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Get ready for China’s luxury travellers

Get ready for China’s luxury travellers
As one of the last countries to remove pandemic-related restrictions, China’s outbound travel sentiments are closely watched. And today, with freedom returning, many affluent Chinese travellers are looking to spend more on travel in the year ahead, and to do so with a renewed need for escapism and exploration.
 

Having saved money over the past three years, most wealthy Chinese are looking to travel again in style and spend more on more extravagant and unique trips, with international travel set to accelerate in 2023.

 

 

Last year, domestic holidays were the most popular choice among wealthy Chinese travellers, many of whom were still concerned about the pandemic. However, there is now a clear shift in willingness to travel internationally. While many are still eager to remain close to China and visit Japan and Singapore, countries farther afield such as France, the US, Australia and Switzerland are cited as their ideal holiday destination for 2023.

 

There has also been a clear upturn in planned spending on holidays since July 2022. At that time, 55% of affluent Chinese individuals anticipated spending more on holidays than on pre-Covid trips. This figure has now risen to almost three-quarters (73%). Indeed, 26% say they plan to spend much more than before, underlining how travel has become even more important to these wealthy individuals.

 

Holiday types have also evolved. Multi-generational family trips should continue to show strong growth, with 46% planning to take one. Meanwhile, 41% of Chinese affluent travellers are planning to take a holiday which specifically improves their mental well-being. The pandemic has also meant that relaxing and slower holidays are now more popular than active ones (79% versus 7%) as people look to unwind and recuperate after two trying years.

 

Moving on, there is little change in priorities when it comes to affluent Chinese travellers’ travel bookings. Overall, the health, safety and hygiene of the destination is the most important factor for upcoming bookings (53%). The retail/food and drink offering and sustainability credentials are the other leading factors, both cited by just under half (49%) as being important for their next bookings.

 

Seclusion and privacy have also come to the fore, with 31% saying this is important to them and several respondents stating their desire to visit less-crowded destinations. The pandemic has also led many to search for new and unusual experiences, and the development of a more adventurous mindset, where 80% prefer new destinations and experiences. Similarly, 69% say that they prefer holidays where they explore the local area, versus only 17% who prefer trips where they mostly stay at the hotel or resort.

 

The pandemic appears to have impacted spontaneity when planning holidays. Two-thirds now say that they prefer to plan in advance, with many citing the additional safety and peace of mind which comes from doing so.

 

There is also a growing desire for longer holidays which last a week or more: 63% prefer these versus just 24% for shorter trips. Holidays are now sometimes also being appended to business trips: one-third of wealthy Chinese individuals took one of these trips last year. Similarly, almost half (52%) say that they prefer to fly less often and stay for longer rather than take whistle-stop, more superficial breaks (25%).

 

Climate change remains a vital and ever-growing issue globally, and in most luxury categories, consumers continue to be more environmentally aware. For example, 84% of wealthy Chinese travellers are planning to take more sustainable/eco-friendly holidays in the future.

 

The report also found out that travel advisors will remain integral, with 80% of Chinese affluent travellers saying that they are at least somewhat influential, with 58% planning to use them for half or more of their holiday bookings over the next year.

 

The projected upturn in the use of travel advisors is a boon for the industry, although this comes with new expectations and demands. Various factors such as monitoring government advice/Covid statuses, getting hygiene information, and taking care of insurance and cancellations are responsibilities that the majority of Chinese travellers now expect to at least be partially taken care of for them.

 

Overall, travel is the most popular category for affluent spending. A whopping 97% of affluent Chinese individuals spent on travel last year, and 11% spent more than a fifth of their total expenditure on holidays. More than three-quarters (78%) say that they have a bucket list of places and experiences that they are trying to complete.

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Source: By Rachel AJ Lee for TTG Asia

 

China to resume outbound group tours...

China to resume outbound group tours to 40 more countries from March 15th.

China will resume outbound group tours for Chinese citizens to another 40 countries including Nepal, Vietnam, Iran, France, Spain, Italy, Greece and Brazil starting from March 15, China's Ministry of Culture and Tourism announced on Friday. It is the second batch of destinations in China's pilot program for out-bound group tours, after the country resumed cross-border group tours to the first batch of 20 countries and regions on February 6.



