According to the data, from January to October 2023, the growth rate of China's outward direct investment was 11.4%, of which the growth rate of non-financial direct investment was 17.3%, and the growth rate of non-financial direct investment in the "Belt and Road" countries was 27%. The data fully shows that it is the general trend for Chinese enterprises to go overseas and embrace the world.
From simple clothes, shoes and hats to high-tech mechanical and electrical products and photovoltaic products, the busy China-Europe freight train has witnessed the rise of a new trade structure led by China, and companies that can grasp this opportunity will usher in new development opportunities. In the field of cultural tourism, cultural and tourism enterprises such as Fosun, Haichang, Jigao, and Daolv have successively gone abroad to find more space for development.
So, in the process of "going overseas", what tracks do cultural and tourism enterprises focus on, and what concepts and paths need to be changed?
On January 11, at the 3rd New Tourism Cultural Tourism Innovation and Development Forum and the 2023 Cultural Tourism Fashion List Award Ceremony with the theme of "Unbounded Symbiosis", Shen Aixiang, the founder of Order, as the annual guest speaker, delivered a speech with the theme of "Challenges and Opportunities for Hotel Technology to Go Overseas", which comprehensively presented the differences in the market environment faced by domestic cultural and tourism enterprises when going to sea, and how enterprises should seize the opportunity to go to sea. The following is the transcript of Shen Aixiang's speech:
Thank you for the invitation, and the theme of my sharing today is "Challenges and Opportunities for Hotel Technology Going Global".
First of all, I would like to share with you the domestic data.
The order came to serve 120,000 homestays and small and medium-sized hotels in China, and with the help of the order system, the merchants realized digital upgrading. Looking back on 2023, the market seen through the system data through orders is quite different from the macro big data provided by Professor Wang Wen.
This year, the OCC (occupancy rate) of hotel merchants using the booking system increased by 56% year-on-year, recovering to 87.2% in 2019. Overall, the overall market of the hotel industry has not fully recovered to the level of 2019.
In terms of recovery path, the first half of 2023 will grow rapidly, and the second half of the year will start to be less than expected from July and August. The peak was on May Day this year and exceeded the same period in 2019. The National Day was less than expected, even lower than in 2019. Because the National Day in 2022 was affected by the lockdown, this year's National Day has grown rapidly compared with last year. However, after the National Day, the domestic market also declined rapidly.
In the process of recovery, long-distance travel has recovered faster than short-distance travel, and the typical example is Yunnan. Yunnan's data for the first quarter is almost always lower than the second quarter, but in 2023, the first quarter of Yunnan is higher than the second quarter. On the one hand, due to the explosive rebound of consumption after the epidemic was released, and on the other hand, it also came from the impact of the hit TV series at the beginning of the year, which brought Yunnan tourism to fire.
Since the second quarter, long-haul destinations have returned to normal, with a certain cooling down compared to the first quarter, but most of them still show significant growth compared to last year and 2019.
After entering the third quarter, long-distance travel began to show fatigue. This year, Harbin exceeded everyone's expectations in the fourth quarter, with an average occupancy rate of 80% in December, which was not reached by any city in the retaliatory rebound in 2023, and the average occupancy rate of a city's accommodation industry reached 80% in a month, which means that ordinary hotels and guesthouses are sellers.
The second quarter is the best time for peripheral travel destinations, but the year-on-year growth rate of summer vacation has also fallen to single digits, so this year's summer peripheral travel is generally not as good as last year, because after the summer, whether it is outbound travel, long-distance travel, or the impact of the economic environment, it has brought a greater impact on peripheral travel.
A lack of summer vacation may become the norm.
As we all know, in the past, the peak season for tourism consumption was in the summer. The main group of customers in the summer is parent-child travel, and the parent-child travel crowd is dominated by children aged 4-12, and the birth time of 4-year-old children in 2023 is 2019, and the cliff of China's birth population began in 2019. As can be seen from this chart, the number of children aged 4-12 will be less and less in the next 10 years, which means that the number of parent-child travelers will show a sharp decline, so the summer vacation will become the norm in tourism.
China's baby boom was born from 1962 to 1970, when more than 25 million people were born each year, and this group of people began to retire gradually, and all of them will retire in the next decade. This group of people is completely different from the post-50s, we call them commonly known as "Internet elders", this generation of retired people will swipe Douyin, video accounts, and even use video editing tools by themselves, and female users also have travel photography needs. Therefore, this generation has a higher desire to travel than the previous generation, but not everyone in this generation has strong consumption power, and the stronger consumption power is still the retirees of state-owned enterprises and government agencies, with an average pension of seven or eight thousand yuan per month, and there is no pressure on car loans, and the consumption power can be fully released. Therefore, with the change of population structure in the future, the tourist base will also change dramatically.
