China Tourism Report Q2 2009

2008 Arrivals Fall Figures released by the National Tourism Administration of China (CNTA) in January 2009 showed that tourist arrivals fell in 2008, with the total visitor arrivals of 130 million representing a 1.5% y-o-y decline.

This was the first time that visitor arrivals had fallen since 2003, when the outbreak of the SARS virus deterred visitor arrivals for much of the year. Although low tourism sector growth had been expected, given the global economic downturn, a decline in tourist arrivals was disappointing, particularly given the boost to tourist arrivals provided by the holding of the Beijing Olympics in August.

This downturn reflects the decline in foreign visitor arrivals, with domestic arrivals remaining relatively strong. However, with the global economic downturn set to continue throughout 2009, CNTA has downgraded its forecasts for 2009 sector growth. It is now expecting foreign tourist arrivals to total 132 million in 2009, growth of just 1.5% y-o-y, and representing a return to 2007 levels. This is a major downturn for the industry, which had been growing at an average annual rate of over 10% since 2003.

This forecast could even be optimistic, given the scale of the downturn. In January visitor arrivals to Beijing (the main tourist entry point to the Chinese mainland) fell by 19.6% y-o-y, to 212,000. Moreover, excluding arrivals from Hong Kong, Macao and Taiwan, foreign visitor arrivals fell by 27.5%. Of these, arrivals from Europe fell by 23.7% while arrivals from Asia fell by 36.6%. Arrivals from major tourist market Japan, which is suffering particularly heavily from the global economic crisis, slumped by 45.3%.

China Plans Domestic Tourism Boost With foreign visitor arrivals slowing, the Chinese government is looking to domestic tourism to provide some insulation for the sector. To do this, the administration plans to introduce a programme encouraging workers to take paid holiday leave between April and June. This replaces the previous holiday system where three one-week sets of public holidays provided most holiday entitlement. Public holidays have now been reduced, encouraging workers to take longer holidays and travel within the country.

Guangdong is expected to be the first province to implement the initiative, followed by Shandong, Shanghai, Jiangsu, Zhejiang and Beijing. The CNTA expects domestic tourism to perform better than international tourism, growing by 9% y-o-y to total 1.85 billion.

China Aviation Industry In Trouble China’s aviation industry suffered drastically from the combination of surging fuel prices in H1 2008 and the downturn in the tourist industry during 2008. Yang Guoqing, deputy director of Civil Aviation Administration of China, stated in March that the industry as a whole lost an estimated CNY28 billion, the worst industry loss in 20 years. He pointed to low growth of passenger traffic, which grew by only 4.7% y-o-y in 2008, to 405.8 million, after growth of 16.7% in 2007. However, the industry was damaged by a sharp slowdown in cargo traffic, reflecting declining global export demand. Cargo volumes rose by only 2.6% y-o-y for both domestic and international shipments, to 5.6 million and 3.2 million respectively.