The move to expand the number of destinations comes as China's overseas tourism industry has been on a firm trajectory of quick recovery during the past month, and as more countries are pinning their hopes on the return of Chinese tourists to shore up a post-virus economic rebound. The return of more Chinese travelers is also expected to provide a much-needed boost to the global tourism industry and channel optimism into the global economy, observers pointed out. 

 



Travel agencies and online tourism companies could release and launch prod-ucts, promotions and other preparation work starting on Friday, the notice said. 



The 40 countries in the second batch span Asia, Europe, Africa, Oceania and Latin America, and will bring the total number of countries and regions in the pilot program to 60 from March 15.



South Korea, Japan, Australia, and the US, which were ranked among the top 15 overseas destinations by Chinese visitors in 2019 before the pandemic out-break, are not in the second batch. Some of the four countries have not lifted COVID-19 control restrictions for travelers from China.



Searches for international flight tickets jumped 185 percent in an hour on Fri-day after the notice was published, data from Alibaba-owned travel platform Fliggy showed. 



"It is another policy boost for the tourism industry [after the first phase of the pilot program], which has been embarking on a quick recovery. It also shows the resumption is being carried out in a phased, stable and orderly manner, which is beneficial to guaranteeing the safety and experience of outbound Chinese tourists," Xu Xiaolei, marketing manager at China's CYTS Tours Holding Co, told the Global Times on Friday. 



Among the 40 countries, flights to Vietnam are fairly regular and affordable, while ticket prices to European countries remain relatively high, data sent by Trip.com to the Global Times showed.



Vietnam's aviation sector stocks saw gains on Thursday, after Vietnam media reported the same day that China would add it to the list of countries approved for outbound tours. China has traditionally been Vietnam's largest tourism partner. 



To date, Asian countries and regions are among the most popular tourist destinations, making up more than 80 percent of the growth in outbound flights from February 27 to March 5, according to data from VariFlight, a data infor-mation provider. 



The resumption of group tour services to more countries also comes a bit ear-lier than the industry had expected, as some predicted that more countries would be added at the end of first quarter or the beginning of the second quarter, to take advantage of the traditional "travel golden period" starting from May. 



Xu expects China's outbound travel to return to between 50 and 60 percent of the 2019 level this year. China's resumption of outbound group tours could bring more than $200 billion back to international tourism, the Financial Times reported in January.



In the past month, visa enquires rose 87 percent on online travel agency TravelGo, and in another platform Qunar.com, bookings for international flights doubled in February compared with January, with the volume of visa searches growing sixfold.

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Source: Global Times

China’s outbound medical tourism

China’s outbound medical tourism

Chinese tourists spent $215 billion overseas last year - $10 billion that went towards overseas medical tourism alone. China is on the rise to become one of the world’s largest outbound medical tourism markets, and this trend for future Chinese demand is set to drive the global market for medical tourism up to $678.5 billion by 2017 – an impressive 54.7% growth from the $438.6 billion charted in 2015.

 

 

Chinese residents, spurred by rising income and growing awareness are increasingly demanding better quality private healthcare, a key factor underpinning Boston Consulting Group’s forecast that private health insurance spending in China will grow to RMB 1.1 trillion in 2020 from last year’s RMB 241 billion.

 

 

China’s population is ageing fast, which means more and more Chinese are discovering serious health problems that comes along with old age. Considering there will be more than 250 million urban households that are classed as middle class by 2020 this will further fuel the demand of foreign medical care.

 

 

While China’s super wealthy HNWI favour the US or Europe for medical holidays, China’s middle-class prefer more affordable treatment options in South Korea, Singapore, or Thailand.

 

 

We review 8 booming medical tourism destinations that are set to grow in the coming years:

 

 

United States

With four hospitals ranking in the top ten facilities in the world, combined with extensive travel links between China and US cities, and recent visa policy changes to quicken visa application processes, it’s no surprise why the US dominates as one of the most popular destinations for Chinese seeking medical treatment abroad.

