As China's travel chill deepens, tourist-starved regions struggle to get by

[April 19, 2022]  By Ellen Zhang and Ryan Woo

BEIJING (Reuters) - As China's domestic tourism unravels, desperate provinces are slashing ticket prices, offering tax breaks and even begging locals to help save plummeting tourist earnings in a sector that employs tens of millions of people.

The slump in tourism - which includes travel, accommodation and catering - has persisted into 2022 because of wider COVID-related curbs on inter-province travel, lockdowns and endless mass testing, official data shows.

Particularly hurt are provinces that lean on tourism for growth such as Hainan and Yunnan, as well as northern regions with smaller windows of mild, tourist-friendly weather.

The downturn has worsened in recent months as the Omicron variant took hold, leaving the industry in its worst state since before the pandemic and boding ill for a sector that contributed 11.05% to China's gross domestic product in 2019 and supported nearly 80 million jobs, or 10% of all employment.

Tian Yun, a former economist at the state economic planning agency, said he expected inter-province trips to resume during the three-day Dragon Boat Festival holiday in early June.

"If inter-province trips are banned during the Dragon Boat Festival, this year's tourism and related consumption will be in chaos," Tian said.

A continued tourism freeze may remove at least 0.5 percentage points from China's 2022 GDP growth, he said. The government has set a growth target of about 5.5% this year.

DETERRENCE

Factors keeping tourists away include dramatic cuts in passenger flights and sudden cancellations.

The number of weekly flights domestically stands at just over 35,000 flights, according to aviation data provider VariFlight, the lowest since the year 2000.

Amid the travel curbs, tourists from other provinces accounted for just 5% of visitors at scenic spots across China during the Tomb Sweeping holiday in early April, official data shows.

Hohhot, capital of the northern Chinese region of Inner Mongolia and known for its verdant grasslands, saw the number of tourist trips drop by half during the holiday. Tourism revenue fell 53.5%.

Even the southern island province of Hainan, dubbed China's Hawaii with its year-round balmy weather, was not spared.

The number of tourist trips to Sanya, a beach destination in Hainan, dived 99.4% during the holiday, official statistics showed. Sanya's hotel occupancy rates averaged 12.6%.

People dressed in astronaut costumes and holding flags of China pose for pictures while visiting the Volcano No. 6 of the Ulan Hada volcano group near Ulanqab, Inner Mongolia Autonomous Region, China October 4, 2021. REUTERS/Carlos Garcia Rawlins/File Photo

Even in a bigger province like Yunnan, where leisure travel accounted for 90% of the services sector in 2019, authorities had to roll out measures such as tax cuts to help travel companies.

To lure local visitors, the picturesque city of Dali, a major destination in Yunnan, on Friday started giving out 10 million consumption vouchers. Prices of tickets to scenic spots were also cut.

RELIANCE ON LOCALS

Local visitors helped lift the number of tourist trips in Ningxia, a poor autonomous region dependent on tourism in northwest China, by 21.1% from a year earlier during the Tomb Sweeping holiday.

Slightly smaller than Ireland, Ningxia has wooed its local population of 7.2 million with passes to more than 60 scenic spots for 199 yuan ($31), a giant discount to normal prices totalling nearly 3,000 yuan.

Despite the higher visitor numbers during the three-day holiday, revenue sank 16.3%.

"(Local people) have their own cars and can drive to scenic spots by themselves," Gu Xuebo, a Ningxia driver and guide, told Reuters. "And there's no demand for accommodation and catering from local people."

Gu said his 14-seat minivan had gathered dust in the garage since August. A few months afterwards, his travel agency was banned from serving tourists from other provinces. This year, Gu has had just two clients.

"Several drivers who had worked with me for six, seven years have all switched to other jobs," said Gu, who works as a personal driver offering ride-hailing services.

Bookings at Desert Star Hotel in Ningxia's Shapotou Scenic Zone are down 70% from a year earlier.

"Tourists from other provinces cannot come here, so we have to rely on local tourists," said a manager at the hotel surnamed Zhang. "It's better than having no one."

($1 = 6.3732 Chinese yuan renminbi)

(Reporting by Ellen Zhang and Ryan Woo; Additional reporting by Stella Qiu. Editing by Gerry Doyle)

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