China will struggle without a post Olympic strategy
Published: 27 Aug 2008
Can Chinese travel suppliers maintain their growth momentum, post the Beijing summer games?
It’s the million dollar question, and previous host nation experiences would suggest that the forces of history are working against them.
Much has been publicised recently about Ctrip’s meteoric revenue growth of 30 percent to $55M, compared with the same quarter a year ago. The trend that online air ticket purchases have begun - with a 44 percent revenue increase -, hotel bookings have been quick to follow recording 14 percent growth across the same period.
However it remains difficult to quantify exactly how much of this growth can be attributed to the Beijing summer Olympics, and the influx of internet savvy travellers currently touring China. Similarly, these figures do not allude to how much extra revenue is being generated by the inflated room night prices throughout Beijing, which will no doubt expire as the games conclude.
Next year’s comparisons will be more revealing and perhaps offer some perspective to these impressive statistics, once the Olympic fervour has subsided. Interestingly, Beijing has 5,790 (one fifth) more hotels now that it did at the end of 2007, which will have sector stakeholder nervous from an oversupply perspective (BusinessWeek, 21.8.08).
The difficulty that any host nation faces in the aftermath of the Olympics is ensuring the demand for their travel product remains constant. Sydney was a typical example of lost opportunity, to the extent where there was an estimated cost to the public of AUS$2.1 billion for hosting the games, and where long term tourism growth rates remained the same as before the games.
During the Olympic period so far, only 77% of Beijing’s 22,300 five-star hotel rooms, and 45.5% of the 34,500 four-star hotel rooms are filled - according to the Beijing tourism Bureau. More than 60% of rooms in Beijing three-star or lower hotels are currently empty (BusinessWeek, 21.8.08).
Chinese travel suppliers can’t afford to rely on the success of the Olympics to fuel its newfound demand for travel products and services. Tourism boards and suppliers alike must construct very clear, well timed and integrated marketing strategies, or risk suffering the same lost opportunities as their Spanish and Australian host nation counterparts have done.
When the Olympic dust settles China will revert back to the challenge of rising fuel prices and declining load factors, the insecurity of online payment portals and ecommerce confidence, and the new issue of hotel room oversupply born out of Olympic optimism – particularly by global brands in Beijing. These factors give rise to a clear need for a deep understanding of the market and its demographics, and a well defined post Olympic distribution and sales strategy.
Hear discussion by Ctrip with Jinjiang Inns, Best Western China, Travelsky and Mastercard Worldwide at Travel Distribution and Sales China 2008 www.eyefortravel.com/tdchina
Direct enquiries to Reece Gladstone at reece@eyefortravel.com
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