Tourism is an industry with high cash flow but no profit，Refers to the phenomenon that the current gross profit level in the tourism industry is too low，Zhihui founder and CEO Liu Zhaohui said in his speech，188bet Online Sports Betting and Casino

March 29-31, 2017，Zhihui, together with the organizers of COTTM, held an event with the theme of "Pursuing Action and Seeking Change at the National Agricultural Exhibition Hall (New Hall) in Beijing&Forum with the theme of “Reshaping the Pattern”，Many industry figures gave keynote speeches and seminars。Zhihui founder and CEO Liu Zhaohui attended the meeting，Gives a welcome speech and publishes "China's outbound tourism reaches a turning point"，Speech on three major challenges that small and medium-sized enterprises need to deal with。

He said that China’s outbound tourism market is currently in a stage where it needs to be “activated”、The turning point of "seeking change"，Over the past year，The domestic outbound tourism market is affected by the domestic and foreign economies、The influence of political factors，Growth is slowing down，But it has not affected the foundation of China’s outbound tourism growth，In the long run，Economy、The impact of political unrest is only temporary。According to Goldman Sachs data report，There will be 2 Chinese overseas tourists from 2015 to 2025.6 times the growth space，The scale of the entire outbound tourism will reach 2.200 million visitors，Therefore, the outbound tourism market is still a blue ocean worth exploring。

Facing this blue ocean，Many tourism companies are trapped in the dilemma of weak profitability。Liu Zhaohui thinks，The current level of refined operation in the tourism industry needs to be improved，Include to destination、Product、Deep cultivation of crowds and market segments，And said that practitioners may be required to operate products in a more refined manner in the future、Services and Resources。

He proposed，In terms of market competition，China’s tourism market is facing traffic monopoly by large corporate giants，The period of burning money to fight for traffic has passed，Need to open up new long-tail markets in the future，Including innovative products and refined service capabilities、Attract the younger generation，Exploring personalization、Experiential destination tours and activities, etc.。

The following is the keynote speech delivered by Zhihui CEO Liu Zhaohui:

Dear guests，Good morning everyone！As the organizer of this forum，Also the only co-hosting partner of COTTM China Conference，We hope to be able to present more exciting content to you on this forum。Zhihui is an industry platform for large-scale cultural and tourism consumption，It is also an industrial innovation platform driven by media content。In fact, we also have some new perspectives in interpreting the industry，From the dynamics of capital and industry，Can be divided into seven dimensions: resources、Product、Marketing、Channel、Capital、Internet and users，I hope to re-examine the entire industry from these seven dimensions to see if there are any new innovations。Today I would like to share with you some of our views on outbound travel，The title is "China's outbound 188bet online sports betting tourism reaches an inflection point，Three major challenges need to be addressed”。

Dr. Yang just mentioned the slowdown in the growth rate of outbound tourism，This view has been unanimously recognized by everyone，Now I’ll add a little，Outbound travel will remain a hot spot in the long run。But due to extensive development，In fact, the profit level is relatively limited，We also have some specific data。Refined operation level needs to be improved，Include our destinations、Product、Deep cultivation of crowds and market segments。Mr. Zhen just talked about the experience of warmth，In fact, the ultimate experience for travelers must be in-depth experience、Interactive and warm，Instead of simply watching the show，In the future, we may need practitioners to operate our products in a more refined manner、Services and Resources。The so-called traffic monopoly of large enterprises，It’s not just the OTA monopoly caused by domestic Ctrip，Ctrip is not the only one in China，Also Alibaba Fliggy and HNA、Jinjiang、First Travel、Fosun、Wanda, etc.，These large companies are actually at the traffic level，It has a very strong monopoly in terms of resources and user convenience。As a small and medium-sized enterprise and an operator that meets the needs of more segmented groups，Facing relatively big challenges，We need to open up a new long-tail tourism market。

1. The growth rate of outbound tourism has slowed down and it will still be a hot market in the long term

Will exchange rate fluctuations affect China’s outbound tourism?

