Cultural and Tourism Group Investment Situation in the Second Quarter
1. Investment and Signing of Projects by Cultural and Tourism Groups
In the second quarter, focusing on investment attraction for cultural and tourism projects, many provinces and cities across the country, represented by Fujian, Shandong, Gansu, Liaoning, Dalian, and Ningbo, successively organized conferences themed on cultural and tourism industry investment promotion, cultural and tourism economic development, and high-quality tourism development. The number of cultural and tourism group investment projects signed increased significantly quarter-on-quarter, with an increase of approximately 55%.
With cultural and tourism groups (companies) as the main investors, 96 projects were signed, of which 66 projects disclosed their investment amounts, totaling approximately 86.9 billion yuan. Five projects had individual investments of 50 billion yuan or more, specifically: Dehua Guanyinqi Ancient Town Project (planned investment of 50 billion yuan, invested by Tongyuan Group), Fuqing High-speed Rail Cultural Tourism Town Project (total investment of 60 billion yuan, invested by Fujian Dongbai Group), Taicang Alps International Resort Project Phase II (total investment exceeding 50 billion yuan, invested by Fosun Tourism Group), Huoshaoping Tourism Resort Project (located in Changyang County, Yichang, Hubei Province, total investment of 50.6 billion yuan, invested by Wuhan Mulan Prairie Tourism Development Co., Ltd.), Poyang Lake "Three Zones and One Line" Cultural Tourism Investment Development and Operation Project (located in Duchang County, Jiujiang, Jiangxi Province, covering 112 square kilometers in Duchang County, total investment of 100 billion yuan, invested by Huaxia Meiyu Cultural Tourism Company).
The distribution of signed project types includes more than 20 types, with the largest number being integrated rural development/rural tourism and agricultural-cultural-tourism integration projects, followed by tourism resorts, theme parks, hotels and homestays, cultural tourism towns, and integrated cultural tourism complexes. The proportion of these project types ranges from 5% to 15%. Overall, agricultural-cultural-tourism, scenic spots and parks, and hotels and homestays remain the mainstream investments, while also showing theme diversification and cross-border integration, such as health tourism, sports tourism, research and study tourism, industrial tourism, and red tourism.
The distribution of signed projects is relatively concentrated in six provinces: Fujian, Shandong, Gansu, Zhejiang, Guangdong, and Jiangsu. Among them, Fujian, Shandong, and Gansu saw concentrated project signings due to the conferences on cultural and tourism investment promotion held in the quarter, such as the 2024 Fujian Provincial Cultural Tourism Economic Development Conference (April 17-19), the 2024 Shandong Provincial High-Quality Tourism Development Conference (April 25-26), and the Gansu Provincial Cultural Tourism Industry Chain Investment Promotion Conference (June 21). Zhejiang, Guangdong, and Jiangsu, as major tourism economic provinces and strong tourism industry provinces in China, have long been popular areas for cultural and tourism investment.
2. Cultural and Tourism Group Investment and Acquisitions
According to incomplete statistics, there were six representative cultural and tourism investment and acquisition events in the second quarter, mainly through equity acquisitions, focusing on achieving strategic layout, enhancing market competitiveness, expanding business scope, etc., whether through "strong alliances" or "big fish eating small fish," promoting the integration and optimization of cultural and tourism assets.
Changxing Cultural Tourism Group: In April, it completed the acquisition of Luchuang Zhebei Commercial Plaza with Shenzhen Luchuang Investment Group. This acquisition will not only enhance the Group's comprehensive strength in the cultural tourism field but also inject vitality into the commercial prosperity and cultural development of Changxing County.
Three Gorges Tourism: Plans to acquire 100% equity of Changjiang Tourism Development and 100% equity of Xingsheng Company. This transaction has been ongoing for two years, and the employee relocation and asset audit and assessment of the target companies are currently underway. After the transaction is completed, Changjiang Tourism Development and Xingsheng Company will become wholly-owned subsidiaries of Three Gorges Tourism, helping Three Gorges Tourism expand its business scope and enhance its market competitiveness.
