The Tenth Five-Year Plan of the Travel Agency Industry and its Development

Travel agencies have experienced rapid development in China in recent years. However, problems like market disorder, non-standardized service and irrational structure do exist. During the 10th Five-Year Plan (2001-05) period, China will focus its efforts on reforming the industry.

1. Quantitative control

The quantity of the travel agencies is already large enough to basically meet the needs of the market development in the next 5 years. During the period of the 10th Five-Year Plan, the growth rate of travel agencies will be controlled between 8 and 10 percent, meaning some 500 and 600 new agencies will be approved for business operation.

The new travel agencies should be: a. international travel agencies set up to fill blanks either at regional level or in newly developed tourism sites; or, b. domestic travel agencies set up to fill blanks at county level; or, c. international or domestic travel agencies approved to be set up to attract large enterprises into the tourism industry.

2. Structural adjustment

The emphasis will be on developing group companies and a national network. The objective of the optimization of the structure of the travel agencies is to gradually form pyramid shape structure.

On top of the pyramid, there will be a few large group companies occupying big market shares. They will be the dominating force in the market. They will enjoy such advantages as funds, brands, business scale while competing with their counterparts.

In the middle of the pyramid are those medium-size specialized travel agencies. Each enterprise finds its own position in the various specialized segments of the market.

The vast majority of travel agencies lying at the bottom part of the pyramid are those small-size travel agencies, which will eventually become the network of the larger ones.

Generally speaking, China needs a dozen large travel agency groups each consisting of several hundred or even over a thousand small branch agencies in a bid to help stabilize the market, standardize the management develop themselves strong enough to compete with those large international groups.

During the "10th Five-Year Plan" period, China will first try to create the environment and conditions for the creation of large travel agencies groups. Secondly, the restrictions of departments and administrative divisions will be lifted to promote the development of a uniform national tourism market. Thirdly, the construction of the retailing shops for travel agencies will be strengthened to make a number of small travel agencies the retailing shops of large travel agencies to help promote development of a national network.

3. Mechanism reform

All kinds of travel agencies, especially those large travel agencies, should implement an all-round reform of modern enterprise system in compliance with the requirements of the Enterprise Law and relevant policies to achieve the objectives of clear ownership, the separation of government and enterprises; a clear cut between responsibilities and power and scientific management.

To promote the network development of travel agencies, various types of ownership, like joint-stock enterprises can be applied. Innovation in management will be encouraged and the current modes of production, that is, department contracting system and individual affiliation will be changed to meet the requirements of knowledge economy.

4. Quality enhancement

During the "10th Five-Year Plan" period, the development of the travel agencies will not be reflected by quantity increase but by quality increase. Efforts will be made to enhance the capability of developing customer sources internationally and the competitiveness in the domestic market of the travel agencies. They will also improve development of new products and internal management to upgrade the enterprises thoroughly. To achieve this, the quality of the managers and staff of the travel agencies should be improved in order to renew their knowledge to deal better with the challenge China Faces after joining the WTO.

The Status Quo of the industry's development

By the end of 2001, the total number of travel agencies all over China reached 10,716, an increase of 1,723 travel agencies, up 19.16 percent over that of 2000. The number of international travel agencies reached 1,319 from 1,268 in 2000, an increase of 51 travel agencies, up 4.03 percent. The quantity of domestic travel agencies reached 9,397, 1,671 travel agencies more than the 7,726 in 2000, up 21.63 percent.

The total assets (both fixed assets and current assets) of all travel agencies amounted to 41.547 billion yuan, a 13.55 percent increase over that of 2000. The total amount of liabilities was 19.908 billion yuan, an increase of 2.07 percent overt hat of 2000. The ownership rights amounted to 21.639 billion yuan, up 26.64 percent. The total registered capital reached 13.063 billion, up 15.39percent.

The change in the assets situation shows that the travel agencies have been further solidified and that liabilities have been decreased. In 2001, the number of employees of the travel agencies was 192,400 (Of them, 84,600 were tourist guides, 8,700 tour group leaders, 22,100 accountants and 44,600 management staff.), 17.11 percent more than that of 2000. The rate of travel agencies buying responsibility insurance reached 85.32 percent. The total amount of insurance premium paid by various types of travel agencies hit 113 million yuan( international travel agencies paid 44.19 million and domestic travel agencies paid 69.16 million yuan.)

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