Dai Bin | New Pattern of Tourism Economy and New Guidance of Industrial Policies - Discussion on the Tourism Economy Situation and Summer Consumption Prospects in the First Half of 2023

01 Rising prosperity, market downturn, and strategic adjustment

Affected by multiple favorable factors such as relaxed policies on residents' travel and contact consumption, stable and positive macroeconomic conditions, and multiple measures taken by the central and local governments to promote consumption, the tourism economy in the first half of 2023 has entered a comprehensive recovery path of "high opening and stable growth, strong supply and demand, and accelerated recovery". During the five-day labor holiday, the number of domestic tourists and tourism revenue both exceeded the same period in 2019, with an average travel distance of over 180 kilometers. The market indicators, city heat, and tourist satisfaction for holidays, months, and quarters, as well as the month on month and year-on-year data, have all indicated that the tourism economy has reached a strategic turning point and entered an irreversible new path of recovery. According to the official website of the Ministry of Culture and Tourism, there were 2.384 billion domestic tourism trips in the first half of the year, a year-on-year increase of 63.9%; Domestic tourism revenue reached 230 trillion yuan, a year-on-year increase of 95.9%. Whether it is residents' willingness to travel, entrepreneurs' confidence, or the comprehensive prosperity index of tourism economy operation, they have all reached the best level in the past three years. Considering the coming "summer vacation", the strong demand for National Day and Mid-Autumn Festival holidays, as well as the positive impact of supply side and policy, we have reason to be more optimistic about the tourism economy in the second half of the year. The China Tourism Research Institute predicts that the annual number of domestic tourists will reach 5.5 billion and the domestic tourism revenue will exceed 5 trillion yuan, respectively recovering to over 90% and 80% of 2019 levels.

Figure 1: Tourism Economic Prosperity Index from Q1 2015 to Q2 2023

In the first half of 2023, the comprehensive satisfaction index of tourists in China was 80.08, in the "satisfied" range, with a month on month increase of 0.32 (0.4%), which is basically equivalent to the level in the first half of 2019 (80.15). Experience has shown that when tourist satisfaction stabilizes in the current period, residents' willingness to travel and consumption expectations stabilize in the next period, and the confidence of investment institutions and market entities will correspondingly increase.

Figure 2: National Tourist Satisfaction Index from Q1 2014 to Q2 2023

Due to the rapidly increasing demand for graduate studies, summer vacations, vacations, and health care, the summer of 2023 has received high attention from various sectors of government, industry, and academia. I often see netizens commenting under popular scenic spots and news such as Dunhuang, Nalati, and Laojun Mountain, 'Am I the only one working?'. According to the prediction of the China Tourism Research Institute (Data Center of the Ministry of Culture and Tourism), this summer is indeed the hottest summer in the past five years. It is expected that the number of domestic tourists in June, July, and August will reach 1.854 billion, accounting for 28.11% of the total number of domestic tourists for the year; Realize a domestic tourism revenue of 1.2 trillion yuan, accounting for approximately 27.46% of the annual domestic tourism revenue. Among them, the most concentrated vacation period for primary, secondary, and tertiary students is from July to August, with an estimated 1.331 billion domestic tourists, accounting for 20.18% of the total number of domestic tourists for the year; Realize a domestic tourism revenue of 0.86 trillion yuan, accounting for approximately 19.71% of the annual domestic tourism revenue.

From the data, it can be seen that the growth rate of tourism revenue is slower than the number of tourists, but this does not easily lead to the conclusion of "consumption downgrade". In the past, tourism consumption was mainly driven by the driving effect of medium to long distance travel. Nowadays, it is mainly reflected in weekend leisure, short distance vacation, rural tourism, and self driving travel. With less than 20% of cross provincial and outbound tourism, tourism consumption presents diverse, three-dimensional, and complex characteristics. Simply describing it as upgrading or downgrading is one-sided. From a technical perspective, on the one hand, the recovery of the tourism market is unfolding at a rhythm of low in the beginning and high in the end, and short in the beginning and long in the end; On the other hand, an increasing number of budget conscious tourists, such as "small town youth," "special forces tourists," and "reverse tourists," are expanding their consumption base while also lowering the per capita consumption of the entire sample of travelers. In Loong Boat Festival in 2023, rural residents will travel 22% of the total domestic travel, the highest proportion in the past five years. People who used to not travel are now traveling, while those who used to rely on family and friends are now staying in budget hotels. For them, consumption is not a downgrade, but an upgrade. What we need to pay attention to is whether those who used to stay in five-star hotels are now staying in economy hotels, and whether tourists who used to buy Universal and Disney AliExpress cards are now buying regular tickets. It is worth noting that the consumption of tourists in the top ten percentiles of consumption power has steadily increased, coupled with factors such as price reductions, free admission, and tourism consumption promotion in tourist attractions. The more objective tourism economic situation is "market sinking, consumption stratification, overall upgrading, unbalanced and insufficient tourism supply and demand, especially the insufficient supply of high-quality tourism products".

