Chinese travelers taking more last-minute trips as economy struggles

Chinese travelers are taking more last-minute trips as they change into more cautious with spending amid a lackluster economic recovery.

There’s a “real crisis of consumer confidence” in China, Anthony Caputano, president and CEO of Marriott International said at the Bank of America Gaming and Lodging Conference last Thursday.

More Chinese consumers are booking hotels as late as three days upfront, which he said was the bottom level ever seen and far shorter than the nearly 20-day booking window for consumers in the remaining of the world.

Travelers are planning trips closer to departure as they fight to “make the most of last-minute deals,” economists at Oxford Economics told CNBC, noting a shift in consumer preferences where “modern travelers prefer spontaneity of their travel plans.”

The shorter booking metric — which normally points to consumers’ increased uncertainty and caution with spending — makes it difficult for businesses to predict and prepare for demand, especially given China’s slow recovery, in response to Patrick Body on the Cheung Kong Graduate School of Business.

Chinese consumers have change into more frugal on every little thing, from groceries to travel, because the world’s second-largest economy grapples with a protracted property crisis and high unemployment.

“While people still wish to go on holiday, sentiment regarding incomes and consumption stays low,” in response to economists at Oxford Economics.

Indeed, China has been generally known as a market with consistently short booking windows, in response to a report by the World Travel & Tourism Council in 2021. In 2019, 70% of hotel bookings on travel agency Trip.com were made inside three days of check-in. This ratio rose above 80% in the primary two years of the pandemic, on account of the high uncertainty of travel restrictions throughout the pandemic.

In July, Marriott International lowered its growth forecast for revenue per available room for this 12 months, citing “current weak demand and pricing trends” in China.

That pricing pressure is reflected across the industry including at domestic travel booking agency Trip.com, which reported average rates for domestic hotels and flights continued to say no this 12 months.

Through the Labor Day holiday in May — certainly one of the country’s longest breaks of the 12 months — China saw more domestic trips and tourism spending than in 2019, in response to the Ministry of Culture and Tourism. But the common spending per traveler continues to be below 2019 levels.

The trend of individuals choosing short-haul trips to smaller cities or counties will proceed, Oxford Economics said, which could boost these local economies.

Travel demand throughout the upcoming Golden Week in early October is anticipated to surpass the 2019 level, the economists said.

When asked in regards to the outlook for the second half of the 12 months, Trip.com CFO Xiaofan Wang said the corporate had “very limited visibility on account of the short booking windows.” The platform expects booking activities to choose up after the National Day holiday, given a lower base in the identical period last 12 months, it said.