China Tourism Report Q3 2012

Initial 2012 Figures Paint Mixed Picture Preliminary tourist arrivals figures from urban areas across China indicate that the industry will experience a mixed 2012, as uncertainty surrounding global economic growth prospects takes its toll.

Foreign visitor arrivals to Beijing grew by an impressive 30% year-on-year (y-o-y) in February 2012, totalling 262,000 arrivals. With Beijing the main entry hub for mainland China, this may act as a proxy for overall mainland arrivals.

However, the picture was less positive in other parts of China; with arrivals in Macau, for example, growing by only 1.5% y-o-y in February. Given Macau’s status as a major regional and gambling centre, this may suggest that high-end tourism is slowing, in line with economic growth. With full-year growth expected to slow to approximately 7% in China, 2012 is unlikely to see a major recovery, although arrivals should pick up towards the end of the year and into 2013.

Taiwan Eases China Tourism Regulations In a further easing of tourism regulations between China and Taiwan, Taiwan announced in March that it will double its quota of solo Chinese travellers permitted to visit the island from April 28. The two states have been increasing tourist links since 2008, but solo Chinese travellers were only allowed to begin visiting Taiwan from June 2011. From April 28 2012, up to 1,000 solo Chinese tourists per day can visit Taiwan, although there will be strict visa regulations to ensure that none overstay their visa limits. As well as being part of political confidence-building measures, the new quota will help to bolster the tourism industry in both states, which is suffering from the economic slowdown.

Chinese Airlines Suffer As High Oil Prices Bite Despite rising passenger numbers in 2011, China’s main airlines suffered declines in overall profits, largely as a result of rising oil prices. China Southern, one of the region’s largest airlines, suffered a 12% y-o-y decline in profit in 2011, despite a 4.6% increase in passengers. Similarly, Air China’s profit fell by 41% y-o-y, while China Eastern’s declined by 7.7% y-o-y. All three airlines suffered from rising fuel prices, with China Southern reporting a 39% increase in its fuel bill in 2011. With oil prices remaining high, airlines are set to experience financial pressure throughout 2012, which may weigh on prospects for fleet expansion.