Harvard Case - Huanglongxi Ancient Town: Digital Transformation of Cultural Tourism
"Huanglongxi Ancient Town: Digital Transformation of Cultural Tourism" Harvard business case study is written by Ning Su, Yang Chen, Qi Song, Si Shi, Carol Hsu. It deals with the challenges in the field of Strategy. The case study is 21 page(s) long and it was first published on : Dec 12, 2021
At Fern Fort University, we recommend Huanglongxi Ancient Town implement a comprehensive digital transformation strategy to enhance its cultural tourism experience, attract a wider audience, and achieve sustainable growth. This strategy should focus on leveraging technology to improve visitor engagement, enhance operational efficiency, and create a unique and memorable experience for tourists.
2. Background
Huanglongxi Ancient Town, a historical and cultural landmark in Sichuan Province, China, faces the challenge of attracting a younger, tech-savvy audience while preserving its traditional charm. The town's management is seeking ways to leverage technology to enhance its tourism offerings and compete with modern attractions.
The main protagonists in this case study are:
- Huanglongxi Ancient Town Management: The entity responsible for managing and preserving the town's heritage and developing tourism strategies.
- Tourists: The target audience, seeking authentic cultural experiences and engaging with the town's history and traditions.
- Technology Providers: Companies offering digital solutions for tourism, including online platforms, mobile apps, and data analytics tools.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Rich cultural heritage: Huanglongxi boasts a unique and well-preserved historical environment.
- Authentic experiences: The town offers traditional crafts, local cuisine, and cultural performances.
- Growing domestic tourism: China's expanding middle class fuels a demand for domestic travel.
Weaknesses:
- Limited digital presence: The town lacks a strong online presence and digital marketing strategies.
- Lack of engagement with younger audiences: Traditional tourism offerings may not appeal to tech-savvy millennials and Gen Z.
- Limited infrastructure: The town requires improvements in digital infrastructure and connectivity.
Opportunities:
- Leveraging technology: Implementing digital solutions can enhance visitor experience and attract new audiences.
- Developing online platforms: Creating a website and mobile app can provide information, booking services, and interactive experiences.
- Partnerships with technology providers: Collaborating with tech companies can offer expertise and innovative solutions.
Threats:
- Competition from modern attractions: Theme parks and other entertainment options pose a threat to traditional tourism.
- Changing travel preferences: Tourists are increasingly seeking personalized and immersive experiences.
- Economic fluctuations: Economic downturns can impact travel spending and tourism revenue.
Porter's Five Forces:
- Threat of new entrants: Relatively low, due to the town's unique historical significance and the need for significant investment.
- Bargaining power of buyers: Moderate, as tourists have many alternative destinations and can easily compare prices online.
- Threat of substitute products: Moderate, as modern attractions and alternative cultural experiences exist.
- Bargaining power of suppliers: Low, as the town relies on local businesses and artisans for services and products.
- Rivalry among existing competitors: Moderate, as competition exists from other historical towns and cultural destinations.
Value Chain Analysis:
The town's value chain can be analyzed by identifying key activities:
- Inbound Logistics: Managing the flow of tourists and resources.
- Operations: Providing cultural experiences, accommodation, and services.
- Outbound Logistics: Facilitating departures and managing visitor feedback.
- Marketing and Sales: Promoting the town and attracting visitors.
- Service: Providing support and assistance to tourists.
Business Model Innovation:
Huanglongxi can explore business model innovation by:
- Developing a digital platform: Offering online booking, ticketing, and information services.
- Creating immersive experiences: Utilizing augmented reality (AR) and virtual reality (VR) to enhance cultural immersion.
- Leveraging social media: Engaging with tourists through social media platforms and creating shareable content.
- Partnering with local businesses: Integrating local businesses into the digital platform to offer curated experiences.
4. Recommendations
Digital Transformation Strategy:
- Develop a comprehensive digital strategy: Define clear objectives, target audience, and key performance indicators (KPIs) for digital initiatives.
- Build a strong online presence: Create a user-friendly website and mobile app with information, booking options, and interactive features.
- Leverage social media: Engage with tourists on social media platforms, share compelling content, and build a strong online community.
