China Tourism Market Report

Posted by Steven Chow on October 24, 2011 3 Comments 1. Current Status of Tourism Market

Maintaining an annual growth rate of 7%, the tourism in China has already become a new sector of economic growth. It has promoted the development of related industries, society and economy and has already become one of Chinas pillar industries. Tourism industry in China consist mainly of hotel industry, catering, transportation, travel agencies and tourist attractions management industries, among which hotel industry, travel agencies and transportation are the three pillars of the tourism industry. Tourism promotes the economic growth, helps to develop relevant industries in tourist cities, offers working opportunities, improves the social, cultural and ecological environment, increases the interregional communication and interactions, and enhances the quality of the population. During the 2011 China Tourism Trade Fair, Shao Qiwei, Director of the National Tourism Administration said that the domestic tourism is one important feature of economic and social prosperity. During the Eleventh Five-Year period, the average annual number of domestic tourists reached 21 million, increased by 11.7%, domestic tourism revenue was 1.26 trillion yuan, with an annual growth rate of 18.9%. At present Chinas tourism market is on the way to becoming the worlds largest one. According to the latest survey of China Tourism Academy, under the influence of favorable factors such as strong international and domestic economy growth, steady rise in the RMB exchange rate and the continuous lowering of the destination countries visa threshold, Chinas outbound tourism has created a record high both in number and in consuming power. Looking into 2011, the foundation for economic recovery is more stable. Chinas economic growth will maintain an annual growth rate of 8%, which ushered in a new era of peoples livelihood. Especially after the two goals proposed by State Councils Document No. 41 in 2009 have been carried out, the development of tourism has been intensified. Chinas outbound tourism market will continue to maintain a double-digit percentile growth; the annual growth rate will up by 13%, spending on overseas travelling is expected to exceed $ 50 billion, reaching a 55 billion dollar high.

In 2006, China received 129 million foreign tourists and more than 1.3 billion domestic tourists, total revenue of tourism amounts to 893.5 billion Yuan, and nearly 10 million people were directly employed in tourism industry. Tourism has become a key industry which has a close bearing on the livelihood of hundreds of millions of people. In 2009 Chinas domestic tourists reached 1.902 billion people, up by 11.1%; the revenue of domestic tourism of 1.02 trillion Yuan, up by 16.4%; China received 126 million foreign tourists, down by 2.7%; the number of inbound travelers amounts to 50.88 million, down by 4.1 %; foreign exchange earnings in tourism totaled at $ 39.7 billion, down by 2.9%;, total tourism income was 1.29 trillion Yuan, an increase of 11.3%. 2. Characteristics of Chinas Tourism Market (1) Characteristics of Chinas Domestic Tourism Market Chinas tourism market enjoys a great variety of uniqueness, such as travel demands come mainly from Chinas young people who desire to experience new world; every year the average number of people who go on overnight leisure trips for the first time is 25 million; Chinese tourists may travel longer than the Western tourists, and often with more friends traveling together; more than half of respondents regard online information as their most trusted source of travel plans; most Western tourists prefer to spend most of their travel budget on accommodation, while nearly half of Chinese tourists will spend their money on shopping. It is obvious that Chinese tourists differ quite significantly from the Western tourists, which means that the travel companies need to offer different services to them.

(2) Characteristics of Chinas Outbound Tourism Market Experts said that the current outbound tourism market is characterized by 4 major features such as an expanding market scale and increasing customer satisfaction. The market will continue to maintain a double-digit growth, the annual growth rate is expected to reach 13%, and the cost of outbound tourism is expected to hit a $ 55 billion new high. Firstly, the outbound tourism market continues to expand. The tourist structure was further optimized. In 2010, Chinas outbound market continues to maintain a strong growth. The number of outbound tourists in 2010 is 57.39 million, an increase of 20.4%, among which the outbound tour for private purposes further strengthened its role as the major tourism pattern; the percentile of people went on outbound tour on public duty reduced to less than 10%, only 9.92%. Secondly, the destinations opened to Chinese tourist increased steadily, and the visa processing time was shortened. Destination for Chinese tourists reached 140 countries and regions, the formally open destinations amount to 110. Thirdly, tourism safety raised more concerns. The travel safety insurance was further regulated Emergencies such as volcanic eruption in Iceland and the Middle East political turmoil have raised many concerns about the travel safety of outbound tourism. In this regard, the relevant departments have been working hard to optimize the rescue mechanism according to the situation. They had especially made significant improvement on travel insurance system. On October 29, 2010, the successful signing of Travel Insurance Cooperation Agreement between China and Russia had accelerated the docking of Chinese travel insurance system with that of the foreign countries. On November 8th, 2010 the Administrative Measures for Travel Agency Liability Insurance was issued, which marked a renewal of legal basis for overseas travel insurance. Fourthly, the consumption scale expands significantly, and the overseas payment becomes increasingly convenient.

