**Chinese Tourists Increasingly Cautious in Spending Amid Weak Economic Recovery**
With the sluggish economic recovery, Chinese people are becoming increasingly cautious about their spending habits. Even when planning a trip, they are looking for opportunities to avail of “last-minute discounts”.
During the Bank of America Gaming and Lodging Conference last Thursday (September 5), Anthony Caputano, President and CEO of Marriott International, stated that China is facing a “genuine consumer confidence crisis”.
He mentioned that more and more Chinese tourists are booking hotels a maximum of three days in advance, which is historically the lowest level, as compared to consumers in other global regions who book much earlier, about 20 days in advance.
Economists from Oxford Economics told CNBC that Chinese tourists are planning their trips in a rush, aiming to take advantage of “last-minute deals”.
Amid the continuous crisis in the Chinese real estate market and high unemployment rates, Chinese consumers are meticulously budgeting their expenses, whether it be for purchasing groceries or for travelling. They are even hesitant to spend on leisure activities.
According to a report by the World Travel & Tourism Council in 2021, in 2019, 70% of hotel bookings from the Chinese market on Trip.com were made within three days before check-in. During the first two years of the pandemic, due to the high uncertainty around travel restrictions, this percentage increased to over 80%.
Patrick Body from Cheung Kong Graduate School of Business mentioned to CNBC that shortening booking times usually signify increasing uncertainty and caution towards consumption by consumers. Especially amid China’s slow economic recovery, this poses challenges for businesses in predicting and preparing for demand.
In July this year, Marriott International Group lowered its growth forecast for available room revenue for this year due to “current weak demand and price trends” in China.
This pricing pressure is evident across the industry, including domestic travel booking agency Trip.com in China. The company reported that average prices of domestic hotels and flights have been consistently decreasing this year.
Data from the Ministry of Culture and Tourism shows that during the Labor Day holiday in May, domestic travel in China exceeded the numbers from 2019. However, the average spending per traveler still remains below the levels of 2019.
Reuters reported that mainland Chinese visitors to Hong Kong during the May Day holiday tightened their wallets, even the younger generation. They opted for walking tours, refrained from buying luxury items, and chose to stay overnight in Shenzhen to save costs. 28-year-old Laura Li from Liaoning and her 20-year-old cousin Diego Deng are examples of this trend.
“On a personal level, I don’t enjoy being in tour groups as it limits freedom,” Li told Reuters. “I prefer aimlessly strolling around the city.”
To save expenses, Li and her cousin chose to stay in Shenzhen and commute to Hong Kong for sightseeing during the day.
Daniel Leung, Assistant Professor at the School of Hotel and Tourism Management at The Hong Kong Polytechnic University, stated that the shift in travel and spending habits is primarily due to the slow economic recovery in mainland China.
“The pace of China’s economic recovery is not as expected,” Leung said. “People are becoming more cautious with their disposable income.”
Regarding the outlook for the second half of the year, Wang Xiaofan, CFO of Trip.com, mentioned that due to short booking windows, the company has “very limited visibility”. However, last year’s figures were relatively lower during the same period.
Oxford Economics predicts that the trend of short trips to small cities or county towns will continue.
Simon Wong, a representative from the Hong Kong catering industry, informed local media that during the May 1 holiday, restaurant business was down by 10% compared to usual, despite it being a peak season in Hong Kong.
Li mentioned that one of the best tips she found from users on the social media platform Xiaohongshu (Little Red Book) is to bring your own water when transiting to Hong Kong.
“I found water that costs one yuan on the mainland, but here it’s selling for ten yuan,” she said.