Not-so-happy holidays for Chinese tour groups

Leisure spending

Not-so-happy holidays for Chinese tour groups

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China is in the middle of a holiday season and the economy is recovering, yet retailers that look to unrestrained spending for a seasonal boost are downcast.

While the workforce at large is thrilled to get away from desks and production lines, many industries that count on Chinese-style mass tourism came up short after the three-day break for Mid-Autumn Festival that ended on Saturday. The seven-day vacation that starts on October 1 may look bleak as well.

The word on this year's Mid-Autumn Festival was “thrifty,” according to a report by the official Xinhua News Agency. Individual cities reported low sales for items that usually fly off the shelves during the holiday.

In Qingdao, a major seaside holiday destination in northern China, the city's Business Bureau reported that consumption for moon cakes, cigarettes and spirits fell by 10% compared to last year. Ten large restaurant companies saw a 3.3% dip in sales. Chongqing, a booming city in the country's interior, experienced a decline in demand for luxury hotel rooms.

Similarly bleak snapshots of sales of holiday-related goods and services are rolling in from around the country. A crackdown on corruption provides one explanation for the downturn.

In the run up to the festival, stern-faced state bureaucrats banned officials from buying moon cakes, a traditional gift during the holiday and a potential form of soft bribery. That push came amid a campaign from the central government to crack down on official wining and dining on the public dime, which could explain the hit in spirits sales.

One Xinhua article boasted that government cars were rarely seen during the festival.

If government policy was to blame for poor sales last weekend, it certainly may have a hand in hurting tourism during the approaching National Day holiday.

Starting October 1, tour operators will no longer be allowed to collect a commission from the owners of the shops that they force tourists to visit during trips. This lucrative line of business in the past enabled travel firms to offer low prices on trips to destinations such as Hong Kong and Thailand.

While Chinese travelers may not be dragged through unwanted shopping venues in the future, the ban on commissions could raise tour prices by up to 80%, according to some reports. Chinese media have already noted a clear drop in the number of travelers set to go abroad for the holiday.

Short-term policy measures such as these are an easy scapegoat for the poor numbers. However, growth in business and leisure travel is in a longer-term decline, according to a note from London-based Capital Economics. Data compiled by the research firm show growth in passenger traffic falling from about 12% year-on-year in mid-2011 to about 8% halfway through this year.

Airlines have also reported shrinking traveler numbers this year.

The same set of data from Capital Economics showed a rapid uptick in electricity output, a sign that heavy industry was fueling what many have called a rebound after a slow start to the year. That's good news for state industrialists but it will add little to the disposable income that travelers would spread around the country during the holiday.

As usual, the escape from work this autumn will make for pleasant memories in households around the country. For those restaurant owners and tour operators who stay at their posts during the break, this holiday will probably be one to forget.