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  • 1. Marketing SA in China Second Edition 2007 1 Copyright © 2007 SA Tourism – not to be used without permission
  • 2. SA Tourism is the Tourism Marketing Organisation of South Africa South African Tourism is the official tourism marketing organisation of South Africa. South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers: international We market across the world focusing on three groups of travellers: international leisure travellers, the domestic and regional traveller, and business tourists who leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to: travel to South Africa for conferences and incentives. A key part of our business is to: Understand the Understand the Choose the Choose the Market the Market the market market attractive segments attractive segments destination destination This booklet is the result of research South African Tourism did in China since 2004 This booklet is the result of research South African Tourism did in China since 2004 and is to help market South Africa in China. The aim of the project was to understand and is to help market South Africa in China. The aim of the project was to understand the whole of the Chinese market and not the section we are currently seeing. We also the whole of the Chinese market and not the section we are currently seeing. We also did qualitative research in Hong Kong to understand its market and the links in the did qualitative research in Hong Kong to understand its market and the links in the trade channel. Against this research, the Asia Portfolio and our country office in trade channel. Against this research, the Asia Portfolio and our country office in China have developed activation plans for the market. These plans are available from China have developed activation plans for the market. These plans are available from our office in Beijing (see address on the back cover). our office in Beijing (see address on the back cover). Current information on arrivals from China to South Africa are available on our Current information on arrivals from China to South Africa are available on our website www.southafrica.net/research and www.southafrica.net/trade website www.southafrica.net/research and www.southafrica.net/tradeMarketing SA in China Second Edition 2007 2 Copyright © 2007 SA Tourism – not to be used without permission
  • 3. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 3 Copyright © 2007 SA Tourism – not to be used without permission
  • 4. Market Overview Maturity of the Market China, as an emerging travel market, is entering the growth phase introduction growth maturity Tourism Industry Life % of Cycle population Italy Germany, Netherlands, travelling for Canada US France, UK, Japan leisure Australia South Africa China, India SADC Nigeria Kenya Botswana This phase may be very long Time* Uninformed, Price insensitive, Seek information & opportunity; Very informed, price sensitive, Consumer multi-purpose discover leisure focus on leisure Very individualized Emergence of packages Product Specialized packages Status oriented (seeking scale effects) Market Symptoms few High competition Competitor Emerging specialization / focus One-stop-shops Clear focus Unsophisticated, isolated, Integrate products; Specialization; Information Channel experience based information/choice provider provider “shout”: get as many as you Adapt trade and market to Tourism Marketing Combine with trade initiatives can select segments Authority Actions Facilitate scale effects (e.g., Understand segments and Overall strategy Develop positioning packages) select * The duration of the four phases of the life cycle may vary significantly; their graphical representation with equal distances may thus be misleading Note: Framework based on Michael Porter: Competitive Strategy, 1980, Chapter 8 (Industry Evolution)Marketing SA in China Second Edition 2007 4 Copyright © 2007 SA Tourism – not to be used without permission
  • 5. Market Overview General Statistics China accounts for 20% of the worlds population Facts about China Facts about China Geographic Characteristics Geographic Characteristics Beijing Heilongjiang Eastern Asia, bordering the East China Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South Sea, Korea Bay, Yellow Sea, and South Jilin China Sea, between North Korea and China Sea, between North Korea and Xinjiang Liaoning Vietnam Vietnam Gansu Inner Mongolia 9,596,960 Square Kilometers (slightly 9,596,960 Square Kilometers (slightly Hebei Tianjing smaller than the US) smaller than the US) Ningxia Shanxi Qinghai Shandong Population Population Tibet Shaanxi Henan Jiangsu 1,313,973,713 (July 2006 est.) 1,313,973,713 (July 2006 est.) Sichuan Hubei Anhui Shanghai Chongqing Jiangxi Zhejiang Annual population growth (2006): 0.59% Annual population growth (2006): 0.59% Hunan Guizhou Fujian Gross Domestic Product Gross Domestic Product Yunnan Guangxi Guangdong $10 Trillion (2006 est.) $10 Trillion (2006 est.) GDP per capita $7,198* GDP per capita $7,198* Hainan Annual GDP growth 10.5% (2006 est.) Annual GDP growth 10.5% (2006 est.) Note: * International dollars Source: CIA Fact Book, China, 2007; International Monetary Fund, World Economic Outlook Database, September 2006; Time Magazine, 11 January 2007Marketing SA in China Second Edition 2007 5 Copyright © 2007 SA Tourism – not to be used without permission
