China’s economic woes dampen ‘Golden Week’ holiday travel

China is expecting to see more travelers during Golden Week, but the country’s persistent economic woes will likely continue to weigh on overall spending this holiday season.

Authorities at the Ministry of Transport project that 1.94 billion inter-city trips will be made during the National Day holiday this year, slightly higher compared to a year ago, according to officials at the Ministry of Transport.

Shaun Rein, founder and managing director of China Market Research Group said that although the number of domestic trips made during this holiday period could beat 2019, the average spend per traveler is expected to be lower.

Consumers across China have become more frugal as the country struggles with a prolonged real estate slump and rising unemployment. Consumers are likely to cut back on spending until they feel “their income levels are stable and will continue to grow,” Rein said.

Average prices for hotels and flights on travel booking site Trip.com have hovered below levels seen a year ago. Prices for both domestic and outbound flights during the National Day period declined compared to last year, according to report by Trip.com released last month.

Alicia Garcia Herrero, chief economist at Natixis, also said that the country could see a slight uptick in overall tourism spending during the holiday break, but such a rise should be seen against the backdrop of what she called last year’s “lower base.”

During the Golden Week holiday last year, China saw domestic tourism revenue reach 753 billion yuan ($107.37 billion). That represented an increase of 1.5% from 2019, according to data from the Ministry of Culture and Tourism.

Not only have flights been cheaper, data also indicates that travelers may be opting for lower cost transport options.

The National Railway Administration said it expected to see more than 175 million rail trips over the Golden Week period from Sept. 29 to Oct. 8, adding that passenger volume is forecast to peak on Tuesday with over 21 million trips.

By comparison, a single-day record of 20.7 million trips were made on May 1, the start of China’s Labor Day holiday.

Overall, tourism spend and travel numbers within China have risen this year compared to 2023. The country expects to see 4.29 billion domestic trips in the first three quarters of this year, 16.8% higher than same period last year, a top official at the Ministry of Culture and Tourism said at a press conference on Monday, according to CNBC’s translation of Chinese state media.

The official said that tourism revenue in the first three quarters is also expected to rise 17.1% year on year, to 4.32 trillion yuan, $615.6 billion, adding that the number of inbound passenger trips for the first three quarters is also expected to grow 55.4% year on year, to 95 million.

Travel data this year has been mixed and indicates that the country has walked a windy road in recovering from the effects of the Covid pandemic. During the Labor Day holiday in May, China saw more domestic trips and total tourism spend than in 2019, but the average spending per traveler was still below 2019 levels.

Following the release of a slew of disappointing data last month, Chinese officials announced a slate of support measures to jumpstart its sluggish economy, including cutting the amount of cash the banks needs to have on hand by 50 basis points.

There might be a major rebound in consumer spending during the upcoming Chinese New Year, Rein said, after the country digests the latest round of government stimulus.