From publicly available information, the policy supply for tourism consumption in the near future will mainly focus on stabilizing consumption expectations, boosting consumption confidence, optimizing consumption structure, expanding consumption scale, and improving development quality. To this end, the central government will, based on macroeconomic policies such as finance, banking, development, and land, supply side structural reform, and demand side expectation management, boost tourism consumption confidence through high-level documents, meetings, and mechanism innovation, and mobilize social capital investment in the tourism field and the enthusiasm of market entities for entrepreneurship and innovation. Pay more attention to the innovative demonstration role of the top 20 Chinese tourism groups such as China Travel Service, Overseas Chinese Town, First Travel Service, Lingnan, Hangzhou Business Travel, Kaiyuan, Ctrip, Spring and Autumn, and attach greater importance to the digital transformation of small and medium-sized enterprises, thereby consolidating the micro foundation for high-quality development of the tourism industry. With the development of the Chinese path to modernization process and the arrival of the era of comprehensive development of mass tourism, the overall positioning and development strategy of tourism in the new era may make necessary adjustments. Tourism is a strategic pillar industry of the national economy, a modern service industry that integrates the real economy and digital economy, and a happy cause that meets the needs of the people for a better life. Adhere to the development of people-centered mass tourism, modern oriented smart tourism, sustainable green tourism in the future, and civilized tourism that demonstrates cultural confidence. Persist in shaping tourism with culture and highlighting culture with tourism, promote the deep integration of culture and tourism, and build the tourism industry into a priority area of humanistic economy and a demonstration industry for high-quality development.

02 Urban Accumulation, Block Drainage, and Business Integration

From a historical perspective, in the 45 years since the reform and opening up, Chinese tourism has gone through an unconventional development model of "inbound tourism first, domestic tourism later, and then outbound tourism". Today, domestic tourism has become an increasingly stable basic consumer market, and inbound tourism requires a new strategic plan to revitalize it. From the perspective of spatial layout, it follows the evolutionary logic of "first sightseeing scenery, then leisure scenes; first ancient villages and towns, then urban blocks; first western, then eastern, and then central". With the comprehensive development of mass tourism and the rise of leisure vacation demand, the focus of tourism work has gradually shifted to cities, and the spatial layout has also begun to shift to developed areas along the eastern coast. The layout of tourism space in the new era will not only pursue the effective improvement of the quality and reasonable growth of scenic spots and resorts, but also pay more attention to the construction of tourism and leisure cities and blocks, the cultivation of national tourism routes based on national parks and cultural parks, as well as the construction of world-class tourism cities such as Guizhou's tourism industrialization, Qinghai's international ecological tourism destination, and Guilin.

The China Tourism Research Institute (Data Center of the Ministry of Culture and Tourism) clusters the tourism market heat of each province, region, and city based on indicators such as tourist volume, population, and effective recreational area, and divides them into leading development areas, potential development areas, and relatively lagging areas from high to low. Among them, the potential areas include 18 provinces, regions, and cities including Henan, Anhui, Chongqing, Sichuan, Yunnan, Hunan, Fujian, Hainan, Hubei, Hebei, Liaoning, Shaanxi, Guizhou, Jiangxi, Guangxi, Jilin, Shanxi, and Ningxia. The domestic tourist reception accounts for 60.05% of the national total, and the provincial average reception accounts for 3.34%. This region has a large permanent population, great economic growth potential, and vast urbanization space. It is the driving force behind the growth of national tourism consumption and a key area for current and future fiscal, financial, development and reform, land, environmental protection, and consumption policies. By unleashing the potential of cultural leisure and tourism consumption in areas with moderate popularity, we will steadily build a new spatial pattern for tourism development in the new era of "central rise, east leading and west rising".