  • 6. Market Overview Age Characteristics A fertility decline since the mid-1970s and the further increase in life expectancy gives rise to an ageing Chinese population Chinese Population by Age Group – Male and Female Source: www.iiasa.ac.at/Research/LUC/ChinaFood/data/anim/pop_ani.htm; United Nations (1999): World Population Prospects, The 1998 Revision, New YorkMarketing SA in China Second Edition 2007 6 Copyright © 2007 SA Tourism – not to be used without permission
  • 7. Market Overview Regional Characteristics – Population and Income Close to a third of the country’s population can be found in four provinces (Henan, Sichuan, Shandong, Guandong) while wealth is concentrated in the coastal regions Heilongjiang Pop: 38.2MM Annual Urban Disposable Income Tier 1: < 10,000 RMB Tianjin Jilin Inner Mongolia Pop: 27.1MM Tier 2: > 10,000 RMB Pop: Pop: 23.8MM 10.2MM Liaoning Pop: Xinjiang 42.2MM Pop: 19.6MM Beijing Hebei Pop: 14.9MM Pop: 68.1MM Shanxi Ningxia Pop: Shandong Pop: 5.9MM 33.4MM Pop: 91.8MM Qinghai Pop: 5.4MM Gansu Henan Pop: 26.2MM Shaanxi Jiangsu Pop: Pop: Pop: 74.3MM 97.2MM Anhui 37.1MM Pop: Xizang/Tibet Hubei 64.6MM Shanghai Pop: 2.7MM Chongqing Pop: 60.2MM Pop: Sichuan Pop: Pop: 17.4MM 31.2MM 87.3MM Jiangxi Hunan Pop: Zhejiang Pop: Pop: 67MM 42.8MM 47.2MM Guizhou Pop: 39MM Fujian Yunnan Pop: 35.1MM Pop: Guangxi Source: National Bureau of Statistics of China, China 44.2MM Pop: Statistical Yearbook, 2005; CLSA Asia-Pacific 48.9MM Guangdong Pop: 83MM Markets, Chinese Tourists: Coming, Ready or Not Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Guangzhou Hainan Xinjun, The Current Situation and the Pop: Characteristics of China’s Outbound Market 8.2MMMarketing SA in China Second Edition 2007 7 Copyright © 2007 SA Tourism – not to be used without permission
  • 8. Market Overview Regional Characteristics – Income Shanghai and Beijing residents enjoy the highest standard of living in China Per Capita Annual Disposable Income of Urban Households, 2004 18,000 16,683 15,638 15,000 14,546 13,628 12,000 11,467 11,175 10,482 9,438 9,221 9,106 RMB 9,000 8,008 6,000 3,000 0 Shanghai Zhejiang Tianjin Jiangsu Chongqing Liaoning Beijing Guangdong Fujian Shangdong Tibet Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005Marketing SA in China Second Edition 2007 8 Copyright © 2007 SA Tourism – not to be used without permission
  • 9. Market Overview GDP and Relative Wealth China remains a poor country with a relatively low GDP per capita even when compared to other developing nations Wealthiest Countries vs. Developing Composition of the GDP – 2001 vs. 2006 Countries, 2005 100% Agriculture Rank Country GDP per capita ($*) 12 18 1 Luxembourg 69,800 2 Norway 42,364 80% Industry 3 United States 41,399 (including 4 Ireland 40,610 construction) 5 Iceland 35,115 6 Denmark 34,740 48 Services 60% 7 Canada 34,273 49 8 Hong Kong 33,479 Percentage 9 Austria 33,432 Contribution 10 Switzerland 32,571 40% 38 Czech Republic 18,341 50 Argentina 14,109 55 South Africa 12,161 57 Chile 11,937 20% 40 58 Libya 11,523 33 65 Mexico 10,186 68 Brazil 8,561 69 Thailand 8,368 0% China (People’s 87 7,198 Republic) 2001 2006 122 India 3,320 Note: * International dollars Source: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006; www.asiasource.org/profilesMarketing SA in China Second Edition 2007 9 Copyright © 2007 SA Tourism – not to be used without permission
  • 10. Market Overview Relative Market Attractiveness (Wealth) The disposable income of the Chinese population is fractionally higher compared to that of India, but lower than fellow developing nation, Brazil Per Capita Personal Disposable Income per Annum1 (PPP), 2006 35,000 31,817 30,000 25,718 25,000 22,731 22,633 22,413 22,081 20,867 20,666 20,064 19,843 USD 20,000 15,000 10,000 5,000 2,962 1,010 651 0 Italy Belgium Germany Sweden Australia China India Brazil U.S. France Canada Japan UK 1 Personal Disposable Income is personal income after the deduction of personal direct taxes and fees, and current transfers abroad (such as gifts) – EIU Definition Source: EIU 2006Marketing SA in China Second Edition 2007 10 Copyright © 2007 SA Tourism – not to be used without permission
