Chinese travelers come to the U.S. for sightseeing, but also (discreetly) to buy properties

CHinese woman at home - China elite focusThe number of Chinese tourists traveling the globe has increased significantly for the last ten years, making them the largest group of travelers in the world. Now, thanks in part to a recent agreement between the U.S. and China to extend visas for short-term business travelers, tourists and students, the U.S. could see an increase in Chinese travelers in the near future.

This trend is supported by research from the latest Chinese International Travel Monitor (CITM) from Hotels.com which reveals the U.S. is the second most popular destination for Chinese travelers to visit in the next 12 months (behind France), with popular U.S. landmarks like the Grand Canyon and the Statue of Liberty topping travel wish lists.
The CITM research also identifies that, while cities in Asia Pacific remain the most popular (82 percent of Chinese travelers have visited in the past 12 months), visitors to Europe and America have increased with a year over year growth of 25 percent and 11 percent, respectively. These destinations were particularly popular with millennial travelers, with 42 percent visiting Europe and 29 percent visiting America in the past 12 months.

“The CITM reveals that the United States is one of the top five countries Chinese travelers visit the most,” said Josh Belkin, vice president and GM of the Hotels.com brand. “With tens of thousands of places to stay across the U.S., like distinctive boutiques, spacious vacation rentals and familiar chains, our site and mobile app have the perfect places for Chinese travelers of all ages and lifestyles.”

In 2016, there were 122 million outbound Chinese tourists – four percent more than in 2015 and a massive 74 percent more than in 2011, when the first CITM was published. China is already the largest source of international travelers for many countries – despite the fact only 10 percent of the population had passports in 2016.

“Chinese travelers in the United States tend to be more affluent than those who choose other destinations”, said Pierre Gervois, CEO of China Elite Focus Magazines LLC and Founder of the STC magazine, a luxury travel digital publication in Chinese Mandarin. “Real Estate investment in the United States is now the #1 real reason – and rarely stated in surveys – for affluent and wealthy Chinese outbound travelers, as they have acquired for $100 billion in U.S. Real Estate in 2016”

Source: CITM, hotels.com, STC magazine

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Pierre Gervois: “Chinese Millennial Tourists in the U.S. might prefer to read travel-related content in English”

Chinese Millennial tourist - Gervois magazineThey speak English now (Just in case you didn’t notice).

They are the millennial Chinese travelers in the United States.

They are the Chinese tourists coming to discover the United States of America and to buy high quality Made in USA products.

They are the Chinese businessmen and businesswomen coming to invest in American companies and create U.S. jobs.

They are the smart Chinese millennial entrepreneurs coming to America to create start ups and contribute to America’s leadership in future technologies.

They are the Chinese guests fed up to be disrespected in luxury hotels when asking if they really can afford to pay for a suite when they ask for one and are offered first the cheapest room available.

They are the Chinese businessmen walking into a bespoke suit company in New York City and asking for a hand made in America suit because they also deserve to wear the finest clothes. (No, they are not only interested in “I Love NY” Made in China T-shirts)

They are the Chinese travelers annoyed to be depicted by U.S. marketing agencies as using only Chinese social media networks such as Weibo and WeChat, when they are actually using Instagram, Twitter and Facebook to stay in touch with their U.S. friends and freely discover the world.

They are the tourists who have spent $40Billion in the U.S. in 2016

They are the LGBTQ+ Chinese travelers wanting to be as respected as any other tourist and find safe places to just be who they are.

They are the Chinese shoppers who find utterly ridiculous when Western luxury brands add a dragon or a Chinese symbol on a watch or a handbag and expect that they’ll specifically want to buy this model.

They are the Chinese tourists who are grateful for the warm welcome they have received by American people when they were doing horseback riding or cowboy shooting. (Yes, they are not only obsessed by shopping in large shopping malls but want to discover the various aspects of America’s culture and heritage).

They are the Chinese travelers who are proud of their Chinese cultural heritage and Chinese language, but who also speak English and prefer to read in English original stories about the United States.

They are the Chinese travelers who are fluent in English and understand exactly what some people say about them when they are traveling overseas.

Actually, they are exactly the same as any other traveler in America.

