China travel, tourism ‘unlikely to improve materially’ as coronavirus curbs hit Labour Day holiday

Travel and tourism spending plunged during China’s Labour Day holiday due to coronavirus lockdowns and restrictions rolled out across the country, with the “situation unlikely to improve materially in May”, analysts said.

Trips taken during the five-day holiday, which ended on Wednesday, 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 also dropped by 43 per cent compared with last year to 64.68 billion yuan (US$9.79 billion), recovering to only 44 per cent of the level seen before the coronavirus pandemic.

“Tourism companies are facing tremendous hardships now, but there’s nothing you can do about the Covid measures,” said Wang Ke, a tourism analyst with consulting firm Analysys.

“With the current intensity of the control measures, it’s unlikely we will see a sudden rise [in the number of trips] in the short term.”

The Labour Day break at the start of May is one of the so-called golden week holidays in China and is traditionally one of the busiest travel seasons.

But this year, according to an estimate by the Ministry of Culture and Tourism, around a third of all traditional tourist venues were closed due to virus control measures.

China’s manufacturing, services activity drop as zero-Covid bites

Authorities had already painted a pessimistic picture before the holiday due to the various travel bans and mass lockdowns, with the Ministry of Transport expecting passenger traffic to fall by over 60 per cent this year.

But according to a report from Jiemian News, citing sources from China Railway, the number of daily railway passengers only reached around 20 per cent compared with last year.

According to the report, the number of railway passengers was around 2.35 million to 4.4 million passengers per day compared with 13 million to 19 million last year.

The Civil Aviation Administration of China had predicted before the holiday that air travel would plummet by 77 per cent compared with last year, with the actual data yet to be released.

Before the holiday, restaurants in Beijing had already been restricted to only offering takeaway services over the break, with museums, libraries and other indoor facilities also temporarily closed, including Universal Studios.

The Chinese capital recorded 1.58 billion yuan in tourist spending during the holiday this year, 83 per cent down from 9.3 billion yuan last year, according to the Beijing Municipal Bureau of Culture and Tourism.

“The situation is unlikely to improve materially in May, as preliminary high-frequency data for the Labour Day holidays revealed that services activities remained highly depressed during the five-day national holiday,” said Nomura analysts Lu Ting and Harrington Zhang on Wednesday.

China’s economy has been faltering amid its worst coronavirus outbreak since 2020, with consumption and services activity severely affected.

As of Tuesday, 328 million people in 43 Chinese cities were under full or partial lockdowns, according to Nomura.

“Despite falling Covid caseloads, we have seen no sign of this Omicron wave ending soon, and Beijing remains quite determined to maintain its zero-Covid strategy,” added the Nomura report.

“As of Tuesday, restrictive lockdown measures affect areas that cover around 31 per cent of China’s total [gross domestic product].”

On Thursday, Caixin services purchasing managers’ index (PMI) for April fell to the second-lowest level since the survey began in November 2005.

“Moreover, according to data compiled by Maoyan, total box office sales for the Labour Day holidays plunged to 297 million yuan from 1.673 billion yuan last year. However, the May services PMI could rise because of a low base,” added Nomura.