Lower entry fees set to hit operators of China’s biggest tourist spots hardest
Michael Wang is one of hundreds of millions of Chinese tourists to travel within the country each year, exploring its many natural wonders, heritage sites and beauty spots.
But he may decide to go abroad for his next holiday. Like many, he’s getting fed up of having to pay what he considers exorbitant prices to access the mainland’s most popular scenic attractions.
“I am losing my interest in visiting the domestic historical sites and places of interest,” said Wang, a Shanghai-based entrepreneur. “I felt disappointed every time. It’s like I pay several hundred yuan to just get a few photos inside.”
The lofty ticket prices have become so prohibitive that the government looks set to intervene, worried that the domestic tourism boom could run out of steam. It is widely seen as a major driving force behind the economy’s transition into one that relies on consumer spending rather than manufacturing for growth.
Prime Minister Li Keqiang said in his work report at the National People’s Congress that the government is considering cutting admission fees for major tourist attractions in a bid to maintain the impressive growth rate. Chinese tourists made 5 billion domestic trips in 2017, up 12.8 per cent from a year earlier, according to the National Tourism Administration.
The prospect of lower ticket prices will come as good news to disgruntled travellers like Wang, who often liken the elevated entry costs at some of the country’s most popular attractions to “robbery”.
But the move has been less welcomed by the tourist operators and their investors.
In the wake of Li’s speech on March 5, many companies that manage major tourist spots in rural China saw their share prices fall. And Bloomberg data suggests the more the gatekeepers are charging visitors, the more they have to lose.
At one end of the scale, Huangshan Tourism Development, the operator of scenic spots in Yellow Mountain in Anhui province, charges each of its 52 million annual visitors an entry fee of 230 yuan. These ticket sales contribute 13 per cent to its total revenue and 28 per cent to its profits, according to Sinolink Securities. The company’s shares have fallen 2.8 per cent since Li’s speech.
By contrast, Shanghai Yuyuan Tourist Mart, which charges a mere 40 yuan to see the Yuyuan Gardens in Shanghai, saw its share price go up by 2.6 per cent.
The revenues and share-price data appear to show it’s the visitor attractions in rural, poorer parts of the mainland charging higher entry fees whose operators stand to take the biggest hit from any reduction in admission costs.
“The renowned tourist sites are unlikely to attract a big rise in visitor numbers because the tourist volumes are already at a high level,” said Dongguan Securities analyst Lu Liting. “A lower admission fee will probably result in shrinking revenue for them.
“For those operators counting on ticket sales to run their businesses, the impact is huge.”
Li’s work report did not contain details about how much entry fees should be reduced or when the cuts should take place.
“It is just a sign that the top leaders are aware of the ailing market, or at least the unhealthy growth of it,” said Annie Ren, a manager with Shanghai Jinjiang International Travel, the largest travel agency in the city.
Buoyed by a burgeoning middle class with more money to spend on travels, tourism revenue across the mainland jumped 15.1 per cent to 5.4 trillion yuan last year. The industry created 28.25 million new jobs in 2017, the National Tourism Administration said.
The proposed slashing of admission costs was mentioned by Li as part of a raft of measures aimed at boosting China’s transformation into a consumer-driven economy.
“For the near term, a lower admission fee will dent the tourist operators’ earnings,” said Sinolink analyst Lou Fengye. “In the long term, reduced income from ticket sales will force them to re-work their business models and upgrade services.”
The listed tour operators can offset their losses from shrinking ticket revenues by improving their offerings in areas like hotels, transport and retail, Shenwan Hongyuan Securities said in a report.
Costs for maintenance, marketing and human resources can also be reduced by introducing advanced facilities and digitalised technologies, said Zheng.
The premier’s work report referred to the concept of “all-in-one tourism” – an approach which combines man-made attractions such as amusement parks, museums and restaurants with the natural wonders or rare resources like Shanghai’s Yuyuan Garden which cannot be easily duplicated.
“In short, it encourages local tourism authorities and operators to build up more artificial scenic sites to entertain visitors,” said Li Wenjie, chief executive of Shanghai Yaheng International Travel. “All-in-one tourism is an ambitious target by the government to boost the regional economies, particularly in poverty-stricken areas.”
Additional reporting by Amanda Lee