RNCOS China Tourism Industry Forecast to 2012 Online Business Research

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2 About Us RNCOS, formed in the year 2002, aims to outsource all your business needs and serve your customers in their quest for the information. RNCOS is transforming the concept of Outsourcing by adapting it into a strategic management preference to attain world-class operational excellence and competitive advantage. RNCOS specializes in Industry intelligence and creative solutions for contemporary business segments. Our professionals study and analyze the industry and its various components, with comprehensive study of the changing market behavior. We provide corporations with an insight of the industry, competitive and market necessary to compete in today's business environment. Additionally, our team focuses on the cause and effect relationship between federal and state regulations and the industries affected by regulation. The company also works closely with small and medium sized consultancy firms, in various industry sectors. We assist in back-end research and data gathering processes. Our accuracy and data precision proves beneficial in terms of pricing and time management that assist the consultants in meeting their objectives in a cost-effective and timely manner. RNCOS Page 2

3 Executive Summary With the improving purchasing power, rapid economic liberalization and favorable government policies, tourism has emerged as a new growth avenue for the Chinese economy over the recent few years. These developments and reforms have taken the tourism industry to new heights and introduced multistage transformations that attracted tourists not only from within the country but from overseas countries as well. The growth process can be segregated into different phases where the initial phase belonged to the emergence of inbound travel market and moved ahead to the development of domestic and outbound travel market. Our new research report China Tourism Industry Forecast to 2012 has found that domestic and outbound tourism segments have witnessed positive growth despite economic slowdown and changing industry landscape. These two segments are the most lucrative segments of tourism industry. At present, China has the world largest domestic tourism market considering the fact that more than 1.7 Billion domestic travelers generated total revenue of over US$ 100 Billion in The outbound travel market has also been undergoing phenomenal transformation, with close to 45 Million travelers generated revenue of more than US$ 35 Billion in the same year (2008). We anticipate marginal effect of 2008 financial crisis on the Chinese tourism industry as compared to other tourist destinations across the globe. The impact of recession has fallen on the inbound tourism market but it will be able to gain its lost momentum from 2010 onwards. Domestic and outbound tourism markets will maintain their growth rate and contribute more than 50% of the tourism industry revenue and visitors movement. The report incorporates an extensive research and rational analysis of the tourism industry in China. It provides segment level analysis of the industry along with future trends that may shape up with the betterment of economic conditions. The research will help consultants, industry analysts and vendors to get in-depth knowledge of the current, past and future performance of the industry. The future outlook mentioned in the report has been derived by interacting with various industry veterans, experts, analyzing information from research papers, journals and our in-house developed models. RNCOS Page 3

4 Table of Contents 1. Analyst View 2. Industry Overview 3. Market Drivers 3.1 Economic Liberalization 3.2 Yuan Appreciation 3.3 Improving Infrastructure 3.4 Government Initiatives 4. Industry Outlook to Tourist Arrivals Region/Country Purpose Mode of Transport Receipts 4.2 Outbound Tourism Destination Purpose Expenditure 4.3 Domestic Tourism Visitor Expenditure 5. Hotel Industry 6. Emerging Trends 6.1 Travel Agencies 6.2 Medical Tourism 6.3 Online Travel Services 6.4 Expanding Approved Destination Status 6.5 MICE Tourism 7. Competitive Landscape 7.1 Beijing Capital Tourism Co., Ltd. 7.2 China Travel International Investment Hong Kong Ltd. 7.3 Ctrip.com International 7.4 China United Travel Co., Ltd. 7.5 Guilin Tourism Corporation Ltd. 7.6 Shanghai Jin Jiang International Hotels (Group) Co. Ltd. RNCOS Page 4

5 List of Figures: Figure 2-1: Inbound Tourist (Million), Figure 2-2: Inbound Tourist by Region (%), 2008 & H Figure 2-3: Forecast for Inbound Tourist (Million), Figure 3-1: Nominal GDP (Billion US$) and Real GDP Growth (%), Figure 3-2: Yuan-Dollar Exchange Rate ( ) Figure 4-1: Foreign Tourist Arrivals (Million), Figure 4-2: Forecast for Foreign Tourist Arrivals (Million), Figure 4-3: Foreign Tourist Arrivals by Region (%), 2008 & H Figure 4-4: Foreign Tourist Arrivals by Purpose of Visit (%), 2008 & H Figure 4-5: Foreign Tourist Arrivals by Mode of Transport (%), 2008 & H Figure 4-6: International Tourism Receipts (Billion US$), Figure 4-7: International Tourist Spending by Segment (%), 2007 & 2008 Figure 4-8: International Tourism Receipts by Top 5 Provinces (Million US$), 2008 Figure 4-9: Forecast for International Tourism Receipts (Billion US$), Figure 4-10: Outbound Tourist (Million), Figure 4-11: Forecast for Outbound Tourist (Million), Figure 4-12: Outbound Tourist by Region (%), 2007 & 2012 Figure 4-13: Top 5 Destinations for Outbound Tourist (Million), 2008 Figure 4-14: Outbound Tourism by Purpose of Visit (%), H Figure 4-15: Outbound Tourism Expenditure (Billion US$), Figure 4-16: Forecast for Outbound Tourism Expenditure (Billion US$), Figure 4-17: Domestic Tourist (Million), Figure 4-18: Rural and Urban Domestic Tourist (Million), Figure 4-19: Forecast for Domestic Tourist (Million), Figure 4-20: Expenditure by Domestic Tourist (Billion Yuan), Figure 4-21: Expenditure by Rural and Urban Domestic Tourist (Billion Yuan), Figure 4-22: Forecast for Expenditure by Domestic Tourist (Billion Yuan), Figure 5-1: Hotel Industry Revenue (Billion Yuan), 2007 & 2008 Figure 5-2: Number of Star Rated Hotels ( ) Figure 5-3: Number of Hotels by Category (2007 & 2008) Figure 5-4: Number of Hotel Rooms (Million), Figure 6-1: Number of Domestic and International Travel Agencies ( & 2012) Figure 6-2: Online Travel Market (Billion Yuan), RNCOS Page 5

