China's Golden Week Travel Surge Conceals Intense Price Competition

Tourism Growth and Challenges: During China's Golden Week (Oct. 1-8), domestic tourism trips reached 888 million, generating 809.01 billion yuan in revenue, marking a 1.8% and 7.6% increase from last year, but growth has slowed compared to earlier holidays, with average spending per trip down 3% from 2019.

Intense Competition in Hospitality: The tourism industry faces fierce competition, leading to significant price cuts in accommodation, with some hostels reducing rates by up to 60%. Despite high visitor numbers, profit margins remain tight for many businesses, as travelers increasingly book last-minute and seek cheaper options.

Changing Travel Trends: Many tourists opted to travel before or after the Golden Week to take advantage of lower prices, with hotel rates in late September being 20% cheaper than during the holiday. Increased demand was also noted in smaller cities, where prices are generally lower.

Economic Context and Future Outlook: While the Golden Week spurred record travel and spending, concerns about deflation persist, with China's consumer prices falling by 0.4% in August. Upcoming inflation data and retail sales figures are anticipated to provide further insights into the economic landscape.