Tong Bisha and Zhang Hui
School of Economics and Management, Beijing Jiaotong University, Beijing, P.R. China
Keywords: Information asymmetry, Tourism industry, Operation mode.
Abstract: Information asymmetry widely exists in China’s tourism industry, which severely disrupts the order of the
Chinese tourism industry. By analyzing the causes of information asymmetry, this paper proposes some
ideas to resolve the disorder problem of the China’s tourism market caused by information asymmetry.
Information asymmetry widely exists in various
industries, which may be taken as an objective
existence. However, for the Chinese tourism
industry which is experiencing its transition period,
certain historical and practical factors may further
increase the scale of information asymmetry of the
market. Under such circumstance, on the one hand, a
tourist, who is the disadvantageous side of
information asymmetry, is more likely to make the
wrong travel decision, and hence his/her travel
satisfaction will be lowered and his/her travel
enthusiasm will be deduced, and as a result the
demand of tourism market will be decreased; on the
other hand, as for the information asymmetry of the
tourism market, a tourist may only be willing to
spend lower price to purchase a tourism product,
therefore, some travel operators who provide high-
quality products and services will make less profit or
even suffer loss, and thus be forced to quit the
market or turn to provide low-quality products, and
finally the market will go into a vicious circle and
the efficiency of tourism market will be very poor.
Hence, it is a very important precondition to
deeply analyze the reasons for information
asymmetry of the Chinese tourism market for
resolving the disrupted order of the current Chinese
tourism market. There are documents of relevant
researches, but most of them just remained on the
surface of the problem. Majorly from the aspect of
operation mode of tourism market, this paper
analyzes the deep-rooted reasons for information
asymmetry of the Chinese tourism market based on
a brand new point, and tries to propose the
corresponding policies.
The development of the Chinese tourism market was
first started with inbound tours and took the package
tours as the main business; therefore, travel agencies
occupied the heart part of the tourism market.
Concerning the travel reception process, the
organizing travel agencies decided the details of tour
route, and the receiving travel agencies decided all
the tour reception details of the tour destination, and
thus the “Route Tourism” operation mode of the
Chinese tourism industry led by travel agencies was
formed, and went on and on till today. As the
developing situation of the Chinese tourism
economy keeps changing continuously, the “Route
Tourism” operation mode turns to be more and more
inadaptable to the new situation. Among which, the
phenomenon that travel agencies deceive or
blackmail tourists by using information asymmetry
happens more and more frequently.
2.1 Falsified Qualification of Travel
With the benefits of tourism economy grows larger
and larger, various operation main bodies, no matter
qualified or disqualified, began to enter the tourism
market one after another, and arouse the operator
disorder of the tourism market in the following
aspects: firstly, the disqualified incomers always
Bisha T. and Hui Z..
DOI: 10.5220/0003592904690472
In Proceedings of the 13th International Conference on Enterprise Information Systems (SSTS-2011), pages 469-472
ISBN: 978-989-8425-53-9
2011 SCITEPRESS (Science and Technology Publications, Lda.)
suffer problems of falsified registration capital or
insufficient quality deposit; secondly, it is very
common that some operators run business without
certificates and business licenses, and black-hearted
agencies and tour guides expand prominently;
thirdly, the market is flooded with contracted or
affiliated travel agencies, and under the cover of this,
a huge amount of disqualified travel agencies
appears, and consequently intensifies vicious
competition of the Chinese tourism market.
2.2 Flooded Fake Tour Advertising
The fake tour advertising is flooded in the following
aspects: the fake tour advertising that uses fraudulent
and ambiguous words to deceive or mislead tourists
has been prohibited for several times but still
emerges occasionally. By taking advantage of the
disadvantageous situation of customers in
information asymmetry, the fake advertising attracts
tourists with very cheap price even lower than the
cost, and then squeezes tourists’ money by adding
view spots that are at tourists’ expenses or going
shopping. Such phenomenon is called “No-charge or
Minus-charge Tour”.
