What: In an effort to stop a COVID-19 outbreak, Hainan Island has shut down business and transport for locals and tourists.

Why it is important: Following an outbreak, lockdowns threaten the island’s duty-free business which only recently began to recover this year.

As one of the only places Chinese citizens could travel to during the pandemic, Hainan saw China’s pent-up demand for travel retail skyrocket in duty-free spending over the past two years. According to data from the Department of Commerce of Hainan Province, duty-free revenue within the tropical island increased by 84% in 2021 to 60.17 billion renminbi, or $9.47 billion. Personal duty-free shopping allowances tripled from 30,000 renminbi to 100,000 renminbi.

Unfortunately, sporadic outbreaks across China have caused a 37% drop in visitors to the island for the first half of 2022. Hainan’s airports saw departing passenger numbers drop by 56 %, 79 %, and 66 % year-on-year in March, April, and May, respectively. And now with a large outbreak of COVID-19, 80,000 tourists are reportedly stranded on the island with 982 confirmed cases in the past week.

Although duty-free stores were forced to close August 4th, luxury and beauty players such as LVMH, Kering, Richemont and Burberry remain bullish on the future of duty-free on Hainan Island.

Duty-free suffers from Hainan Island lockdown