The fast growth of China outbound travel has attracted many tourism entrepreneurs into the business, making it highly competitive. In response, a mode of tour operation nicknamed ‘ling-tuan-fei’ (literally ‘zero-charge’) has emerged. Ling-tuan-fei (LTF) tours are tour packages that demand either no charge or a very low charge that is obviously insufficient to cover the costs of the package, let alone profits. Instead, the host tour operators make their money by demanding commissions on the leisure travellers’ purchases from souvenir stores. Although this practice is viewed by some people as an exploitation of the travellers, such a practice has been going on for quite some time, demonstrating that it is favoured by some travellers. So, this leads to the question: Is the ‘LTF’ tour a panacea, a poison or a palliative?

It is the purpose of this research to answer this question by studying China’s outbound leisure travel market. In doing so, this research will look at the perspective in four parts. First, this research discusses how the LTF phenomenon came about. Second, it identifies, and then explores the problems of the LTF tour. Third, the research explores the rationale of why the LTF tour is so popular for outbound leisure travellers, and what the satisfaction level is for those who experience the LTF tour. Finally, this research studies the reactions of the New Zealand (NZ) tourism industry to LTF tours, as presented by Tourism New Zealand (TNZ).

The researcher uses both primary and secondary data to explore her questions. The secondary data consists of reports of complaint cases about LTF tours and the reaction of TNZ. The primary data comes from face-to-face interviews with outbound travel agencies (tour operators) in China, inbound travel agencies (tour operators) in NZ, tour leaders, and the Chinese leisure travellers who have experienced the LTF tour. A qualitative research method was employed because this method enables the researcher to first explore the attributes of the LTF phenomenon and then to understand both why Chinese leisure travellers may prefer to buy these package tours and their subsequent satisfaction levels.

The research shows the LTF mode of operation is not sustainable because not all the parties involved can derive benefits from this mode of operation. While the Chinese outbound travel agencies (COTAs) and the Chinese outbound leisure travellers (COLTs) still like the LTF mode of operation, treating it as either a panacea or at the least as chocolate candy in a panacea wrapping, TNZ could only tolerate the LTF mode and attempt to make improvements incrementally knowing well that eradicating the LTF mode right away would at the same time drastically reduce the number of Chinese leisure travellers. For TNZ, the LTF mode is a cancer-inducing poison because a quick cure could also mean a quick kill. However, the most adversely affected group are the inbound tour operators (ITOs). Their position in bargaining for better payment from the COTAs has been weakening; thus, the ITOs have to rely increasingly on commissions from the COLTs’ shopping to augment their income. Therefore, for the ITOs, the LTF mode has degraded from a panacea they once enjoyed, to a mere palliative, which can only serve to mitigate the pain of having no business at all. TNZ and the ITOs want to change, but the party holding the deciding vote–the COLTs–do not want to change. Therefore, it is expected that the LTF model will continue until there is a change in the external factors, such as a change in the Chinese tourism policy, a drastic reduction in Chinese import tax, or a change in the mind-set of the COLTs for a better tour experience. Unless there are such changes, the LTF model can be expected to go on for quite some time.