Finance
China’s Golden Week’ travel boom masks a bruising price war
Tourists visit the Confucius Temple market area in Nanjing, Jiangsu province, China, on Oct. 1, 2025.
Cfoto | Future Publishing | Getty Images
BEIJING — The latest sign of hyper-competition, or “involution,” has emerged in China’s tourism industry, adding to concerns about growing deflationary pressure in the broader economy.
Over the Oct. 1 to 8 public holiday — dubbed “Golden Week” — total domestic tourism trips reached 888 million and generated 809.01 billion yuan ($113.63 billion) in revenue, according to official data released Thursday. That’s up by 1.8% and 7.6% from last year, respectively, according to CNBC’s calculations of the figures.
The gains, however, slowed from the May 1–5 holiday earlier this year, when domestic trips and tourism revenue grew 6.4% and 8% respectively. In fact, average spending per domestic tourist trip during the Golden Week was also around 3% lower than in 2019 before the pandemic, Goldman Sachs pointed out Thursday.
“The Golden Week was ‘Golden Weak,'” said Mix Shi, founder of PoshPacker Hostels Chengdu Group.
Although his three hostels in the city ended up being fully booked, Shi said he had to cut nightly rates by about 60% — because nearby hotels dropped prices even more.
“Way too much money has been pouring into the hotel industry lately,” Shi said, noting, “the competition is insane, and some really nice places are going for dirt cheap. It’s great for travelers because they have more choices, but it’s a real blow to hostels.”
Chengdu, the capital of Sichuan province in southwestern China, ranked second to Nanjing, capital of Jiangsu province in the east, in tourism spending for the holiday on the Meituan online booking platform.
Among local and international visitors to hostels in mainland China, Chengdu’s popularity more than doubled from last year’s Golden Week, second only to Shanghai, according to HostelWorld. Still, average bed prices fell more than 20% in both cities — to 165.70 yuan ($23.27) in Shanghai and 80.99 yuan in Chengdu.
While most locals have only a handful of paid days off each year, China has sought to encourage businesses to give workers more vacation days and extended official public holidays to boost consumption.
This year’s Golden Week was one day longer than usual because it coincided with the Mid-Autumn Festival, which follows the agrarian calendar. The festival fell on Oct. 6 this year, versus Sept. 17 last year.
“The Mid-Autumn Festival is considered to be a family reunion festival,” said AJ Wang, owner of the X Hotel and Observatory Hill House venues in the northeastern coastal city of Qingdao.
“The real Golden Week, in terms of revenue generation, actually ends on the 6th,” he said, noting he had to cut prices after that date by 60% due to falling demand.
Official domestic tourism revenue for the Golden Week alone rose by 15.4% from 2024, but when including last year’s Mid-Autumn Festival revenue figures, the comparable revenue growth slowed to 7.6%, CNBC calculations showed.
“Everyone’s working harder, spending more, but the profit gap stays small,” said Sasa Yau, who runs a hostel and restaurant in the southern city of Guangzhou.
Yau said his daily restaurant sales surged from the typical 3,000 yuan to as much as 10,000 yuan during the Golden Week, with the average customer spending just 30 yuan.
“We were busier than ever and broke our revenue record,” Yau said. “There are only four of us running the show, so by the end of the week we were so tired that when I said, ‘Let’s celebrate with a late-night meal!’ everyone just said, ‘Can we celebrate by sleeping instead?'”
Hunting for deals
In Chengdu, famous for its Giant pandas and spicy food, Shi said travelers tend to book rooms only a day or two in advance instead of a week or two ahead, making accommodation rates unpredictable
China’s vast network of high-speed trains and airports — with flights sometimes cheaper than train tickets — has made travelling on a whim fairly easy. Large price swings and challenges in booking tickets for the first or last day of a public holiday are pushing travelers to stagger their trips when possible — and save money.
Many tourists chose to travel slightly before or after the Golden Week period this year, according to Chinese travel booking site Trip.com. It noted that hotel prices in late September were about 20% cheaper than during the Golden Week, while mid-holiday airfares were more than 30% cheaper than at the start of the break.
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Alibaba-owned travel booking site Fliggy said average spending per travel booking rose 14.6% from a year earlier, and noted that far cheaper flights started the weekend after the holiday, such as a flight from Shanghai to Hong Kong for less than 400 yuan ($56).
Official figures also pointed to a rise in road trips, with the holiday seeing an average of 304 million trips per day, mostly by car.
“The Golden Week unleashed a wave of energy across China: record-breaking travel, booming business activity, and fresh spending trends all gave domestic demand a solid boost,” said Bruce Pang, adjunct associate professor at CUHK Business School.
“Still, it might take a while before the [consumer price index] returns to positive [year-on-year] growth, as food prices and oil prices remain soft compared to their peak,” he said.
China’s official consumer prices fell by 0.4% in August from a year earlier but rose 0.9% when stripping out food and energy prices. The tourism sub-segment saw prices rise 0.7% year over year in August, but they were 0.3% lower for the January to August period compared with the same period in 2024.
Travel platforms also reported increased demand in smaller cities, where prices can be far lower. Chinese booking site Tongcheng said hotel bookings in at least 30 such cities and less developed areas more than doubled from a year ago.
China’s inflation data for September is due Oct. 15, and retail sales on Oct. 20. Retail sales rose just 3.4% in August from a year ago, missing analysts’ expectations.
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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