"Recovery" and "rationality" are the key words given by Feng Bin, chairman of Zhongxin Tourism, for the recovery of the outbound travel market in 2023 and 2024.
As a leading outbound tourism company, although the recovery level of Zhongxin Tourism's outbound travel business in 2023 is not as high as that in 2019, it has leveraged the strong demand in the summer to make its performance recover rapidly in the third quarter and achieve a turnaround. One year after the resumption of outbound group tours, consumers' travel patterns have also quietly changed: traditional large groups have gradually fallen out of favor, and the characteristics of small groups, customization, and independent travel have become more and more obvious. Changes in the outbound travel market have also made travel agencies more cautious, rational and even conservative in their use of resources. Feng Bin reminded that the era of "enclosure" of travel agencies to take resources from 2018 to 2019 has passed, and the price war is even more forbidden. In 2024, travel agencies will no longer expand blindly. In the future, with the recovery of international flight capacity, the Chinese market will still be the most important source of outbound travel in the world.
Recovered three percent
"It has only recovered to nearly one-third of its 2019 levels. Talking about the degree of recovery of Zhongxin Tourism's outbound travel business in 2023, Feng Bin gave such data. In his view, it is not easy for the market to recover to this level, and in the initial stage of the resumption of outbound travel, all aspects including visas, flight capacity, and consumer adaptability must be re-started to recover and run-in, which is a gradual process.
At the beginning of 2023, the release of the list of the first batch of countries for the resumption of outbound group tours on a pilot basis sounded the clarion call for travel agencies to relaunch their outbound travel business. However, on the way to recovery, there are still multiple constraints. Feng Bin pointed out that in fact, in the process of market recovery, the safety of outbound destinations affects consumers' travel decisions, and the capacity of international flights has not yet fully recovered, resulting in the emergence of high fares, making some consumers "discouraged" from outbound travel.
The outbound travel market ushered in a turnaround in the summer when travel demand was extremely strong. According to the data released by the National Immigration Administration, from July 1 to August 29, 2023, border inspection agencies across the country inspected a total of 82.413 million people entering and leaving the country, with a daily average of 1.397 million people, an increase of 19.88% month-on-month.
Driven by the summer, Zhongxin Tourism achieved a turnaround in the third quarter of 2023: operating income of 1.261 billion yuan, a year-on-year increase of 748.28%, and net profit of 48.656 million yuan, a year-on-year increase of 195.51%. Feng Bin believes that the recovery of outbound tourism will not be achieved overnight, but with the joint efforts of all players in the supply chain, the products will be more abundant, and the cost of travel will be further reduced, bringing good news to consumers.
The proportion of small groups and independent travel has increased
After nearly a year of observation, Feng Bin concluded that compared with 2019, the tourism market in 2023 will show a trend of large groups "falling out of favor", and the proportion of small groups and independent travel will continue to increase. Specifically, the demand for "one family, one group" and "two families, one group" small group products is increasing. Previously, the proportion of large-scale group tours with dozens of people was higher than that of independent travel, but now, the proportion of group tours is gradually declining and even surpassed by independent travel. Not only are consumption Xi changing, tourists are also paying more attention to safety in terms of travel, compared with traditional large-scale group tours, small group and customized tours are more flexible, private and safe, and are more and more popular in the market.
Feng Bin also saw that with the increase in demand for group products, the age distribution of consumers is relatively even, and the family unit can basically cover the old, middle and small people of all ages in a group. Young people who prefer to travel independently are also gaining a share of the tourism market. In the past, middle-aged and elderly people traveling in large groups were the mainstream of the market.
Feng Bin believes that although the silver-haired people with money and leisure are still the main force in the future tourism market, family travel twice a year (one long-term and one short-term) is essential, and the proportion of family travel will definitely continue to rise in the future.
"Price wars" are a thing of the past
The demand for travel has gradually become "small and fine", reflecting that in the future, travel agencies will not blindly expand, but tend to be conservative and cautious.
Feng Bin recalled that in 2019, the tourism market demand was very strong, in this environment, small travel agencies want to develop rapidly, large travel agencies want to go public, get capital, and travel agencies are crazy to take resources for different business purposes. At that time, many travel agencies were overloaded with a lot of hard resources, including luxury cruise ships and a large number of hotels, air tickets, ferry tickets and other resources, which invisibly brought a lot of pressure to themselves, but in the end they needed to achieve a balance, and the unsold expiring products needed to be sold, thus forming a "price war" in the market.
As the head of the leading outbound tourism enterprise, Feng Bin feels that there are still many uncertainties in the current market, and the travel agencies will not blindly fight the market, in the context of the slowdown in the domestic economy, travel agencies will no longer impulsively predict the future, so as to package a lot of hard resources, so that the price of the final product dives. "On the one hand, at present, the financial pressure of small travel agencies is greater, and there is not too much money that can be advanced in advance; on the other hand, in the process of continuous recovery of large travel agencies, many enterprises have begun to tilt from the channel side to duty-free, tourism real estate, etc. ”
As a result, Feng Bin also gave a prediction: from 2024 to 2025, most travel agencies will choose a relatively rational and cautious layout strategy, and they will tend to be conservative in expansion.
Outbound travel is still a blue ocean
If you want to find a "breakthrough point" in the tourism market, you must start with high-quality products, and Zhongxin Travel is also looking for business opportunities in the slow recovery of the outbound travel market.
In September 2023, the General Office of the State Council issued the "Several Measures on Unleashing the Potential of Tourism Consumption and Promoting the High-quality Development of the Tourism Industry", aiming to enrich the supply of high-quality tourism, release the potential of tourism consumption, and promote the high-quality development of the tourism industry. In response to the release of the policy, Feng Bin also felt that the price of high-end tourism products should be controlled at 30,000-40,000 yuan/person, not the more expensive the better, but from the product quality, experience and cost performance and other aspects. At the same time, in 2024, Zhongxin Tourism will continue to adhere to the layout of high-quality tourism products and not blindly pursue breakthroughs in revenue.
In Feng Bin's eyes, although the number of group tours operated by travel agencies in 2024 will not necessarily exceed that of 2019, the quality of overall tourism products and consumers' requirements for travel experience will be significantly improved. In recent years, with the changes in people's consumption Xi and clearer understanding of the world, consumers will prefer to have an in-depth experience of the destination, hoping to play a destination "thoroughly", so the in-depth tour of one or two overseas destinations may become a new trend in the future market development.
When answering whether the outbound travel market is still a blue ocean, Feng Bin said that with the increasing number of Chinese consumers with passports, China will still be the world's largest source of outbound tourists in the future, and the outbound travel market will still be a blue ocean. However, how to turn this blue ocean into a deep blue through management requires the joint discussion and efforts of all tourists.
Beijing Business Daily reporter Wu Qiyun
Image source: Courtesy of the company