For China, this was a year when everything was supposed to be so right. And yet, it has all been so wrong.

Winning the bid to host the 2008 Summer Olympic Games in Beijing was a huge victory for China, a chance to be in the spotlight, to prove that this rapidly evolving hybrid of free markets and communism could successfully host the largest international event ever to be held in China.

But while Beijing has been triumphantly putting the final touches on the 31 Olympic venues, as well as rigorously beautifying and preparing the city itself before the Aug. 8 opening ceremony, the spotlight has repeatedly shifted away from the country's Olympic accomplishments.

From concerns about toxic pollution in Beijing to the conflict in Tibet, from the tightening of visa requirements to the deadly and devastating earthquake of May 12, the Games have time and again been overshadowed by headlines trumpeting pollution, human suffering and political unrest.

Even when the subject of headlines was the Olympics, they often focused on the pro-Tibet demonstrations that greeted the torch as it made its way around the world.

The effects of all these events on China's tourism industry have been incredibly damaging during a year when Beijing alone was expected to welcome 4.8 million tourists.

Rather than see a boom, Beijing experienced a 1.6% drop in international tourists in the first five months of 2008, to 1.6 million visitors, compared with the same period in 2007, according to the Beijing Statistics Bureau. It was the first year-over-year decline reported since 2005.

Additionally, in the period from January to May, average hotel occupancy in China dipped 8%, to 59.3%, compared with 64.4% for the same period last year. In May alone, average hotel occupancy dropped to 57.7%, a 12.6% decline from May 2007, according to Smith Travel Research.

"Three to four months ago, we were in a situation where China was booming," said Eric Demaret, general manager of hotel sourcing in Asia for Gullivers Travel Associates. [Editor's note: Gullivers owns Travel Bound, which hosted Michelle Baran's visit to Beijing and Shanghai last month.] "Then we had a few events in the torch relay."

With everything going on -- tension in Tibet, tighter visa restrictions and the earthquake in China's southwestern Sichuan province -- "people are not very sure if there is any risk in coming to China right now," said Demaret.

Pollution solution

Already in 2007, the news media began distributing reports critical of Beijing's environmental conditions -- a by-product of China's hyperdevelopment -- and speculating on how high levels of pollution might affect the hundreds of thousands of athletes and visitors expected in Beijing this August. Disturbing images of visibility-impairing smog in Beijing garnered growing concern.

China responded with drastic measures to reduce pollution and make Beijing greener in time for the Games. As part of its Olympic bid, Beijing fulfilled its promise of planting 88 square miles of trees and grass around the city and encouraged drivers to ride bikes and take the subway. Starting July 20 for two months, half the typical number of cars will be allowed on the road. This will be achieved by alternating drive days for license plates with even or odd numbers.

These ambitious measures have had some effect. Between Jan. 1 and June 18, Beijing had 115 "blue sky" days, during which blue skies were visible and air quality fairly good, according to the Beijing Municipal Environmental Protection Bureau, as reported by China's state news agency Xinhua. That was 12 more days than the same period last year, a better than 10% improvement.

The Tibet quandary

In March, China's pollution took a back seat to the diplomatic crisis in Tibet. Violence that broke out between Tibetans and Chinese police officers ended in dozens, perhaps hundreds, of deaths, according to varying reports.

To China's dismay, the incident thrust age-old controversies about Tibetan autonomy into an international spotlight, prompting pro-Tibet demonstrations that disrupted the torch relay as it passed through London and San Francisco.

Demonstrators halted the relay in Paris, creating a political tension between China and France that has yet to subside.

Tourists were not allowed to enter Tibet immediately after the clashes there. In late April, domestic tourists were reportedly allowed to re-enter, but foreign tourists were barred until June 25.

While tourism in Tibet has been seriously damaged, operators predicted that only a small percentage of travelers would cancel travel plans to China because they were unable to get to Tibet.

"People just held off a bit," said Demaret, explaining that many clients were taking a cautious approach to travel to China after the Tibet protests. "But we really didn't see hot cancellations."

Red tape

In May, the Chinese government began cracking down on visas.

"The authorities are really concerned about demonstrations and terrorists," said Roy Graff, managing director of ChinaContact, a China tourism consultancy agency. Graff also recently joined Sportsworld, a British company specializing in travel for international sporting events; it is Britain's official ticketing agency for the Games.

"They are putting a lot of pressure on people issuing visas all over the world," said Graff. And the people working in the embassies "would rather not let anyone in than risk losing their jobs."