 


Japan

At just a mere 2-3 hours away by plane and offering increasingly liberalised visas for Chinese visitors, Japan is a highly-accessible and popular medical tourism destination for Chinese, especially for standard health checks. Japan invests heavily in its health system, hence its health system is not only one of the world’s best equipped and most cost-effective, but also one of the most fastidious and reliable ones. This makes Japan highly attractive to Chinese patients – many who are jaded with China’s tenuous medical offerings – which explains the 310,00 Chinese medical tourists expected to visit Japan by 2020.

 


Germany

Boasting first-rate medical facilities Germany is ranked as the fifth-best medical system in the world by the US-based Commonwealth Foundation. Germany is also home to the second-best medical facilities in the world, as voted by Medical Tourism Index, and this largely due to the fact that the German government is the second-largest investor in healthcare among the countries in the OECD.

 


United Kingdom

Ranked top out of 11 of the world’s wealthiest countries in a study by the US-based Commonwealth Foundation, the UK healthcare system is a huge draw for Chinese medical tourists, particularly for those in search for liver transplants. Besides that, its quality of care, efficiency, and low cost at the point of service are also other factors attracting Chinese medical tourists to the UK – now even more so with the pound’s depreciation post-Brexit.

 


Singapore

Proximity, cultural and language similarities, as well as great food make Singapore a popular option for Chinese medical tourists. Singapore’s excellent facilities are made even more compelling by Singapore’s move to relax visa requirements for Chinese travellers - 9,000 Chinese medical tourists ventured to the Lion City in 2015 for treatment.

 


Thailand

Excellent and fast-growing range of medical facilities have rendered Thailand as one of the biggest medical tourism markets in the world, attracting an astonishing 2.81 million overseas patients in 2015. A big reason can be attributed to the Bumrungrad Hospital in Bangkok, which not only offers a range of premier and VIP suites and 24-hour hotline service, but even provides an embassy contact service, a visa application assistance service, reception service, and airport transfer service, making it a luxury medical experience. Having received approximately 7,500 Chinese customers in the past year, Bumrungrad Hospital added a ward staffed by Chinese speakers, adding to a customer base that has been growing at approximately 25% per year.

 


South Korea

A favourite for Chinese medical tourists seeking cosmetic surgery, South Korea’s medical tourism drive, including specialised medical visas for foreign patients, saw 56,000 Chinese medical tourists visits in 2014. Last year, that number surged to 179,000 Chinese patients, who spent $1 billion on hospital fees, accommodation, and travel in South Korea, making Chinese the largest group of foreign patients in South Korea.

 


India

Low cost, increasingly accessibility, and with an expanding range of private hospital chains like Fortis, Appollo, and Max, India is currently ranked as the top country in the world by Medical Tourism Index This is especially so for those seeking treatment for diseases, such as Hepatitis C and malaria.

 

 

Sources: Caixin, Boston Consulting Group.

 

 

Hainan Airlines: China’s Favorite...

Hainan Airlines: China’s Favorite Long-Haul Carrier?

Hainan Airlines is the fourth largest carrier in China in terms of fleet size. However, it is the only airline based in the People’s Republic to earn a five star rating from Skytrax (not counting Hong Kong’s Cathay Pacific).

 

 

Much of Hainan’s service is focused on its namesake island, which is becoming a major tourist destination for both domestic and international travelers. In addition to its main base in Hainan’s provincial capital, Haikou, the carrier has a hub in Beijing and a number of focus cities around China (including in economic hotspots like Chongqing and Shanghai).

 

Building on its five-star reputation

Now, the upstart airline is trying to take its five-star reputation to the bank by continuing to expand its international route offerings. The carrier plans to launch service to both Tel Aviv and Manchester, England starting next year.

 

Hainan has adopted a strategy that has become rather popular amongst up-and-coming airlines. In Manchester, they have found a market that has yet to be tapped. London residents already have nonstop connections to Beijing, but Manchester does not yet have such a service. Hainan’s goal is to create a new “air bridge” between Northern England and China. This kind of service is often appreciated by people in “secondary” cities because it means they do not have to travel to another hub in order to fly overseas.