- Implement digital marketing campaigns: Utilize targeted online advertising, search engine optimization (SEO), and content marketing to reach potential visitors.
- Enhance visitor experience: Utilize technology to provide interactive tours, AR experiences, and personalized recommendations.
- Improve operational efficiency: Implement digital tools for ticketing, accommodation management, and customer service.
- Collect and analyze data: Utilize data analytics to understand visitor behavior, preferences, and trends.
- Partner with technology providers: Collaborate with companies offering digital solutions for tourism.
- Invest in digital infrastructure: Upgrade internet connectivity and digital infrastructure within the town.
- Train staff on digital tools: Equip staff with the necessary skills to utilize digital platforms and technologies.
5. Basis of Recommendations
These recommendations are based on:
- Core competencies and consistency with mission: The strategy aligns with the town's mission to preserve its cultural heritage and attract visitors.
- External customers and internal clients: The recommendations cater to the needs of tourists and empower staff with digital tools.
- Competitors: The strategy aims to differentiate Huanglongxi from competitors by offering unique digital experiences.
- Attractiveness: The recommendations are expected to increase visitor numbers, enhance revenue streams, and improve operational efficiency.
6. Conclusion
Implementing a digital transformation strategy is crucial for Huanglongxi Ancient Town to remain competitive and attract a wider audience in the evolving tourism landscape. By leveraging technology to enhance visitor experience, improve operational efficiency, and engage with digital audiences, the town can achieve sustainable growth and preserve its cultural heritage for future generations.
7. Discussion
Alternatives not selected:
- Maintaining the status quo: This option would likely lead to declining visitor numbers and revenue as competitors adopt digital strategies.
- Focusing solely on physical infrastructure improvements: While essential, this approach would not address the need for digital engagement and innovation.
Risks and key assumptions:
- Technology adoption: The success of the strategy depends on the willingness of tourists to adopt digital tools and technologies.
- Digital literacy: The town's staff needs to be trained and equipped to utilize digital platforms effectively.
- Financial investment: Implementing digital solutions requires significant financial investment.
Options Grid:
| Option | Strengths | Weaknesses | Risks |
|---|---|---|---|
| Digital Transformation | Enhanced visitor experience, increased engagement, improved efficiency | High initial investment, technology adoption challenges | Technology failure, data security breaches |
| Status Quo | Lower investment, familiar approach | Declining visitor numbers, lack of competitiveness | Loss of market share, reduced revenue |
| Physical Infrastructure Improvements | Improved visitor amenities, enhanced accessibility | Limited impact on digital engagement, potential for limited return on investment | Delays in implementation, cost overruns |
8. Next Steps
Timeline with key milestones:
- Year 1: Develop a comprehensive digital strategy, build a website and mobile app, launch social media accounts, and implement initial digital marketing campaigns.
- Year 2: Enhance visitor experience with AR/VR technologies, improve operational efficiency with digital tools, and collect data to analyze visitor behavior.
- Year 3: Expand digital marketing efforts, partner with technology providers, and invest in digital infrastructure upgrades.
By implementing this strategy, Huanglongxi Ancient Town can transform its tourism offerings, attract new audiences, and achieve sustainable growth while preserving its rich cultural heritage.
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Case Description
Huanglongxi, a historic town in Sichuan Province, topped the list of "China's Iconic Cultural Tourism Towns 2020." In October 2017, Zhang Dafan, the executive director of the Huanglongxi Overseas Chinese Town Group (OCT), had led his team in initiating a smart cultural tourism project in Huanglongxi against the backdrop red-hot rivalry between China's ancient towns. In just three years, the project had led to the remarkable transformation of Huanglongxi into a smart, award-winning ancient town. Unfortunately, the COVID-19 pandemic had left the tourism industry in limbo. To emerge from these difficult times caused by the pandemic, Huanglongxi the OCT had to assess how to strengthen the depth and breadth of its Huanglongxi's smart cultural tourism construction offer in order to bring draw travellers back. How had Huanglongxi overcome the homogeneous competition it faced to develop into a unique, smart ancient town in 2017? Given the new challenges it faced, how could it do so once again?
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