Summary of Key Points
This year, the domestic tourism market has been booming, with a total of 3.463 billion people traveling nationwide, generating a consumption of 3.21 trillion yuan, showing a significant year-on-year increase. The common perception is that all tourist attractions are crowded with people. However, paradoxically, the average revenue of 21 listed scenic area companies in the A-share market has decreased by 3.8% year-on-year, creating a strange situation where the large crowds do not translate into substantial financial gains. This report clarifies where the tourists' money has gone by analyzing the financial reports of these 21 companies: On one hand, tourists are now more cautious with their spending and no longer flock to famous mountains and rivers, marking the end of the days when traditional scenic areas could easily make money. On the other hand, the money has flowed to companies that adopt innovative strategies, such as those with monopolistic high-profit businesses, services that encourage repeat visits, and low-asset models. Many companies' reported profits do not actually come from tourism revenue but from the sale of assets, indicating a complete shift in the industry's profit-making logic.
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Detailed Analysis
1. Why are traditional scenic areas not making money despite the large crowds?
Many people think that operating a scenic area simply means selling tickets, and the more people there are, the more money is made. However, this is not the case. First, tourists are more frugal with their spending. For example, in the past, visitors to Huangshan would likely buy tickets, take the cable car, stay in a hotel on the mountain, and even buy water from the scenic area. Now, many choose cheaper hiking routes, bring their own food, and leave the mountain on the same day without using the cable car. Although the number of visitors has increased by 8%, the average spending per person has decreased, so revenue growth has not kept up with visitor growth. Second, the costs of operating a scenic area are fixed; whether there is one or ten thousand visitors, the cable car needs to be maintained, the mountain paths need to be repaired, and employees need to be paid. The initial investment in the cable car and hotels results in annual costs that cannot be reduced. For instance, 36% of Huangshan's gross profit is consumed by these fixed costs. Third, tourists are being diverted to less well-known attractions in nearby counties, which offer better value for money. Local consumption in these areas increased by 14% year-on-year, meaning that scenic areas are now competing with these alternative options.
2. Tickets are no longer the main source of revenue for scenic areas
In the past, scenic areas relied on ticket sales for income. However, the most profitable companies no longer depend on this. Three new strategies have emerged:
- Monopolistic high-profit businesses: For example, cable car operations are highly profitable. Once built, adding more visitors hardly incurs additional costs, and each additional ticket generates nearly 90% profit, with industry-wide gross margins of 70%-88%. Lijiang Tourism, for instance, has a cable car business with an 87% gross margin, and its stable performance from events like the "Impression·Lijiang" performance has led to revenue growth four times that of its ticket sales.
- Content-based strategies to retain visitors and generate secondary revenue: For example, Wuzhen saw a 5.8% decrease in visitor numbers but still a 5.49% increase in revenue. This is because the town uses events and IPs like the World Internet Conference to keep visitors longer. Visitors now stay longer, spend more on meals and night tours. Kaifeng Wansui Mountain has taken this strategy to the extreme, offering a three-day pass for 80 yuan, with most of the revenue coming from interactive experiences, snacks, and souvenirs.
- Low-asset models: Companies like Songcheng Entertainment do not invest heavily in building scenic areas but instead offer brand management services. They receive management fees and licensing fees, avoiding the costs of owning physical assets, with gross margins exceeding 60%.
3. Don't be misled by reported profits
Some scenic areas' profits have increased significantly year-on-year, but this is often due to the sale of assets, not tourism revenue. For example, Zhangjiajie reported a 1026% increase in net profit, but after deducting non-recurring income from asset sales and government subsidies, its net profit from tourism operations was actually in the red. Another example is *ST Xiliu, which has a gross margin of only 0.51%, indicating that it earns very little from tourism and is struggling financially.
4. The era of easy profits for scenic areas is over
In the past, scenic areas could rely on ticket sales. Today, the most profitable ones use different strategies. The industry's new profit models include:
- Monopolistic high-profit businesses: Cable car operations are a prime example, where additional revenue generates almost no extra costs, with high margins.
- Content-based strategies: These companies use events and IPs to retain visitors and generate additional revenue.
- Low-asset models: They offer brand management services without investing heavily in physical assets.
5. The survival of scenic areas depends on multiple factors
Scenic areas must now possess three key capabilities to survive:
- Basic resources: Unique assets that others cannot copy, such as cable car operations or cultural IPs.
- Operational capabilities: Engaging and memorable experiences that attract and retain visitors.
- Financial resilience: The ability to manage cash flows and avoid excessive spending that could lead to financial crises during off-peak seasons or industry downturns.
In summary, while the tourism market is still booming, it is no longer as easy to make money from tourists as it used to be. Scenic areas must provide exceptional experiences to attract and retain visitors and manage their finances wisely.