 

Adding more and more international routes

This is not the first long-haul route that the airline has added to Hainan’s map. In fact, the Manchester service, slated for takeoff in June of 2016, will be the sixth major transcontinental route launched in recent times. The airline’s Beijing-San Jose flight is another example of trying to develop service in a new, underserved marketplace. Today, most transpacific flights take off from SFO, requiring a train or taxi trip north for travelers from San Jose and other parts of the Southern Bay Area.

 

Hainan Airline’s other new long-haul routes are Chongqing-Rome, Shanghai-Boston, Shanghai-Seattle and Beijing-Prague.

 

According to the carrier, more intercontinental flights are in the works. Hainan is banking on its image as a premium airline to differentiate itself from others in the crowded Chinese marketplace. They claim to have better food, better service and more spacious seating than the competition. These claims are backed up to a certain extent by the Skytrax rating, which is based on flier survey results. Billing itself as a premium airline has always worked quite well for one of Hainan’s main competitors, Cathay Pacific.

 

Domestic expansion

Hainan has also become a major player on the domestic front. It has snapped up or launched a number of regional carriers including business-oriented Beijing Capital Airlines, Fuzhou Airlines and Kunming-based Lucky Air. They are also a minority stakeholder in Hong Kong Airlines.

 

Hainan Airlines is obviously focused on leaving its niche behind and becoming one of the major players in China’s long-haul and domestic marketplaces. The strategy of expanding into underserved destinations like Manchester could work in the airline’s favor. At the very least, it is a welcome trend both for Chinese travelers (and East Asian fans of Manchester’s two popular soccer franchises) and for English fliers who are heading to China and don’t want to have to connect through London or another European hub.

 

Source: Travelpulse.com

Travel giants integrating services:...

Travel giants integrating services: Ctrip & Qunar

The business of selling airline tickets and resort vacations to China's holiday-happy middle class is now a battleground for Internet giants, following a deal that brings Ctrip.com International Ltd. to the fore.

 

Ctrip was already the country's biggest online travel agency before announcing a share-swap agreement on October 27th that gave it virtual control of traveler services provider Qunar Cayman Islands Ltd., a subsidiary of the Internet search giant Baidu Inc.

 

 

In the deal, Baidu transferred 45 percent of its stake in Qunar to Ctrip. In turn, Baidu got a 25 percent stake in Ctrip. The swap strengthened Ctrip's grip on what market research institution iResearch says is China's 270 billion yuan online travel agency market. Ctrip already owns 37 percent of eLong Inc. and 6 percent of Tuniu Corp.

 

The tie-up of the two Nasdaq-listed companies with a combined market value of US$ 18 billion set the stage for a three-way travel market battle pitting Baidu and its new partner Ctrip against the nation's dominant social media company Tencent Holdings Ltd. as well as e-commerce leader Alibaba Group.

 

Tencent has an online travel information section on its qq.com platform, an instant messenger. The company has also invested US$ 84 million in travel service provider eLong in 2011 and US$ 78 million in LY.com in 2014.

 

Alibaba, meanwhile, has had one foot in the travel agency door since 2010 by selling ticket and hotel booking services through its Tmall and Taobao websites. It's also invested millions of U.S. dollars in several online travel sites including qyer.com and baicheng.com. And in October 2014, Alibaba formally launched its own travel service division called Alitrip.

 

But through their new partnership, Ctrip and Qunar now account for nearly 70 percent of all revenues generated through the country's online travel market.

 

 

Alitrip's is pitching it`s service as an open platform through which travelers and qualified service providers can find each other. Future plans call for offering various traveler conveniences, such as hotel room deposit waivers based on a client's credit record with Alibaba. In its first year of operations the company signed up more than 100 million members and averaged more than 10 million daily webpage views. But it's still lags behind Ctrip and Qunar.

 

And although big brands rule the market, a number of new players have recently joined the online travel services game. One is the group-buying website company Meituan.com, which for the second half of this year reported 5.3 billion yuan worth of hotel bookings as well as 1.8 billion yuan worth of other travel-related deals. Meituan established a new division in July aimed at expanding its services.

 

China is also seeing traditional, storefront-based travel agencies increasing their online exposure opportunities through a growing number of new websites.

