China’s tourism sector was already in a ‘death spiral’ – and now Beijing reports a new cluster of Covid-19 cases

Daniel Ren

Zhang Ban, who drives a coach for a Shanghai tour service company, bemoans the Covid-19 pandemic that led to his paycheck being cut by more than 50 per cent.

“We are among the main victims to the coronavirus,” he said. “The tourism sector is crippled by the disease and I feel hopeless.”

By April, after the Covid-19 was brought under control in mainland China, most manufacturing and service companies resumed production and operation. But not so in the tourism sector, where livelihoods continue to be threatened by people’s reluctance to travel since the outbreak in Wuhan was first made public in January.

Some 59 per cent of the respondents in a survey of Chinese consumers by the Boston Consulting Group in May said they were worried about their household financial conditions and cautious about travelling.

An outbreak in Covid-19 cases in the Chinese capital of Beijing over the weekend is making some people even more skittish about climbing on a plane or a coach or a train. It was certainly no help to the mainland’s estimated 30 million employees in the travel industry.

“I had a plan to bring my two kids to Beijing to visit the historic sights such as Tiananmen Square during the summer vacation, but have to scrap it now that Beijing is inflicted by the coronavirus again,” said Zhang Wenjie, owner of an automobile maintenance workshop. “Safety is always the priority.”

Beijing shut down its biggest vegetable market on Saturday and declared “wartime management” in one district after spotting a new cluster of coronavirus cases in which more than 50 people tested positive.

Zhang Ban said he was worried about job prospects after pay cuts that began in February.

“Workload continues to drop with the absence of tourists,” he said. “Using common sense, bosses would have to fire people to survive the market downturn.”

China’s domestic tourism sector generated 5.73 trillion yuan of revenue in 2019, up 11.7 per cent on year.

Chinese travellers had become the biggest driving force of the global tourism market, as increasingly well-to-do mainlanders sought new experiences. The mainland raked in US$131 billion from 65.7 million inbound tourists in 2019, up 3.3 per cent from 2019.

Beijing now essentially bans all foreign travellers from visiting the mainland. (Diplomats are exempt and people can apply for special exceptions.)

Last year, 162 million mainland tourists travelled overseas, a 4.6 per cent rise from 2018.

But it is estimated that the lockdown and restrictive measures implemented from February to April have caused losses to the tune of at least 1 trillion yuan.

Shanghai-listed Huangshan Tourism Development, the operator of scenic spots at Yellow Mountain in Anhui province, reported net loss of 77.2 million yuan (US$10.9 million) for the first quarter of this year, compared to profit of 23.6 million yuan in the same period in 2019.

The company also warned investors of potential losses for the first half ending in June because of a sharp fall in tourist numbers.

Since March, Beijing has limited international flights to ward off imported Covid-19 cases. It also imposed a 14-day quarantine requirement for mainland citizens flying home from outbound travel.

The restrictions siphoned off interest for overseas tours.

A senior manager with a state-owned travel agency said it had lost all outbound travel businesses since February. Domestic travel demand represented just a small portion of its business volume in the same period last year, she added.

Zheng Honggang, the chief executive of Shanghai-based Kate Travel, said massive job cuts appeared to be unavoidable given the market.

“We had tried to keep the employees by pay cuts and cost reductions, but were still unable to sustain the business without slashing the payroll,” he said. “The dire scenario forced us to face the grim reality. It is a do-or-die moment for travel businesses.”

To many working in the industry, the news of the outbreak in Beijing was the final straw.

“We cannot expect people to make travel plans upon hearing of the new cluster of cases in the capital city,” said Scott Yin, a freelance tour guide. “It is time to consider other job options since nothing can stop the death spiral in the travel industry.”

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