Four ways travel and tourism has changed in China

Published on : 7/6/21
  • Domestic market demand for travel and tourism has changed significantly since July this year and we can now see the return of domestic travel in China.

    This case study was originally published on the global Sodexo website

    Last July, we published the article, ‘Re-opening Travel and Tourism in China’ highlighting key travel trends, in a country where people were gradually starting to travel again. Since then, transmission rates have dropped significantly, and traveler confidence has bounced back. A recent McKinsey study has observed the following four key changes in traveler behavior in China:

    1.    People of all ages are now ready to travel again (and soon)

    The proportion of Chinese people who said they had travel plans in the coming month rose from 15% in May to 70% in August.

    In our previous article, we highlighted the fact that people under 30 and without a family, were the most open to resuming travel. Today, there are no longer any age-related barriers: 75% of the young (24 to 34); 77% of elderly (55 to 64) and 78% of retirees are now willing to travel again. 

    2.    Demand for domestic travel is very close to pre-pandemic levels

    Local urban leisure trips increased from 54% in May to 73% in August

    More recent data released at the end of October from Les Echos puts that figure at 98% of 2019 domestic traffic.

    While outbound flights are still paused, Chinese confidence in domestic travel is now nearing “completely safe”. And it does not only apply to leisure travel, but also to business trips with a 23% recovery from May to August.

    3.    Leisure trip format has slightly changed

    People who would consider doing a group tour for their next trip increased from 29% in May to 32% in August. 

    Travelers remain cautious and will continue to avoid the most popular - and crowded – destinations. When they choose a group tour it will be a small one. In the meantime, self-guided tours remain in high demand. 

    4.    Spending patterns are changing

    Occupancy rates at luxury and high-end hotels were back to 85% of 2019 figures at the end of August

    In May, the trend was toward the consumption of economy products rather than luxury ones. But today, with borders remaining closed and with lower transmission rates in the country, domestic high-end travels have recovered very quickly, and luxury hotels’ occupancy rates have increased significantly. 

    What can we learn from China? What strategy can we adopt? 

    China has one of the lowest infection rates in the world and the country has adopted what we call a ‘zero case first’ strategy. Most of the borders remain closed and international travel recovery is likely to take time. There is a clear focus on developing the domestic travel market

    The travel and tourism industry is using aggressive pricing strategies (with all kinds of discounts) to rebuild domestic demand as it will continue to drive the short-term recovery. With volumes reaching their pre-pandemic levels, companies have plenty of opportunities to be innovative and to upsell and cross-sell additional products

    Synergies between the different actors across the industry should be encouraged to co-create a new, diversified offer with a focus on emerging domestic destinations. It’s also important to target the high-end market with enhanced personalized and customized offers given its strong recovery and revenue potential. 

    And finally, as we pointed out before, Covid-19 has accelerated companies’ digital transformation. It is now more essential than ever for tourism and travel operators to develop and leverage their digital identity to enrich the consumer experience and stand out from the competition. 

    Sodexo recently partnered with Harris Interactive to uncover current passenger perceptions of visiting an airport lounge.

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