China Tourism Group merges for three years, where is the road

There are tens of millions of Chinese tourism companies, but in the name of China Tourism, China Tourism Group is the only one, which also represents the official No. 1 status of China Tourism Group. However, the situation of the tourism market is changing. For a Chinese tourism group that has only been established for 3 years, striving to become a veritable No. 1 has never been a simple matter.

On November 7, 2019, China Tourism Group formally announced the new version of the Group s brand logo. The group s visual identity system, new website domain name, email domain name, and group official micro QR code were also released at the same time. Since the strategic reorganization of the Group and China National Tourism Group has been implemented, the long-term strategic restructuring has been a long way. What changes have China Tourism Group experienced? In the future, how to break, adjust and promote its major businesses will become a problem outside the world.

Large The tide of state-owned enterprise reform

招 The signboard of China Tourism Group can be described as the product of the state-owned enterprise reform wave.

港 The predecessor of Hong Kong China Travel is the Hong Kong Branch of China Travel Service established by the famous banker Mr. Chen Guangfu in April 1928. It is an important state-owned backbone enterprise directly managed by the State-owned Assets Supervision and Administration Commission of the State Council and one of the four major Chinese-funded enterprises in Hong Kong. China Travel Service enjoys a good reputation and high visibility at home and abroad. It is widely known as the core company of China Travel Service , which was founded in November 1949 and is the first travel agency in New China.

The restructuring of state-owned assets in the tourism industry began in 2004 with the reform of the separation of the main and auxiliary enterprises of the central SOEs and the lean main business. In the same year, the SASAC proposed the idea of leading large-scale tourism enterprises and decentralizing small-scale tourism , and the tourism industry initiated a merger. Under this opportunity, the State-owned Assets Supervision and Administration Commission of China officially merged China Travel Service into Hong Kong and China Travel Service in June 2007, forming a great unification and synergy between the tourism resources of the two major state-owned enterprises of Hong Kong Travel Service.

On August 24, 2015, the State Council issued a programmatic document for the reform of state-owned enterprises in China, which clearly states that commercial state-owned enterprises whose main businesses are in fully competitive industries and fields must, in principle, implement a company-owned shareholding system reform and actively introduce other state-owned capital or various types of capital. Non-state-owned capital realizes equity diversification.

China National Travel Service is a central enterprise supervised by the SASAC of the State Council. Its main tourism business covers the fields of travel services, distribution of duty-free goods, development and management of comprehensive tourism projects, transportation, and e-commerce . Its tax-free business is second to none in China.

In order to further promote the reform of state-owned enterprises, in July 2016, Hong Kong China Travel Group and China National Tourism Organization implemented a strategic reorganization and established the China Tourism Group. At this point, China Tourism and Hong Kong and China Travel Group, the two major tourism giants, have completed the reorganization, and China s largest tourism central enterprise, China Tourism Group, was born. How to realize 1 ​​+ 12 is by no means a simple matter.

Travel agency business goes down Duty free business goes up

The business network of the merged China Tourism Group has spread to 28 countries and regions in the Mainland, Hong Kong, Macao and overseas. It can be said to be backed by strong capital and core resources. However, it is not difficult to find that behind each of its businesses, there are no small challenges.

Travel service is its old-established business. The merged China Tourism Group has three major old-fashioned travel agencies under the China Travel Service, China Travel Service and Hong Kong China Travel Service, with strong resources and business capabilities. However, the three travel agency brands have avoided internal competition and maximized benefits. Whether they need to redefine the regional distribution or have their own business priorities has not been effectively resolved. In addition, with the development of the online tourism industry and the transformation of residents consumption patterns, the traditional travel agency industry is fiercely competitive, the profit margins are being continuously compressed, and the policy advantages of the three major brands have gradually weakened.

China Tourism Group said in a recently released financial report: The scale of the company s travel agency business revenue has been decreasing year by year. In 2017, the company s travel agency business realized revenue of 22.774 billion yuan. From 2015 to 2017, the company s travel agency business revenue has declined by a compound annual average of 4.09%.

12In December 2018, China National Travel Service issued an announcement saying that the company intends to transfer 100% of the equity of its wholly-owned subsidiary, China National Travel Service Corporation, to China Travel Service Group through a non-public agreement transfer at a transfer price of 1.831 billion yuan.

Accompanied by the lag in the development of travel agency business, China Tourism Group has continued to strengthen its duty-free business, and the integrated duty-free shop business has become a major profit. In 2017, the proportion of duty-free merchandise trade in China National Tourism s total revenue exceeded 50%, and by 2018 it had exceeded 70%.

