20 Years of the Spring Festival Golden Week: 10 Observations Behind 415 Million Trips

Trip numbers and spending both grew in single digits for the first time since the 2008 financial crisis.

It is easy to forget that the seven-day Spring Festival holiday everyone now takes for granted is only 20 years old.

The 1998 Central Economic Work Conference named tourism a new growth driver for the national economy. The following year, the State Council created the first seven-day Golden Week.

The 1999 Spring Festival was also the first of those seven-day holidays. Out of 1.25 billion Chinese people, only 18 million trips were made that week, and travelers spent 14 billion yuan inside China.

Chinese tourism was barely off the ground. Until 1995, after all, people worked six days a week and had few days off in a year; paid leave was a perk reserved for public institutions and state-owned enterprises. Businesses weren't ready either. Beijing Youth Daily reported that during the May Day holiday that year, faced with a sudden crush of visitors, several of Beijing's main department stores still shut at their usual hour, and tourists ended up scuffling with security guards.

Over 20 years, as the number of Spring Festival travel-rush trips doubled, the holiday turned from a family reunion into the year's biggest occasion for travel and spending.

This year, between New Year's Eve and the sixth day of the lunar new year, people made 422 million trips. About 7.22 million of them went abroad, to pass the holiday in 97 countries and regions. Over the seven days, national tourism revenue reached 513.9 billion yuan, or 8% of the 2018 total. Across the whole week, Chinese consumers spent 1 trillion yuan.

As the economy grew and incomes rose, Chinese households had more money to spare. Golden Week tourism grew fast for a long stretch, roughly in step with the double-digit growth of urban per capita disposable income.

This year, growth in the number of Spring Festival Golden Week travelers fell into single digits for the first time since the financial crisis, to 8.2%. Retail spending passed 1 trillion yuan for the first time, but grew 8.53% — the slowest rate on record. The slump first showed during the 2018 National Day Golden Week, when domestic travel growth had already dropped into single digits for the first time since the crisis and per capita travel spending fell.

In only 20 years, Golden Week travel growth has slowed sharply. That says something about where China's economy is heading.

As we noted in our piece on consumption upgrading and downgrading in China, growth in per capita disposable income for urban Chinese households has been slowing since 2013. Last year, the spending those households raised most was on housing, education and healthcare.

Travel is spending, but not spending anyone has to do. Set against education and healthcare, it is the category people cut when they stop feeling sure about the future.

Spring Festival spending is generally taken to run above the year's average, so its decline is a fair sign of how willing Chinese consumers will be to spend in 2019.

As one company after another released its holiday data, we pulled together figures from Trip.com Group, Tuniu, UnionPay, JD.com and others, and found 10 trends in this year's Spring Festival travel.

415 million domestic trips over the Golden Week, with growth falling to single digits for the first time since the financial crisis

Tourism revenue grew 12% during the 2018 Spring Festival; this year it grew 8.2%. Per capita spending was 1,238.31 yuan, up 0.63%. The number of travelers rose 7.5%. The last time growth fell below 10% was the 2008 financial crisis.

Both traveler numbers and revenue had in fact already slowed to single digits during the 2018 National Day Golden Week. The Spring Festival that followed repeated the pattern, more sharply.

Soochow Securities Research Institute wrote in a report: "Tourism growth was weak both against last year and against the previous holiday; given the weak economy and weak consumption, it came in slightly better than expected." Shenwan Hongyuan Research argues that China's base of tourist trips is already large enough that growth has flattened out.

But by the estimate of Li Xunlei, chief economist at Zhongtai Securities, roughly 1 billion Chinese people have never been on a plane, which means potential domestic demand is, in theory, enormous.

The 415 million figure also has to account for people going home to see family and for people visiting several nearby cities or sights, so the number who actually traveled for pleasure over the holiday is certainly lower. The statistics show it. The China Tourism Academy ranked Hengyang and Shaoyang the fourth- and fifth-busiest destinations this Spring Festival. Neither is a tourist city; visiting relatives is still what drives their crowds.

So even before most people set out to actually see the sights over Spring Festival, travel growth had already begun to slow.

A bottleneck in tourist facilities, three or four years old by now, is also holding back domestic visitor traffic. A worse trip puts people off taking one. Wu Wenxue, former deputy director of the National Tourism Administration, has said that the absence of effective fixes for the traffic and severe crowding at domestic scenic areas has also dampened the urge to travel at peak times.

Spring Festival spending passed 1 trillion yuan, and its growth also fell below 10% for the first time

Compared with other holidays, Spring Festival is the one about spending money: no other time of year makes splurging feel so justified.

