Asia Travel Re:Set #11 – Half of China Goes on Vacation
Deconstructing China's impressive Golden Week travel rebound
Hello. Welcome to the Sunday edition.
For good reason, China’s October Golden Week is already the top travel story of the month - and most likely the entire year.
Whichever way you interpret the figures, 637 million trips in 8 days is, well, eye-watering in the current global context.
Or any context.
Many countries will not rack up that kind of total for many years to come.
Elsewhere, Japan and Singapore are progressively accumulating bilateral business travel agreements. Although they operate on a small scale, these fast tracks provide a vital lifeline for airlines and airports - and a modicum of hope for more expansive movement in 2021.
That is the theory, anyway.
Meanwhile, months of locked borders mean the challenges for destinations are mounting. Thailand continues to highlight the perils of not setting a strategy and sticking with it.
Conversely, Maldives is making steady progress and deserves credit for its thoughtful approach over the past 3 months.
Testing times ahead, for sure, but Maldives is betting that being (safely, and creatively,) back in the game at an early stage may bring longer term rewards.
Thanks for being onboard,
Gary
The Sunday Itinerary
- Dashboards
1. China’s October Golden Week
2. Asian Economies 2020
- The Top 8 Stories of Asia’s Travel Week
1. China’s Golden Week
2. Thai Tourism Teeters on the Brink
3. Singapore Protects Air Hub Status
4. Problems Pile Up for AirAsia
5. Japan & South Korea Reopen Links
6. Maldives Rewards Travel Loyalty
7. Slow Recovery Ahead for Macau
8. More Travel Turmoil in Australia
Dashboard #1
China’s October Golden Week
Here are the headline statistics from the 8-day Chinese public holiday:
RMB466.56 billion tourism revenue
637 million trips
RMB154.9 million duty-free sales in Hainan
126 million rail journeys
13.26 million flight trips
[Source: Chinese Ministry of Tourism & Culture]
Dashboard #2
Asian Economies 2020
Only 5 economies in Asia Pacific are forecast to register real growth this year:
Bangladesh: 5.04%
Vietnam: 2.95%
China: 2.18%
Myanmar: 1.99%
Taiwan: 0.93%
[Source, Bloomberg, Fitch Solutions]
1) Half of China Goes on Holiday
Imagine almost the entire population of South East Asia travelling in one country in one week. That’s what just happened in China. The October public holiday saw 637 million trips across the 8-day break. The eye-watering figures included 13.26 million flight trips and 126 million rail journeys.
Taking place from 1 to 8 October, the China National Day holiday – one of two annual ‘Golden Weeks’ alongside Chinese New Year – celebrates the founding of the People’s Republic of China in 1949. This year, it overlapped with the Mid-Autumn Festival celebrations.
“Revenge Consumption” was the media phrase of the week as Chinese tourists reacted with vengeance to a year of curtailed travel.
“China Forgets Covid-19 for a Week as Half a Billion Hit the Road,” was Caixin’s take on the story, adding:
“The travel surge resulted in familiar scenes of packed tourist attractions, congested highways and expensive hotels - things not seen in such big numbers since last year’s October holiday, the last major one before the pandemic struck.”
The report continued:
“With the Covid-19 pandemic largely under control in China, the Golden Week holiday is putting on display the country’s confidence in its economic rebound and its public health measures.”
The 637 million Golden Week trips fell by 145 million (equivalent to the population of Russia) from the 782 million during the 2019 October holiday. That, though, was a 7-day break.
Despite a 21% shortfall, the total is hugely impressive given the current global contexts in travel. Total spending rolled in at RMB466.56 billion, down 31% on 2019, suggesting Chinese travellers are currently a little cautious with their cashless payments.
Digging deeper into the statistics, it is worth noting that certain restrictions were in place. Some sectors of society, notably schoolteachers and students, were permitted to travel only within their own province.
“10 of the 42 candidate vaccines listed by the WHO as undergoing clinical evaluation are developed by Chinese scientific institutes.”
Inevitably, this will alert tourism policymakers worldwide about the evident desire of Chinese travellers to hit the road after a tumultuous year.
The return of Chinese tourists to global destinations is out of their own hands, however. A 14-day quarantine remains in place for anyone entering China, and this is a major disincentive to travel.
Furthermore, China averaged 10-20 imported COVID-19 cases last week, meaning its authorities will stay on high alert to prevent re-importation of the novel coronavirus.
On that point, it is worth noting that 10 of the 42 candidate vaccines listed by the WHO as undergoing clinical evaluation are developed by Chinese scientific institutes.
2) Chaos & Confusion in Thailand
It’s almost a month-and-a-half since Thailand’s Central Bank [as reported in Issue #1] declared that the accumulated impact of a prolonged border ban in 2020 could prove economically disastrous in 2021.
