China’s Golden Week’ travel boom masks a bruising price war

BEIJING — The newest signal of hyper-competition, or “involution,” has emerged in China’s tourism trade, including to considerations about rising deflationary strain within the broader economic system.

Over the Oct. 1 to eight public vacation — dubbed “Golden Week” — complete home tourism journeys reached 888 million and generated 809.01 billion yuan ($113.63 billion) in income, in accordance with official information launched Thursday. That is up by 1.8% and seven.6% from final 12 months, respectively, in accordance with CNBC’s calculations of the figures.

The positive aspects, nevertheless, slowed from the Could 1–5 vacation earlier this 12 months, when home journeys and tourism income grew 6.4% and eight% respectively. In actual fact, common spending per home vacationer journey through the Golden Week was additionally round 3% decrease than in 2019 earlier than the pandemic, Goldman Sachs identified Thursday.

“The Golden Week was ‘Golden Weak,'” mentioned Combine Shi, founding father of PoshPacker Hostels Chengdu Group.

Though his three hostels within the metropolis ended up being absolutely booked, Shi mentioned he needed to lower nightly charges by about 60% — as a result of close by accommodations dropped costs much more.

“Approach an excessive amount of cash has been pouring into the resort trade recently,” Shi mentioned, noting, “the competitors is insane, and a few very nice locations are going for filth low-cost. It is nice for vacationers as a result of they’ve extra decisions, nevertheless it’s an actual blow to hostels.”

Chengdu, the capital of Sichuan province in southwestern China, ranked second to Nanjing, capital of Jiangsu province within the east, in tourism spending for the vacation on the Meituan on-line reserving platform.

Amongst native and worldwide guests to hostels in mainland China, Chengdu’s recognition greater than doubled from final 12 months’s Golden Week, second solely to Shanghai, in accordance with HostelWorld. Nonetheless, common mattress costs fell greater than 20% in each cities — to 165.70 yuan ($23.27) in Shanghai and 80.99 yuan in Chengdu.

Whereas most locals have solely a handful of paid days off every year, China has sought to encourage companies to present employees extra trip days and prolonged official public holidays to spice up consumption.

This 12 months’s Golden Week was at some point longer than traditional as a result of it coincided with the Mid-Autumn Competition, which follows the agrarian calendar. The pageant fell on Oct. 6 this 12 months, versus Sept. 17 final 12 months.

“The Mid-Autumn Competition is taken into account to be a household reunion pageant,” mentioned AJ Wang, proprietor of the X Resort and Observatory Hill Home venues within the northeastern coastal metropolis of Qingdao.

“The actual Golden Week, when it comes to income technology, really ends on the sixth,” he mentioned, noting he needed to lower costs after that date by 60% on account of falling demand.

Official home tourism income for the Golden Week alone rose by 15.4% from 2024, however when together with final 12 months’s Mid-Autumn Competition income figures, the comparable income progress slowed to 7.6%, CNBC calculations confirmed.

“Everybody’s working more durable, spending extra, however the revenue hole stays small,” mentioned Sasa Yau, who runs a hostel and restaurant within the southern metropolis of Guangzhou.

Yau mentioned his every day restaurant gross sales surged from the standard 3,000 yuan to as a lot as 10,000 yuan through the Golden Week, with the typical buyer spending simply 30 yuan.

“We had been busier than ever and broke our income document,” Yau mentioned. “There are solely 4 of us working the present, so by the tip of the week we had been so drained that after I mentioned, ‘Let’s have a good time with a late-night meal!’ everybody simply mentioned, ‘Can we have a good time by sleeping as a substitute?'”

In Chengdu, well-known for its Big pandas and spicy meals, Shi mentioned vacationers are likely to e-book rooms solely a day or two prematurely as a substitute of every week or two forward, making lodging charges unpredictable

China’s huge community of high-speed trains and airports — with flights typically cheaper than prepare tickets — has made travelling on a whim pretty straightforward. Giant worth swings and challenges in reserving tickets for the primary or final day of a public vacation are pushing vacationers to stagger their journeys when potential — and lower your expenses.

Many vacationers selected to journey barely earlier than or after the Golden Week interval this 12 months, in accordance with Chinese language journey reserving website Journey.com. It famous that resort costs in late September had been about 20% cheaper than through the Golden Week, whereas mid-holiday airfares had been greater than 30% cheaper than at first of the break.

Alibaba-owned journey reserving website Fliggy mentioned common spending per journey reserving rose 14.6% from a 12 months earlier, and famous that far cheaper flights began the weekend after the vacation, corresponding to a flight from Shanghai to Hong Kong for lower than 400 yuan ($56).

Official figures additionally pointed to an increase in highway journeys, with the vacation seeing a median of 304 million journeys per day, largely by automotive.

“The Golden Week unleashed a wave of power throughout China: record-breaking journey, booming enterprise exercise, and contemporary spending traits all gave home demand a strong increase,” mentioned Bruce Pang, adjunct affiliate professor at CUHK Enterprise Faculty.

“Nonetheless, it would take some time earlier than the [consumer price index] returns to optimistic [year-on-year] progress, as meals costs and oil costs stay gentle in comparison with their peak,” he mentioned.

China’s official client costs fell by 0.4% in August from a 12 months earlier however rose 0.9% when stripping out meals and power costs. The tourism sub-segment noticed costs rise 0.7% 12 months over 12 months in August, however they had been 0.3% decrease for the January to August interval in contrast with the identical interval in 2024.

Journey platforms additionally reported elevated demand in smaller cities, the place costs may be far decrease. Chinese language reserving website Tongcheng mentioned resort bookings in a minimum of 30 such cities and fewer developed areas greater than doubled from a 12 months in the past.

China’s inflation information for September is due Oct. 15, and retail gross sales on Oct. 20. Retail gross sales rose simply 3.4% in August from a 12 months in the past, lacking analysts’ expectations.