Recommended Key Events in the Recent Tourism Industry
(Click the image above for details)
(Click the image above for details)
▲
Author | Xing Jingjing
Editor-in-chief | Yang Ming
Editor | Jing Xiangyuan
Source | Maidian Research Institute
Since 2023, China's tourism market has begun to accelerate its recovery and revitalization, and the industry's development trend has continued to improve. Focusing on tourism listed companies and state-owned tourism groups that occupy an important position in the industry's development, how have their investment, financing, operating performance, and operations performed over the past year or so? What new characteristics, challenges, and trends have emerged? Looking at the world and looking to the future, what are the gaps between China's tourism groups and "world-class tourism groups," and how can they catch up?
Development Background: Long-term optimism for the tourism industry's development, but short-term consumption weakness and lack of confidence pose challenges and pressures
First, economic strength support. Judging from the domestic production total value and per capita disposable income of residents in the past ten years, there has been a year-on-year increase, providing solid economic support for the tourism industry, and the national tourism consumption demand will remain strong.
Second, the industry's status has been elevated. In 2024, the tourism industry entered a track of steady and upward development. In the first quarter, the contribution rate of domestic tourism revenue to GDP was 5.06%, returning to the baseline level of "5%" in 2019, and tourism's contribution to the national economy has significantly increased.
Third, industry confidence has recovered. From 2023, the number of tourism-related enterprises registered reached 362,900, a year-on-year increase of over 40%, exceeding the 2019 level and setting a historical high, indicating a comprehensive increase in industry development confidence.
Fourth, short-term consumption weakness. From January 2023 to March 2024, for more than a year, the consumer satisfaction index, consumer confidence index, and consumer expectation index in each month have been below 100, indicating an overall sluggish macroeconomic consumption market, insufficient consumer confidence, and conservative consumption trends.
Data Source: National Bureau of Statistics, Maidian Research Institute
Data Source: National Bureau of Statistics, Maidian Research Institute
Investment and Financing: Investment recovery, capital flows towards scenic spot and amusement park projects and popular sectors such as tourism digitalization and immersion; active financing by state-owned tourism groups to accelerate "capital replenishment," and orderly progress of scenic spot infrastructure REITs projects
The recovery of the tourism market has driven the growth of investment confidence among tourism groups. According to incomplete statistics, from 2023 to 2024Q1, major tourism groups signed investment contracts for 205 key projects, with a significant increase in 2023Q4 and 2024Q1. In addition, judging from the types of signed projects, scenic spots, amusement parks, and tourism digital technology and immersive tourism projects are favored by capital.
Active mergers and acquisitions among tourism groups, actively promoting the strengthening, supplementing, and extending of the industrial chain to enhance comprehensive competitiveness. The overall approach is divided into three methods: asset acquisition, equity acquisition, and asset exchange, with equity acquisition accounting for the highest proportion, exceeding 70%. This is because equity acquisition has advantages such as simple legal procedures, effective preservation of the acquired company's shell resources, and benefits for the stability of the acquired company.
State-owned tourism groups actively utilize the capital market for financing. In 2024Q1, tourism groups completed 73 debt financing transactions, with a total financing amount of 52.853 billion yuan, a year-on-year increase of 58% compared to 2023Q1, indicating an increase in financing activity and intensity, providing financial support for business expansion.
Operating Performance and Operational Innovation: The recovery of the tourism market has driven the growth of tourism group operating revenue, but the phenomenon of "increased revenue but not increased profit" is prominent, and operations are under pressure; various groups are actively exploring and cultivating their own new productive forces through traffic empowerment, cross-border integration, and the application of digital technologies.
In 2023, the revenue of tourism listed companies recovered significantly and overall achieved profitability. According to statistics: the operating revenue of 49 tourism listed companies increased from 498 billion yuan in 2022 to 603.5 billion yuan in 2023; net profit increased from a loss of 25 billion yuan in 2022 to a profit of 23.7 billion yuan in 2023, achieving overall profitability.
However, judging from the performance of tourism listed companies in 2024Q1, there are phenomena such as weak revenue growth, increased revenue but not increased profit, short-term cash flow, and overall weak profitability. The increase in costs and the sluggish macroeconomic environment leading to insufficient growth momentum in tourism consumption have increased the operating pressure on tourism enterprises. In the first quarter, 18 out of 42 tourism listed companies suffered losses, accounting for over 40%; the average cash flow ratio was only 2%, far lower than the reasonable range of 20%-30%, indicating insufficient short-term debt repayment ability. Except for a few companies such as Songcheng Performance, Tongcheng Travel, China Duty Free, Lijiang Stock, and Trip.com, most other companies have cash flow shortages; the average return on total assets and return on net assets are below 1%, and the average net profit margin is negative, indicating overall weak profitability.