Since, then Thailand’s tourism-reliant economy has continued to suffocate. Public policy flip-flopping over the Special Tourist Visa has been unedifying, while a survey revealed 46% of Thai respondents are uneasy about the country readmitting tourists. This week, local media published hyperbolic headlines about Thai returnees and foreign visa holders testing positive for COVID-19 when arriving in Thailand.
Once again, the tourism debated skirted with chaos. Official statements were made about the urgent need to readmit “entrepreneurs and business investors.”
Meanwhile, the head of the government’s economic planning panel, said:
"If the country does not reopen, it will be hard for GDP to grow because the country's economy depends mainly on the tourism industry and exports."
The fourth-quarter season is vital to Thailand’s economy, and airlines need to make their flight schedules in advance.
“If no steps are taken soon to reopen Thailand during the peak season, there would be no time to schedule incoming flights, and if it reopened any time after that, it would be too late.”
Predicting a 7.8% GDP contraction in Thailand this year, Fitch Ratings says the collapse in global tourism “will prove a major drag on growth over the coming years.”
As a consequence, Thailand faces:
“Higher unemployment in the informal sector and reduced incomes, [and] domestic demand is likely to remain subdued as well over the coming quarters.”
Despite continued confusion about the exact terms of engagement for Special Tourist Visa visitors, the Tourism and Sports Minister said that two charter groups of 120 tourists each will arrive from China on 20 and 26 October.
The first flight will apparently land in Bangkok, and a second – which has been delayed from its original 8 October schedule – in Phuket. Both groups must undergo testing and a 14-day quarantine upon arrival.
Raising the stakes, the Tourism Minister added that "If there's even a single case,” the reopening plan will be abandoned.
Alternatively, if there are no positive cases among the two groups, the Public Health Ministry may shift to a “7+7” quarantine – with the first 7 days being confined in a hotel room, and more freedom to move around the hotel during the second 7 days.
Interestingly, Chinese state media is yet to make specific reference to either group, one of which Thailand says is from Guangzhou.
Upping the ante, China’s Foreign Minister Wang Yi today begins a 5-day state visit to Cambodia, Malaysia, Laos, Singapore and Thailand.
3) Singapore Protects its Air Hub Status
Since the outset of COVID-19, Singapore has been unequivocal about protecting Changi Airport's hub status for the long-term benefit of its national economy. This informs its self-style “progressive” approach to building Green Lanes and Fast Tracks for business travellers.
Singapore has established “special travel arrangements” with eight countries in Asia Pacific: Australia, Brunei, China, Japan, Malaysia, New Zealand, South Korea and Vietnam. These remain relatively limited in scope, and span 3 agreement types, the Air Travel Pass, Reciprocal Green Land and Bilateral Fast Lane.
Singapore is currently in negotiations to establish a reciprocal travel corridor with Hong Kong. This would be a highly progressive development for the region’s two foremost international air hubs. More agreements are also likely.
Last week, Singapore Changi Airport announced its financial results for the year to 31 March 2020. The airport handled 62.9 million passengers across the 12 months, noting:
“In the first 10 months of the year, Changi Airport performed well across key indicators. However, in February and March 2020, passenger traffic at Changi plunged 33% and 71% respectively.”
Subsequent monthly capacity drops have been far more severe.
Singapore Changi is currently operating two of its four terminals. It has postponed plans to construct Terminal 5 “for at least two years”. However, it announced this week that T5 remains “a critical long-term infrastructure investment for the future of Singapore’s economy”.
Moreover, Singapore Changi says it is “committed to seeing through the completion of the development in the years to come.”
For now, Singapore Changi is investing in new safety and security technology and infrastructure. This includes an in-airport COVID-19 testing laboratory.
Being a regional and global air hub, however, relies heavily on other markets for the supply and demand of air travel. With uncertain clouds hanging over global aviation, Singapore Changi admits that the future is hard to predict:
“How Covid-19 will affect the longer-term operational and financial performance of the Group remains uncertain at this point.”
4) AirAsia X Faces an “Existential Crossroads”
Malaysia-based AirAsia, South East Asia’s largest low-cost carrier group, endured another miserable week. With AirAsia Japan ceasing operations, reports surfaced that the group wants to sell its stake in AirAsia India to its JV partner, Tata Sons.
This week, the group also announced a restructuring plan for AirAsia X, it’s mid-haul Asia Pacific low-cost carrier. By its own admission, AirAsia X is “facing severe liquidity constraints,” As at 30 June, its unaudited current liabilities totalled RM3.38 billion, far exceeding assets of RM1.39 billion.
“Travel and border restrictions have grounded all scheduled flights, and there is no imminent return to normalcy,” AirAsia X said in a statement.
The lifeline plan is the “only option” available to “avoid a liquidation and to allow the airline to fly again.”
