The U.S. travel industry is slowly learning how to attract affluent Chinese tourists

Cover of Vip Golf USA magazine, the first magazine fully in Chinese about Golfing in the United States.

According to a report released last week by the U.N. World Tourism Organization, Chinese travelers spent $102 billion on international tourism in 2012, 40% more than they spent in 2011. More than 80 million Chinese traveled internationally in 2011, outspending German tourists — the longtime leader in overseas travel spending — for the first time. Those numbers have steadily climbed since 2000, when 10 million Chinese traveled abroad.
This remarkable growth — largely due to relaxed government restrictions on foreign travel and the rise of a Chinese middle class with disposable income — has forced the U.S. travel industry, from hotels to restaurants to shopping centers, to adapt to this influx of Chinese tourists.
The hotel industry has perhaps been the most attentive. According to USA Today, Marriott has stationed 20 sales representatives in China and teaches employees in the U.S. to speak basic Mandarin phrases like hello and thank you. The Marriott Marquis in New York City has even replaced room numbers on the 44th floor with names because the number four is considered bad luck in many Asian cultures.
Hilton sends its reps to China regularly to meet with corporate travel planners and, according to the report, started a Chinese-guest program, staffed with native Chinese speakers. The company features Chinese meals and displays oranges and tangerines (often considered good luck) in 63 of its hotels.

Meanwhile, Starwood, which owns Sheraton, Westin and W hotels, has revised its amenities and services as well, according to USA Today: “In-room tea kettles, slippers, translated restaurant menus and welcome brochures, on-site translation services and comfort food such as congee (rice porridge) and noodles” can now be found at many of Starwood’s properties.
Even the publishing industry has now several specialized magazines made for very affluent Chinese travelers coming to the United States: Luxury Hotels of America, VIP Golf USA, Niuyue Mag -  fully in Chinese Mandarin language – offer the latest news about historical hotels in Texas, golf courses in Arizona, or sophisticated boutique hotels in New York City. “The new generation of Chinese tourists coming to the U.S. is craving for high quality information about historical and boutique hotels in America, and want to try other kind of hotels that standardized hotel chains”, said Pierre Gervois, CEO of China Elite Focus, the publishing company of Luxury Hotels of America.
States around the country have also been experimenting with ways to draw more Chinese tourists. According to BBC News, the Massachusetts Office of Travel and Tourism holds a workshop advising businesses on how to cater to Chinese tourists, and California has started a program called China Ready, which includes a learning kit that helps the state’s businesses serve those travelers and understand their culture.
So what are Chinese travelers looking for when they leave their homeland? Mainly, luxury goods. Many tourists leave China to shop, spending an average of $1,230 per trip, and some estimates show they spend about $3,200 per trip when visiting New York City. Items such as clothes and accessories (many of which were made in China) are often at the top of their list.

While the increase in discretionary income among China’s middle class is part of the tourism spike in the U.S., the Chinese government’s decision in 2007 to make the U.S. an “approved destination” has also helped. The designation lets American businesses advertise and market to audiences in China.
As U.S. businesses adapt, they have been forced to confront the reality that America is no longer the inevitable No. 1 destination for Chinese tourists. Because of prior approval by the Chinese government, many European countries have been marketing to Chinese tourists for longer. University of South Carolina professor Robert Li told USA Today that travelers from Shanghai now prefer to travel to France rather than the U.S.
But the number of travelers visiting the U.S. from China is still projected to grow dramatically over the next few years. The U.S. Department of Commerce estimates that from 2010 to 2016, the number of Chinese tourists visiting the U.S. will grow by 232%.

Source : Time, article by J. Sanburn

Chinese tourists spent $102 billion on foreign trips in 2012

Chinese tourists spent $102 billion on foreign trips last year, outstripping deep-pocketed travelers from Germany and the United States.
Chinese tourists spent 41 percent more on foreign travel in 2012 than the year before, beating the close to $84 billion both German and U.S. travelers parted with last year.
Tourists from other fast-growing economies with swelling middle classes, like Russia and Brazil, also increased spending in 2012. In recession-hit Europe, however, French and Italian tourists reined in their holiday budgets.
“The impressive growth of tourism expenditure from China and Russia reflects the entry into the tourism market of a growing middle class from these countries,” said UNWTO Secretary-General Taleb Rifai.
The German Travel Association (DRV) said it was to be expected that the Chinese would eventually overtake Germans in terms of spending, given that the country had more inhabitants than North America, Russia and Europe put together.
“But that they have overtaken us already is astonishing,” DRV president Juergen Buechy said.
The Chinese make more long-haul trips than Germans, who typically go to Mediterranean destinations, meaning that the average spend per holiday was greater, he added.
“This all new generation of  young & affluent Chinese travelers is much more sophisticated than their parents. They prefer to travel independently rather than in group tours, and take the time to choose carefully their hotel and shopping program well in advance” said Pierre Gervois, CEO & Publisher of the Shanghai Travelers’ Club magazine, a travel magazine for very affluent Chinese outbound tourists.
China is the world’s fastest growing tourist source market, thanks to higher disposable incomes in the world’s number two economy and looser foreign travel restrictions. Chinese tourists made 83 million foreign trips in 2012, compared to 10 million in 2000.
Hoteliers, tour companies, restaurants and even taxi drivers will need to brush up on their knowledge of Chinese cuisine, culture and language if they are to tempt them away from favorite destinations like Hong Kong, Taiwan and the Maldives, European tourism officials have said.
Other countries in the top 10 including Japan and Australia posted growth in travel spending, though only Russia came close to China’s huge growth, with a 32 percent increase in holiday budgets.
Russians are now the fifth highest-spending tourists, parting with $43 billion last year, according to the Madrid-based UNWTO, and catching up on the British, who spent $52 billion in 2012.
Italian spending dipped by 1 percent to $26 billion in 2012 and French tourists parted with $38 billion, a 6 percent drop year-on-year. The two euro zone peers were the only countries in the top 10 outbound markets to post declines.

