During 5-day Labour Day holiday, China's consumer market remained robust. Indicators showed moderate improvement across different sectors. According to Ministry of Transport, during the 5-day period, total volume of cross‑regional passenger movements reached 1.5bn person‑trips, with a daily average of 303mn, representing a YoY increase of 3.5%. Nationwide domestic tourist trips totaled 298mn, up 11.3% YoY and representing 119% of the same period in 2019. Domestic tourism revenue reached RMB302bn, a YoY increase of 14.7%, which is 24.3% higher than the level in the same period of 2019.

Oil prices weigh on air travel – Rising oil prices have led to a contraction in flight capacity and a sharp increase in airfares. During the holiday, total civil aviation passenger volume reached 10.5mn, down 5.7% YoY. Consistent with this decline, the average number of daily flights fell 2.6% YoY to ~15.7k. On the pricing front, the average price (including taxes) for a one-way domestic ticket stood at around RMB960, up 12% YoY. For international routes, the average one-way ticket price rose 9% YoY to about RMB1,750. Other transportation modes showed resilience. Railway/Highway passenger volume was up 4.6%/ 3.5% YoY, waterway passenger volume edged down 1.4% YoY.

Sports and entertainment events emerge as a strong growth driver – The "event economy" has proven highly effective in stimulating consumption. During the holiday, there were over 34.4k commercial events organized, generating revenue of RMB2.1bn, a sharp 37% YoY increase. Meanwhile, attendance at events grew 31% YoY. Importantly, the spillover effect is substantial, it is estimated that for every RMB spent on an event ticket generates an additional RMB4.8 in adjacent spending across catering, accommodation, and transportation.

Fresh-drink market experienced broad-based strong growth – Leading players such as Chagee, Chabaidao, and Nayuki generally recorded HDD to triple-digit sales increases, particularly in stores located at tourist attractions, transport hubs, and event venues. For instance, Chabaidao achieved double-digit sales growth in cities hosting popular events or performances, including Jiangsu and Beijing. Chagee reported over 16mn cumulative transactions across its national store network, representing a 48% sequential increase. Meanwhile, Nayuki saw sales at many of its stores surge by more than 7x compared with the pre-holiday period, with a single store selling over 1k cups per day.

Casual dining led catering consumption growth – Nationwide catering sales increased by 31.4% YoY. Within the sector, casual dining recorded the fastest growth. Specifically, revenue from snack services rose 41.6% YoY, bar and tea house services surged 51.5% YoY, while full-service dining grew 26.8% YoY. Leading brands delivered particularly impressive results. Over the first three days of the holiday, Haidilao's more than 1,300 stores nationwide welcomed over 5 million customers in total. On the first day alone, reservations exceeded 25k tables. Meanwhile, store turnover rates in many locations rose by more than 20% YoY.

The hotel industry showed quality-driven demand – Nationwide, revenue per available room (RevPAR) increased slightly by 1% YoY, although occupancy came under some pressure. Against this backdrop, luxury hotels and those in first-tier cities outperformed the broader market, pointing to an ongoing shift toward higher-end consumption. Consumption upgrades also accelerated in lower-tier markets. For instance, bookings at high-star hotels in county-level areas grew by 34% YoY. Meanwhile, data from Trip.com revealed that, for the first time, the growth rate of travel activity in cities below the fourth tier surpassed that of first-tier cities. Overall, hotel consumption is shifting to being quality-focused.

Our view: As the key indicator of China's consumption dynamics, the tourism spending delivered moderate growth during the Labour Day holiday, despite growth rate slowing down compared with the high-base in 2025. We believe tourism demand remains resilient, particularly given the ongoing shift to quality-led consumption. Looking ahead, as the summer travel peak season approaches, we are more confident on the near-term performance of these names: Haidilao (6862.HK, HK$17.32, HK$96.5bn), Green Tea (6831.HK HK$9.41, HK$6.34bn), Chagee (CHA.O, US$10.99, US$2.1bn), Chabaidao (2555.HK, HK$5.96, HK$8.81bn), HWORLD (1179.HK, HK$38.36, HK$118.0bn). They are currently trading at 15.5x/8.5x/7.8x/8.4x/18.6x FY26E P/E, respectively. (Research Department)