Nanjing Shanglv: Plans to wholly acquire Nanjing Huangpu Hotel and increase its stake in Nanshang Commercial Management by 49%. The target company, Huangpu Hotel, is a high-end hotel, and Nanjing Department Store is the only state-owned commercial retail enterprise in Nanjing. Through this transaction, Nanjing Shanglv will further increase its business layout in the cultural tourism field.
Jinan Licheng Holdings: Acquired 100% equity of Jinan Rongge held by Jinan Cultural Tourism City, obtaining the assets of Jinan Rongcheng Cultural Tourism City Shibage Hotel and International Conference Center. The transaction transfer price is approximately 474 million yuan. The entry of state-owned capital will bring new development opportunities and vitality to Jinan Cultural Tourism City
and is expected to further improve management, operation, and service.
Dongcheng Group: Formally signed an equity cooperation agreement with Shandong Bai Zhai Yisheng Hotel Management Co., Ltd. (i.e., Morandi Hotel), successfully acquiring 30% of the latter's equity. Through strategic complementarity and empowerment growth cooperation, Dongcheng Group and Morandi Hotel will achieve resource sharing and complementarity, jointly promoting the layout and development of both parties in the regional market.
Lingnan Holdings: Completed the acquisition of Baiyunshan Tourism Development Company, holding 100% equity. This transaction will help promote Lingnan Holdings Group's diversified tourism ecosystem layout and enhance its scenic spot operation capabilities (Note: Lingnan Holdings is mainly engaged in travel agency operations and hotel operations. According to its 2023 annual report, travel agency and hotel business revenue accounts for 99.5%).
3. Establishment of New Cultural and Tourism Groups
In the second quarter, on the one hand, state-owned cultural and tourism groups such as Nujiang Cultural Tourism Group, Changsha Chengfa Cultural Tourism Group, and Zhejiang Health Tourism Group were successively unveiled or registered. On the other hand, private companies such as Beijing Lanbiao Cultural Tourism Technology Company and Beijing Wanda Cultural Tourism Industry Company were established. The scale of China's cultural and tourism groups is gradually expanding, their strength is gradually increasing, their business scope is expanding, and their cooperation is deepening.
From the "government-village-enterprise cooperation group" of Dali East Coast Cultural Tourism Company to the "joint venture establishment" of Inner Mongolia Sunite Cultural Tourism Investment Company, and then to the joint venture establishment of "Hangzhou Xiangyuan Digital Technology Research and Development Company" by Uchain Times, a leading digital human enterprise, and Xiangyuan Cultural Tourism, the "joint investment establishment" of Huangshan Zhexiu Cultural Tourism Performing Arts Company, and the "joint venture establishment" of Zhujiang Ruifeng Cultural Tourism Group, the establishment of these "cultural tourism joint ventures" reflects the deep integration of the cultural tourism industry and the characteristics and trends of cross-border cooperation, and has advantages such as resource integration, complementary advantages, improved market competitiveness, and risk sharing.
Second Quarter Cultural Tourism Group Financing Situation
According to incomplete statistics, there were 66 cultural tourism group financing projects (only those that have been issued and passed) in the second quarter of 2024, an increase of about 37% year-on-year compared to 2023Q2. These involved 37 cultural tourism groups, with a total financing amount of 38.04 billion yuan, a year-on-year increase of about 22% (31.192 billion yuan in the second quarter of last year). Quarter-on-quarter, there was a relative decline, with financing transactions slowing down.
In the second quarter, the debt financing instruments of various cultural tourism groups were mainly medium-term notes, accounting for 42%, with advantages such as low issuance costs, flexible issuance methods, and demonstrating the company's good creditworthiness. Next were very short-term financing bills and private placements, accounting for 29% and 18%, respectively. Short-term financing bills, ABS, small public offerings, and asset-backed debt financing instruments CB accounted for a relatively low proportion, but they are of great significance in enriching financing products and expanding financing channels.