There is also a trend towards consumption downgrades.
From the perspective of the average unit price of tourism consumption, it will be further reduced in 2023 compared with 2022, and in terms of trend, there is no sign of rebound or recovery. When we are statistically, the ADR of the entire system (average room rate sold) is the ADR that generates the booking, not the ADR of the hotel selling price.
There are two factors that can be seen from ADR: the first factor is that the top luxury hotels with high unit prices will not be affected much this year, and the vast majority of middle-class consumption is concentrated in rooms with a unit price of about one or two thousand, and this part of the demand is obviously weak this year, so the products with a unit price of 1,000 to 2,000 will obviously decline in ADR in 2023.
Another influencing factor is the polarization during the epidemic, the higher the unit price of the hotel or B&B business, the better the business, the lower the unit price of the customer the worse the business, but after the epidemic is released, the fastest recovery is the low-price market, so the growth rate of star-rated hotels in the Ctrip market is also the fastest, and most of the new orders for this year's retaliation rebound are low-price orders.
Next, let's take a look at the overseas digital market.
Since April 2022, the order has come, and an overseas version R&D team has been established in Shanghai. After a year, the overseas version of the product was officially launched in May this year. When developing overseas products, we found that Chinese digital technology companies, especially hotel digital technology companies, want to go overseas, far from selling domestic products to overseas customers, so the production and research team basically redeveloped the entire product.
The original intention of doing this at that time was because China's very famous word abroad is "made in China", and we are a big manufacturing country. But doing the hotel industry and doing corporate services is about empowerment, so in the future, can we create a word, called "power by China", to provide Chinese empowerment, whether it is capital, technology, traffic or resources, can provide all-round empowerment to overseas hotels.
When we develop overseas products, the biggest problem we encounter is that the overseas Internet ecology is completely different from that in China, so almost everything has to be done all over again.
Whether it's an OTA review or a face-to-face communication, translate the global language into a language you can understand. Taking Thailand as an example, the main guests of Chinese hotels are Chinese, but the guests of Thai hotels are global users, and the official service language used in Chinese hotels is Chinese, but in Thai hotels at least Thai and English can be spoken at the same time, and if the proportion of Chinese guests is high, they must understand Chinese. Most of the Chinese hotels for tourists speak Chinese, but overseas hotels for tourists, they speak global languages.
In terms of traffic channels, the mainstream domestic OTAs are Ctrip, Meituan, and Fliggy, the overseas mainstream OTAs are Booking, Agoda, and Expedia, and the domestic mainstream media are WeChat and Xiaohongshu, but Thailand uses WeChat and whatapp. Social tools are also not unified, our social platforms are Douyin and Xiaohongshu, and overseas social platforms are ins, Facebook and tiktok. In China, we use mini program technology to help merchants open stores on WeChat and Xiaohongshu, but overseas merchants need to be on the PC side, because most of their traffic source is Google, so we need to build direct sales and mobile direct sales websites at the same time.
The biggest difficulty is payment.
There is no unified payment country like China overseas, and the current payment methods in our country are almost Alipay and WeChat payment. But overseas, the payment tools you face are credit cards, cash, and dozens of different wallets. For example, the mainstream wallet in Thailand is TrueMoney. When we did the payment test, we found that the payment function needs to spend several times or even dozens of times more energy than the domestic one to achieve global settlement. All hotels in China issue invoices, and the invoices are not managed by digital enterprises, and the tax bureau will provide invoicing software, but all overseas hotels issue Invoice (commercial invoices, which are produced and issued by the enterprises themselves).
Therefore, in comparison, everyone can feel that it is not so easy for Chinese companies to go overseas, and the biggest difficulty is that the Internet ecology is different.
When we went to the Southeast Asian market and the Japanese market, we researched different types of hotels, and found that the current state of small and medium-sized hotels in the whole Asian region is very similar to the state of China about ten years ago. International high-star hotels and Chinese high-star hotels both use Opera (the preferred management operating system for major high-star brand hotels), and local star-rated hotels also have software companies that have been working for more than ten years to provide services, but small and medium-sized hotels in Asia are now generally in a state where no system is available, and they use Channel Manager (Booking's PMS system) as a booking engine (hotel booking engine). In some countries in Asia, a country is only the size of China Province, and it is not easy to grow a technology company under such a volume, and it is difficult to give birth to a SaaS company. Therefore, small and medium-sized hotels in Asia either do not use the system, or use European and American software. The price of software in Europe and the United States is ten times that of ours, but the per capita GDP of most countries in the Asia-Pacific region is not as good as that of China.
