NNestled among the crumbling stupas of Laos’ ancient capital, Luang Prabang, 525 Cocktails and Tapas was the city’s premier restaurant, serving haute local cuisine and perhaps Southeast Asia’s tastiest smoked negroni.
Foreign visitors accounted for 95% of the restaurant’s footfall and with the number of tourists to Laos breaking year-on-year records, plus a new high-speed train route to connect the landlocked nation with the Chinese city of Kunming in the north and Singapore in the south, business was looking up.
Then the pandemic hit. With the borders closed, 525’s British owner, Andrew Sykes, had no choice but to suspend operations, instead catering to the local clientele by opening new premises in Laos’ modern capital, Vientiane. “Business is going very well,” says Sykes. “I will reopen in Luang Prabang, but not yet.”
Laos opened its borders to visitors in May, but the growth in foreign arrivals has been dire. Many in the hospitality industry had hoped that would change after China opened its borders on January 8, given that free-spending Chinese tourists made up almost a quarter of the country’s 4.7 million international visitors in 2019. However, the results have been overwhelming.
“We’re starting to see Chinese customers coming in, but it’s under 10% of our business,” Sykes says. “It’s still mostly Laos with some expats too.”
Despite an undetermined human toll, the sudden end of China’s zero-covid policy is an undoubted boon for the global economy, freeing consumers and retailers of three years of supply chain disruptions caused by shuttered ports and factories in arbitrary way. The end of China’s pandemic travel restrictions is also a big relief for the global hospitality industry. In 2019, Chinese travelers took 155 million trips overseas, spending $277 billion – one-fifth of the global total spent by international tourists.
But the experience of Laos, right on China’s southwestern border, shows that returning to pre-pandemic travel levels will be a long and slow process.
Back in stages
The Dec. 26 announcement that Chinese travelers could once again travel abroad naturally sparked optimism in a regional hospitality industry that has suffered greatly during the pandemic. Ctrip, China’s largest travel agency, reported that overseas bookings from January 1 to January 10 were up 313% year-on-year, with Singapore, Thailand and Malaysia among the most popular destinations.
However, the total number of travelers remains a fraction of pre-pandemic numbers. First, the sudden and chaotic end of zero-COVID meant airlines and travel agencies had little time to ramp up capacity before a rush of interest, meaning flights were limited as costs rose.
“Many airports, airlines, travel partners let some of their staff go,” says Jane Sun, CEO of Ctrip. “So now they have to recruit staff and retrain them. But we hope that during the second half of the year, everything will return to normal.”
When China announced it would reopen its borders from January 8, the domestic focus was on preparing Hong Kong and Macau – two destinations within the People’s Republic, but which due to their “semi-autonomous” status still count as travel” out”. tourist figure.
The second phase, which began on February 6, included only 20 countries where Chinese travelers could book tours and “package” (flight plus hotel) vacations: most Southeast Asian nations—including Laos—plus the United Arab Emirates, Egypt, Kenya, South. Africa, Russia, New Zealand, Fiji, Cuba and Argentina. In Europe, only Switzerland and Hungary made the cut, while North America was completely avoided.
In any case, the surprise of the January reopening meant that few Chinese wanted to travel abroad for the Lunar New Year – instead choosing to spend it with families they had been separated from for the holiday for the past three years. The period immediately following the Lunar New Year has never traditionally been a popular travel time in China, and so there is unlikely to be any major return until early summer.
“October and towards the end of this year is when you’ll start to see the real pick-up,” says Gary Bowerman, director of Check-in Asia, a travel intelligence and strategic marketing firm. “And by that time, you’d think the Chinese travel industry would have found its feet and be able to manage demand.”
Changes in capacity and demand
As the world’s largest travel industry, it will take some time for China to return to full capacity. One positive factor is that China’s domestic tourism is large and allows tour operators to move internally rather than suspend operations entirely, as was the case in smaller countries.
However, it is unlikely that tourism from China will return to the same form as before. Currently, there are simply not many flights. Travel data firm OAG suggests that capacity to and from China will grow from around 1.5 million seats in December 2022 to more than 4 million in April 2023. The Civil Aviation Administration of China (CAC) expects total air traffic for 2023 to reach 75% of pre-pandemic levels.
CAC will soon publish new spring and summer flight schedules, which will show where demand is heading over the coming months. Every major airline is currently deadlocked in negotiations, although China, as always, will protect its domestic carriers by giving them the choice of routes and schedules.
Furthermore, political strife continues. China is the only country globally to reopen its borders amid a major surge in COVID (in fact, the largest in history). Some nations eager to cash in on tourism chose to downplay the public health consequences. In Thailand, where 28% of all visitors in 2019 were from China, arrivals were welcomed with wreaths and health kits personally distributed by a deputy prime minister.
However, many governments imposed new testing requirements or bans on Chinese arrivals, prompting Beijing to retaliate by suspending the issuance of short-term visas to their nationals, including South Korea and Japan. Tourism flows will continue to be buffeted by such politically charged pandemic winds.
The pandemic has also left its mark on travel habits. Ctrip’s Sun says today’s Chinese tourists are looking to book trips on short notice – mitigating potential pandemic disruption – but also travel in smaller groups, using more sustainable means and in ways that they feel safe. “More and more customers want to be very protected when they travel,” says Sun.
This is another reason why the US may be the last to feel the benefits of any rebound. As relations between Beijing and Washington spiral over a host of issues, anti-Asian hate crimes and gun violence have been amplified in Chinese state media. Even before the pandemic, Trump-era trade tariffs and bombshells against China contributed to just 2.9 million Chinese travelers visiting the US in 2018, down from 3.2 million in 2017, according to data from the US National Travel and Tourism Office. “Chinese tourists are extremely risk averse,” says Bowerman. “They don’t want to be around anything that puts their personal safety at risk.”
Of course, given the many Chinese who study, work or have families in the US, a significant number will continue to cross the Pacific. However, security concerns and a high price for US travel amid a slowing Chinese economy, plus severe restrictions on Chinese nationals obtaining US visas, mean many will stay away. And they will be missed; in 2018, Chinese tourists to the US each spent an average of $6,700 per trip – over 50% more than the typical traveler, according to industry body the US Travel Association.
“The Chinese economy has been struggling, so I think the more expensive destinations might have a little more difficulty,” says Bowerman. “Value will be a big factor over the next six to 12 months, for sure.”
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