With trains packed, roads congested and landmarks overcrowded, you would be forgiven for thinking that China’s Labour Day holiday celebrations were a portal into our pre-pandemic world.
Hotspots such as the Broken Bridge in Beijing and the Ancient City Wall in Xi’an welcomed vast numbers of restriction-free travellers celebrating China’s weeklong festivities for International Workers’ Day, broadcasting an image of a country comfortably back in the swing of mass tourism.
During the five-day break, there were 230 million domestic tourists travelling around China, according to estimates from the country’s Ministry of Culture and Tourism, a year-on-year increase of 119.7% in terms of numbers and 138.1% in terms of revenue. A recent report from Bain Consultancy found that domestic travel in China is accelerating, while it has only just restarted in the US and is still lacking in Japan and Europe.
At a time when the biggest threat to tourism is the unpredictability of lockdowns due to flare-ups of the coronavirus, China, whose effective control of the virus continues into 2021, represents a self-contained, colossal market with a returning appetite for travel.
While middle-class growth rates are not what they once were, luxury travel is on the rise, with foreign hotel operators taking note of the new digital consumer trends in the country. Staycationers choosing rural destinations are also on the rise as they rediscover the country’s most remote villages, not least in a year commemorating the 100 years since the founding of the Chinese Communist Party (CCP).
Bet on luxury travel
Stephen Ho, president of growth and operations in Asia-Pacific at hotel group Hyatt, tells fDi that China is “a rapid growth market with huge potential” and “we have great confidence in China’s domestic tourism market because China is one of the largest domestic tourism markets in the world”.
In 2020, the multinational hotel chain set up a joint venture with BTG Homeinns, one of China’s homegrown hotel giants, to set up its first five UrCove hotels in China (three in Shanghai, one in Chengdu and one in Nanjing). Mr Ho says this was to cater for a broader range of Chinese travellers and that “through market research and industry insights, we see a gap in the upper to mid-scale segment as Chinese consumers start to look for new and upgraded offerings”.
China will see a total of 4.1 billion domestic tourist trips in 2021, and will gain Rmb3300bn ($515.5bn) in revenue from domestic tourism in 2021, according to the latest report by the China Tourism Academy, an increase of 48% from 2020. The top tourist destinations are the top tier Chinese cities, such as Beijing, Shanghai, Guangzhou, along with Hainan, an island just off the country’s southern coast.
Imogen Page-Jarrett, China analyst at the Economist Intelligence Unit (EIU), says she expects personal disposable income to grow but “not at the same rates as historical periods, since headline economic growth is slowing due to structural issues like high debt and declining labour force”.
The EIU predicts that disposable income will grow by 4.7% over the next five years. Between the years 2015 and 2019 this stood at 6.8%.
One development in the 2020s that was less present in the previous waves of middle-class growth, however, will be the integration of digital devices and platforms.
According to a September 2020 report from global research and advisory firm Gartner, ‘The Recovery of China’s Travel Industry’, the travel industry in China has shifted its marketing focus to emerging social platforms as a way to target young consumers, who comprise an increasing share of the country’s post-Covid tourism population.
Digital-only bookings and check-ins through online travel agencies such Ctrip or Qunar have been available for some time but recently hotels have understood digitally native consumers’ desire for consolidation. Both foreign and hotel operators have partnered with WeChat to attract China’s social media generation, and in June 2020, Hong Kong-based Mandarin Oriental Hotel Group launched an integrated WeChat function for its Chinese customers, enabling them to book any Mandarin Oriental hotel worldwide via the platform.
“We are the first luxury hotel group to enable this combined booking and payment functionality on China’s preferred social media and e-commerce platform,” Jill Kluge, chief marketing officer, said in a statement.
Meanwhile, Hyatt launched the Hyatt Mini Program on its official WeChat platform in November 2019, while InterContinental partnered with WeChat to open a smart hotel in Shanghai in 2018.
Rural and red tourism
Aside from the momentum towards urban luxury stays and digitisation, there has also been heightened interest on Chinese social media in rural tourism over the past year.
In July last year, the Ministry of Culture and Tourism listed 680 key villages for promoting rural tourism. Chinese internet phenomenon and vlogger Liziqi, who only uses traditional cooking and farming to sustain herself and whose YouTube channel has more than 2.3 billion views, has also given many in China a taste for the simple life.
Sam Huang, research professor in tourism and services marketing in the School of Business and Law, Edith Cowan University (ECU) in Perth, says since domestic tourism is used as a barometer for the Chinese economy and society, this renewed interest in rural retreats reflects a broader societal shift. “Before 2012, China had more people living in the countryside and after 2012, we have more people living in cities than in rural areas. Because of the pandemic, people may value more rural tourist attractions, fresh air and less crowded places,” he says.
Once travel restrictions ease, it is likely that urbanites will swap Chinese rural environments with destinations overseas, Mr Huang supposes.
But as Chinese consumers use their international tourism budgets for trips around their homeland, another trend is emerging: ‘red’ tourism. Despite the glossy hotels and capitalist spirit, China remains a titular communist country. Ahead of July 2021’s 100-year anniversary of the Chinese Communist Party — the single party governing the country — the government has been promoting travel to sites with significance for the party’s history.
“This discourse around China’s communist heritage is, and will be, a big part of China’s domestic tourism system,” Mr Huang says, adding that many heritage sites, such as the Jinggang Mountains and Yan’an, the alleged birthplaces of the Red Army and the Chinese communist revolution respectively, are in rural locations.
With consumer boycotts resulting from perceived anti-China sentiment among foreign brands, will red tourism and rising nationalism make Chinese tourists less inclined to go abroad when restrictions ease? Ms Page-Jarrett says that while Chinese consumers are patriotic, the rise in domestic tourism will probably not encroach on outbound tourism.
“It’s important to remember that even with the huge numbers of tourists we saw overseas before Covid-19, in 2018 only 10% of the Chinese population had passports,” she adds. “That number will only increase.”
This article first appeared in the June/July print edition of fDi Intelligence. View a digital edition of the magazine here.