Small Public Offering: Compared to the "non-public" issuance of private placements, small public offerings are publicly issued and there is no limit to the number of subscribers or investors. They have advantages such as moderate investor thresholds, good liquidity, and high audit efficiency, but also have certain investment risks, investment targets are affected by market fluctuations, and there are restrictions on issuance conditions.
Asset-Backed Debt Financing Instrument CB: Using the issuer's assets or asset pool as collateral, it is agreed that the cash flow generated by the issuer or assets will be used as income support. It is a structured financing instrument positioned as "dual recourse of assets and principals", i.e., "dual credit enhancement", helping enterprises to revitalize dormant real estate, land use rights, construction in progress, equity, and other types of assets. For cultural tourism groups, this financial instrument helps to revitalize existing assets, turning "stock" into "increment".
3. Financing Performance of Cultural Tourism Groups in Some Provinces and Regions
According to statistics, cultural tourism groups that issued bonds for financing in the second quarter were distributed in 17 provinces (municipalities, autonomous regions) across the country. Among them, Jiangsu Province had the most bond issuance by cultural tourism groups, with 14 issuances; Beijing had the highest financing amount, at 60 billion yuan, involving three bond issuers: Shoulu Group, Shoulu Hotel Group, and Beijing Badaling Tourism Co., Ltd. In addition to Beijing and Jiangsu, the financing performance of cultural tourism groups in Fujian and Hubei provinces was also outstanding, with financing amounts exceeding 40 billion yuan.
In recent years, Fujian Province has achieved significant results in financial support for the development of cultural tourism resources, industrial development, and scenario construction, such as innovatively promoting exclusive cultural tourism financial products (such as "Minsu Loan", "Maritime Silk Road Loan", "Cultural and Creative Loan", "Old House Loan", "Famous City Ancient Building Loan", etc.), solving financing problems through pledged income from scenic spots, and financial e-commerce supporting rural tourism, which is worth learning from and borrowing from other provinces. In the second quarter, with Fuzhou Gucuo, Longyan Cultural Tourism Huijin, and Quanzhou Cultural Tourism as the financing entities, a total of 9 financing projects were completed, with a financing amount of 4.25 billion yuan.
Hubei Province, with Hubei Cultural Tourism Group, Yichang Jiaojia Group, and Wudang Mountain Cultural Tourism Group as the financing entities, completed 6 financing projects with a financing amount of 4.111 billion yuan. In particular, Hubei Cultural Tourism Group, as a representative, continues to explore and enrich innovative financing models and expand financing channels: in April, it successfully issued Hubei's first hotel asset CMBS, namely the "CITIC Construction Investment - Hongshan Hotel and Guanggu Holiday Hotel Asset-Backed Special Plan", with an issuance scale of 1.051 billion yuan; in June, the group's second small public offering corporate bonds in 2024 were successfully issued on the Shanghai Stock Exchange, with an issuance scale of 600 million yuan.
4. Financing Performance of Cultural Tourism Groups
According to incomplete statistics, a total of 37 cultural tourism groups initiated and completed financing in the second quarter of 2024. Among them, Shoulu Group had the highest financing amount, at 4.9 billion yuan; Fuzhou Gucuo Group had the most financing projects, with 6 projects. In addition to the above two cultural tourism groups, Shanxi Cultural Tourism Group, Zhenjiang Cultural Tourism Group, and Hubei Cultural Tourism Group all had financing amounts exceeding 2 billion yuan this quarter; Shouxihu Tourism Development Group, Guangxi Tourism Development Group, and Qingdao West Coast Tourism Investment Group all had 4 or more financing projects.
Shoulu Group: 5 financing projects (3 medium-term notes, 2 very short-term financing bills), with a financing amount of 4.9 billion yuan. Compared to the first quarter, both the number of projects and the amount showed a downward trend. From its first-quarter financial report data, it can be seen that the net profit in 2024Q1 was -305 million yuan, showing a loss and facing debt pressure.
