China CNY travel data – Experiences please.. but at a lower price point
• China Spring Festival Data saw a 2.8x increase in trips taken across the holiday period; Spend per pax reduces further to c.90.5% of pre-pandemic levels
• Red hot destinations include near-border favourites of Macau and HK; Southeast Asia most preferred outbound destination
• SG – Budget conscious mindset amongst Chinese to see demand influx for mid-tier to upscale hotels in the pricing range of S$200 – S$300 per night; CLAS and FEHT to stand as top beneficiaries
• HK – Inbound tourism gathering pace, exceeding 2018 CNY level on average. Tenant sales recovery lagged while tourist-sensitive trades should have outperformed.
What’s new?
• China released holiday data across the CNY spring festival, which spanned across 8 days starting 10 Feb.
• China saw a total of c.87 million outbound passenger trips in 2023, with projections of outbound trip counts to reach 130 million in 2024, or a 50% y-o-y increase.
• Datapoints on spend per pax showed spending per trip during this holiday at RMB1,335, to be just c.90.5% of pre-pandemic levels.
• This represented a slowdown from recovery rates of c.97% across Chinese holidays last year, and partly mitigated by higher trip counts which rose 2.8x to 13.5 million trips (inbound + outbound), or returning to c.90% of 2019 levels.
• Our HK strategists gathered insights that continue to support spending cautiousness amongst consumers, prioritising essential goods, experiences over discretionary goods (China / HK strategy: CNY holiday data)
• Online travel agencies saw a surge in outbound travel bookings exceeding 2019 levels on the first day of spring festival.
• Southeast Asian countries were the top few destinations, with Bangkok hotel bookings x3 y-o-y and Singapore hotel reservations seeing a 800% y-o-y increase.
China Spring Festival Holiday data (% of 2019)
Source: Culture and Tourism Ministry, DBS HK
Our thoughts
Singapore Hotels -> time for mid-tier & upscale hotels to shine? The start of our China- SG 30 day Visa free arrangement came on a very timely date of 9 Feb, or one day ahead of the start of China’s Spring Festival holidays. We believe that 1Q visitorship data will see a spike in China-sourced travelers that are here on relative and friend visitation, one of the key holidays where family reunion is held above all priorities .. potentially even costs. Family travel accounted for c.45% of all trips according to Mafengwo, a catalyst we see for Singapore which has its fair share of citizens and PRs with families situated in China. Singapore hotels may be priced as one of the highest within the South-east Asia region, alongside a strong SGD:RMB currency. This could be seen as a key deterrent for cost-conscious Chinese, but we see trading down mentality amongst those that are prioritising their trips to Singapore to spend with loved ones. As such, hotels that are primely priced in the range of S$200 – S$300 per night could stand to benefit from the inflow of budget conscious travelers, within the mid-tier to upscale positioning. We also see longer-stay options for the likes of serviced residences benefiting from the influx of Chinese travelers this CNY. Singapore tourism board is forecasting a c.14% y-o-y increase in visitor arrivals this year, to hit c.15.5 million for full year 2024. A 50% y-o-y recovery in Chinese visitorship (as forecasted by China authorities) to Singapore will greatly benefit to potentially add another 700k visitors additional tourist footfall this year.
SG hotels – CapitaLand Ascott REIT (CLAS) and Far East Hosp Trust (FEHT) key beneficiaries of outbound travel amongst the Chinese in 1Q24. CLAS: beneficiary of exposure in APAC to benefit from both inbound and outbound travel amongst Chinese, and markets with more favourable RMB exchange rates; FEHT: full exposure in Singapore hotels, doubling down on mid to uptier hotels with affordable room rates.
Singapore hotel average daily rates across hotel tiers (S$)
Source: STB Stan, DBS Bank
Hong Kong inbound tourism gathering pace. During the CNY holiday (10 Feb to 17 Feb) over the past week, Hong Kong recorded total visitor arrivals of 1.44m, of which 1.25m or c.87% of the total were from Mainland China. On average, the number was c.180k per day, first time exceeding 2018’s level since the border re-opening in early 2023. Hotel occupancy was reportedly high at c.90% during the period. Despite the robust tourism numbers, selected retailers reflected that sales, albeit rising by a low-to-mid single digit y-o-y, remained c.20-30% below the pre-COVID level. Jewellery and cosmetics, which are more sensitive to visitor spending, should have outperformed other categories. This should improve sentiment towards Wharf REIC (1997 HK), given its strong exposure in discretionary retail in Hong Kong.