By Pierre Gervois, Founder of Gervois Hotel Rating, Publisher of Gervois Magazine, Hospitality & tourism keynote speaker and expert about marketing to outbound Chinese tourists.

 

U.S. Retailers now more widely accept WeChat Pay and Alipay, China’s leading mobile payment solutions

WeChatPay - China Elite FocusCitcon, the integrated payment and marketing platform, announced a strategic partnership to enable brands in North America to accept WeChat Pay and Alipay.

WeChat Pay and Alipay are the most popular and convenient payment options for Chinese consumers to purchase goods and services. Adding these payment options to retail point of sale allows brands to now tap into an even larger revenue stream from Chinese consumers who are the largest spender, and fastest growing traveler segment to the North America. The platform enables brands to optimize revenue growth without the costs and hassles of establishing a business entity in China.

WeChat Pay is a fully integrated payment solution within WeChat, the world’s most popular mobile social communications service with 936 million active users and Alipay is a super lifestyle app run by Ant Financial Services Group with more than 450 million active users. Together these platforms jointly account for 90% of China’s mobile payment market share. Both super apps allow users to book a trip, hail a taxi, order food, purchase movie tickets, pay for water and electricity bills, manage investments, perform transactions on e-commerce websites and more to create a cashless society.

“China is changing fast. Mobile payment is the new frontier of commerce and China is leading this trend. By providing an integrated and easy-to-use payment solution, Citcon is creating a future that takes payment and marketing to the next level, empowering global merchants to drive business growth with millions of Chinese consumers.”said Chuck Huang, Founder and CEO of Citcon

As the first payment partner of WeChat Pay and Alipay, in addition to major credit cards such as UnionPay, MasterCard, Visa, Discover and American Express, Citcon is a one-stop shop for merchants to connect with Chinese consumers and accept payments anywhere. Citcon’s stand-alone mobile point-of-sale (mPOS), easy-to-integrate API and software products empower merchants to optimize growth both online and offline, with an easy and affordable rate compared to credit card processing. In addition to the convenient payment solutions, merchants will also be able to gain in-depth consumer behavior insights, manage business performance, run marketing campaigns, guides users to merchants stores while saving their shopping preferences for future visits and manage lifetime customer loyalty programs.

“Accepting WeChat Pay is a smart move for U.S. Retailers. That will definitely help with the category of budget-conscious Chinese travelers who choose to travel in groups. But they must keep in mind that the most affluent categories prefer to pay with their international credit cards, who show their status when traveling overseas and offer more perks in terms of miles and reward points.” commented Pierre Gervois, CEO of China Elite Focus Magazines LLC, a media group specialized in luxury travel publications for very affluent Chinese outbound travelers.

Source: Citcon

Wealthy Chinese travelers favor boutique hotels when traveling overseas

STC Display 2016Among the biggest trends among China’s luxury travelers is the growing popularity of boutique hotels, according to the ILTM Asia event in Shanghai.
With 60 percent of High Net Worth Individuals (HNWIs) reporting that they spend over 3,000 RMB (US$441) per night when they stay at hotels, the future looks bright for luxury hotels catering to China’s growing number of high-end travelers. While large luxury chain hotels remain dominant on the list of HNWIs’ preferred accommodation providers, the report finds that HNWIs now increasingly favor boutique hotels—a clear significant shift from the trend just a few years ago.
For wealthy Chinese travelers, The Ritz-Carlton was the most popular hotel group in 2016, followed by the Banyan Tree, the Four Seasons, Mandarin Oriental, Fairmont and the Peninsula. The luxury boutique hotel group Aman also broke into the top 10, and Chinese HNWIs’ favorite boutique hotel brand, Banyan Tree, keeps climbing on the list of hotel brands preferred among luxury travelers. Hilton, while not topping the overall list, still remains the preferred business hotel for survey respondents. Ritz-Carlton, which tops the list, also has the by far most popular membership scheme among overall luxury travelers and millennial luxury travelers alike at 33 percent and 31 percent membership rates respectively. In comparison to airline membership schemes, hotel membership rates remain low among China’s wealthy. Nevertheless, Ritz-Carlton’s jump in membership rates by 19 percent compared to the year prior indicates that there is substantial interest in membership schemes among luxury travelers given the right incentives.

Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre GervoisAccording to Pierre Gervois, Expert in marketing to affluent Chinese outbound travelers and Publisher of the prestigious STC magazine, “High Net Worth Chinese outbound travelers’ behavior pattern is now exactly the same as other HNWI travelers from the U.S. and Europe. They want sophistication, exclusivity, and experiences that money only can’t buy”
Among the biggest trends among China’s luxury travelers is the growing popularity of boutique hotels. With 60 percent of High Net Worth Individuals (HNWIs) reporting that they spend over 3,000 RMB (US$441) per night when they stay at hotels, the future looks bright for luxury hotels catering to China’s growing number of high-end travelers. While large luxury chain hotels remain dominant on the list of HNWIs’ preferred accommodation providers, the report finds that HNWIs now increasingly favor boutique hotels—a clear significant shift from the trend just a few years ago.
For wealthy Chinese travelers, The Ritz-Carlton was the most popular hotel group in 2016, followed by the Banyan Tree, the Four Seasons, Mandarin Oriental, Fairmont and the Peninsula. The luxury boutique hotel group Aman also broke into the top 10, and Chinese HNWIs’ favorite boutique hotel brand, Banyan Tree, keeps climbing on the list of hotel brands preferred among luxury travelers. Hilton, while not topping the overall list, still remains the preferred business hotel for survey respondents. Ritz-Carlton, which tops the list, also has the by far most popular membership scheme among overall luxury travelers and millennial luxury travelers alike at 33 percent and 31 percent membership rates respectively. In comparison to airline membership schemes, hotel membership rates remain low among China’s wealthy. Nevertheless, Ritz-Carlton’s jump in membership rates by 19 percent compared to the year prior indicates that there is substantial interest in membership schemes among luxury travelers given the right incentives.

While authentic and unique experiences are highly sought after by China’s luxury travelers, the same applies to a much lesser degree in terms of accommodation. Only 25 percent of HNWIs interviewed for the report had even considered Airbnb-style accommodation options, and instead preferred private boutique hotels and yachts when considering options other than brand hotels. In fact, only 30 percent of respondents said that they have the impression that Airbnb-style rentals allow them to better experience local life—arguably defeating the purpose of rentals for travelers that put little importance on cost-effectiveness. “I think that in a close future the category of luxury Airbnb’s will attract the youngest generation of Chinese HNWI. Now is the right time for Airbnb owners to promote themselves in China”, Pierre Gervois added.
Instead, boutique hotels seem well-positioned to benefit from Chinese HNWIs’ lust for authentic and unique travel experiences. With accommodation cost of little concern for these travelers, boutique hotels certainly have an exciting future ahead of them in China’s luxury travel market.

Source: ILTM Asia / Skift / Jing Daily / Ritz Carlton

U.S. Retail brands too much focused on Chinese Mobile payment systems and forget to create an emotional connection with affluent Chinese millennial travelers

The growing purchasing power of affluent Chinese travelers is making it more important than ever for luxury brands to adopt marketing strategies to target them. With Chinese third-party mobile payment systems like Alipay and WeChat Pay beginning to set up shop in popular global tourist destinations, catering to this traveling consumer is becoming easier to do, but it’s not a brand’s only option.

Digital intelligence firm L2’s recent report “Cross-Border and Travel Retail: Connecting Digitally with China’s Shoppers” discusses ways brands can be targeting consumers online both during their journey overseas and before they set off.

“[Luxury brands] are under-serving the traveling Chinese consumer, whether it’s through their own brand site and its functionality and capability, their WeChat acShanghai Travelers Club - Bloomingdale's - Jacky interviewcount, or from leveraging things like WeChat Pay and Alipay,” said Danielle Bailey, head of Asia Pacific Research at L2. “It’s a huge missed opportunity for them to not engage on these platforms that Chinese consumers are using all the time. Their phone is their number one travel accessory.”

Brands that do engage consumers digitally abroad with an omnichannel approach are using platforms like Alipay’s “Overseas Travel Channel (支付宝境外游)” to give travelers exclusive gifts, better exchange rates, or let them find deals near where they’re going, all within the app on their mobile device. WeChat’s website within an app feature gives consumers the opportunity to reserve a product online to pick up in a store and access store locators in their own language that they can hand to a taxi driver en route.
But about half of Chinese travelers are doing research on what they want to buy abroad before they leave, and luxury brands have been adopting strategies to target these consumers, according to L2.

