Why Labor Day travel trends are boosting the Chinese economy

Editor's note: Lu Yue, a special commentator on current affairs for CGTN, is a Professor at the Academy of China Open Economy Studies, University of International Business and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.

The holiday economy in China is characterized by its large and continuously thriving market. In recent years, with the improvement of consumption and living standards, holidays have become increasingly important windows for people to release their pent-up demand. As a result, the holiday economy is thriving. Data from the Ministry of Transport shows that the total cross-regional population flow in China reached 1.36 billion during the five-day May Day holiday from May 1 to 5. 

Holiday tourism destinations have become more diversified. With the improvement of infrastructure and the enhancement of tourism reception capability across various regions, the number of destinations in markets in the third- or fourth-tier cities – has increased significantly. Particularly, some cities with distinctive characteristics that are popular on social media platforms are highly favored by tourists.

During the Labor Day holiday, the growth rate of travel orders in third-tier cities and below surpassed that in first- and second-tier cities. At the county level, hotel bookings increased by 68 percent year-on-year, while orders for scenic spot tickets increased by 151 percent year-on-year.

There is also a trend towards a younger consumer demographic. Currently, the younger generation of travelers is more active than the elderly and gradually becoming the dominant force in the market. Data from Qunar, a popular travel booking platform, shows that during this year's Qingming Festival, the proportion of travelers aged 18-25 exceeded 20 percent, making it the most active travel group. As young consumers place greater emphasis on the value-for-money aspect of travel and seek unique travel experiences, there has been a surge in personalized experiential consumption.

Moreover, the popularity of inbound and outbound tourism during holidays remains unabated. With more convenient entry and exit measures and the gradual recovery of international flight capacity, cross-border tourism is experiencing rapid growth. Data from Ctrip, a leading travel booking platform, shows that during the Labor Day holiday, inbound tourism orders increased by 105 percent year-on-year.

In addition to traditional popular destinations like Japan and Thailand, flight bookings to emerging destinations like Saudi Arabia and Egypt have seen a notable rise. At the same time, there has been a rapid increase in inbound flight bookings from cities like Seoul, Tokyo, and Moscow.

What are the reasons for the sustained heat of China's holiday economy? First of all, rising consumption levels and changing consumer attitudes have expanded holiday demand. From the demand side, China's vast population base and consumer group size provide enormous potential for holiday consumption. With rising household incomes and changing consumer attitudes, there is a continuous increase in demand for higher-quality vacations.

Therefore, the holiday market that aligns with the trend in upgrading consumption has become a key channel for demand. According to the China Tourism Academy, the willingness of residents to travel reached 91.86 percent in 2023, a new record since monitoring began. The increase has driven the rapid growth of the holiday consumption market from the demand side.

Furthermore, policy support from various regions and departments, as well as the enrichment of consumer activities and products are conducive to the continued growth of China's holiday economy. From the supply side, holiday promotion policies, such as issuing vouchers and organizing cultural, sports, and travel activities, have effectively stimulated residents' enthusiasm for holiday consumption.

Additionally, digital platforms empower marketing, leading to an abundance of popular tourist destinations. Digital platforms like short video apps and social media are increasingly driving the marketing of cultural and tourism products. These platforms leverage precise algorithms, innovative content formats, and high user engagement to provide a powerful momentum for popular tourist destinations to "go viral," further driving the prosperity of the holiday economy and consumption.

The Labor Day holiday has contributed to economic and social development by promoting the growth of domestic demand. Besides directly increasing consumer expenditure, the holiday economy also triggers broader domestic demand through the multiplier effect, thereby favoring the sustained recovery and improvement of the economy.

Emerging trends such as "holiday economy plus shopping district economy," "holiday economy plus stay-at-home economy" and "holiday economy plus trade-in programs" are becoming new drivers of economic development, demonstrating fresh vitality for high-quality growth.

The fervor of the Labor Day holiday economy extends beyond major cities, igniting consumption growth in small to medium-sized cities and rural areas, thereby providing robust support for the sustained and healthy development of regional economies.

At the same time, the holiday economy propels the development of cultural and tourism-related industries, such as the hospitality sector, civil aviation industry, travel agencies, and local specialty manufacturing, effectively promoting employment and boosting residents' incomes, thus fostering a favorable economic ecosystem.

The increasing demand for higher-quality service prompts enterprises to continuously innovate their service models and improve the quality of supply. More businesses are introducing personalized and differentiated products and services, such as specialty tourism packages, limited edition goods, experiential consumption, driving high-quality development in the consumption industry. In addition, the holiday economy meets people's pursuit of spiritual and cultural life, which will facilitate optimization and the upgrading of the consumption structure.

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