How has China's travel industry been performing?

Across the globe, the travel industry has been severely impacted by the COVID-19 pandemic, and China has been no exception. Both domestic and international tourism suffered significant declines.

However, thanks to a centralized pandemic response system, coupled with the general public's compliance with rigorous countermeasures such as mask-wearing, the COVID-19 pandemic in China is largely under control across much of the country. As a result, the travel industry has started to rebound back, in terms of both traffic and spending.

Due to travel restrictions imposed by the government, there are still headwinds for international travel, which accounted for 14% of mainland China's travel industry in 2019. Markets with a higher dependency on international travel and transit passengers such as Hong Kong and Taiwan have still been severely impacted.

What are the future scenarios for the Chinese travel industry?

Accenture has developed four future scenarios for the global travel industry that reflect various potential outcomes and impacts of key external factors that influence global travel demand.

Remarkable recovery

Travel companies must act to take full advantage of a burst in pent-up demand, which largely returns to 2019 levels by 2022.

Collective coexistence

Along with the world, travel companies learn to coexist with the virus through discipline and containment, and travel makes a tentative return.

Market mayhem

Amid permanent volatility, travel companies must shrink and refocus on remaining areas of demand to survive. Some companies fail.

Darkest days

The uncontrolled virus upends the industry, and travel companies must radically rethink their business models. Many fail.

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Given the rebound in domestic travel, we do not expect the "darkest days" scenario to transpire for China. Rather, we expect that at least for the domestic travel industry, a "remarkable recovery" or "collective coexistence" future scenario is quite likely. However, the international travel market still remains volatile since the virus is not yet fully contained globally. Therefore, for the international inbound and outbound travel market, the "market mayhem" future scenario remains a possibility in the short and medium term.

Shifts in market dynamics and customer behavior in China?

Although China is on the way to recovery, things will not exactly go back to the way they were before. The pandemic has transformed the way Chinese consumers travel and what they expect from travel companies. We've identified several key shifts in local market dynamics and customer trends that have implications for the specific actions that travel companies should take to prepare for the future travel scenarios described.

Increased emphasis on domestic spending

Given the limited opportunities to travel overseas where the pandemic is still spreading, we expect that domestic travel will account for a significant share of Chinese consumer spending going forward.

Reservation-based planning

New government measures such as capacity limits at tourist attractions and real-name pre-registration for ticket purchases mean that consumers now plan and make reservations ahead of time, and often through digital channels.

Self-guided and contactless travel

Chinese consumers now have a much higher awareness of the importance of hygiene than in the past. There is now a rapidly emerging, clear preference for private, self-guided tours that allow people to avoid crowds when they travel.

"Bleisure" travel

The pandemic has accelerated the transformation of how and where people work. A new "bleisure" trend has emerged in which people combine both business and leisure when traveling.

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What actions should travel companies take going forward?

In response to these new local dynamics, Chinese travel companies have the opportunity to take action in five areas:

Traveler experience

Elevate travel experiences with new technologies to address new behaviors.

Retail in travel

Develop or reshape value propositions across the purchasing journey to stimulate demand.

Intelligent travel services

Leverage data analytics to support business and operational strategies.

Intelligent operations

Realize operational efficiencies through cost-reduction initiatives.

Living systems

Migrate and transform legacy IT systems to enable a more nimble and efficient organization.

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About the Authors

Robert Hah

Managing Director – Strategy & Consulting Lead, Accenture Greater China

Marco Siu

Director – Accenture Strategy, Greater China

Yuxing Jiang

Director – Accenture Strategy, Greater China

David Lau

Manager – Accenture Strategy, Greater China


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