01

After being silent for three years, it is now strongly counterattacking. This is a true picture of the travel industry in recent years.

The tourism industry, which is recovering strongly, once made hotels and airlines reluctant to eat three years of food last year. On May 1st of this year, prices for machine wine began to drop one after another.

Compared to last year, during the May Day holiday, the real winners were no longer airlines that sold sky-high air tickets, nor hotels that were sitting on the ground where prices were rising all the time; instead, they were established OTA platforms and luxury brands.

On the face of this year's May Day travel data, it still looks very hot.

The total number of domestic travel trips nationwide was 295 million, up 7.6% year on year, up 28.2% from the same period in 2019; the total travel expenses of domestic tourists were 166.89 billion yuan, up 12.7% year on year, up 13.5% from the same period in 2019.

However, behind this data is a sinking market, increasing volume and falling prices.

On May 1st of this year, the tourism market sank further, and the growth rate of travel orders in third-tier cities and counties far surpassed that of first-tier cities.

According to the May Day Insight Report released by Ctrip at the end of April, travel bookings for fourth-tier cities and below increased 140% year-on-year during the May Day holiday, while county hotel reservations increased 68% year-on-year, and scenic spot ticket orders increased 151% year-on-year, all outperforming the national market.

The small county was full of gains, but airlines and hotels were severely beaten in the face by last year's brilliance.

The average daily passenger volume of civil aviation continued to rise during the May 1st period of this year, but the sky-high air ticket prices stopped; instead, quite a few ticket prices began to dive as soon as departure. The average economy class price dropped 10% compared to last year.

In terms of hotels, hotel reservation prices have also generally dropped, and the prices of homestays near popular attractions in Beijing, Fuzhou and other places have also generally dropped by more than 10%.

In contrast to rising domestic travel volumes and falling prices, outbound travel, which had been dormant for a long time, has finally ushered in a recovery.

According to data from the official website of the State Administration of Immigration, 4.768 million mainland residents entered and left during the “May 1st” holiday this year, an increase of 38% over the same period last year.

Ctrip data also shows that in early April, the number of people applying for the “May 1st” holiday increased by more than 30% compared to last year, and the transaction amount has already exceeded the same period in 2019.

In terms of machine wine, the number of international air ticket reservations departing on May 1, 2024 surpassed 2019, and hit a single-day high on May 1st in previous years.

What is exaggerated is that there are 1,035 cities around the world where Chinese tourists have booked hotels, and various foreign media have also sung praises, praising Chinese tourists for “buying and buying” again.

You need to know that in 2019, there were 170 million outbound trips from Chinese tourists, and travel expenses accounted for 14% of global tourism revenue, making it the largest financial player in the global tourism industry.

Obviously, Chinese outbound travel has not returned to its former glory this year, but compared to the lackluster outbound travel in previous years, this rare increase is enough to cure everything.

02

In recent times, the yen has depreciated sharply, hitting a new low in nearly 30 years. As a result, Japan has become the first choice for many Chinese tourists to “scavow wool.”

During this May 1st holiday, data from many travel platforms shows that Japan has become the first choice for Chinese tourists to travel abroad.

Compared to experiencing Japan's cultural customs, more Chinese tourists chose “buy buy buy.”

Ginza, Japan's biggest luxury gathering place, is full of shoppers lining up for shopping. There are long lines at LV and Hermès doors, and they even have to wait at least an hour before entering the store to buy.

On various social media, LV has also become a “souvenir” of Japan. Counting the exchange rate, the difference between Japanese LV and domestic LV starts at 1,000 yuan. With various discounts, the actual price is basically around 20% off, and the price difference of many models can even reach about 5,000 yuan.

Japan has always been a “mecca” for luxury goods consumption. In the first-quarter earnings reports of Gucci's parent company Kering Group and LVMH, despite poor sales performance, Japan is one of the few regions with outstanding performance. LVMH even recorded double-digit growth in Japan in the first quarter of this year, up 32% year over year.

Among the huge consumption of luxury goods, the most prominent one is that of Chinese tourists. Although the number of Chinese visitors to Japan in the first quarter of this year ranked only third among all countries or regions, it contributed 293,100 yen (about 13,700 yuan) in per capita consumption, topping the list among foreign tourists.

Those receiving dividends abroad are luxury brands, while those receiving dividends domestically are OTA brands.

As outbound travel gradually takes on a new form, the proportion of tourists and group tours declines, and the proportion of independent travelers increases. These free travelers often choose to book wine and foreign attractions on OTA platforms.

At the same time, many outbound tourists chose to rent a car abroad and drive themselves, which also allowed many OTA platforms that set up overseas car rental businesses in advance to seize the limelight.

Since May, Ctrip's stock price has been rising for many consecutive days, breaking through a record high. Over the past four months since this year, the cumulative increase has even exceeded 50%.

According to the “2023 China Outbound Travel Industry Development Report” released by Fastdata, the competitive pattern of OTA platforms represents the competitive pattern of the outbound travel market, because OTA platforms are still the most mainstream channel to meet the demand for outbound travel.

The report shows that currently, of the domestic OTA platform's outbound travel market share, Ctrip tops the list with 54.7%, Flying Pig Travel in second place accounting for 27.1%, and Tongcheng Travel in third place accounting for 11.5%. These three platforms have already taken over 90% of the domestic OTA outbound travel market share.

