China’s real consumer strength—What Labor Day travel reveals
"Consumption downgrade" continuing?
China’s Labor Day holiday, which ran from May 1 to May 5 this year, is the first major break after Chinese New Year—and one of only two long holidays when most households can afford to take extended trips. That makes it a critical window for assessing real consumer confidence through tourism and spending data.
On paper, this year’s Labor Day holiday looked strong:
Domestic travel volume hit a record high: 314 million trips were made, up 60% from 195 million in 2019, surpassing pre-COVID levels.
Total domestic tourism spending rose 8% year-on-year.
But per-head spending still lags behind pre-Covid level: It reached 574.1 yuan this year, still below the 603.4 yuan in 2019.
So what does this mean? Is this a sign of recovery—or of consumption downgrade?
This year, that question carries more weight than ever. With U.S. tariffs and global trade tensions resurfacing, the key concern for investors is this: Can domestic demand pick up the slack as external demand weakens? And if it can’t—what does that mean for China’s macro outlook, and for your exposure to Chinese equities?
Here’s what I’ve observed:
Consumers are cautious—but not in crisis mode
The real economy doesn’t exactly feel like it’s booming—but it’s not weak enough to kill all discretionary spending. People are still talking about saving money and cutting unnecessary spending. That’s a reality we can’t ignore. But this doesn’t mean consumers are always choosing the cheapest options—especially when it comes to travel. For instance, our analysis of millions of posts on Xiaohongshu and Douyin shows that mentions of “budget travel” (穷游) remained relatively low as of March, compared to the same period in previous years.
Meanwhile, data from Qunar, one of China’s biggest OTAs, shows bookings for high-end hotels surged over 40%. Notably, residents in lower-tier cities led the trend, with high-end hotel bookings up 50%—even more than in tier-1 cities.
Bottom line? It’s not about being cheap. Consumers are asking: is it worth it? And if the answer is yes, they’re willing to pay for comfort. And compared to other discretionary categories, tourism—along with other forms of experiential spending—has actually performed relatively well. Many consumers carry a certain psychological weight after the past few years, as I’ve observed on the ground, which makes them more likely to see travel as a “worthy” expense.
Who’s dragging down per-person spending?
Why is per-head travel spending still below 2019 levels, even with a rebound of total trips?
First-time travelers are leading the holiday surge—but they aren’t big spenders.
According to Qunar, one of China’s largest OTAs, the number of people buying their first-ever plane ticket rose 30% YoY. The biggest jump came from travelers aged 19–22, with a surge of over 60%. (Many are college students).
Anecdotally, many in this age group are choosing to travel and unwind—partly because the job market is already difficult. Some say: “If I can’t find a job anyway, I might as well travel and see the world.”
That mindset is real. Youth employment still remains highly competitive. But young people are adapting. The vibe I’m getting on the ground is that, compared to 2023–2024, there’s less anxiety and despair. Despite a tough labor market, more are choosing to explore and see the world—and that’s a good thing. What better way to spend your time if you’re stuck in that situation?
For instance, on Xiaohongshu and Douyin, far fewer people have been talking about 躺平 (lying flat) since last October — a popular Chinese internet slang term that means doing the bare minimum to resist societal pressure.
Elderly first-time travelers are also rising. The number of travelers aged 60–80 buying their first plane ticket rose 40% YoY.
These new travelers are boosting trip volumes, but likely spend less than the traditional heavy spenders—urban middle-class consumers who historically drove China’s tourism recovery with higher per-person spending.
A psychological shift - high spenders aren’t spending as much
It’s not just about the economy — Chinese consumers’ philosophy of travel is fundamentally changing. In a way, I see a certain level of "fatigue" among travelers because holidays in China usually look like this:
People are tired of crowds, lines, and the pressure to check off famous tourist spots. This is especially true among high-spending urban consumers in China’s more developed cities — many of them have already been to those places over the past decade and no longer feel the need to pay for the hectic experiences. Instead, they’re turning to nature, freedom, and peace of mind. The “No fame, no crowd” is trending.
On Qunar, the top-searched keywords were: “reverse travel” (反向, meaning traveling from big cities to small counties), “less crowded” (人少), and “hidden gems” (冷门). Hotel bookings in small counties rose 30% YoY, with 60% of tourists from Tier-1 and new Tier-1 cities.
I saw this firsthand. I took a road trip this holiday, didn’t buy a single ticket, and visited only free places.
Not because I couldn’t afford it — but because so many attractions feel commercial, man-made, and uninspiring.
Many urban dwellers are now genuinely content staying home, or just driving a few hours to chill in nature.
The same story with the box office: down 51% YoY — not because of spending power, but because the movies are boring these days.
This isn’t frugality. It’s a shift in values.
Extremely divergent spending behavior
Staycation-style travel is booming among middle-class and affluent consumers in China. They’re happy to spend big on resort experiences, not sightseeing.
From what I’ve seen, ultra-luxury hotels like Aman Resorts and Banyan Tree were fully booked weeks in advance across most destinations. Club Med, which targets middle-class families, reported over 95% occupancy during the May Day holiday.
This year, with an extra day off and a weekend just a few days after the holiday, many turned it into an 11-day break (May 1–11) by using PTO.
Many affluent consumers also intentionally chose not to travel during May Day at all, because they can vacation whenever they want and avoid crowds entirely.
But that kind of flexibility is mostly available to higher-income groups — the ones with better-paid jobs and more control over their schedules.
On the flip side, most working-class people have no choice but to travel during official public holidays. That means overcrowded trains, peak prices, and limited options — not because they want to, but because they have to.
This divide is also one reason why per-person spending continues to fall.
China’s travel boom is real. But behind it is a deep divide in how — and when — people can afford to enjoy life.