Hotel reservations, airline bookings at 50% of pre-COVID levels in China

Hotel bookings in China have returned to about 50% of pre-Covid levels, while airlines resumed operations at more than half of their capacity. China has decided to extend the exemption of value-added taxes for the tourism industry until the end of the year, thereby aiding the speedy recovery of the sector, as part of its efforts to shore up consumption.

The epidemic plunged hotel occupancy rates to single digits in February, but the numbers have since bounced back to around 50%, based on information from operators and industry experts. Midmarket hotels are faring better than both high-end and low-end properties. A lack of business or international travellers has curbed demand for luxury hotels.

A daily average of 23 million people travelled in the five-day May Day holiday, the first major national holiday since the COVID-19 outbreak, down by about half from the same period in 2019, according to the Ministry of Culture and Tourism.

Despite the year-on-year drop, it’s a great improvement from February and March, when China was largely locked down due to the contagion. Even a few weeks ago, a three-day weekend in early April saw only around 14 million daily domestic travellers, China Travel News said.

People flocked to famous scenic areas in the extended May Day break, which ran from May 1 to May 5. Beijing’s Forbidden City sold out all 25,000 tickets before the holiday even started, while scenic Taishan Mountain in Shandong province saw massive overnight queues at its entrance ahead of its May 1 opening, China Travel News reported.

Tourism demand has been partially curbed by tough crowd-gathering control measures to reduce infection risks. The ministry had ordered park operators to cap visitor numbers at 30% their capacity during the May Day holiday.

A gradual recovery in domestic tourism could offer a dose of encouragement to other countries looking ahead to life after lockdowns, including the release of pent-up demand among consumers. For many people, travel is a way to vent their stress and frustration from lockdowns.

Yet the rebound could be tentative with risks lingering. More data are needed to know when a full recovery might blossom, the report added.

For instance, China’s commercial carriers are staging a rebound while many airlines around the world remain effectively grounded. Financially, they fare much better than many foreign commercial carriers. Large Chinese airlines show relatively strong balance sheets without any immediate liquidity problems.

Despite the improvement, challenges remain for Chinese airlines. International flights have almost completely collapsed, while domestically, business travel remains sluggish. Forward bookings indicate that a recovery in demand will be gradual, with low visibility beyond the very near term.