Fuzhou Gucuo Group: 6 financing projects (3 medium-term notes and 3 very short-term financing bills), with a financing amount of 2.25 billion yuan. As a large-scale comprehensive state-owned enterprise managed by Fuzhou City, Fuzhou Gucuo Group takes ancient house cultural tourism, exhibitions and events, commercial hotels, and urban construction and transportation as its four core businesses, with Sanfang Qixiang and Gulings Scenic Area as its main operating scenic spots.
Zhenjiang Cultural Tourism Group: Through a private placement, the issuance amount was 2.517 billion yuan, the highest single financing amount in this quarter. The group mainly undertakes the functions of comprehensive development and operation of Zhenjiang's cultural tourism resources, cultural tourism industry development, garden and scenic area development and construction, and ancient canal development and construction.
Shouxihu Tourism Development Group: 5 financing projects (2 medium-term notes, 3 very short-term financing bills), with a financing amount of 757 million yuan, characterized by high frequency and low amounts. As the capital operation platform for Shouxihu Scenic Area, in addition to its main cultural tourism business, the group's business extends to garden design and construction, real estate development, film and television media, and asset management. At the same time, in terms of business innovation, Shouxihu Scenic Area is accelerating the exploration of building a fully electrified carbon-neutral ecological scenic area, actively creating a "zero-carbon scenic area" demonstration model.
Qingdao West Coast Tourism Investment Group: 4 financing projects, all medium-term notes, with an issuance scale of 1 billion yuan and a face value annual interest rate of around 3%. As a district-owned state-owned enterprise, the group's business involves tourism project development, construction and investment and financing, tourism scenic spot operation, development, construction and management, and hotel and commercial operations. According to its 2023 annual report, its asset scale reached 25 billion yuan.
Summary and Analysis
Looking back at the first half of 2024, investment in cultural tourism groups has rebounded and expanded, with a preference for tourism resorts, high-end resort hotels, characteristic towns, rural tourism, and theme parks; acquisition transactions have become more frequent, with asset integration and optimization, business layout adjustments, and reshaping of the competitive landscape; the establishment of joint ventures through "strong alliances" and the cross-border establishment of cultural tourism companies have become a trend, injecting new vitality and new impetus into the industry; financing has accelerated and increased, with an amount exceeding 90 billion yuan, and continuously innovating financing methods to reduce financing costs and ensure the orderly and sustainable operation of enterprises.
At the same time, looking at the market operating environment for cultural tourism groups in the first half of 2024: on the one hand, favorable cultural tourism policies are superimposed, tourists' willingness to travel has increased, the cultural tourism consumption market demand is strong, and the number of tourists during various holidays has hit new highs; on the other hand, consumption in the cultural tourism industry has returned to rationality, corporate operating costs have risen, market competition has intensified, the diversion effect of outbound tourism has gradually become prominent, and technology is rapidly updating and iterating; overall, enterprises are also under pressure in a positive market trend, with favorable opportunities coexisting with challenges for change. The "pre-loss" in the semi-annual reports of Xi'an Tourism, Qujiang Culture and Tourism, Zhangjiajie, Tibet Tourism, etc., to some extent, confirms the operating pressure faced by various cultural tourism groups.
2024 is a crucial year and a year of tackling tough challenges for the new round of deepening and upgrading reforms of state-owned enterprises. According to the "Measures for the Assessment and Management of Business Performance Targets for State-owned Enterprises in 2024," the assessment is guided by "highlighting business performance" and "highlighting SOE reforms." Therefore, as a key force in the development of the cultural tourism industry, state-owned cultural tourism groups will focus on "improving business performance" while ensuring the preservation and appreciation of state-owned assets. In the future, weakening the financial platform attribute, reducing enterprises' reliance on "financing loans - asset expansion" paths, returning to the essence of cultural tourism operations, and encouraging enterprises to embark on a path of creating commercial value based on project operations may become an inevitable choice for the sustainable and endogenous development of state-owned cultural tourism groups.
