China’s Tourism Boom By Bruce Einhorn

China's new wealth has created a new kind of world traveler, the Chinese tourist. Both inbound and outbound tourism are booming as more Chinese can afford to travel around their own country and also go overseas. Late last year, the U.S. and China reached agreement on a deal to liberalize restrictions on Chinese tourist visits to the U.S. The deal, signed last December during a visit to China by Commerce Secretary Carlos M. Gutierrez, is one of many Beijing has been making with foreign governments eager to welcome big-spending Chinese tourists.

While millions more Chinese tourists travel overseas, the Chinese government is readying to welcome more foreigners. In the lead-up to the Beijing Olympics, officials and company executives involved with China's tourist industry focused on opening hotels and building infrastructure to prepare for the Games. The next big event to attract visitors from abroad will be the World's Fair in Shanghai in Officials hope that will kick off an even bigger decade for the local tourism industry. By 2020, China is likely to be the world's largest tourist destination.

As the Chinese economy slows because of the global financial crisis, the country's tourism industry is feeling the impact. Revenue growth is slumping at Macao's casinos, for instance, and sales are slowing at Hong Kong's retailers. But over the medium term, companies in the tourism business are still counting on big demand from China.

Rising Income The total revenue for the tourism industry in 2007 was $160 billion, according to the China National Tourism Administration. That was a 22.6% increase over the previous year. Tourists, both Chinese and foreign, favor traditional favorites such as the Great Wall (pictured) outside Beijing.

Local Travel Thanks to rising incomes among the middle class, more Chinese can afford to travel locally. There were 132 million domestic tourists last year, according to the China National Tourism Administration, and spending rose 25%, to $113 billion. Among the favorites of Chinese travelers are the karsts, bizarre limestone cliffs, outside the southeastern city of Guilin

Overseas Travel Until recently, relatively few Chinese could afford international travel. But 41 million traveled abroad last year, and that number is likely to hit 100 million by Washington reached a deal with Beijing last year to liberalize restrictions on Chinese tourist travel to the U.S., and the Commerce Dept. expects more big-spending tourists from China to visit as a result. "Chinese citizens spend more during their stay than visitors from other countries," a Commerce statement noted last year when announcing the deal with China.

Olympics Slump Ironically, the Beijing Games did not do much to boost tourism in the Chinese capital. Because of security concerns, the government imposed restrictions on tourist visas that made travel to the city more difficult for foreigners. As a result, tourist arrivals in August for Beijing were 389,000, a drop of 7.2% compared with the same month in 2007.

Future Growth The tourism industry is growing at an annual rate of 10.4%. By 2020, China will be the world's top tourist destination as visitors from around the world flock to sites such as the Forbidden City in Beijing (pictured). China will also be the No. 4 exporter of tourists, according to research firm Research & Markets.

New Sites In Beijing, the big attractions remain the famous sites from Imperial China such as the Great Wall, the Forbidden City, and the Summer Palace. But tourists are also visiting new attractions such as the National Grand Theater, the controversial performing-arts center near Tiananmen Square designed by Paul Andreu.

Advanced Infrastructure The gigantic new terminal at the Beijing airport (pictured) is just the latest of the projects designed to boost the tourist infrastructure. During the recent week- long National Day holiday that started on Sept. 29, the airport was projected to have 8,373 arrivals and departures, a 16% increase over 2007, and 1.07 million passengers, a 7% boost.

Macao Slowdown? Macao, the former Portuguese colony across the Pearl River Estuary from Hong Kong, has been a boomtown thanks to an influx of new casinos such as the Venetian (pictured). Casino revenue is soaring, up more than 40% year-on-year in both July and August. However, rumors that Beijing is tightening visa rules for mainlanders visiting Macao have taken their toll on Macao tourism stocks recently.

Foreign Hotels Hopeful that the tourism boom will increase demand for luxury hotels, top chains from overseas are expanding in China. The new Sheraton in the western city of Chongqing (pictured), now under construction, will be a 42-story complex. Dubai's Jumeirah will open its first hotel in China by yearend in Shanghai. The luxury chain last month also announced plans to open a hotel in Guangzhou in 2011.