Over the next few months, it intends to restructure RM63.5 billion of debt, including future lease rentals, aircraft purchase commitments and flight ticket sales. AirAsia X also wants to consolidate its share structure, while travel agents and flight customers will receive credits with an extended validity, rather than refunds.
The Star newspaper said AirAsia X stands at “an existential crossroads, [and] is in dire need of massive debt forgiveness from its creditors.” The Edge business publication described the revival plan as a “Steep haircut for creditors to rescue AirAsia X,” adding:
“AirAsia X, which slipped to the brink of insolvency as the Covid-19 pandemic added to its financial woes, has also proposed share consolidation to combine every 10 shares into one, according to a bourse filing.”
Benyamin Ismail, CEO of AirAsia X, made an apparent plea for a state loan:
“To safeguard Malaysia’s vested interest through the aviation industry, regional air connectivity is essential for trade, businesses and economic growth, especially to our core markets of China, Japan, Korea and Australia where we have established a strong foothold. The closure of these markets can impact the stimulus spending, GDP contribution and employment within the supply chain of the aviation industry.”
More bad news followed on Friday, as AirAsia Group’s CEO Tony Fernandes confirmed that 10% of its 24,000 workforce - across AirAsia and AirAsia X - would lose their jobs. He also reiterated that AirAsia will “return as many planes as we can” to its lessors. The current goal is to reduce its fleet of 245 to 180 by the end of 2021.
5) Japan & South Korea Reopen Business Travel
On Thursday, Japan and South Korea will resume business travel between the two countries. Easing entry restrictions, which have been in place throughout the pandemic, hints at a partial defrosting of icy relations between the two nations.
A bilateral agreement signed on 8 October removes the 14-day quarantine requirement for short-term business travellers. The Business Track and Residence Track accords will be introduced in a phased manner. The latter agreement will allow resident visa holders to enter, subject to a 14-day self-isolation at home upon arrival.
This will be the 10th similar agreement entered into by Japan in recent weeks, with the other 9 being with South East Asian countries and Taiwan. South Korea currently has similar agreements in place with China, Indonesia, UAE and Singapore.
On 10 October, Japan’s Yomiuri Shimbun reported that a similar short-term business travel deal between Japan and Vietnam may commence soon, likely coinciding with Japanese Prime Minister Yoshihide Suga’s first overseas trip to Vietnam this month.
A bilateral agreement with China is also pending.
After the agreement was signed, South Korean LCC T’Way Air announced it will resume one flight per week between Seoul Incheon and Osaka and Tokyo in early November. Flights to Nagoya and Fukuoka will follow soon after. Korean Airlines and Asiana currently operate flights to Tokyo and Osaka.
Japan welcomed 31.9 million visitors in 2019. While China accounted for 30.1% of arrivals (9.6 million). South Korea placed 2nd with 5.6 million visitors. This was despite a bitter trade dispute between Japan and South Korea that spilled into tourism from August 2019 onwards. The stand-off reignited latent anger in South Korea about reparation payments owed by Japanese companies dating from WWII.
Local media in both countries have reported the business travel deal in a relatively detached manner without any semblance of hype or fanfare.
6) Maldives Wants to Reward Loyalty
The Indian Ocean archipelago of Maldives is launching what it claims is the world’s first destination loyalty scheme. Called Maldives Border Miles, the programme was jointly developed by the Ministry of Tourism, Maldives Marketing and Public Relations Corporation, Maldives Airports Co, and Maldives Immigration.
Announced in September, the rewards scheme will officially begin on 1 December.
Visitors who sign up will accrue loyalty points for each stay. The benefits vary across the three-tiered scheme: Aida (bronze), Antara (silver) and Abaarana (gold). Additional points will be awarded “for visitors to celebrate special occasions.”
An official statement says:
“The introduction of Maldives Border Miles... is a golden opportunity for returning visitors to rediscover the best of Maldives and get the most out of their visit to the sunny side of life.”
Maldives reopened to inbound visitors on 15 July. Velana International Airport in Male recently achieved the Airports Council International Health Accreditation certification. From 15 October, guest houses as well as resorts will be permitted to open in accordance with stringent health and safety protocols.
This week, Maldives also announced a six-month string of marketing activations in India to draw more visitors from its second most important inbound market in 2019. These include special wedding and honeymoon promotions. India and Maldives entered into an Air Bubble agreement on 25 August.
In 2019, Maldives welcomed a record 1.7 million inbound arrivals, and targeted 2 million visitors in 2020. It received 382,760 visitors from January to March before closing its borders.
From reopening on 15 July until 5 October, Maldives welcomed 22,007 tourist arrivals. The top 5 source markets during the period were Russia, UAE, US, UK and Spain.
