INFORMATION MANAGEMENT IN CHINA’S TOURISM

INDUSTRY

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.

1 INTRODUCTION

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.

2 INFORMATION ASYMMETRY

IN CHINA’S TOURISM

INDUSTRY

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

469

Bisha T. and Hui Z..

INFORMATION MANAGEMENT IN CHINA’S TOURISM INDUSTRY.

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 REASONS FOR INFORMATION

ASYMMETRY IN CHINA’S

TOURISM INDUSTRY

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,

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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

Suppliers

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 COUNTERMEASURES AND

SUGGESTION

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

Information

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,

INFORMATION MANAGEMENT IN CHINA'S TOURISM INDUSTRY

471

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.

5 CONCLUSIONS

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.

ACKNOWLEDGEMENTS

This paper is supported by the Fundamental

Research Funds for the Central Universities

(No.2011JBM035).

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