In the past two years, the hottest business has been cultural and tourism.

With wave after wave of internet-famous cities, the cultural and tourism sector has experienced multiple surges, and cultural and tourism destinations across the country have been competing to become the next internet-famous city.

In March of this year, Tianshui, Gansu, made use of the popularity of spicy hot pot, and Shanxi's cultural and tourism sector gained popularity with the success of the TV series "The Myth of Wu Kong." However, more than half of 2024 has already passed, and true blockbusters like Zibo and Harbin have yet to emerge, leaving many cultural and tourism enterprises in a difficult situation.

After a long winter, the spring of cultural and tourism seems to pass by in the blink of an eye.

01

Recently, Qujiang Cultural Tourism released its semi-annual report for 2024. The financial report shows that in the first half of 2024, Qujiang Cultural Tourism's operating income was 770 million yuan, a year-on-year growth of 11.9%; net loss attributable to the parent company was 187 million yuan, a year-on-year decrease of 5091.16%.

The most dramatic thing is that among the 20 participating and controlling companies under Qujiang Cultural Tourism, only 8 have achieved profitability, while the remaining 12 companies are in a loss-making state.

One of the most famous attractions in Xi'an, the Datang Furong Garden, only achieved operating income of 39.383 million yuan in the first half of the year, with a net profit of only 0.2353 million yuan.

But this is already one of the better-performing scenic area companies under Qujiang Cultural Tourism.

The Dawning Palace Site Park, which performs even worse, achieved revenue of 67.985 million yuan in the first half of this year, but the net loss reached 59.417 million yuan.

Since April of this year, Qujiang Cultural Tourism has been subject to several freezes of equity, with an asset-liability ratio as high as 78.17%. In July, Qujiang Cultural Tourism also sold assets of companies such as the Dawning Palace National Site Park Management Co., Ltd. to save itself, which caused quite a stir.

In contrast to the dismal performance, Xi'an Tourism is booming.

The off-peak season for Xi'an tourism is only from 2:00 am to 5:00 am.

In 2023, Xi'an attracted 0.278 billion tourists and generated revenue of 335 billion yuan, ranking fifth among all cities, behind Beijing, Shanghai, Nanjing, and Chengdu.

Xi'an is able to attract so many tourists due to its numerous historical and cultural attractions.

Among them, the "Xi'an Qujiang Dayan Pagoda and Datang Furong Garden", Xi'an City Wall Scenic Area, Daming Palace National Heritage Park, and the national-level tourist leisure street Datang Furong Garden, all belong to the operation of Xi'an Qujiang Cultural Tourism.

Source: Tuchong

However, these popular tourist attractions barely make any money.

Taking the popular tourist attraction Datang Furong Garden as an example, its revenue in the first half of 2023 was 65.86 million yuan, and according to media reports, Datang Furong Garden received 42.44 million visitors in the first half of 2023.

If we don't consider other factors, the revenue per capita brought by Datang Everbright City to Xi’an Qujiang Cultural Tourism is only 1.5 yuan.

While searching for strategies for popular attractions such as Datang Everbright City, Giant Wild Goose Pagoda, and Daming Palace, it can be observed that if visiting Datang Everbright City for sightseeing only, no money is needed at all. One can take photos outside the Giant Wild Goose Pagoda without going up the tower and therefore spending no money. The outer park of Daming Palace is free, and if not interested in the relics inside, one can also visit for free.

In summary, when visiting these three attractions and engaging in light activities without making secondary purchases, apart from necessary transportation and lodging, one can almost spend no money.

So even if the attractions are not profitable, the surrounding hotel dining must be raking in money, right?

However, the reality is that not only Xi’an Qujiang Cultural Tourism, the three major cultural tourism listed companies in Xi'an – Xi'an Tourism, Xi'an Qujiang Cultural Tourism, and Xi'an Catering, are now deeply mired in a crisis of losses, with a total loss of 0.31 billion yuan in the first half of the year.

In Xi’an, Xi'an Tourism, Xi'an Qujiang Cultural Tourism, and Xi'an Catering have basically monopolized the most core tourism resources in Xi'an.

Xi'an Tourism Company owns a total of 57 hotel lodgings, as well as historic hotel resources like Victory Hotel and Liberation Hotel. Xi'an Tourism's Xi'an China CYTS and Xi'an Overseas are among the top 100 and top 10 companies in Shaanxi Province, respectively.

However, in the first half of 2024, out of Xi'an Tourism's 17 subsidiaries and 2 joint-stock companies, only 7 companies were profitable. Among them, Xi'an China CYTS and Xi'an Overseas incurred losses of 5.2 million yuan and 0.96 million yuan respectively in the first half of the year.

Xi'an Catering owns many well-known old brand names such as Xi'an Restaurant, Lao Sun Family Restaurant, and Defa Chang Hotel. However, in the first half of 2024, Xi'an Catering's operating income was 0.349 billion yuan, a year-on-year decrease of 7.93%, with a net loss of 59.6463 million yuan.

Since 2013, Xi'an Catering has been in continuous loss for 11 years after deducting non-recurring gains and losses.

Among the listed tourism companies, the performance of Zhangjiajie Tourism, Guilin Tourism, and other cultural and tourism groups is also not optimistic in the first half of this year, with some turning from profit to loss and some expanding losses.

The tourism industry is booming, yet it seems difficult to translate into real profits.

What problems have occurred in the tourism industry?

02

Last year, Zibo and Harbin emerged out of nowhere, and cities were filled with tourists from afar. Since then, various cultural and tourism bureaus have showcased their skills and joined the propaganda war, with many cultural and tourism directors even personally participating, dancing, rapping, and cosplaying.

