Travelers go to the departure lounge of Beijing South Railway Station before the New Year celebrations take place on Wednesday. (Reuters Photo)

China’s tourism industry showed signs of recovery towards the end of last year, but analysts believe vacation spending is unlikely to pick up in the coming months.

According to the Ministry of Culture and Tourism, around 25.25 million people took part in package tours in the fourth quarter, a decrease of almost half compared to the same period last year.

Still, package tour attendance gradually recovered over the course of 2020 from 4.98 million in the first quarter at the height of the coronavirus pandemic to 7.79 million in the second quarter and 19.71 million in the third quarter.

The tourism industry has been hardest hit by a pandemic due to lockdowns, travel restrictions and fears from potential travelers about the risk of contracting the virus from home.

China’s tourism revenue in 2020 is likely to have fallen to 4.13 trillion yuan (19 trillion baht), according to estimates by iiMedia, a data company, down about 2.5 trillion yuan from 2019.

China saw a resurgence of the coronavirus last month when a new group of infections emerged in Hebei province surrounding Beijing, followed by outbreaks in northeastern Heilongjiang and Jilin provinces. Local authorities put in bans, travel restrictions and mass testing to contain the virus.

Although the recent wave of infections appears to have subsided, travel volume is expected to drop significantly during the New Year holidays, which began on February 4, as authorities have encouraged people to continue to stay to control potential outbreaks.

The Commerce Department said on Wednesday that 48 million people would stay where they work instead of traveling to their hometowns for the seven-day hiatus as they normally do.

Analysts said the decline in the number of travelers would dampen the recovery of the tourism industry, which represented 11% of China’s gross domestic product in 2019.

“We have downgraded our forecast for China’s first quarter growth due to the recent impact [mild] Coronavirus outbreaks and new restrictions, including Chinese New Year travel, “Louis Kuijs, head of Asian economics at Oxford Economics, said in a note this week.

“In light of the recurrence of Covid-19 cases, Beijing has taken tough measures to curb vacation travel. Now that the Chinese New Year is a week away, passenger revenue is only 25% of normal,” said Larry Hu, China’s chief economist in Macquarie, on a note last week.

“The steep vacation trips of migrant workers could increase production but dampen consumption for this year.”