  • 11. Market Overview Relative Market Attractiveness (Travel Propensity) Top 40 Outbound Markets in the World — 2005 90 83 66 64 60 Million 38 33 30 22 22 22 21 19 18 17 16 16 14 14 12 10 10 8 8 8 8 7 7 7 7 7 7 6 6 6 5 5 5 5 4 4 4 4 0 Mexico Egypt USA Italy Turkey Hungary Norway Malaysia Switzerland Czech Germany UK China Japan Hong Kong Canada France Singapore Ukraine Sweden Rep Korea Taiwan Austria Poland India Finland Ireland Iran Spain Bulgaria Australia Saudi Lithuania Netherlands Belgium Belarus Denmark Romania Indonesia Russia Top 20 Long-Haul Outbound Markets — 2005 45 41 36 Million 27 14.8 18 12.4 9 5.1 4.7 4.3 3.9 3.8 3.4 3.2 3.0 2.9 2.9 2.1 2.1 2.0 1.7 1.4 1.3 1.1 0 Egypt USA UAE Italy Malaysia Brazil UK Germany Japan Sweden Canada China Australia France Singapore India Korea Indonesia Israel Russia Rep Long-Haul as a % of Total 64% 22% 56% 36% 14% 22% 10% 5% 83% 17% 19% 47% 60% 21% 10% 27% 8% 55% 34% 38% Outbound Note: Long-Haul outbound data was calculated using the proportions estimated from WTO data source and applying it to the Euromonitor data. It is the closest approximation as this data is not available. Data for the USA was sourced from U.S. Department of Commerce, ITA, Office of Travel and Tourism Industries, September 2006 as 2005 WTO data was incomplete and skewed the results. Source: EuromonitorMarketing SA in China Second Edition 2007 11 Copyright © 2007 SA Tourism – not to be used without permission
  • 12. Market Overview Overseas Travel The Chinese travel market has been growing rapidly and the WTO predicts it will be the biggest travel market in the world by 2020 Total Outbound Travellers, 1992–2006 40 ’92–’06 CAGR: 19.3% 34.5 31.0 30 28.5 Number of 20.2 Travellers 20 (Millions) 16.6 12.1 10.5 10 9.2 8.4 5.1 5.3 3.7 3.7 4.5 2.9 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005Marketing SA in China Second Edition 2007 12 Copyright © 2007 SA Tourism – not to be used without permission
  • 13. Market Overview Vacation Participation In 2004, outbound departures represented only two percent of the population of China Travel Intensity of the Chinese Population, 2004 12% 10% 10% 8% Percentage of 6% Population that Travel 4% 4% 2% 2% 0% Total Population Urban Population Population of Guangzhou, Shanghai and Beijing Source: CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005Marketing SA in China Second Edition 2007 13 Copyright © 2007 SA Tourism – not to be used without permission
  • 14. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 14 Copyright © 2007 SA Tourism – not to be used without permission
  • 15. Travel Patterns Main Destinations The market is dominated by travel to Hong Kong and Macao: outbound departures to these destinations constitute 71% of all Chinese outbound travel Regional Distribution of Outbound Top 10 Outbound Destinations, Travel, 2005 2005 SA represented 2% of Hong Kong 13,525 Europe “Other” arrivals and 0.5% of non-Hong 5% Other Macau 8,479 Kong/Macau arrivals 7% Japan 1,117 Vietnam 845 Other Asia Korea 843 17% Russia 770 Hong Kong Thailand 596 and Macau 71% USA 532 Singapore 477 WTO estimates WTO estimates 100MM outbound 100MM outbound Chinese tourists by Chinese tourists by Malaysia 355 2020 2020 0 6,000 12,000 18,000 Number of Travellers (Thousands) Source: Asia Travel Tips.com (www.asiatraveltips.com) “New ETC / UNWTO Study on Chinese Outbound Tourism Market to Be Launched at ITB 2007”; U.S. Dept. of Commerce “China Outbound Tourism Industry”Marketing SA in China Second Edition 2007 15 Copyright © 2007 SA Tourism – not to be used without permission
  • 16. Travel Patterns Travel Purpose The structure of the Chinese outbound market has changed dramatically over the last decade: in contrast to the situation in 1993, more than 70% of Chinese outbound tourists travelled for private reasons in 2003 Structure of Outbound Passengers, 1993 and 2003 100% 80% 40 Travel for private reasons 73 60% Percent Travellers 40% 60 Travel for non- private reasons 20% 27 0% 1993 2003 Source: Xu Fan, Marketing on China Outbound TourismMarketing SA in China Second Edition 2007 16 Copyright © 2007 SA Tourism – not to be used without permission
  • 17. Travel Patterns Importance to South Africa Chinese arrivals to South Africa are comparable to arrivals from Canada and India Total Volume by Market (excluding Africa), 2002 and 2006 600 2002 488 500 2006 443 Thousands of Arrivals 400 300 249 259 255 200 183 125 110 112 106 89 100 70 48 54 49 34 34 44 37 42 26 32 0 Netherlands Hong Kong) Italy Germany Australia India France Canada Japan UK USA China (inlc ‘02–‘06 2.46% 0.94% 8.68% 3.09% -1.36% 6.37% 2.93% 9.74% 6.81% 3.23% 5.08% CAGR Source: SATMarketing SA in China Second Edition 2007 17 Copyright © 2007 SA Tourism – not to be used without permission
  • 18. Travel Patterns Importance to South Africa Although Chinese arrivals to South Africa are higher than arrivals from Canada and India, the economic impact of Chinese travellers is currently smaller Importance to South Africa, 2005 Seasonality Spend Per Trip Market Distribution2 Arrivals Value (Rand)3 Index1 in SA (Rand)3 UK 8% 1.90 9,832 469,730 4,534,943,950 Germany 15% 2.25 11,142 249,504 2,762,411,837 USA 3% 1.90 10,348 233,418 2,409,343,703 Netherlands 21% 2.50 10,679 116,244 1,212,223,110 France 10% 2.50 7,179 101,139 720,711,128 Italy 43% 2.33 7,228 51,464 347,925,645 China 10% 1.89 8,705 44,352 389,525,834 Canada 6% 2.13 10,624 40,818 425,044,535 India 5% 1.70 13,058 36,045 393,259,799 1 Anindex value of 0% represents perfect seasonality, i.e. the market is not characterised by large fluctuations from month to month. A value of 100% means that seasonality is very poor, i.e. the market is characterised by large fluctuations month by month; 2 Average number of provinces visited by all foreign tourists; 3Total Foreign Direct Spend (excl capex) Source: Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 18 Copyright © 2007 SA Tourism – not to be used without permission
