China's tourism sector needs steady, sustainable growth

With more Chinese willing to pack their bags and travel, the tourism boom has potential to reshape the country's economy, but steadiness and sustainability are needed, experts said at an international tourism summit on Friday.

PILLAR of GROWTH

China's decision to make tourism a strategic pillar of the national economy in 2009 has set a leading example for countries around the world and is paying off, said Taleb Rifai, Secretary-General of the United Nations World Tourism Organization (UNWTO) at the ongoing 2014 World Travel & Tourism Council (WTTC) Global Summit in Hainan.

Total tourism consumption reached about three trillion yuan (480 billion U.S. dollars) last year, accounting for over 12 percent of total retail sales of consumer goods.

Over 13.5 million people were employed in the tourism sector in 2013, with more than 1.7 million households in the farm stay business, benefiting more than 30 million farmers.

The tourism sector has integrated itself with other sectors as the Chinese government views the industry as a strategic pillar to sustain growth and leverage modern service business, said Shao Qiwei, director of the National Tourism Administration.

Travel and tourism have upgraded the primary industry with an increase in village tourism spots and services, supported the secondary industry by churning out tourism equipment and souvenirs, while boosting the tertiary sector through tourism-themed financial, information and health-care businesses, Shao added.

FASTER PACE EXPECTED

China is already the world's second-largest travel and tourism economy, with each Chinese person making an average two-and-a-half trips last year, and the momentum is expected to continue.

The Chinese tourism market is expected to grow 7 percent annually for the next 10 years, and may overtake the United States to be the number one tourism superpower in 2023, according to David Scowsill, president and CEO of WTTC.

The sector, especially the high-end hotel business, was challenged last year as the Chinese government launched a frugality campaign to uproot bureaucratic and extravagant work styles among public servants, a policy that has reportedly prompted star hotels to downgrade their ratings to woo customers.

"The policy impact is just short-term. Tourism is resilient as new products and services will keep growing, especially for China, which is still in the primary phase of tourism development. The potential of growth is enormous in the long term," said Wolfgang Boettcher, Starwood Hainan Area Managing Director.

STEADINESS, SUSTAINABILITY NEEDED

The general outlook of China's tourism sector is rosy, but market players directly feeling the pulse of tourism trends pointed out there is still a long way to go for China to be a real and sustainable tourism superpower.

The biggest challenge facing China's tourism market is oversupply, especially in the accommodation sector, said Duan Qiang, Chairman of Beijing Tourism Group.

The days have gone when a few star hotels could easily make hefty profits, said Duan, adding that now most of them only score marginal profits with a surging number of players grabbing a piece of the cake.

Over-reliance on government and public money is no longer sustainable, and service quality has to be improved, he said.

While rising income enables the middle class to spend more on travel and tourism, an unsound social security network may dampen their willingness to enjoy more and longer travels, said David G. Brooks, chairman for Greater China at Coca Cola.

Sustainability is another major concern, Brooks added.

"We should bear in mind that the tourism business is about tomorrow tourism. You should take into account profits, people and the planet in tourism development," said Ken Chu, Chairman & CEO of Mission Hills Group.