‘There is a lot of pent-up demand’: world awaits return of Chinese tourists

As China reopened to the world for the first time in nearly three years, 24-year-old May Liang wasted no time planning her first trip.

The student, who lives in the city of Nanjing, hopes to travel to Hong Kong this month and has budgeted Rmb5,000 ($730) for luxury cosmetics.

“I really miss the street scene, the vibe and the food,” he said. “Beauty products sold in Hong Kong are still competitive in terms of price. I believe they are more authentic than those sold on Chinese e-commerce platforms.

Since the beginning of 2020, the world’s largest tourism population has been cut off from the world by Chinese authorities for zero-Covid restrictions that include mass testing, lockdowns and quarantines for visitors.

This weekend, when Beijing finally dismantles those last measures, that will change. Around the world, airlines, hotels and luxury businesses are seeking to bring back tens of millions of tourists and hundreds of billions of dollars – although experts suggest the revival could take months to gather momentum.

May’s travel visa to Hong Kong, which reopened its border with China on Sunday, expires in 2019, and she was unable to renew it while services were suspended during the pandemic, reflecting further obstacles to travel from the shuttered country. China has “severely restricted” outbound travel in an effort to prevent citizens from returning with the virus.

In 2019, before the coronavirus pandemic, 155 million Chinese traveled abroad and spent $255bn, according to analysts at Citi, which projected a strong recovery in the first quarter of 2023 and the return of mass tourism in the second.

The earliest impact could be felt in Hong Kong, where tourism accounted for 4.5 percent of the economy in 2018. The city’s government announced a daily quota of 60,000 in each direction when it reopened the border on Sunday.

His return will be awaited. In the first 10 months of 2022, there were only 249,000 visitors from the mainland to Hong Kong, down from more than 51 million for 2018.

Mainland tourists’ taste for luxury goods is also the lifeblood of Hong Kong’s retail sector, which lost its crown as the world’s most expensive retail district by renting to New York’s Fifth Avenue last year, according to real estate consultants Cushman & Wakefield.

For major global destinations such as Europe and the US, limited commercial flights and a backlog of visa applications mean the impact of China’s reopening may take some time. The China Outbound Tourism Research Institute estimates that 18 million Chinese tourists will travel internationally in the first half of the year, followed by 40 million in the second.

“There is a lot of demand from Chinese people to travel, but the problem is how we will be able to accommodate it by issuing visas and creating extra flight connectivity,” said Eduardo Santander, chief executive of the European Travel Commission. .

Harrods, the London luxury department store, is buying stocks of clothing designed for Chinese people for the first time since 2019. Michael Ward, managing director, points to the lack of flight availability as an initial constraint but predicts an acceleration later this year.

“We are talking about a very important number of Chinese tourists coming back,” he said. “Our thinking has doubled: it allows us to return to the country to talk to high-net-worth individuals and it allows us to return to old friends who have not been seen in the UK for years.”

In Japan, where Chinese tourists accounted for 30 percent of overseas arrivals before Covid, a return will be critical to achieving the industry’s $37bn annual target. Some traders have attributed the yen’s recent strengthening over the past few decades to retail investors betting on an influx of Chinese tourists reviving buying patterns.

Masaki Akita, president of the store chain Matsuya, told reporters this week that the group is expected to boost food and cosmetics sales, while rival Isetan Mitsukoshi added tax refund counters in a flagship department store in Tokyo’s Shinjuku commercial district in November.

But with Japan joining countries including the US, Britain, France, Italy and Spain in imposing border controls and mandatory testing for visitors from China, analysts say it could take up to two years for arrivals to reach pre-pandemic levels.

“We’re starting to see a return from wealthy Chinese customers but we don’t expect the kind of explosive cosmetics purchases we’ve seen before,” said spokesman Isetan Mitsukoshi.

In the US, where China was one of the biggest sources of tourists pre-pandemic, companies are also not fully prepared. Expedia, the travel website, said searches for flights from China to the US jumped 40 percent after Beijing’s decision to lift entry quarantine rules last week, while inquiries in other directions doubled.

The speed of the policy reversal, which came despite China already experiencing the worst of the pandemic, surprised onlookers. Michael Yu, a 30-year-old office worker in Shanghai, had arranged a September trip to Italy for a November wedding, despite the ban.

“At that time, it was predicted that the reopening would happen in the first half of 2023, but I don’t expect it to be so soon,” Yu said.

In many cases, enforcement of the zero-Covid rule was effectively dropped after the relaxation was announced, long before Sunday’s deadline.

When Zhao Xiaoou, a 26-year-old master’s student in Zurich, returned to Shanghai this week after nearly a year and a half abroad, quarantine rules were still in place, but he managed to avoid being locked up. Police and airport staff were not bothered, he said. Only hotels – an industry suffering from a lack of tourism – are still trying to implement it.

“Hotel [wanted] extra money wherever you can get it,” he said.

Additional reporting by Xueqiao Wang in Shanghai, Oliver Barnes and Arjun Neil Alim in London, Andy Lin, Chan Ho-him, Gloria Li in Hong Kong, Andrew Edgecliffe-Johnson in New York and Kana Inagaki in Tokyo