6 List of Tables: Table 4-1: Number of Foreign Tourist Arrivals by Region/Country (2007 & 2008) Table 4-2: Number of Foreign Tourist Arrivals by Purpose of Visit (2008) Table 6-1: Number of Health Institutions and Professionals by Type ( ) RNCOS Page 6

7 1. Analyst View Tourism industry in China is one of the fastest growing industries in the country s economy and is also one of the few industries with a very distinct global competitive edge. Tourism industry has witnessed continuous development and transformation driven by two decades long economic liberalization and government favorable policy framework. These developments and favorable policy framework has resulted in three stage development for tourism industry, namely, inbound tourism only, inbound and domestic tourism, and latter on comprehensive tourism including domestic, inbound and outbound tourism sectors. Tourism industry up to large extent has also diversified from the earlier culture and natural tourism to other fields such as leisure vacation, industrial technology, and agricultural ecology tourism, which have become an important impetus in the growth of development of domestic tourism. Over a period of time domestic and inbound tourism have emerged as the most dynamic segments of the country s tourism industry. These two segments dominate the overall economic output from the tourism activity and have been emerged as the center of government policy and development framework. During 2008 china witnessed more than 130 million inbound tourist arrivals and close to 1.7 Billion domestic travelers. The combined revenue generated by these two segments has surpassed their earlier performance levels. The outbound tourism in China has been witnessing phenomenal growth in last few years and is way ahead in comparison to inbound tourist arrival. The sustained economic growth and rising number of affluent population has transformed the outbound tourism industry China. In last few years the increasing number of international agreements with countries across Europe and Asia coupled with loosing visa restriction is making it easier for Chinese citizens to travel abroad. When it comes to China, the state involvement in the travel business is extensive as compare to other tourism market across the globe. Majority of the airline industry is owned by the central government and provincial and city administrations are major owners of hotels and tourism attractions. Despite government dominance the private participation in the sector is RNCOS Page 7

8 growing, encouraged both by economic liberalization and by growing demand for betterquality travel services. In our opinion China will start dominating the global tourism industry landscape in coming years with record number of domestic tourist and rapidly rising outbound traveler. It is expected that by 2012 there will be more than 2 Billion domestic trips in China and close to 70 Million outbound travelers. For the purpose of report: 1 USD = 6.8 Yuan RNCOS Page 8

9 4. Industry Outlook to Outbound Tourism The outbound tourism in China has been witnessing phenomenal growth in last few years and is way ahead in comparison to inbound tourist arrival. The sustained economic growth and rising number of affluent population has transformed the outbound tourism industry China. In last few years the increasing number of international agreements with countries across Europe and Asia coupled with loosing visa restriction is making it easier for Chinese citizens to travel abroad. The outbound travel has been largely influenced by the Chinese government favorable policies and relaxing the traditional controls over outbound travel. Like, in most areas of the country, private passport application has been made much easier without complicated examinations and approvals and more operators are now allowed to do outbound tourism business. In last few years discussion on destination for the Chinese outbound traveler has been an important issue on the agenda of government diplomatic relations. Also the removal of monitory restrictions on purchase of foreign currency by Chinese residents has also been lifted for a few times along with growing popularity of dual currency credit cards among Chinese outbound traveler. The outbound travel by Chinese residents has maintained positive growth momentum in last few years. During 2004 to 2008 total outbound travel grew by close to 12% CAGR to reach 45 Million travelers in The rapid growth of outbound tourism indicates the further opening of the country, and its tourism development has begun to follow the normal track, and the industry has become more mature. The trend of the development in China s outbound market shows that with the growth of the market and the increase of ADS, the proportion of tourists who make a second or even more overseas trip will grow. In the hinterland and remote border provinces, the proportion of one-time outbound tourists will be higher than that in developed areas. The proportion of repeaters will be slightly higher in provincial capitals than in other cities. It is anticipated that by 2012 the total number of outbound travelers will reach 70 Million by 2012 from 46 Million in RNCOS Page 9

