Welcoming the Dragon and assessing China outbound in 2011

I warmly extend a very happy Chinese New Year to everyone who is celebrating this week. Including the millions of Chinese who are using this long holiday not just for the traditional custom of visiting family but to explore further afield and visit new destinations around the world.

In New York, my friends at Affinity China have laid out a week long events program around luxury shopping and experience for the Chinese consumer. In a few weeks’ time, I will collaborate with them on a full day workshop to communicate the needs and aspirations of the Chinese luxury traveller and show how to market to them and serve them. Details on this event will be forthcoming soon.

Before we open the new year, how did 2011 pan out? According to statistics from the China Tourism Academy, 70 million Chinese travelled abroad and spent $69 billion. That’s 22% and 25% year on year growth. Outbound travel is projected to grow a further 12% in 2012 to over 78 million. 

When we look at specific destinations affected by Chinese tourism, the picture is even more striking. Some of the stories illustrating this in 2011 included:

So despite all of us expecting a general slow down in 2012, outbound tourism from China continues to show remarkable stability. The apetite for international experience is strong and so far, I believe, we have only seen the tip of the iceberg. There is now an urgent need for hospitality providers and incoming operators to prepare their China market strategy and have someone on hand to deal with inquiries and make sales in China. Building a reputable brand among China’s travel agencies is quite important, just as building a strong quality brand for a destination is important in the Chinese consumer market.

COTTM Show Daily from Travel Link Daily – special offer to ChinaContact readers

We are pleased to offer you a special deal on insertion in the Travel Link Daily special official publication of the China Outbound Travel and Tourism Market (COTTM) in Beijing, April 18-20, 2012.

For details of how to contact and pricing, please see the attached PDF. As a ChinaContact reader you will receive a special offer: one free editorial feature in the COTTM Show Daily along with your paid advertising or article. To enjoy the offer, please quote ‘COTTM Special’ and ‘ChinaContact’ as your referral.

For inquiries, contact Ms. Zhang by email.

click to download the COTTM Media Kit

BBC tackles the Chinese visitors to UK

Recent news piece about Chinese visitors/shoppers showed their impact on retail, as they spend 3 times more than the average tourist in places like Bicester village and Oxford street.

They interviewed Carey Fletcher from China Holidays who rightly explained that restrictions on entry visas and limited capacity on flights is limiting the growth. The story also covers the need to check what Chinese like to spend money on and how they like to travel, and adjust your travel product accordingly before you start marketing your services in China. This was explained in my recent holiday post.

See the full video here, and feel free to submit your questions or comments about it in the comments section.

If you would like to stay updated on Chinese tourism news and related events in the UK, click here to join our mailing list. 

Happy New Year,

Roy

Season’s Greetings from Roy at ChinaContact

Greetings to all, either hoping you are keeping warm and well hydrated with mulled wine or staying cool in the sea breeze (our readers are from both the Northern and Southern Hemisphere, so I need to be inclusive). Another complex and challenging year is coming to pass, with the next one showing all the signs of carrying on in a similar fashion. For us in the tourism industry dealing with unforeseen situations and man made or natural made crisis is part of a day’s job. We have to be the most optimistic of all sectors to carry on delivering customer service and thinking up new products and new ways of delivering them to our customers.

I won’t go into a reflective mood here – this is meant to be a happy time of year with loads of holidays (and great parties if you are not a follower of any religion) so I hope you use it well to get closer to your loved ones and remember what really matters in your life.

The ongoing process of recognising that much in our Western Capitalist system is ill and needs mending does help focus the mind on priorities and reasons for doing what we do. For me, working in travel distribution and marketing is really about connections – my connection with great people all over the world, and the easier connection we can help facilitate for people who want to travel and explore different cultures, experience how others live and expand their horizons.