This year Chinese consumers ate, drank, played and shopped their way through 1.005 trillion yuan over the holiday, the largest amount since records began in 2005. But the 8.53% growth rate was also the slowest since 2005.

Nomura analysts say Spring Festival retail figures are one barometer of the Chinese economy, and that this year's growth rate "does not bode well for overall retail sales growth."

The slowdown in holiday travel data also reflects how the Chinese economy has weakened since 2018.

"Stable growth" has long been the keynote of the Central Economic Work Conference, and each year's growth rate has indeed matched the statistics bureau's forecasts, usually down to the first decimal place. Even so, 2018's rate was the slowest in 28 years. Consumption, investment and financing figures point the same way.

During the 2018 National Day holiday, domestic travel growth fell below 10% for the first time since the financial crisis. CITIC Securities analysts said at the time that the slowdown did partly reflect people trimming travel spending as expectations for the economy fell. For an individual household, spending on healthcare, education and housing is growing far faster than total consumer spending — all of which squeezes travel and spending.

Guotai Junan Securities Research, citing Wind data, said that adjusting for inflation makes the slide in Spring Festival spending both steeper and older: it first fell into single digits in 2015, and this year's inflation-adjusted rate was 6.77%.

Duty-free shopping brought Sanya more money, but the city drew fewer visitors in the holiday's first five days

Domestic destinations fall roughly into three groups: natural scenery, above all China's famous mountains; city breaks in Beijing, Shanghai and Guangzhou; and warm-weather islands such as Haikou, Sanya and Xiamen. Because of the season, more travelers head south to escape the cold at Spring Festival than at other times of year.

According to figures from the China Tourism Academy and Trip.com, the five cities that received the most visitors this year were Beijing, Xiamen, Kunming, Sanya and Guangzhou, four of them in the south. Rankings of popular domestic destinations from UnionPay, Tuniu and Lvmama differ slightly, but their top fives are largely the same cities.

In Trip.com's ranking, Sanya failed to top the domestic list for a third year running. The economic cycle and a mild winter may both have held it back. In the holiday's first five days, Sanya received 877,400 visitors, 2.1% fewer than at the 2018 Spring Festival. Nanshan, Daxiao Dongtian, Tianya Haijiao, Xidao Island and other attractions all drew fewer visitors than a year earlier.

Only after the seven days were over did Sanya's visitor growth recover to 3.06% — still far below the national figure.

Soochow Securities Research Institute noticed one exception: Sanya Romance Park, built around a New Year temple fair, coconut-picking shows and a hunting dance, drew 245,200 visitors in the first six days, up nearly 4% year on year and ahead of Sanya as a whole. But that was slower than at New Year's Day, when its first two days grew 18.3%.

Duty-free shopping for travelers leaving the island is the other pillar of Sanya's tourism market. Over the holiday's first six days, Hainan's four duty-free stores sold 490 million yuan of goods, 384 million yuan of it at the Sanya store, up 23% year on year. That was slower than 2018's 34.4%, but still far ahead of the 8.5% growth in national consumption over the same period.

Sanya is not the only traditional destination hitting a ceiling. Anhui provincial tourism authority data shows that rain and snow cut Mount Huangshan's visitor numbers 21.49% at last year's Spring Festival. Even against that low base, and with the "boost" from the new Hangzhou-Huangshan high-speed rail line, Huangshan's traffic rose only 3.9% from the first through the fifth day of the lunar new year. Mount Emei's rose 1.5% over the same days.

"Natural scenic areas already run into clear capacity limits in high season," Huatai Securities Research Institute wrote in a report. "Thin product offerings, a lack of innovation and relatively backward facilities have also made them less appealing to tourists."

Leisure trips to museums and cultural events, meanwhile, grew steeply. The Shanghai Museum received 595,600 visitors from the first through the fifth day of the new year, up 30% year on year — as many as Shanghai Disneyland and Chongming Island drew between them. Among Beijing's major attractions, only museums and ski resorts had more visitors than a year earlier.

High-speed rail has spread, but what it takes is mostly not the airlines' market

Compared with 2015, rail's share of trips in the first 20 days of this year's travel rush rose from 10% to 13%, and civil aviation's from 1.7% to 2.5%. The shares of waterway and road transport each slipped slightly.

Over the seven-day holiday itself, civil aviation kept growing at double digits, with domestic airlines carrying 12.58 million passengers. To move more people, the Civil Aviation Administration piloted longer operating hours at airports including Shanghai Pudong, Sanya Phoenix and Chengdu Shuangliu, giving airlines room to shift their schedules.

