(GA, 01 March 2021)
By Giovanni Angelini
THE STRENGTH AND POTENTIAL OF CHINA’S OUTBOUND TRAVEL MARKET
For planning purpose and post-pandemic action.
The Chinese outbound tourism market has been characterised by its rapid growth, large volume, vast reach, and enormous potential. In terms of trips and expenditure, it is the world’s largest outbound travel market.
As the country is making constant progress in almost every area, it is essential to recognise that the travel preferences, behaviours, and spending patterns of the country’s outbound market are changing significantly.
Most notably, as seen in 2018 & 2019, large group tours are waning, while private family travel, customised/semi-self-guided tours, and free independent travel (FIT) are all on the rise.
It is a fact that large group tours – volume business – attract price conscientious travellers who are often seeking the lowest prices available. Customised smaller groups and FITs, on the other hand, are more quality-focused and prepared to pay for their experiences.
Destinations and service providers, hotels included, have to be clear about which group they are targeting – volume or quality – and develop strategies accordingly. This is very important because it’s extremely difficult to attract both segments simultaneously.
The Chinese market is in the process of maturing and transforming. It is becoming much more sophisticated, bringing with it rising demand for higher quality hospitality experiences. Value for money remains very important, but this market is learning to appreciate quality and is prepared to pay for it. More and more destinations are realising this transformation and investing in this rapidly burgeoning market.
The savviest travel/hospitality organisations are also making moves to attract the outbound FIT market, with unique and customised services that appeal to high-end Chinese travellers.
A new segment with strong potential for service providers outside of China – and within Asia in particular – is Chinese MICE business. Currently, MICE activities represent over 40% of total domestic business travel in China, and the volume is enormous.
With rapid economic development and continuous improvement of internationalisation in China, that volume will also pose a substantial opportunity for outbound business travelers when the world is travelling again. This is a fast-growing and attractive segment, and international hospitality companies must be pro-active in their efforts to secure it.
As measured by GDP, China is on the way to becoming the largest economy in the world, and this could materialise before the end of the decade. As an indication of how fast this economy moves, China just outpaced the USA in attracting foreign direct investment for the first time. With this in mind, it is clear that the business world is moving east.
Another interesting potential market for hotels is the approximately 700 thousand Chinese students that travel overseas every year to pursue advanced studies at universities worldwide. It has become a trend for relatives of those students to visit them regularly, wherever they are located, and those travellers are not on tight budgets.
At present, the whole world is still battling this nasty pandemic, and China has not yet officially lifted restrictions on outbound travel. But, of course, we must look and plan for the future as the situation will gradually stabilise again. With this in mind, it is highly recommended that organisations interested in this lucrative source of business prepare themselves by making necessary changes and improvements that cater to the market’s expectations.
While travel restrictions are likely to be lifted very gradually, as soon as China gives the green light to outbound travel, visa processes and air connections are expected to resume swiftly. Millions of Chinese are waiting eagerly to travel abroad again, and China will undoubtedly reclaim its position as the primary source market for international tourism.
A lot has been written about this market, and there are numerous sources of information on how to handle Chinese travellers and meet their expectations. The China Tourism Academy, China Ministry of Culture and Tourism, and China’s International Tourism Offices are a good place to start.
In this document, I will address just a few important aspects of this vast market which I have gleaned from personal experience.
Potential: The growth in outbound travel from China is just beginning. Only 10% of citizens in the People’s Republic of China have passports enabling them to travel internationally. Considering the large population, rising disposable income, and affordable long-haul flights, the number of passports and travellers will increase significantly.
Loyalty to the Motherland: Chinese people are very nationalistic and sensitive to the world’s geopolitical situations. They are fully aware of the various trade frictions with a number of western countries, and in principle, they will stay away from those countries until the situations have stabilised. Chinese will also stay away from countries and destinations that have displayed discrimination against them, including those which blame China for the present pandemic. As proof of loyalty, it is interesting to note that many countries, in line with the “Belt and Road Initiative,” are experiencing a substantial increase in demand from Chinese tourists and business people.
Respect: By nature, the Chinese are not critical of other cultures or other countries’ habits and ways of doing things. Consequently, they are extremely sensitive to any kind of discrimination towards them. This is a big issue, and it is taken very seriously. Chinese travellers need to feel welcomed and treated equally.
Trust: There is a saying that the Chinese do business only with people they trust. This applies to travel as well. Trust in the healthcare system of the respective countries they visit. Trust in airlines, hotels, and other brands that they deal with (including shopping). Safety, hygiene, and security protocols are essential to them. The ‘peace of mind’ factor when they travel is very important.
Changing trends: Popular destinations (overtourism) are falling in favour, while less-crowded destinations offering quality products and attractions are in demand. Authentic local experiences will gradually replace the importance placed on shopping. Demand for eco-friendly and green hotels is on the increase. Demand for quality wellness facilities/services is also very high. Wine tasting tours, skiing and other winter sports are all becoming popular among Chinese travellers – proof that the market is maturing.
Influencers and bookings: Social media remains the major online influencer. 90% of all bookings are made via OTAs (Trip.com, Qunar, Feizhu, Tunin, Mafemgwo, Meituan, and others). Before the pandemic, long-haul trips were increasing, so too were the length of stays.
Communication: It is a must for any service provider to have all communication channels in Mandarin, including websites, printed materials, menus, excursions/tours, etc. A minimum of one Mandarin channel on the in-room TV is essential. In-house Mandarin-speaking staff available 24/7 are also expected and highly recommended.
Personal business relations: In general, developing a productive personal business relationship with Chinese decision-makers takes time. But, once a good relationship has been developed, it will last for an extended period, and business will benefit significantly. Chinese decision-makers do not like changes in people/approach nor dealing with new managers/executives. Consistency is vital in business relations in China.
Problem-solving: It is a fact that it is practically impossible to please everyone every day, and problems do arise. In dealing with the Chinese, it is imperative to ‘solve the problem on the spot’ and prevent the issue from becoming bigger. Offical involvement needs to be avoided at all costs, as this could simply put the future of the business at stake. Empathy in dealing with problems goes a long way, and do remember that the Chinese are very much ‘face-saving’ focused.
Focus on Food: Chinese travellers have developed an appreciation for quality food (and wine) beyond their own cuisine and products. A recent survey reported that Asian travellers, Chinese included, are very keen to sample quality food and wines wherever they travel, and they are prepared to pay high prices for the privilege. Still, they usually will not stay more than two-and-half days without having access to their native cuisine. This is important for hotels, as arrangements need to be made to ensure basic ethnic food items are available as part of the breakfast offerings. Hotels should also be able to recommend trustworthy speciality restaurants (not tourist traps) located nearby where Asian visitors can go to get their own food.
Payment: In addition to Apple Pay and UnionPay, mobile payment platforms such as Alipay and WeChat have become the norm for transactions among Chinese travellers. Businesses without digital apps and mobile payment options in place are likely to miss out.
Importance of Tourism: The Chinese tourism market has transformed into one of the world’s most-watched inbound and outbound tourist markets. The emergence of an affluent middle class and an easing of movement restrictions have played a major role. China’s outbound tourism is not going to go away. It will grow, and it will continue to be an important source of business for many countries, destinations, and hotels around the world.
I hope you find this information useful as you seek to attract and cater to this important source of business.
Are you ready to tap the opportunity?