Low-profit industry

Many tourism industry insiders hold that the traditional tourism market has entered a time of meager profits. There is little room for price reductions on standard tourism products, and the profits of travel agencies have been falling. In order to survive, travel agencies must steer tourists to shop in selected places, which has bored the tourists. Many people are attracted to independent travel, which is more costly but less safe. Thus, travel agencies have come up with some high-end products that can meet consumers' individualized needs.

"The high-end tourism market is taking shape in China, which is a good opportunity for the travel agencies to promote themselves and win a bigger slice of the pie," said Li Jilie, Board Chairman of China Comfort International Travel Co. Ltd.

The luxury market is not limited to affluent individual travelers, however, as business travel plays a major role in this area.

According to the World Tourism Organization, the main purpose of business travel is to attend an activity or event associated with a person's business or interests, including conferences, exhibitions, trade fairs, corporate events and meetings, and incentive travel. Business travel, which usually generates considerable profits, is considered a gold mine to be tapped.

Foreign trade can boost a country's economic development and stimulate the growth of tourism as well. Foreign companies have pumped $1 trillion of investment in China since it initiated reform and opening-up in the late 1970s. Accordingly, the Chinese tourism business has grown rapidly, with annual international business travel expenditures hitting $4.2 billion, which makes up 17 percent of the Asian business travel market. Expenditures on domestic business trips total $20 billion each year. Business travel in China is increasing at an annual rate of 20 percent.

A report issued by the Beijing Tourism Administration in May shows that in Beijing, business travel accounted for 46 percent of the total in 2005, an increase of 27 percent over 2004. The per-capita consumption for those interviewees who have business travel in Beijing is $1,125. The per-capita daily expense for a business trip is 635.86 yuan, 28 percent higher than that for sightseeing tours. Most of the business travel expenditure covers lodging, food and transportation.

The high-end tourism consumption group consists of people who have a high and stable income. They have increasing demands for shopping, travel, food, health care and entertainment. Most are managers, white-collar workers, celebrities and government officials, the report said.