Domestic tourism a bright spot for China

Amid high youth unemployment, a property market slump and cautious consumer spending, domestic tourism is one of the few bright spots in China’s economy. 

Context

The property market is no longer a driver of GDP growth and the government is expected to establish new “pillar” industries, including digital, new energy, advanced manufacturing and biological engineering. It’s also pushing hundreds of thousands of underemployed young people to return to the countryside in volunteer programs reminiscent of the cultural revolution. 

Why tourism matters

The economy may not be growing as strongly as before and consumers may be cutting back spending in some areas – upmarket Western brands, for example, are starting to report lower sales – but tourism remains a hugely attractive option for a population for whom the memory of pandemic lockdowns is still recent.

Takeaways 

• Hotel occupancy rates have recovered to pre-pandemic levels, reaching 68.4% in the first nine months of the year and peaking at 83.1% during the recent Golden Week holiday, reports the South China Morning Post. 
• The average daily rate is also up 6.4% from 2019 levels, largely a consequence of economy hotels pushing prices up faster than mid-range and upmarket hotels.
• The sector mix is shifting towards upmarket hotels but mainland Chinese travellers prefer “premium economy”’ locations, according to commercial real estate business CBRE. 
• Chinese civil aviation completed 180 million passenger trips in the Q3, up 108% year-on-year.
• Three leading Chinese airlines recently reported a return to profit in Q3 thanks to the rise in domestic tourism. 

Sourced from South China Morning Post, Manila Times, The Motley Fool, Wall Street Journal