Tourism Sector Booms Ongoing

Here is the translation of the provided text into English: Data from the beginning of the year to date consistently indicate that the tourism industry's prosperity is on an upward trend, and it is expected to remain in a high-speed recovery phase at least until 2026.

Future policy catalysts and the increase in inbound tourism are anticipated to become significant increments in the tourism market.

At the start of the year, the market generally recognized the high prosperity of the tourism market for the whole year.

Despite the weakening of the sector's performance in the second quarter, the overall trend remains unchanged.

The recently concluded summer peak season, coupled with the upcoming Mid-Autumn Festival and National Day holidays, shows that the tourism consumption market will continue to maintain a high prosperity trend, with various sub-sectors benefiting to varying degrees.

Advertisement

Statistical data clearly show a market recovery.

During the summer travel period (July 1 to August 31), the national railway sent a total of 887 million passengers, with an average daily passenger volume of 14.312 million, setting a new high for summer travel passenger volume; the civil aviation summer travel passenger volume also set a new high, reaching 140 million passengers, with an average daily volume of 2.289 million, increasing by 17.7% and 12.3% compared to 2019 and 2023, respectively.

Two weeks after the end of the summer peak season, the Mid-Autumn Festival will arrive, which is also a small peak in the tourism market.

Fliggy data shows that the booking momentum for tourism services during the Mid-Autumn Festival is obvious.

As of September 5th, the reservation volume of domestic hotels, car rentals, tickets, etc., has increased by more than double digits compared to the same period in 2019; compared with the Dragon Boat Festival holiday, the overall reservation volume for the Mid-Autumn Festival holiday is also significantly larger.

Mafengwo big data shows that the "Where to go for the Mid-Autumn Festival" has increased by 110% in the past week, and the "Three-day Mid-Autumn Festival tour" has increased by 175% in popularity.

Young people who avoid the peak of summer family travel have become the main force of the Mid-Autumn Festival travel, with post-90s and post-00s accounting for nearly 40% of the current Mid-Autumn Festival orders.

Looking at a longer period, the prosperity of the tourism sector does not decrease.

According to CCTV news, under the favorable policy of visa-free and the strong promotion of the summer aviation market, on September 8th, the passenger throughput of international and regional routes at the capital airport exceeded 10 million people, a year-on-year increase of about 130%.

From January to August, the number of tourists from ASEAN and Japan and South Korea to China has increased exponentially.

Data shows that in the first half of the year, the number of domestic tourists was 2.725 billion, a year-on-year increase of 14.3%; the total expenditure of domestic tourists was 2.73 trillion yuan, a year-on-year increase of 19.0%, and the per capita tourism consumption increased by 3.8%.

The China Tourism Academy (Ministry of Culture and Tourism Data Center) predicted at the beginning of the year that in 2024, the number of domestic tourists and domestic tourism revenue will increase by 25% and 23% year-on-year, respectively.

Southwest Securities believes that from a medium and short-term perspective, it is expected that the tourism market will recover to 75%-80% of 2019 by 2024.

Currently, the willingness to travel is ranked first in consumer spending, and the tourism industry will continue to be in a high-speed recovery phase.

From a long-term perspective, future policy catalysts and the increase in inbound tourism are expected to add nearly 1 trillion yuan in economic value to the tourism industry.

With the gradual recovery and stability of the tourism industry's supply chain, the industry's cost-effectiveness is also higher and more rational.

According to Ctrip data, during the summer vacation, the average price of domestic air tickets decreased by about 10% compared to the usual, while the average price of international air tickets saw a double-digit drop year-on-year.

At the same time, the average price of hotel accommodation also slightly decreased year-on-year.

The number of orders in the study tour field has achieved significant growth, and the average cost of overseas study tours has decreased by about 40% year-on-year.

During the upcoming Mid-Autumn Festival holiday, the average price of a one-way domestic flight ticket (including taxes) is 770 yuan, which has also decreased year-on-year.

Shanghai Securities believes that behind the high cost-effectiveness of the Mid-Autumn Festival, it reflects the current situation of the domestic tourism market's uneven peak and off-peak seasons.

The trend of taking leave for travel, due to its high cost-effectiveness and the advantage of avoiding the peak, has become a new trend in the tourism market, and it is recommended to pay attention to the related listed companies in the travel chain.

Shanxi Securities believes that due to the focus on cost-effectiveness, county-level tourism is rising.

The consumption behavior of the general public has shifted from "paying a higher price to get better goods and services" to "paying the same or lower price to get better or the same goods and services."

More consumers return to rational pragmatism, trying to minimize irrational consumption and unnecessary expenditure, and county-level tourism is rising in the tourism market.

If the prosperity of the tourism market continues, the sub-industries related to the industry chain will all benefit.

