CITIC SEC released a research report stating that the combination of the "longest Lunar New Year holiday in history" and favorable weather conditions led to a robust travel market during the holiday period. The extended break prompted multi-segment travel patterns, such as "returning home first, then traveling" or visiting multiple destinations. Hotel RevPAR growth exceeded expectations, off-island duty-free sales remained strong, and numerous tourist attractions issued visitor capacity restrictions. Looking ahead for the full year, service consumption is a key area for policy support. As travel is a major component of service consumption, the firm anticipates stronger-than-expected demand growth and recommends paying attention to sector allocation opportunities. Key views from CITIC SEC are as follows:

Overall: Extended holiday duration and favorable weather supported strong travel demand. This year's Lunar New Year holiday spanned nine consecutive days, with the possibility of extending it to 15 days by taking five additional days off, making it the "longest Lunar New Year holiday in history" and conducive to travel. According to meteorological data, temperatures across most parts of China were higher than average during the holiday, with generally suitable conditions for tourism. Regions such as South China, eastern Jiangnan, and parts of southwestern China experienced comfortable weather, with areas like southern Guangdong, southern Guangxi, southern Yunnan, and Hainan reaching "optimal comfort" levels. Data from the Ministry of Transport showed that cross-regional passenger flows in the first 20 days of the Spring Festival travel season increased by 5.2% year-on-year, with air, rail, and road transport rising by 5.4%, 4.9%, and 5.4%, respectively. From New Year's Eve to the sixth day of the lunar new year, daily cross-regional passenger flows changed by -5%, +6.3%, +9.7%, +11.6%, +12.3%, +11.7%, and +11.2% year-on-year. According to CADAS, average domestic airfares from the first to the fourth day of the lunar new year rose 5.8% year-on-year. The National Immigration Administration projected daily average border crossings during the holiday to exceed 2.05 million, up 14.1% from the previous year, supported by visa-free policies and consumption stimulus measures, leading to growth in both inbound and outbound travel. Commerce ministry data indicated that daily average sales at key retail and catering enterprises in the first four days of the holiday increased 8.6% compared to the same period in 2025. In the first three days, footfall and revenue at 78 key monitored pedestrian streets and commercial districts rose 4.5% and 4.8% year-on-year, respectively, while domestic travel spending on major platforms grew 4.5%.

Online Travel Agencies: Multi-segment travel boosted overall bookings, with lower-tier cities and cross-border markets as key growth drivers. The extended holiday reshaped travel patterns, leading to multi-destination trips. Data from Tuniu showed average travel duration per person reached 5.9 days, up 1.1 days year-on-year. Ctrip reported a 19-percentage-point increase in travelers visiting two destinations. Overall bookings surged; Fliggy data indicated hotel room nights and attraction ticket sales in the first three days of the holiday jumped over 80% and 54% year-on-year, respectively. Travel trends included "reverse migration" of elderly relatives to cities and increased "micro-vacation" spending in surrounding areas by returning hometown visitors. Meituan data showed leisure and entertainment orders in lower-tier cities grew nearly 30% year-on-year, with young consumers accounting for over 60% of spending. Destination choices reflected a "north-south convergence," with Harbin's ice and snow tourism remaining popular, while southern warm-weather travel shifted from Sanya to more affordable, culturally rich lower-tier markets. Ctrip reported order growth in Quanzhou, Chaozhou, and Jieyang exceeding 100% to 200%, demonstrating strong consumption resilience in county-level tourism. Cross-border travel saw volume and price increases, with long-haul outbound travel gaining popularity. Fliggy noted over 60% of bookings were for destinations within an eight-hour flight radius or beyond, with Australia and New Zealand seeing over 100% growth. Inbound travel benefited from visa-free policies, with foreign tourists engaging in immersive cultural experiences in cities like Guangdong. Ctrip data showed orders for 4-7 day and over 7-day stays by foreign visitors growing 18% and 12% year-on-year, respectively.

Hotels: Volume and price increases drove RevPAR growth above expectations. Data from a hotel industry source indicated that average occupancy rate (Occ) in the first seven days of the nine-day holiday was 50.0%, up 3.1 percentage points year-on-year. Average daily rate (ADR) was RMB 300.4, up 11.0% year-on-year, while RevPAR reached RMB 150.4, up 18.6% year-on-year. By segment, economy hotel Occ was 49.5%, up 3.2 percentage points year-on-year, while mid-scale and above Occ was 51.0%, up 2.8 percentage points. ADR for economy, mid-scale, upscale, and luxury hotels increased by 11.5%, 12.9%, 10.7%, and 6.7% year-on-year, respectively. Daily room nights averaged 10.73 million, up 13.1% year-on-year. RevPAR growth significantly exceeded the firm's pre-holiday expectations (mid-to-high single-digit growth). Possible reasons include a low base in 2025, when an eight-day holiday saw Occ, ADR, and RevPAR decline by 1.2 percentage points, 5.9%, and 8.3% year-on-year, respectively. The extended 2026 holiday broke traditional travel patterns, with many opting for segmented trips, leading to multiple occupancy peaks and an extended tail rather than a single concentrated spike.

