China’s resort and hotel operators await windfall as National Day holiday set to unleash pent-up demand, inflate room prices

In some cases, pent-up demand will allow hotel and resort operators to raise prices by as much as 10 times during the forthcoming national holiday
Many onshore-listed travel-related companies have managed to turn around their business this year since China abandoned its zero-Covid policy

China stock market

Daniel Renin Shanghai

Published: 9:00am, 4 Sep 2023

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Resort and hotel operators in China are expecting another windfall during the eight-day National Day holiday later this month as a boom in tourism overwhelms capacity, allowing the industry players to raise prices.

In some cases, the operators could inflate fees by as much as 10 times the average rates, some of them said, a welcome relief for the industry seeking to make up for lost income and opportunities in the past two years. China abandoned its zero-Covid policy late last year, giving the economy a burst of optimism.

China’s National Day holiday, known as the Golden Week peak season, runs from September 28 to October 6, freezing the local financial markets and bringing most economic activity to a standstill.

“A business boom during the National Day holiday is a certainty,” said Andrew Xu, co-president of Fosun Tourism Group, who is also the CEO of its resort business Club Med. Tourists will rush to reserve air tickets and hotel rooms in early September, and “room booking is already strong and prices will be raised,” he added.

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Thousands of visitors flock to Huangshan on Chinese National Day

“Businesses will be busier than during the Labour Day holiday [in May] because pent-up travel demand will be unleashed over the longer [National Day] holiday,” he said.

Fosun Tourism is the Hong Kong-listed leisure business unit of Fosun International controlled by mainland Chinese billionaire Guo Guangchang. Its assets include Club Med, which operates all-inclusive holiday resorts worldwide.

Revenue generated over the May 1-3 holiday this year jumped by eight-fold over the same Labour Day holiday in 2022, when pandemic curbs were still ravaging China’s economy, and more than doubled the receipts in 2019, before the coronavirus outbreak.

“Long holidays, when parents are able to travel to places of interest and scenic spots with their kids, give hotel, restaurant, and airline operators the opportunity to make a killing,” said Ivan Li, fund manager at Loyal Wealth Management in Shanghai. “Prices can be unreasonably high in some cases.”

Hotel room prices surged by up to 10 times in popular tourist destinations such as Yunnan province during the Labour Day holiday, according to Li Wenjie, CEO of Shanghai Yaheng International Travel. “It will not be surprising that some room rates will become even more expensive during the National Day holiday due to a surge in demand.”

01:29

China set to open its borders to foreign tourists for the first time since Covid-19 pandemic

After the Covid-19 was downgraded by the World Health Organization, travel operators will look back at Beijing’s decision to live with the virus as a major turning point for the industry.

Fosun Tourism earned 472 million yuan (US$65 million) of profit in the first half of this year, compared to a loss of 197 million yuan in the same period a year earlier. Revenue climbed 29 per cent to 9.5 billion yuan as it filled more rooms at resorts and hotels in mainland China.

The company is not alone, as 15 of the 19 tourism-related companies listed in onshore stock exchanges also made a turnaround in their latest interim reports for this year through June 30.

Lijiang Yulong Tourism posted a net profit of 121 million yuan versus a loss of 48 million yuan a year ago. Xi’an Qujiang Cultural Tourism posted a net profit of 12.9 million yuan, compared with a 85.1 million yuan loss a year earlier.

In Shanghai, total spending on hotels and dining out soared by 42 per cent to 19.4 billion yuan (HK$20.82 billion) in the first half of 2023, outpacing the city’s 9.7 per cent growth in gross domestic product, according to official statistics.

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