![]() ![]() In China as a whole, hotel occupancy and the number of travelers on domestic flights were more than 90 percent of their 2019 levels at the end of August, and over the October Golden Week holiday, more than 600 million Chinese hit the road, around 80 percent of last year’s figure. But it was a different normal: domestic travel was surging, but international travel was still depressed given pandemic-related border restrictions and concerns about health and safety. The CEO of one major travel company told us that, beginning in the third quarter of 2020, business was “pretty much back to normal” when referring to growth. People who travel for pleasure will want to get back to doing so. Leisure travel bounces back but business travel lags The point is that spending will only recover as fast as the rate at which people feel confident about becoming mobile again-and those attitudes differ markedly by country. New lockdowns and, critically, the rollout of COVID-19 vaccines have and will affect those numbers. ![]() Only around a third had resumed out-of-home activities, compared with 81 percent of consumers in China, 49 percent in France-and just 18 percent in Mexico. 2 “ Survey: US consumer sentiment during the coronavirus crisis,” December 2020. In late September, for example, the US consumers surveyed were more optimistic than before but still cautious, reporting that they planned to buy holiday gifts for fewer people and keep an eye on discretionary spending. ![]() How fast and deep confidence will recover is an open question. 1 Jamie Smyth, “Australia’s economy powers out of COVID-19 recession,” Financial Times, December 1, 2020, ft.com. ![]() With the pandemic largely contained in that country, household spending fueled a faster-than-expected 3.3 percent growth rate in the third quarter of 2020, and spending on goods and services rose 7.9 percent. Except for international air travel, Chinese consumers have begun to act and spend largely as they did in precrisis times. While manufacturing in China came back first, by September, so had consumer spending. On Singles Day, November 11, the country’s two largest online retailers racked up record sales. China’s consumers are relieved-and spending accordingly. The first country to be hit by the COVID-19 pandemic, it was also the first to emerge from it. China was an exception-it has an older population but is conspicuously optimistic.īut China’s profile proves a larger point. McKinsey’s most recent consumer survey, published in late October, found that countries with older demographics, such as France, Italy, and Japan, are less optimistic than are those with younger populations, such as India and Indonesia. That isn’t to say that consumers will act uniformly. The bounce back will therefore likely emphasize those businesses, particularly the ones that have a communal element, such as restaurants and entertainment venues. One difference, however, is that services have been particularly hard hit this time. That has been the experience of all previous economic downturns. In these and other ways, consumers have pulled back.Īs consumer confidence returns, so will spending, with “revenge shopping” sweeping through sectors as pent-up demand is unleashed. If the Musée du Louvre were open, the lack of tourists might even create the opportunity for an unobstructed view of the Mona Lisa. Fashions are in closets rather than on display. There are lines outside stores, but they are often due to physical-distancing requirements. The return of confidence unleashes a consumer rebound ![]()
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