Book your holiday now, before a wave of 174 million Chinese tourists snap up the best bargains.
Already the most prolific spenders globally, the number of Chinese outbound tourists is tipped to soar further as the millennial generation spreads its wings.
Here are the numbers: 174 million Chinese tourists are tipped to spend $264 billion by 2019 compared with the 109 million who spent $164 billion in 2014, according to a new analysis by Bank of America Merrill Lynch. To put that in perspective, there were just 10 million Chinese outbound tourists in 2000.
“China-mania spread globally in the past few years, akin to when the Japanese started travelling some 30 years ago, when the world went into frenzy then, pandering to Japanese customers’ needs,” the analysts wrote. “In our view, this is going to be bigger and will last longer given China’s population of 1.3 billion vs Japan’s population of 127 million.”
Millennials, or 25- to 34- year olds, are expected to make up the bulk of Chinese tourists at 35% of the total, followed by 15- to 24- year olds accounting for around 27%.
“Chinese travelers now massively prefer to shop overseas. Buying a luxury product in Mainland China is seen as “Uncool” and shows that you can’t afford to travel to New York city, Paris or London to buy at the original brand ‘s flagship store” says Pierre Gervois, Publisher of the New York City based Shanghai Travelers’ Club magazine.
Only about 5% of China’s 1.3 billion populace are thought to hold passports, meaning the potential for outbound tourism is vast.
The projected boom could be good news for the global economy. The Chinese are the world’s biggest consumers of luxury goods, with half of that spending done overseas. Chinese visitors to the U.S. have risen more than 10% since 2009, the fastest pace for a destination outside of Asia. Australia, France and Italy are also popular.
Asian markets stand to benefit, with the biggest uptick tipped for Japan, South Korea and Southeast Asia, according to the research led by Billy Ng in Hong Kong.
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 stereotypical image of Chinese tourists abroad is of large tour groups following a guide with a red flag through sightseeing spots and shopping malls.
But all that could be about to change, as the country’s leading travel agencies attempt to replace traditional tour packages with high-end experiences.
China Travel Service, a big player in the travel industry, has announced it will cooperate with vacation resorts in South Korea to provide packages that appeal to well-off families, eco-golfers and winter sports enthusiasts.
“Getting in and out of a tour bus at tourist spots and being in a rush is no longer working with outbound tourists,” said Zhang Ping, president of CTS. “We have to move upstream in quality and create tourism products tailored to the demands of individuals and that give people more freedom for unique experiences.”
The company says its cooperation with South Korea’s GB Networks, an agency that provides travel services to 14 resorts, will give Chinese tourists access to large-scale ski resorts, golf courses, water parks, hotels and convention centers.
Jin Chengxiu, director of the CTS’ branch in Seoul, said it was the first time a Chinese travel agency has attempted to tap into the South Korean resort market, which currently attracts a large number of Korean and international tourists, but few Chinese.
“Most resorts are in northern Gangwon Province, which has a smooth, sandy coastline and is known as the epicenter of winter sports in Korea,” he said. “Chinese tourists, especially those traveling with their families or for business conventions, can spend several days and nights in one place relaxing.”
The province is also the site of the 2018 Pyeongchang Winter Olympic Games, and authorities expect to draw 10,000 tourists from China each year in the lead-up to the event.
According to Zhang, Chinese tour agencies are making bold attempts to offer a variety of high-end tourism packages to cater for a booming market demand.
“Some remote but captivating destinations that were believed to be too expensive for Chinese tourists are becoming more popular,” said Zhang, adding that the agency has organized trips to Seychelles in the Indian Ocean with chartered flights this year. “Because the number of Chinese outbound tourists is increasing, the prices of hotels and airline tickets are getting lower, which can cut the price for outbound travel.
“Amid the economic downturn, people are more likely to spend money on tourism to relieve stress. The industry is now also promoted by the Chinese government as a way to stimulate consumption.”
According to the National Tourism Administration, 38 million Chinese tourists traveled overseas in the first half of this year, up 18 percent from the same period last year.
After Japan, China is South Korea’s second largest source of inbound tourists. A new visa policy will come into effect next month, loosening restrictions on Chinese tourists in a bid to promote tourism.
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