Dragon Head by Ai Weiwei

The search for connection is probably best exemplified in the quick and unprecedented expansion of the Asian tourism market over the past few years, led by China the Dragon. With 2012 being the year of the Dragon, we should expect this giant flying lizard motif to be displayed everywhere we look (So I am starting this trend now). With it comes another double digit growth of China’s outbound tourism and a new waive of younger (and older) Chinese travelers who are no longer content to sit in coaches for 12 hours snapping famous sites from behind a tinted window. The confidence that comes with experience and growing disposable income is now translating into demand for more diverse and culturally insightful travel experiences. Access to information, thanks to the investment in excellent internet infrastructure in China, allows Chinese to research and plan independently of travel agents or guide books. They now take to travel forums to hear about other tourists’ experiences, monitor destinations and brands on social media and add their own views and opinions online. They look for travel partners online and group  together to negotiate discounts on travel accessories, flights and packages.

To understand how China’s growing clout is dramatically affecting the tourism sector, we need to observe the changes that South East Asia has been going through over the last 5 years or so. China is now the top market for most SE Asian countries and the top spenders in most of the Asian countries (all the way to Australia and New Zealand too!). Products and services no longer need to be exclusively tailored to Americans or Europeans – they are now being customised to Chinese tastes and preferences. And Asia’s experience will be replicated in North America in Europe in the near future (provided we don’t shut the gates but actually invite visitors to spend their money here with easier visas and better, targeted marketing and promotion).

So, as I count over 6 years since ChinaContact launched to communicate the opportunity that the Chinese tourist market represents, I hope that you will take this contemplation period to think what is your strategy and action plan to be relevant for Chinese visitors. Contrary to what you may think, that is not the exclusive domain of multinationals or large wealthy countries with millions to spend on promotion. The internet levels the playing field to a great extent (bearing in mind the internet sites popular in China are indeed different to the sites we flock to in the West) and you can take advantage of that.

So to help you along this process of seeing with your own eyes how China is changing the global tourism industry (starting in Asia) and may indeed be the saving grace of us all, I am passing along a holiday gift worth over $400 US dollars.

It is a 20% discount (worth over $400) for the Travel Distribution Summit Asia, taking place in Singapore in May. With major companies from Asia and international speakers including from China, this is an excellent education and networking opportunity. The Summit this year will include dedicated discussions and workshops on China aimed at all levels of familiarisation with the market. So it is a great entry point but also a good step on the way to implementing your China and Asia strategy. I am planning to hold a market entry workshop focused on how to utilize online marketing and social media to build brand and grow revenues in China.

How to benefit from this fantastic discount? Here are the details, and if you book before 20 January, there are also early bird rates!

  • To register at the discounted rate and save 20% of the rate, please click on this link and quote the discount code ‘Leyoba‘ when prompted.
  • If you are living in China, there is a special reduced China delegate rate, which you can access by quoting ‘China‘ when prompted.

So hope to see you in Singapore, or maybe see you in China or perhaps in London. In any case have a great holiday season and happy New Year and happy Chinese year of the Dragon too!

Best wishes

Roy

Roy’s interview on the China Business Network – Chinese travellers and World Travel Market

Click here to listen to the podcast, on the China Business Network.

