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

As China reopens to the world for the first time in nearly three years, 24-year-old Mei Liang is wasting no time planning her first trip.

The Nanjing-based student hopes to visit Hong Kong this month and has budgeted 5,000 yuan ($730) for high-end cosmetics.

“I really miss the streetscape, the vibe and the food,” he said. “Beauty products sold in Hong Kong are still competitively priced. I have more confidence in their authenticity than those sold on Chinese e-commerce platforms.

Since the start of 2020, the world’s largest tourist population has been cut off by China’s apparatus of zero-covid restrictions, including mass testing, lockdowns and quarantines for arrivals.

A woman from China enters a Covid-19 testing center
Some countries are introducing border controls and mandatory testing for arrivals from China © Lee Jin-man/AP

This weekend, that will change as Beijing finally repeals the last of those measures. Airlines, hotels and luxury businesses around the world are bracing for the return of tens of millions of tourists and their hundreds of billions of dollars, but experts say it could take months for the revival to fully gather pace.

May, who reopened the border with China on Sunday, had a travel visa to Hong Kong that expired in 2019 and she was unable to renew it while services were suspended during the pandemic, reflecting widespread barriers to travel from the closed country. China has “severely restricted” its residents from going out to prevent them from returning with the virus.

In 2019, before the coronavirus pandemic, 155 million Chinese traveled abroad and spent $255 billion, according to Citi analysts, who forecast a sharp recovery in the first quarter of 2023 and a massive return of tourism in the second.

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The earliest impact will be felt in Hong Kong, where tourism accounted for 4.5 percent of the economy in 2018. When the city government reopened the border on Sunday, it opened a daily quota of about 60,000 arrivals in each direction.

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Their return is eagerly awaited. In the first 10 months of 2022, only 249,000 visitors from the mainland came to Hong Kong, down from more than 51 million in 2018.

According to real estate consultant Cushman & Wakefield, mainland tourists’ appetite for luxury goods has been the lifeblood of Hong Kong’s priciest retail sector, which last year lost the world’s most expensive retail space to New York’s Fifth Avenue lease.

Limited commercial flights and high visa applications for major global destinations such as Europe and the US mean that the impact of China’s reopening may take some time. The China Foreign 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 half.

“The demand for Chinese travel is increasing, but the question is how quickly we can accommodate them by issuing visas and creating additional flight connections,” said Eduardo Santander, executive director of the European Travel Commission. .

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London’s luxury department store Harrods is stocking up on Chinese-made clothing for the first time since 2019. Managing director Michael Ward cited aircraft unavailability as an early hurdle, but said it could accelerate later this year.

“If Chinese tourists come back, we are talking about very significant numbers,” he said. “Our outlook is two-fold: it allows us to go back to the country and talk to high-net-worth individuals, and it allows us to get back old friends we haven’t seen in the UK for years.”

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In Japan, where Chinese tourists made up 30 percent of overseas arrivals before Covid, their return will be crucial to the industry’s $37 billion annual target. Some traders attributed the yen’s strengthening from its lowest levels in decades to retail investors betting on an influx of Chinese tourists, which has fueled a buying pattern.

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

But Japan has joined the US, UK, France, Italy and Spain in introducing border controls and mandatory testing for visitors from China, and analysts say it could take up to two years for arrivals to return to pre-pandemic levels.

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“We’re starting to see a return of affluent Chinese customers, but we don’t expect the kind of cosmetic explosion we’ve seen in the past,” said spokesman Isetan Mitsukoshi.

In the US, where China was one of the biggest sources of tourists before the pandemic, companies are still not fully prepared. Expedia, the travel website, said that searches for flights from China to the United States rose 40% after Beijing’s decision to lift quarantine rules last week, while inquiries to other destinations doubled.

Even as China grapples with the worst of the pandemic, the speed of the policy shift has surprised onlookers. Michael Yu, a 30-year-old office worker in Shanghai, arranged a trip to Italy for a wedding in September despite the restrictions.

“At that time, I predicted that the reopening would happen in the first half of 2023, but I did not expect it to happen so quickly,” Yu said.

In most cases, enforcement of zero-covid regulations was effectively suspended until Sunday’s deadline after the holiday was declared.

When Zhao Xiaoou, a 26-year-old master’s student from Zurich, returned to Shanghai this week after nearly a year and a half abroad, quarantine rules were still in place, but he was no longer locked down. Police and airport officials were not particularly concerned, he said. The only hotel suffering from a lack of tourism is still trying to make it happen.

“Hotel [wanted] Some additional income from where 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 Lee in Hong Kong, Andrew Edgecliffe-Johnson in New York and Kana Inagaki in Tokyo

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