7) Slow Recovery for Macau
Amid the triumphalism of China’s Golden Week, which state media heralded as a “barometer of the health of the Chinese economy,” spare a thought for Macau.
China’s two “Special Administrative Regions,” Macau and Hong Kong are currently in different situations. The Chinese border with Hong Kong is closed, meaning its economy did not benefit from mainland tourism during Golden Week. Discussions are ongoing to reopen cross-border movement.
Expectations were more elevated in Macau. Famed for its glitzy casino resorts, Macau launched a month-long Macau Light Show on 26 September to welcome back mainland tourists after the reinstatement of the Individual Visit Scheme on 23 September. The move was perfectly timed for Golden Week, although results were underwhelming.
Macau received just 156,000 visitor arrivals across the 8-day national holiday. This represents a huge deficit from 974,000 visitors in the 2019 October Golden Week - 793,620 of which arrived from mainland China.
This year, the vast majority of Chinese visitors to Macau arrived via land borders, with just 7,593 arrivals at Macao International Airport.
The subdued Golden Week visitor arrivals were not a complete surprise, however.
In mid-September, Helena Maria de Senna Fernandes, Director of the Macao Government Tourism Office, warned not to expect a big bounce because mainland arrivals would still need to show a negative Covid-19 test result.
In addition, Chinese immigration suspended the use of kiosks for endorsements to travel to Macau, meaning potential visitors must wait 7 days to receive their permit.
Macau Daily Times reported this week that sluggish near-term prospects for tourism could see the heavily hyped Grand Lisboa Palace and Lisboeta casino resorts delay their openings until 2021.
Macau received 39.4 million visitors in 2019, up 10.1% from 2018. Some 52% of arrivals were same-day travellers. Mainland China contributed 27.9 million visitors, with Hong Kong (7.35 million) and Taiwan (1.06 million).
In related news, the top post-Golden Week story in Macau is a Bruce Lee statue. A proposal has been tabled for a statue of the martial arts movie star that is “big enough to be seen when people come in to land at the airport.”
If approved, the Bruce Lee installation will grace Praça de Luís de Camões, in the historic centre of Macau.
8) Australia’s Federal Budget Raises Travel Tensions
With state border closures continuing to cause economic pain, Australia’s tourism sector suffered further schisms this week. Travel organisations urged the government to increase funding support following the federal Budget, on 6 October.
While supporting the fast tracking of road, rail and visitor amenity infrastructure, the Australia Tourism & Transport Forum said it “remained critical for the Federal Government to fund a AUD50 million ‘COVID Safe Domestic Travel Campaign’ to restore traveller confidence to return to the skies.”
The Australian Federation of Travel Agents, meanwhile called for “an AUD125 million federal support package plus state and territory government support.”
Without international travel, the onus is on Australia’s domestic market, but state border closures are hindering a recovery. The Australia Tourism & Transport Forum says “Australia’s visitor economy is on its knees,” and is losing AUD8 billion per month “due to the lack of international and interstate travel.”
This situation has contributed to “470,000 direct tourism job losses and AUD18 billion in lost wages.”
As a result, travellers are staying intra-state, even as the potentially lucrative spring-summer season begins. The ATTF’s research shows that over the past 6 months:
“Australians who travel are largely choosing to use their own cars and are choosing destinations within four hours driving distance of their homes, while the corporate sector has all but stopped travelling.”
This week, a new domestic travel video series, Australia in 8D, produced by Tourism Australia neglected to feature Gold Coast. This caused yet more antagonism, as the series promotes 25 of Australia’s favourite destinations.
Adding fuel to the fire, Australia’s Treasurer Josh Frydenberg told a National Press Club meeting that international borders may remain closed “until late 2021”. The strategy appears to be predicated on Australia being able to roll out a national COVID-19 vaccine programme before reopening its borders.
In the meantime, a one-way travel bubble will enable New Zealand travellers to visit New South Wales, Australian Capital Territory and Northern Territory from 16 October.
Other exceptional travel bubble agreements may be agreed with low-risk markets, such as Singapore, Japan and Taiwan. Maybe.
On The South East Asia Travel Show this week, we discuss Singapore’s Fast Track intentions for the coming months. Plus, green shoots of hope for domestic travel in the Philippines and for charter traffic in Lao. Gloomier news in Malaysia and Myanmar, where daily infections are causing renewed concern.
Elsewhere, we dissect the strategy behind Unilateral Travel Agreements, Thailand’s mystifying Special Tourist Visa and Private Travel Bubbles in Vietnam and Bali.
Listen to the podcast here
And, that’s a wrap for Issue 11.
Until next time, you can catch me on Twitter, LinkedIn and The South East Asia Travel Show.
Please send comments and thoughts to gary@check-in.asia - I enjoy all feedback, regardless of positivity, indifference or ego-wrenching negativity.
Speak soon
Gary