China outbound news selection for first week of Dec’2011

 Highlighted stories on China outbound tourism from the past week, courtesy of Travel Link Daily China Tourism Update
New York witnesses a surge in the number of Chinese tourist
According to the World Journal report, New York received a total of 266,000 Chinese tourists, an increase of 45.4% compared to the same period last year. The estimated number of gu…  More»
2011-12-07
China becomes the premier source market to the Maldives
Officials from Tourism Maldives gladly announced that China has become the number one tourist source market for the country. There are about 100,000 Chinese travelers visiting the …  More»
2011-12-07
Jetstar Airways launches Singapore-Beijing flight
Qantas Airways low-cost carrier, Jetstar has opened the Singapore-Beijing route on the 24th November. It is the first airlines to offer a budget fare service on the Singapore-Beiji…  More»
2011-12-07
Qatar Airways opened Chongqing route
Qatar Airways has opened a direct flight to Chongqing from its capital Doha on the 28th November, 2011. The opening of the flight makes the journey between the two cities only 8 ho…  More»
2011-12-07
Air China adds several international flights in 2012
Air China is resuming the Shanghai-Paris-Shanghai route on the 10th of March, 2012. It is also adjusting the original Shanghai-Beijing-Paris route to a Beijing-Paris-Beijing route …  More»
2011-12-07
720,000 visited Korea in the first nine months of this year
According to the data for the first nine months of this year, foreign visitors to Korea reached 720,000 half of which were Chinese visitors. These Chinese visitors generated a tota…  More»
2011-12-07
United Airlines to launch charter flight products to Guam Island
United Airlines has announced to launch ten charter flights to and from Guam Island from the four Chinese cities of Shanghai, Beijing, Hangzhou and Dalian. It revealed the ten flig…  More»
2011-12-07
First wholly foreign funded cruise company sets up in China
Costa Cruises has announced the set-up of a wholly foreign funded cruise service company on the 18th of November Costa Cruises Service (Shanghai) Company. This is the first wholly …  More»
2011-12-07
Lufthansa to add a new flight to Qingdao
Lufthansa is launching a new round trip flight to Qingdao on the 27th March, 2012. This tri-weekly flight will make a transfer in Shenyang, a city in northern China. The route will…  More»
2011-12-07
Eva Air opened Tianjin-Kaohsiung route
Eva Air has launched a once weekly Tianjin-Kaohsiung flight on the 18th November, 2011. The detail of the new flight is as follows: Flight No. Route Flight time Flight date BR789 T…  More»
2011-12-07
EIBTM places unparalleled importance on China outbound tourism market
EIBTM, the leading global event for the meetings and events industry, held in Barcelona, is to present a China Meetings Summit for the first time to give the international meetings…  More»
2011-12-07
New surge in China’s New Year overseas celebration tourism products
In recent years, celebrating Chinese New Year overseas has been a good selling tourism product for the tourism industry. Tourism bureaus, airlines, attractions as well as tour oper…  More»
2011-12-07
A quick look at Q3 outbound tourism market
According to CNTA statistics, in quarter three 2011, China sent over 5.45 million tourists to foreign countries, an increase of 16.21% compared with the same period last year. The …  More»
2011-12-07

Download the podcast with Roy Graff’s interview on Monocle24 talking about China’s outbound tourists

Click here to listen to the podcast.

The interview starts 28 minutes into the program.

The topic was how the Chinese outbound tourism has evolved over the last few years.

Summary of live streaming from World Travel Market: BRICS session

Summary of live streaming from World Travel Market: BRICS session  

This is a collection of tweets from the event.

  • Adam Wu, CBN: China projected to be top outbound market by 2015. Chinese are highest spending tourists. China ADS agreement is bilateral tourism agreement to promote tourism in both directions.
  • The main challenge to grow outbound tourism is visa issue (recurring theme).
  • Jeanine Pires, Brazil:
  • 60% growth in domestic tourism, 15% growth in outbound tourism.
  • 70% of spend is on shopping. Very intrepid travelers.
  • Sergey Stanovkin, Russia: visa regulation for Russia is hard,
  • cruise visa is very easy but limited to staying with the group on day tour. Russians find it hard to get visa to Britain.
  • Winter Olympic Games are boost to tourism.
  • Sanjay Kothari, India: growth is strong inbound. 714 mln domestic trips.
  • Heavy investment in infrastructure. Need more international airports at high quality.
  • Roshene Singh, South Africa: 4% growth inbound. New entry to BRICS (from. BRICs to BRICS is am easy leap). China is largest trading partner with SA. Office in China leads double digit growth 40 and 30 percent from India and China.
  • Touching on responsible tourism: how not to develop tourism, lessons from the developed economies.
  • China: mass traffic into short haul destination creates pressure. Outbound tourism is aimed at reducing trade surplus and spend in other countries. Top priority for Chinese is shopping.
  • Brazil: how growth in inbound tourism affect the natural resources?
  • Need to control numbers into sensitive areas, help reduce poverty, preserve resources while growing.
  • How true is it that foreign tourist dollars trickle down to local communities and distribute wealth?
  • Russia: benefit is integration into international community, creating jobs, help infrastructure development.
  • India: focus on generating employment for local people. Providing training now to ensure trickle down to villages. Targeting 15 mln. (in China it is 32 mln now). India developing sustainable tourism criteria. Classification of hotels based on energy saving and suitable architecture.
  • South Africa: developed tourism with responsibility and sustainability at its core. Use inclusion and discussion to develop criteria. Launched fair trade packages in UK market today.
  • BRICS talk finishing with visa discussion. Not easy for visa access from other emerging economies. China ADS is mutual so should help in both directions.
  • Question to China: why so difficult to open outbound tour operator business in China?
  • Adam Wu: restrictions are easing but competition too hard and expensive setup costs.
  • (Actually now only very large JV operators can get outbound license. Still not fully liberalized).

