Visitors stroll along the Badaling section of the Great Wall of China in Beijing, China on Tuesday May 4, 2021.

Yan Cong | Bloomberg | Getty Images

BEIJING – Millions of Chinese rushed to travel over the five-day Labor Day holiday, another sign of a gradual recovery in domestic consumption.

May 1-5 was the “hottest” holiday travel holiday since the coronavirus pandemic, Chinese travel booking site Trip.com said in a statement translated by CNBC on Wednesday. The reappearance of Covid-19 on the outskirts of Beijing earlier this year prompted local authorities to restrict travel during the Spring Festival in February.

Labor Day vacation bookings for hotels, rental cars, and other trips have more than tripled from the same period last year and are up more than 30% since 2019, Trip.com said without disclosing the dollar amounts. According to Trip.com, the Shanghai Disney Resort was one of the top 10 travel destinations, even for 21 year olds and youngsters.

Chinese consumers spent 1.67 billion yuan ($ 260 million) on movies during the holidays, mostly domestic movies, according to Maoyan ticketing website.

In total, 230 million trips were made within the country during this period, an increase of almost 18% from 2019, according to the Chinese Ministry of Culture and Tourism.

However, the total spending of 113.23 billion yuan ($ 17.48 billion) was about 4 billion yuan lower than the 2019 spending, the data showed.

At that level, per capita spending during the holidays was around 75% of 2019’s spending, said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “Overall, the economic trend continues to improve, but part of the service sector is not yet at the pre-Covid level.”

Individual consumer spending lagged behind the recovery in the Chinese economy as Covid-19 forced more than half of the country to temporarily shut down in early 2020. Retail sales declined last year despite overall GDP growth before rising in the first quarter of 2021.

International travelers turn to Hainan

The rush to travel domestically comes with quarantine requirements, and travel bans keep most Chinese people from venturing overseas.

Chinese international travel is down 87% over the past year and is not expected to return to pre-pandemic levels until the second quarter of 2023, consulting firm Oliver Wyman said in a report last week.

That means billions of dollars not spent overseas could potentially be spent at home or saved for future purchases, the report said. Chinese consumers spent $ 245 billion overseas in 2019.

The analysis found that nearly 60% of these travelers migrate to the southern tropical island province of Hainan, which has expanded its duty-free shopping centers in recent years.

For high-end luxury brands, Hainan will be much more appealing to them if they can open their own stores in the future rather than through a duty-free operator.

Imke Wouters

Partner at Oliver Wyman

According to state media, duty-free sales in Hainan from May 1st to May 4th were over 700 million yuan, citing the latest available figures from the local customs authority. For comparison, an eight-day vacation in October saw duty-free sales of 1.04 billion yuan in Hainan.

“May is the first (moment when) you can really see the true potential of Hainan without travel restrictions,” said Oliver Wyman partner Imke Wouters in a telephone interview on Thursday.

However, she pointed out that brands are currently required to partner with duty free centers in Hainan. As a result, profitability could be up to 50% less than in-house branches on the mainland.

“For high-end luxury brands, Hainan will be much more appealing to them if they can open their own stores in the future rather than through a duty-free operator,” said Wouters.