The struggle of the $1.5 trillion tourism industry in China

 The struggle of the $1.5 trillion tourism industry in China

Two years of a pandemic that has plagued China's tourism industry and still has not seen the light at the end of the tunnel.

When Covid-19 broke out in early 2020 and brought tourism to a halt, the ancient town of Wuzhen in Zhejiang had to make the difficult decision to close just before the peak season of the Lunar New Year.

Since then, like many people working in the tourism industry, Wuzhen Tourism Chairman Chen Xianghong has repeatedly hoped the worst is over.

But temporary closures keep happening. Visitor numbers dropped due to travel restrictions between provinces, causing a sharp drop in revenue and forcing people out of the industry.

Tourists in China made 3.25 billion trips in 2021, up 12.8% from 2020, but only 54% from 2019, according to the Ministry of Culture and Tourism. Total tourism spending also increased 31% last year, to 2,920 billion yuan ($459 billion), but this is again only half the level of spending in 2019.

In January 2021, many local governments advised people to stay in place during the Lunar New Year holiday, instead of going back to their hometown to join the traditional reunion. This causes the peak in daily commutes to drop by 76.2% compared to 2020.

At least 38 intercity travel bans were imposed last year to limit the spread of the virus, due to sporadic outbreaks and severe weather during most of the following peak travel seasons. there. "Spring will come, and this will be the last difficult year," Chen Xianghong constantly told himself and his employees.

People queue to take a train at the end of January 2022 at a train station in Guangzhou, Guangdong province. Photo: AP

People queue to take a train at the end of January 2022 at a train station in Guangzhou, Guangdong province. Photo: AP

But ahead of this year's week-long Lunar New Year holiday, a wave of outbreaks swept across the country, prompting local authorities to once again warn against intercity travel and enact strict measures. strictly to prevent people from traveling.

"Tourism is an industry supported by cross-regional mobility and spending. Without movement from province to province, from city to city, there would be no market," Chen said. Xianghong added.

In 2019, Wuzhen attracted 9.6 million tourists, with 7 out of 10 visitors coming from provinces outside Zhejiang. But as people now take shorter trips, the traditional travel agencies in charge of booking trips and flights become unemployed. Airlines also suffered financial losses.

China Airlines lost 10.3 billion yuan ($1.6 billion) in the first three quarters of 2021. China Eastern Airlines and China Southern Airlines lost 8.2 billion yuan and 6.1 billion yuan, respectively, due to the impact. of the Delta and Omicron variants.

In 2019, tourism and related industries generated about $1.5 trillion, accounting for 11.05% of China's GDP. As one of the main sectors, they contribute 79.87 million direct and indirect jobs, or 10.31% of total employment.

According to Wang Yu, Vice President of Spring Travel, the pandemic has caused 11,000 travel agencies to close since 2020. As one of the largest travel agencies in the country, Spring Travel had to refund 4.13 billion yuan to customers in the past two years.

With strict quarantine requirements imposed on those entering China, international travel is frozen. Therefore, foreign travel companies have to bear heavy losses.

CAISSA Tourism Group, one of the largest outbound companies in China before the pandemic, reported 780 million yuan in revenue for the first three quarters of last year, down 34.32% compared with a year earlier, recorded a net loss of 260 million yuan ($40.8 million). Meanwhile, UTour Group reported a net loss of 205 million yuan in the first three quarters of last year.

Before the pandemic, 95% of Guan Wenlu's business was focused on overseas travel. His Shenzhen-based travel agency posted revenue of 100 million yuan in 2019. But subsequent international travel restrictions caused that number to drop by more than 60%, while net profit fell even further. deeper.

In 2020, Guan Wenlu seeks to develop domestic tourism destinations and products. Things seem to be turning smoothly as the first half of 2021 has been smooth sailing without any large-scale outbreaks.