 

Nevertheless, the country's online travel giants have fortified their market positions in ways that should keep their new rivals at bay for a long time. For several years the market had anticipated a Ctrip-Qunar merger.

 

Integrating Services

The main focus of the merger is as a way to streamline business and counteract competitive pressure since many domestic companies in this industry are running in the red.

 

For the second quarter, Qunar reported an 816 million yuan loss. Elong.com registered a 356 million yuan loss and Tuniu said it lost 292 million yuan in the same period.

 

Ctrip outperformed its rivals by posting a 143 million yuan net profit for the second quarter, a 5.9 percent increase from the same period last year.

 

Baidu, meanwhile, has been singled out by market analysts as the biggest winner in the deal between Ctrip and Qunar. The search engine had controlled Qunar since buying a 62 percent stake for US$ 306 million in July 2011, just a few months after expanding into what was then a fledgling market for online travel services.

 

Ctrip and Qunar will likely continue to operate separately yet complement one another. Ctrip will focus on the business traveler, hotel and ticketing operations, while Qunar will function mainly as a platform for a variety of travel services based on packages, search and price comparisons.

 

But the merger also presents challenges for the companies involved. Baidu, for example, must figure out how to integrate and distribute traffic and resources between Ctrip and Qunar. In the short term Ctrip and other travel booking sites are expected to continue relying on investments to keep their businesses growing whilst being forced by the competitive environment to offer services at discounted rates.

 

Chinese domestic aviation: problems...

Chinese domestic aviation: problems, advantages and outlook.

At first sight the Chinese domestic airline industry does not seem too different from those of America or Europe: a few players dominating the market, regional airlines and burgeoning low-cost carriers. However, further examination reveals a typical trait of the Chinese economy prevalent in the aviation industry as well - it is mostly state controlled. The main Chinese airlines, Air China, China Eastern and China Southern, not only control 80% of the market, but are also owned by different branches of the central and local governments despite being listed on various stock exchanges. All of the companies are forced to compete, but the “Big 3” can be suspected to prefer to do so with each other, rather than “outsiders”.

 

Air China, China Southern and China Eastern have all posted comparable results for 2013 and the first quarter of 2014, citing similar reasons for their declining profits: lower yields, harsher competition from regional and low-cost carriers, declining numbers of premium travelers and depreciating Renminbi. All carriers face, essentially, the same problems as their operations are based on a similar model - an international hub with few secondary hubs and an extensive network within Mainland China (which they are subsidized to fly).

 

According to the Civil Aviation Administration of China (CAAC), in 2013, the three airlines altogether officially received subsidies of 433 million Chinese Renminbi ($69.25 million) from the central government in Beijing, theoretically modest compared with other Chinese industries. However, because local governments of smaller cities want to maintain direct flights to the main economic centers of China, they therefore provide airlines with generous support, which accounts for the lion’s share of the industry’s subsidies.

 

China's skies are becoming ever more crowded, making for constant delays. Anyone who has recently taken a domestic flight in China has experienced the frustration of sitting on an aircraft waiting to depart. Poor air traffic control and lack of capacity at the airports are cited for this phenomenon, but the main reason remains the military’s reluctance to allow commercial airlines to use its restricted airspace for weather diversions. Changes are being implemented and airlines will be allowed to change their flight path from this summer in Northern China, if there are dangerous weather conditions. However, further improvement will take time, since PLAAF will be slow to yield its authority to the commercial aviation.  

 

Although the delays cannot usually be blamed on carriers, the service passengers receive still leaves a lot to be desired. Often, passengers are forced to wait for hours in an aircraft without any explanation or information as to the delay. In numerous cases this has lead to passenger protests and sit-ins. The authorities, not oblivious to these protests, have directed the airlines to provide greater levels of customer service to passengers in case of delays. However, other aspects of the flight experience have improved significantly in the last few years, enhanced by new aircraft orders coming into service.

 

Another trait shared by all three airlines is debt structure. Almost all debts held by the “big three” are denominated in US dollars; hence any Renminbi movement against the USD can significantly affect companies’ financial results.

 

Despite these problems, the main question remains, how will “the big three” continue to expand after the recent slowing in the Chinese economy and will they be able to turn a profit without Government subsidies.

