China's Domestic Tourism Boom: A Golden Opportunity for Investors?

The 314 million domestic trips recorded during China’s May Day holiday in 2025 mark a historic milestone, signaling a post-pandemic tourism revival that could redefine investment opportunities in travel, infrastructure, and consumer goods. This surge—driven by policy reforms, shifting consumer preferences, and geographic diversification—offers clues about where capital can find growth in the world’s second-largest economy.

The Post-Pandemic Tourism Rebound

The May Day holiday, traditionally a key travel period, has become a barometer for China’s economic health. After years of pandemic-related restrictions, domestic tourism rebounded sharply: trips rose 28.2% in 2024 compared to 2019, hitting 295 million, before reaching 314 million in 2025—a 6.2% year-on-year increase.

However, spending lagged behind trip numbers, with per capita tourism expenditure at just 88.5% of 2019 levels in 2024. This gap highlights a value-seeking shift among travelers, favoring budget-friendly destinations and mid-range accommodations.

Policy-Driven Growth and Structural Shifts

China’s tourism revival is not accidental. Government policies have played a central role in boosting demand:
- Tax Refunds and Entry Simplification: By 2025, inbound tourism bookings surged 141% year-on-year, fueled by tax refunds for international travelers and streamlined entry procedures.
- Subsidies and Incentives: “Trade-in” policies for appliances and automobiles in regions like Zhejiang and Jiangsu boosted durable goods sales by 61% year-on-year in 2025, indirectly supporting travel-related spending.
- Rural Revitalization: Policies targeting lower-tier cities and rural areas spurred a “county-level counterattack,” with fourth-tier cities and below seeing 25% YoY tourism consumption growth—outpacing higher-tier cities by 11 percentage points.

The Rise of “Reverse Tourism”

The May Day data reveals a seismic shift in travel preferences. Urban elites are no longer the sole drivers of tourism growth. Instead, rural and smaller cities are emerging as key markets:
- Lower-Tier Destinations: Cities like Hefei, Tangshan, and Xuzhou recorded tourism growth exceeding 2019 levels by double digits in 2025. In Gansu Province, rural tourism attracted 3.35 million visitors, with consumption up 29.8% year-on-year.
- Cultural and Ecological Experiences: Music festivals and hidden gems like Heilongjiang’s Jingpo Lake drew urban travelers seeking authenticity over crowded tourist traps. Homestays in such areas saw bookings rise over 30% year-on-year.
- Self-Driving Tourism: Car ownership and road infrastructure improvements made self-driving the dominant travel mode, enabling decentralized exploration.

Challenges Ahead

Despite the optimism, risks remain:
- Hotel Pricing Pressures: Average daily rates (ADR) for hotels dropped 28% from 2023 to 2024 due to oversupply and outbound travel diversion. While budget hotels thrived (ADR up 33% vs. 2019), luxury properties struggled.
- Spending Plateau: Per capita tourism spending has yet to fully recover, suggesting households remain cost-conscious.
- Film Market Decline: Box office revenue for May Day 2025 fell to less than ¥900 million, down 40% from 2024, as travelers prioritized travel over local entertainment.

Investment Opportunities

The data points to three key sectors for investors:
1. Travel Tech and Infrastructure: Companies enabling rural tourism (e.g., homestay platforms, travel apps targeting smaller cities) and self-driving infrastructure (EV charging networks, navigation services) stand to benefit.
2. Consumer Goods and Real Estate: Subsidy-linked sectors like home appliances and automobiles (e.g., Zhejiang’s “trade-in” policies) could see sustained demand. Meanwhile, county-level real estate with tourism-linked amenities (e.g., near scenic spots) may offer value.
3. Cultural and Ecotourism: Investments in heritage preservation, rural cultural festivals, and eco-destinations align with the “reverse tourism” trend.

Conclusion

China’s May Day tourism data underscores a structural shift: domestic travel is no longer dominated by first-tier cities or luxury spending. Instead, it is fueled by lower-tier markets, cultural experiences, and cost-effective mobility—a recipe for long-term growth. Investors ignoring this shift risk missing out on opportunities in travel tech, rural infrastructure, and consumer goods.

The 314 million trips in 2025 are not just a recovery—they’re a new normal. With policies prioritizing domestic consumption and rural revitalization, the sector is poised to outperform even as global markets stagnate. For investors, the question isn’t whether to bet on China’s tourism revival, but how to do it right.