Hurun Report has cooperated with ILTM Asia to publish The Chinese Luxury Traveler 2013. This report attempts to calculate the number of Chinese luxury travelers, evaluates their consumption patterns, travel habits as well as key market trends over the last year. In addition, this report analyses the purchase of luxury products and examines the impact of Chinese wealth overseas.
Chinese luxury travelers are going overseas less, down to an average 2.8 trips a year. The frequency of travel is slightly higher in First Tier Cities. The internet and magazines are the main sources of information when deciding travel destinations. Chinese luxury travelers are going overseas in smaller groups, most often in a group of three to ten people. Expenditure on hotel rooms is higher than the global average and Chinese tourists are the largest travelling nationality in the world for the third year running – and have widened the gap with second place.
Alison Gilmore, Event Director, ILTM Portfolio, said: “ILTM events are trade-only hubs created exclusively to develop the business of bespoke luxury travel. Agents and buyers attending ILTM Asia from across the region will have the opportunity to ensure they’re ahead of the game in meeting their clients’ increasing demands during three days of face to face pre-scheduled appointme nts, educational seminars and business networking.”.
Pierre Gervois, CEO of China Elite Focus and Publisher of the Shanghai Travelers’ Club magazine said “The new generation of luxury Chinese travelers is changing the game in the luxury hospitality industry. They are now very experienced international travelers, with the most important purchasing power compared with any other nationality. Influencing their choices of hotel brands and destinations is critical for luxury travel and tourism marketing executives.”.
According to statistics provided by the National Tourism Administration, the number of Chinese outbound tourists in 2012 was a staggering 83 million, an increase of 18.4% year on year. China’s outbound tourism market is now larger than that of Germany and the United States, putting it firmly on the map as the world’s largest outbound tourism market. It is expected that China’s outbound market will continue to grow throughout 2013 with numbers reaching 94 million, which translates to a year on year rise of 15%. A key reason for the increase in the number of luxury travelers is the increase in Chinese HNWIs. At present, there are 2.8 million US$ millionaires in China, a year on year increase of 4%.
One hundred HNWIs were asked about their travel habits from the period of March and April 2013. Most of those surveyed are from Shanghai and Beijing, with 80% being male and an average age of 37 years. Data collected also includes B2B data through investigating domestic travel agencies and international hotels from ILTM’s database.
The Decision Making Process The internet and magazines are the most important media channels for seeking out travel information. 60% of HNWIs will make the decision themselves, usually traveling with family or friends for the purpose of sightseeing, but increasingly for business. The most important factor when choosing a hotel is the location and brand.
Bookings are made by the HNWIs themselves or by a family member and the logistics are taken care of by an assistant through third party online booking sites. Business travel is mainly scheduled through local business partners.
Destination Inspiration: Internet and magazines main channels
83% on the internet every day
91% are in the habit of reading monthly magazines
Travel Formulation Trends
Destination decision:Themselves 60%
Travel companions:Family 40%;Friends 20%
Travel Purpose:Sightseeing 45%;Business 43%
Hotel selection:Location 61%;Brand 58%
Hotel bookings: HNWIs themselves 38%;Secretary/assistants 30%
Personal travel hotel booking:Third party online booking sites 22%
Business travel hotel booking:Local business partners 24%
Although Spring Festival and the October holiday are still popular travel times, there is not one particular time when Chinese HNWIs do most of their traveling; rather they tend to stagger their trips in order to avoid peak periods.
Most package tours last for 9.8 days on average and most consist of between three to ten travelers (53%). 43% of travel groups contain over ten individuals. Trips overseas last for an average of 7.4 days with 63% in the five to eight day travel time bracket. On each overseas trip, Chinese travelers visit one or two countries and the preferred destination is France, followed by the US. Family, friends, and the entrepreneurs themselves control the booking process. The deciding travel factors are shopping, culture, cuisine, and finally business potential. 43% of Chinese travelers spend over US$5,000 (excluding flights) per trip, and 11% of them spend over US$10,000.
Tour group sizes are generally smaller for luxury travelers who are spending over US$10,000 (excluding flights). On average there are 7.1 people per group and only 16% of tour groups are larger than ten travelers. For big spending travelers, trips are usually longer, all over five days and half over eight days, with the average trip time being 9.6 days. Most fly business class and inChina prefer Air China and internationally Singapore Airlines. Their preferred destination is France, followed by Switzerland. Most travel with family but also with alumni associations and private clubs.
The number of Chinese travelers making international trips was up by a strong 22 per cent in 2011, compared to 2010, and experts predict China is on track to overtake Germany and the US as the world’s largest outbound tourism market in the next few years.
The inaugural Chinese International Travel Monitor (CITM) from Hotels.com, one of the world’s leading online hotel booking websites, gives an insight into how the rise of the Chinese traveller is changing the dynamics of the global hotel market.
Johan Svanstrom, Managing Director of Hotels.com Asia Pacific, commented: “The Chinese made a staggering 70 million international trips in 2011 and, while many of these were to Hong Kong and Macau, the number going further afield is growing significantly. Implementing strategies to cater specifically to this burgeoning source market is moving from a nice-to-have to a competitive necessity.”
