Austerity measures in China seem to take their toll on tourism activities

JINAN - An austerity campaign launched in China has produced a chilling effect on the tourism industry, with travel agencies having to realign their strategies to heat up their profits, wrote recently Hou Qiang, a journalist from the news agency Xinhua. According to the journalist, group tours seem to be among the hardest hit by those austerity measures, as travel agencies report plummeting sales of up to 50 percent since the beginning of the year.

Lu Bo, a manager of a travel agency based in east China's Jiangxi Province, said his company's group tour activities are half of what they used to be a year ago, as fewer travellers are signing up for packages. Industry insiders said agencies used to rely on group tour packages tailored for government officials for nearly 80 percent of their profits.

However, not all such tours were paid with officials' own money. The public were angered over reports of officials using business trips and conferences as a disguise to go on personal vacations, splurging taxpayers' money on extravagance.

Worst example exposed to the public ire was the behaviour of He Luhua, a former head of the Bureau of Justice in Shenzhen (Guangdong Province). He was recently removed from office after spending Yuan 140,000 (US$ 22,820) on luxury hotels and travel during what was supposed to be a five-day inspection tour. The 24 people involved in the case, including He, were asked to return the money they spent.

In December, the ruling Communist Party of China rolled out a series of measures to improve work style and efficiency, such as controls on the number of people on inspection tours and banning lavish receptions.

Travel agencies are not the only ones to have suffered from the government's crackdown. High-end catering and luxury goods have witnessed plunging revenues after the campaign kicked in.

In response, many restaurants started to offer half servings of food, allowed diners to bring their own drinks and canceled charges for individual dining rooms.

Chen Guozhong, head of the Tourism Planning and Design Institute of Shandong Province, said similar changes must take place in the tourism industry with opportunities to make money being provided by the growing number of middle-class Chinese people.

Gone are the days when managers working from office buildings strike group tour deals with large clients over the phone, said Lu Bo, general manager of a travel agency based in east China's Jiangsu Province.

In a bid to attract long-ignored customers, some agencies are looking to grow their presence in communities and in supermarkets while other tour operators are providing beauty and health programs, rather than just trips to scenic spots, as part of holiday packages.

More Chinese people are travelling around the country and abroad, but less in groups arranged by tour operators. The rise of individual travellers heralds the coming-of-age of China's tourism industry highlighted Chen Guozhong.

Analysts thus advise tour operators to redesign their products to better meet the needs of savvy travellers. "This might be a cold winter for the whole industry, but I'd like to see it more as a game-changer", said Ma Li, vice president of Shandong Jiahua Travel Agency to Xinhua.

According to Ma, the company has reinvented its marketing strategies to target various groups, such as senior couples and newly-weds. Revenues have seen single digit growth so far this year despite diminished interest in traditional tour packages.

Sourced: TravelDailyNews