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Daliang's Night City's net profit in the first half of the year was 235,300 yuan. Why is this popular scenic spot not making money?

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2024-08-27

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Editor-in-chief | Yang Ming

Editor | Jing Xiangyuan

Source | First Wind Point

From the "Unstoppable Sister" to "Li Bai at the Spring Festival Gala," Xi'an always attracts waves of traffic. Surprisingly, the wildly popular Xi'an Daming Palace, this year's first half net profit was only 235,300 yuan. The internet buzzed with this news. Clearly not lacking in traffic, why is business so bad? Why aren't these popular tourist attractions making money?

Daming Palace Not as profitable as

imagined

Recently, Qujiang Cultural Tourism released its 2024 semi-annual report. From January to June this year, Qujiang Cultural Tourism achieved operating revenue of 770 million yuan, a year-on-year increase of 11.9%; however, it incurred a net loss of 187 million yuan, turning from profit to loss.

The company's operationally managed scenic areas mainly include three national 5A-level scenic areas: "Xi'an Qujiang Big Wild Goose Pagoda & Daming Palace," Xi'an City Wall Scenic Area, and Daming Palace National Ruins Park; the national 4A-level scenic area Qujiang Ocean Polar Park; the national-level tourism and leisure street area Daming Palace Pedestrian Street; and several other national 3A-level scenic areas.

Xi'an City Wall Scenic Area Source: Visual China

The company has three 5A-level scenic areas alone, plus the popular Daming Palace pedestrian street, so how could it still lose 187 million yuan?

Among Qujiang Cultural Tourism's many loss-making subsidiaries, Daming Palace Ruins Park Company suffered the most severe losses in the first half of this year. In the first half of this year, Daming Palace Ruins Park Company achieved revenue of 67.985 million yuan, but its net profit was nearly 59.417 million yuan in losses. Another 5A-level scenic area, the Big Wild Goose Pagoda, lost 7.618 million yuan.

Of the three 5A scenic areas, only the Xi'an City Wall Scenic Area was profitable, with a net profit of 16.272 million yuan.

Financial statements show that Daming Palace achieved operating revenue of 39.383 million yuan in the first half of this year, with a net profit of only 235,300 yuan.

The company has too many "bad debts"

The main debtors are "insiders"

Owning the operational management rights of three national 5A-level scenic areas: "Xi'an Qujiang Big Wild Goose Pagoda & Daming Palace," Xi'an City Wall Scenic Area, and Daming Palace National Ruins Park, plus the popular "Daming Palace" and other scenic areas. Qujiang Cultural Tourism undoubtedly possesses top-tier tourism resources nationwide.

Xi'an Daming Palace Source: Visual China

Netizens were the first to express their incomprehension: "Such a popular attraction, and it's still losing money?" Other netizens analyzed the reasons: "Most of Qujiang doesn't charge admission fees; they are almost all free attractions!" The core reason for Qujiang Cultural Tourism's poor performance is not in the operation of the scenic areas, but in the company's "bad debts."

Qujiang Cultural Tourism itself admitted this point. Regarding the significant decline in net profit, Qujiang Cultural Tourism stated that it was mainly due to changes in the expected credit loss model for accounts receivable compared to the same period last year, resulting in an increase in the amount of bad debt provisions.

In the first half of this year, the top five debtors of Qujiang Cultural Tourism owed a total of approximately 1.396 billion yuan, with accumulated bad debts of 582 million yuan.

Among them, the top three debtors are:

■ Xi'an Qujiang New District Enterprise Asset Management Center

■ Xi'an Qujiang Daming Palace Ruins Area Protection and Transformation Office

■ Xi'an Qujiang Cultural Industry Development Center

The main debtors are Qujiang Cultural Tourism's "insiders." In the first half of this year, the accounts receivable of the Xi'an Qujiang Daming Palace Ruins Area Protection and Transformation Office amounted to 425 million yuan, with a bad debt reserve balance of 164 million yuan, an increase of 59 million yuan and 75 million yuan respectively compared to the same period last year.

The debtor with the most outstanding debt is the Qujiang New District Enterprise Asset Management Center, which is the commissioning party for key scenic areas such as the Qujiang Big Wild Goose Pagoda & Daming Palace, Daming Palace Scenic Area, and Tang Ci'en Temple Ruins Park. The Asset Management Center entrusts Qujiang Cultural Tourism with the operation and management of the above-mentioned scenic areas, and Qujiang Cultural Tourism collects scenic area management fees according to the agreement.

From Qujiang Cultural Tourism's reply to the Shanghai Stock Exchange's supervision, in the past few years, many scenic areas, including the Qujiang Big Wild Goose Pagoda & Daming Palace, have generally had situations where payments were not received or were received in short amounts, which has led to a simultaneous expansion of accounts receivable and bad debt amounts over the years.

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