For example, travel and chain hotels with strong certainty, and the recovery of the cross-border tourism market is expected to promote the recovery of airport duty-free and the acceleration of the introduction of new city duty-free policies.

Companies in the catering and scenic area sectors are expected to boost performance as demand increases.

Taking UTour as an example, the 2024 semi-annual report shows that the company achieved a revenue of 2.617 billion yuan, a year-on-year increase of 230%, and the net profit attributable to the parent company was 72 million yuan, and the net profit attributable to the parent company after deducting non-recurring gains and losses was 67 million yuan, all of which turned from loss to profit year-on-year.

Regarding the change in the company's revenue, the semi-annual report stated that this was due to "the rapid increase in the company's business volume during the reporting period, and the increase in the scale of income."

The company's profit in the second quarter has basically recovered to the level of 2019, and the profit margin is the best in the same quarter of history.

Dongwu Securities expects that the performance in the third quarter is likely to be stronger than the second quarter.

Moreover, as the leader of domestic outbound tourism operators, UTour has accelerated the layout of the country with a combination of wholesale and retail, and has a rich matrix of outbound tourism products.

During the COVID-19 pandemic, the industry supply was cleared, and the leading company is expected to benefit first from the recovery of outbound tourism, and the profitability is expected to continue to improve.

In terms of hotels, Huazhu Group, Jin Jiang Hotel, BTG Homeinns, Atour Hotel Group, Jinling Hotel, Junting Hotel, and HNA Group and other 7 major listed hotel companies achieved a total operating income of 26.857 billion yuan in the first half of the year, a year-on-year increase of 13.30%; the total net profit attributable to the parent company was 4.474 billion yuan, a year-on-year increase of 43.08%.

Overall, in the first half of 2024, the operating income of these 7 hotel companies has increased year-on-year, and the net profit attributable to the parent company of 6 companies has increased year-on-year.

Shanghai Securities believes that from the perspective of the industry development cycle, hotels are gradually entering the era of stock game, and building core competitiveness is the key to winning.

On the one hand, consumer demand for hotels has shifted from simple accommodation to pursuing more personalized experiences; on the other hand, the hotel track is more diversified and segmented, and the competition and iteration of products have also intensified.

In this context, the hotel industry needs to continuously find growth points and breakthrough points.

Jianghai Securities also recommends paying attention to the scenic area plate, hotel plate, and catering plate, among which the scenic area plate includes Huangshan Tourism and Guilin Tourism, the hotel plate includes BTG Homeinns and Jin Jiang Hotel, and the catering plate includes Quanjude and Xi'an Catering.

Entry and exit tourism is recommended to pay attention to China Youth Travel Service and UTour.

Southwest Securities also believes that most of the valuation levels of listed scenic area companies are around 15-25 times, considering that the industry is still in a high-speed recovery phase, with good long-term prosperity, and the overall scenic area plate is optimistic about the opportunity for valuation repair, and it is recommended to pay attention to companies with long-term performance catalysts.

Shanghai Securities recommends paying attention to the mass tourism market.

As travel has become a part of the daily life of Chinese people, the mass consumer group has gradually become the main force of China's tourism consumption and has brought huge growth potential to the market.

Tongcheng Travel achieved a revenue of 4.25 billion yuan in the second quarter of 2024, a year-on-year increase of 48.1%, setting a new high for the single-quarter revenue scale; the adjusted net profit was 660 million yuan, and the adjusted net profit rate was 15%, and the company's performance growth rate is higher than the industry average.

Therefore, Shanghai Securities is optimistic about Tongcheng Travel's business expansion, increasing efforts to promote the overseas strategy, and continuously increasing the reach to grasp the dividends of the mass market.

Shanxi Securities' investment advice is that entry and exit tourism: the visa-free policy promotes the continuous recovery of entry and exit tourism.

Since 2024, various airlines have also increased the number of international flights, and the price of air tickets has decreased significantly, igniting consumers' enthusiasm for travel.

Hotels: mid-range hotels continue to grow, and the sinking market has become the main direction for development.

The low-tier cities with the largest stock market and the lowest chain rate in the hotel industry show a strong supply and demand, and the reverse travel and other travel methods drive the growth of accommodation demand in the sinking market; at the same time, there is still a large room for improvement and optimization of the overall chain rate and product structure in the hotel industry.

Catering: snacks, small drinks, small gatherings, small shops, small cities, small and beautiful are favored, catering has entered a new cycle of rational quality consumption, and the "small and beautiful" catering formats and models have ushered in a development moment.

Duty-free: the sales structure of duty-free goods on the island has improved; the city duty-free shop is waiting for the policy; the recovery of entry and exit passenger flow drives the growth of airport duty-free business.