Hainan Duty Free Shop

Before and after the divestiture of the travel agency business, China National Travel Service has repeatedly extended its merger and acquisition of Juli Duty Free. In July 2017, it acquired 51% equity of Nisshang China for 38.82 million, which operates exit and entry duty -free shops at T2 and T3 of Beijing Capital Airport; in February 2018, the company s wholly-owned subsidiary Approximately RMB 1.505 billion was acquired for 51% of Shanghai Rishang. After the completion of the acquisition, the company has the duty- free operating rights of Shanghai Pudong International Airport and Hongqiao International Airport.

10In October 2018, China Tourism Group, the controlling shareholder of the company, and Hainan State-owned Assets Supervision and Administration Commission signed an agreement for the free transfer of equity. The former will hold 51% equity of Hainan Duty Free Co., Ltd . under Hainan State-owned Assets Supervision and Administration Commission. Through acquisitions and new bids, China National Travel s duty-free business has covered multiple channels including airport duty-free shops, Sanya duty-free shops, and cruise ship duty-free shops. According to the data compiled by Ping An Securities Research Report, the company s market share in the domestic tax-free industry exceeds 75% (excluding the injection of 51% equity in Haiwai).

However, the tax-free business of China Tourism Group is not invincible, and the lack of advantages in overseas expansion is a big pain.

From the perspective of the general environment, it is relatively late for China s tax-free industry to benchmark internationally, and relevant policies have not yet fully integrated with international standards. Having a state-owned enterprise background cannot occupy an absolute advantage in overseas competition. On the other hand, the current competition in China s tax-free market is also constantly intensified, and more and more entities have entered the field, and there is considerable pressure on competition.

Challenge Investment operations, financial business challenges are not small

Excluding the two major business sectors mentioned above, the hotel business and tourism destination investment operations are the other two major businesses of China Tourism Group.

In terms of hotel business, China Tourism Group owns 16 hotels (excluding hotels under export management and hotels in the UK) with a total of 5,463 rooms, including 5 Hong Kong and Macau hotels and 1,711 rooms. It also owns 54 KG-owned and managed hotels in the UK, with 6,893 guest rooms. From 2015 to 2017, China Tourism Group s hotel business generated operating income of 3.08 billion yuan, 2.741 billion yuan and 2.817 billion yuan, respectively, and the growth tended to stagnate.

In terms of investment and operation of tourist destinations, 16 integrated cultural and tourism projects were mainly invested and operated, including the theme park represented by Window of the World, Splendid Huawei, Songshan Shaolin Scenic Area, Shapotou Scenic Area, and natural humanities. Scenic areas, as well as comprehensive tourist resorts such as Haiquan Bay Resorts in Zhuhai Haiquan Bay, Qingdao Haiquan Bay, Xianyang Haiquan Bay, Anji Club Med Joyview Resort, and China Travel Anji Hele Town, Ningbo Hangzhou Bay Splendid Oriental Country Wind town and other characteristic cultural tourism towns.

From 2015 to 2017, China Tourism Group s scenic area business income was 2.071 billion yuan, 1.885 billion yuan and 2.548 billion yuan, respectively, and the total profit was 563 million yuan, 377 million yuan and 986 million yuan, respectively. The revenue and profit figures show a dynamic trend, and the scale of revenue has lagged behind the investment and operation revenue of OCT, Chimelong Collective, and Huaqiang Fangte.

At the same time, taking the newly rising Fosun Travel News as an example, in the first three quarters of 2019, the revenue of resorts, tourist destination operations and tourism leisure services and solutions has reached 11.5 billion yuan, significantly exceeding the similar business of China Tourism Group Revenue.

Financial business is also the focus of China Tourism Group s layout. Through the layout of tourism financial products, China Tourism Group will integrate financial products and services into the tourism industry chain, integrate related resources, and build a financial platform and ecological circle with tourism cultural characteristics..

Tourism China Tourism Group Tourism Finance Business Group

However, as a golden place to be explored, tourism finance has been eager to move, and the financial + tourism model has long been common.

Tongcheng, Qunar, Ctrip, Tuniu, Donkey Mom and other OTAs have all opened up the financial zone. Tongcheng Financial Services was established in 2015 with Tongcheng, where the financial business department was established in 2016, Ctrip established Ctrip Finance in 2017, 2018 In the same year, Tongcheng Tourism released the first industrial financial service product for the entire tourism industry- tongyi loan. This airline company such as China Southern Airlines, China Southern Airlines, China Eastern Airlines has set up wallets in their respective apps.

We can see that several major business segments of China Tourism Group are large and rich in content, but they are facing challenges and pressures in each segment. How to find a breakout path in the encirclement of competitors? This is the answer that China Tourism Group needs to give.

