After two years of on-and-off business due to travel restrictions and snap lockdowns, China’s travel sector was banking on 2022 being the year that everything turned around. Instead, the country is battling its worst coronavirus outbreak in two years, which has wiped out major holiday travel and come close to extinguishing the last glimmer of hope held by many small companies. “Tourism is dead,” said Yun Qishi, whose travel agency had no clients during the recent Labour Day holiday, a five-day break at the start of May that is traditionally one of the busiest times of the year. Business has been tough since before the Lunar New Year holiday in February, said the chief operating officer of the Shenzhen-based company. China’s tourism sector will soon go bankrupt Yun Qishi “China’s tourism sector will soon go bankrupt,” Yun said. “I would have nothing to say if it were because of individual companies’ bad management, but the situation is that we are not getting any opportunity to operate.” Beijing is refusing to budge from its zero-Covid policy, which relies on lockdowns , mass testing and quarantine in government facilities to contain the virus. The strategy has also discouraged interprovincial travel through restrictions and warnings, causing major disruptions to the week-long Lunar New Year holiday, the three-day Ching Ming Festival and the Labour Day holiday. As a result, trips taken by domestic tourists in the first quarter fell by 18.9 per cent from a year earlier to 830 million, according to Fastdata, a think tank and online data provider. During the Labour Day holiday , which ended on May 4, trips fell to 160 million, down by a third compared with the same period last year, according to data from the Ministry of Culture and Tourism. Tourist spending over the break dropped by 43 per cent compared with last year to 64.68 billion yuan (US$9.6 billion), recovering to only 44 per cent of the pre-pandemic level. The reality for many tourist-dependent local economies has been particularly grim. The southern city of Sanya, famed for its tropical beaches and resorts, has seen few tourists in recent months, with most from within Hainan province. Traffic at Sanya Phoenix International Airport fell by more than 80 per cent to 50,000 passengers during the peak holiday season, between April 30 and May 4, compared to the same period last year. ‘Huge potential’: tourist town looks to lift-off with China’s space dreams Zhangjiajie National Park in the northwestern province of Hunan saw visitor numbers plummet by more than 60 per cent compared to last year, according to local government data, losing nearly all of its traditional out-of-province market. Made famous by the movie Avatar, millions of people visited the park each year before the pandemic to see its pillar-like rock formations and deep canyons. In Guangxi, an autonomous region in China’s southwest famous for its picturesque mountain terrain and vibrant indigenous culture, interprovincial visitors have all but vanished, multiple industry insiders said. “There were a few dozen bookings, but they all cancelled at the last minute,” said Zhu Jianhua, who runs a tour service on Guangxi’s Weizhou Island, the largest volcanic island in China known for its spectacular landscape. Last year, the province saw more than 22 million tourists, a nearly 20 per cent increase on pre-pandemic levels in 2019, according to the region’s culture and tourism department. In 2019, tourism and related industries accounted for 11.05 per cent of China’s gross domestic product and provided 79.87 million jobs directly and indirectly, roughly equivalent to 10.31 per cent of the workforce. While travel agencies, transport and accommodation are on the frontline of the tourism sector, the reach of the industry extends far beyond, touching on souvenir manufacturing and raw materials. Some 11,000 travel agencies were closed as of January, according to Wang Yu, vice-president of Spring Travel, adding the number could be much higher after the past four months. More than 92.3 per cent of the travel agencies in China suffered losses last year, as did more than 80 per cent of tourist sites and more than 70 per cent of hotels and inns, according to Fastdata. Since the beginning of the year, a preference for short-distance trips has gathered steam, with people opting to explore nearby regions due to travel restrictions and fear of quarantine mandates. Compared to out-of-province tourists, day trippers spend much less on transport, hotels, meals and souvenirs, experts said. “Tourism is an industry supported by cross-regional movement and spending, and if there is no movement from province to province, from city to city, there is no market,” said Chen Xianghong, president of Wuzhen Tourism in Zhejiang province and of Gubei Water Town in Beijing. Cun Xiaoqin, who runs a travel agency and small hotel in the southwest border province of Yunnan, has had to let go of more than 80 per cent of her staff. “Most workers have left the industry, while those who stuck around are struggling every step of the way,” she said. Cun’s business operated for fewer than three months combined last year, as new cases continued to cause travel bans and cancellations. “Last year we could still run intra-province tours, but this year travel restrictions were issued against leaving the counties,” she said. “We have been letting our staff go and trying to lower costs as much as possible, but except for meagre profits during the Lunar New Year, we have been losing money every month.” In the ancient town of Lijiang in Yunnan province, a Unesco heritage site that used to be packed with visitors, streets are quiet with more than half of the stores and hotels closed. This year people are being forced to make a decision: either stay or leave the industry Cun Xiaoqin Owners of small hotels are trying to transfer ownership at low-to-zero fees, as long as rent is covered for the remainder of the lease. “We’ve suffered huge losses in the past three years so we are unlikely to be able to soldier on,” Cun said. “This year people are being forced to make a decision: either stay or leave the industry. “Everyone is proactively looking for ways to survive.” Cun said if the slump continues throughout July and August – typically the busiest season – “most people will completely lose hope and give up”. “There won’t be many people choosing to stay in tourism,” she said. Tourism entrepreneur Xiao Yuanshan disbanded his company in 2020 after paying full salaries to his employees for five months and losing nearly 1 million yuan. “Those who could leave, have left,” said Xiao, who now creates tourism media content but still struggles with an unstable income. The central government and local authorities have rolled out targeted support for the tourism sector, including fee and tax cuts, as well as loans and subsidies to companies in catering, retail, travel and civil aviation. But those relief measures are mostly distributed to companies and do not necessarily help workers, said Li Qianjian, a Guangxi-based operations associate with travel agency Dianfeng Zhiye, or Davos Intelligence. Economic toll of China’s latest virus outbreak ‘10 times’ worse than Wuhan “We used to be very busy, but now that many projects have fallen through because of inadequate capital flow, the company has been ordering us to take unpaid breaks in rotation,” Li said. “I am doing OK, my basic life expenses can still be covered, but there’s nothing left for savings. “I have a 2,000 yuan mortgage every month, it’s not a lot but I have to tighten all my expenses elsewhere. I can’t spend at will any more, because nobody knows when this will end.” At least sixty per cent of the stores in the city of Guilin, Guangxi autonomous region, are closed because of the scarcity of tourists, according to Li’s estimate. In 2019, the city attracted 130 million visitors. “It’s terrifying to look at, and very sad to be frank,” Li said. We know the pandemic will end at some point, but we don’t know when Li Qianjian “Many people have been asking in the group chats, what we should do next and when tourism could be back on track, but no one knows. “It’s like we are ships sailing without directions. We know the pandemic will end at some point, but we don’t know when.” Despite the hardship, most in the industry believe tourism will recover as people will always have a desire to travel. Sun Wei, a former travel agent who left her job to become a consultant at an insurance company during the pandemic, is determined to return to the sector once the pandemic ends. “I chose this industry and will stick to it until the end,” he said.