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China Travel Feels a Chill

June 15, 2008

Earthquake, inflation, ethnic protests undermine tourism in the Olympics runup
By JASON LEOW and JONATHAN CHENG
The Wall Street Journal (USA)
June 14, 2008

Beijing --  The Olympic Games in August were supposed to make 2008 a
banner year for travel to China, not only transforming Beijing into a
magnet for international visitors but also sharpening the tourist
appeal of other Chinese destinations.

See an interactive map of restricted travel in China.

But the pre-Games scenario now playing out is quite the opposite. The
massive earthquake in Sichuan province, ethnic unrest in Tibet, new
visa restrictions, rising inflation -- and even the prospect of the
Olympic Games themselves -- have turned off a swath of leisure
travelers, who are apparently postponing trips to China until things
calm down. Many Chinese travel companies say they are reeling from
cancellations and delays by foreign tourists backing away because of
security and visa concerns.

Vacationers usually pick Beijing, the capital, as their jumping-off
point to China's more exotic attractions. But a number of those
destinations now are off limits or inaccessible. While travel
bookings to Olympic events remain robust and hotel rooms during the
Games are in short supply, agents say the disappearance of so much
tourism during the pre-Olympic weeks has deflated expectations for a
better-than-average year for China tourism overall.

"This is a tough year for the smaller operators who do a lot of
things off the beaten path," says Paul Moreno, vice president of
WildChina, a Beijing-based travel company whose niche is western
China. About 75% of WildChina's clients are Americans. Between bans
on foreign travelers and the earthquake, Mr. Moreno says, he has
"basically lost all of our business" in western China.

For the first five months of 2008, the number of tourists to Beijing
and Shanghai -- both cities where conditions are currently calm --
ran 15% to 20% below the same period last year, WildChina's Mr.
Moreno says. Making matters worse was the government's move last
month to tighten visa approvals for foreigners as part of
public-safety measures ahead of the Olympics. Some agents say leisure
travelers are avoiding Beijing completely, because they assume they
won't get a visa if they aren't attending the Games.

Beijing tourism has been hurt by a perception -- which has plagued
other Olympic host cities -- that hotels are completely booked at
exorbitant rates now, weeks before the Games are set to begin. In
fact, plenty of five-star-hotel rooms in Beijing are currently empty,
the city's tourism bureau says. Five-star hotels were booked at only
77% of capacity for the first five months of 2008, and four-star
accommodations were running at only about 45%, the bureau says.
During the Games themselves, though, which start Aug. 8, many hotels
are almost booked solid.

Shanghai Jinjiang Travel, a booking company, says inbound tourism in
2008 has plunged at least 60% from 2007; many cancellations are by
Japanese and other Asians. Liu Lin, deputy manager of Shanghai China
Travel International Co., says she hasn't booked a single American or
European tourist trip to China that wasn't Olympics-related. Overall,
Ms. Liu says, her inbound business for the first five months of 2008
was 10% below the same period in 2007. She is hoping for a
last-minute rush of reservations from Southeast Asians. "If they want
to come here, they can decide and do it quickly," she says.

Large-scale companies are trying to sell wary visitors on Chinese
destinations that are far away from trouble. China's Hainan Island,
south of Hong Kong, has beaches and a climate that are often compared
with Hawaii's. Cecilia Yee, marketing supervisor in Hong Kong for
Abercrombie & Kent, an upscale operator with mostly American clients,
suggests Xishuangbanna in southern Yunnan province, famed for its
rain forests and wild elephants. The province also is home to
Shangri-la, the storied region of snow-capped mountains, grasslands
and canyons. The provincial government lifted travel restrictions on
foreigners on May 31, local officials say.

Mountainous Sichuan province will be recovering for years from the
7.9-magnitude earthquake last month that killed more than 69,000
people, upended roads and destroyed attractions such as the Wolong
Panda Preserve, where at least one panda was killed and another is
missing. For the past month, the government has restricted use of
many highways traversing Sichuan to relief vehicles, making travel by
tourists virtually impossible. The scenic Jiuzhaigou valley, about
200 miles north of Sichuan's capital, Chengdu, technically remains
open, but roads into the resort area aren't ready for traffic, and
local hotels say they aren't registering guests.

Frequent aftershocks in the region have raised concerns about
personal safety. "I can't tell when...the aftershocks are going to
stop, so it's really difficult to predict when things will return to
normal again," says Ronnie Ho, chairman of the Hong Kong Travel
Industry Council. Mr. Ho says trips to western China constitute up to
40% of Hong Kong residents' travel to the mainland, which for now has
virtually ceased. Some agents say the decline in foreign visitors to
China has been partially offset by the growing number of Chinese
making plans to travel abroad.

In Tibet, ethnically fueled protests in March spread to neighboring
provinces and triggered government-imposed closings of certain areas
to foreigners. Tibet is still off-limits, as are parts of Sichuan,
Qinghai and Gansu provinces, all with Tibetan populations. The rugged
terrains there are usually major tourist draws, especially since a
rail line was completed linking Lhasa, Tibet's capital, with Beijing in 2006.

For Americans, the appeal of a Chinese vacation has diminished
alongside the yuan's rise against the dollar, travel agents say.
Inflation within China is an issue, too. Eating out is much more
expensive in 2008 than in 2007; consumer price data for May indicate
prices for pork rose 48% and for cooking oil 41% over last year.
Overall, China's inflation rate for May hit 7.7%, according to
state-run Xinhua news agency.

It isn't too late for the situation to turn around. Zhanor, a
spokesman in the Tibet tourism bureau, says the region may reopen to
foreigners by early July; domestic tourists face no restrictions on
travel there. A regional tourism official in Sichuan promises parts
of the province will open up "very soon." Mr. Moreno, of Wild China,
meanwhile, is looking ahead to 2009. "Next year is looking very good
now," he says. "We're rejuvenating our offerings in a way we wouldn't
have been able to do before. I'm quite optimistic about 2009."

* TRIP PLANNER *
Chinese travel agents are steering clients to Hainan Island, in the
South China Sea, and other attractive destinations. Ethnic unrest,
the recent earthquake and a slew of other factors are dampening
tourism in the runup to the Olympic Games this year.

Hainan Island, in the South China Sea, offers sandy beaches and warm,
humid weather. Stay in Sanya, on the southern coast.

Getting There: Fly to Hong Kong International Airport. Transfer to a
Dragonair flight to Haikou Meilan International Airport. Most
visitors get to Sanya by taxi. Be prepared to bargain for the best fare.

Where to Stay: The nightly rate for a standard double-occupancy room
at the five-star Hilton Sanya is $203 on weeknights, and $229 plus a
15% surcharge on weekends. At the five-star Sheraton Sanya resort, an
ocean-view room is $275 on weeknights and $291 on weekends. Rates
include breakfast and taxes.

Where to Eat: Chunyuan seafood stall sits at the north end of Hexi
Road in Sanya's city center, amid some 40 other seafood stalls.
Locals throng here at night.

What to Do: Sunbathe, scuba dive, snorkel, water-ski and swim.
Dadonghai is reputedly Sanya's most beautiful beach.

When to Go: April to December -- the dry season.

--Jason Leow

** Gao Sen and Kersten Zhang in Beijing and Ellen Zhu in Shanghai
contributed to this article.
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