Airlines usually draw up route maps and capacity plans a year at a time, adjusting for past years' figures and actual bookings. At a moment as critical as the travel rush, weighing both market and political considerations, they build in more slack. The Civil Aviation Administration estimated that airlines added 35,000 flights across the whole travel-rush period.

Shanghai-Shenzhen round trips were the busiest route this Spring Festival, followed by Beijing-Shanghai and then Xishuangbanna-Kunming. Flights between these cities have always been among the busiest; the order shifts with the weather and other factors.

Shanghai-Shenzhen was also the busiest route during the 2018 National Day holiday, and one theory then was that travelers were routing through Shenzhen on their way to Hong Kong. The South China Morning Post reported last year that in the first five days of that holiday an average of 77,000 passengers a day entered Hong Kong on the Guangzhou-Shenzhen-Hong Kong high-speed rail line.

The Spring Festival looked much the same. But because passenger growth was higher still, on certain routes rail and air complemented each other more than they competed — the effect high-speed rail has had on Hong Kong tourism, for instance.

Soochow Securities Research Institute said in a report that with the new line open, the share of mainland visitors reaching Hong Kong by high-speed rail rose to 16.6%, up from 15% at New Year's Day and National Day in 2018, making rail one of the main ways into the city.

Free highway tolls over Golden Week also generated some demand for driving. Trip.com data shows domestic car-rental bookings for self-driving trips grew more than 70% year on year over the holiday. CAR Inc. reported rental demand up more than 40%, with customers mostly renting to visit family or take driving trips. Next to rail and air, though, this demand is still weak.

People born in the 1980s do most of the Spring Festival traveling, which matches the population structure

Reports from Trip.com, Lvmama and Tuniu all show that family and parent-child trips remained the dominant form of Spring Festival travel: families of three or more made up 70% of Lvmama's orders, 46% of Trip.com's group-tour and independent-travel bookings were parent-child trips, and 55% of Tuniu's visa applications came from whole families at once.

By age, people born in the 1980s and 1990s were the bulk of holiday travelers. As that generation starts families, a Spring Festival trip becomes a reward for the children and, when the parents come along, a show of filial duty.

It also matches China's population structure, in which people born between 1975 and 1990 make up the largest share of the workforce.

Tuniu's data shows travelers aged 26 to 35 were the biggest group at 42%, followed by those aged 36 to 45 at 35%. Trip.com's data likewise shows people born in 1980 alone made up a quarter of its group-tour and independent-travel customers. Among Anhui province's 30 million travelers, those born in the 1980s accounted for 33% and those born in the 1990s for 29%; more than half traveled as families with parents and children, followed by friends or couples at 34% and solo travelers at 11%.

People born in the 1960s and 1970s made up a smaller share of travelers but were the freest with money: they spent an average of more than 4,000 yuan each on Trip.com over the holiday. Figures from UnionPay Merchant Services and the China Tourism Academy also show middle-aged consumers were readier to pay for better accommodation, with the 35-to-45 group spending the most, followed by the 45-to-54 group.

After years of Spring Festival e-commerce campaigns, JD.com's fastest-growing gift is the study guide

Tmall, JD.com, Suning, Pinduoduo and the other big platforms started marketing their "New Year goods festivals" and "open through the holiday" promotions early, with assorted red-envelope gimmicks and discounts. Suning's ran earliest and longest, from late last year to February 10; JD.com's ran from January 9 to February 11, then came Pinduoduo's and Tmall's.

According to holiday figures from Tmall, JD.com and Suning, the categories that sold best during the New Year goods rush were mostly the ones that sell best the rest of the year. On Tmall, new clothes and new furniture together made up more than 50% of transactions, followed by 3C electronics and fast-moving consumer goods. JD.com's top three by sales were phones, computers and office equipment, and home appliances, with sales across all categories up 42.74% year on year. Suning's fastest-growing category was fresh food: it sold 1 million jin (500,000 kg) of Chilean cherries, up 1,268.6%, and 100,000 seafood gift boxes of various sizes, up 1,526%, while its overall order volume rose 241.24%.

JD.com released data on the gifts sold on its platform over the holiday. Study guides, health supplements for the elderly and gold good-luck beads were the popular things to bring when visiting relatives in 2019. Against the same period last year, study guide sales grew 710%, gold good-luck bead sales grew 126%, and sales of supplements for the elderly — milk powder, calcium tablets, vitamins — grew 128%.

Because JD.com gave only the fastest growth rates, there is no telling how many of these things people actually bought.