In a dissent opinion, Pierre Gervois, Publisher of the STC magazine, a digital travel media in Chinese Mandarin, said “The most important for retailers is not the way Chinese shoppers are going to pay. It’s a technicality. Chinese Customers who want to make a purchase have plenty of options: Cash, credit Cards or WeChat Pay.  The really important thing to do is to convince them to choose a particular retailer”
“Too oftenly, we see U.S. retailers being obsessed by Chinese mobile payment systems when their strategy should be focused on branding their image to Chinese millennial travelers, and create an emotional connection with their future customers, based on their brand values”, Gervois added.

A good starting point is to provide an international store locator on their official online store in China, a strategy about 72 percent of brands employ. However, brands can also take it a step further by adding a Chinese-language travel retail site that let shoppers research the products, compare prices, read reviews, view maps that direct them to duty free shops, and even let them purchase the product online in advance so that they can simply pick it up at the airport if they’re in a hurry.
To help consumers find these pages, brands are paying for search term generated Baidu ads. L2 lists the efforts of beauty brands as an example—many brands pay for cosmetics-related key words, while others, like Lancôme, are taking a more travel-centric approach, targeting consumers researching phrases like “South Korean vacationSTC Bloomingdales 05.”

Some high end retailers, such as Bloomingdale’s, choose a more qualitative approach, and advertise in luxury digital travel publications about the U.S., like the STC magazine, available for mobile but also in digital inflight entertainment.

While maintaining an engaging physical presence in airports and shopping malls is always important for marketing to the Chinese shopper abroad, brands that understand how to make the most of China’s digital sphere are likely going to more efficiently connect with Chinese travelers who are in the process of creating their luxury goods shopping list for their next overseas vacation.

Source: Jing Daily / Skift

Kering Group is struggling with Chinese consumers

Kering, the French luxury group, is adapting its sales approach to better cater for increasingly sophisticated Chinese customers, according to group managing director Jean-François Palus.
“We’ve changed the way we conduct our business in China and the way we address Chinese clients when they’re abroad,” said Mr Palus at the Financial Times luxury conference in Lisbon on Tuesday.
“We learnt that a very serious risk is to become complacent, to think that it’s an easy business, an easy customer base, easy to open stores with good products and then people will come in. That was true for a moment but Chinese customers have become sophisticated and highly demanding and we need to adapt.”
Chinese consumers account for more than 30 per cent of global luxury consumption, according to consultant Bain, which is forecast to increase to 35 per cent by 2020.
How much of global luxury consumption Chinese consumers account for, according to Bain, a figured set to rise to 35% by 2020
In the past, luxury houses relied on rapidly opening up stores in China to fuel growth amid rampant Asian demand for their products, but this approach has been undermined by an economic slowdown in China.
In the final quarter of last year, Chinese consumers showed signs of returning, although notably shopping more in mainland China, while tourism in Europe has slowed in part owing to recent terrorist attacks.
In China, Kering is retraining shop assistants and replacing email communication with WeChat, China’s most popular social media platform with more than 800m daily users.
Mr Palus said: “The way the Chinese treat very important clients is different — they have a very candid approach to wealth.”
He pointed to a recent visit to a Gucci store in Beijing where the store manager told him he had hired the daughter of a billionaire to work with clients in the shop “because to talk to wealthy people in China, you need to be wealthy”. He added that bad feng shui in a shop can hurt client traffic.
According to Pierre Gervois, the Founder and Publisher of the STC magazine, a luxury travel publication for High Net Worth Chinese global travelers “HNWI Chinese clearly signaled about  five years ago that they wanted to purchase luxury goods outside China, to enjoy the full experience of the iconic flagship stores in London, Paris or New York”
“This new trend has not been immediately recognized by luxury conglomerates such as LVMH and Kering, that led to an inflation of store openings in China in the years 2010/2015, with little customer traffic, insufficient staff training, and in some cases damaging consequences in terms of brand image.”, Mr Gervois added.
Kering posted a 31.2 per cent rise in revenues to €3.57bn in the first three months of 2017, lifted by a 34 per cent jump in sales from luxury activities.
Among its brands, Gucci led the way, posting record revenue growth of 51.4 per cent for the three months — the latest sign of improvement under creative director Alessandro Michele. Other Kering brands such as Brioni and Bottega Veneta were doing less well than the likes of Saint Laurent.
Mr Palus said: “The market has become more difficult and the pace of growth has slowed down. In this environment you need to take market share from the competition.”
Kering was not looking at acquisitions, added Mr Palus. “We have so much on our plate with helping our existing brands tap their potential . . . we don’t have enough time to think about M&A.”
He said that Kering was also still adapting to digital platforms. “We need to open ourselves to what’s happening in other industries and other countries. Our industry needs to become less product-centric and become more customer-centric.”

