A World Travel & Tourism Council (WTTC) report published in 2003 estimated that by 2015 the size of China’s travel and tourism industry would be second only to the US; predictions that were swiftly met by a wave of disbelieving readers. The reality, however, was even more surprising: in 2011 the nation beat Japan to the second spot, and today it is readying itself to take America’s place at the summit. Whereas in years past it was neighbouring Japan, South Korea and Hong Kong that welcomed the majority of Asia’s tourists, China’s young – though no less impressive – market has quickly made a name for itself on the world stage and brought with it a degree of economic independence.
WTTC data shows that China’s tourism sector contributed $850bn to the country’s GDP, equivalent to 9.2 percent of its total output and 8.4 percent of the country’s workforce. Yet the sector’s expansion is not without consequence, and an explosion in tourist numbers, whilst profitable in the immediate-term, has come with its fair share of growing pains.
Although the vast majority of the media’s focus has so far fallen on outbound travel, dwindling inbound figures are of just as much, if not more, significance for the country and its diversification away from foreign investment. Granted, the headline figures for the latter make for lighter reading – but the implications of sustaining such high visitor numbers without improving its infrastructure has significant ramifications for the country generally, as well as for its international appeal.
9.1%
Of tourism’s overall contribution to China’s GDP is attributable to foreigners
12%
Domestic tourism increased this much in 2013
10m
People visit the Great Wall of China every year
Worryingly, it can be argued that major tourist sites have cut corners to make good on foreign interest in the market, without a view to how this might stifle the sector’s ability to sustain growth. What’s even more concerning, however, is that China’s failing infrastructure is turning off wealthy domestic travellers.
This eagerness to cash in on rising visitor numbers is partially responsible for a year-on-year decline in inbound tourists, and so, without an increase in spending, the country’s infrastructural inadequacies and overly complex administrative processes will leave arrival numbers to stagnate. An unwillingness to enforce the necessary controls or modernise long outdated facilities and attractions has plunged some of China’s biggest draws into disarray, leaving the country with no option but to pack in pundits wall-to-wall at peak season.
The implications of shying away from further investment go further, however, and continuing with this cash-in-quick mentality could threaten the country’s capacity to make good on opportunities for much-needed social and economic development. As such, the issue is not whether the country’s tourism industry will continue to expand, given that it’s forecast by the WTTC to grow 8.3 percent year-on-year – but rather, whether this growth can be really sustained over time.
The great fall
The Great Wall of China is crumbling under the weight of tourist footfall, and the crowds – 10 million a year at last count – are threatening to wipe the site from existence should visitor numbers continue on up at the same rate. Granted, the midpoint of the 20th Century saw large sections of the wall dismantled to make way for agriculture, but in the years since visitors have shown little to no regard for the site’s preservation. The site is coated in graffiti, and lifting the barriers to foreign entry has given rise to a tradition where tourists inscribe their names into the ancient stone. As of today, a third of the 13,000 mile-long structure has been lost, and as sightseers continue to arrive in droves, more money must be spent to stop the rot.
Most disconcerting of all is the inability of the ruling regime in recent years to address known threats to the wall’s structural integrity, or even to impose the appropriate penalties for on-site misconduct. Indeed, the fact that the wall stretches 11 provinces in its entirety makes the UNESCO World Heritage Site particularly difficult to police, though at the points where authorities have made efforts to clamp down on the site’s deterioration, they have more often than not been ill-placed.
With minimal investment put towards the upkeep of the Great Wall, not to mention various other popular attractions, the gains in the immediate term are made to look greater than they are. And without a thought for the upkeep and expansion of popular tourist sites, one of the country’s leading contributors will fall by the wayside.
In the case of the Great Wall, it was only in 2002, when World Monuments included the wall on the world’s 100 Most Endangered Sites list, that policymakers were finally persuaded to take action and protect against further damage being done. Cultural Preservation Offices were set up to reside over the area, and new laws were brought in to stop encroaching construction works. Further out, the ‘wild wall’ (so-called for its distance from Beijing) has largely escaped the attention of public preservation efforts, with commercial entities quick to pounce on the loose touch regulations presiding over these areas.
