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Published on Thursday, May 21, 2020

The Chinese travel market: when will it be back?


Of course, it's impossible to predict exactly when the travel-mad Chinese will be back on our shores, but we knew that Helena Beard, MD of China Travel Outbound, would have some good insights about when the recovery will come and what might affect it. Here's what she had to say...

On 11 May, three and a half months after it closed its doors, Disneyworld Shanghai reopened. This milestone was viewed across the global tourism community as one of the most significant 'green shoots' to date, and the world is watching to see how the mighty Disney fares with social distancing and new cleaning regimes. But it seems there was no problem filling the 30% capacity as Disney fans flocked to the gates to be welcomed in by cast members who, it is reported, outnumbered the actual guests.

At the beginning of the month, China enjoyed its May national holiday. The government extended the break to five days this year as an invitation to restart normal life in an atmosphere where many were still cautious about leaving their homes. It seems to have worked.

It was reported that over 90 million domestic trips were made over that period. This compares to 200 million last year, but, even so, it is a significant number, and a clear indication of consumer sentiment and desire to travel. According to the news site, Xinhua, on May 1, 7.37 million rail trips were made in China, the highest daily usage since Chinese New Year.

My company, China Travel Outbound, has an office in Beijing and we are updated daily by our colleagues on the situation in the capital. Since the lifting of lockdown, people are now starting to return to the restaurants and shopping malls of Beijing. Significantly for tourism, flagship attractions such as the Forbidden City and parts of the Great Wall have now reopened with reduced capacity and compulsory online reservations. It is clear the first stage of recovery, domestic tourism, is well underway.

International travel
However, the question on our lips is when will the mighty Chinese travel market get back on its feet and start to travel internationally again? Can we rely on this travel-hungry nation to boost tourism here in the UK? Which segment will be first to take the leap? And what does the UK tourism industry need to do to persuade Chinese tourists to come to Europe, rather than seek out destinations closer to home?

I could say I don't know. That nobody knows. That the data isn't there yet. That it all depends on the trajectory of the virus. But, if you've read this far, you're probably hoping for fewer platitudes and a bit more insight.

Of course, the domestic market is leading the way, and strong demand is already being reported. The China Tourism Academy and report which was carried out in March also indicated that Chinese FITs (Free Independent Travellers) would be the first segment to travel internationally, with summer 2020 seeing domestic numbers and the Golden Week holiday (1-7 October) being the next potentially important international travel period. McKinsey's April consumer sentiment survey backed this up, concluding that the first group to return to travel will be young, single, experienced travellers, with a higher propensity to live in Tier One cities. So far, so obvious.

In my opinion, Golden Week will be most golden for the short haul, and potentially the island, destinations of Asia. I think familiarity will be important here and popular countries like Thailand, Malaysia, and Japan will receive the lion's share of the outbound international market from China. Islands will be considered a good option to get away from the crowds and get back to nature. There may also be wins for those countries considered most safe and which did a good PR job early on, extending the hand of friendship to China when the virus initially broke out in Wuhan. Australia and New Zealand are the best examples.

For the UK, I think the journey may be a little longer. Assuming flights are operating, we will see the return of some inbound travel in October with another peak during Chinese New Year next February. But the big surge is going to come next May and during the summer of 2021. Pent up demand should deliver very strong numbers, and the UK tourism industry needs to be ready. However, I believe there are also other factors at play besides the virus.

Politics is going to be very, very important
Whilst UK travel and tourism brands need to maintain their profiles in China, keep up their relationships with the travel trade, and pay close attention to their PR, we may not have 100% control over our own success. I listen carefully to what our politicians are saying. Holding my breath every time one of the UK cabinet comes close to making any kind of anti-China decision or public remark. So far, so good but make no mistake about this. Our short to mid-term chances of wooing back the Chinese travel market quickly lie less in the marketing efforts of VisitBritain, and more in the hands of our politicians.

Trump to the rescue?
In an ironic twist, the man of my nightmares may well be the best supporter of my business. Trump is doing such a great job alienating the Chinese, he may just save the UK's reputation. As the UK's death rate from COVID-19 surpasses other European countries, I nervously enquire of my team in China 'how bad is Weibo looking for us?'

'Don't worry', they say. 'It's all about the USA. Nothing much in the media about Britain.'

Flying under the radar can be a very good thing sometimes.

We're looking in the wrong place. Universities are the real issue here
My biggest concern is not whether the Chinese travel market recovers. I know that it will. It may take a while, and it may start small, but travel is such an important part of Chinese culture, such a vital element of President Xi's support for economic globalisation, and such an important status symbol to China's 400 million plus affluent millennials, that it will return to its position as the largest source travel market in the world. And, in Britain, we will get our fair share.

No, I am more concerned about the UK's universities. With Chinese students making up the largest proportion of international students to the UK, and the fees from these students bringing in around £1.7 billion, not to mention the contribution to accommodation, food, books, merchandise etc, our universities can no longer live without them.

I suspect Chinese parents will be deferring decisions about sending their precious prodigy over to Europe this September. Partly because of health concerns, but also because it is possible learning will be moved online; a tricky environment to master especially when English is your second language.

If the students don't come, it will deal a blow to education and to tourism at a time when we were just about to clean up. Chinese students only really study abroad in three main places; the UK, USA and Australia - driven by the desire to learn English. With China's relationship with the USA at a low ebb, 2020 would have been the UK and Australia's bonanza year. While they study abroad, Chinese students are extremely lucrative, as they have such a high discretionary spend. A recent research study we carried out amongst Chinese students showed that their average budget for leisure spend was over four times that of a British student. That's a lot of meals out, day trips, European city breaks, and some serious shopping.

They also bring with them secondary benefits. Wealthy parents and friends will visit during their studies, and alumni maintain an ongoing relationship with our country which delivers inward investment (often in the cities in which they studied), return visits, and valuable recommendations to friends and family both through word of mouth and social media.

Australia will probably do well; the country has contained the virus effectively and is considered a very safe choice amongst the Chinese. But, if you want my best guess, I think Britain is going to have to wait another year before our international student market fully recovers. The good news is that, just like tourism, the pent-up demand from China is going to be huge, and once we have made it through the storm of the next few months, our universities, alongside our tourism businesses, are going to be welcoming our Chinese friends in droves. After all, whatever else happens, we'll always have our dreaming spires.

* China Travel Outbound is a Brighton-based travel PR and representation agency specialising in China. Its clients include English Heritage, City Cruises, VisitBrighton, Merlin Entertainments Group and Royal Museums Greenwich. 

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