During golden week of the recent National Day holiday, official numbers show 888 million domestic trips and 809.01 billion yuan of tourism revenue, reflecting a strong recovery. But under all this high-octane hustle and bustle and crowded tourist hot spots, is a brutal tourism price war that is squeezing the life out of businesses and grabbing an unwanted spotlight on bigger economic worries.
Such competition — a phenomenon sometimes referred to as “involution” — shows that more travelers do not always equal a more profitable industry. However this analysis is based on what has been an overwhelming view of the economic data and direct insight into the sector in China, thereby putting a clear line of sight into the impact of this tourism price war.
But the heart of the problem is hotels slashing their rates. Founder of PoshPacker Hostels Chengdu Group Mix Shi was full but only after dropping his nightly rate by about 60%. Shi astutely summarized the predatory nature of this tourism price war by noting that “the competition is fierce and the good ones go for peanuts.” This trend wasn’t isolated. HostelWorld data revealed that average bed prices decrease by 20% or more in cities such as Chengdu and Shanghai until popularity more than doubled. This ubiquitous discounting is the key driver to the current price war on tourism.
Traveler behavior is substantially changed as a result of this tourist price war. Meanwhile, consumers have been booking rooms only a day or two before their stay to cash in on last-minute deals, taking advantage of the wildly swinging prices. This spontaneous, price-sensitive travel is made entirely possible thanks to the extensive network of high-speed rail, along with cheap flights.
Travel platforms like Trip. According to own report, a lot of travelers opted to travel just before or right after the official holiday, which brings much lower prices on hotels 20% cheaper and mid-holiday airfares more than 30% cheaper. In essence, this consumer response to the tourism price war in the sector is what we see as travel plans strategically shifted.
The financial repercussions of this tourism price war are remarkable. Average amount spent per domestic tourist during Golden Week was roughly 3% lower compared with 2019, Goldman Sachs analysts noted. Revenue was again up from 2024, but the growth markedly slowed compared to the holiday window in May. But that means the number of travelers is being compensated with heavy discounts, which is a classic sign of a fatal war of tourism prices. Corporate are doing more for less, or at least that’s what Sasa Yau, a hostel and restaurant owner in Guangzhou, said, and he cannot be wrong when he reported record revenue with each customer averaging only 30 yuan in spending.
The ripples of this tourism price war also extended beyond the very biggest metropolitan centers. Chinese booking site Tongcheng stated that hotel bookings in at least 30 smaller cities and less developed areas doubled or more than doubled compared with a year earlier, as travelers sought out even more affordable destinations.
The geographical spread of price cuts underscores the national nature of the tourism price war, spurred by over-capacity in accommodation and fierce competition for each and every consumer yuan. The analysis shown below comes from a writer who spent more than a decade tracking Asian economic and consumer market trends for an American audience, his long experience adding context to this universal price war in the tourism sector.
So to make a long story short, travel is back for this year Golden Week but so is the travel price war. The holiday filled the void temporarily with a flurry of consumer activity but should such deflationary forces persist long-run, will be a worry for the sector. The unceasing war on tourism prices has certainly benefitted travelers who are shell-shocked at the hotel bar, but represents an albatross on the long-term health and sustainability of China’s hospitality landscape. We are a high-quality â—‹ WebSite ​ commited to deliver accurate, through analysis of global economic trend, with a focus on the Asian market.