10 Figure 4-11: Forecast for Outbound Tourist (Million), Source: RNCOS Purpose We have found leisure and sightseeing has been the main purpose for Chinese tourist visiting overseas destination in recent years. Most of the outbound tourist for leisure and sightseeing are the first timers. Although the leisure and sightseeing dominates the purpose for outbound travel but when it comes to spending in overseas destination Chinese business travelers are far ahead as compare to their other counterpart. Besides these two segments the number of tourist visiting overseas destination for education and training purposes is also increasing and is not affected by government tourism policy framework. During first half of 2009 around 11.5% of total outbound travel trips were undertaken mainly for official or business purpose and 88.5% for private purpose. We expect the same scenario for outbound travel to continue in future also. The number of outbound visit for private purpose will see sharp increase due to increasing number of approved destination status to countries across Europe and Africa. RNCOS Page 10

11 Figure 4-14: Outbound Tourism by Purpose of Visit (%), H % 88.5% Private Public Source: CNTA RNCOS Page 11

12 4.3 Domestic Tourism Expenditure The domestic tourism market in China has more economic importance as compare to inbound or outbound travel market. The economic output of domestic tourism is more than the combined economic output of inbound and outbound tourism. In last few years market has witnessed series of developments and rapid transformation driven by improving macro and micro economic conditions. During 2008 total expenditure by domestic travelers was Yuan Billion (US$ 129 Billion) as compare to Yuan Billion (US$ 78 Billion) driven by increasing number of domestic travel by Chinese population. Figure 4-20: Expenditure by Domestic Tourist (Billion Yuan), Source: CNTA The expenditure by traveler in domestic tourism industry has been dominated by travelers from urban areas. Total expenditure by urban traveler has been way ahead as compare to traveler from rural region. During 2008 total expenditure by urban traveler was Yuan Billion (US$ 88 Billion) as compare to Yuan Billion (US$ 41 Billion) by rural tourist. RNCOS Page 12

13 Figure 4-21: Expenditure by Rural and Urban Domestic Tourist (Billion Yuan), Urban Rural Source: CNTA The expenditure on tourism activities in domestic market is expected to reach Yuan 1550 Billion (US$ 228 Billion) by The increasing number of paid holidays by government and increasing trend of festive, cultural and adventure will drive the domestic industry in coming years. We expect that the domestic tourism market will undergo series of new changes driven by increasing government focus and improving economical condition. Figure 4-22: Forecast for Expenditure by Domestic Tourist (Billion Yuan), Source: RNCOS RNCOS Page 13

14 6. Emerging Trends 6.5 MICE Tourism Meeting, Incentive, Convention and Exhibition (MICE) industry in China is proving its ability to bring in more quality business travelers. The MICE industry has strengthened in the mainland in recent years with the improvement of economy following its entry into the World Trade Organization in The MICE industry offers tremendous opportunities to hospitality and travel operators to attract a large number of business delegates from Europe and the US. The MICE tourism has emerged as the most promising segment of tourism industry Chine is now preparing itself for Shanghai World Expo 2010 after successfully hosting Beijing 2008 Olympics and will attract thousands of visitors from across the globe. This new event will help tourism industry to earn revenue from tourists who will come for business purpose. Such kinds of events will help in shifting the focus of industry players to tap the MICE segment. MICE represents a highly profitable and unexplored segment of the tourism industry in China. For the time being, the number of travelers on business worldwide accounts for one-third of total travelers. We expect the China will become a primary destination for international MICE tourism in the next decade. It will be able to attract more than 10 Million business travelers, accounting for more than 20% of the total travelers. RNCOS Page 14

15 Other Related Reports Turkey Tourism Industry Forecast to 2012 The country received more than 26 Million international tourists in 2008 and despite the ongoing financial crisis these numbers are expected reach around 33 Million by Malaysian Tourism Industry Forecast to 2012 International tourist arrivals in Malaysia will grow at a CAGR of around 9% during , and tourism receipts from overseas tourists are expected to rise at a CAGR of around 10% to RM 70 Billion (US$ 19.6 Billion) in the same period. Vietnam Tourism Industry Forecast to 2012 In 2008, the country recorded around 4.25 Million foreign visitor arrivals, an increase of around 2% from However, this growth was comparatively slower than over 16% recorded in Opportunities in Singapore Tourism Industry ( ) Tourism is one of the largest service sectors of Singapore. As of 2007, the tourism industry contributed 3% to Singapore s GDP, and generated US$ 9.4 Billion in tourism receipts. Egypt Tourism Sector Analysis According to Egypt Tourism Sector Analysis, tourism is the main source of foreign earning for Egypt, a leading Middle East country in terms of tourist arrivals. The tourism industry of the country has expanded rapidly over the past few years. For More Reports related to Tourism Industry, RNCOS Page 15

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