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No sharp rebound for China’s tourism industry amid staff shortages, reluctance to spend among consumers

  • Not prepared to serve a rising number of tourists, Shanghai travel agency executive says
  • A full recovery will not occur until next year: McKinsey analyst

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A tourist district in Beijing. Thousands of businesses that expected Chinese consumers to splash the cash in ‘revenge spending’ might be disappointed. Photo: Reuters
Daniel Renin Shanghai

Optimism about a recovery in China’s tourism sector in the post-Covid-19 era might prove to be short-lived, as hotels, airlines and tourism must first hire back all the staff they let go. Moreover, consumers are still not in a mood to spend.

China’s travel industry was expected to be a top beneficiary of the country’s reopening, due to the release of pent-up travel demand. However, the industry, which is estimated to have employed 30 million people before the coronavirus outbreak in 2020, let go of 68 per cent of industry employees, according to a survey conducted by the All-China Federation of Industry and Commerce in May 2022.

“We are not prepared to serve a rising number of tourists since we are short of employees,” said Zheng Honggang, CEO of Shanghai-based Kate Travel. “The pace of recovery will turn out to be slow.”

The loss of staff over the past three years cannot be compensated for by a hiring spree, because many former employees of the tourism sector have secured jobs in other industries, he added.

Beijing announced a plan to exit its zero-Covid strategy and to live with the coronavirus in December. It reopened its borders on January 8 and resumed issuing nearly all types of visas for foreigners on Wednesday.

“Business travel is rebounding sharply, buoyed by surging cross-border travel by company executives,” said Jackey Yu, a partner with global consultancy McKinsey. “But in summer, overall travel business [in China] is expected to recover to just 40 to 50 per cent of 2019 levels. A full recovery will not occur until next year.”

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