Wen Zhou, Penelope Chan
University of Hong Kong (HKU972-PDF-ENG)
June 12, 2012
In early 2003, a SARS outbreak in Hong Kong caused a drop in the number of people entering the city. Many local travel agents began offering inexpensive entry tours known as “zerofee tours” to mainland Chinese tourists. They make a profit by having these tourists shop at designated retail stores that overcharge them, but offer lucrative commissions to tour operators. Zerofee tours first came to the public’s attention in October 2006, when a group of tourists was stranded on a pier for spending too little on shopping. In June 2010, a tourist died of a heart attack after a heated discussion with a tour guide about a shopping arrangement. Despite the preventive measures of the industry association, the number of complaints from tourists is increasing and there are always high-profile cases where tour guides insult tourists or even argue with them. Trendy Travel Limited is a local travel agency offering inbound tours at regular prices. In view of the strong market demand for Zerofee tours, you would like to understand the business model of Zerofee tours: What is the driving force, is it sustainable, and what impact does it have on the company and the entire industry? You also want to determine how to establish your short-term and long-term inbound tour business.
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