China's tourism experience has changed dramatically in the last few decades —for the better

by Chase Poffenberger and David Parry, China Business Review

The January issue of China Business Review, the official magazine of the US-China Business Council, noticed the travel heat of China. Here are some excerpts. For full text, please click here.


Beginning with a trickle of intrepid pathfinders in the late 1970s, foreign tourists have been making China a "must-see" destination in rapidly increasing numbers. In 1979, China hosted only 5.7 million foreign visitors, nearly all of whom were from Hong Kong, Macao, and Taiwan. By 2005, China received 120.3 million foreign visitors, more than 80 percent of whom were from Hong Kong, Macao, and Taiwan. Like the rest of its economy, China's tourism sector has changed dramatically in the last 20 years.

According to the World Travel and Tourism Council's April 2006 report on China, the country's travel and tourism industry generated $353.7 billion in 2006 and is expected to grow to $1.3 trillion in 2016, or roughly 8.7 percent per year on average. In 2006, foreign visitors were expected to spend $75.1 billion and account for 7.4 percent of China's total exports. The travel and tourism industry was expected to account for 2.9 percent of China's total GDP directly (13.7 percent when indirect effects are included). Tourism provides 17.4 million jobs in China, or 2.3 percent of total employment in 2006, and is forecast to support 20.4 million jobs, or 2.5 percent of the total, by 2016. In total, 10.2 percent of all jobs, or 77.6 million, in China depended on travel and tourism in 2006.

Most tourists to China still go on a package tour. The most common itineraries visit Beijing; Guilin, Guangxi; Shanghai; Xi'an, Shaanxi; and the Yangzi River over 12-14 days. Tourists are rushing to see the Three Gorges area before the reservoir created by the Three Gorges Dam floods it completely. With a new fleet of luxury river vessels available, the Yangzi River has become a centerpiece of many mainstream itineraries. Hotels for these tours tend to be joint ventures and range from three to five stars.

New demand for luxury

The US Baby Boomer generation is far more sophisticated and educated than its predecessors, and the same characteristics are true of boomers in other Western countries. These characteristics, combined with the trend among mid-market consumers in the United States to selectively purchase luxury goods and experiences that used to be reserved for the wealthy, are creating a broader market of travel buyers who are willing to pay a premium for an upscale travel experience to China. (Luxury tours often start at $500 per day. These tours also last about 14 days on average.)

Better service

Chinese tourists with increasing amounts of disposable income have helped raise China's service levels dramatically in a relatively short time. In many cases, Chinese tourists spend more per capita than Hong Kong tourists in China, although Hong Kong tourists still have higher incomes.

Another welcome change stemming from China's focus on the economy is the increased openness of the guides. For the most part, tourists are no longer subject to a closely scripted delivery of information, and many foreigners unfamiliar with China are surprised when their local and national guides speak their mind. The approach of local guides tends to fall along generational lines. Older guides who remember the Cultural Revolution often share stories of survival and tend to view Chinese history since the 1970s as positive, in contrast to the hardships they endured earlier. On the other hand, guides who are too young to remember the Cultural Revolution tend to be more critical of China.

Beijing pledged when bidding for the Olympic Games that there would be 800 star hotels with altogether 130,000 guest rooms in Beijing in 2008. Therefore, the quantity of guest rooms in Beijing star class hotels has to grow at an annual average rate of about seven percent to reach goal. Now the Olympic Games will be held in two years, how far are we from the goal?

The latest statistics show that at present, there are 658 star class hotels with 109,000 guest rooms in Beijing. Thus, there is still a gap in comparison with the goal of 800 star hotels with 130,000 rooms needed for the Olympic Games. However, relevant authorities in Beijing are confident to realize such a goal. Du Jiang, the director general of Beijing Tourism Administration, said recently that there were 110 star class hotels under construction or to be constructed in Beijing; with some of the existing hotels/resorts inferior to star class hotels reconstructed and upgraded, it is expected that star class hotels needed by the Olympic Games will amount to 800 by the end of next year.

Old Hotel Reconstruction bringing forth great business opportunities 

In order to draw a whole picture for the Beijing's hotel industry, Beijing Tourism Administration spent over half a year carrying through a half-year hotel census in cooperation with commercial institutions and administrative institutions of industry and commerce. The census shows that there are over 4,000 hotels inferior to star class hotels with 160,000 guest rooms and 360,000 beds. Du Jiang, the director general of Beijing Tourism Administration, expressed that making full use of the existing reception resources in the lodging industry while introducing investment to upgrade some hotels inferior to star level hotels, the accommodation needs during Beijing Olympic Games will be met without leaving exceeding hotels resources unused.

Both investors from abroad and domestic investors have seen the great business opportunities in the reconstructing lodging facilities inferior to star class hotels in Beijing. During the recently held Trade Fair of Investment Management in Beijing's Lodging Industry Before 2008, 35 domestic and overseas investors, financial organizations, famous hotel groups, and real estate investors had in-depth negotiation with 103 lodging facilities from Beijing's 18 districts and counties having demands for cooperation. They have signed 11 agreements and letters of intent with a total sum of RMB212.62 million yuan. 

