Guotai Haitong Securities Co., Ltd. has released a research report suggesting the travel and tourism sector stands to benefit from policy support, decreasing marginal travel costs, and increased leisure time during peak seasons. This is expected to lead to an improvement in sector sentiment that surpasses previous pessimistic forecasts, potentially triggering a valuation recovery for related stocks.
Previously subdued expectations for the summer travel period may see an upward revision, with the autumn holiday period offering further long-term catalysts. The market had held low expectations for the second quarter due to multiple headwinds including oil prices, consumer spending power, and weather. However, as oil prices steadily decline and weather-related impacts become more quantifiable, the tourism sector has demonstrated notable resilience and maintained structural growth, indicating that summer performance could exceed earlier pessimistic projections.
The main points from Guotai Haitong Securities Co., Ltd. are outlined below.
Policy Support for Culture and Tourism
Supportive policies for the cultural and tourism sectors are being implemented intensively, reflecting a firm commitment to bolstering service consumption. The recent comprehensive rollout of the "15th Five-Year Plan" for building a strong tourism nation explicitly positions the cultural and tourism industry as a pillar of service consumption, setting the long-term development direction through initiatives in business model innovation, digital upgrades, and infrastructure improvement. Concurrently, the Ministry of Culture and Tourism has launched a nationwide summer cultural and tourism consumption season, allocating over 4.5 billion yuan in special subsidies covering various consumption scenarios such as accommodation, tickets, and travel packages, alongside tens of thousands of themed cultural and tourism activities, effectively stimulating latent consumer demand. Complementary policies facilitating inbound tourism and promoting cultural-tourism integration continue to be rolled out, forming a comprehensive industry support system. These policies cover multiple sub-sectors including hotels, OTAs, and scenic spots, which should aid in optimizing the industry's supply structure and improving the competitive landscape.
Lower Oil Prices Reduce Travel Expenses
Marginal improvements in oil prices are lowering travel costs. Previous increases in oil prices led to significant rises in airfare, negatively impacting both business and leisure travel. Recent declines in global oil prices have driven down domestic refined oil product prices, with civil aviation fuel surcharges following suit. The drop in oil prices benefits both short-distance and long-haul, high-value planned travel: lower fuel costs boost willingness for family self-drive trips, while cheaper airfares aid the recovery of long-distance, high-value travel demand. During the earlier phase of rising transportation costs, accommodation and destination spending were squeezed by higher travel prices, limiting their ability to increase rates. As transportation costs fall, hotels and destination consumption are likely to resume their previous steady price increase trend. Both hotels and OTAs will benefit from the dual effect of rising travel passenger numbers and the steady upward trend in accommodation pricing.
Summer Expectations and Autumn Catalysts
Previously low expectations for the summer period may improve, with the autumn holiday providing a longer-term catalyst. The market's low expectations for Q2, shaped by factors like oil prices, consumer spending power, and weather, are set against a backdrop where oil prices are now steadily falling and weather impacts are becoming clearer. The tourism sector has shown high resilience and maintained structural growth, suggesting subsequent summer performance may be better than the pessimistic outlook. The increase in leisure time has effectively addressed previous bottlenecks in service and tourism demand, with the spring holiday already delivering a significant tourism demand boost. It is anticipated that the upcoming autumn holiday will continue to contribute substantial tourism volume, optimizing the annual structure of peak and off-peak seasons. The implementation and standardization of systems like staggered holidays and subsequent paid leave schemes will significantly optimize the temporal and spatial distribution of tourism, tangibly enhance travel experience and real purchasing power, and shift passenger flow patterns towards a more normalized structure.
Risk Factors to Consider
Potential risks include extreme weather disrupting summer travel patterns, a weaker-than-expected recovery in residents' cultural and tourism consumption, intensifying homogenized competition within the industry, and delays in the implementation of supportive cultural and tourism policies.
Comments