Central to the solution, not just for the Great Wall but for the industry as a whole, is ensuring that the country’s infrastructure is capable of facilitating the influx of international and domestic tourists. It is in this department above all else that the country finds itself falling short. With many of China’s most popular sites folding under the weight of overcapacity and the surrounding environment suffering the effects of ill-conceived public planning, bigger and better managed investment is vital if the country is to make good on its rich potential.
Up the funding
A report released earlier in the year, written by Oxford Economics and commissioned by Amadeus, underlines the importance of the task at hand, showing that the lion’s share of growth in tourism will stem from emerging markets for at least the next ten years. “Forecasts predict a new golden era for travel, which will be welcome news for many segments of the industry that are only just beginning to emerge from recession,” said Holger Taubmann, SVP Distribution, Amadeus. China, therefore, is indicative of a much larger shift in the global travel and tourism business – yet its sheer size means that any opportunities and challenges are magnified, and that their solutions harder to find.
The number of inbound tourists suffered an annual 2.51 percent decline through 2013, and though revenue increased, the dip should serve as a warning for China’s government that, without investment, the country’s appeal among international tourists will begin to fade. The ruling regime, therefore, will be disappointed that the travel and tourism industry is posting sub-par results, though they will undoubtedly still take heart from the fact that China is only one of two G20 countries in the top 20 for travel and tourism. Nonetheless, without first focusing on infrastructure growth, the country’s tourism industry will find it hard to shake the immature market tag and reel in numbers from abroad.
China’s crumbling landmarks
Terracotta Army
After 2,000 years of slumber under the Xi’an Shaanxi province soil, the World Heritage Site is beginning to suffer the effects of exposure and, as a consequence, the world famous Terracotta Army is slowly sinking into disrepair.
Unearthed by local farmers four decades ago, the mausoleum of Qin Shi Huang and the vast majority of its resident artifacts have been kept in a controlled indoor environment. However, studies undertaken by a team led by Professor Gu Zhaolin of Xi’an Jiaotong University show that the environment has exposed many of the figures to irreparable damage, showing that even this museum space has not been immune to China’s pollution problems.
Recommendations to protect against further damage include an ‘air curtain’, which, when installed, would keep pollutants away from the relics and prevent them from overheating. However, for as long as visitors continue to flood in, preserving the collection will be a major struggle.
Beijing’s Old City
Onwards of the 1990s saw the much-loved Old City of Beijing ravaged by the onslaught of modernisation, and many in the community believe the city’s heritage has been dealt a major blow. What some would call authentic Beijing has today been reduced to a handful of temples, the vast majority of which are open for tourist purposes only. The overdevelopment of the capital in the time since is also thought by many to be part responsible for the haze that hangs low over the city streets and the congestion on its roads and walkways.
At the development’s height tower blocks were being erected daily, and critics claim that the construction work has brought disastrous consequences for the city’s remaining sites of historical importance. In this instance, as in many others like it, the toss up between cultural heritage and economic growth leant heavily towards the latter.
Forbidden City
The six century-old palace ranks high on the list of major Chinese tourist attractions, and millions come every year to see it. Come holiday season, the site is plunged into disorder and dismay as overcrowding at times brings the entire palace to a complete standstill. The problem is so great that in 2010 the site was forced to introduce a new ticketing system and a cap on visitor numbers.
At peak times as many as 100,000 people pay the palace a visit, despite the site’s capacity stopping at 60,000. Aside from dampening the spirits of holidaymakers, the sheer number of people at the palace at any one time is significantly damaging the UNESCO World Heritage Site, as well as the hundreds of precious relics contained within its walls. Plans have, however, been sketched out to improve the site’s security and move many of the artifacts elsewhere for 2016.