Last year, without a doubt, was the best year for the tourism industry in recent years.

According to the "China Domestic Tourism Development Report (2023-2024)" released by the China Tourism Research Institute, the number of travelers during the major holidays in 2023 not only recovered to pre-pandemic levels, but also increased. The number of tourists and revenue during the 2023 National Day holiday even surpassed that of 2019.

So what about this year?

As August comes to an end, data from China Railway Group shows that the daily average number of passengers on trains during the summer vacation was 13.87 million. According to the Ministry of Culture and Tourism, there were over 4,000 cultural and tourism consumption activities and about 0.037 million events held throughout the country during the summer vacation, making it quite lively.

However, from a subjective perspective, the tourism enthusiasm this year is obviously not as high as last year.

This year, there hasn't been a real popular tourist city, and people's willingness to travel has also decreased.

As a result, many tourist attractions have launched discounted ticket promotions, but some attractions still face the dual blow of reduced income and fewer visitors.

Therefore, the tourism industry this year has become more and more competitive. Whether it's hotels, OTA platforms, or airlines, they have all started more fierce discounts and promotions.

The phenomenon of decreasing quantity and price has become especially evident this year.

This has also resulted in severe losses for local cultural and tourism enterprises this year, and even frequent bankruptcies.

In February of this year, Henan Luoyang Mengjin State-owned Cultural and Tourism Group was even overwhelmed by 0.1 billion yuan of debt, and the court ruled that there was no possibility of reorganization or reconciliation, declaring bankruptcy.

Everything is related to culture and tourism, which has become the main factor for the losses of cultural and tourism enterprises.

With the booming cultural and tourism trend, low-quality artificial scenic spots quickly emerge, and copy-and-paste ancient cities fill various regions. The irony of "I miss you in XX" is the best interpretation of this phenomenon.

The "fake ancient cities" built across the country are all the same and require huge investments. Not only are they prone to unfinished projects, but they also have poor profitability. According to media statistics, more than 80% of the domestically created ancient cities are not profitable.

Zhangjiajie, which suffered losses of 60 million yuan in the first half of this year, also cooperated with Wanda to develop Dayong Ancient City, planning to create "eight ones," including an ancient city, a commercial area, a program, a group of hotels, a Lishui River, a series of events, a platform, and an intellectual property, revitalizing Dayong Ancient City.

However, in the first half of this year, there were only about 2,300 ticket buyers for Dayong Ancient City, and Zhangjiajie has been in continuous losses for 4 years.

However, not all cultural and tourism enterprises are like this.

In contrast to these loss-making enterprises, in the first half of 2024, the number of tourists in Changbai Mountain increased by 64.3% year-on-year, with a simultaneous increase in revenue and profit. The revenue was 0.254 billion yuan, a year-on-year increase of 51.73%, and the net income attributable to shareholders was 21.0329 million yuan, a year-on-year increase of 71.70%.

Source: Tuchong

Under the China CYTS Tours Holding, Wuzhen received 7.72 million visitors in the entire year of 2023, a year-on-year increase of 568%. The average ticket price was 223 yuan, achieving a revenue of 1.784 billion yuan, a year-on-year increase of 183.65%, and a net profit of 0.284 billion yuan.

These cultural and tourism enterprises are able to stand out among many loss-making enterprises due to their innovation in the cultural and tourism model.

Take Wuzhen as an example, it is completely self-operated but relies on a unique business model to transform Wuzhen from a dilapidated town into its own cultural IP, creating diversified functions such as exhibitions and culture. These achievements cannot be accomplished by mere promotion and traffic alone.

Focusing solely on promotion but neglecting the development of the cultural tourism industry itself is tantamount to missing the forest for the trees. Not to mention, in many places, inviting internet celebrities for cultural tourism ends up excluding tourists and even has a negative effect.

Cultural tourism has not only been popular in recent years; from the earliest Yunnan, Sanya, Guilin, to now Zibo, and Harbin, have all once been internet sensations.

However, under the previous internet celebrity craze, Yunnan, Sanya, and Guilin emerged with endless rumors of overcharging, leading to a continuous decline in reputation.

It is enough to see that when the 'overnight success' arrives, it is truly a city's moment of true test.

03

Epilogue

Looking back at last year's internet-famous cities, Zibo's GDP in 2023 ranked seventh in Shandong Province, with an actual growth rate of 5.5%, nearly at the bottom within the province. The previously popular Harbin, in the first quarter of 2024, still ranked the lowest among the 'Northeast F4' in terms of GDP.

This is because although the tourism industry drives consumption, its weight in the economy is not high.

Before the epidemic, the added value of the tourism-related industry, including travel, dining, lodging, shopping, and entertainment, accounted for less than 5% of the national GDP. Even in major tourist cities, the proportion of cultural tourism-related industries in the overall economy is less than 10%.

In the past two years, cultural tourism consumption has rapidly recovered, and there has been a significant amount of online buzz. However, it is clear that online popularity does not necessarily translate to actual visitor traffic, and actual visitor traffic does not necessarily translate to corresponding economic benefits.

Local cultural tourism can be said to have a great advantage, but at the same time, it also bears more responsibilities.

How to better develop tourist sites, improve service quality, innovate tourism projects, and safeguard the rights of tourists are actually the most important issues to consider before promoting cultural tourism.

Furthermore, how to convert traffic into revenue, optimize profit models, and bring benefits to local industrial development is also worth considering and improving.

In the face of the current environment, local cultural tourism may require more patience. Taking the first steps is necessary for subsequent development so that local cultural tourism can progress and thereby drive the advancement and development of more industries.