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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 | Yang Ming

Responsible Editor | Jing Xiangyuan

Source | The First Breakpoint

From "Tumbling Doll Sister" to "CCTV Spring Festival Gala Li Bai", Xi'an always welcomes wave after wave of traffic. What's absolutely surprising is that the popular Xi'an Grand Tang Mall scenic area had a net profit of only 235,300 yuan in the first half of this year. It's been widely discussed online: why does a popular scenic area, which clearly doesn't lack traffic, struggle financially? Why aren't popular scenic spots profitable?

Grand Tang Mall Not as much as imagined

So profitable

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%; the net loss attributable to shareholders of listed companies was 187 million yuan, turning from profit to loss.

The scenic spots operated and managed by the company mainly include "Xi'an Qujiang Giant Wild Goose Pagoda & Tang Paradise", Xi'an City Wall Scenic Area, and Daming Palace National Heritage Park, which are three national 5A-level scenic spots; Qujiang Ocean and Polar Park, a national 4A-level scenic spot; Grand Tang Mall Pedestrian Street, a national-level tourist and leisure block; and several other national 3A-level scenic spots.

Xi'an City Wall Scenic Area Image source: Visual China

The company owns three 5A-rated scenic areas, plus popular pedestrian streets like Grand Tang Mall. How can it still lose 187 million yuan?

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

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

Financial report data shows that Grand Tang Mall 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"

Possessing the operation and management rights for "Xi'an Qujiang Giant Wild Goose Pagoda & Tang Paradise", Xi'an City Wall Scenic Area, Daming Palace National Heritage Park, three national 5A-level scenic spots, plus the massively popular "Grand Tang Mall" and other scenic areas. Qujiang Cultural Tourism undoubtedly possesses top-tier cultural and tourism resources nationwide.

Xi'an Grand Tang Mall Image source: Visual China

Netizens immediately expressed confusion: "Such a popular attraction, and it's still losing money?" Other netizens analyzed the reason: "Most of Qujiang doesn't charge admission; almost all attractions are free!" The core reason for Qujiang Cultural Tourism's poor performance is not in scenic area operations, but in the company's "bad debts."

Qujiang Cultural Tourism itself admitted this. 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, leading to an increase in provisions for bad debts.

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

Among them, the top three debtors are:

■ Xi'an Qujiang New Area Enterprise Asset Management Center

■ Xi'an Qujiang Daming Palace Heritage Area Protection and Renovation Office

■ Xi'an Qujiang Cultural Industry Development Center

The main debtors, however, are "insiders" of Qujiang Cultural Tourism. In the first half of this year, the Xi'an Qujiang Daming Palace Heritage Area Protection and Renovation Office had accounts receivable amounting to 425 million yuan, with a bad debt provision balance of 164 million yuan, representing increases of 59 million yuan and 75 million yuan respectively compared to the same period last year.

The largest debtor of Qujiang New Area Enterprise Asset Management Center is precisely the entrusting party for key scenic spots such as Qujiang Giant Wild Goose Pagoda & Tang Paradise, Grand Tang Mall Scenic Area, and Tang Cien Temple Heritage Park. The asset management center entrusts the aforementioned scenic areas to Qujiang Cultural Tourism for operation and management, and Qujiang Cultural Tourism collects scenic area management fees as agreed.

From Qujiang Cultural Tourism's response to the Shanghai Stock Exchange's supervision, in the past few years, many scenic areas, including Qujiang Giant Wild Goose Pagoda & Tang Paradise, have generally not received payments or received less, leading to a simultaneous increase in accounts receivable and bad debt amounts over the years.

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