  • 19. Travel Patterns Travel to South Africa Chinese arrivals to South Africa grew at an annual average rate of 3% between 2002 and 2006 Chinese Inbound Tourists to SA, 2000–2006 60,000 ’02–’06 CAGR: 3.2% 51,265 50,000 44,352 42,991 41,962 40,000 37,129 Number of 30,595 29,804 Travellers 30,000 20,000 10,000 0 2000 2001 2002 2003 2004 2005 2006 Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005; SAT Arrivals, 2006Marketing SA in China Second Edition 2007 19 Copyright © 2007 SA Tourism – not to be used without permission
  • 20. Travel Patterns Travel to South Africa Despite arrivals showing positive growth over the period 2002-2005, spend has decreased considerably Arrivals from China to South Africa, 2002–05 Spend Per Trip from China to SA, 2002–05 60,000 20,000 51,265 (’02–’05) (’02–’05) 44,352 CAGR CAGR 42,991 14,019 15,000 40,000 37,129 Spend 11,872 6.1% -14.7% Arrivals per trip to SA to SA 10,000 9,458 8,705 (Rand) 20,000 5,000 0 0 2002 2003 2004 2005 2002 2003 2004 2005 Length of Stay in SA, 2002–05 Spend per Day in SA, 2002–05 25 1,500 (’02–’05) 21.3 21.7 (’02–’05) 1,236 CAGR 20 CAGR 16.0 1,000 -24.6% 15 12.4 9.1% Spend No. of per day nights 10 in SA 551 530 451 (Rand) 500 5 0 0 2002 2003 2004 2005 2002 2003 2004 2005 Source: Combined SAT Departure Survey Dataset, 2002–2005Marketing SA in China Second Edition 2007 20 Copyright © 2007 SA Tourism – not to be used without permission
  • 21. Travel Patterns Growth in Arrivals South Africa is not yet fully capitalising on the Chinese outbound tourism boom Chinese Travellers: Total Outbound vs. Inbound to South Africa, 2002–2006 100,000 40,000,000 China Inbound to SA 34,500,000 China Outbound 35,000,000 31,000,000 80,000 28,500,000 30,000,000 25,000,000 60,000 20,200,000 51,265 Travellers 44,352 20,000,000 16,602,300 42,991 41,962 40,000 37,129 15,000,000 10,000,000 20,000 5,000,000 0 0 2002 2003 2004 2005 2006 Inbound to SA Total Outbound ’02–’06 CAGR 3.2% 20.1% Source: Combined SAT Departure Survey Dataset, 2002–2005; Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; SAT Arrivals, 2006Marketing SA in China Second Edition 2007 21 Copyright © 2007 SA Tourism – not to be used without permission
  • 22. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 22 Copyright © 2007 SA Tourism – not to be used without permission
  • 23. Channel Strategic Position of South Africa in the China Travel Market Low market penetration Increasing high growth rates High price levels South Africa is a low Low Low market scale product within a maturity of transparency market which has not yet Chinese travel developed sophisticated Low consumer market demand or supply sophistication SA as a tourist structures and experience product in China Low tendency of channel to specialize low Profitability driven by low high market access Low maturity of Product Low Low High Low Low number of variety of relative price frequency of knowledge of pax (market packages tour groups sales staff re share) productMarketing SA in China Second Edition 2007 23 Copyright © 2007 SA Tourism – not to be used without permission
  • 24. Channel Strategic Position of South Africa in the China Travel Market South Africa as a travel product in China remains in its emerging phase Tourism Product and Market Life Cycles in Group Package Tour Prevalent Markets Mature Invention / Scale Reinvention Strategy SA Product Strategy SA Product in Hong in Japan Kong Market Evolution SA Product in China Concentration Strategy Emerging New Established Product EvolutionMarketing SA in China Second Edition 2007 24 Copyright © 2007 SA Tourism – not to be used without permission
  • 25. Channel Market Characteristics Fast changing market conditions drive marketing uncertainties Current Structural Characteristics of Current Structural Characteristics of Emerging and Fast Changing Market Emerging and Fast Changing Market the Market the Market Leisure travel is concentrated in 3 golden Highly fragmented market with large number Consumers Leisure travel is concentrated in 3 golden Highly fragmented market with large number weeks weeks of players at city level of players at city level Group tour is the dominant form of leisure Group tour is the dominant form of leisure No true national players, largest travel No true national players, largest travel travel travel agencies have regional influences agencies have regional influences Organization sponsored leisure travel is Organization sponsored leisure travel is Little differentiation, all players are very Little differentiation, all players are very significant significant similar in structure and selling commodity similar in structure and selling commodity products products ADS positively influences choices of outbound ADS positively influences choices of outbound travel destinations travel destinations No universally well recognized brand in the No universally well recognized brand in the market market There