Comprehensive elements

China Tourism Group brings together many well-known domestic and foreign brands such as Hong Kong China Travel, China International Travel, China China Travel, and China Duty Free. These valuable member companies have created China Travel Group s good brands in the competition . There are always shortcomings in the United States and China. This also brought three problems. At the Star Companion Without Borders brand image conference held on November 7, 2019, one of the main members of China Tourism Group s brand building project, Zhengbang Creative (Beijing) Brand Zhang Aichao, director of brand strategy of Technology Co., Ltd., said at the scene.

He said that the first is the relative lack of synergy between the various business brands. Due to the integration of several brands, the business units and brands are relatively independent, and there is also a lack of relative synergy between the businesses. The second is that the brands within the group have less mention of related brands, consumers have overlapping perceptions of the group s brands, users have outdated perceptions, and may even be confused.

List of brands of China Tourism Group

Therefore, based on the analysis of its own entire industrial chain, China Tourism Group finally determined that its core competence and positioning of the brand are: focusing on the full factor and all-round travel consumer demand, and providing first-class travel services for the global travel market.

Brand China Tourism Group brand core and positioning

To this end, China Tourism Group proposed to become the chief national tourism service provider in domestic and outbound tourism, and to become the chief Chinese tourism service provider in outbound tourism.

The ultimate realization is that under the command of the new brand, a clearer brand positioning, richer connotation requirements, and clearer cultural value propositions will be established, and different high-quality brand systems will be formed to cover different business lines, product lines, and business areas., Become the most trusted travel partner for travel consumers and enterprises, the leader of the supply-side structural reform of the travel industry, the main force to realize the strategy of a strong country in tourism, and a system service provider for global travel for tourists.

In addition to the release of a new brand image and new strategic positioning, in 2018 China Tourism Group also deeply integrated and adjusted the original business layout and organizational structure. Finally, it was clear that tourism was the main industry, covering travel services, investment operations, tourism retail, and tourism. Finance, hotel operation, and innovation incubate the industrial structure of six tourism-related business areas, and build six business groups.

Another unexpected major adjustment of China Tourism Group was the relocation of its headquarters.

China On September 12, 2018, China Tourism Group announced that the group s domestic headquarters officially moved from Beijing to Haikou with a registered capital of 15.8 billion yuan. The southward move was finalized at the signing ceremony of the first round of strategic cooperation agreement between Hainan Province and the central government in early July 2018. The change of headquarters was officially implemented in just two months.

Tourism industry is a characteristic industry of Hainan, and it is also one of the twelve major industries that Hainan Province will focus on during the 13th Five-Year Plan period. Prior to this, Hainan s tourism industry has always been dominated by tourism. Relatively shortcomings in entertainment and tax-exempt services have been identified. After the Hainan Free Trade Port policy is determined, Hainan will likely test the new policies on entry and exit tourism, and may even relax foreign investment. Admission, to form more adequate competition in the tourism market. This has led to the rapid expansion of capital in the industry in the Hainan market, and want to get a share of it.

With the increasing vitality of Hainan s industrial development and the policy advantages of Hainan Free Trade Zone and Free Trade Port construction, Hainan Province has unlimited potential in the future. The southward move of the headquarters also shows the ambition of China Tourism Group to make up for its shortcomings and seek new development in the new era.

In addition to relocating its headquarters, restructuring its business structure, and launching a new brand, China Tourism Group is constantly trying to update its business and incubate new businesses.

Shangang China Travel Miyun Mountain RV Town (Source: Official Weibo)

China Tourism Group is the first state-owned enterprise to deploy the RV and camping industry. So far, it has invested in the first international standard RV camp in China—Hong Kong China Travel Service Miyun Mountain RV Town, and cooperated with Sichuan 318 and Yunnan Otto. In the western RV camp, it organized seven consecutive China International RV Exhibitions in cooperation with the German Düsseldorf Exhibition Group and participated in the drafting of national camping standards.

Cruise business is also the innovation direction of China Tourism Group. Relying on the Sansha Nanhaimeng Cruises Co., Ltd., established in 2016, and the resource advantages of funds, technology and professional teams after integration, China Tourism Group can be said to build a Chinese cruise The vanguard of industrial national brands.

Two major central enterprises join hands with China s first independently operated luxury cruise ship

On September 26, 2019, the naming and inaugural ceremony of the first luxury cruise ship Gulangyu under the Chinese national cruise brand Startrip Ocean jointly invested and operated by China Tourism Group and China Ocean Shipping Group was held in Xiamen, marking China The first independently operated luxury cruise ship officially debuted in the Chinese market.

Layout The various layouts and actions of China Tourism Group clearly show that this oldest Chinese tourism company is showing a new round of vitality and momentum.

Feizhou breaks the waves and crosses the future. Can China Tourism Group becomes a world-class tourism industry group with outstanding product innovation capabilities and resource endowments and global competitiveness? Let us wait and see.

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