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China's customized tourism market

China’s customized tourism market in 2019 | Daxue Consulting

“Customized travel in the Chinese tourism market is unique in that it is characterized by its popularity, youthfulness, and high growth rates.”

– COTRI director Prof. Dr. Wolfgang Georg Arltstated

Growing demand for private tours for Chinese tourists

Customized tours are trips with personalized itineraries. This provides tourists with flexibility catering to specific interests and individual needs. In the Chinese tourism market, high-end customized tourism is aimed at clients with relatively high disposable income who can afford such expensive services.

According to the report published jointly by China’s online tourism giant Ctrip and China Outbound Tourism Research Institute (COTRI), “Customized Travels of Chinese Visitors to Europe”, the number of private tours for Chinese tourists to European countries has increased by 130% and made up 10% of the whole outbound customized travels. China’s customized tourism market is fast-growing and shows huge potential.

2019 Chinese travel consumptions trends

With the growing number of tourists traveling abroad, customized travels for Chinese tourists are actively developing. One of the goals is to prevent overcrowding, especially during holidays. According to the Hurun Report, around 3.9 million families in China have assets worth more than RMB 6 million, and 1.6 million households have more than RMB 10 million. Besides, a growing number of high-income groups in China are delighted to spend money on outbound tourism because they believe overseas travel experience is a vital contributor to improve life quality and happiness.

Based on the report, China’s high-net-worth individuals totaled 1.67 million in 2018. These travelers are ready to spend a generous budget for tourism. Professional service and individual approach are the most valued drivers in the high-end tourism market in China.

For those Chinese tourists with more disposable income, the uniqueness of a travel experience is prioritized over cost savings. The following data demonstrates the sequence of decisive factors for Chinese tourists. Beauty and uniqueness of tourist attractions (56%) are most important to high-net-worth Chinese tourists, the next factor is safety (47%) and then ease of visa procedures (45%). Relatively less important factors are friendliness of local people (35%) and affordability (34%).

China’s customized tourism market
[Source: Nielsen, “The 5 most important factors for Chinese tourists”]

Following the demand, many travel agencies now offer private tours for Chinese tourists. As a popular online tourism company, Ctrip launched its “high-end customized travel platform 3.0” to promote the development of the high-end tourism market in China.

Ctrip organizes private tours for Chinese visitors

Ctrip can now organize customized private tours for Chinese tourists. Its customized services take significant share in China’s customized tourism market, by upgrading facilities, such as flight tickets booking, accommodation reservations, route arrangement, exclusive car service, Chinese speaking tour guide, etc.

 Specifically, Ctrip’s platform also works on arranging experiential activities to contribute to the high-end customized tourism of Chinese travelers, such as study tours to prestigious universities, honeymoon packages to watch aurora borealis or visit hot spring, wedding tours, and mock marriage ceremonies, local food tours, etc.

The main target audience of high-end customized tourism in China is 35-50-year-olds due to the higher consumption level. High-end tourists aged over 46 years old account for nearly 60% of the long-distance customized travel. And most of them choose to travel with partners and families. As for younger tourists, they prefer to have shorter trips because their time for vacation is more limited. Thus, private tours for Chinese tourists also need to offer age-appropriate services. This is one of the big challenges shaping this industry.

The high-end travel agency, HHtravel’s report shows that the high-end customer groups have a strong willingness to travel to South America, Northern Europe, Africa, Russia, Australia, Canada, Maldives, Japan, and Southeast Asia.

China's customized tourism market
[Source: HHtravel, “Favorite destinations in China’s high-end customized tourism market”]

In order to follow the consumption trends of Chinese high-net-worth individuals,  Ctrip’s high-end customized travel platform 3.0: HHtravel, has developed various tourism projects. For example, travelers can choose to ride a speedboat across the Horizontal Waterfalls in Australia; dine under stars at a camp on the Savannah in Kenya; run a Marathon or watch the NBA finals. Aiming to meet the diverse needs of Chinese visitors, all these activities can be adjusted with clients’ individualization.

Rethinking the classic Chinese tourism market

There are two ways to travel in the current Chinese tourism market: Fully independent travelers (FITs) and Modular outbound travelers (MOTs).

