Tourism stocks surge as restrictions ease ahead of summer holidays

Zhu Shenshen
Market leader Trip sees "positive signals" after posting a money-losing first quarter result.
Zhu Shenshen

China's listed tourism companies surged on Tuesday with positive signals of a rebound, such as eased quarantine requirements for travelers, recovering demand and the looming summer vocation., China's biggest tourism platform, jumped 16.54 percent to HK$230.40 (US$35.40) on the Hong Kong market, despite posting a net loss for the first quarter.

The Shanghai-based company, formerly known as Ctrip, has seen "positive signals" recently, such as rocketing online searches and bookings for domestic air tickets and a recovery in overseas demand, especially across Europe and the Asia Pacific.

Revenue in some regions has returned to the pre-pandemic levels in 2019, said James Liang, Executive Chairman of Trip.

Based on updated pandemic control guidelines, the mandatory quarantine period for inbound visitors will be shortened to 10 days from three weeks.

Tourism stocks surge as restrictions ease ahead of summer holidays
Wang Rongjiang / SHINE

Visitors throng the "2021 Macau Week in Shanghai" in downtown Huangpu District last year. There are several positive signs of a rebound in the tourist sector.

Shares in pandemic-affected tourism firms surged on the news.

Huazhu Hotels jumped 13.45 percent to close at HK$32.9, compared with the 0.85 percent gain for the Hang Seng Index. Shanghai-listed China Eastern Airlines gained 4.49 percent to 5.35 yuan while Shanghai International Airport Co jumped 8.53 percent to close at 56.51 yuan.

Shenzhen-listed travel agency UTour Group rose by the daily limit of 10 percent to 7.04 yuan.

Hainan, Gansu and Sichuan Provinces no longer require visitors from low risk parts of Shanghai and Beijing to quarantine, fueling demand especially in Shanghai, which has been easing restrictions since the start of June.

Recent online searches and bookings for flights to Hainan and Sichuan provinces have jumped up to 50 percent from last month, according to Trip.

One-way flights from Shanghai to Sanya, the most popular city in Hainan, are fully booked at full price without any discounts.

The coming summer vocation and the reopening of amusement parks, including Shanghai Disneyland and Beijing's Universal park, will continue to boost the sector's overall recovery.

Between June 20 and June 26, Shanghai's shared-apartment bookings jumped about 50 percent from the previous week, with an average price of 641 yuan, according to Tujia, a Chinese Airbnb-like service.

Apartments around Shanghai Disney Resort are the most popular, with sales almost doubling in a week and an average price of 1,391 yuan.

Trip said it expected "a bright outlook" in the long-term despite its first quarter loss of 989 million yuan, compared with a net profit of 1.8 billion yuan a year earlier, due to the COVID-19 resurgence. Revenue was steady at 4.1 billion yuan.

Trip's accommodation reservation revenue, one of its major income sources, fell 8 percent from a year ago to 1.5 billion yuan.

But demand is recovering in some regions. In the past two weeks, accommodation revenue in West China and South China rebounded to 2019 levels.

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