 

China National Aviation Corporation (Air China Group).

 

Although Air China itself is a smaller airline compared with its main rivals, China Eastern and China Southern, Air China Group is as big as the other three carriers combined. It has a 100% stake in Air China, majority ownership of Shenzhen Airlines, Shandong Airlines, Air Macau, Dalian Airlines, as well as a 30% share in Cathay Pacific (Hong Kong airline holds a 20% investment in Air China). The Group has 497 aircraft, with the majority flying under the Air China, Shenzhen Airlines and Shandong Airlines brands. Air China’s main hub is Beijing Capital Airport, while its secondary hubs are Chengdu and Shanghai Pudong airports.

 

 

 

2013

2012

Change %

Revenue

¥98.18 billion ($15.79 billion). 

¥99.47billion ($15.94 billion)

-1.3%

Net profit

¥3.6 billion ($576 million)

¥5.3 billion ($849 million)

-32%

Carried passengers

77.68 million

72.41 million

+7.3%.

Load factor

80.8%.

80.41%

 

Cargo

1.45 million metric tons

1.46 million metric tons

0.69%

 

Revenue has decreased in the core market of Greater China as well as Korea and Japan. Net profit might have turned into loss if not for a Renminbi appreciation against the US dollar.

 

According to CAAC, Air China (the airline) has received a relatively small, 10 million CNY ($1.6 million) subsidy from regional CAACs for flying regional routes and improving accessibility of less economically developed cities. However in reality, according to some reports, the airline received 1.28 billion CNY ($204 million) from local governments. Moreover, this number could actually be higher, since the real data about state subsidies is not made public.

 

Air China expects a 65% decrease in profits for the 1st quarter of 2014, mainly due to the weakening Renminbi. Moreover, a few days ago, the airline’s Chinese pilots published a public letter demanding equal pay with foreign pilots, reduced hours and better working conditions. On a positive note, Germany's Lufthansa has expressed an interest in a possible joint venture with Air China, but stressed tough negotiations lie ahead before any concrete results can be achieved. Air China has recently started testing free Wi-Fi on its Beijing-Chengdu route and expects to gradually expand this to other flights.

 

China Eastern Airlines.

 

This company is the largest airline in Asia, by number of destinations. Both Shanghai airports serve as the airline’s principal hubs, while it has secondary hubs in Xi’an and Kunming.  China Eastern subsidiaries are Shanghai Airlines, and a recently announced joint venture with Qantas - Jet Star Hong Kong. The total size of China Eastern Airlines and its subsidiaries fleet are 478 aircraft. In an example of the industry’s close ties, CNAC (Air China) owns 11% of China Eastern holdings. Also it successfully derailed Singapore Airlines’ bid for 24% in CEA in 2008, in order to prevent it from entering the Chinese domestic market.

 

 

 

2014

2013

Change%

Revenue

¥88.25 billion ($14.07 billion)

¥85.25 billion ($13.65 billion)

3.5%

Net profit

¥2.38 billion ($380 million)

¥3.07billion ($491 million)

-22.5%

Carried passengers

79.1 million

73.1 million

8.2%

Load factor

79.21%

79.81

 

Cargo

1.41 million metric tons

1.416 million metric tons

-0.44%

           

The company blamed the decline in business/first class passengers and lower yields for its recent poor performance.

 

China Eastern’s debt structure must be examined, since it is representative of all the “Big Three's” balance sheets. More than 95% of CEA’s 58.35 billion Renminbi debt is denominated in US dollars ($9.35 billion). Therefore, larger currency swings on the Forex Market result in a substantial impact on companies’ financial results. The Yuan’s appreciation against the dollar in 2013 helped China Eastern to remain profitable, but has been in reverse as of this year.

 

Amongst the Chinese domestic airlines, CEA receives the biggest subsidy from the state. Although the official amount paid by local CAAC offices is only 110 million CNY ($17.6 million), the real subsidy is a lot higher, and should stand at about 1.7 billion Yuan ($2.7 billion).