With prestigious overseas investors and hotel groups introduced to reconstruct and upgrade the existing reception facilities of the lodging industry, services and management can be improved on one hand; on the other hand, Beijing hotels can be included into the global reservation network of well-known international hotels in virtue of such an opportunity. For instance, the Beijing Jufeng Super 8 Hotel, which was a very popular guesthouse with traditional Chinese style architectures among foreign tourists and signed a contract this round, suffered an insufficiency of potential customers before due to its location in an alley near the Qianmen area. After it joined the Super 8 chain hotels, the hotel can utilize Super 8's global reservation network to come onto the stage of the Olympic Games.

To meet the needs of guests at various levels during the Beijing Olympics, the management over lodging facilities inferior to star class hotels is also placed on the agenda. A local industry standard called Beijing Lodging Industry's Service Quality and Evaluation has been lately approved by experts and will be published and implemented soon. According to Xiong Yumei, vice director of Beijing Tourism Administration, that standard is targeted on the lodging and reception facilities inferior to star class hotels with prominence given to standards on security, hygiene and services. Accommodation facilities in Beijing will be rated according to this industry standard so as to regulate the operation and management against the standard and improve service level. Hotels that fulfill the standards will be conferred the title of "Beijing Qualifying Accommodation Unit".      

Mushrooming investments in new hotels

Besides restructuing existing hotels, the construction of new hotels is mushrooming in Beijing. Many grand hotels are under construction in Beijing CBD now. The Thai Solapan Investment Company and Beijing GuoHua Real Estate Co., Ltd. jointly set up the Beijing Huamao-Solapan Investment Limited Co. to build two grand luxe hotels, the Rits-Carlton Hotel and JW Marriott Hotel, which are anticipated to be completed in June 2007; the project of 63-floor Beijing Yintai Center is also under construction and Park Hyatt Hotel, the high-class and the most expensive luxury hotel brand of Hyatt International Hotel Group, will open on the top of Yintai's 63-storey main building in the spring of 2007; in addition to the China World Hotel and Traders Hotel, the Phase 3 of China World Trade Centre project, which occupies an area of 6.27 hectare with a total investment of US$800 million, is under construction. As introduced on the website of China World Trade Center, the project including a grand five star hotel is expected to be completed in the end of 2007.

The high-class hotels in the area of Yayun Cun and Olympic Sports Center are under construction like a raging fire in order to meet the demands in the market during the 2008 Olympic Games. It is reported that a five-star hotel with a floor space of 198,300 square meters will be built nearby the Olympic Park; a four-star hotel will be built near the Mingren Hotel at Yayun Cun; and a high-class hotel will be constructed, about 500 meters north to the Piaoliang Shopping Mall.

At present, there have already had 33 hotel brands from 22 famous hotel groups, such as Inter-Continental, Starwood, Cendant and Accor in Beijing. It's estimated that five-star hotels in Beijing will account for 33.5 percent of all hotels in 2007. The hotel of Hyatt, Marriott and Rits-Carlton will be open. There will be two Rits-Carlton Hotels, two JW Marriott Hotels, two Inter-Continental Hotels and one Four Seasons Hotel in Beijing by then. Beijing will become the second Asian city where there are both brands of Hyatt and Park Hyatt at the same time.
   
Market trend after the Olympics

The Olympic Games will bring tremendous opportunities to the Beijing's hotel industry and other related industries. As analyzed, only hotel decoration and reconstruction of the existing hotels in Beijing will cost RMB10 billion yuan.

As estimated by relevant institutions, the 2008 Olympic Games will bring the opportunities worth RMB280 billion yuan. It is expected that 4.6 million overseas tourists and 96 million domestic visitors will travel to Beijing in 2008. During the Olympic Games, a large amount of visitors will come to Beijing in addition to Olympic officials, journalists, sponsors and working staff. It is expected that there will be possibly about 600,000 overseas tourists and 1.1 million domestic tourists coming to Beijing during the 2008 Olympic Games.

Tour to Mutianyu will be handled by private taxies that we connect. Our experienced driver will send you to the Great Wall and bring you back round-trip. We'll group you and other tourists together to fit into a taxi in order to lower your cost. You may opt to go with 4-people, 3-people, or 2-people team. We'll try to match the dates of everyone who is interested in the tour, so that we can go with one car. Depart at any time if a team is formed. We'll pick you up at where you stay. Certainly, you do not have to stay in our hostel or Homelodge to join the tour. Any tourist is welcomed.

Starting August 1, 2006, we'll be launching our first Guesthouse service in Beijing -- HomeAwayFromHome. This guesthouse is located in the Beijing Center, ideal for business or backpackers for a couple, a family or student travelers.

Distinguished from other hotel and hostel service, HomeAwayFromHome offers many highly-demanded services including the following:
 
> Free daily Beijing orientation and Q&A session
> Free Beijing map
> Free fruits and drinks
> Free laundry
> Free Internet
> Free English Newspaper
> Free Beijing tour tickets/passes (with qualified length of stay)
> Free airport/train station pickup (with qualified length of stay)
> Free airport/train station drop-off
> Discount movie ticket
> Free guest kitchen
> Discounts to bars
> Discount Great Wall tour
> Free domestic and international flight ticket booking
> Free train ticket booking


Please visit www.greatwalladventure.com/homeawayfromhome.htm to find more information.