How will the future development of tourism from China affect you?
Within only a few short years, Europe and the rest of the Western world have seen a marked shift in how Chinese experience travel. This is having a major effect on the way which destinations must market themselves to Chinese visitors. Since 2004, Chinese tourists have been playing catch up with the rest of the world in record speed. These days, the talk is of a rising consumer group consisting of self-made millionaires, and senior executives working for multinational corporations. The wealthy elite are not just men, and not just middle-aged. High-flying career women and female entrepreneurs as well as the 20-something children of senior Communist Party officials comprise this niche market for luxury travel and consumer goods. Some of the niche travel categories to emerge out of this are: spiritual journeys (to Tibet, Bhutan, Nepal and India); adventure travel (hiking, climbing, self drive safaris, skiing); cultural travel or a combination of activities. Within China itself the shift in how people travel created a boom in the construction of luxury hotels, both large chains and small boutique offerings. There has also been a massive growth in the budget hotel sector, with local and international chains scrambling to find locations in China’s booming cities. Rural retreats are opening up to offer relaxing therapies to busy business people. The trend towards more individual choices in travel is apparent in the larger cities.
Looking ahead, it is plain to see that the old clichés about Chinese tourists no longer hold true. The sheer size and complexity of the market means that there is demand for almost any type of travel service, provided the seller knows where to look. Chinese who can afford luxury are educated and well traveled. Broadly speaking, they would prefer to be treated the same as clients from other countries while still enjoying special amenities and services afforded especially to Chinese customers.
Current Trends
Fast forward to 2015 and what has changed is that now the constant online chatter through mobile instant chat apps has been accepted as integral to doing business and China is leading the world in connectivity and use of mobile smart phones.
13 years ago, the challenge was convincing travel agents to offer individual travel services, not just group tour packages; since agents were used to collecting commissions from wholesalers for each person that they booked on a group tour. China began to allow its citizens to travel abroad for leisure in the early 90s through a policy known as ADS (Approved Destination Status), which was meant to control the outflow of tourism and link it to a growth in inbound tourism through bilateral tourism agreements. In fact outbound tourism has grown much faster, but from a smaller base, while inbound tourism to China has slowed down due to various factors including pollution, brand image and lackluster marketing initiatives.
Regarding individual travel, only when travel agents saw the ease and speed with which such bookings can be made online and the handsome profit margin on these orders, did they begin to shift towards independent travel. During the three years I spent living and working in China, we connected more than 5,000 travel agents to the online booking system and saw online bookings grow 600 percent. During that time, Ctrip grew to become the dominant online player and led a wave of companies offering online travel service focused on the domestic travel market.
There is no question that a new generation of Chinese travelers has embraced the Internet for their travel research and booking needs. While the share of travel transactions conducted online is still low compared to Western economies, online travel is growing at twice the pace of all travel. The leading OTAs in China are spending big to attract new customers through building loyalty and focusing on brand recognition.
Within only a few years, Europe has seen a shift in how the Chinese travel that is affecting the way in which destinations must market themselves. When Europe joined the ADS agreement in 2003, the Chinese arrived in large, organized group tours that covered 10 or more countries in less than 14 days. Their daily schedule started at 6am and ended late at night, spending most of their time on board a coach and never more than one night in the same place. After the long period in which businessmen traveled in small groups, the first ADS tours consisted of a mixed demographic and included visits to the most famous landmarks in Europe. Tourists saved on accommodation and food in order to have spare cash to spend on shopping. The reason retailers love Chinese customers is that when they travel they feel obliged to buy gifts for their relatives, friends and co-workers. Often what they buy must be unique to the place where they buy it, as another testament to their travel (apart from the ubiquitous pictures).
From 2004 until today, this trend has rapidly changed as Chinese catch up with the rest of the world in record speed. These days, the talk is of a rising consumer group consisting of self-made millionaires, and senior executives working for multinational corporations. The wealthy elite are not just men, and not just middle-aged. High-flying career women and female entrepreneurs as well as the 20-something children of senior Communist Party officials comprise this niche market for luxury travel and consumer goods. Some of the niche travel categories to emerge out of this are spiritual journeys (to Tibet, Bhutan, Nepal and India); adventure travel (hiking, climbing, self drive safaris, skiing); cultural travel or a combination of activities. Within China itself the shift in how people travel created a boom in the construction of luxury hotels, both belonging to large chains and small boutique offerings. There has also been a massive growth in the budget hotel sector, with local and international chains scrambling to find locations in China’s booming cities. Rural retreats are opening up to offer relaxing therapies to busy business people. The trend towards more individual choices in travel is apparent in the larger cities.
The Outlook
Looking ahead, it is plain to see that the old clichés about Chinese tourists no longer hold true. The sheer size and complexity of the market means that there is demand for almost any type of travel service, provided the seller knows where to look. Chinese who can afford luxury are educated and well traveled. Broadly speaking, they would prefer to be treated the same as clients from other countries while still enjoying special amenities and services afforded especially to Chinese customers. The newly updated and expanded China Travel Handbook 2015 launched today is intended to help set into context the media hype and excitement across the industry, and provide deeper insights about this market to people working in the tourism, hospitality and retail sectors. Articles and reports about Chinese tourists can be found everywhere, and I’ve first written about the vast potential of the market in 2005. This book contains interviews and case studies from industry insiders that have many years of experience working in, and with the Chinese outbound tourism market. Each brings their own perspective to form a rounded picture of the opportunities and challenges.
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A recognized expert in China tourism and hospitality, ‘China, the Future of Travel’ author Roy Graff founded ChinaContact as a market entry consultancy in 2005 and published the very first edition of the book that same year. The book is available for purchase here: www.chinafutureoftravel.com with a 10% discount using the promotional code: chinabrain10