are 3 distinct regional markets There are 3 distinct regional markets Intense competition due to large number of Intense competition due to large number of Integrated travel agencies dominate the self- Integrated travel agencies dominate the self- players and little differentiation players and little differentiation funded leisure travel market funded leisure travel market Channels Particularly for smaller volume destinations, Particularly for smaller volume destinations, Foreign companies participate mostly Foreign companies participate mostly group failure is prevalent so scale is key group failure is prevalent so scale is key through HK through HK Consumer Insights and Activation Strategies should be recalibrated earlier than in other Consumer Insights and Activation Strategies should be recalibrated earlier than in other markets markets Source: Development of Chinese Travel Agencies; Monitor AnalysisMarketing SA in China Second Edition 2007 25 Copyright © 2007 SA Tourism – not to be used without permission
  • 26. Channel Policy Environment China’s tourism market has historically been shaped by government policy 1950 1960 1970 1980 1990 2000 2006 1990s Chinese economy becomes highly regionalized Beijing, Shanghai and Guangzhou become 3 key 2003 economic centres SA is granted 1957 1980 ADS CTS established CYTS established 1987 to service as an all purpose CITS, CTS, CYTS overseas Chinese travel agency formally break apart travel in China More independent 2006 travel agencies 1983 Now 81 ADS 1954 established countries / CITS established HK was first Number of travel regions; the USA for inbound travel approved ADS agencies growing is not on this list only destination rapidly 1999 1949 1980s First year of golden Communist party China broke away week policy established People’s from centralized Republic China Aimed to boost economy Social and domestic Foreign participation Organizational economic change consumption generally barred in outbound travel Chinese economy Might be replaced by Travel industry becomes paid vacation change pervasive Source: Development of Chinese Travel Agencies; Monitor Analysis; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005Marketing SA in China Second Edition 2007 26 Copyright © 2007 SA Tourism – not to be used without permission
  • 27. Channel Structural Issues Four key structural issues powerfully influence traveller behaviour 1 1 Approved Destination Status (ADS) Approved Destination Status (ADS) Golden Weeks Golden Weeks 3 3 ADS countries have the lowest visa ADS countries have the lowest visa The Chinese government has instituted The Chinese government has instituted barriers and are best promoted barriers and are best promoted a policy creating three week-long a policy creating three week-long – Attracts large number of self-funded – Attracts large number of self-funded holidays holidays leisure travellers leisure travellers Intent was to stimulate domestic Intent was to stimulate domestic The number of ADS destinations is The number of ADS destinations is consumption, but its future now appears consumption, but its future now appears expanding rapidly, so ADS alone is not expanding rapidly, so ADS alone is not to be confirmed to be confirmed sufficient to stimulate growth sufficient to stimulate growth Consumer Consumer Perspective Perspective 2 2 Sponsored Travel Sponsored Travel Product Structure Product Structure 4 4 The Chinese market is marked by an The Chinese market is marked by an SA is priced relatively high in the market SA is priced relatively high in the market unusually high percentage (almost 50%) unusually high percentage (almost 50%) as compared to its competitors as compared to its competitors of sponsored travellers of sponsored travellers SA tours are fairly uniform and based SA tours are fairly uniform and based Sponsored travel typically follows a Sponsored travel typically follows a roughly on the HK tour model roughly on the HK tour model distinct buying process distinct buying processMarketing SA in China Second Edition 2007 27 Copyright © 2007 SA Tourism – not to be used without permission
  • 28. Channel 1 Structural Issues: Approved Destination Status China had established ADS agreements with 28 countries / regions when the research was originally undertaken in 2004, it reached 73 by December 2005 and climbed to 81 by March 2006 Approved Destination Status 100 Outbound travel agencies can only organize Outbound travel agencies can only organize vacation package tours to ADS locations vacation package tours to ADS locations 81 – Can’t promote leisure travel to a a non-ADS – Can’t promote leisure travel to a a non-ADS 80 destination destination Outbound travel agencies are responsible for Outbound travel agencies are responsible for Sweden Iceland screening tourist candidates for potential over- screening tourist candidates for potential over- Norway stayers stayers Switzerland 60 Lichtenstein Chinese citizens can individually travel to non-ADS Chinese citizens can individually travel to non-ADS Jordan Ethiopia countries provided they get visas countries provided they