Chinese tourists: the foreign destinations’ market yet to be saturated
International destinations are experiencing an increased interest from the Chinese tourists. An increasingly higher number of Chinese are spending their holidays abroad seeking a unique experience. In 2014 the outbound of Chinese travelers reached 117 million, a rise of 20% over 2013, marking the new milestone and a record in the history of China. The period when Chinese did not have the right to travel abroad has long since ended, nowadays more than 40% of all the China’s population shows interest in traveling and spending time outside the Mainland country.
China’s neighboring countries lead the ranking for the top Chinese destinations
The major destinations are located on the Asian continent, which, in 2015, hosted around 80% of all the Chinese travelers. Small cultural differences, lower travel costs and the possibility of a more flexible and short holiday are some of the reasons why 86 million Chinese decided to spend their free time in the Mainland’s adjacent countries.
This data also reflects a change in the sociodemographic characteristics of the typical Chinese tourist. If before international tourism was considered a practice only for the elites, nowadays an ever higher number of middle-class members are willing to enjoy their free time abroad. Since they cannot afford expensive transcontinental flights and bear the cost of strong currencies like the US dollar or the Euro, the middle class prefers to focus its attention on the Asian countries which have been proved to be cheaper than the western counterparts.
Following the Asian region, Europe placed itself in the second position with 6 million Chinese visitors in 2014. France is the top European destination chosen by the Chinese tourists with more than 2.5 million arrivals in 2015. Germany, Austria and Italy close out the top foreign Chinese destinations with a total of 2 million visitors annually.
In 2012, China became the second largest source of tourists for Australia, behind only New Zealand. The Australian government and Australian tourism companies are spending more than one-third of their budget to promote the country in the top first, second and third Chinese cities. This trend shows that more and more tour operators worldwide are trying to target those Mainland citizens who do not live in the megalopolis (Shanghai, Beijing, Tianjin, Guangzhou, and Shenzhen) but rather in the second and thirds tier cities. The aim is to expand the scope of the future costumers by focusing on the newest Chinese bourgeoisies who would like to travel abroad but it does not dispose of the necessary information to do so (i.e. how to book on an English web page, how to apply for the VISA, how to take an international flight).
The Chinese tourists: a heavy purchaser of luxury goods
Around one out of ten tourists worldwide is Chinese, this figure is expected to double in the upcoming years considering the interest for foreign destinations and the always increasing numbers of Chinese passport applicants – only 8% of the Mainland citizens currently own a passport.
Chinese tourists spend the most in total ($129 billion in 2013, followed by Americans at $86 billion) and per tax-free transaction ($1,130 compared with $494 by Russians) of any country. More than 80% say that shopping is vital to their plans, compared with 56% of Middle Eastern tourists and 48% of Russians. In 2015, Chinese tourists’ spending overseas reached $229 billion – a rise of 23% from 2014 – with purchases of clothing, footwear, cosmetics and electronics at the top of the list. They are expected to buy more luxury goods in 2016 while abroad than tourists from all other countries combined.
The origin of travelers is no longer limited to the first tier cities in developed eastern areas, but also second and third tier cities in middle and western China. Traveling abroad is enjoyed not only by officials and members of the wealthy class but also by the middle class. More and more, common Chinese citizens are traveling abroad, showing that the tourism market is full of potential and is far from saturated. With the rising standard of living of Chinese people, many of them are seeking to know about different societies, cultures, and places.
In conclusion, regardless of the social class to which they belong, Chinese tourists have the true reputation of being heavy purchasers in the foreign markets. Two are the main reasons causing this reputation. First of all, buying a Luis-Vuitton’s bag in Paris or a Prada’s dress in New York is part of the unique experience the Chinese tourist seeks when travels abroad. Secondly, foreign luxury brands are more expensive within the Chinese borders than in the others countries, therefore, the Mainland travelers do not let the opportunity of buying a cheaper luxury brand pass.
The foreign hospitably industry adapts to the Chinese clients
Shops, hotels, and other tourist businesses are scrambling to profit from the new arrivals and are adapting themselves to meet the needs of the Chinese costumers. Luxury hotels and resorts are trying their best to satisfy Chinese tourists’ expectations: they are hiring Chinese-speaking staff, updating the Chinese language based website, accepting yuan as a currency for local payments and placing Chinese ATM machines in their buildings. An example is Harrods in London which has recently installed 100 Union Pay terminals in its malls – Union Pay is the most used card operator in China. Hotels are also increasing their appeals by providing Chinese television channels and adapting their restaurants to the typical Mainland tastes.
Most of the hospitality industry players are organizing special trips to luxury top brand boutiques and are encouraging the Chinese tourists to spend their money on the top quality products. Products or trips branded as “VIP”, “unique” or “limited edition” have always appealed to the Chinese travelers because they fear to be considered second-class tourists in the western countries.
Hotels are also providing 4+1s packages – young couples traveling with one child and two sets of parents. While the children and the parents are engaged in organized outdoors activities, the grandparents can enjoy the local shows, SPAs, museums, and gyms.
Given the westernization of the younger Chinese generation, a higher number of couples wants to spend their honeymoon in a foreign country in order to experience a unique and long-lasting adventure. The international honeymoon firms are adapting themselves to the needs and expectations of the new Chinese couples in order to further boosting the extremely positive data on the Chinese tourism market.
Finally, several countries are approving rules to improve the ease of acquiring a visa or to introduce in a visa-waiver scheme for Chinese tourists.
For example, the US and Maldives have started to interview Chinese visa applicants online and allows them to pick up their visas at any of 900 bank branches, rather than the national embassies. The US has experienced a 22% increase in a number of Chinese visitors after the implementation of the new VISA policies. The Maldives saw an even greater increase (45%) of Chinese tourists in 2015 who now represents one-third of the country’s 1.5 million tourists.
While marketing and accommodating Chinese tastes in a destination are important elements to attract Chinese tourists, relaxing visa requirements and improving visa processing procedures have proven to be sure-fire ways of boosting arrivals from China. A recent market research study conducted by the European Tour Operators Association found out that more than 25% Chinese who had hoped to visit Europe for holidays had abandoned their plans because of visa delays and related difficulties.
Chinese visitors made great contributions to the development of outbound destinations in many aspects during the year, including hotels, restaurants, attractions, airlines and retail. In particular, national and foreign airline companies are doubling their connections between the top-Chinese cities and other global tourist centers (including Tokyo, Soul, New York, London and Bangkok).
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— Daxue Consulting (@DaxueConsulting) November 18, 2015