Review: Taking Off Travel and Tourism in China and Beyond
Jason Toussaint L'Ouvertur
Entrepreneur, Visionary, Food Style Consultant, Travel Consultant
Introduction China’s travel market has increased very much in the past years. Travel within China is where most Chinese travelers spend their holidays and their money, and is projected to grow by 16% per year. In a survey made by the Boston Consulting Group (BCG), in 2010, they found an increasing demand for travel in China, and also a lack of quality offerings to Chinese travelers. This can become an opportunity to starting travel companies to take advantage in this growing market. Chinese tourists are desperately seeking for brands and companies that know what their needs are, and can develop products that suits better their wants and needs.
Travel within China Most Chinese travelers’ aim is to visit friends and family within China. Some Chinese from urban zones and large cities are more used to travel for leisure, but less than 1/3 spends the night away from their home. It is expected the market of leisure travel’s value to more than quadruple by 2020, and the demand for accommodations to double.
There are also some Chinese that travel for business, it is a smaller percentage, but their expenditure is higher. Anyhow, this type of travel in China is not expected to grow for the next decade.
International Travel Chinese travelers are not used to travel offshore, this market is still initiating. Although it is expected to grow by 17% per year for the next ten years. This growth in international travel is due to higher incomes and aspirations of Chinese population. More than two thirds of international travel from China is to Hong Kong and Macau, but more tourists are becoming curious on other parts of Asia, and even more distant destinations. Chinese international travel will increase in the next years, being an opportunity for travel businesses to provide these travelers new destinations and packages. BCG calculates that by 2020, “25 of international travelers arriving to Japan and South Korea will come from China, while arrivals in Europe from China will quadruple”. China is about to become one of the biggest sources of travel market growth in Europe. “In North America, travelers from China will rank third in number after travelers from the UK and Japan”.
Profile of Chinese Travelers 1. First-time travelers: An average of 25 million people are taking their first leisure trip per year in China.
By 2020 more than 50 million Chinese travelers will take their first leisure trip each year. In the next ten years the middle class and affluent consumers’ population will increase to more than 400 million, and one third of these population will reside in urban locations. Middle class and affluent travelers will become an incredible opportunity for travel businesses to grow. 1. Group travelers: Chinese travelers take longer trips than Westerns. 26% of Chinese travelers are used to travel with 5 people or more. From the Chinese that travel in groups, half of them prefer traveling with friends than family. Most Chinese travelers are less than 40 years old, in contrast with most travelers from the rest of the world. Chinese take less time (less than three months ahead) planning a trip. It is important to consider also that Chinese travelers like sales and offers, and usually travel agencies announce that kind of offer until two months or less before the trip.
1. Most popular ways of transportation: busses and trains. 2. Travel planning: Since China has about 400 million internet users, Chinese travelers use to make their travel arrangements by themselves through the internet. They seek for travel sites for recommendations, information, and more. For international travel, tourists prefer to plan with travel agents. 1. Travel and shopping: Chinese travelers are willing to make big expenses on their trips, they usually spend up to 8% of their income in one single trip. But their absolute spending is less than the Westerns one. Chinese use approximately half of their travel expenses in shopping. They have a very strong culture about buying gifts for friends and family. Chinese tourists prefer to buy luxury products overseas rather than in duty-free Chinese airport shops. “Burberry claims that one-third of the sales in its London stores are made to Chinese shoppers”.
1. What do Chinese tourist value? God services in air travel: Chinese are more willing to pay more for better services than Westerns. Chinese and Western views on most valuable services differ in many aspects. Chinese, for example, consider that baggage delivery to the hotel is the second most desired service, while US travelers do not consider it is in the top ten most wanted premium services. Chinese travelers appreciate special treatment at the airport more than Western ones.
Traveler Segments Inexperienced Travelers
These are the vast majority of the Chinese population. They tend to make short trips to visit family and friends. They go then to more distant parts of the countries and eventually they travel offshore. Inexperienced travelers often prefer tour packages that have a schedule previously established. They are interested in going to the most common, beautiful and important places of the destination.
Experienced Travelers These Chinese travelers prefer arranging their own transportation and accommodation through online travel and booking sites, rather than asking for a travel agency’s services. Experienced Chinese travelers prefer spending their money and time on entertainment activities and shopping (which usually influences their destination choice). The more experienced the traveler, less organized the trip and activities.
Chinese Travelers Needs and Habits 1. Domestic Front:
They care a lot about basic services, for example, it is important the price and cleanliness of their accommodations. For Chinese travelers, multinational-brand hotels where the least satisfactory. 1. International travel: Chinese travelers feel they need a better service to deal with language and cultural barriers. Most airlines, restaurants, and hotels overseas lack of special services regarding this matter for Chinese speaking travelers. 1. Online travel planning: Chinese travelers are not used to hire travel agents to help plan their trip. They spend a lot of time finding the best deal and comparing options and prices by themselves online. Hours and even days are spent by Chinese travelers downloading and interpreting all the information they find on the internet. And since more sites join everyday it becomes harder to trust online travel brands.
Opportunities in Chinese Travel Industry 1. Adapted offers for specific segments: the first step to take an advantage position in China’s growing
travel market is to determine and target the specific audience for your products. It is important to find ways to add value services that will make them different from the competition. 2. Brand loyalty through customer relationships: Chinese travelers like to travel with their usual brands, they feel uncomfortable with unknown brands. They would be willing to try a new brand if they have previously heard from it. It is essential to have different characteristics from the other businesses to make yours stand out. 3. More efficient travel planning tools: since Chinese travelers spend so much time searching and planning their vacations, they are looking for reliable ways to reduce the complexity. This is an opportunity to provide solutions to this complicated and tedious process. 4. Serve smaller cities travelers: travel companies often target travelers from big cities, leaving the middle-class tourists from smaller cities. These cities have less travel agencies and travel services as a whole, being a need that has not been satisfied.
Conclusion
Travel industry in China is growing and developing more and more each day. Companies that are entering this market now are more likely to grow and guide customers in their travel decisions. This is why it is important to start acting now. It is recommended to invest in customer insight, to always be ahead of the other companies and know that clients are looking for. Also to take all the opportunities that will make your company develop loyal customers that are new in this market. Be innovative and always remember that every client has its personal wants and needs, taking this into consideration might be the road for success in this business.
Additional Resources Based on BCG Chinese Consumer Travel Survey. July 2010.