The Zhitong Finance App learned that the travel demand for “May Day” travelers was strong this year, and passenger traffic in several popular cities broke through historical records one after another. Netizens lamented “it is said that 100 million people have come to every city.” According to data from the Ministry of Transport, during the “May 1st” holiday period (April 29 to May 3), railways, highways, waterways, and civil aviation across the country are expected to send a total of 27.19 million passengers, an average of 54.038 million passengers per day, an average increase of 162.9% over the same period in 2022.

The optimization of the visa-free policy has also boosted inbound tourism. According to Ctrip data, inbound travel orders increased 105% year-on-year during the “May 1st” holiday. The cumulative number of visa-free visitors to Singapore, Thailand and other places with China increased about 2.5 times over the same period last year.

On the outbound side, on May 5, the “2024 “May Day” Holiday Travel Bulletin published by Flying Pig showed that during the “May 1st” holiday this year, outbound travel continued to nearly double. Among them, the number of outbound hotel reservations increased by about 1 times compared to last year; car rental and self-driving tours became popular at home, and reservation amounts surged more than 3 times compared to last year; international cruise supply quickly recovered, and cruise tours ushered in a major explosion, and the number of reservations surged more than 15 times compared to last year.

According to the data, the popularity of hotel bookings in Hong Kong and Macau, China both increased by more than 100% year over year. Since this year, both places have introduced a number of preferential travel policies to attract tourists. Tourists from Guangdong Province have become the largest source of mainland visitors to Hong Kong and Macau. Among visitors concerned about Hong Kong and Macao travel information, Guangdong residents account for more than half. In addition, Fujian and the Yangtze River Delta provinces and cities are also important tourist destinations for Hong Kong and Macau.

It is worth noting that during the May Day holiday, the trend of tourism sinking was even more obvious. In terms of year-on-year growth in travel orders, Tier 1 and 2 cities are smaller than Tier 3 and 4 cities, and Tier 3 and 4 cities are smaller than county markets.

According to Ctrip data, Yangzhou, Luoyang, Qinhuangdao, Weihai, Guilin, Kaifeng, Zibo, Huangshan, Tai'an, and Shangrao are popular third- and fourth-tier destinations, with an average increase of 11% in travel orders. Anji, Tonglu, Dujiangyan, Yangshuo, Mile, Yiwu, Wuyuan, Jinghong, Kunshan, and Pingtan are popular county tourist destinations, with an average increase of 36% in travel orders.

Also, according to data released by Where to Go on May 5, the number of reservations for May Day hotels in cities such as Zibo, Tianshui, Liuzhou, Yanji, Suzhou, Luoyang, Quanzhou, Fuzhou, Weihai, and Taizhou more than doubled compared to the same period last year. Even hotels in Tianshui, Fuzhou, and Luoyang sold out popular room types ten days before the holiday season.

Unlike large resource-rich cities, niche cities can drive exponential growth in the tourism economy by relying only on a single exit label. Where to go Big Data researchers roughly calculated that a meal of Tianshui spicy hot pot costs 30 yuan per person, driving local consumption of 650 yuan; experiencing Quanzhou hairpin flowers only costs 40 yuan, driving local consumption of 900 yuan; going to Pingtan to chase blue tears is about 40 yuan, driving local consumption of 700 yuan... Based on this calculation, when you go to a niche influencer city, check in “e-people” (extroverted personalities) and pull down the overall consumption by nearly 20 times.

Wang Yalei, an industry analyst at Ctrip Research Institute, said that the sinking market base is low and there is more room for growth. At the same time, tourists' pursuit of more relaxation and cost effectiveness has accelerated the downward trend. Compared to the “crowds” of Tier 1 and 2 cities, the sinking market offers visitors the possibility to relax physically and mentally during their vacation. Moreover, compared to the high vacation costs of accommodation and meals in Tier 1 and 2 cities, the sinking market is also more cost-effective. According to Ctrip data, during the May 1st holiday, the average nighttime price between hotels in the county market was only half of the average price in popular Tier 1 and 2 cities.

