China’s travel recovery is proving “slower than expected” with outbound leisure travel “not considered safe”, business services giant McKinsey has reported.
McKinsey partner and lead on travel for Asia Steve Paxton said China “is headed in the right direction”, but he noted “good and bad news” from research on consumer confidence in China.
“There are implications for the wider economy and businesses. For instance, USD 0.9 trillion to 1.2 trillion has been lost in export revenues from tourism worldwide. While global tourism may return to previous levels in 2022, China, Indonesia, and the US stand out in optimism, with travel in China coming back to around half of the previous levels currently. However, traveller confidence is still low, and recovery is slower than expected.”
He said: “Chinese consumer optimism about economic recovery stands out.” More than half (53%) of Chinese consumers expected China’s economy to recover in McKinsey research in late May.
However, just 4% said they expected to travel more post-Covid than before, with 36% expecting to travel less.
Paxton also warned: “Business travel is not likely to return to its previous level. We see a structural shift in business travel. Maybe 20% is not coming back.”
Speaking on a Hong Kong Tourism Board global online forum, Paxton said: “China shows signs of recovery. Roughly 90% of domestic flights are back and about 70% of domestic passengers, led by visiting friends and relatives and some leisure travel.
However, he said: “The recovery is slower than expected. Numbers are still relatively low and outbound leisure travel is not considered safe. The industry has a lot of work to do to convince people it is safe to travel.”
McKinsey and Oxford Economics data suggests the UK economy could benefit to the tune of $31 billion a year and Germany’s economy by $30 billion if outbound travel spending switched wholesale to domestic tourism.
But Italy would lose $27 billion and Spain $52 billion in earnings.
Speaking in the same forum, Trip.com Group chief executive Jane Sun said: “Travel bubbles will probably become the new normal post-Covid. Customer demand for risk-free travel will become the new normal.”
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