Pent-up travel demand building in China

SHANGHAI – Whilst the global financial crisis did not have the negative affect on Chinese traveling outbound in the first quarter of 2009 as anticipated, H1N1 has severely curtailed the outbound travel industry since April.

In light of this travel industry executives across China are now unanimous that pent-up demand for international travel is growing, according to current research into the Chinese travel industry by the Shanghai-based tourism consultancy, Asia Tourism Relations (ATR).

ATR’s half yearly survey of 100 travel industry executives from across China’s six major cities, the “State of the China Travel Market” has revealed that 100 percent of those interviewed had been severely affected by the global spread of the H1N1 virus.

In the second quarter of 2009, 87 percent of respondents in the review stated H1N1 had completely devastated their businesses with outbound travel numbers collapsing by over 90 percent in comparison to the equivalent period in 2008.

In relation to the global financial crisis, Chinese travel executives admitted that the first quarter of 2009 had exceeded their initial expectations with 79 percent reporting solid growth of more than 15 percent over the same period in 2008.

It revealed that the only China outbound travel segment affected by the GFC was the highly lucrative company-funded incentive market, with 68 percent of those interviewed saying that many annual incentive planners had either severely reduced delegate numbers or had budgets shelved until 2010.

Of the popular destinations most severely affected by the effects of H1N1, Chinese travel executives said the first was the Americas, Australia and then Japan.

Whilst demand for Europe had reduced dramatically there were still a few groups traveling with 65 percent saying that Hong Kong and Taiwan were surprising buoyant.

Domestic travel within China is currently extremely robust with 73 percent of travel agents stating that business in the second quarter of 2009 was up by over 20 percent on same period in 2008.

Ninety six percent of those interviewed said they are now preparing for what they are certain will be the massive release of the growing pent-up demand in China for international travel.

However the critical unknown factor is still when the Chinese authorities will revoke travel warnings and cancel the current strict re-entry screening processes along with subsequent quarantine procedures for those considered at risk of having the swine flu virus.

Of the travel executives interviewed, 86 percent said they believed it was not the fear of catching H1N1 that has consumers not travelling, but rather the real concern of being quarantined that has halted outbound travel demand.

In regard to the growing pent-up demand, the vast majority of travel executives interviewed said they were hopeful that the Government would announce the availability of a mass-produced vaccine for H1N1 before September.

This would allow the travel industry to release new travel programs into the market for the last quarter of 2009.

“Undoubtedly the medium-term future of the Chinese outbound travel market is extremely promising as soon as the crippling effects of H1N1 subside and then China can again be the savior market for many destinations which are still severely affected by the downturn caused by the GFC,” said ATR’s managing director, Glen Hingley.

“If a vaccine can be produced soon and the strict controls currently in place can be released by end of August then the last quarter for 2009 will be very strong, especially for destinations such as South East Asia and Australia,” Hingley added.

“Of course, short-haul destinations such as Hong Kong and Taiwan will quickly reboot back to the levels they were before the spread of H1N1.”

“To have such a promising start to 2009 and then to have this massive impact of H1N1 on the market has been nothing short of devastating for many travel executives who have not only had to endure massive financial losses but in the process also had to lay off many good staff to offset the significant losses to their company.” Hingley added.