As far as OTA platforms are concerned, whether it is large-scale travel promotion in Thailand after the previous pandemic or the recovery of overseas travel brought about by the subsequent opening of visa-free visas in various countries, these OTA platforms only need to lie back and catch the traffic.

However, this method of getting traffic while lying down also makes it difficult for OTA platforms to take the initiative to create hot spots. They are neither able to launch “discount promotions” like airlines, nor can they decide prices on their own like hotels. As a “middleman earns the difference in price,” platforms such as Ctrip are bound to only be caught in the middle and rely on “heaven” to eat.

As more and more platforms need to build “omnipotent platforms,” the OTA platform market is also facing the impact of local lifestyle platforms such as Meituan and Gaode. Platforms such as Douyin and Xiaohongshu have also enabled more private connections for outbound travel, such as local companions.

According to official Douyin data, in 2023, the number of Douyin wine travel merchants increased nearly 7 times year on year, and payment GMV increased more than 300 times year over year. Among them, the GMV payment for live streaming of wine tours increased more than 200 times over the same period last year.

According to Meituan's financial report, during the 2023 Spring Festival, Meituan's on-site wine tourism business also reached a new high, and the transaction volume of the on-site wine tourism business increased by more than 100%. Furthermore, Meituan believes that the on-site wine tourism business will maintain a high growth in total platform transactions in 2024.

Although competition is becoming increasingly intense, it is clear that the current overseas travel market is still in a phase where everything is waiting to be developed.

For the current outbound travel market, increasingly fierce competition and market dividends still exist at the same time, and the dividends outweigh competition. In 2024, outbound travel companies and platforms may usher in a blue ocean period.

03

Changes in the travel industry confirm the saying — the world is, at the end of the day, young people.

In recent years, Douyin, which mainly focuses on short videos, and Xiaohongshu, which mainly focuses on user notes, have gradually become famous, and there is a trend of replacing traditional Weibo as mainstream media platforms.

The rise of Douyin and Xiaohongshu has made the travel industry's promotional methods more diverse.

Influencer cities in recent years, from Zibo to Harbin to Tianshui, have all surged in popularity since Douyin or Xiaohongshu, which in turn has encouraged a large number of young people to check in.

This change in promotion strategies has also made young people more involved in travel decisions, and the entire tourism industry has also become younger.

The post-90s and post-00s population was huge, reaching 370 million. At the same time, many post-90s have become mainstays in the workplace, and the post-00s are also gradually entering the workplace and are becoming the main consumers in the market.

The rise and fall in the volume and price of domestic travel, the rise of OTA platforms, and even the rise of outbound travel can be attributed to one reason, which is that the travel population is gradually getting younger.

For the post-90s and post-00s, travel required a higher degree of freedom, more diversified needs, and low planning and cost performance. Interest is the biggest deciding factor driving young people to travel.

It is the travel characteristics of young people that are different from the past. Poor tours and special forces tours make young people's tours cheaper but more frequent, causing domestic tourism volume to rise and fall.

Similarly, young people have different preferences from the past, making the tourism market in the county, which was difficult to get noticed in the past, into the public eye, and also making outbound travel, a tourist activity that required a long period of planning and preparation in the past, more within reach.

According to the Fastdata report, the post-90s and post-00s already account for more than 50% of outbound travelers. Among people with travel plans, the post-90s and post-00s are also more willing to travel abroad. Among the post-90s and post-00s with travel plans, the proportion of people who want to travel abroad is close to 60%.

Currently, the development of outbound travel and the travel market as a whole is very similar to the situation after the collapse of Japan's bubble economy.

In the early days of the collapse of Japan's bubble economy, due to changes in consumption expectations, consumer consumption had already begun to shift towards leisure and entertainment. The pursuit of leisure and entertainment was essentially a pursuit of spiritual resonance.

After the collapse of Japan's bubble economy, the entertainment industry rose steadily and even gradually became one of Japan's pillar industries, which is the best example of this phenomenon.

Compared to today, the mentality of young people in China places more importance on spiritual needs and more embraces niche culture. As demand continues to stabilize or even rise, the popularity of the tourism industry will surely rise for a long time, and the tourism industry can also maintain resilience in an increasingly sluggish market environment.

04

epilogue

The rapid recovery of the tourism industry is bringing about a comprehensive revival of the entire upstream and downstream industries. In addition to platforms, various cultural tourism companies have also taken advantage of this to revitalize themselves.

However, now that there are many influencer cities, tourism has yet to become a lifesaver for urban development.

Despite continuing popularity, Harbin, which was hot at the beginning of the year, was still at the bottom of the “Northeast F4” GDP in the first quarter. Tianshui's spicy hot pot, which recently exploded, has yet to lift Tianshui's position in Gansu as a whole.

This is because although tourism drives consumption, its share of the economy is not high.

Before the pandemic, the value added of tourism-related industries accounted for less than 5% of the country's GDP, even when travel, catering and lodging, shopping and entertainment were added.

Even in some major tourism markets, the share of cultural tourism-related industries in the overall economy is less than 10%, which is significantly lower than manufacturing, or even less than real estate and construction.

As far as the industry is concerned, the travel industry has clearly recovered, but for society as a whole, this “good medicine” is clearly not enough. (End of full text)

edit/emily