Daily Insights

The Recovery of China’s Travel Industry

By: Amie Song | Sep 25, 2020

With its effective control of the COVID-19 pandemic, China has seen strong recovery in the travel industry. Domestic air travel is forecasted to fully recover in September and hotel occupancy has recorded a meaningful rebound. The market’s recovery roadmap suggests brands should leverage promotions smartly, target younger demographics on emerging social media platforms, adapt quickly to meet new consumer needs, and continue to invest in technology. “While in the US the focus has remained on reassuring safety and providing cancellation flexibility, China’s airlines and hoteliers have adapted to traveler desires to stay close to home and turned to innovative platforms and packages to incentivize travel, charting the course to pre-COVID levels,” says Danielle Bailey, MVP APAC at Gartner for Marketers. 

Unlimited Packages to Incentivize Travel

Airlines in China offered heavy promotions post COVID-19, contributing to the V-shaped recovery of domestic air travel. Beyond discounts and coupons, major airlines all rolled out unlimited flight packages to get their customers back to flying. On June 18, the annual mid-year shopping festival, China Eastern Airlines became the first to launch its “fly at will on weekends” product. Customers pay 3,222 RMB (550 USD), to fly an unlimited number of times on weekends for the remainder of 2020. China Eastern Airlines sold more than 100,000 packages by the end of June and more than 65,000 tickets were redeemed on the first weekend. The airline also launched a “fly at will on mornings and evenings” product to target business traveling. Such packages not only help airlines with cash flow but also drive app downloads and loyalty acquisition since most require consumers to join loyalty programs prior to purchasing packages. 

However, maintaining the customer experience seems to be a challenge. Hainan Airline’s package was sold on its app which immediately stopped working due to the sudden increase of traffic. The airline received 17,000 Weibo comments from users complaining about the app not loading. Since most airlines only reserve limited tickets for the package subscribers, consumers have also complained on social media that they weren’t able to find the tickets they want. It’s important for airlines and hotels to plan ahead and develop the capability to support such product launches. 

Target Young Consumers

Travel recovery first happened with millennial and Gen Z consumers in China since the pandemic has less health impact on them. According to local travel booking platform Trip.com, the post-90 group (those who were born between 1990-99) accounted for 57% of travel during the May Labor Day holiday in 2020, a significant increase from 21% during the same holiday period in 2019. 

To target young consumers, the travel industry has shifted its marketing focus to emerging social platforms and experimented with new content formats such as livestream and short video. Trip.com’s chairman James Liang launched his series of “Boss Livestreams” on WeChat, during which he wore cosplays while introducing hotels and travel destinations. The entertaining content and heavy promotions drew a huge following which grew from 9.8 million in April to 16 million in June. In the four months since its launch, Trip.com has gained 1.1 billion RMB GMV from livestreams, driving a strong recovery. 

Local hotel group Huazhu leveraged livestream on Douyin to promote its high sanitary standard, sending its housekeepers to clean at a picky Shanghainese grandma’s apartment. Bilibili, the UGC video platform that attracts young users, saw significant growth post COVID-19. Huazhu’s HanTing Inns invited Bilibili influencers to hotels and offline pop-up exhibitions to experience smart technologies and create vlog content. Post COVID-19, opportunities exist for more brands to tap into emerging social platforms that target younger consumers.

Target Staycationers 

Due to the restrictions on international and cross-province traveling, staycation and weekend trips became popular post COVID-19. According to navigation app Amap, users making short road trips have increased 50% from June to August. The industry pivoted its content and offerings to meet the changing demand. Airbnb launched a series of “48 Hour” livestreams on WeChat each weekend to provide travelers with short trip inspiration. From May to August, a quarter of Marriott’s WeChat posts promoted restaurants and food deliveries. Marriott announced its partnership with ele.me in May and all 130 of its hotel restaurants are available for delivery on the platform.

Hotels have also started offering discounts and deals for weekend stays and for dining: IHG offered a 30% discount for its loyalty members on weekend bookings; Acor offered a “stay at will on weekends” package and a 99RMB (14 USD) package that can be redeemed for breakfast, lunch, or high tea; Marriott offered a 388RMB (57USD) package for 31 days of breakfast at hotels. Agility remains key for the travel industry post COVID-19 and brands should plan for new products and content that speak to the changing consumer travel patterns in the short-term. 

Contactless Hotel Technology Push

Smart hotels have been on the rise in China since Alibaba piloted its robot hotel Flyzoo in 2018. During the pandemic, hotels accelerated their focus on technology to meet consumers’ higher standards for health and safety. Huazhu Hotels Group required 5,700 hotels to provide contactless services since January. Consumers can check in and check out via app or kiosk to avoid human contact. 1,200 of Huazhu Hotels use robots to deliver room services and outside deliveries to consumers. 

Post COVID-19, Local hotel chains continue to double down investment on technology. Both Huazhu Hotels and HomeInns recently invested in the service robot provider company Uditech. Leveraging technology to offer personalized services and elevate customer experiences will be key in winning over Chinese consumers, particularly in a 5G world.