Jiuzhaigou Valley
The idyllic Jiuzhaigou Valley was overrun by tourists in October 2013, to the extent that thousands of holiday-goers were forced to trek hours into the night to escape the UNESCO World Heritage Site and World Biosphere Reserve. The park’s management reportedly oversold entrance tickets and, when visitors were refused passage on the shuttle bus, many proceeded to block them from taking what few tourists they could fit inside.
Thousands of visitors filled the valley’s walkways and photo opportunities were few and far between, as many struggled to contend with mass overcrowding. For those caught up in the traffic, what should have been a relaxing National Day holiday turned into a constant struggle to see almost anything other than crowds of disgruntled tourists. The chaos did serve to highlight the need for better transport onsite, if only to protect against incidents of a similar sort in the future.
Recent steps taken by the Chinese government, however, show that they are finally beginning to recognise the importance of increased spending on tourism. As the country looks to reduce its dependence on foreign investment and exported goods, those in power are beginning to understand the influence of the tourism industry in raising domestic output. Having spent only $422.6bn on the sector through 2013, the government unveiled a plan in August to up domestic spending on tourism twofold: “Speeding up reform of the tourism industry… has important meaning for boosting employment, increasing incomes, pushing development in central and western China, helping poverty-struck areas get rich and promoting stable economic growth,” according to the plan.
Homegrown opportunity
Foreign tourists are certainly important for the purposes of building the country’s international reputation, but in terms of contribution to GDP, the money spent by foreign tourists pales in comparison to what’s spent by those already residing in the country. WTTC figures reveal that a mere 9.1 percent of travel and tourism’s overall contribution to GDP is attributable to foreigners, which highlights the dominant role of domestic spending in the industry’s ongoing development.
“The rapid escalation in social and economic mobility in China has brought a relatively rapid increase in discretionary income available for travel,” according to a Boston Consulting Group report entitled Taking Off: Travel and Tourism in China and Beyond. “Chinese travelers (including the affluent segment) are therefore more eager than Westerners to increase their spending on travel. But Chinese travelers differ from their Western counterparts in ways that are significant for the companies that serve them.”
In stark contrast to China’s lacklustre inbound tourist numbers, domestic tourism flows were up 12 percent in 2013, according to figures compiled by Euromonitor. The country’s budding middle-class population, increased disposable incomes and the modernisation of public transport in major cities are together driving the level of investment onward and upwards. However, overcapacity at major sites and on key transport links are proof, if ever it were needed, that there is some way to go yet before the country’s spending is sufficient enough to meet insatiable domestic appetite.
The fear for China is that its homegrown potential will be lost to more developed markets, and with such vast potential locked up in its emerging middle class and so much of the country’s development dependent on foreign sources, capitalising on domestic spending is imperative for growth. With better connections, security and accommodation overseas, domestic tourists with wealth to spare are no longer restricted to China’s choice sites, and for the first time have the means to travel abroad.
What’s more, the reasons for domestic travel are shifting, and, as such, many in the industry are adjusting their strategic approach to acclimatise accordingly. Even today, most individuals travel only with the intention of visiting friends or family, though Boston Consulting Group anticipates that the number of people making leisure trips will quadruple in the decade leading up to 2020, and business travel, by all accounts, is expected to rise. Clearly, travelling for leisure or for business means that there is a tendency to spend more than you normally would. And with the leisure market on course to occupy over one half of the whole, and business travel set to increase 10 percent every year for the next decade, this changing demographic brings with it an opportunity for those in the industry to cash in.
“China’s speedy ascent in the world’s travel and tourism sector – from sixth place in 2008 to a projected second place in 2020 – presents an unprecedented opportunity for growth at a time when most mature markets remain sluggish,” according to the Boston Consulting Group report. And although the expectations shared by domestic tourists are not necessarily compatible with foreign ones, both segments are underserved by inadequate infrastructure and so, without first addressing known weaknesses in the travel and tourism market, China will continue to trail its developing counterparts. In short, the country must improve upon its present condition to boost its renown among international tourists and protect against wealthy domestic travellers looking to foreign markets.
