McKinsey: China’s economic rebound offers a roadmap for the global travel sector
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One of the more complex aspects in assessing the post-corona future is gauging the speed at which different economies will recover from the effects of the virus.
But by most measures, China’s national lockdown has left the country significantly further along the recovery curve than many of its western counterparts.
In comments overnight, BHP chief Mike Henry said he expects the global economic fallout to last for another 18 months.
At the same time, he said China appeared to be the only economy on track for a rapid (or “v-shaped”) economic recovery.
And research this week from global consulting firm McKinsey provides some extra context around how that rebound is playing out.
McKinsey said most offices, schools and factories have reopened in China, with additional social distancing and hygiene measures in place.
The consulting firm takes a gauge of consumer sentiment on the Chinese mainland every two weeks, and the numbers revealed some sharper changes over the past fortnight.
“When a lockdown ends, the first thing people want to spend money on is eating out,” McKinsey said. “The second is travel.”
The survey showed confidence in domestic travel rose by 60 per cent in the first half of May.
But even though China is further along the recovery curve than its Western counterparts, McKinsey said the peak in domestic travel recovery still wouldn’t arrive until after September.
So, what can travel industries abroad learn from the Chinese experience? McKinsey said while the experience from country to country would differ, some common themes would emerge.
“The young will go first. Travel will involve nearby destinations. Economy travel will recover more quickly. And outdoor and nature-related destinations will be more popular than congested cities,” the analysts said.
To capture early demand, domestic travel industries will need to re-focus their strategies on those four key areas.
“Travel will return. By acting early and flexibly, companies can better adapt to the changing needs of travelers. China’s early signs of recovery provide useful lessons for the whole travel industry,” McKinsey said.