While the outlook for domestic tourism for most countries worldwide remains uncertain, China’s inbound travel has begun to signal a speedy recovery. The Chinese safety confidence for short-distance and urban leisure travel has been boosted, signaling a gradual revival of the domestic tourism economy.
Have a look at our previous article on Hainan Economy Boosted with New Duty-free Policy
The recently held Chinese New Year period restricted traveling within the country. Nevertheless, China has seen a boom in staycation consumption within cities.
Domestic tourism and Chinese travel consumption
According to a 2021 report on China’s tourism market, travel willingness among Chinese consumers became certain overtime. This means that the Chinese people’s confidence over traveling showed a gradual increase from uncertainty to a more positive outlook. Moreover, the Chinese consumers’ travel consumption preferences also changed since the start of the recovery from the epidemic outbreak.
The report also noted that due to restrictions on outbound travel, high-end Chinese consumers have diverted their travel willingness to domestic niche tourism. For instance, many high-end travelers who used to go abroad for skiing or diving adventures, have spent these activities within the country instead. According to statistics, Heilongjiang, Xinjiang, and other places have had full house for ski resort activities in winter. Meanwhile, indoor ski resorts in Guangzhou, Chengdu, and Chongqing were popular for family consumers last summer. Popular diving training spots in Hainan also experienced full holiday bookings during the Labor Day period in China. In addition, duty-free consumption on the island also soared, amounting to RMB 32.7 billion in 2020. This means that Chinese luxury travelers have shifted their purchasing power toward domestic products and services.
Finally, Chinese tourists’ outbound travel may target natural attractions, small customized groups, and brand new experiences in the long run. Furthermore, Chinese aged travelers may prefer health-related outbound travel involving medical, spa, and detox treatments, according to the International Medical Travel Journal.
Domestic tourism boost during CNY, thanks to staycation!
In response to the government’s travel advisory to stay put for the Chinese New Year, migrant workers avoided trips back home. As a result, there was a surge in staycation activities especially concerning retail and catering. Companies in the retail and catering industry earned a total of RMB 821 billion in sales including online purchases. Moreover, the jewelry sector performed best as the CNY coincided with the celebration of Valentine’s Day on February 14.
Before the holidays, the travel and hospitality sector had rolled out several fun activities and packages in preparation for the staycation boom. In a China Daily report, data from various travel agencies including Ctrip, the largest in China, online searches for local travels including nearby hotels and scenic spots turned significantly higher than the previous year. Hence, travel agencies took the opportunity to introduce new offerings and services for the local customers during the festival period.
What should domestic tourism companies look forward to?
As the most epidemic-stricken industry, travel and tourism-related companies in China look forward to a brighter future despite the ongoing pandemic. However, they should come up with a contingency plan to respond quickly in case of the epidemic recurrence. One of the ways is to develop flexible policies related to bookings, packages, and membership or reward offers. Above all, they should ensure to maintain safety and high-quality service to keep their customers feel at peace.
Diversifying packages to offer local customers is a great way to make flexible adjustments during epidemic recurrence. Moreover, travel companies should consider shifting their target market from intra-city or provincial tourists to “local tourists”. This means that they should focus more on preparing packages for consumers within the city instead of those coming from other cities or provinces.
In an event of a much better and more stable environment, travel and tourism companies should explore a new and differentiated approach to customers’ demands. To improve the tourism experience, companies should integrate products and services based on the shift from pure landscape to diversified experience.
Possibility of a travel bubble
Tourism companies may look forward to the possibility of a travel bubble. A travel or tourism bubble takes place where there is a cross-border exchange agreement between countries to allow people movement. In this case, China may open borders to countries with low epidemic risk or with almost zero cases. According to the said report, Chinese outbound travelers mentioned two conditions for traveling overseas:
- the number of cases in the destination country is close to zero; and
- quarantine measures are eliminated when returning to China.
If a travel bubble is realized in the near future, travel companies must carefully assess and closely communicate with the participating countries for detailed measures involving safety, exit-and-entry as well as itinerary. More likely, island countries may be the first targets for Chinese travelers waiting for an escapade. Therefore, as noted earlier, travel companies must also evaluate what they can offer to high-end consumers once they start to indulge again in overseas adventures.
The role of digital transformation
Digital transformation has become more and more relevant with the onset of the pandemic. It is undeniable that the crisis may have changed people’s way of life and consumption behavior. Because of this, businesses should insist on using digital means to keep their companies survive and satisfy consumers’ demand.
The lockdowns and control measures being implemented all over the world have heightened digital consumption. More so, people are forced to stay home and binge on the screen. This means that companies should take more advantage of digital marketing and evaluate the most effective method for selling their services. These days companies make use of bloggers or influencers to magnify brand exposures. On the other hand, tourism companies such as resorts and hotels may also team up with online travel agencies to strengthen online traffic.
In terms of business-to-business transactions, the need for digital solutions such as Cloud-based applications is inevitable. Every company should realize by now that digital transformation is not an option anymore.
Thus, business owners should not be reluctant to utilize any software that can enhance their efficiency and allow their smooth operations. They have to make sure that their employees can perform their duties even with the consequences of an epidemic such as lockdowns and limited travels.
Conclusion
With China’s success in preventing another wave of the epidemic during the CNY holidays, the outlook for business is now rather optimistic. The continuous recovery of consumers’ confidence in China will drive hopes for businesses, especially for the domestic tourism and travel companies.
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