinions about the other's nation.

In the meantime, European countries are increasingly in agreement with the stance taken by Washington on China. They are making efforts to reduce the risks associated with their heavy reliance on China and the trade imbalances that have existed for a long time.

Germany, being the largest trading partner of China within the European Union, has taken the lead among EU countries by revealing exclusive plans to minimize risks associated with trading with China.

Maximilian Butek, the head honcho of the German Chamber of Commerce's Shanghai branch in China, acknowledged that several factors such as de-risking, political tensions, and how the media depicts China's economy on the decline have led to a lack of interest and confidence among German businesses. This shift in attitude towards the Chinese market is notable post-pandemic.

China lifts travel restrictions for organized trips to the United States and Japan, finally putting an end to the pandemic-induced prohibitions.

According to him, the number of German business delegations heading to China this year has significantly declined in comparison to approximately 50 delegations per year before the outbreak of the pandemic.

According to information presented by the German Chamber of Commerce, the number of German exhibitors at the China International Import Expo has been declining. Previously, Germany had the highest number of exhibitors, reaching a peak of 205 companies in 2019.

At present, there is a lack of new businesses emerging as they do not have a sense of apprehension about falling behind, according to Butek. Although it is natural to be interested in exploring business prospects and growing one's company, the enthusiasm for not missing out on opportunities in China is not as strong as it used to be during the prosperous period of the past three decades.

According to Butek, although German companies are spreading out their supply chains to different markets to decrease risks, most of them still have a keen interest in investing in China. However, rather than injecting fresh funds, they would rather channel their earnings back into investments in China.

"That entails expanding beyond China and delving deeper into China," he stated. "Moreover, based on the foundational factors, we also hold the belief that growth will be experienced once again in the future."

China has intensified efforts to enhance the influx of overseas investments that declined significantly in the second quarter of this year, reaching the lowest level in 25 years. Last month, China issued fresh guidelines with the objective of reinforcing the safeguarding of foreign investments, particularly their rights concerning intellectual property. Furthermore, it seeks to enhance immigration policies for foreign staff and provide increased tax and financial assistance. As a part of this assistance, China will temporarily waive the requirement for foreign individuals to pay withholding income tax when they reinvest their profits back into the country.

The China branch of the European Union Chamber of Commerce stated that although easing travel arrangements for business professionals may alleviate certain inefficiencies faced by foreign businesses, implementing only these modifications is unlikely to result in a substantial growth in EU-China business interactions.

During a significant encounter, Xi reassured Blinken that China has no intentions of posing a threat to or supplanting the United States.

During a significant meeting, Xi reassured Blinken that China will not pose a threat to the United States or seek to supplant its position.

The statement conveyed by the chamber in a message to the Post stated that in order for this to occur, additional matters pertaining to the general business setting and circumstances for international corporations must be taken into account. These matters include the absence of clarity and consistency in China's policy atmosphere.

It mentioned that European businesses still have worries after China's reopening due to unclear regulations and rules, obstacles in accessing the market, and economic issues such as increasing debt burden and ongoing decline in consumption.

Einar Tangen, a prominent member of the Taihe Institute and the founder of Asia Narratives, expressed his belief that China's latest strategies to appeal to international tourists will primarily impact the developing nations, rather than the Group of 7 countries. He noted that the latter have been casting China in a negative light, labeling it as an "assertive and unruly nation."

"He remarked that businesses from both America and Europe will persist in participating and dispatching individuals to maintain their presence and vie in China's markets. China must not only implement policies but also ensure that the bureaucratic system executes them," he commented.

According to Liu, an expert from the China Tourism Academy, she is confident that initiatives such as the exemption of fingerprint requirements would contribute to the growth of tourism in China. It is anticipated that there will be a significant increase in inbound tourism during the latter half of this year.

Additionally, she proposed alternative approaches to aid in this matter, such as spearheading promotional initiatives for the tourism industry and allocating increased resources towards the developing tourism markets, which encompass areas influenced by the Belt and Road Initiative.

"I believe there is room for further enhancement in the country's focused efforts towards welcoming foreign tourists. It is important to recognize inbound tourism as a means of unofficial diplomacy," she expressed. "By allowing a greater influx of foreign tourists to experience the true essence of China, we can counteract any biased or inaccurate notions about the country perpetuated by certain unfair, one-sided accounts presented by the mainstream media."