China’s tourism industry is coming out of the doldrums and is on track to achieve its annual growth target for the year thanks to a recovery in domestic travel.

China’s tourism revenue is expected to increase 11 percent to 2.87 trillion yuan (US$470.5 billion) in 2013, in line with the official growth target set at the beginning of the year, the China Tourism Academy, the research arm of the China National Tourism Administration, projected in a quarterly report.

The number of tourist visits in China is estimated to reach 3.4 billion by the end of this year, up 10 percent from a year earlier, according to the report.

Tourism moderated in the first half of the year due to decreases in domestic business trips and inbound visits as a result of an economic slowdown. But the industry has started to gather pace in the third quarter as the sector’s business climate gauge rebounded for the first time since the fourth quarter last year.

“Tourism is well on the way to becoming a pillar industry in a consumption-driven economy as the government is determined to boost domestic demand as part of its economic restructuring plan,” the report said.

Urban residents were the biggest group behind the improvement.

Following the implementation of toll-free highways for holidays last year, the country’s top economic planner this year cut admission fees to major tourism attractions during the National Day holiday.

During the weeklong holiday, the National Development and Reform Commission introduced a 20 percent discount on entrance fees at about 1,400 attractions in Hubei, Guangdong, Hainan and Yunnan provinces as well as in the Xinjiang Uygur Autonomous Region.

The China National Tourism Administration said domestic tourists made 428 million trips within the country from October 1 to October 7, an increase of 15.1 percent year on year. Tourism revenue surged 21.2 percent from the same period a year ago to 223.3 billion yuan.

The momentum is poised to continue. The CTA report said it expects revenue from Chinese travelers touring the country to rise 12 percent year on year to 2.54 trillion yuan this year, accounting for 89 percent of total tourism revenue.

The Beijing-based research institution said the desire to travel will remain high in the fourth quarter after many delayed summer trips due to the sweltering heat and numerous floods.

Meanwhile, with a rebounding economy and a rising middle class with money to spend, outbound travel is also rising. Chinese tourists overtook Americans and Germans as the biggest tourism spenders in the world in 2012.

China remains the most important emerging economy for the global travel and tourism industry, according to the World Travel Market Industry Report for 2013.

“China is still dominating the headlines, and its economic success continues to be reflected by the level of interest from the global travel industry,” said Simon Press, senior director of Reed Travel Exhibitions of World Travel Market.

The CTA forecasts that the number of Chinese outbound trips will rise 18 percent year on year to 98 million this year and those travelers will spend US$120 billion, a 20 percent surge from a year earlier. 

Simpler visa procedures and more airline choices help encourage Chinese to take trips abroad. 

Mauritius and Jordan started offering visa exemptions for Chinese travelers at the end of October. China is also in talks with Thailand over a bilateral visa-exemption policy for regular passport holders.

Britain this month introduced an easier visa application process for Chinese travelers in hopes of getting a bigger share of the multi-billion-dollar Chinese travel market.

Airlines are adding more routes to China to cater to the rapid increase in outbound travel.

Domestic and foreign carriers will add 23 new international routes for the winter-spring tourism season, according to the Civil Aviation Administration of China.

In sharp contrast to flourishing outbound tourism, fewer foreigners are coming to China. The number of inbound tourists is expected to fall 3 percent year on year to 129 million this year, according to the CTA report.

Income from inbound tourism is forecasted to decrease 2 percent year-on-year to US$47 billion in 2013.

Inbound tourism peaked in 2008 and then went downhill against the backdrop of the global financial crisis. An economic slowdown, the yuan’s appreciation and challenges from neighboring competitors are among major factors leading to the decline, industry experts said.

“The appreciation of the yuan makes it more expensive to travel here and China has lost its edge as a cheap destination compared with Thailand, Vietnam and India,” Guo Xiaodong, vice president of China CYTS Tours Holding Co, said during the China International Travel Mart held last month in Kunming, Yunnan Province.

The number of inbound tourists dipped 2.2 percent in China last year. By comparison, it increased 7.7 percent in Thailand, jumped 9 percent in Singapore and climbed 4.3 percent in India.

A less-regulated market and an under-developed service environment are other factors driving international travelers to other destinations. Forced shopping outings, price irregularities, arbitrary route changes and unscrupulous travel operators have caused a rising number of consumer complaints and disputes.

The implementation of the country’s first tourism law in October may help clean up the industry and improve protection for tourists, helping China better its image and strengthen its competitiveness in the global market.

The long-awaited law addresses safety, unfair competition, the rights of tourists and more in 112 articles. Among other things, the law bans forced purchases of products and activities not on trip itineraries.

Travel agencies violating the law face up to a 300,000 yuan fine and loss of business license.

The law has led to higher tour packages since travel agencies can no longer accept kickbacks from shops for bringing them customers. But analysts said it will benefit the industry in the long run.

“The law did result in a price surge during the National Day holiday,” said Xu Juanjuan, analyst with Guotai Junan Securities. “But over the long-term, it will help drive prices back to rational levels and force travel agencies to improve services and be more innovative.”

Market demand will increase if travelers receive better service, concluded Xu.