Recently, Anxin International released a research report saying that the release of demand for family parent-child trips and long-term tours during the May 1st holiday is expected to increase the average cost of users. At the same time, consumers' preferences for cost performance and special travel will affect the repurchase of company/regional travel orders. It is recommended to pay attention to air ticket & hotel reservation volume and price trends. The bank is optimistic about the steady growth prospects of the travel market and the advantages of OTA platforms in expanding the user base and increasing the frequency of user bookings. It is optimistic about the supply chain advantages and user mentality of Ctrip Group-S (09961/TCOM.US), the growth of Tongcheng Travel (00780) user spending and the incremental contribution of the travel agency business.

Related concept stocks:

OTA platform:

Ctrip Group-S (09961): In late February, Anxin International released a research report stating that it maintained the Ctrip Group-S “buy” rating, raised the target price to HK$437, purchased ADS of US$224 million from September 2023, and announced a US$300 million shareholder reward plan (repurchase/cash dividend, etc.) to provide additional support to the stock price. Ctrip's domestic hotel reservations/air ticket reservations during the Spring Festival holiday increased by 60%/50% year-on-year, and outbound hotel and air ticket reservations surpassed 2019 levels. In view of the low year-on-year base effect in January, it is expected that the year-on-year growth rate of the first quarter results will still be impressive. The company's performance in 2024 is expected to take advantage of Dongfeng in the domestic tourism year and overseas expansion, and large-scale model and content marketing are expected to continue to optimize costs.

Tongcheng Travel (00780): In mid-April, Jefferies released a research report stating that while maintaining Tongcheng's “buy” rating, revenue and non-IFRS profits for the first quarter of this year are expected to be in line with expectations, with a target price of HK$28.2. The bank expects Tongcheng's revenue for the first quarter of this year to rise 44% year-on-year to 3.7 billion yuan (RMB. same below). Among core OTAs, revenue from accommodation reservation services increased 12% due to last year's high base effect; transportation ticket revenue increased 20% due to increased activities returning home during the Spring Festival; and other revenue increased 40%. The gross margin of core OTAs is expected to remain around 74.5%, while the gross margin of tourism is about 17.5%; non-IFRS profits reach 502 million yuan.

Hotel category:

Shangri-La (Asia) (00069): Shangri-La (Asia) recently announced results for the year ended December 31, 2023. The group achieved consolidated revenue of US$2.142 billion, an increase of 46.5% over the previous year; profit attributable to company owners was US$184 million, with a loss of US$159 million in the same period last year; earnings per share of 517 US cents, with a proposed final dividend of HK15 cents per share.

Huazhu Group-S (01179): According to Huazhu Group's previous data, as of April 23, the hotel reservation rate for this year's May Day holiday has remained the same as last year's May Day holiday reservation rate, and the trend continues to rise. The reservation rate for hotels in Chengdu and Chongqing increased by 3 percentage points compared to last year's “May Day” holiday reservation rate. The hotel reservation rate for “new influencers” in Tianshui increased by 10 percentage points over last year's “May 1st” holiday reservation rate.

Scenic area category:

Fosun Tourism Culture (01992): Fosun Tourism Culture recently announced its operating performance for the first quarter of 2024. During the reporting period, Fosun Tourism's operating turnover was 7.158 billion yuan, an increase of 15.8% over the previous year. Thanks to core business growth contributions, the Group's unaudited profit attributable to the company's shareholders continued to increase in the first quarter of 2024 compared to the same period in 2023. During the period, thanks to the continued release of domestic vacation demand in China, Atlantis Sanya's turnover reached 576 million yuan, an increase of 4.5% over the same period in 2023.

China Travel Service Hong Kong (00308): China Travel Hong Kong recently announced its 2023 results, with consolidated revenue of HK$4.494 billion, an increase of 48% over the previous year. Profit attributable to shareholders was HK$240 million, and loss attributable to shareholders was HK$356 million in the previous year. Basic earnings per share were HK4.33 cents, and the final dividend was HK1 cents per share. According to the announcement, the loss was mainly due to the significant improvement in the Group's operating performance due to the relaxation of travel control and social distancing measures related to the COVID-19 pandemic and the effective implementation of the company's strategy. Excluding the impact of the Group's calculation of land value-added tax on real estate projects, the profit attributable to shareholders was HK$436 million.