Travel restrictions set to dampen Lunar New Year travel in China but outlook for Hainan remains bright

The outlook for Chinese New Year domestic travel has deteriorated sharply, according to new figures released by travel data analyst ForwardKeys.

As of 28 January, tickets booked for the period 28 January-24 February were down -75.9% against those booked for the comparable period of 2019, despite a more encouraging figure of -57.3% having been recorded during December for advance bookings.

ForwardKeys observed that there had been hopes for high levels of travel during this typically busy period, especially after a strong travel recovery in the domestic market by the end of Q3 2020. But localised COVID-19 outbreaks have resulted in new restrictions on travel, with travel bookings dropping sharply as a result.

Forward bookings for Chinese domestic air arrivals

CNY 2021 vs 2019, Year-on-year variation

Travel agencies have been restricted from selling group tours or packages to high- or medium-risk areas, and some tourist attractions have closed. Travel to the duty free hotspot of Hainan from 55 medium-risk and ten high-risk Chinese cities has been suspended.

“As of 18 January, air and rail departures from Beijing over the Spring Festival period were already down by -43% compared to 2020, and -69% compared to 2019,” says Sienna Parulis-Cook, Associate Director of Communications at Dragon Trail Interactive, which has recently partnered with ForwardKeys to examine flight booking trends and travel marketing campaigns.

ForwardKeys China Market Expert Nan Dai said that travel to southern parts of China (with warmer weather and fewer new cases) witnessed higher levels of bookings. Guangdong tops ForwardKeys’ list and Hainan jumped to second place.

Destinations with the fastest recovery in H2 2020

Year-on-year variation

Dai adds that there is still some momentum behind Hainan travel. This is partly fuelled by the fact that on 1 February, the Hainan provincial government announced that travellers from low-risk areas with a green Hainan health QR code won’t need to take a PCR test before coming to the island.

ForwardKeys notes that as of 22 January, the Trip.com Group (Ctrip) reported that Spring Festival staycation bookings were up +260%, with searches for local travel up by +40%. 80% of their users will stay local over Chinese New Year, it said, with increases all over the country.

Dai says: “This is the holiday period when families most often travel together. Our issued tickets back this further by showing that on 13 February, passengers travelling in family size (2-5 persons per booking) represents around 60% of all departures, and the share of passengers travelling alone represents only 10%, down by 20% from the day before the holiday.”

Looking at the second half of 2020 to predict the future potential for domestic travel in China in terms of issued air tickets, ForwardKeys reveals that the most resilient destination provinces (or destinations with the fastest recovery rates) were Tibet, Hainan and Chongqing.

Top destinations with the most issued tickets for domestic China travel during Chinese New Year

CNY 2021 vs 2019, year-on-year variation

Spending soars in Hainan

While projections for travel and spending in China over Lunar New Year have been dampened by recent COVID-19 restrictions, the wider picture for Hainan Island in particular remains positive, says ForwardKeys.

The analyst reports that the average transaction value in offshore duty free reached US$589 in December compared to US$435 a year earlier.

The share of those spending more than US$1,000 also increased from 9.9% in December 2019 to 14.3% in December 2020, as allowances were widened and spending limits raised from 1 July.

Number of Duty Free transactions based

2020 vs 2019

“This confirms that not only are more duty free purchases being made in Hainan but also at a higher price point,” says Dai.

In the past three months, Chinese Shopper Tracker data shows that beauty is the leading category, broken down by skincare (20.7%), makeup (13.4%) and fragrances (8.6%). Other categories are taking advantage of the new allowances in Hainan, such as electronics (17.4% share) and spirits (8.4% share).

Of the path to recovery once case numbers ease, Dai adds: “The Chinese government has more experience in dealing with the outbreak situation now and people have started to administer the vaccine. I believe when the Winter is gone, the outlook for Chinese domestic travel in Summer is still optimistic.”

Duty free average spending value in Hainan

2020 vs 2019