In 2010, the spending on overseas travel was $ 48 billion, an increase of 14%, reaching a new record high. And the total consumption ranked fourth in the world. Shopping has become an important factor for promoting the growth of consumption. Currently, spending on shopping accounted for 76% of total expenditure of mainland tourists to Hong Kong. After the overseas CUP acceptance network was opened to all the Union-pay cards, currently there are 98 countries and regions opened to CUP business. Its acceptance network was expanded. Besides, an overseas cardholder service system including ATM, convenient Chinese operation interface, preferential merchants, and foreign and overseas hotlines are improving and perfecting over time. 3. Market Prospect of Chinas Tourism According to 2011 Chinas Tourism Market Trends Observation and Forecast, by 2020 China will become the worlds largest tourist destination country. This decade will be the golden years for the development of Chinas tourism industry. By 2015, Chinas tourism industry will account for 8% of the GDP, and the percentile in 2020 will be 11%. As Chinas tourism industry continues to maintain a rapid growth, tourism will become an important sector in Chinas national economy. By 2020, the national tourism value added is expected to account for more than 12% of value added in the service industry. It is estimated that over the next 10 years, Chinas tourism industry will maintain an average annual growth rate of 10.4%, among which personal travel spending will enjoy an average growth rate of 9.8%, the growth rate of businesses and government spending will reach 10.9%. By 2010 Chinas total tourism revenue will account for 8% of the GDP, as compared with 5.44% in 2002. By 2020, China will become the worlds largest tourism destination and fourth larg est

exporter of tourists. Therefore, as one of six emerging industries, tourism industry in the next few years will enjoy great investment opportunities and development potential. 4.Relevant Laws and Regulations on China Tourism Market With the development of Chinas tourism industry, the tourist exchanges between China and other countries are developing steadily. At present, 32 foreign travel agencies have set up branches in China. And Chinas tourist agencies had also set up 17 branches overseas. China has establish close links and has conducted a series of important cooperation with the United Nations World Tourism Organization, Pacific Asia Travel Association, the World Travel & Tourism Council and other international tourism organizations. The rapid development of China outbound tourism has made China the largest passenger source country in Asia and the major emerging passenger source country in the world. Nowadays many countries and regions have reduced the visa threshold for Chinese tourists. For example, the 25 contracting country of Schengen Agreement have jointly implemented the EU visa code, which promotes visa facilitation and reduces visa fees appropriately; Germany launched an online reservation system; Korean Ministry of Justice issued Proposal on Relaxing Chinese Tourists Visa Standards, and Japan also launched Japan in July a more relaxed personal travel visa policy.

It is understood that Chinas tourism industrys twelfth 5 year plan has basically been completed. And The National Recreation Program would help to further reduce the operational, transportation pressure on the scenic zones and properly arrange the volume of travelers. the offshore duty-free policy carried out in Hainan Island will help the island to become a international tourism island. And the regional favorable policy implemented in Shanghai, Tibet, Guangxi, Yunnan and other places will also be boost the development of local tourism.

In order to effectively protect legitimate rights and interests of consumers and travel agents engaged in outbound tourism, optimize tourism development environment, regulate behavior of the outbound tourists, prompt honest business and consumption behaviors, reduce travel contract disputes, the National Tourism Administration and the State Administration for Industry had jointly developed Contract for Outbound Chinese tourists (model version) in accordance with the Contract Law, Law of the Peoples Republic of China on Protection of Consumer Rights, The Rules of Travel Service Industry Management, Measures for Administration of Outbound Tours by Chinese Citizens, and other relevant provisions of laws and regulations. 5. Brief Introduction to Famous Travel Agency in China (1) China Travel Service Head Office Co. Ltd.

China Travel Service Co., the parent company of China CTS Group was founded in April 1928. It is one of 54 key state-owned enterprises under the direct governance of the central government and is one of the four mainland Chinese enterprises in Hong Kong. With tourism as its core, industrial investment (steel), tourism, real estate, logistics trade as its pillar industries; the Group has now developed into a large enterprise group wellknown at home and abroad. By the end of 2008, the group has total assets of approximately 50 billion Yuan and more than 40,000 employees. It is Chinas oldest, largest and most welldeveloped tourism enterprise groups. In July, 1990 China Travel Service (Holdings) Company and China Travel Service Group were established in Beijing and co-located with the China Travel Service Head Office. It was the first travel agency that had served foreign customers, Taiwan customers and had organized outbound trip for Chinese citizens. CTS trademark was awarded the title as Chinas Famous Brand. In 2002, it was listed in Chinas Top Ten Recognized Trademarks, Chinas Famous Tourism Brand( ranked by China Tourism News) and other awards. China Travel Service Head Office was also in 2002, 2004 ranked by Travel Weekly as Best Chinese Outbound Travel Agents. In 2005 it was ranked by World Brand Lab as Chinas Most Influential Brand and won the trust among a vast number of consumers. (2) CYTS Tours Holding Co., Ltd.

China Youth Travel Service Head Office is an enterprise owned by all people and it belongs to the Communist Youth League Central. The English name: CHINA YOUTH TRAVEL SERVICE Abbreviations: CYTS The CYTS Head Office was established in 1980. In 1997 the group, as a main sponsor, set up the CYTS Tours Holding Co., Ltd, Chinas first company built under the concept of travel service. CYTS Holding Co., Ltd has been engaged in tourism, high technology, venture capital, investment in the securities industry, inbound tourism, domestic tourism, and Chinese citizens outbound tourism (at their own cost). The company also undertakes conferences in China and commodity exhibitions. It also offers high-tech product R&D service, technical services, tourism resources R&D, and the Internet information services. For four consecutive years it has been ranked as Chinas most promising top 50 listed companies and Top 500 Enterprises in China. (3) CHINA COMFORT TRAVEL CO., LTD

China Comfort Travel Group Co., Ltd. (formerly China Comfort Travel Service) was founded in 1984. After 20 years of development, it has become one of the largest travel agency group in China and a professional travel group under Beijing BTG. Headquartered in Beijing, China Comfort Travel Group has set up with 108 affiliates companies with capital as the link. In 2002, the group was ranked by China Tourism News as Chinas Famous Tourism Brand. In 2007, the group has been selected by the World Brand Laboratory into the directory of China Top 500 Valuable Brand for the 4th consecutive years. Now the brand value of this group was nearly 1.2 billion Yuan; January 2010, this group was recognized by SAIC as China Famous Brand.

Ranking of Chinas Tourist Agencies 2011, Top 10