From the perspective of urban scale, promoting the linear diffusion and fan-shaped radiation of tourism consumption from high hotspot cities to surrounding areas, steadily building a new pattern of tourism consumption with "central radiation and peripheral reception". Traditional high heat cities such as Xi'an, Shanghai, Guangzhou, Shenzhen, and Zhengzhou have a high frequency and stable heat, while emerging hot cities such as Zibo, Shantou, and Xining have a low frequency and short duration of occurrence. This means that traditional high heat cities have stable popularity, but the popularity of emerging hot cities is difficult to maintain. The total number of cities ranked in the top 50 in terms of popularity each month is only 84, accounting for 24.49% of the 343 sample cities. Among them, there are 26 cities that can enter the top 50 in terms of popularity every month, and the structure is very stable. These cities are concentrated in the triangular area with Beijing, Shanghai, and Chengdu as its vertices, as well as the urban agglomeration of the Guangdong Hong Kong Macao Greater Bay Area. Due to the combined influence of multiple factors such as the source areas, distribution centers, and destinations of highly popular cities, the popularity of surrounding cities will also show regular fluctuations. Tourism industry policies focus on guiding destination marketing agencies and travel merchants to redirect tourists from the main urban areas of highly popular cities to suburban areas, outer suburbs, and surrounding provinces and cities. Encourage market entities with conditions to explore new tourism economic models such as "travel agency drainage, air/high-speed rail passenger transportation, and resort consumption", in order to expand their ability to deliver remote customer sources.

Figure 3: Frequency of Top 50 Cities with National Tourism Popularity (January June 2023)

From the perspective of block scale, implementing the concept of shared development between hosts and guests, implementing the integration plan of business and travel, promoting the spread of passenger flow from the main urban area and main block to auxiliary and back streets, and effectively expanding urban tourism consumption. The China Tourism Research Institute (Data Center of the Ministry of Culture and Tourism) has been conducting grid tracking research on the recreational trajectories of urban tourists for a long time. The data shows that the landing point grid of tourist trajectories is highly concentrated in the local main commercial districts, blocks, and urban leisure areas. The top five corresponding blocks or commercial districts in Nanjing are: Xinjiekou Commercial District, Nanjing Confucius Temple Qinhuai Scenic Belt, Caochangmen Commercial District, Zhongshan Scenic Area, and Nanjing Muyan Riverside Scenic Area. Through the analysis of base station load within the grid, it was found that tourists mainly contact the base stations on the main street in specific blocks and commercial districts, but the base station load level on the auxiliary or back streets is relatively low. This means that even in the main urban areas of central cities, tourist trajectories and tourism consumption are uneven. The consumption policy in the new era should effectively guide the diffusion of urban customers from main streets to back streets, from main commercial districts to secondary commercial districts, and from central leisure areas to community cultural spaces through the application of modern technologies such as artificial intelligence, big data, and 5G communication, combined with commercial outlets and transportation planning layout.

03 Project construction, scene reconstruction, and investment guidance

After this epidemic, the tourism industry cannot return to the traditional model of "a sea of people eating dividends, surrounded by mountains and water collecting tickets". Natural resources and historical and cultural resources have shown signs of diminishing marginal effects, and technology, culture, art, education, and entrepreneurial innovation are becoming new driving forces for the development of the tourism industry. With the cross-border entry of industrial capital and the digital transformation of traditional market entities, the tourism economy is steadily entering a virtuous cycle of "quality demand guiding supply innovation, innovative supply creating demand upgrading". The tourism industry policy will pay more attention to implementing the new development concept of innovation, coordination, green, openness, and sharing, adhere to shaping tourism with culture and highlighting culture with tourism, promote the deep integration of culture and tourism, and build a new development pattern of effective improvement in quality and reasonable growth in quantity. Mass tourism has entered a new stage of comprehensive development, with more obvious characteristics of personalized, high-quality, and diverse consumption, and more diverse consumption scenarios. Tourists not only want beautiful scenery, but also a wonderful life. Tourist destinations have become a new space for a "near and far, shared by hosts and guests" beautiful life. The demand for new types of tourism such as self driving tours, RVs, ice and snow, summer retreats, cold shelters, nighttime activities, health and wellness, study tours, vacations, sports, cuisine, exhibitions, music festivals, concerts, etc. has moved from the concept introduction period to the market practice period. Tourism consumption has shifted from the concept of destination to a new pattern that emphasizes both destination and source of customers, and connects pre trip, during trip, and post trip. Promoting more infrastructure and public services to enter the tourism industry, encouraging innovation in travel service providers, tourism suppliers, and destination small transportation modes, will be the policy direction to promote tourism consumption and high-quality development of the tourism industry.