Overseas Asian hotels are very interesting in terms of budget management, they divide their marketing budget into three parts: Domestic, Global and China, and if they want to attract Chinese tourists, they must place on Chinese social media platforms to be seen by Chinese. This also makes us admire many overseas businesses, in order to attract global tourists, they are even willing to divide the budget and work hard for a certain country independently, which is what I think the country needs to improve the most in the future.
Let's talk about what problems the international version of the product can help merchants solve.
First of all, the problem to be solved is multi-language, multi-time zone, multi-currency. In the domestic system, the company time is only one Beijing time, the currency is only RMB, and the language is only Chinese. To develop overseas markets, each country has different languages, time zones, and currencies, and the volume is not large, so you have to do it all, and you have to do it at a very low cost. When we develop the system, we need a strong underlying system architecture to achieve a very low cost, so that merchants in each country can feel at home when using the system.
At the same time, the mainstream way to identify users in China is mobile phone numbers, while overseas is Email. Therefore, the international version of the order is mainly based on Email, and the domestic order is a mobile phone number, but overseas is Email, so we need to receive the Email, send an Email to the hotel to confirm the information, and then check in to the customer through the Email link.
The international version of Orders has helped merchants create independent stations on PC and mobile to achieve global acquiring and global settlement, and at the same time helped overseas merchants open stores on WeChat, Douyin, and Xiaohongshu in China with one click, helping them to gain tourists more efficiently on China's emerging social media.
Finally, let's look at the opportunities for Chinese cultural and tourism enterprises to go overseas.
Although we are talking about going to sea here, I think not all companies going to sea must be like us to go overseas to serve overseas enterprises, and the biggest opportunity for Chinese cultural and tourism enterprises is to develop inbound tourism.
The picture shows the growth curve of inbound tourism in Japan over the past decade. The Japanese government has launched a series of different marketing methods at different times, but it is the third stage that has really made the rapid development of Japan's inbound tourism, when Japan began to promote popular tourist destinations, and at the same time, with the development of the mobile Internet, a large number of check-in content spread rapidly on the global Internet, bringing about the rapid growth of Japan's inbound tourism. So, during the three decades of Japan's recession, Japan's tourism and economy went in the opposite direction. Japan's GDP has been sluggish over the past three decades, but the tourism and accommodation sectors are growing at an annualized rate of more than 10% due to an increase in inbound tourism.
For China's cultural tourism, under the economic situation of slow growth in the next ten years, what is our way out? It is not necessarily to go out to do business with foreign enterprises, and to be able to develop inbound tourism, which is a new market consumption power for China's cultural tourism. This matter requires the cooperation of the government, and the government needs to put a large amount of overseas content, because Chinese content is basically not seen overseas, and at the same time, we need to actively connect with the overseas Internet ecology to form a closed loop of overseas customer acquisition.
Since we talk about cultural tourism, in fact, the cultural industry is very important to the tourism industry. We have seen it at the beginning and end of 2023, Liu Yifei's TV series has brought fire to Yunnan, and "Flowers" has brought fire to the whole of Shanghai. There is another country that is using culture to promote the development of inbound tourism, South Korea's cultural establishment has allowed a large number of Korean dramas and Korean music to be exported overseas, and many overseas tourists travel to South Korea because of Korean cultural content. The South Korean government predicts that in 2023, South Korea's tourism industry will surpass the semiconductor industry and become the largest industry in South Korea to earn US dollars.
Today, Japan is already in a trade deficit, but there is a huge surplus in tourism. In the words of my uncle in "Flowers", China's future supporting industry is still foreign trade, but inbound tourism may provide a safe channel for China's economy.
In the case that inbound tourism has not fully recovered, and outbound tourism has only recovered to 50% of 2019, we spend a lot of energy and money to develop overseas markets, in fact, in the long run, we hope to create a global tourism ecology, so that in the future, it will be more convenient for Chinese to leave the country and foreigners to travel to China.
Therefore, our domestic system connects all the Internet ecosystems in China, and the international version of the system connects the global overseas Internet ecology in the process of expanding overseas markets. In the future, it can help Chinese tourists and overseas tourists to achieve two-way interconnection more conveniently. That's the main long-term value we see in going overseas.
Returning to the opportunity to go to sea, if it is to do science and technology to go overseas, the threshold is really high, and you may not prepare 10 million, and the product will not be developed. For the vast majority of cultural and tourism enterprises, they can think more about how to work together with the government to develop China's inbound tourism into the core growth engine of China's tourism industry in the future.