Luxury Tour Operators Are Ready for a China Boost

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Good morning from Skift. It’s Monday, January 23. Here’s what you need to know about the business of travel today.

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Episode Notes

Luxury tour operators have seen a business boom coming out of the pandemic, and they anticipate a huge boost from Chinese travelers permitted to participate in overseas group travel from February 6, writes Travel Experiences Reporter Selene Brophy.

Although Joss Kent, CEO of South Africa-based luxury tour operator AndBeyond, acknowledged Chinese travelers currently represent a small portion of his company’s business, he said that segment is expected to grow quickly. Kent also expressed surprise at the interest he’s seen in AndBeyond’s trips from Asian travelers in general.

However, Johan Groenewald, an executive at Royal African Discoveries, another South Africa-based luxury tour operator, said he’s not expecting an immediate increase in visitors from China. Groenewald noted that Chinese travelers are currently focused on the Lunar New Year, adding that the high-end segment will only start planning to visit long-haul destinations after the holiday period.

Next, a recent survey found that roughly 40 percent of Chinese travelers aren’t planning to go overseas in 2023 despite Beijing lifting travel curbs from January 8. What’s the main reason? Asia Editor Peden Bhutia reports the financial impact of Covid is keeping many Chinese travelers home.

As Bhutia writes travel spending will be somewhat constrained for many people coming out of the pandemic, roughly 45 percent of Chinese travelers said they’d keep travel budgets within $3,000, according to marketing firm Dragon Trail International. In addition, more than a third of respondents said they’d be staying at home because of time constraints or the inconvenience of applying for a passport or visa. The Chinese government, which stopped issuing passports at the start of the pandemic, started taking applications again this month.

Finally, Hong Kong-based carrier Cathay Pacific Airways is projecting a more than $800 million net loss for 2022, in large part because of the territory’s strict travel restrictions for most of the year. But the company envisions getting a major boost in 2023 from China’s reopening, reports Edward Russell, editor of Airline Weekly, a Skift brand.

Russell writes limits on nonstop flights between the U.S. and China could result in a huge payday for Cathay Pacific. Most travelers between the two countries will need connecting flights, and Russell adds airlines with strategically located hubs — like Cathay Pacific in Hong Kong — are poised to capture a major share of those flyers. Cathay Pacific will operate 100 weekly flights to Chinese cities by the end of February, up from just 27 at the start of January.