Chinese tourism market
[Source: COTRI, “Chinese tourism market”]

As a traditional way for Chinese visitors to travel abroad, travel packages offered to MOTs are mainly covering tourist landmarks and include coerced shopping in a fixed itinerary. The travel expenses are pre-fixed with the agency, but hidden costs of optional activities often come up. Such group tours usually have tight schedules at a lower price, due to the larger number of destinations to visit at one time.

Currently, a number of Chinese traveling as FITs is growing because of the flexibility and freedom it offers. The penetration of global information online also made it easier for FITs to use mobile apps to receive local information on the tourist destinations before and during the trip. However, the experience of FIT is insufficient to be applied for everyone and can also be time-consuming.

The classic travel agencies in the Chinese tourism market contain separate service types for FITs and MOTs. The former travelers usually choose travel agencies to help them book flight tickets and accommodations, because the cooperation between airlines and local hotels with travel agencies can bring discounts. Apart from this, the main business and profit of travel agencies rely on groups tours. MOTs only need to follow schedules pre-arranged by the agency. However, one problem remains: agencies have often force travelers to do more shopping and activities to earn commission.

Chinese travelers no longer believe that the meaning of tourism is simply to meet with their relatives and friends living abroad, go shopping, or eat fast food. Currently, Chinese travelers pay more attention to local cultural and natural experiences. Hence it is considering as an emerging approach to provide new and authentic offers to private tours for Chinese tourists.

Process of customizing private tours for Chinese tourists

Because customized travels of Chinese visitors is becoming a hot topic and the demand is fast-developing, many travel agencies modify their original journey packages narrowing down group tours to small groups or offering business travel groups. While prices have been greatly increased, the service quality has not been improved significantly. It means that there is a big market potential and room for development.

Customized travels for Chinese high-net-worth individuals should focus on the top-notch quality services and the exclusive use of highly scarce resources. This kind of butler services for customers include the ability to solve all problems that occur during the journey and make a real-time adaptation. Service providers in the travel planning stage follow this process:

Customized travels of Chinese visitors
[Source: Ctrip customized travel, “Process of customizing private tours for Chinese tourists”]

For a subsequent journey, the customized services should always keep in touch with customers to follow their status and care their feelings.

Customized travels of Chinese visitors: The sophisticated future of high-end tourism

According to the COO of Ctrip, Mr. Ming Guo, with the advancement of technology, the future development of the high-end tourism market in China will offer more online services to make the traveling process more scalable. There are multiple online resources of touristic information which are easy to be accessed. Combined with the database, the algorithm of machine learning will be more precise to match travelers with personalized needs. As machine learning becomes stronger and more powerful, it would be used to meet the customers’ expectations.

Business opportunities for international companies

According to COTRI’s forecast, the number of Chinese outbound tourists will reach 4 million in 2030. Based on the fast and impressive market growth rate, Ctrip predicts China’s customized tourism market will increase by 200% in the next three years.

Undoubtedly, the development of the high-end tourism market in China, along with the increase in customers will bring higher profits to tourism companies. It will also expand the public’s interest and return on investment in terms of tourism resources. For those touristy cities that want to further increase the share of the tourism market, it is crucial to provide tourists with personalized tours.

For international companies, to develop high-end tourism market in China, it is necessary to combine advantages of local tourism resources and cooperate with well-known tourism companies in China, in particular, with the online service of individual trips.

In addition to research China’s customized tourism market and build local travel database, international companies can also take advantage of educational resources for expertise and training professionals.

Building a reputation among China’s customized tourism market will be a focus for China’s travel agencies as they compete for more share in the growing market segment. Thus, tourism companies that provide the highest quality of services have every chance of becoming leaders in the Chinese tourism market.

Transformation of China’s tourism market with COVID-19: Consumption trends

Outbound tourism has declined as the world is gradually affected by the pandemic. With the coronavirus under control in China, short trips within the country have been popular, particularly road trips. According to a consumer survey, confidence in domestic travel rose by 60% in first two weeks of May with the top three destinations in 2020 being Shanghai, Guangzhou, and Beijing, all of which are reachable by car or train.   

Following the crisis, the younger generation is more willing than the elderly to travel. On Tomb Sweeping Day in April, 60% of the people who booked trips were under the age of 30, which is a huge surge from 43% in the same period last year. According to a report by China Tourism Academy, more than 43 million domestic tourism visits were made within China during the Tomb Sweeping break, generating 1.1 billion USD.

Author: Yufeng GUO

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