The overall outbound tourism market is declining，China’s tourists in 2016 1.2.2 billion，A year-on-year increase of 4.3%，Falled below 5%。Overall，It is due to the influence of several aspects: changes in the RMB exchange rate，I also wrote an article analyzing exchange rate changes some time ago，There was a rumor at that time that China’s foreign exchange reserves would soon fall below 3 trillion US dollars，What impact will it have on outbound travel？After this article was published, many industry players communicated with me，I have carefully studied the changes in the mainstream outbound tourism market in the past 20 to 30 years，Compare Japan、Korea and China Market，In fact, there are some big differences between these markets。The correlation between markets in developed countries that is affected by exchange rate changes is actually not that strong，Japan and South Korea have been relatively mature outbound travel markets in the past two decades，Outbound travel between each other is greatly affected by exchange rate fluctuations，Chinese market and Japan、The fluctuations affected by the exchange rate between Korea are not so obvious，The number of Chinese outbound tourists has increased from more than 30 million to 1 in just a dozen years.2.2 billion，There will be even faster growth in 2025, that is, seven or eight years later，So in the long run, it is still an industry that continues to grow。

Political and economic turmoil are only temporary

In recent years, the European outbound travel market has been greatly affected by the security situation，includes Germany、Frequent terrorist attacks have occurred in France and the United Kingdom，In fact, it has a serious impact on Chinese people’s mentality of traveling abroad。At the same time, China’s GDP growth rate will only remain at 5-6% in the next 5-10 years，Slowing down the growth rate of outbound tourism to a certain extent，But it does not mean that it will no longer increase。The surrounding markets, especially the Taiwan market, are seriously affected by geopolitics，Many friends who work in the Taiwan market, including homestays and outbound travel, should have a deeper experience。South Korea’s influence 188bet app download has also been relatively large recently，The deployment of THAAD has brought China-South Korea diplomatic relations to a freezing point。These factors have waxed and waned over the past two decades，It’s good, it’s broken, it’s broken again，The general trend of the world must be divided for a long time and must be united for a long time，The overall trend is still positive and upward。The Japanese market is also slightly affected，But the market should be very good in the next 10-20 years。Some time ago I communicated with a senior executive in the investment banking department of Goldman Sachs，They continue to be optimistic about the Japanese market，So the Japanese market is very worthy of everyone’s attention。At the same time, South Korea、The impact of Taiwan relations，New hot spots in Southeast Asia have emerged，For example, Nha Trang, Vietnam、Sri Lanka and Bali, etc.，These segmented tourist destinations will have room for continued growth。We will have a global island resource docking conference in Shenzhen on April 7th，I also hope everyone will pay attention，We are exploring the development space of market segments。

Goldman Sachs predicts that there will be 2 more Chinese overseas trips from 2015 to 2025.6 times growth space

Goldman Sachs’ data basically presents the growth of China’s entire outbound tourism market from 1999 to 2025。The dark part in the picture above is the real outbound travel market，Let’s see 1.Among the 2.2 billion passengers, 55.3 million are from Hong Kong, Macao and Taiwan，So real outbound travel should be spread to more than 100 countries around the world，2 more between 2015 and 2025.6 times the growth space，That is, the annualized growth is 10%，So by 2025, the total outbound tourism including Hong Kong and Macao should reach 2.200 million visitors，This number is a very optimistic number。We see that the growth of outbound travel to Hong Kong and Macao will also reach 2.5% average growth rate，1 more in the next ten years.3 times the growth space，So，Overall，Outbound tourism will continue to rise sharply after 2017。

二、Extensive development has limited profitability，Refined operations urgently need to be improved

The biggest pain point currently: profit margin is too low

Chinese tourists spend more than 100 billion US dollars abroad every year，How to earn this money？Where are the opportunities for our industry？The profitability of extensive development is actually very limited，Just look at the profitability of these large domestic travel agencies and mainstream wholesalers，It is difficult for us to achieve stronger profitability under the traditional extensive tourism development model，Refined operations need to be improved。

Travel products except air tickets and hotels，A few other product forms deserve our attention，Accommodation included、Insurance、Vacation and other comprehensive products，The profit level is much higher than that of a simple vacation package。In fact, the gross profit level under a simple line combination is generally between 5% and 9%，The average is 7%。

Take a large domestic travel agency as an example，The overall gross profit margin of CYTS on tourism products is 6%-8%，The highest is 7.9%，This level is far lower than many industries。Tourism is an industry with high cash flow but no profit，Refers to the fact that our gross profit level is too low，Too extensive development，Build business by buying and selling goods，Can’t make money on services and added value，This is a very big pain point in the tourism industry。The average gross profit margin of China National Travel Service’s outbound tourism business in the past five years is less than 6.5%，This is still gross profit，Net profit may be lower，It is not uncommon for transactions with cash flow to reach billions 188bet app download per year，But the profitability level needs to be improved。The gross profit of UX Travel’s outbound travel wholesale business in the first half of last year was 7.93%，The overall profit level of the outbound travel wholesale business from 2013 to the first half of 2016 is basically at this level；The gross profit of retail may be slightly higher，Basically within 15%。Caesar Travel’s wholesale business gross profit level is also between 5% and 8%。

