Will Chinese Tourists Return After Being Grounded for 3 Years?
International Flight Increases, Staffing Shortages, and Administration Must Recover
South Korea's Travel and Casino Industries Also 'Watching Closely'
[Asia Economy Beijing=Special Correspondent Kim Hyun-jung, Reporter Kim Heung-soon, Reporter Koo Eun-mo] Overseas travel by Chinese people, who have been grounded for the past three years due to the spread of COVID-19, is showing signs of explosive growth. The domestic travel and casino industries are also closely monitoring the situation, including changes in quarantine guidelines and the possibility of increasing international flights, in anticipation of a large influx of tourists.
According to Chinese economic media Caixin on the 29th, from the 7th to the 27th of this month, when China announced the 'Top 10 National Measures' that significantly eased quarantine standards, the number of overseas visa applications by Chinese citizens increased twelvefold compared to the previous year. This is based on data from Chinese online travel company Ctrip, whose platform saw visa consultation cases increase by 1.5 times compared to a month earlier, most of which were related to 'tourism.'
◆Will Chinese Group Tourists Return... Interest in Traveling to Korea= The attention of Chinese people is focused on nearby neighboring countries physically close to them. According to data from the Chinese travel platform 'Qunar,' as of the 27th, the top three countries for international hotel reservations were Thailand, Japan, and Korea, which surged by 116%, 86%, and 56% respectively compared to the previous day.
However, the possibility of Chinese tourists flooding in as they did in the past within a short period is low. According to the China National Immigration Administration, the number of immigration inspections nationwide from the first to the third quarter this year was 84.572 million, which is only 16.50% of the same period in 2019 before the spread of COVID-19. The Immigration Administration announced that starting from the 8th of next month, when quarantine for arrivals from overseas will be abolished, it will resume accepting and approving passport applications for Chinese people for tourism and other purposes. However, considering the number of people whose passport validity expired during the past three years when travel was restricted, it is expected to be burdensome for the authorities to process all applications in the short term.
China is discussing increasing international flights with several countries, but the actual number is far below pre-COVID-19 levels. According to Chinese aviation data provider Feichangjun, as of the 27th, the number of international flights operated by China was 208 per day, which is only 7.7% of the daily average in 2019. With demand surging, airfares are also rising. As of the end of December, the price for a direct flight from Shanghai to Tokyo, Japan, reaches 5,000 to 10,000 yuan (approximately 910,000 to 1,820,000 KRW).
The manpower losses caused by restructuring implemented by private airlines during the three-year recession are also a problem. In July, the Civil Aviation Administration of China announced that the number of aircraft captains decreased by 215 since the spread of COVID-19, and maintenance personnel decreased by 9,298.
Associate Professor Chi Chi of Guangzhou Civil Aviation Vocational and Technical College explained, "With the cancellation of the circuit breaker policy over the past three years, the situation of international flights by domestic and foreign airlines is currently unstable," adding, "The prompt resumption of flights and normalization of domestic entry and exit management will be key to the full recovery of demand such as group tours." A representative from the Chinese tourism industry said, "There may be restrictions on arrivals from China overseas for about one to two months," and predicted, "After the COVID-19 spread stabilizes in China after March next year, actual travel demand will recover, and large-scale group tours will likely resume around June or July."
◆Domestic Industry Also ‘Watching Closely’= As China significantly relaxes COVID-19 quarantine measures, the domestic travel and casino industries are closely monitoring the situation, keeping in mind the possibility of an increase in Chinese tourists. Hana Tour has established a plan to respond through its inbound travel subsidiary Hana Tour ITC in cooperation with local travel agencies in China if demand arises. Mode Tour is also monitoring the local situation through its Beijing branch.
A travel industry official said, "We need to closely examine our government's quarantine measures and the expansion of flights as prerequisite tasks," adding, "Since confirmed cases are also increasing in China, it is expected that tourist arrivals will be possible only after the first quarter of next year." Foreigner-only casino operators such as Grand Korea Leisure (GKL), Paradise, and Lotte Tour Development are also busy tracking trends, as the Chinese-speaking market accounts for about 40% of their total customers. The casino industry’s third-quarter performance greatly improved in October due to the resumption of visa-free tourism to Japan, and stock prices are also stirring as Chinese demand is reflected.
Expectations are also rising in the duty-free industry, which has been struggling with poor performance for three years. Since Chinese sales account for a high proportion, the return of Chinese tourists is expected to accelerate sales recovery. Before the COVID-19 pandemic spread, 'Daigou' (Chinese proxy shoppers) accounted for more than 50% of total duty-free sales, including at airports.
The industry expects that, barring any surprises due to the lifting of China’s lockdown policy, the recovery trend of Chinese tourists and sales will accelerate next year. Eun-jung Park, a researcher at Hana Securities, forecasted, "When the recovery of Chinese visitors to Korea begins in earnest, benefits will be concentrated in the duty-free channel," adding, "Gradual recovery will appear from the first quarter of next year, and the peak tourist season effect will be seen in the third quarter."
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