China hotels, flights, cinemas perk up as Covid curbs end

SIGNS are emerging that Chinese consumers are gearing up to go out and spend again, as three years of dealing with some of the world’s toughest Covid-19 curbs come to an end.

Over the three-day New Year’s Day holiday, businesses and consumers caught their first glimpse of a return to normality. Holidayers flocked to beaches, flight numbers ticked up, and hotels even had to turn some guests away as they were fully booked.

The Caixin China General Services purchasing managers’ index (PMI) on Thursday (Jan 5) showed that the services sector continued to struggle in December. But businesses are now hoping the busy long weekend was a sign that a rebound is on the cards, even if a full recovery will take some time.

Looking ahead to Chinese New Year in late January, cinemas are expecting their busiest single day of the year, while the catering industry should manage to take in revenues matching those from 2019.

“I think the most difficult time for China’s tourism industry is behind us, and what didn’t kill us will only make us stronger,” said Haiqing Lu, chief corporate affairs and strategic relations officer at Intercontinental Hotels Group Greater China.

“Although it’s hard to quantify the recovery in the coming months at this point, we firmly believe ‘once the gate is open, the trend is irreversible’.“

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Some economists, however, are cautiously optimistic.

Jones Lang Lasalle chief economist Bruce Pang said: “If there are no new Covid strains, based on the experience of other countries, confidence will increase in the coming months after the fading of fear amid the exit wave, as will consumers’ willingness to spend.”

However, he noted that any such recovery would initially be focused on the country’s first-tier cities. He added that if travellers were to carry the virus home to rural areas during the upcoming holiday, the resulting rise in infections would hurt consumption in third- and fourth-tier cities.

Covid cases in China have risen sharply since the government lifted most of its pandemic controls in December. But the country’s chief epidemiologist, Wu Zunyou, said on Dec 29 that infections in the most populous cities such as Beijing, Tianjin and Chengdu had peaked.

Reuters earlier reported that, based on data from aviation-information provider Variflight, that Chinese airlines operated 8,126 passenger flights in mainland China on Dec 30, marking a 190 per cent increase from the month before. However, flight numbers on the last working day ahead of the New Year’s Day holiday only recovered 70 per cent compared with pre-pandemic levels.

For four of the past six years, the first day of Chinese New Year has been the busiest single day at the box office in China, even in 2021 and 2022, according to said movie ticketing platform Maoyan Entertainment. As Covid lockdowns supposedly become a thing of the past, Chinese cinemas look set to benefit with customers returning to the big screens.

Many businesses were forced to adapt how they reach customers over the course of the pandemic. While contact-intensive dining services were hit hard by stringent lockdowns, the catering sector recovered over the first 11 months of last year, with revenues at nearly 95 per cent of those seen in the same period in 2019. This was thanks to online orders, going by Reuters’ calculations based on official data.

Citi analysts said that consumer spending, especially on services, would “likely see a non-linear snapback when the pent-up demand is released”. They predicted retail sales to grow around 11 per cent in 2023.

As Chinese New Year rolls in, Chinese officials are also expecting a significant uptick in activity.

Xu Chengguang, vice-minister for transport, announced on Friday that from Jan 7 to Feb 15, some two billion people are expected to travel. This would be an increase of 99.5 per cent from the same period last year, but still at 70.3 per cent of 2019 levels. REUTERS