 

Summary of live streaming from World Travel Market: China Tourism Industry by Daniel Tschudy

Summary of live streaming from World Travel Market: China Tourism Industry by Daniel Tschudy

This is a collection of tweets from this event.

  • Busy room, over 100 people. Majority have been to China. Talk starts with population background, very basic stuff.
  • ‎32 mln people employed in tourism in China. 12,000 travel agencies and 300,000 hotels
  • Rail network in China highly developed (puts US to shame really). Domestic tourism grows to Lhasa, Hainan and Taiwan. Lhasa is exotic. Hainan is the Chinese Hawaii, Taiwan is the new hot spot recently opened up. ‎(missed out top destinations like Beijing, Hangzhou, Xian)
  • ‎(Taiwan not strictly domestic tourism. Need visa, different currency. Politically sensitive issue) the forbidden City treasures are kept in then Taipei National Palace museum.
  • Inbound tourism boosted by global events hosted in China like Olympics, World Expo, F1, Asian Games etc.
  • China Olympic Games was a showcase to confirm China’s position on the world stage. World Expo was about the world coming to woo Chinese visitors.4.4 foreign visitors.
  • 2010 saw 55 million visitors. That includes Taiwan, Hkg.
  • China 3rd destination in the world. Only 5 destinations offer sufficient service level to foreign visitors. Beijing is 4th destination city, want to have 10 million visitors by 2016.
  • HKG is here included as Chinese destination. Not sure they will agree with that. For MICE the destinations are just SHA and BEJ.
  • Beijing’s Olympic legacy left great convention centers and infrastructure for major events.55 hotels of 5*.
  • SITE to meet in Beijing during CIBTM.
  • Incentive trips mostly go to Shanghai. ICCA to meet in SHA in 2013.
  • Outbound leisure travel: 1500 outbound licensed agencies. 3 JV operators got outbound license. JTB, TUI, AMEX-CITS. Only large JV at the moment,
  • Internet growth drives access to information on destinations. From 384 mln in 2009 to 551 mln by 2012 (expected).
  • (stats on demand for outbound is sourced on UNWTO study from 2003. Very outdated) the number of approved destinations (ADS) is now 135 at least. Asia destination at the top are Japan, Korea, Singapore. HKG and Macau are the top but are part of China culturally.
  • Outbound MICE: demand for Australia,SE Asia, Dubai.
  • Corporate travel to other BRIC nations and SE Asia.
  • Singapore investing heavily for Chinese incentive and meetings as well as leisure. Building casinos and entertainment.
  • Conclusion: China not right for everyone. Most impact in and around Asia. Total numbers mask the bias towards China and its surroundings.
  • And need help of experts to facilitate relationships and tailor the product.

Hotelbeds aiming for healthy growth in China and Asia as they celebrate 10 years

Joan Vila, TUI

Joan Vila, TUI PLC

At the recent WTM (World Travel Market) in London I interviewed Joan Vilà, Managing Director of Accommodation & Destinations Sector at Hotelbeds and TUI PLC, the parent company. Hotelbeds are 10 years old and have unveiled a revamped brand and some growth goals at the WTM this year in London.