Beyond e-commerce, Ministry of Commerce data shows some offline shopping centers grew too. Seven closely monitored shopping centers and outlet malls in Shanghai grew sales more than 20% year on year, and the large shopping centers monitored in Anhui grew 11.6%. Alibaba's figures show foot traffic at Intime department stores nationwide up 19% over the holiday, sales up 35% and online sales up 326%.

7.22 million outbound trips, with more than 40% of the growth coming from Hong Kong

A report from Trip.com and the China Tourism Academy counted 7.22 million outbound trips over the seven days, 720,000 more than in 2018. Hong Kong alone accounted for more than 40% of that increase.

Hong Kong Immigration Department data shows 1.39 million mainland visitors over the seven days, 310,000 more than a year earlier.

Trip.com's data has Thailand, which had a boat sinking, and Japan, which had a typhoon, still the two countries Chinese travelers visited most this Spring Festival. Third was Hong Kong, back on the top-10 list of destinations outside the mainland for the first time after falling off it in both 2017 and 2018.

As in past years, most Chinese travelers stayed inside a four-hour flight radius: neighboring countries and Southeast Asia. Skyscanner, the online flight-booking service owned by Trip.com Group, also published a holiday report, with Beijing the top departure city and Bangkok, Tokyo and Hong Kong the top three destinations. Skyscanner noted that Cebu in the Philippines and Chiang Rai in Thailand were the two fastest-growing destinations, both above 100%.

Fliggy's data puts Hong Kong first and Macau third. More travelers went to Macau specifically to gamble, but its jump is more likely explained by the rebound in mainland travel to Hong Kong, since a ferry runs from Hong Kong straight to Macau.

Hong Kong officials and local travel agencies say the newly opened Hong Kong-Zhuhai-Macau Bridge and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong high-speed rail line had already produced a marked rise in mainland visitors in the fourth quarter of last year. Over the Spring Festival, 199,500 mainland travelers entered Hong Kong through the West Kowloon rail terminus.

Wu Xi'an, a director at China Travel Service (Hong Kong), says the Hong Kong rail link put Guizhou, Jiangxi, Hunan and other provinces within five hours of the city by train. He has seen more visitors coming to Hong Kong from central and western China.

Thailand and Japan went cold for two quarters, then became the top destinations again — exchange rates and visa rules explain much of it

Nikkei reported that from the second half of last year hotels in Chiang Mai, Thailand kept closing or going up for sale, with prices dropping from about 1.05 million yuan to around 630,000 yuan. For a Thailand still in its tourism high season that was abnormal: attractions, hotels and the rest of the chain should have been preparing for new arrivals.

The main causes were the boat sinking off Phuket last July, in which most of those killed were Chinese, and an incident in September in which a Chinese tourist was beaten by security guards at Bangkok's Don Mueang Airport. Together they cut the number of international tourists to Thailand from July to October, Chinese travelers above all.

China has long been Thailand's largest source of visitors, supplying roughly 30% of both arrivals and tourism revenue.

An employee at a Guangdong travel agency, who asked not to be named, told QDaily that after the sinking, customers who had already booked Thailand trips canceled, and agencies, afraid of another accident, cut back their promotion of Thailand.

That was a heavy blow to Thai tourism. To revive it and pull in visitors, Chinese visitors especially, Thailand issued one travel incentive after another this month: waiving visa-on-arrival fees from December 2018 through January, then extending the waiver to April. The Tourism Authority of Thailand also ran promotions, including inviting Chinese internet celebrities to help drum up business.

Like Thailand, Japan has long been among the countries Chinese tourists visit most. Each of the two received more than 500,000 Chinese visitors over the Spring Festival.

Growth in Chinese visitors to Japan slowed in July 2018 because of typhoons, was flat in October, then recovered somewhat to 8.9% in November. In January 2019 Japan further loosened visa requirements for Chinese university students and for people who visit often. According to the Japanese embassy in China, Chinese tourists filed 10% to 20% more visa applications for the 2019 Spring Festival than a year earlier.

The yuan's appreciation at the end of 2018, and its relative stability since, gave outbound travel some encouragement too. By Shenwan Hongyuan Research's reckoning, exchange rates mostly affect which destination people choose: a sustained rise or fall changes what people expect the rate to be later, and that shapes the decision.

"Because an outbound trip involves visas, time off and several other steps, that lag weakens the effect of the exchange rate to some degree, and concentrates it on short-haul trips, especially short-haul trips with a strong shopping element — Japan, South Korea, Hong Kong and Macau," Liu Lewen, senior tourism services analyst at Shenwan Hongyuan Securities, wrote in a report.