Luxury retailers must re-think their marketing strategies with wealthy Chinese travelers

A report from the Beijing-based World Luxury Association found that luxury spending in China last month fell to its lowest level in five years. Affluent Chinese spent $830 million on luxury goods in China — half of what they spend last year. The month included the important Chinese New Year holiday, which is critical for Chinese tourism and spending.
The report predicts the Chinese luxury market is slowing from double-digit growth to single-digit growth.
But that doesn’t mean the Chinese weren’t spending. While spending on luxury at home was down, the Chinese spent big on luxury abroad.
They spent $8.5 billion on luxury goods overseas during the month — an 18 percent gain over last year. The report said the Chinese accounted for half of all the global luxury products’ consumption during the period and remain far and away the largest luxury consumers in the world.
Such a huge share of the market may not be sustainable over the longer term, of course. Most luxury experts say Chinese consumers will account for about a third of the global market by 2015.
And the overseas spending will drive much of that growth. The Chinese are buying more luxury goods overseas primarily because they’re cheaper. The Chinese are also traeling more and they prefer buying luxury brands overseas because there is less likelihood of fakes (presumably they’re buying more on Fifth Avenue and the Champs Elysees than along Manhattan’s knock-off row, on Canal Street.)
Hong Kong, Taiwan and Macau are still the most popular markets for Chinese luxury shoppers but about one in five Chinese consumers are now buying luxury goods in Europe (mainly Paris) – a share that’s doubled over the past two years, according to reports from McKinsey & Co. and KPMG.
A smaller but growing share of Chinese consumers is buying goods in the U.S., including New York and Los Angeles, the reports show. According to the Shanghai Travelers’ Club, the Chinese luxury travel magazine for very affluent Chinese travelers, the average spending in New York City  for affluent Chinese tourists is between $15,000 and $50,000, mostly in jewelry and watches.  “This new generation of affluent Chinese customers has a purchasing behavior that has not been predicted by any traditional economic models, and the retail industry must innovate to attract these customers” said Pierre Gervois, Publisher of the Shanghai Travelers’ Club magazine. He added “Audemars Piguet, for instance, has worked with us to target specifically wealthy Chinese tourists in New York City, that is a smart move”
The high costs of luxury goods in China is due mainly to stiff government taxes, which can range between 20 percent and 70 percent on some luxury goods. A designer bag can cost 40 percent less in Paris, for instance, than in Shanghai. While the government may be considering a reduction in those taxes, a report from McKinsey called “Luxury Without Borders” predicts that the Chinese appetite for luxury abroad will continue.
“The price gap is likely to remain substantial in the next two to three years,” the report said, “and assuming it does, Chinese spending on luxury goods will grow about as fast overseas as it will domestically.”
McKinsey said the migration of Chinese luxury spending makes it even more important for luxury retailers to maintain a consistent image in China and abroad.
Marc-Andre Kamel, a retail and luxury expert at Bain & Co. said luxury companies are also installing special payment systems for Chinese consumers and adding more salespeople who speak Mandarin.
He cautioned, however, that the big flagship luxury stores in Paris and other Western cities need to be careful of the long lines and crowd problems associated with an influx of Chinese tourists.
“They need to be mindful of their other customers, as well,” he said.

Old stereotypes don’t work anymore for Chinese tourists in Europe

Europe enjoyed a good performance of its tourism industry in 2012 as total arrivals grew by 3.5% last year. “With 476 million international tourist arrivals, Europe is the world’s largest destination, representing a 50% market share worldwide. This share might slightly shrink due to the strong growth of arrivals to other continents-especially Asia. But we will still remain a dominant force in the years to come”, explained at an ITB Press Conference Eduardo Santander, Executive Director of the European Travel Commission.

ETC comprises 33 National Tourism Organisations in Europe comprising most of the continent’s largest countries except France, the UK and the Netherlands which recently left the Commission. ETC has been attributed with a budget of one million euro to muscle its presence abroad, especially to overseas countries. Its website “visiteurope.com” was recently revamped and a new campaign done in partnership with the European Commission was also launched. “Ready for Europe” which showcases the wide variety of Europe through its arts, architecture, nature and landscapes might however miss its target – at least in Asia- due to its vagueness.

