China Galaxy Securities: The Spring Festival travel market has been highly prosperous for 26 years, and the platforms and duty-free tracks are facing dividends.

China Galaxy Securities released a research report stating that the overall travel market during the 26th Spring Festival has shown high prosperity, with domestic and international travel demands fully released. Online travel agency (OTA) platforms serve as the core entrance for travel bookings, comprehensively accommodating various types of bookings for domestic and international travel, including flights, hotels, and tour products. Pre-bookings before the festival have significantly increased compared to previous years, benefiting platform revenue and profit growth; leading companies in the duty-free industry are benefiting from the expected closure of Hainan and the increasing popularity of tourism in Hainan. Extended stays by tourists are driving growth in duty-free consumption, thereby realizing performance dividends. Key points from China Galaxy Securities: Event: The social service industry rose by 5.93% this month, with the following subcategories experiencing increases: professional services (10.37%), hotels and catering (5.56%), tourism and scenic spots (4.10%), education (1.29%). Important industry dynamics and news: 1) On January 29th, the State Council Office issued the "Accelerating the Cultivation of New Growth Points in Service Consumption Work Plan," focusing on nine areas including transportation, housekeeping, culture and tourism, and sports; 2) Booming duty-free sales on Hainan's outlying islands: As of January 27th, the amount of duty-free sales on Hainan's outlying islands after the closure totaled 6.28 billion, with 81,000 shoppers, representing a year-on-year increase of 35.9% and 21% respectively. Preview of Spring Festival travel data: The Spring Festival travel volume may reach a historical high, with increased rail and air transport capacity: According to the State Council's press conference, the cross-regional passenger flow during the 26th Spring Festival is expected to reach 9.5 billion person-times, an increase of 5.3% year-on-year. This growth is mainly attributed to the high number of travelers resulting from the longer Mid-Autumn Festival and National Day holidays in the previous year. The anticipated modes of travel are as follows: 1) Railway passenger volume during the Spring Festival is estimated to reach 540 million person-times, an increase of 5.1% year-on-year, benefiting from increased train services and optimization, with an overall seating capacity increase of 5.3% year-on-year; 2) The civil aviation transportation volume is expected to reach 95 million person-times, an increase of 5.3% year-on-year, with an increase compared to the National Day and Mid-Autumn Festival period of 1.9%. The Civil Aviation Administration will ensure an average of approximately 19,400 flights per day, up 5% year-on-year. Data from travel agencies shows that domestic flight bookings have exceeded 7.16 million tickets as of January 29th, with a daily booking volume increase of 16% year-on-year. This high frequency of bookings, combined with official flight forecasts, reflects strong civil aviation travel demand and steady release of flight capacity, which is expected to support improvements in passenger flow and revenue levels during the Spring Festival. Long holidays combined with staggered leave, leading to concentrated travel demand: This year's Spring Festival holiday is dubbed as the "strongest Spring Festival holiday ever," with the addition of staggered leave patterns, resulting in a significant increase in early returns to hometowns or travels. Data from travel agencies shows that domestic flight bookings for the period from February 2nd to February 14th have increased by 8% year-on-year. Additionally, reports from OTA platforms such as Ctrip and Tongcheng indicate that this year's holiday is expected to be one of the busiest in recent years. 1) Domestic travel: Diverse travel patterns have emerged with destinations resonating north and south. Domestic travel is showing a pattern of "heading south to avoid the cold, and heading north to enjoy the snow," with impressive performances in various subcategories. On one hand, benefiting from the first Spring Festival after the closure and the favorable climate, tourism in Hainan has surged in popularity. According to Ctrip data, as of January 27th, hotel bookings in Hainan province for the Spring Festival have increased by 191%, with hotel bookings in Haikou and Sanya increasing by 227% and 167% respectively, which is expected to significantly boost duty-free consumption. In terms of ice and snow tourism, Harbin has been listed as a popular destination on platforms such as Ctrip, Tongcheng, and Tuniu during the Spring Festival, and the popularity of snow fields in Jilin, Liaoning, Xinjiang, and other places continues to grow with ski resorts like Changbai Mountain Tourism Wanda and Wanfeng Tonghua seeing a 15% increase in Spring Festival bookings. 2) International travel: Visa-free policies combined with long holidays continue to drive market activity. For outbound travel, the popularity of new visa-free countries such as Russia and Turkey is on the rise, with Ctrip data showing a year-on-year increase in bookings for flights, hotels, and related products from these countries of 113% and 248% respectively as of January 27th. At the same time, long holidays have expanded the range of residents' travel, with data from Zhongxin showing a significant increase in bookings for deep European tours, with a 90% year-on-year increase in the number of travelers. Regarding inbound travel, "spending the Spring Festival in China" has become a new trend, benefiting from recent visa-free policies for both sides. Bookings for inbound travel from Russia and South Korea on Ctrip have increased by 471% and 95% respectively year-on-year, indicating the potential for cross-border consumption. Risk warning: Risks of intensified industry competition; risks of macroeconomic downturn; risks stemming from policies.