Source: The Financial Times.

Europe Bets Big on Chinese Tourism but should leave to the States their marketing strategy

Chinese family - China Elite FocusIn a press event hosted by upcoming travel trade fair ITB China and its Chinese joint venture partner TravelDaily China, Europe laid out its plans for greater efforts to boost tourism between China and the EU.

Eduardo Santander, executive director of the European Travel Commission (ETC)—which represents European national tourism organizations—said that the European Commission is making huge investments in the 2018 EU-China Tourism Year. Santander argued that Europe as already reached the “awareness phase” in the Chinese market, and that the challenge now is to enhance Chinese consumers’ understanding of Europe as a destination. Santander also emphasized that Europe needs to understand the Chinese market better, and to look beyond the large cities in East China.

Even though the EU-China Tourism Year still lies a year into the future, efforts are being made to enhance the promotion of Europe as a destination already in 2017. ITB China, the Chinese counterpart of ITB Berlin—the world’s largest tourism fair—is hosting Visit Europe as its official partner destination for the inaugural event in May 2017, and outlined further collaboration during the tourism year in 2018.

The European Commission has also invested in what is called the World Bridge Tourism initiative; an EU initiative carried out by the ETC and the European Tourism Association (ETOA) that aims to grow the number of Chinese visitors to Europe by encouraging stronger business ties between European and Chinese tourism businesses. The initiative includes a conference as well as business workshops that bring European tourism suppliers and Chinese tour operators together, first for two days in Shanghai in conjunction with the ITB China fair, and later in the fall of 2017, doing a similar round of events on European soil. According to Tom Jenkins, CEO of ETOA, both events will host 150 European tourism suppliers and 100 Chinese tourism buyers. It was also announced that the EU had granted additional funding to carry out tourism workshops in both China and the EU to strengthen tourism ties further. The European Commission, which created the initial outline for the project, as well as funds the project, was also represented at the press event, briefly emphasizing the importance of Chinese tourism to Europe as a region.

But industry experts have a more cautious approach, like Pierre Gervois, Expert in marketing to Chinese outbound tourists, who declared “Europe in itself does not mean a lot for Chinese travelers. A coherent marketing approach should be done at country level, as each European country is so different, with different languages and cultures, promoting at the same time 28 very different countries is a waste of the European’s taxpayers money”

“European countries should promote themselves using their unique cultures.  For a Chinese traveler, you don’t dream on a trip to Europe, but to a trip to Italy and a trip to France, for example”, Mr Gervois added.

While strengthening the European tourism businesses with the help of Chinese tourism is a clear goal of both the World Bridge Tourism initiative and the 2018 EU-China Tourism Year, Santander also underlined that the designated tourism year “goes beyond tourism,” emphasizing the importance of more people-to-people interactions to reduce existing “misunderstandings” between Chinese and European people.

The event also hosted speakers from some of China’s largest tourism companies, including representatives from Jin Jiang Hotels, Ctrip, and Tuniu—all outlining their ambitions for future growth. Jin Jiang, which acquired Europe’s second-largest budget hotel chain, Groupe De Louvre, back in 2015 also has to ambition to expand in the European luxury hotel market. Ctrip, meanwhile, acquired Scotland-based Skyscanner to strengthen its position in the European market late last year. Tuniu, meanwhile, has partnered with ITB China and promises to send a large number of its buyers to the May event—where 40 percent of exhibitors represent European destinations and tourism businesses. While Europe may be looking to China for future tourism growth, it seems like large Chinese tourism businesses are looking to Europe for their own global expansions.

Sources: Jing Daily / ITB / European Travel Commission / ETOA