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State-owned tourism group's Q1 performance is released, let's discuss the issue of "wasteful investment in tourism"!

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2024-05-31

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Author | Wang Xinyu

Editor-in-Chief | Yang Ming

Editor | Jing Xiangyuan

Source | Zhikoo Culture and Tourism

State-owned cultural tourism groups and listed cultural tourism companies are both very important components of the cultural tourism industry. This article first reviews the Q1 performance of state-owned cultural tourism groups, and then discusses how to view the value of state-owned cultural tourism enterprises.

There are numerous state-owned cultural tourism groups, including central cultural tourism enterprises, provincial tourism groups, municipal and county-level tourism platforms, and cultural tourism groups established around important scenic areas. This article mainly summarizes the state-owned cultural tourism groups with larger asset scales, higher revenue, and publicly released financial reports. Through multiple channels, a total of 54 groups have been summarized. (Note: Because not all data on state-owned cultural tourism groups could be collected, this article is for reference only and should not be used as an authoritative ranking basis.)

Q1 Performance of State-Owned Cultural Tourism Groups

Among the 54 state-owned cultural tourism groups, the top three in Q1 revenue were China Tourism Group, Gansu Provincial Highway and Aviation Tourism Investment Group, and OCT Group, with revenues of 24.049 billion yuan, 12.473 billion yuan, and 11.992 billion yuan, respectively.

China Tourism Group owns China Duty Free Group, the largest duty-free group in China, a travel agency sector consisting of China National Travel Service and CTS, as well as scenic area and hotel investment businesses. It has invested in Shapotou Scenic Area, Detian Waterfall, and several hot spring resorts, and manages approximately 200 hotels. Gansu Provincial Highway and Aviation Tourism Investment Group is the largest highway, airport, and tourism investment platform in Gansu Province. It has constructed more than 70% of Gansu's high-grade highways and constructed and manages several civil airports. Its tourism sector owns more than ten well-known scenic areas, including Zhangye Danxia, Kongtong Mountain, and Tianshui Ancient City. OCT Group has several listed companies, including OCT A, Shenzhen Konka A, and Yunnan Tourism, and is involved in many fields, including cultural tourism, real estate, home appliances, semiconductor trade, and financial investment.

In terms of net profit, 32 state-owned cultural tourism groups achieved profitability in Q1. The top three in net profit were China Tourism Group, Gansu Provincial Highway and Aviation Tourism Investment Group, and Hangzhou Municipal Commerce and Tourism Group, with net profits of 1.775 billion yuan, 990 million yuan, and 385 million yuan, respectively. Hangzhou Municipal Commerce and Tourism Group owns the famous Hangzhou department store Jiebai Shares, and its tourism sector includes the famous cultural tourism performance "The Most Memorable is Hangzhou," the "West Lake Paradise" international tourism complex located in West Lake Wetland, and has also developed several cultural tourism projects, including Yunhe Rice Terraces, the Fox Fairy Little Red Lady scenic town, and the Tonglu Shengxianli International Ski Resort.

Hangzhou West Lake Banyan Tree

In Q1, 36 state-owned cultural tourism groups saw year-on-year growth in revenue, accounting for 66.67% of the total. The three with the highest growth rates were Huai'an Municipal Culture and Tourism Group, Longyan Cultural Tourism Huijin Development Group, and Suzhou High-tech Tourism Industry Group, with growth rates of 368.24%, 295.61%, and 232.39%, respectively. Huai'an Municipal Culture and Tourism Group owns several 4A scenic areas, including the Liyun River Cultural Corridor and Baima Lake Ecological Tourism Scenic Area. Suzhou High-tech Tourism Industry Group owns several cultural tourism projects, including Suzhou Amusement Park, Suzhou Dayangshan Scenic Area, Taiyangshan Botanical Garden, and Xuzhou Amusement Park.

Objectively speaking, state-owned cultural tourism groups are generally diversified and comprehensive groups, and the proportion of cultural tourism business is not high. At the same time, state-owned groups often have asset allocation and restructuring, resulting in frequent changes in performance, so it is difficult to see the performance of the cultural tourism market from the Q1 performance of state-owned cultural tourism groups.

How to View the Value of State-Owned Cultural Tourism Groups?

How should we view this type of enterprise, state-owned cultural tourism groups? This is a topic frequently discussed in the industry.

First, one viewpoint is that the main business of these state-owned cultural tourism groups is not cultural tourism. Previously, some self-media accounts have also been dedicated to restoring the "true cultural tourism revenue" of cultural tourism groups.