So we can see through these data，China’s overall tourism gross profit level can actually be improved through more refined operations，You can also find more opportunities in market segments，Including the extension and service part of the tourism industry chain and the part of tourism derivatives，There is more space worth cultivating。

Exploring the high value-added part of the tourism industry

If compared to China、South Korea、Japan、Distribution of the United States and Thailand in every aspect of food, accommodation, travel, shopping and entertainment，You can see that the largest proportion in China is in the eating part，Most Chinese tourists are foodies，Overseas food is a big demand。But we found that in other parts we can achieve high gross profit levels，And the parts that can win the industry’s deep cultivation，Our abilities are relatively limited，Domestic tourism companies are entertaining、The travel and travel parts are actually relatively poor。But we found that in other parts we can achieve high gross profit levels，In other words, tourism in developed markets has become a way of life in other places，More of in-depth experience and activities。Therefore，In addition to traditional domestic air tickets、Hotel、In addition to simple line combinations such as tickets，In fact, there is more room for development，These spaces deserve serious discussion by our industry。

Thailand has the best medical tourism conditions and medical tourism facilities in the world，Recently we discovered when studying the foreign tourism industry，In fact, the United States is not the best in medical tourism，Thailand is a very noteworthy market segment for medical tourism。Physical examinations are much cheaper in Taiwan than in South Korea，Besides, beauty treatments in Taiwan are no worse than those in Korea，But the price is much lower。Japan is also very good，But medical care in Japan is very expensive。When we do research on domestic medical tourism, it is difficult to find decent ones，Or an enterprise with a certain size and scale，Including large companies and small businesses。In fact, the scale of this market is very huge，I know that there is a Youxiang International in China who has been working for more than ten years，Only 100 million annual revenue，But the net profit is 40-50 million yuan，The profit potential of these market segments is far beyond our imagination。If you want to watch the island tour again，Chinese island tours are very personalized，Very representative of the form of free travel，Its products are relatively standard，But the derivative space behind is very large，There may be some new ideas in the future。

三、Under the traffic monopoly of large enterprises，Small and medium-sized outbound tourism companies need to find three long-tail markets

Long Tail Market 1: The era of tourism fighting for traffic has passed，Future products and refined service capabilities

The global OTA monopoly is not just domestic Ctrip，There is also Expedia abroad、Priceline and other major travel groups。Competition is fierce，What will growth depend on in such a market？Expedia’s digital marketing investment in Google in 2016 was US$3.1 billion，Priceline’s digital marketing investment is also nearly US$3 billion，The combined spending of the two foreign 188bet online sports betting OTA giants on Marketing should reach more than 5 billion US dollars。Ctrip’s annual investment in mobile devices exceeds 3 billion yuan。

Visible，This market was created with heavy investment，That is to say, it is no longer suitable for our small and medium-sized enterprises to compete for traffic，What we can strive for is products and refined services。Some time ago we held an internal exchange meeting for the customized travel industry，I am very impressed by an industry owner’s sharing。He has been a long-term supplier of Ctrip，In fact, Ctrip is better at traffic matters，The product and server are not as powerful as we imagined，This is the truth。Large OTA platforms are better at traffic and channels，Small and medium-sized outbound tourism companies only need to establish good channels、Make good use of the platform，Instead of shopping with them on platforms and channels，Then we will definitely have space。

It is difficult for small businesses to avoid Ctrip and some large giants with monopoly advantages，Actually if from resource、Product、Looking at the four dimensions of marketing and channels，The development of information technology represented by the Internet in the past two decades has actually pushed marketing and channels to the extreme，But innovation in products and services is not enough，Especially when resources become products、Products form an advanced service system，These two paths are very lacking。When we held the Tourism Big Consumption Innovation Summit last year, Mr. Zhen (Zhen Hao, Senior Vice President of Pathfinder Group) was also our guest，When talking about experiential tourism, the audience below reacted strongly，The audience who exchanged business cards with him after the speech was also the largest，Because he touched everyone’s common pain points。

