Goldman Sachs: Robust Tourism Demand During The Golden Week

China’s Golden Week starts from 1 October and ends on 8 October, creating an extensive tourism window. According to Goldman Sachs, this year, Golden Week will drive a strong tourism recovery both in domestic and international destinations. Mix Shi, who is the founder of PoshPacker Hostels Chengdu Group, stated that “The Golden Week was ‘Golden Weak.’

This week, domestic travel increased to over 888 million trips recorded. States show that the consumer interest was very strong, like tourism spending reached up to $113.5 billion. China’s outbound travel intentions rose by over 40% YOY. In this rise, Japan and Southeast Asia are among the top destinations, instead of Europe. When comparing this golden week from last year, domestic travel bookings are almost 30% higher than last year.

Goldman Sachs Flags Resilient Demand

According to Imke Wouters, Partner at Oliver Wyman, “Consumers were holding back their spending because of less positivity on the long-term outlook. The difference between last year and this year is that people are starting to become pessimistic.”

Goldman stated that the average domestic spending by tourists was lower than pre-pandemic levels of 2019. However, if we ignore this dip, the overall demand remains high. Describing the week as a “golden week” means that although spending was weak, demand in volume was high.

Prof. Dr. Wolfgang Georg Arlt, CEO of COTRI, describes this high travel vs low spending staging as “The October Golden Week cum Mid-Autumn festival ended with new records with regard to the number of travellers. However, there are clear indicators that the level of spending did not increase, but rather went down.”

Online Travel Platforms Face Moderate Competition

Online platforms like Trip.com, Fliggy, and Qunar saw double-digit growth in bookings. On the other hand, both platforms and consumers faced fair price competition. China’s Ministry of Translation and the Ministry of Tourism and Culture stated that this year’s Golden Week “888 million domestic tourist trips and 809 billion yuan (US$113.5 billion) in domestic tourism spending.”

According to Channel News Asia, “Record passenger trips and an uptick in domestic tourism spending, China’s annual ‘Golden Week’ holiday rush returned with a vengeance this year.” Goldman Sachs described this week as “moderate”. It also signals the emerging price war and possibly leads to hyper competition and lower margins. These signs may further contribute to aggressive discounting.

The biggest earners are those platforms focused on building services. The platforms like transport, hotels, and others that especially target the younger population with app-based deals are among the most competitive ones now.

Strategic Implications for Travel Platforms

To keep the momentum maintained, platforms now need to provide differentiated offerings. They need to offer a more personalized travel experience with detailed guides, utmost ease, and fulfillment of all the necessities. They could also offer loyalty programs to keep their customers returning and satisfied.

Domestic tourism is the crux of any country’s economy. The importance rose to its peak, especially when global uncertainties are too high and unpredictable. So, operators have to monitor consumer spending trends closely. They also have to adapt pricing accordingly if they want to stay competitive in the market.