In early 2016 the yuan rose 14% and visits to Japan increased; in early 2017 it fell 17% against the yen and growth in visits to Japan dropped off sharply. The same correlation shows up in visitor numbers to South Korea and Hong Kong.

Shanghai and Beijing spend the most on travel, and nearly half of outbound flights leave from Shanghai

In almost every holiday the biggest sources of domestic travelers are the four first-tier cities: Shanghai, Beijing, Guangzhou and Shenzhen. This year Trip.com's data has Shanghai, Beijing and Guangzhou in the top three, then Chengdu, Hangzhou and Chongqing, with Shenzhen pushed down to seventh.

Shanghai also ranked first in per-trip spending per person, at 3,416 yuan, followed by Beijing at 3,307 yuan. Average spending in this year's top 10 cities was above 2,700 yuan.

Shanghai is the largest source of outbound travelers as well. Variflight data shows that on flights to this year's hottest destinations outside the mainland — Thailand, Japan, Hong Kong and South Korea — Shanghai was far ahead of every other city.

Over the seven days, for example, flights between Shanghai and four Thai airports came to 463, 77% more than second-place Guangzhou. Flights between Shanghai and five Japanese airports came to 772, 141% more than second-place Beijing.

On outbound spending, though, travelers leaving from Beijing spent the most, 8,818 yuan a head. Those leaving from Shanghai were second at 8,464 yuan.

What visitors spend in China still lags far behind what Chinese travelers spend abroad.

In 2017 the mainland took in $32.6 billion from inbound tourists, less than Hong Kong's $33.3 billion. Ministry of Culture and Tourism data shows inbound visitor numbers fell 0.4% year on year in the first half of 2018 — and 80% of those visitors came from Hong Kong, Macau and Taiwan.

China's huge surplus in goods trade — exports over imports, $351.7 billion in 2018 — is offset to a large degree by its deficit in services trade, which is mostly tourism. In 2017 the international tourism deficit came to nearly $225.4 billion.

China's outbound travel rate is where Japan's was in the 1980s, but growth has already slowed

By Shenwan Hongyuan Research's rough calculation, outbound trips now equal 5.6% of China's population, close to Japan's level in the 1980s and South Korea's in the 1990s.

Data from those two countries shows outbound travel growth tracks economic development, with visitor numbers rising roughly in step with per capita GDP. China's GDP in absolute terms does indeed correspond to Japan's in the early 1980s and South Korea's in the early 1990s.

That has left many institutions optimistic about Chinese outbound tourism. According to China's tourism statistical bulletin and World Tourism Organization data, Chinese outbound trips more than doubled between 2010 and 2015. In 2017 they passed 131 million, and spending per trip per person, about 12,900 yuan, was the highest in the world.

The World Tourism Organization once projected that by 2020 total Chinese outbound tourism spending would keep growing at a compound 6.1% a year and might top 2.03 trillion yuan.

"Benchmarked against Japan and South Korea, China's outbound penetration rate still has room to double," Shenwan Hongyuan Research said in a report.

After they reached the same point, outbound travel rates in Japan and South Korea kept climbing quickly with per capita income and GDP: Japan's rose to 14%, South Korea's has held around 40%.

The Chinese numbers are less encouraging. Customs data shows outbound growth slowing markedly. In 2017 the number of trips abroad for private purposes grew 5.7%, against 22% in 2010 and 10% in 2015.

The figures, taken together, suggest growth will not be as strong as the forecasts said.

China Outbound Tourism Report 2018 notes that 52% of Chinese outbound travelers so far come from the Yangtze River Delta, the Pearl River Delta and the Bohai Rim around Beijing. Household per capita disposable income in these cities is generally among the highest in the country.

Working from statistics bureau income data, Zhongtai Securities economist Li Xunlei estimates that no more than 100 million people in China have annual disposable income above 120,000 yuan. For them, a single trip abroad costs about 10% of a year's income — so in theory no more than 100 million people can afford what an outbound trip currently costs.

"Growth in the number of people going abroad should be closely tied to income levels and income growth," Li Xunlei wrote in a column. As of the fourth quarter of 2018, per capita disposable income for urban Chinese households was growing 5.6%, and the trend since 2014 has been downward.

Travel is an ordinary but non-essential part of household spending, and it is limited by how the rest of that spending is arranged. When mortgage debt pushes a household's leverage above half, or rent, education and healthcare drive up the cost of necessities, it is no surprise that the things people don't need take the hit.

In the end, every one of these shifts in travel spending is a reflection of the economy.

Charts by Xiuxia Feng

Data compiled by Jinping Xie, Fangyi Gong

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