2.3 Serious Deception in Tourism
Market Contracts
Tour contracts are full of deceiving conditions which
use word play to deceive tourists, and thus damage
the legal rights and interests of tourists; the tourism
shopping market is glutted with fake and
disqualified products, especially some souvenir
goods sold at the appointed stores arranged by travel
agencies, characterized by both extremely low
quality assurance rate and astonishingly high price;
the forced purchase is very common during the tour,
and some tourists are forced to take part in
sightseeing or shopping at their own expenses; and
part of the travel agencies are running business
beyond their license.
3.1 The Unequal Status of the
Organizing Agencies and Receiving
Agencies in “Route Tourism”
Concerning “Route Tourism”, the organizing
agencies, who are closer to the tourist market and
take the control of the cash flow of tour charges, are
occupying the advantageous position in market
business; and, the receiving agencies are taking the
disadvantageous position, for they are not close to
the tourist market and cannot control the cash flow,
although they possess the sightseeing resources.
Under such circumstance, the organizing agencies
have the initiative to offer price and squeeze price,
and unaffectedly have the advantages in the final
profit distribution. As the competition of tourism
market becomes white-hot, the advantages of the
organizing agencies in profit distribution will be
turned into the stakes to further squeeze the profit of
the receiving agencies, and as a result, the receiving
agencies have to take the unequal and abnormal
business relations such as “No-Charge or Minus-
Charge Tour”.
There is also information asymmetry existing
between tourists and travel agencies. With
insufficient information, a tourist usually tries to get
more information of tour product by cutting down
the price, hoping to avoid the “blackmail” as much
as possible. As the competition of tourism market
becomes white-hot, some travel agencies are tending
to make use of the disadvantages of tourists in
information asymmetry again. On the one hand, they
pretend ignorance of improper price cutting by
tourists or even offer lower price to attract tourists,
on the other hand, they “blackmail” tourists by
adding sightseeing that are at tourists’ expenses or
going shopping during the tour. If we say that
tourists’ cutting down price is a kind of inevitable
behavior to get more product information because of
information asymmetry, travel agencies’ offering
lower price may be a long-planned blackmail
behavior taking the advantage of information
asymmetry. Tourists who are kept in the dark
become accustomed to the lower and lower tour
charge in the game of “No-Charge or Minus-Charge
Tour” by travel agencies, and therefore tour products
of good quality and high price have been ignored
gradually. As a result of such games, the tourism
market became flooded with “No-Charge or Minus-
Charge Tour” products.
3.2 Uncertainties of Tour Activities are
Increased in the “Route Tourism”
Operation Mode
Concerning the “Route Tourism” operation mode,
the business chain starts from tourists entrusting
organizing agencies, then goes to organizing
agencies entrusting receiving agencies and receiving
agencies entrusting tour suppliers. Consequently,
ICEIS 2011 - 13th International Conference on Enterprise Information Systems
two time differences are formed between tourists
and organizing agencies: one is that the tour product
is sold to tourists first but consumed later, the other
is that the tour service promises are made first but
committed later. These time differences will
certainly bring uncertainties to tour activities. At the
same time, the social labor division by many
different tour organizers also brings forward an
organizational isolation between the sales and
consumption of tour products and the promises and
commitments. This organizational isolation, again,
increases the uncertainties of tour activities to a
certain degree. With the increase of uncertainties of
tour activities, the degree of tour information
asymmetry is increased correspondingly, and hence
the tour consumption risk of tourists and tour
business risk also goes up.
3.3 Restraint of “Route Tourism” to
the Competition Among Tour
Located at the destination, the receiving agencies
that take the full charge of local arrangement of
dining, accommodation, vehicles, sightseeing,
shopping and entertainment of tourists are
controlling the local tour supply market. If tour
suppliers what to gain profit from the tour market,
they have to cooperate with the receiving agencies.
In order to gain advantages in the competition, some
tour suppliers lure the receiving agencies with high
commission, and finally become the appointed
reception units of various kind, all characterized by
poor quality and high price. This shows that the
arrangement solely made by the receiving agencies
constrains the tourists’ consumption only to those
tour suppliers recommended by the receiving
agencies on the one hand, and on the other hand,
those truly high-quality and inexpensive tour
suppliers are missing the competition opportunity
because they haven’t been admitted into the whole
reception system. Therefore, the arrangement solely
made by the receiving agencies may easily conceal
large amount of fair-and-square information.