get visas Kenya Mauritius Tanzania Number of Tunisia ADS 40 Zambia Zimbabwe Countries Northern 28 Marianas Fiji Vanuatu EU 20 19 India Russia Brazil Mexico Maldives Sri 14 Nepal Lanka Peru Antagua & Barbuda 7 9 Japan* Malta Turkey S. Africa Croatia Barbados 3 5 6 Vietnam Australia Cambodia Egypt Hungary Laos Mongolia Tonga Island 2 Philippines South New Myanmar Indonesia Pakistan Grenada (2002) Cuba 0 Hong Kong Thailand Singapore (1992) Korea Zealand Brunei (2003) Bahamas Macao (1988) Malaysia (1998) (1999)* (2000) St Lucia (1983) (1990) UK (2004–2006) 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2006 -20 * Selected ADS countries are only approved for Beijing, Shanghai and Guangdong Source: China National Tourism AdministrationMarketing SA in China Second Edition 2007 28 Copyright © 2007 SA Tourism – not to be used without permission
  • 29. Channel 2 Structural Issues: Sponsored Travel Close to 50% of leisure travel is sponsored by organizations Beijing Reasons for Sponsored Travel Reasons for Sponsored Travel 12,000 South African PAX Common in state owned enterprises (SOE) Common in state owned enterprises (SOE) and joint ventures (JV) and joint ventures (JV) 70% Sponsored – Salaries are low for SOE employees and – Salaries are low for SOE employees and Beijing Heilongjiang Chinese employees in JVs Chinese employees in JVs – Sponsored travel is a form of compensation – Sponsored travel is a form of compensation Less common in wholly owned Less common in wholly owned Jilin Xinjiang foreign enterprises (WOFE) foreign enterprises (WOFE) Liaoning – Salaries are high in WOFE – Salaries are high in WOFE Inner Mongolia Also common are company Also common are company Gansu sponsored government trips sponsored government trips Hebei Tianjing – An effective means of government – An effective means of government Ningxia Shanghai Shanxi relationship building relationship building Qinghai Shandong 4,000 + South African PAX Tibet Shaanxi Henan Jiangsu 50% Sponsored Sponsored Travellers Are Valuable Sponsored Travellers Are Valuable Sichuan Hubei Anhui Shanghai Consumers Consumers Chongqing Zhejiang Jiangxi Concentrated demand, no need for Concentrated demand, no need for Hunan aggregation aggregation Fujian – Organizational buyer acts as demand – Organizational buyer acts as demand Guizhou aggregator aggregator Yunnan Less price sensitive Less price sensitive Guangxi Guangdong – Not paying out of own pockets – Not paying out of own pockets Guangdong – Company established budget – Company established budget 9,000 South Relatively easier to identify targets Relatively easier to identify targets Hainan African PAX – Number of organizations is relatively small – Number of organizations is relatively small 25% Sponsored Source: Monitor Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 29 Copyright © 2007 SA Tourism – not to be used without permission
  • 30. Channel 3 Structural Issues: Golden Weeks Golden Weeks are a policy started in 1999 to boost the domestic economy Rationales Rationales Effects Effects Government sees growth in service industry as a Government sees growth in service industry as a Not yet clear if the golden week policy has Not yet clear if the golden week policy has solution to unemployment in the failing state solution to unemployment in the failing state stimulated domestic consumption or merely stimulated domestic consumption or merely owned sector owned sector changed the consumption pattern changed the consumption pattern Government believes the high saving rate Government believes the high saving rate Travel and other leisure activities became highly Travel and other leisure activities became highly inhibits economic growth inhibits economic growth concentrated around the 3 golden weeks concentrated around the 3 golden weeks Government wants to stimulate the domestic Government wants to stimulate the domestic Airports and train stations are over-crowded, Airports and train stations are over-crowded, economy by encouraging domestic economy by encouraging domestic hotels over-booked and prices higher during the hotels over-booked and prices higher during the consumption consumption golden weeks golden weeks “Prices are generally 10%–20% higher during the “Prices are generally 10%–20% higher during the golden weeks because our costs are higher.” golden weeks because our costs are higher.” – CYTS HO – CYTS HO Decisions Decisions Switch work days around public holidays with Switch work days around public holidays with weekend days to make 3 one week holidays weekend days to make 3 one week holidays The intent was to encourage consumption of The intent was to encourage consumption of goods and services, especially travel related goods and services, especially travel related services, with longer holidays services, with longer holidays Source: Development of Chinese Travel Agencies; Monitor AnalysisMarketing SA in China Second Edition 2007 30 Copyright © 2007 SA Tourism – not to be used without permission