They intend to increase investment in IT and sales/marketing spend (40% increase) and grow their workforce by 18% with particular focus on expansion in Asia and the Americas. I sat with Mr. Vilà and Marta Alvarez, Deputy Managing Director – Sales and Marketing, Hotelbeds to discuss their experience in China to-date and future plans for that market. TUI acquired an Asian company, Pacific World, in 2007 and proceeded to merge certain functions with Hotelbeds in the Asian countries. Until now, many backoffice functions and office space are shared between the two companies. While Pacific World is a full service corporate travel, incentives and meetings service provider, Hotelbeds is a bed-bank. Hotelbeds contract space and discount rates at hotels worldwide and distribute this wholesale to retail agents (through the BedsOnline brand), white-label website partners (Hotelopia) and to distributers and OTAs.

They have experienced strong growth in Asia over the past few years, especially in Korea, Singapore and Thailand. Their focus for the moment is on increasing the overall number of directly contracted hotels in the region to make them a strong player in regional travel sector. The vast majority of hotel reservations happen between Asian countries as opposed to travel from Europe or America to Asia and therefore Hotelbeds needs to own sufficient product at competitive rates compared to regional players in this sector.

 

Marta Alvarex

Marta Alvarez, TUI PLC

TUI PLC also has a joint venture in China, TUI-China. TUI own 75% in this company while a major local brand, CTS, own 25%. Earlier this year TUI China obtained an outbound travel license from CNTA, allowing it to sell outbound tour packages to Chinese directly. Hotelbeds, by contrast, concentrates on working with the travel trade and for the moment, is focusing on driving more hotel bookings into China from their existing network of travel agent clients from around the world.

In terms of the challenges ahead, Hotelbeds are growing the team of local Chinese contract managers to increase the numbers of hotels in China and improve the prices and conditions of these contracts. They recognise that the preferred business model of Chinese hotels is different from that of Hotelbeds and are pushing hotels to accept their standard business terms. This includes providing guaranteed allocated rooms and receiving payment from Hotelbeds post check-out for all reservations. Overall they are happy with their progress to-date in Asia but acknowledge that Japan is proving a much tougher market to operate in, while China will take some time to become one of their mainstream destinations.

To assess Hotelbeds performance in China specifically is difficult as they are mostly focused on inbound business to China and Asia. They are in the contracting and growth stage now. There is no doubt that they have resources and existing infrastructure through other TUI companies such as Pacific World and TUI-China to implement an outbound strategy, selling global hotel reservations to the Chinese travel trade and becoming a major player in this sector. The advent of the outbound license given to TUI-China can make this process faster.

In terms of corporate image for TUI PLC and Hotelbeds in China, they can greatly improve their positioning through better localisation of their messaging and engagement with China’s dominant search engine, Baidu. The Chinese industry will appreciate knowing TUI group’s scale, however the website is presently not translated to Chinese. Hotelbeds also does not seem to have a Chinese language website or even Chinese information available to download.

While TUI-China does have both Chinese and English sites, the branding is very different than that of TUI Group and the site would benefit from a design refresh more suitable to Chinese viewers. The logo and brand could be localised as well as TUI’s Chinese name is actually pretty good (途易 – roughly translated as ‘the road is easy’).

 

Roy Graff, for ChinaContact and The China Business Network

About Hotelbeds: 

 Hotelbeds (www.hotelbeds.com) is a global hotel distribution partner with an online accommodation database of over 45,000 hotels from over 1500 hotel chains and independent hotels in 147 countries.

For the year ended 30 September 2010, Hotelbeds sold over 11 million roomnights and outperformed the market with 24% growth in total transaction values (TTV). For the year ended 30 September 2011 Hotelbeds sold circa 14 million roomnights and its total transaction values are forecast to increase by 25%.

Hotelbeds was founded in Spain in 2001 following the acquisition of Barceló Travel Division by First Choice PLC in 2000. When TUI Tourism and First Choice Holidays PLC merged in 2007, Hotelbeds became part of the Accommodation & Destinations Sector of TUI Travel PLC, the international leisure travel company. Hotelbeds has 132 offices in 38 countries and employs over 6000 people.

 

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