Travel companies were spared the first round of the U.S.-China trade war. But outbound travel to the United States and U.S. hospitality companies could become collateral damage without too much provocation.
While China and the United States may be working to dodge a trade war, the U.S. travel industry faces a broader battle to hold the interest of Chinese travelers as tariff-related tensions between the two countries flare.
It doesn’t take any kind of official policy or direct action on the part of China’s government to bring travel to a particular destination, including the United States, to a sudden halt.
Witness only the unofficial ban on travel to South Korea and parallel restriction on Korean popular culture in China in 2016. To put the impact of Korean TV content and music in proper perspective, imagine if “Downton Abbey” enjoyed such popularity in the United States that it was shown in primetime, on NBC.
Then add three or four other UK-produced series that also became major influencers for fashion and music, and which starred top British pop idols. That was the position of Korean TV in China – right up until South Korea’s announcement that it would deploy the U.S.-made Terminal High Altitude Area Defense (THAAD) missile system. Although it was adopted as a shield against potential North Korean attack, China saw itself as a potential target for the weapon’s capabilities.
Without ever issuing a proclamation or other order, the Chinese government demonstrated both its displeasure with and leverage against THAAD. In late 2016, Japanese-Korean retailer Lotte found its 20-plus megastores in China suddenly closed for “inspection;” in September 2017, the company finally gave up hope of re-opening and began looking for a Chinese buyer. Concert tours by Korean pop singers were suddenly cancelled, and Korean TV shows disappeared from television and streaming services.
While regular flights between destinations in China and South Korea continue, and citizens of the People’s Republic of China are still free to apply for individual tourist and other visas to South Korea, group tours to the shopping destination of Seoul and the beach resort of Busan, and every other Korean stop in between, were not receiving approval to depart. All this directed at a popular destination only two hours by air from Beijing and Shanghai.
The U.S. could face a similar fate. Citizens of the U.S. and China currently enjoy a relatively simple visa process, after which the successful may receive a 10-year visa valid for stays up to 60 days in the respective countries. That’s unlikely to change. But continued commercial pressure by the Trump administration on China could suddenly see the word passed to pull the plug on Chinese group travel to the United States.
In 2016, nearly three million Chinese visitors to the U.S. spent $33.2 billion. That represented a 15 percent year-over-year increase in visitors and a more than 9 percent jump in spending. But the trend started to reverse in 2017; through September, the number of visitors from China was down 5.8 percent. That drop-off could be even more severe should an emboldened China decide to take swift and unilateral action against travel to the U.S.
Already, airline executives are worried that tariffs could depress demand. An analyst last week pointed out that United Airlines especially was at risk because of its capacity in China.
“We are concerned,” Zhihang Chi, Air China’s vice president and general manager for North America, told Skift in an email last week. “There’s no other way to put it.”
The fears date back to the beginning of the month, when U.S. President Donald Trump announced a series of tariffs on Chinese imports. When he revealed an expanded slate of targeted products three weeks later, American business interests in China clutched their collective hearts, awaiting Chinese retaliatory measures that would certainly come.
The Chinese government came back and placed tariffs on its own list of American goods. Only goods were affected — $3 billion worth of them — but services including hospitality and transportation were left untouched. At present, the Trump Administration is far more excited about, and has far more to gain politically, than China in a trade war.
Skift News Editor Hannah Sampson contributed to this report.