  • 31. Channel 3 Structural Issues: Golden Weeks Golden Weeks are the busiest leisure travel times Chinese Self-funded Travellers Don’t Chinese Self-funded Travellers Don’t Sponsored Travellers Travel Outside Sponsored Travellers Travel Outside Policy Could Be Changing Soon Policy Could Be Changing Soon Have Flexible Vacation Times Have Flexible Vacation Times the Golden Weeks the Golden Weeks Most Chinese don’t have paid Most Chinese don’t have paid Sponsored travel is “business” Sponsored travel is “business” Golden weeks strain Golden weeks strain holidays other than the 3 golden holidays other than the 3 golden – Although 80% of the activities – Although 80% of the activities transportation infrastructure transportation infrastructure weeks weeks are leisure, it is still considered are leisure, it is still considered – Overcrowded airports and – Overcrowded airports and – They have no choice but to – They have no choice but to work. Therefore it doesn’t work. Therefore it doesn’t railway stations railway stations travel during Chinese New Year, travel during Chinese New Year, overlap with national holidays overlap with national holidays May Day and National Day May Day and National Day Strain domestic product capacity Strain domestic product capacity holidays holidays Sponsored leisure travel could Sponsored leisure travel could – Overbooked // sold hotels, – Overbooked sold hotels, loose part of its appeal if loose part of its appeal if attractions attractions Chinese like to travel with family Chinese like to travel with family scheduled during national scheduled during national – Travellers have bad – Travellers have bad and // or friends and or friends holidays holidays experiences; lots of complaints experiences; lots of complaints – It’s difficult to fit the schedules – It’s difficult to fit the schedules – Takes away personal leisure – Takes away personal leisure together other than during the 3 together other than during the 3 time time golden weeks Policy may shift towards annual Policy may shift towards annual golden weeks – Lower enjoyment because of – Lower enjoyment because of paid holiday paid holiday crowded transportation and crowded transportation and attractions – Internal discussion within – Internal discussion within attractions government at present government at present – Unclear when, if ever, the new – Unclear when, if ever, the new policy will be implemented policy will be implemented Source: Monitor Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 31 Copyright © 2007 SA Tourism – not to be used without permission
  • 32. Channel 3 Structural Issues: Golden Weeks – Constrained Airlift Capacity To SA Channels complain of airlift capacity Channels complain of airlift capacity Note: Consumer research constraints during golden weeks constraints during golden weeks findings indicate that late Beijing (12,000 PAX) Beijing (12,000 PAX) Chinese travellers make purchasing Chinese travellers make purchasing bookings are the exception rather than the norm Heilongjiang Hong Kong Hong Kong South Africa South Africa decisions late decisions late – Difficult to do advance booking – Difficult to do advance booking Singapore South Africa Singapore South Africa – Airlines don’t trust Chinese travel agency’s – Airlines don’t trust Chinese travel agency’s Beijing Jilin Airline presence: Airline presence: advance booking plans advance booking plans Xinjiang Singapore Air, Malaysia Air, Liaoning Singapore Air, Malaysia Air, Ad hoc booking made difficult by Ad hoc booking made difficult by Cathay Gansu Inner Mongolia Cathay – SAA does not fly to Beijing or Shanghai but – SAA does not fly to Beijing or Shanghai but now has an office in Beijing now has an office in Beijing Hebei Tianjing Ningxia – There is no market mechanism to consolidate – There is no market mechanism to consolidate Qinghai Shanxi Shandong last minute bookings last minute bookings Shanghai (4,000 PAX) Shanghai (4,000 PAX) There are insufficient flights during 3 golden There are insufficient flights during 3 Tibet golden Shaanxi Henan Jiangsu weeks Hong Kong South Africa Hong Kong South Africa weeks – International airlines do not respond to – International airlines do not respond to Sichuan Hubei Anhui Shanghai Singapore South Africa Singapore South Africa Chinese golden weeks demand because of Chinese golden weeks demand because of Chongqing Kuala Lumpur South Africa Jiangxi Zhejiang Kuala Lumpur South Africa yearly fluctuations and last minute booking yearly fluctuations and last minute booking Hunan Airline presence Airline presence Fujian Guizhou Cathay, Singapore Air, Malaysia Cathay, Singapore Air, Malaysia Yunnan Guangxi Guangdong Air Air There is a general frustration within the channel There is a general frustration within the channel Hong Kong for golden weeks flight tickets for golden weeks flight tickets Perception within the channel that sending Perception within the channel that sending Guangdong (9,000 PAX) Hainan Guangdong (9,000 PAX) groups to SA is difficult groups to SA is difficult Hong Kong South Africa Hong Kong South Africa Malaysia Airlines Malaysia 3 flights per week Airline presence Airline presence South Africa Singapore Air, Malaysia Air Singapore Air, Malaysia Air Singapore Airlines Singapore 7 flights per week SAA 7 flights per week Cathay 5 flights per week Source: Monitor Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 32 Copyright © 2007 SA Tourism – not to be used without permission
