Global Hospitality Industry To Meet Chinese Revenge Spending As 2023 Resolution

Dr. Adam Tabriz

According to CNN Business News, China is about to Reopen its Three Years Long-closed Borders to International Travelers

During the COVID-19 pandemic, china's Zero COVID tolerance policy blocked Chinese citizens from traveling abroad.

As the news agency reports, Chinese travelers before the pandemic contributed about 155 international tourists and around a quarter of a trillion dollars to the global hospitality industry. In fact, until the end of 2019, based on a report published by Business Standard, China was the leading global spender in international travel.

It is no surprise that as the country prepares to reopen its borders, global hospitality stakeholders see a rapid surge in "Revenge Spending" by the Chinese people.

Steve Saxon, a partner in McKinsey's Shenzhen office, predicts that the full recovery of outbound international travel and spending may reach its pre-pandemic level by summer 2023. The market saw a 95% loss during the COVID-19 pandemic.

The Chinese government announced the opening of the borders earlier this week as of Sunday, January 8th, 2023. International travel booking for the upcoming Lunar New Year holiday season (January 21–27) witnessed over five-fold surge compared to the previous year.

The average spending surge for bookings during that season is around 23%. Moreover, the top destinations are Asia pacific countries, including Australia, Thailand, Hong Kong, and Japan, with the United States and the United Kingdom being among the top ten, according to CNN.

But, What is Revenge Spending, And What Does It Mean to The Global Economy and China

Revenge Spending is a recognized phenomenon when someone or a group of people engage in excessive spending after little opportunity to spend their cash at hand.

Revenge Spending is the upshot of hardship individuals endure for various reasons. In this case, Chinese citizens had to go through strict lockdowns during the pandemic and were prohibited from international travel.

Although Revenge Spending may stimulate the overall economy, it can devastate an individual's economic health. Those who fall into the vicious circle of bad money management habits through Revenge Spending can bury themselves in piles of debt that are hard to escape. In other words, taking expensive vacations and eating in fancy restaurants for one who used to eat at home can be devastating in the long term.

Indeed, the pandemic has been brutal on almost everyone; however, it often serves as a trigger to a much deeper psychological or other unhealthy justifications.

As a country with a unique version of the open market economy policy, the Chinese government had a challenge encouraging people to spend money during the pandemic. 

The swift move towards opening the borders breaks the curse of non-spending.

Likewise global economy expects profitable returns with the Chinese administration's move. However, the new strain of the virus hitting the worldwide stage and another rise in COVID infection cases in China has prompted some nations to implement Corona protocols before welcoming Chinese travelers.

Only some feel the global response to Chinese Revenge Spending is as pragmatic in 2023. Moreover, only time will tell what the outcome will be for the fastest-growing economy in the world, China. Moreover, how the rest of the world, global hospitality, and individuals will react to that event is yet to be seen.

References

  1. Liu,Cheng Cheng, L. H., Juliana, 2023. What the return of Chinese tourists means for the global economy | CNN Business [online]. CNN. Available from: https://www.cnn.com/2023/01/06/economy/china-tourist-boom-post-covid-impact-intl-hnk/index.html [Accessed January 7th, 2023].
  2. Anon., 2023. Revenge Spending [online]. Corporate Finance Institute. Available from: https://corporatefinanceinstitute.com/resources/economics/revenge-spending/ [Accessed January 7th, 2023].
  3. Hickey, K., 2022. Revenge Spending: What It Is And How to Curb It [online]. Sunday Edit. Available from: https://edit.sundayriley.com/revenge-spending/ [Accessed January 7th, 2023].
  4. Cheng, E., 2021. China's big challenge for 2022: Getting people to spend money [online]. CNBC. Available from: https://www.cnbc.com/2021/12/31/chinas-big-challenge-for-2022-getting-people-to-spend-money.html [Accessed January 7th, 2023].
  5. Anon., 2022. How Does China Manage Its Money Supply? [online]. Investopedia. Available from: https://www.investopedia.com/articles/investing/072815/how-does-china-manage-its-money-supply.asp [Accessed January 7th, 2023].
  6. IANS and @bsindia, 2023. "Revenge spending" by Chinese tourists could boost the global economy [online]. "Revenge spending" by Chinese tourists could boost global economy | Business Standard News. Available from: https://www.business-standard.com/article/international/revenge-spending-by-chinese-tourists-could-boost-global-economy-123010700342_1.html [Accessed January 7th, 2023].
  7. Liu,Cheng Cheng, L. H., Juliana, 2023. What the return of Chinese tourists means for the global economy | CNN Business [online]. CNN. Available from: https://www.cnn.com/2023/01/06/economy/china-tourist-boom-post-covid-impact-intl-hnk/index.html [Accessed January 7th, 2023].

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