One point to clarify is that state-owned cultural tourism groups are generally diversified and comprehensive groups, especially local cultural tourism groups established in recent years, which have integrated many non-cultural tourism enterprises with large asset scales. Therefore, the bulk of the revenue of these cultural tourism groups comes from businesses other than cultural tourism, such as infrastructure construction, energy, finance, real estate, and commercial wholesale.

However, it should also be noted that cultural tourism is the strategic direction of these state-owned groups and is a main business that they are fundamentally unlikely to abandon. The purpose of integrating other industries is to increase the scale of assets. A sufficiently large asset scale allows for large-scale financing, and financing capacity allows for the integration of the cultural tourism industry and expansion of investment capacity. In recent years, these state-owned cultural tourism groups have also been making adjustments. On the one hand, they have divested a large number of assets unrelated to cultural tourism, and on the other hand, they have accelerated the mergers and acquisitions of tourism scenic areas within the region, and the proportion of cultural tourism business is increasing year by year.

For example, Shanxi Cultural Tourism Investment Holding Group originally focused on energy and mining. Since June 2020, it has transferred out enterprises unrelated to its main business in three batches, reducing the number of legal entities from 358 at its inception to 175 today. At the same time, it has increased its efforts to integrate cultural tourism resources within Shanxi Province, successively integrating a series of excellent projects such as Qiao Family Courtyard, Huangcheng Xiangfu, "Again See Pingyao," Niangziguan, and Zhaoyu Ancient City, and investing in a series of new projects. It has improved digital cultural tourism and tourism cultural creativity throughout the province and created a brand image for Shanxi cultural tourism. It can be said that Shanxi Cultural Tourism Investment Holding Group has effectively played the role of investment function, integration effect, and regional cultural tourism brand enhancement of the provincial cultural tourism platform.

Again See Pingyao

Therefore, state-owned cultural tourism groups are constantly changing, and we cannot view such enterprises with unchanging perspectives.

Secondly, some cultural tourism practitioners hold the view that "state-owned enterprises are not as good as private enterprises." In terms of innovation vitality, management mechanisms, and operating efficiency, some state-owned cultural tourism groups are indeed not as efficient and flexible as private enterprises. However, it should also be noted that cultural tourism is a diversified economic field. In some cultural tourism sectors with large investments, slow returns, and long cultivation periods, state-owned cultural tourism groups, as "patient capital," have irreplaceable advantages.

Taking tourism resource investment and development as an example, most of China's top tourism resources are in the hands of the government and state-owned assets. Non-top resources are very welcome to private enterprise investment and development, and many private enterprises have indeed entered the market and obtained the operating rights of many scenic spots. However, after private enterprises obtain the operating rights, there is a widespread phenomenon of long-term non-development or underdevelopment, waiting for the appreciation of resources. The reason is that the development of many tourism resources requires large-scale "patient capital" and is relatively high-risk. Private enterprises are precisely a group with high financing costs and weak risk tolerance, so their rational approach is to wait for the appreciation of resources and engage in speculation. In recent years, many local governments have been working hard to recover the tourism resource operating rights previously contracted to private enterprises and entrust them to state-owned cultural tourism groups for investment and development.

Moreover, it cannot be assumed that state-owned cultural tourism groups cannot develop good cultural tourism projects. The success or failure of cultural tourism projects depends more on the ability of the core team, rather than whether the enterprise is "state-owned" or "privately owned".

For example, Huaqiao City Group developed the Splendid China, Window of the World, and Happy Valley theme park series; Wuxi Lingshan Cultural Tourism Group developed Lingshan Grand Buddha Scenic Area and Nanhua Bay Zen Town, and also exported its capabilities to many projects nationwide; Wuzhen and Gubei Water Town were invested by CYTS Tours Holding Co., Ltd., with Chen Xianghong, the core developer, previously serving as the "Director of the Wuzhen Protection and Tourism Development Committee"; Suzhou High-tech Tourism Industry Group developed the famous Suzhou Amusement Park series; Changzhou Dinosaur Park originated from Longcheng Industrial Investment Holding Group; the resort Sanya Yalong Bay originated from COFCO Group; Chang'an Twelve Hours originated from Shaanxi Cultural Investment Group; Fuzhou Ancient House Group is the main body for the protection and development of Fuzhou Sanfang Qixiang; Kuanzhai Alley originated from Chengdu Cultural Tourism Group; the currently acclaimed top-tier zoo, Nanjing Hongshan Forest Zoo, is entirely a public institution. 。

Fuzhou Sanfang Qixiang

Therefore, when evaluating a cultural tourism enterprise, one should not prejudge that "state-owned is inferior to private", but should specifically look at whether the enterprise itself has innovation, creativity, and a spirit of pioneering, and whether it has made contributions to the cultural tourism industry.