Traveling without temperature、No real improvement in feelings and experiences，This tour is actually outdated。In the future, everyone should pay more attention to how our products can be more warm under the traffic monopoly of giants？How to be more experienced？How to be more innovative？Just now Dr. Yang mentioned that the future may be more of a state of symbiosis between us and giants，So the future pattern of China’s tourism should be more like the African savanna，There are some very huge bread trees，But the shrubs below are also very dense，The entire ecology is very complete。Maybe no longer a tropical rainforest，Everyone is a towering tree inside，It is difficult for new companies to grow into towering trees now，Especially the traffic side and channel side。For example，Wholesale and channel links，It is difficult for any company to surpass Zhongxin、Caesar、Huayuan，There is also Tongcheng、Ctrip、Mother Donkey，They have formed a monopoly。If we acquire a user, we need to pay 2,000 yuan，How can you ensure your gross profit level is 5%-10%？Difficult。So we must make innovations in real products and services。

There is nothing wrong with being small and beautiful，Small but beautiful, there is a small but beautiful way to live，In the future, I hope to find and invest more energy in the long-tail market under the monopoly of large traffic。

Long Tail Market 2: Looking for the long tail crowd and welcoming the younger generation

Next, let’s take a look at the penetration rate of the Internet in China’s entire tourism industry，China is huge，But the penetration rate of the Internet is very low。

Online travel penetration rates in different countries

Currently, China’s entire Internet penetration into the entire tourism industry chain is only within 15%，Asia Pacific is 29%，The United States is 45%，European countries are 49%-50%，In this case, it is actually difficult for our traditional 188bet online sports betting methods to reach the truly young users。For example, the Millennials from 1984 to 1995，Z-Generation from 1995 to 2000，If there is no more personalized experience、There are no more different services and products，It is difficult to reach these users，It’s also hard to impress them。China’s development in recent years has far exceeded all previous countries，includes India、United States、Japan and the United Kingdom，So it’s not terrible that we missed the PC era，In the era of mobile Internet, we must capture the precise group of people，Find the long tail crowd，Millennials and Generation Z gathered on the mobile Internet are our first long-tail target users。

Long Tail Market Three: Mining Personalization、Experiential destination tours and activities

Another long-tail market is destination fragmented resources、Personalized products、Service and experience method、Different ways to travel、Different services、More sophisticated crowd。In this long tail market，There is huge room for development for everyone。China’s tourism market has such a characteristic，Very large，The market will reach 10 trillion in 2025，Any small segmentation group you make in it will become very large，So there are still plenty of opportunities。

If we divide the entire outbound tourism into a subdivided level，I would like to mention the underlying suppliers and fragmented resource side T1，This part is extremely scattered，No system integrator can integrate all these fragmented resources。China has been relatively complete，Because in China Meituan Dianping.com，Once recommended by nearly ten thousand people，It took many years to move all the fragmented business, food, drink and entertainment aspects of our domestic tourism online。How do we move abroad？Difficult。China’s small and medium-sized outbound travel companies have had their ups and downs over the years，There are also many people who have received financing of 50 million to 100 million but still find it difficult to survive，Because overseas fragmentation integration is too difficult，Cannot find overseas fragmented resource provider。

I saw a very niche audience when I attended ITB in Germany last year、Segmented destination，But there is no small or medium-sized personalized travel service provider in China。Domestic travel agencies and overseas ground services，No one can be found by foreign travel agencies or domestic tour operators，The value of today’s COTTM is here，The ability for everyone to find each other is the meaning of this exhibition lasting for thirteen years。T2 is a ground operator and wholesaler、Integrator，The junction between T1 and T2 is the part of our long tail。T3 is online、Offline travel agency、OTA and supply chain communities and channels that have closer contact with consumers、Marketing Section，We think this part is the battlefield for OTA，It is also a battlefield for large wholesalers，The innovation point in the middle stays between T1 and T2、Junction between T2 and T3。

Summary

Let’s sum it up，This long tail market consists of several parts，The three long tail markets are also very clear，i.e. segmented population、Segmented products and services，There are also subsequent segmented resources and markets。Although the growth rate of outbound tourism has slowed down，But it will still be a hot market in the next ten years，We should pay more attention to refined operation methods and means in addition to the original simple and extensive product operations，This can improve the comprehensive gross profit of our products，It can also allow us to obtain better benefits。We hope there will be more innovation，Can we find subdivided groups of people under the traffic monopoly of large enterprises、Segmented resources、Segmented market、Find differentiated services？Tourism is ultimately a matter of service，An experience thing，We should make our products and services more warm。