“We might have to adjust the campaign for some markets such as Asia where we still need to better understand what are the expectation in terms of product and image when talking about Europe”, admited Eduardo Santander.

ETC’s new strategic campaign towards long-haul markets will target in priority four markets: Canada, the USA, Brazil and China.

China has been identified as one of Europe’s fastest growing market segments. A study was recently released over the Chinese Outbound Market, made in conjunction with the UNWTO. ETC looked also at the Chinese profile. A netnographic study -“the Mind of the Chinese Traveller”- analyzed Europe’s perception as well as Chinese travellers’ behaviour through the prism of blogs and social media.

A China Day conference was also organized last November in Copenhagen while a similar conference will be organized at the end of October in Beijing. “We now need to recognize the specific status of Chinese travellers across Europe. It means that we should add more signs in Chinese in international areas, have more Europeans trained to speak mandarin, identify Chinese restaurants in cities as a majority of Chinese look only for their own food and develop specific products. We still have a long way to go,” recognized ETC Executive Director.

“The Chinese travelers coming to Europe today are very different than the first Chinese independent leisure tourists that came five years ago” said Pierre Gervois, Publisher of the prestigious Shanghai Travelers’ Club magazine, a publication for Chinese High Net Worth Travelers. Mr Gervois Added “The old stereotypes about Chinese tourists are no more valid: they now want to stay in the best suites of Paris and London most prestigious hotels, and don’t want to hear anymore about budget hotels!”

The ETC and Tripadvisor signed also during ITB a cooperation agreement paving the way to promoting Europe around the world.

The U.S. and New Zealand, Favorite luxury travel destinations for affluent Chinese tourists.

The Shanghai Travelers‘ Club has the pleasure to announce the results of the Luxury Travel Awards 2013.
The results come after a vote by the 3,400 Chinese members of the Shanghai Travelers‘ Club, who distinguished the very best luxury hotels, travel agencies, destinations and luxury lifestyle experiences all over the World according to the taste of affluent Chinese outbound travelers.

Awards have been presented in three categories: World’s Best Luxury Travel Experiences, Asia-Pacific Best Luxury Travel Experiences and USA Best Luxury Travel Experiences.

New Zealand has been awarded the most coveted title of “ World’s Best Luxury Destination 2013”, as well as three other New Zealand winners: Auckland Airport (World’s Best Airport), Whare Kea Lodge (Best Asia-Pacific Boutique Hotel), and Millbrooks Golf resort (Best Asia-Pacific Golf Course).

The U.S. is also a very popular luxury travel destination for affluent Chinese tourists, who distinguished great luxury shopping experiences (South Coast Plaza, Best USA Luxury Shopping Mall), historical hotels (Waldorf-Astoria, Best USA hotel), luxury lifestyle exeriences (Crowds on Demand, World’s Best Luxury Lifestyle Experience), or travel agencies (Luxe Travel Hawaii, Best USA Luxury Travel Agency), to quote a few.

As said Pierre Gervois, President of the Shanghai Travelers‘ Club: “The new generation of affluent Chinese outbound travelers have demonstrated in their vote that they are now very mature and experienced World travelers, far from the clichés of the “Group tours”.”

Mr Gervois added: “It’s time for the luxury travel industry in Europe and in the United States to realize that their future Chinese guests are now no more looking for discounted trips, but expect a high quality of service in the very best hotels and luxury retailers. They enjoy travelling independently, making their own itineraries, and trying more sophisticated luxury lifestyle experiences.”

In 2013, Let’s re-think marketing to affluent Chinese outbound tourists

I want to thank you all for your active participation in our discussions and exchanges on this blog about how welcome better Chinese travelers. You’ll notice that I don’t say “Tourists”. I prefer to use the term “Travelers” as I think it better descibes the level of maturity and sophistication reached by Chinese outbound travelers. The time of cheap “Group tours” is now over for Chinese travelers:It’s time for hospitality and travel industries in the United States, Europe and Asia-pacific to re-think the way they are promoting their hotels and destination management companies’ services in China. More focus on quality and genuine VIP welcome, less focus on discounts and entry-level services. The 2013 Chinese traveler now wants the exact same level of service that European and American travelers. It’s time for all of us to understand this and act accordingly for the marketing and Public Relations campaigns intended for a Chinese audience: Better contents, better design, more interaction on Chinese outbound travel social media networks and a more accurate advertisement strategy with specialized Chinese luxury travel magazines. Four pounds glossy paper Chinese luxury lifestyle magazines are perfect to promote watches and jewelry brands in China, but are not very effective to promote outbound travel destinations. The new generation of digital Chinese luxury outbound travel magazines are far more effective to reach the specific audience of affluent Chinese outbound travelers. We’ll talk a lot about these new exciting magazines in 2013!

Have a great 2013 year with more Chinese guests.

Pierre Gervois

CEO

China Elite Focus Ltd.

Pierre Gervois, the leading expert on marketing to Chinese inbound tourists in the U.S. will be in New York on Oct 18, 2012 for meetings with travel and tourism industry professionals.