Surveying more than 5,000 Hotels.com’s hotel partners around the world, the report found the majority of respondents envisage the boom in outbound Chinese travel continuing. One in five (22%) expect to see an increase of as much as 40%. Many national governments are facilitating the boom by relaxing visa requirements. Japan and Spain are examples of popular tourism markets that have already done this and Korea, amongst others, will implement similar changes later this year. Chinese international travelers are known to spend significant amounts on shopping and there is a clear opportunity for the hotel industry to grab a share of that spend for the stay experience itself.
The study found that the profile of Chinese guests is changing as they become increasingly more independent, confident, younger and more familiar with foreign cultures and customs.
According to Pierre Gervois, author of the Best Selling book How U.S. Retail, Travel and Hospitality Industries Can Attract Affluent Chinese Tourists, “Chinese outbound tourists are now extremely mature consumers, and know what they want – and do not want. The time of low cost group tours is now definitely over as they want a true travel experience, specifically in the United States, the #1 dream destination according to China Elite Focus’ survey”
Among hoteliers polled, it is clear that many are starting to adapt, offering Mandarin-speaking staff, translated materials, Chinese menus, entertainment options and the China UnionPay card services for payments. Examples from the study found that 41% of hotel respondents are planning to offer Chinese TV channels, while 66% of European hotel respondents are planning to offer Chinese breakfast options.
The Chinese economy continues to grow at a fast rate, contributing to the build-up of a travelling middle class of several hundred million people. With the the ongoing economic uncertainty in key markets, catering to Chinese travellers should be high on the list of priorities.
“Hoteliers should form concrete plans in two areas. Firstly, develop marketing strategies to reach the Chinese source market; concentrating on online as the Chinese internet population has now crossed the 500 million mark. Secondly, adapt hotel property services to cater to the expectation and needs of this growing audience,” concluded Svanstrom.
Source: Travel Daily News, August 2012
Visiting tourism experts from Asia are urging New Zealand to focus on attracting high-end Chinese travellers through premium marketing and by gaining a better understanding of the market’s potential – forecast to reach 80 million outbound travellers by 2013.
Supporting this view is Auckland Airport with the launch of a highly-targeted premium programme as part of its Ambition 2020 initiative outlined last week, which aims to showcase “luxury New Zealand” to young wealthy Chinese. The airport has also launched complimentary three-day “China Ready” workshops designed to help tourism businesses learn more about marketing to and servicing Chinese travellers.
Speaking at TRENZ as part of the Auckland Airport International Speaker Series and as a partner in the Airport’s premium programme, Pierre Gervois, CEO of China Elite Focus, provided conference delegates with insights into targeting the new generation of affluent Chinese.
“Chinese people love to travel, and given China’s location in the world they have unlimited holiday options to choose from. New Zealand is a similar flying time to other must-see destinations such as London, Paris, New York and Las Vegas. That said, only a relatively small number of Chinese can afford a long-haul holiday, and those that can demand luxury over camping and outdoors holidays.”
“To compete, New Zealand needs to be less shy about marketing its premium offer and dare to sell to this affluent audience. The super wealthy in China – about 0.5 per cent of the population – would only consider a minimum $US50,000 a week holiday package or it’s not of the right value for them,” he says.
Through his company China Elite Focus, Mr Gervois and Auckland Airport’s promotion of luxury tourism in New Zealand to affluent Chinese travellers uses premium marketing and targeted social media to reach this extremely discerning audience.
“Luxury New Zealand is a highly-targeted initiative designed to reach Chinese travellers interested in New Zealand and luxury travel. Predicated heavily on social media, Luxury New Zealand was able to tap into an exclusive invitation-only network of very wealthy young Chinese. Since launching in May 2011 the feedback has been positive with many I’ve spoken to pleasantly surprised to learn New Zealand is a luxury destination, not just a family-orientated place, good for camping, biking and so on.”
Also speaking at TRENZ was Trevor Lee of TravConsult, specialists in international customer service and tourism development who are also running the China Ready workshops for Auckland Airport. Mr Lee says New Zealand, like many markets, needs to better understand what Chinese are looking for when they travel.
“There are more than one million millionaires in China and another 60,000 Chinese who are classified as ‘super-rich’, with more than $15 million dollars’ worth of assets to their names. These people expect a level of service and product quality when they travel. Our advice to New Zealand tourism businesses is to invest what you can now to enrich your offer to suit Asian markets including accommodating multiple languages and different cultures.”
“Not all Chinese travellers are the same but their language is by-in-large universal. Where possible, ensure your product can communicate with them from basic translated factsheets to multi-language audio guides and personal translators. A Chinese traveller isn’t going to truly appreciate an $800 scenic helicopter trip if they can’t understand what they are seeing or experiencing,” says Mr Lee.
Auckland Airport has some ambitious targets to significantly grow the value New Zealand sees from Chinese travellers as part of its Ambition 2020 initiative.
The Airport believes by 2020 Asia, especially China, will provide the largest growth potential both in visitor arrivals and in the amount they spend when they’re here. Asia could provide $2.9 billion of the projected $8.5 billion in inbound tourism value by 2020, with China providing the lion’s share at $1.5 billion.
Glenn Wedlock, Auckland Airport General Manager Aeronautical Commercial, says China is a vital market for New Zealand with annual growth of about 20 per cent likely.
“Auckland Airport has a number of initiatives in place to promote New Zealand to Chinese travellers including the Luxury New Zealand initiative, as well as our work in growing air links with China. We are also investing in helping the industry become better equipped to market to and service the Chinese traveller through the launch of our market intelligence workshops.”