In spring 2003, an outbreak of SARS in Hong Kong led to a jump in inbound travel to the city. Many local travel agencies started hosting costs of inbound tours, called “zero-fee tours” for tourists from mainland China. They make a profit by buying these tourists in certain stores, they charge exorbitant prices, but offer lucrative commissions to tour operators. Zero-fee tours first caught the public’s attention in October 2006 when a group of tourists were abandoned in a p … Read more »

In spring 2003, an outbreak of SARS in Hong Kong led to a jump in inbound travel to the city. Many local travel agencies started hosting costs of inbound tours, called “zero-fee tours” for tourists from mainland China. They make a profit by buying these tourists in certain stores, they charge exorbitant prices, but offer lucrative commissions to tour operators. Zero-fee tours first caught the public’s attention in October 2006 when a group of tourists were abandoned at a pier because they spent too little while shopping. Then in June 2010, a tourist died of a heart attack after a heated argument with a tour guide on a shopping arrangement. Despite preventive measures implemented by the industry association, tourist complaints keep growing and high-profile cases in which happen guides insult or even fight with tourists continue. Trendy Travel Limited is a travel agency that organizes tours regularly priced in-depth. Looking to strong market demand for zero-fee tours, they would like the business model of zero-fee tours understand: What is the driving force that is sustainable, and what are the effects on the company and the industry? It also wants to determine how to position their inbound tour company in the short and long term.
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from
Wen Zhou,
Penelope Chan
Source: University of Hong Kong
27 pages.
Release Date: 12 June 2012. Prod #: HKU972-PDF-ENG
Zero-fee tours: an irresistible bargain or a shithole? HBR case solution

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