According to the report released by CITICS Securities, domestic tourism demand is expected to remain stable in the summer, and outbound tourism demand continues to recover, with the resilience of leisure travel consumer demand continuing to be verified. The bank maintains the view that looking ahead to the second half of 2024, the trends of "enthusiasm for travel" and "affordable choices" are still clear, and the configuration rhythm suggests that based on the high base of 2023Q2 and Q3, there may be a U-shaped growth in sector revenue performance in 2024. The view is to maintain the perspective that outbound demand > holiday leisure demand in China > domestic business travel demand > domestic daily optional demand, and to recommend the configuration of OTA, scenic spots, and gambling, and to pay attention to industry data turning points such as duty-free and hotel industry data.

Event: According to the survey results of 1,600 urban residents nationwide conducted by the CITICS-CLSA CRR team regarding the willingness to travel during the summer, the overall expected number of residents traveling in the summer of 2024 is roughly the same as that of last year's summer. The proportion of residents in relatively low-income and lower-tier cities whose willingness to travel has marginally increased is higher. Influenced by factors such as higher willingness to travel to low-tier and county-level tourism destinations, increased supply of tourism resources and decreased prices, the travel budget of the surveyed residents has slightly decreased. The interest in shopping among residents' outbound tourism expenses has further declined, and they are more inclined to increase spending on dining, accommodation, and sightseeing. Hong Kong and Macau are still the preferred destinations for outbound tourism among respondents, with Southeast Asia and the Middle East gaining popularity. The view is to maintain the perspective that outbound demand > holiday leisure demand in China > domestic business travel demand > domestic daily optional demand, and to recommend the configuration of OTA, scenic spots, and gambling, and to pay attention to industry data turning points such as duty-free and hotel industry data.

The opinion of Citic Securities is as follows:

Domestic tourism: Demand remains resilient.

Among the surveyed residents, the proportion of those who have plans to travel during the summer of 2024 (July to August), are uncertain, and have no travel plans is 62%, 22%, and 16%, respectively, which is similar to the expected distribution of the summer of 2023, but there are changes in structure: the proportion of residents with a family monthly income of less than 0.01 million yuan who plan to travel has significantly increased (+12pcts), and the proportion of residents in third- and lower-tier cities has also increased by 7pcts. Influenced by changes in the population structure, residents are more inclined to take short trips in nearby areas during the summer of 2024 (+5pcts), and the travel budget has decreased slightly. The proportion of residents with a per capita budget of less than 3,000 yuan has increased from 49% to 54%, and the hotel prices planned for those surveyed have fallen compared to the 2024 Spring Festival. Looking ahead to the next 12 months, 65% of the surveyed residents expect their travel budget to remain the same, up 32pcts from January 2024; only 12% expect to increase their travel spending, down 30pcts from January 2024.

Outbound tourism: Demand continues to recover, and consumption structure changes.

In May 2024, China's international air passenger traffic on international routes has recovered to 84.6% of the level in the same period in 2019, and the number of Chinese tourists entering Thailand, Japan, and South Korea has recovered to 70%, 72%, and 79% of the level in the same period in 2019, respectively, but is still lower than the overall level of international tourists entering these countries. Looking ahead to the next 12 months, the number of outbound tourists is expected to further increase and the frequency is expected to increase. Among the surveyed residents, 33% have plans to travel abroad, of which 18% are for one trip, both higher than before the pandemic and in the past year. The proportion of those who plan to travel abroad two or three times is also higher than the actual travel over the past year. Compared with July 2023 and January 2024, the main reasons for the surveyed residents not planning to travel abroad include limited budget (36%), which is up 11pcts from January 2024, and expensive airfare (21%), which is up 9pcts. Interest in overseas shopping among surveyed residents has declined, with the highest expectations for expenditures on dining, accommodation, and sightseeing. South Korean and Japanese official survey data shows that the proportion of per capita shopping spending by Chinese tourists has decreased compared with 2019, and spending on dining, entertainment, hotels, experiences, and medical services has increased. Data from South Korea and Thailand both show that the proportion of free independent travelers among Chinese tourists has increased significantly since before the pandemic.

Risk factors: limited-sample survey leading to errors; calculation results deviating from the actual situation; slower-than-expected recovery progress of the domestic consumption market; lower-than-expected downstream demand; risk of unexpected changes in domestic and overseas travel policies; risk of unexpected changes in outbound visa processing policies; slower-than-expected recovery of overseas air transportation capacity; geopolitical risks; natural disaster risks; lower-than-expected global liquidity; risk of significant exchange rate fluctuations; lower-than-expected economic growth rate decline; lower-than-expected consumption downgrading trend; product price fluctuation risks; risks of significant increases in raw material and logistics prices; risks of unexpected changes in domestic and overseas policies; intensified industry competition; risks of overseas investment; risks of technological research and development; cost and expense control falling short of expectations; and risks stemming from unexpected business or capacity expansion.