Create more new tourism experience scenarios such as humanities, technology, and academic research. The promotion of tourism consumption cannot simply focus on free admission, price reduction, and subsidies. It is necessary to pay more attention to the travel markets of young people's study tours, middle-aged and elderly people's health and wellness, rural residents' sightseeing and leisure, and launch products that meet their consumption preferences and payment abilities. We need to systematically sort out the geological landforms, flora and fauna resources, and historical context of national parks and cultural parks, coordinate government, social, and market forces, and bring to life the cultural relics collected in museums, the heritage displayed on vast lands, and the characters written in ancient books. We will pay more attention to the creative inheritance and innovative development of excellent traditional culture, and rely on the Chinese Dream of national rejuvenation and people's happiness to provide tourists with excellent literary and artistic works, high-quality tourism products, and more futuristic quality leisure spaces. Increase domestic tourism publicity and promotion, so that the Chinese people can walk freely on the beautiful land, enjoy the beauty of mountains and rivers, and understand the beauty of culture. Pay attention to the cutting-edge trends in technology, education, and economic and social development, and guide youth tourism to focus on current life and the future of human civilization with a broader international perspective. Therefore, the tourism industry policy in the new era should focus on promoting the diversified coupling of tourism with various industries of the national economy and social development. Traditional industries such as travel services, accommodation, and entertainment are becoming more refined, with characteristic homestays, themed hotels, youth hostels, camping, and others occupying an increasingly large proportion in the accommodation industry. Tourism and leisure complexes such as cultural, commercial, and agricultural tourism have long been investment hotspots, while new formats such as health tourism, industrial tourism, and sports tourism have also developed well. Immersive performances, light and shadow shows, drone shows, and smart theaters supported by advanced technology have become the new favorites in the market. A large number of peripheral enterprises such as production service enterprises, equipment manufacturers, and technology solution suppliers have emerged around the core needs of the cultural and tourism industries.

04 Individual customer demand, diversified supply, and modernization of governance capabilities

The development of independent travel and self guided tours has allowed more and more tourists to enter residential production and living spaces as well as leisure scenes. Tourist destinations are increasingly possessing high-quality living space attributes of "near and far, shared by hosts and guests". With personalized, high-quality, and diverse dining, accommodation, transportation, travel, shopping, and entertainment, the tourism market has formed new demands such as food tourism, RV tourism, and specialty homestays that are sufficient to support business innovation. The proportion of catering consumption in tourism consumption remains high, at over 20% for a long time. 90% of tourists will taste local specialty foods after arriving at their destination. For popular tourist cities such as Chengdu and Changsha, specialty cuisine is an important attraction. The pursuit of food even extends to the market, and some places' markets have become an important choice for tourists to experience the local lifestyle due to their beauty, ease of shopping, and fun, especially their "fireworks atmosphere".

Theoretical research, data analysis, and market observations increasingly point to the fact that tourist experience not only relies on traditional travel service providers, but is also closely related to local life service providers, infrastructure, business environment, public services, and more. The traditional tourism development model based on teamwork and sightseeing, as well as the corresponding industry regulatory methods, are facing fundamental pressure for change. The tourism sector cannot only focus on travel agencies, tour guides, star rated hotels, A-level scenic spots, and resorts, but should also focus on whether tourist satisfaction is high or not, whether market entities have strong competitiveness, and whether tourism development momentum is new or not. We should comprehensively promote organizational change, technological innovation, and the construction of cadres and talent teams, and build a new high-quality development system for the tourism industry in the new stage of comprehensive development of mass tourism. Only when tourism supply, market innovation, industry regulation, and people's good lives are closely related, can the tourism economy ensure sustainable and prosperous development.

Although the country's determination to develop inbound tourism has never wavered and confidence has never dissipated, the relative decline of inbound tourism in the tourism economic system and global tourism market pattern is still an undeniable fact. Establish a central level tourism coordination and discussion mechanism, and increase efforts in external publicity and tourism promotion. The revitalization plan of inbound tourism was introduced, focusing on improving the short board of inbound foreigners' tourism experience. All regions and departments should move in the same direction. Key tourist cities should focus on updating their tourism image, promoting their image to the outside world, and conducting market promotions to enhance their visibility and reputation, and make great efforts to improve the tourism consumption environment. Simplify fingerprint visa policies, orderly restore and expand visa on arrival and visa free policies, increase efforts to restore flight routes, and enhance payment, hotel, and scenic resort entry facilitation services. Based on the practical needs of inbound tourists such as cultural experience, travel preferences, and dining habits, optimize inbound tourism products and routes. Strengthen the training and policy support for tour guides, especially foreign language guides, especially those in minority languages.