2022 could be a promising year in terms of tourism as borders gradually reopen and quarantine requirements become less strict.
NB: This is an article from AP Hospitality Advisors
Several countries in Asia-Pacific already announced quarantine free travel for vaccinated visitors from specific points of origin. We can expect this trend to accelerate and become more pervasive. That doesn’t mean that there won’t be any bumps on the road – new strains, localized spikes in infections on the one side and infrastructure capacity constraints and bottlenecks on the other provide plenty of challenges along the long road of recovery the region is embarking on.
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In this article, we focus on potential scenarios for mainland Chinese outbound travel for 2022. We address several key issues before providing projections for five destinations in the region that are likely among the first to benefit from an opening of borders. As it stands, China continues to pursue a zero-tolerance policy, enforcing strict lockdowns and mass-testing in areas affected by outbreaks of COVID-19. Any future domestic outbreaks jeopardize a timeline for reopening. Certainly, the current high level of its fully vaccinated population(75%) is not sufficient to warrant an easing of quarantine restrictions. Notably, the vaccines used were of the ‘traditional’ type, using inactivated viruses as compared to the widely adopted, and reportedly more effective, mRNA types. While Fosun, a major Chinese holding conglomerate, has formed a joint-venture with the German mRNA-vaccine maker BionTech to produce such a type of vaccine, the process has been slow. Rumor has it that fully domestic developed mRNA-vaccines are viewed as more desirable and an approval for Fosun will not be prior the launch of a local alternative. Even once approved, mRNA vaccines would need to be produced and administered at a tremendous scale of 1.2 billion(assuming a booster short alone will do) – a process which could be further prolonged should two shots be needed. Notably, the vaccine rollout to the current 75%-level took approximately six months. Should the type of vaccine be a significant factor in regulating quarantine requirements, then a reasonable timeline for an easing would not be before the third quarter.
Needless to say, 2022 will be an eventful year – certainly in Beijing. February 4-20 of next year will be the first time for the city to host the Winter Olympic Games. After hosting the Summer Olympic Games in 2008, Beijing will thus become the first city to have hosted both games. Based on current announcements and precedent from the Tokyo Summer Olympic Games, there is no doubt that a very strict protocol will be in place reflective of the ‘zero-tolerance policy’. Reportedly, athletes are to remain in a closed ‘loop’ and either be fully vaccinated or subject to 21 days of quarantine. Foreign spectators will not be able to attend.
Sports aside, the political calendar in Beijing will also be more busy than usual. The customary ‘Two Sessions’ consisting of the annual plenary sessions of the two organizations that make national-level political decisions: the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC). Already in 2021 the city enforced strict policies to ensure smooth ‘sessions’ and similar measures can be expected for 2022. Taking place merely days after the closing of the Winter Olympic Games, it is unlikely that quarantine restriction will be lifted in any meaningful way before then.
Another event, and possibly a more important one, will take place in October or November of 2022: the National Congress of the Chinese Communist Party. Held every five years, the congress marks the change in the most senior party leadership. In this congress the term for Chairman Xi will be extended for a third period of five years, something unprecedented since the days of Mao Zedong. Given the significance of events, any distraction is highly unwelcome, including from the pandemic. An easing of quarantine restrictions to risk an influx of virus cases is seemingly unlikely.
Clearly, the bigger picture has revealed several challenges preventing a rapid opening of China during 2022. One may need to distinguish between outbound leisure and business travel. During 2021, there have been pockets of outbound business travel. Under the maxim of dual circulation, a more introspective business community may well seek opportunities at home, for the time being, limiting demand from new overseas ventures. Companies with existing overseas activities may well continue to generate some demand, though at a small scale. Like inmost other places, leisure travelers face the bigger challenge contending with quarantine requirements given the limited number of days of holidays and unlikely scenario that all would be awarded in one go at the same time as for a spouse or significant other.
Throughout 2021, across major cities in China, large-scale quarantine detention centers have been built, housing thousands of arrivals. The required ratio of 20 rooms for 10,000 residents implies the need for 25,000 rooms for Shenzhen alone (and more than 40,000 in Beijing!). Such a major undertaking would unlikely take place without a long-term perspective.
‘Fortress China’ may be preparing for multiple scenarios on the long road of opening to the world. Vaccinations and quarantine requirements are two distinct aspects that won’t go away anytime soon. Meanwhile, upcoming events in Beijing have the potential to delay or slow the pace of opening by several months.
What does that mean for outbound travel?
We do not expect a dramatic change from 2021 for the first quarter of 2022. The restrictions are not favorable to generate significant leisure demand unless for destinations with very easy access. Macau is the poster child which was able to welcome larger numbers of mainland travelers, including around 50% of same-day visitors. Hong Kong could be another benefactor of its proximity to the mainland. While the Hong Kong government tries hard to convince mainland authorities that local prevention measures are adequate, no timeline for any opening has surfaced. Notably, visitors coming from the mainland can enter the region without quarantine, though at least two weeks in a dedicated quarantine facility are required for individuals entering China.