 

Recently, China Eastern placed an order for 70 Airbus A320NEO, fuel-efficient, short-haul aircraft, in order to increase the airline’s total capacity by 13 aircraft. The deal is estimated to be worth $6.4 billion. However, the company in its annual report states that the biggest challenge for the future is the rise of domestic low-cost carriers (Juneyao and Spring airlines both have their main hubs in Shanghai), encouraged by the 12th five-year plan.

 

China Southern Airlines.

 

China Southern is the biggest carrier in Asia, by passenger numbers (91.79 million in 2013) and size of its fleet (561 aircraft). It operates from its main hub Guangzhou Baiyun international airport, with secondary hubs in Beijing, Chongqing and Urumqi. China Southern is also the world’s largest airline to receive a four star rating from IATA. Guangzhou airport is logistically convenient, since it lies in the center of popular routes, such as Australia-Europe, US-South East Asia, and East Asia-South East Asia.

 

         

 

2013

2012

Change%

Revenue

¥98.55 billion ($16.2 billion)

¥99.51 billion ($15.93 billion)

-1%

Net profit

¥2.7 billion ($451 million)

¥3.8 billion ($608 million)

-27.3%,

Carried passengers

82.17 million

77.3 million

5.85%

Load factor

80.22%

81.8%

 

Cargo

923 thousand metric tons

890 thousand metric tons

3.75%

 

China Southern recently stated that it had reduced seat prices to increase its market share, due to increasing competition from the HSR network and regional and low-cost airlines. As in cases of Air China’s and China Eastern, its profits have received a boost from the strong Renminbi.

 

China Southern is currently the only airline in the world to operate both Airbus A380 and the Boeing 787; and has a promising strategy, based on a large transit hub (with more intercontinental routes expected to be opened up, especially to the US and Europe). Although the airline’s officially-received-subsidy of ¥98.52 million ($15.8 million) does not reveal the full picture, it received much lower governmental support than its rivals.

 

Outlook.

 

All in all, the “Big 3” face similar problems in both the short and long run: a slowing economy, fewer premium class travellers, China’s expanding HSR network and Renminbi currency fluctuations. As SOEs, they are continually fighting to increase efficiency and reduce waste whilst compelled to fly unprofitable routes for the “greater cause” of regional development.

 

Regional carriers, most if which are subsidiaries of the “Big 3’s”, are used as a means to improve already fierce competition in the domestic market and develop the domestic industry. Shandong Airlines, subsidiary of Air China, recently reported a $4.6 billion order for 50 Boeing 737.

 

However, the main challenge to the “Big 3” arises from the Chinese government’s intention to boost competition, especially through the low-cost carriers. These currently account for only 5% of the market, but airlines can expect this to only grow as infrastructure is put into place such as Beijing’s new low-cost terminal (due to open in 2018), the removal of caps on new aircraft purchases and minimum ticket prices, the building of new airports in 2nd, 3rd and 4th tier cities and the encouragement of financial institutions to deepen cooperation with them. The results should appear in the near future.

 

Juneyao Airlines and Spring Airlines are planning to IPO in Shanghai, in order to fund their expansions, though the latter was suspended, after some uncertainty regarding its financial results. Jiuyuan, subsidiary of Juneyao, should commence operations from Guangzhou-Baiyun airport in August this year. Spring Airlines, which has been growing 20% annually for the last 10 years, continues to expand internationally not only by gaining slots on the routes like Shanghai - Taipei, but also by setting up a subsidiary in Japan. Jetstar Hong Kong, a subsidiary of China Eastern and Australian Qantas, should begin operation this or next year with 48 destinations in Mainland China. Hainan Airlines, the largest private airline in the country, has renamed its Chongqing-based subsidiary West Air, and turned it into a low-cost carrier.

 

China’s domestic aviation market is only expected to grow in spite of the current economic slowdown. Whilst all three carriers are looking into possible joint ventures with Western carriers, a move that should improve Chinese companies’ management and operational efficiency, the domestic air travel market will grow with greater development and infrastructure coming into operation over the next few years. Market share will shift away form the larger SEOs towards the new players, whilst remaining under the aegis of the big three. China Brain will continue to report on this topic.

 

The Chinese Luxury Traveler 2014 (Hurun...

