Hong Kong China Travel Service is training the focus of its strategy on its developing tourism lifestyle products and has redefined its urban destinations, natural and cultural scenic areas and leisure resorts accordingly.
Under the strategy, it will move away from non-travel related businesses selling off businesses such as power generation by early or mid next year, according to its CEO Muhan Xu.
Adopting the light investment model
The key elements for forming HKCTS’s urban destinations are theme parks and hotels, including Shenzhen’s Window of the World and Splendid China theme parks and eight hotels in Hong Kong, Macau and China.
“We will incorporate the light asset model in future development, which means either exporting our brand and management or leasing, capital management and equity participation,” Mr. Xu said. HKCTS already has 70 contracted hotels that will be launched in the next few years.
“We aren’t thinking about projects that require heavy investment for now and we are assessing alternative investment models. Though there is demand for such projects, we do have to take into account why 85% of China’s theme parks fail in our planning,” he said.
Although the consumer trend of Chinese tourists is progressing from sightseeing to leisure travel, Mr. Xu believes that natural or cultural scenic areas will still be major draw cards for travelers. For example, HKCTS added a tour to the Ningxia Shapotou scenic area after it was featured in the hit Chinese reality show “Where are we going Dad?”. After securing management rights to the attraction, HKCTS invested capital, know-how, branding and human resources to upgrade the attraction’s operational efficiency, management quality and profitability.
Tourism and real estate
“Traditional scenic attractions can be transformed into leisure destinations but we can’t just sit back and wait. We must proactively develop. We can choose areas that have natural beauty, clean air and a variety of scenery yet are located near economically developed and populated regions and large cities,” he said.
For example, HKCTS is investing RMB3.5 billion in Zhuhai Ocean Spring Resort, which Mr. Xu hopes to develop over the long term into a beach resort town like Long Island in the USA. To achieve the vision, the group will develop housing and living facilities along with infrastructure and basic tourism facilities.
“Tourism developments are those that meet special tourism purposes. They must target tourists, operate with a tourism model, and offer relevant tourism services. In view of this, no one is really developing tourism real estate in China right now,” he said. He emphasized that the tourism property projects extended from HKCTS leisure destinations will become authentic time-share holiday homes.
Mr. Xu said that HKCTS is starting a time-share joint venture with a US listed company to include HKCTS’s tourism properties in China in the international network of time-share holiday homes.
“In addition, we can also leverage our integrated system to offer global lifetime value-added services to our loyalty club members. This is in synch with the current trend of outbound travel and our time-share system,” he said.(Translation by David)
