economy

Boosting China’s travel economy

China’s travel industry gears up for a post-pandemic future with new mega-airports, theme parks, and expanded duty-free shopping.

China’s outbound travel market was once the world’s biggest, peaking at 169 million trips in 2019. Chinese tourists were so ubiquitous that hotels in Hawaii hired Mandarin speakers and London’s Marylebone train station debuted platform announcements in Mandarin. Then COVID-19 hit and national borders clanged shut. But China’s travel economy hasn’t exactly stalled. It’s just turned more domestic—for now.

Despite periodic local lockdowns, the total number of domestic trips taken between January and September 2021 rose 39% year-on-year to 2.69 billion trips, the Ministry of Culture and Tourism reported.

Three things China is doing to boost its travel economy:

Premiumizing airports

Beijing’s starfish-shaped Daxing International Airport, the capital’s second international flight hub, opened in September 2019. Designed by Zaha Hadid Architects, it cost over $11 billion, features a central courtyard inspired by traditional Chinese architecture and skylights for intuitive navigation, and is expected to eventually serve over 100 million passengers a year, rivaling Hartsfield-Atlanta International Airport, the world’s busiest.

In China’s southwest, Chengdu Tianfu International Airport opened in June 2021, with capacity of 60 million passengers a year, offering a second international gateway to Sichuan province’s giant pandas and signature spicy cuisine.

Enhancing duty-free shopping

Unable to fly to Paris, New York or Milan to buy the latest designer bag, luxury shoppers are instead flying to the duty-free zone of Hainan island, known as China’s Hawaii.

In July 2020, China tripled duty-free shopping limits and expanded eligible categories in Hainan. In the year since, duty-free sales jumped 226% to $7.2 billion, according to Hainan Customs.

LVMH, Kering, Shiseido, L’Oréal and other global brands have all opened stores here, and Hainan has become a test bed for stitching together physical stores with elements of social commerce and livestreaming.

Hainan’s success in catering to pent-up demand for foreign luxury brands has since inspired five metropolises—Beijing, Shanghai, Guangzhou, Tianjin and Chongqing—to also start developing their duty-free offerings as “international consumer centre cities.”

Encouraging a boom in theme parks

Just as international retail is rushing into China, so too are Western-style theme parks.

Five years after Disneyland opened in Shanghai, Universal Studios opened in Beijing in September 2021. The Beijing theme park, Universal’s fifth and largest globally, has seven themed lands, including the first Kung Fu Panda Land of Awesomeness.

The UK’s Merlin Entertainments is building three Legoland theme parks in China. The 2023 Sichuan opening will feature local cultural elements, including a panda-themed area, while the Shenzhen and Shanghai parks will open in 2024 and focus on China’s high-tech digital experiences and ancient water town architecture respectively.

Why it’s interesting As national borders shut down, China’s travel economy has turned toward the domestic market. That has pulled significant investment into travel retail and entertainment within China, by both international and domestic partners, who are betting on a long-term boost to domestic tourism as well as the return of foreign visitors when borders finally re-open.

As national borders shut down, China’s travel economy has turned toward the domestic market.