The Chinese Luxury Traveler 2014 (Hurun Report)

This report analyzes the travel habits and consumption patterns of China’s HNWIs in the past year, and includes a new case study on medical tourism through collaboration with DIADEMA.

 

 

According to statistics provided by the China Tourism Academy, consumer demand was strong as China’ s tourism economy grew steadily in 2013, with the number of Chinese outbound tourists coming to a staggering 98 million, up 17.8% year on year. However, the international tourism trade deficit continued to widen due to the rapid growth of outbound tourism. The China Tourism Academy continues to hold relatively optimistic expectations for the tourism economy in 2014 and believes it will continue to maintain steady and rapid growth.
 
 
Please click here to open the report PDF

China’s Outbound Tourism, 2014

China’s Outbound Tourism, 2014
China became the largest spender on international tourism globally in 2012, surpassing Germany and the United States, propelled by strong spending growth in 2011. China’s outbound tourism has been growing vigorously at an annual rate of ~15% over the past decade, which is much higher than that of the global market and the other BRIC countries. Whilst growing urbanization of various Chinese cities and their improved connectivity with the outer world have broadened the geographical market focus for the destination countries. Lastly Chinese tourists are proving to be a boom for the retail industry of the destination countries, as they account for the largest share of the global expenditure on tax-free shopping.
 
 
 

The report found here as a PDF highlights the opportunities and trends associated with growth in the Chinese outbound travelers markets.

China to become the 2nd largest travel...

China to become the 2nd largest travel & tourism market by 2013

The travel market in China currently represents $232 billion, with a domestic dominance. Research by Boston Consulting Group suggests that China will surpass Japan as the second‑largest travel and tourism market in the world by 2013.

 

 

In 2011, 2.6 billion total trips were taken by Chinese, of which 70 million were to international locations. Rising disposable income and abolition of travel restrictions inside the country has led to a take off in domestic tourism. Relaxation of visa restrictions fuels growth for travel abroad. Visa processing for the USA grew by 46% from Oct 2011 to Mar 2012 compared to same period in 2010-2011.

 

Digital Luxury Group and Luxury Society are proud to announce the launch of the World Luxury Index™ China Hotels, in a first-time partnership with Luxury Concierge China. Unveiling for the first time, a ranking and analysis of the most searched-for luxury hotel brands specifically in China, based on the unbiased search inputs coming from Google and Baidu.

 

Our research examines over 65 brands, through 170 million+ searches, from 75 domestic and international locations.

 

 

A Preference for Sheraton

The most searched for hotel by Chinese travellers is Sheraton, capturing 13.58% of total luxury hotel searches. This is perhaps unsurprising as Sheraton was the first western hotel brand to operate in China when it launched in 1985.

 

The brand currently has plans to open 12 new hotels across China in 2012, with plans to raise its Chinese portfolio to 80 properties by 2015.

 

A look at the searches for Sheraton from the beginning of 2012 show a significant increase starting mid-January and continuing until mid-February. This is most likely an effect of the Chinese New Year, a popular time for travel. Top destinations during this period were Shanghai, Beijing, Dameisha & Chongqing.

 

Sheraton’s Dameisha Resort, Shenzhen

 

Domestically, Shanghai

After the nation’s biggest economic hubs, Shanghai (#1) and Beijing (#2), cities Chongqing and Tianjin are most
searched. These locales act as primary gateways to western and northern China, respectively.

 

Hangzhou, known as “the Switzerland of China” beckons with lakes, mountains, and beautiful countryside (with tea plantations instead of vineyards). Leisure holidays to Sanya, Dameisha and Dalian are very popular due to their weather, nature and cuisine.

 

Most searched for hotel brands by International location

 

Internationally, Hong Kong

Proximity, no language barrier and regular and direct flights make business and shopping hubs Hong Kong and Singapore top locations for Chinese travellers.

 

Interest in travel to New York surges as China is set to become the largest inbound tourist market to the U.S. Dubai has become the most popular destination in the Middle East, as a stable and shopping–oriented city, benefiting from the “approved destination” status given by Chinese authorities in 2009.

 

The full report is available online at: dlgr.com/chinahotels. More detailed data and analysis on a particular segment or brand is available upon request.

SOURCE: LuxurySociety

 

 

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