Duty-Free: Strong off-island duty-free sales, with Sanya outperforming Haikou. Following border reopening, Hainan saw record tourism demand during the holiday. According to Hainan Daily, the island's three major airports handled over 215,000 passengers on February 19, up 6.3% year-on-year. Boosted by increased visitor numbers, optimized duty-free policies, government vouchers, and store promotions, off-island duty-free sales grew sharply. Haikou Customs reported sales and shopper numbers in the first five days of the holiday reached RMB 1.38 billion and 177,000, up 19% and 24.6% year-on-year, respectively, though average spending per customer fell about 4.5%. Sanya's Commerce Bureau stated duty-free sales in the city exceeded RMB 200 million on the first day of the lunar new year, remaining above that level in subsequent days, with year-on-year growth rates of 36.7%, 27.6%, 28.7%, and 18.2% on the second to fifth days. Haikou reported cumulative duty-free sales of RMB 882 million in the first seven days, up 8.6% year-on-year.

Attractions: Strong visitor numbers prompted capacity restrictions at many sites. Favorable holiday length and weather led to robust attraction attendance, with multiple sites issuing visitor limits. The firm's tracking of listed companies' attractions showed: 1) Songcheng Performance Development: In the first eight days, show counts at self-owned projects increased about 4% year-on-year, with Zhangjiajie, Hangzhou, Shanghai, and Xi'an leading growth. "Xi'an Eternal Love" performed 21 times in a single day, setting a new record. 2) Xiangyuan Cultural Tourism: Visitor numbers in the first four days reached 264,500, up 20% year-on-year, with revenue at Huanglong Cave, Bailong Elevator, Fenghuang Ancient Town, Qiyun Mountain, and Bifengxia growing 79%, 43%, 31%, 56%, and 27% year-on-year, respectively. 3) Jiuhua Mountain Tourism: Visitor numbers in the first eight days saw double-digit year-on-year growth. 4) Changbai Mountain: The attraction received 38,900 visitors in the first four days, up 77.5% year-on-year. 5) Sante Cableway: Estimated visitor growth in the first eight days was between 10% and 20%.

Gaming: Strong holiday demand, with post-holiday tail effect to watch. Macau welcomed 1.179 million visitors from the first to sixth day of the lunar new year, up 7.9% year-on-year (106% of 2019 levels), with mainland visitors rising 9.7% to 921,000 (110% of 2019). Gross gaming revenue (GGR) growth expectations for February vary due to timing differences, with median market expectations at 10.5% year-on-year growth (optimistic: 22%; pessimistic: 4%). Given that core gaming customers preferred visiting Macau during off-peak periods in 2025, the firm expects weaker GGR in the first half of February, with the post-holiday tail effect supporting overall monthly performance. The firm projects February GGR growth of 5% year-on-year (14% growth for January-February combined).

Investment Strategy: The extended nine-day Lunar New Year holiday and favorable weather supported a vibrant travel market, characterized by multi-segment trips. Hotels saw significant volume and price increases, with RevPAR exceeding expectations. Off-island duty-free sales were strong, particularly in Sanya. Attractions experienced robust demand, leading to capacity restrictions. For 2026, service consumption remains a policy priority, with travel-related sectors poised to benefit. Demand is expected to show a K-shaped recovery, with low-base effects for mid-market leaders and scaling overseas expansion. Supply-side innovation, policy support, and AI-driven efficiency gains will also play roles. The firm recommends three investment themes: 1) high-quality leisure travel companies; 2) resilient, growth-oriented leaders in cyclical leisure segments; 3) gaming operators and leading ready-to-drink beverage brands with high demand elasticity. Additionally, monitor regulatory developments for online travel agencies and the recovery of business demand and AI applications in human resources.

Risk factors include worse-than-expected economic slowdown, accelerated consumption downgrading, unexpected changes in travel policies, visa processing disruptions, slower recovery of international flight capacity, intensified competition, and significant currency fluctuations.