Third, currently, many cultural tourism projects are idle or unfinished, and there are also some "image projects" disguised as cultural tourism projects. Some insiders believe that much of the waste in cultural tourism investment is caused by local governments and state-owned cultural tourism groups. Some media and self-media even use eye-catching headlines to link the rise and fall of cultural tourism projects with the downfall of local officials.

Objectively speaking, some state-owned cultural tourism groups are currently merged and reorganized from urban investment and construction companies. In the past, they have long undertaken the tasks of local infrastructure and cultural tourism construction, and their business operations are not sufficiently market-oriented. This is an important reason for the idleness and unfinished status of cultural tourism projects.

However, the core of solving the inefficiency of cultural tourism project investment lies in improving local governments' understanding of the laws of the cultural tourism industry and the trends of the cultural tourism market, helping them invest in "the right cultural tourism projects", rather than restricting their actions and limiting their investment in cultural tourism projects.

On the one hand, the cultural tourism industry itself has both public and economic attributes. The public part cannot be expected to be undertaken by private capital, such as the construction of tourism infrastructure, the creation of regional cultural tourism brands, and some units of significant cultural relics protection, historical and cultural streets, nature reserves, ecological wetlands, national cultural parks, botanical gardens and zoos with scientific research and species protection value, etc. The development, protection, and utilization of these cultural tourism resources are the responsibilities of the government, and there is no doubt that the government and local state-owned enterprises are the main participants.

On the other hand, the economic attributes of cultural tourism make it an indispensable part of some regions' development of experiential economy and the integration of the primary, secondary, and tertiary industries. So many cities, towns, and villages across the country cannot all develop industry. Industry, especially high-value-added industry, has a cluster effect and is destined to develop only in a few areas. What should other areas do? They cannot let local residents continue farming or working outside. To achieve relatively balanced economic development nationwide, we must find the comparative advantages of the local area, develop cultural industries and experiential economies, and integrate cultural tourism into the local primary, secondary, and tertiary industries.

Cultural tourism may not be able to solve the local development problems comprehensively and immediately, but it can at least alleviate the problem of unbalanced development, and it is at least a promising industry direction, an economic industry that can continue to grow and be cultivated over time.

Therefore, it is not wrong for the government and local state-owned assets to develop cultural tourism. What is wrong is the investment direction of some places. They should not invest in purely image projects or performance projects, nor should they invest in "backward production capacity" in the cultural tourism field. They should understand and grasp the trends of cultural tourism consumption and guide the local cultural tourism industry to develop in the direction consumers need.

For example, the recent hit drama "My Altay" has set off a tourism boom in Altay, which shows that tourists yearn for natural, ecological, leisurely, and culturally rich tourism experiences. Therefore, under this consumption trend, local governments should not invest in large-scale landscape sculptures, luxurious visitor centers, empty imitation ancient streets, and monotonous cultural tourism towns, especially not blindly believing in the "super landmarks" touted by some cultural tourism planning and design institutions.

Overall, under the current situation of the decline of real estate and large-scale infrastructure construction, the role of state-owned cultural tourism groups in the cultural tourism industry will become more prominent. State-owned cultural tourism groups are the largest "patient capital" in the cultural tourism field, with sufficient funds and willingness to cultivate cultural tourism projects, integrate regional cultural tourism resources, and enhance the development potential of regional cultural tourism.

With the cultivation of patient capital, the conditions for the launch of the cultural tourism market can be created. With the conditions for the launch of the market, private capital will be willing to enter. For example, the prerequisite for the rural revitalization of home appliances, automobiles, and the sinking of e-commerce in recent years is that state-owned enterprises have first solved the infrastructure such as water, electricity, roads, and broadband in rural areas. These investments are not profitable, and private capital is impossible to invest. Once state-owned assets invest, private capital will have the conditions to enter and profit.

Therefore, the current situation of state-owned cultural tourism groups should not be simply evaluated as "their main business is not cultural tourism", "state-owned is inferior to private", or "causing waste in tourism investment". We should view the value of state-owned cultural tourism groups with a developmental perspective and recognize the potential of state-owned cultural tourism groups. State-owned assets, private capital, and the government should cooperate with each other, each playing their own advantages and different positions, to jointly solve the current problems facing the cultural tourism industry.

On June 13, the China Amusement Machine and Amusement Park Association will hold the seventh session of the seventh council (expanded) meeting and the immersive cultural tourism high-quality development exchange meeting at Puy du Fou's first Asian project, "Puy du Fou SAGA City of Light", sincerely inviting all member enterprises to participate!

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