For tourists, in addition to the standard application, photo and airline reservations, some embassies and consulates have been requiring complete land itineraries with hotel confirmations, proof of purchased airfare and, in some cases, even a bank statement.

But in fairness, said Graff, the tightening of visa requirements has been standard practice for countries hosting an event of this size and scope.

"They can't really find fault with the operation itself," Graff said of China's critics.

With so many journalists in China covering the Games, Graff said the visa story has been another example of the media looking to take a jab at China while the country is on center stage: "The reality is that it's in fashion to criticize China."

Nevertheless, the visa issue has been an added obstacle for agents and operators trying to help clients make travel plans to China. And it has made it even more difficult for business travelers to China to obtain multiple-entry visas, as China has been trying to limit visas to single- and double-entry.

When the earth shook

On May 12, a 7.9 earthquake in China's southwestern Sichuan province killed more than 69,000 people and devastated areas of Sichuan surrounding the epicenter in Wenchuan county.

The effects of the earthquake on the tourism industry have been complex and varied.

Tourism to China had already been expected to drop off somewhat in the months leading up to the Games, as is typical for hosting countries. But the earthquake amplified the slowdown among both international and domestic tourists.

In the Sichuan province, tourism has slowed to a standstill. Many people who work in the tourism industry there have either lost their jobs or have had their salaries significantly slashed.

Of more than 4,000 scenic areas in Sichuan, 568 were damaged in the earthquake, according to Xinhua.

One of the main tourist draws of the region is the Wolong Nature Reserve, the world's largest panda breeding center, which was very near the earthquake's epicenter. The reserve was damaged and remains cut off to tourists due to unsafe road conditions.

Other tourism destinations, such as the Buddhist sanctuary Mount Emei, the Chengdu Panda Research Center and the 233-foot-tall Leshan Giant Buddha were not damaged in the earthquake and have since been opened to tourists, but they remain virtual ghost towns. There was relatively little destruction in Chengdu, the capital of the Sichuan province, but there have been tents scattered around the city to shelter people too scared to go back to their homes.

The Shangri-La Hotel in Chengdu saw a 15% decrease in May occupancy from both FIT and group travelers. The hotel estimated a 42% occupancy on average in May.

Operators estimated it would take at least two years for the tourism industry in Sichuan to rebound.

As for the rest of China, even in areas far from the quake, such as Beijing and Shanghai, the effects of the natural disaster have been felt.

In May, Beijing welcomed a total of 346,000 inbound tourists, a 14.2% decrease compared with May 2007, according to the Beijing Statistics Bureau.

One problem, Graff said, is that "people don't realize just how big China is," so that news of a massive earthquake killing tens of thousands of people has scared tourists away from all parts of China.

Moreover, travel industry insiders said many potential domestic tourists donated a significant percentage of their salaries and savings to the relief effort, leaving them little left over for travel.

Countdown to the Games

Despite the difficulties China has encountered this year, preparations for the Games have continued on schedule.

The main venues have all been completed, and the 7.1 million-square-foot Olympic Village, which will house 16,000 athletes from 205 countries and regions as well as 7,000 members of the media, is set to open July 27, according to the Beijing Organizing Committee for the Games.

The city's hotels have also been overhauled to create enough capacity for visitors in August.

But there are some early signs that the number of visitors initially projected for the Games might not materialize.

For one, demand for hotel rooms across China declined 8% in May compared with the previous May, the highest drop in demand since February 2007, according to Smith Travel Research.

And Graff predicted that "many fewer" people than expected would be attending the Games. Recent data indicate that close to 80% of five-star hotels in Beijing have been booked for the Games, but less than 50% of three- to four-star hotels have been booked, he said.

"Actually, a lot of people don't come because of the Olympics," he said.

Which means that while the tourism industry on the ground readjusts to the strange realities of this year, the quiet calm of May, June and July before what is supposed to be the storm of August, for the time being it offers a rare chance to see the Great Wall and the Forbidden City without having to fight crowds.

And while operators, agents and China's travel industry are definitely seeing a setback this year, many are anticipating a readjustment period in 2009 and a total return to last year's healthy growth levels by 2010.

"It's a real drop, but a drop from an excellent situation," Demaret said. "It will recover. I'm very confident."

The people of Sichuan appeared to be starting the process of healing. But with 69,185 people reported dead, 18,458 reported missing and 374,171 injured from the earthquake, not to mention the 6.5 million homes that collapsed and the 23 million homes damaged, it will take time.

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