China’s Golden Week travel boom masks deadly price war

BEIJING — The latest sign of hypercompetition, or “involution,” has emerged in China’s tourism industry, reinforcing concerns about growing deflationary pressure in the economy as a whole.

Between the Oct. 1 and Oct. 8 public holiday — nicknamed “Golden Week” — the total number of domestic tourist trips reached 888 million and generated 809.01 billion yuan ($113.63 billion) in revenue, according to official data released Thursday. That represents an increase of 1.8% and 7.6%, respectively, from last year, according to CNBC calculations.

The gains, however, slowed compared to this year’s May 1-5 holiday, when domestic travel and tourism revenue rose 6.4% and 8%, respectively. In fact, average spending per domestic tourist trip during Golden Week was also about 3% lower than in 2019 before the pandemic, Goldman Sachs noted Thursday.

“Golden Week was Golden Week,” said Mix Shi, founder of PoshPacker Hostels Chengdu Group.

Although his three hostels in the city ended up being full, Shi said he had to reduce his nightly rates by about 60 percent because nearby hotels lowered their prices even more.

“Far too much money has been invested in the hotel industry lately,” Shi said, noting that “the competition is insane and some really nice places are being sold at very low prices. It’s great for travelers because they have more choices, but it’s a real blow to hostels.”

Chengdu, capital of southwest China’s Sichuan province, ranks second behind Nanjing, capital of east China’s Jiangsu province, in tourism spending for China’s holiday. Meituan online reservation platform.

Among local and international visitors to hostels in mainland China, Chengdu’s popularity more than doubled from last year’s Golden Week, second only to Shanghai, according to HostelWorld. Still, the average bed price fell more than 20 percent in both cities, to 165.70 yuan ($23.27) in Shanghai and 80.99 yuan in Chengdu.

While most people only get a few days of paid vacation each year, China has sought to encourage companies to give more vacation days to their workers and extend official holidays to boost consumption.

This year, Golden Week lasted a day longer than usual because it coincided with the Mid-Autumn Festival, which follows the agrarian calendar. The festival took place on October 6 this year, compared to September 17 last year.

“The Mid-Autumn Festival is considered a family reunion holiday,” said AJ Wang, owner of venues X Hotel and Observatory Hill House in the northeastern coastal city of Qingdao.

“The real Golden Week, in terms of revenue generation, actually ends on the 6th,” he said, noting that he had to cut prices by 60% after that date due to falling demand.

Official domestic tourism revenue for Golden Week alone increased 15.4% from 2024, but including revenue figures from last year’s Mid-Autumn Festival, comparable revenue growth slowed to 7.6%, according to CNBC calculations.

“Everyone works harder, spends more, but the profit gap remains small,” said Sasa Yau, who runs an inn and restaurant in the southern city of Guangzhou.

Yau said his restaurants’ daily sales increased from the usual 3,000 yuan to 10,000 yuan during Golden Week, with the average customer spending just 30 yuan.

“We have been busier than ever and broke our revenue record,” Yau said. “There’s only four of us running the show, so by the end of the week we were so tired that when I said, ‘Let’s celebrate with a late-night meal!’ everyone just said, ‘Can we celebrate in sleep instead?’

In Chengdu, famous for its giant pandas and spicy cuisine, Shi said travelers tend to book their rooms only a day or two in advance instead of a week or two in advance, making accommodation rates unpredictable.

China’s extensive network of high-speed trains and airports – with flights sometimes cheaper than train tickets – makes spur-of-the-moment travel quite easy. Wide price fluctuations and the hassle of booking tickets for the first or last day of a holiday are pushing travelers to stagger their trips when possible – and save money.

Many tourists chose to travel slightly before or after the Golden Week period this year, according to the Chinese travel booking site. Trip.com. He noted that hotel prices in late September were about 20% cheaper than during Golden Week, while mid-holiday airfares were more than 30% cheaper than at the start of the holiday.

Alibaba-owned travel booking site Fliggy said average spending per travel booking rose 14.6% from a year earlier, and noted that much cheaper flights started the weekend after the holiday, such as a flight from Shanghai to Hong Kong for less than 400 yuan ($56).

Official figures also show an increase in car travel, with an average of 304 million trips per day during the holidays, mainly by car.

“Golden Week unleashed a wave of energy across China: record travel, booming business activity and new spending trends provided a solid boost to domestic demand,” said Bruce Pang, adjunct associate professor at CUHK Business School.

“It may take some time before (the consumer price index) returns to positive (year-on-year) growth, as food and oil prices remain low compared to their peak,” he said.

Official consumer prices in China fell 0.4% in August from a year earlier, but rose 0.9% when excluding food and energy prices. The tourism sub-segment saw prices increase 0.7% year-on-year in August, but they were 0.3% lower for the January-August period compared to the same period in 2024.

Travel platforms have also reported increased demand in smaller cities, where prices can be much lower. Chinese booking site Tongcheng said hotel reservations in at least 30 of these cities and less developed areas have more than doubled from a year ago.

China inflation data for September is due on October 15 and retail sales on October 20. Retail sales rose just 3.4% in August from a year ago, beating analysts’ expectations.