4.1 To change the Operation Mode
from “Route Tourism” to
“Destination Tourism”
The so-called “Destination Tourism” operation
mode refers to the economic system of which the
main operators are the travel agents at tourists’
origin and the individual tourist service system at the
tour destination, and in which the resources of
relevant travel services are effectively allocated.
And, the travel agents at the tourists’ origin mainly
include various tickets agencies that provide
transportation service, various travel intermediary
organizations that provide hotel booking service, and
agencies that provide comprehensive services using
the internet as a platform. The individual tourist
service system at the tour destination mainly include
the tour information inquiry system, tour indication
system, tour transportation system, tour
accommodation and reception system, tour shopping
and entertainment system, and tour complaint
system, etc.
In the “Destination Tourism” system, no matter
the travel agents or the individual tourists service
centers, will take the information construction as the
major task and try to enhance the market
competitive power by providing more public and
transparent information for tourists, so as to ensure
that tourists take more initiative position in the
market business. In respect of the current
mainstream online travel operators in China, such as
the websites of Ctrip and Elong, their remarkably
rising business achievements are closely related to
the huge amount of valid information provided on
their websites. It can be concluded that the
“Destination Tourism” operation mode that takes
information construction as its core part will
effectively relief the current disorder of the Chinese
tourism market caused by information asymmetry.
4.2 To Enhance the Integrity System
Construction of Tourism Market
It is suggested that the administrative tourism
authority of the government and the industry guilds
together build the integrity system of the tourism
market, information collection system of travel
enterprises and individual tourists, integrity
supervision and management system and the
integrity breaching and punishment mechanism. The
collection of integrity information shall be finished
under the leadership of the administrative tourism
authority of the government; at the beginning, the
collecting work may be handled directly by the
administrative tourism authority of the government,
and commercial integrity collection firms may join
in and operate according to the market rules when
the collection develops into certain period. The
integrity contents shall mainly include the
information of loans and credits, tax payment,
contract fulfillment, tourist complaints, etc.; the
system shall provide the basic information, good
integrity information, noted integrity information
and warned integrity information that has nothing to
do with trade secrets and individual privacy. On the
base of integrity information collection, the
authenticity and completeness of integrity
information shall be ensured through the
corresponding supervision and management. It shall
be legally punished to provide fake integrity
information. For travel enterprises that do not keep
promises, the conflict between the bilateral sides of
the business shall be turned into the conflict between
the integrity breaching side and the whole society
through the integrity breaching and punishment
mechanism, and consequently the integrity
breaching side will suffer lower integrity and have
less cooperators, and the cost of integrity breaching
will go up.
4.3 To Build Well-developed Tourism
Legal System
First of all, it is essential to formulate the Basic
Tourism Law. The formulation of the Basic Tourism
Law should be based on the developing rules of the
market economy, and establish the economic status
of the Chinese tourism industry through legislation
measures, and adjust the legal relations among the
tourism administrative organs, tour operators,
tourists, citizens at the tour destinations and relevant
departments. The formulation of the Basic Tourism
Law will provide firm guarantee for the healthy and
orderly development of the Chinese tourism industry.
Secondly, some currently existing laws and
regulations shall be amended; those articles and
rules that are not going along with the developing
rules of the market economy shall be abolished to
lessen the opportunities for some lawbreakers to
exploit advantages of law in the business of the
tourism market.
Thirdly, the legal enforcement and supervision
shall be enhanced. It is suggested that all the
working staff of the quality supervisory bureaus take
trainings of legal knowledge and laws and take the
post with certificates. Meanwhile, the service quality
feedback system of quality supervisory bureaus shall
be built. For renowned sightseeing places, special
tourism enforcement departments shall be
established if necessary, for instance, the tourism
police, etc., in order to improve the timing and
efficiency of disposal of travel disputes.
The “Route Tourism” operation mode led by travel
agencies intensifies the degree of information
asymmetry of the Chinese tourism market. It will
radically change the current disorder of the Chinese
tourism market caused by information asymmetry to
change the current singular “Route Tourism”
operation mode, build the “Destination Tourism”
operation mode centered by information
construction, and meanwhile supplement with the
well-developed legal system and integrity system.
This paper is supported by the Fundamental
Research Funds for the Central Universities
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