Data Source: Financial reports of various tourism listed companies, Maidian Research Institute
In comparison, the operating performance recovery of state-owned tourism groups is not as good as that of tourism listed companies, mainly due to the comprehensive nature of their businesses, a relatively high asset-liability ratio, and greater debt pressure. According to statistics, the average asset-liability ratio of 61 state-owned tourism groups in 2023 was about 60%, which is at the warning level, indicating insufficient equity capital and certain financial risks. Further looking at the financial data in 2024Q1, the overall revenue decreased by about 18% year-on-year, and the total net profit decreased by about 30% year-on-year, showing a "double decline," and the operating performance was not as expected.
The recovery and improvement of operating performance are not only driven by the external market environment, but also by the tourism group's own operating innovation measures, such as product scene innovation, digital technology application, and brand marketing promotion. For example, Harbin Ice and Snow World, under the Madiel Tourism Investment Group, achieved 88.506 billion media marketing publicity exposures, receiving 2.71 million tourists from home and abroad during its 61-day operating period, becoming an excellent case of "traffic empowerment" for scenic spot development. Another example is Shaanxi Tourism Group, which has reconstructed the integrated development path of "culture + tourism + technology," continuously innovating tourism products. In 2023, the sales revenue of the "Eternal Regret" performance reached 530 million yuan, exceeding the ticket revenue of the Huaqing Pool scenic spot, gradually achieving a transformation and upgrading from "ticket economy" to "industrial economy." At the same time, Huangshan Tourism Group launched "Huangshan Pay After Visit - Credit Tourism," Taishan Tourism Group created the "Taishan Divine Inspiration" cross-dimensional digital art experience hall, Sichuan Energy Investment Tourism Group's Niu Baishan scenic spot pioneered the country's first tourism scenic spot transaction data asset entry registration, and Trip.com launched the tourism industry vertical large model "Trip.com Wen Dao," all promoting the application of technology in the tourism field and actively exploring the development path of tourism digital economy and cultivating new productive forces in tourism.
Trend Outlook and Discussion: Tourism investment will undergo structural adjustments and changes, and tourism operation and management will enter a stage of refinement, digitalization, quality improvement, and professionalization
Investment trends, using new productive forces to promote a new stage of high-quality development of the tourism economy, tourism investment will undergo the following changes:
(1) Continued improvement in the scale and quality of investment, the promotion of tourism policies, the improvement of the industry's strategic position, and the upcoming "15th Five-Year Plan" will drive investment in tourism projects in various places;
(2) Investment target benefits are accurate, shifting from a single-dimensional goal focusing on economic benefits to a diversified and comprehensive goal that strengthens social, ecological, and cultural benefits;
(3) Investment priorities are adjusted and transformed, shifting from traditional cultural and tourism projects to smart cultural and tourism and digital cultural and tourism projects, and from mainly new projects to projects of "stock transformation and stock revitalization";
(4) Investment entities are becoming more diversified, gradually forming a diversified pattern represented by local state-owned enterprises, national real estate companies, local private enterprises, traditional cultural and tourism enterprises, and cross-border large enterprises;
(5) The investment driving force structure is shifting from relying on cultural and tourism real estate investment to driving force from industrial investment.
Operational transformation: The cultural and tourism industry is shifting from focusing on construction to focusing on operation and management, and the importance of operation will become more prominent. The operation of cultural and tourism scenic spots or projects will undergo transformations from extensive to refined, from experience-based judgment to scientific data, from following internet celebrity trends and imitation to enhancing connotation and quality, and from mainly physical assets to compound capital assets.
Open discussion: "Looking at the world and looking to the future", the construction of a tourism power requires strong cultural and tourism groups to support and lead. Compared with world-class tourism groups, China's cultural and tourism groups still have a large gap in terms of profitability, product services, innovation capabilities, IP and brand building, business model innovation, service quality improvement, and internationalization level, and still have considerable room for growth.
In the future, various cultural and tourism groups need to cultivate their internal strengths, improve their "three efficiencies" of product power, operational power, and service power, increase revenue and scale, and enhance their own strength and competitiveness. At the same time, increase investment and cultivation in brand building, and create world-class cultural and tourism IPs with international influence. In addition, actively expand overseas international markets, and seek "going global" as a way to break through involution and accept international tests, but it is necessary to be rational and cautious, and make good strategic planning and risk planning.