  • 33. Channel 4 Structural Issues: Product Structure SA is priced above its competitors in the Chinese market Price Average Flight Time Destinations (RMB) Number of Days Price per Day (Hours) Direct Flight Europe 10,000–16,800 9 1,489 13 Daily South East 4,000–9,600 7 800 7 Daily Asia Australia and 12,000–23,000 10 1,500 9 Daily New Zealand Russia 11,000–18,000 10 1,500 8 2x per week SA 14,000–16,000 8 1,875 14 No Note: CITS (Head Office) used as sample Source: Channel Interview and VisitsMarketing SA in China Second Edition 2007 33 Copyright © 2007 SA Tourism – not to be used without permission
  • 34. Channel 4 Structural Issues: Product Structure SA has low product diversity as compared to other long-haul destinations Number of Group Group Non-group Non-group Availability of Availability of Products Package Tours Package Tours Package Tours Package Tours Direct Flight Direct Flight Europe** 3 0 Australia and 10 0 New Zealand SA 2 0 — Eastern Europe 2 0 South East Asia 19 0 — * Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted ** Excluding Eastern Europe Source: Channel Interview; Retail Survey; Monitor Analysis; CITS (Head Office) Used as SampleMarketing SA in China Second Edition 2007 34 Copyright © 2007 SA Tourism – not to be used without permission
  • 35. Channel 4 Structural Issues: Product Structure SA has a standardized package based on the HK model DAY 1 Depart to Johannesburg, SA Sightseeing in Johannesburg. Visit the Gold Mine city and watch DAY 2 the mining process Leave for Sun City after breakfast. Enjoy a day with the wildlife at DAY 3 Pilanesburg. Try your luck at the casino at night Visit the Lion Park in the morning and head for the Museum DAY 4 after lunch. Spend the afternoon watching diamond mining Arrive at Cape Town in the morning. Stop at the ostrich farm DAY 5 and eat an ostrich lunch Start your route to Seal Island. Sightseeing at the Cape of Good DAY 6 Hope. Visit penguin beach and then back to Cape Town Shop in V&A shopping center and head for the airport after DAY 7 lunch DAY 8 Arrive in Shanghai the next dayMarketing SA in China Second Edition 2007 35 Copyright © 2007 SA Tourism – not to be used without permission
  • 36. Channel Channel Map SA group packages flow through multiple channels to Chinese consumers Product Owners Intermediaries China Outbound Travel Consumers Agents China regulations bar foreign players from China outbound market Airlines 40%, 0% Business Trip 30%, 30% Specialist 15%, 0% Organizational Sponsored Buyers Travellers Ticketing SA Hotels Agents Integrated Travel Agents 15%, 0% 20%, 20% 50%, 50% 40%, 0% 0%, 95% 40%, 95% SA Attractions 15%,15% SA Inbound 30%, 30% Tour Operators SA Retail Only Self-funded Transportation Travel Agents* Travellers <5%, 0% <20%, 20% <5%, <5% 0%, <5% HK Wholesalers <5%, <5% % = Airline Large Travel % = Others Agencies * Domestic flights, if any, are purchased directly form airlines; special players, like Longway, bridge multiple categories (inbound operator and business specialist). In this diagram, Longway is considered a business trip specialist; in peak season, volume shifts to self-funded travellers; FIT leisure travel to SA estimated at less than 5%; retail only travel agents for SA might act as integrated travel agents for domestic and more popular international destinations Source: Monitor Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 36 Copyright © 2007 SA Tourism – not to be used without permission
  • 37. Channel Strategy To grow demand for South Africa, sponsored and self-funded travel require distinct strategies: this strategy focuses on self-funded travel Role of Travel Agent Archetypes Sponsored Business trip specialists Consumer pull from organizational buyers 30% Role filled by Role filled by is most important for organizational organizational sponsored travellers buyers buyers Focus Travel agents for the self-funded market are 50% (+15% sub-scale for SA. wholesale) Current group failure rate is very high (above 50%) with few Integrated Travel exceptions Retail only travel agencies Agents 20% Self-funded Doesn’t Aggregates Aggregate Aggregate Note: Bubble size denotes total SA bound volume; percentage is percent of total SA volume Source: Monitor Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 37 Copyright © 2007 SA Tourism – not to be used without permission
  • 38. Channel Integrated travel agents play the most significant role in the Chinese trade Overview The market is highly fragmented with top 100 travel agencies controlling 50% of the The market is highly fragmented with top 100 travel agencies controlling 50% of the market market All large travel agencies do both wholesale and retail All large travel agencies do both wholesale and retail – The share of direct sales through owned retail outlets to end consumers is – The share of direct sales through owned retail outlets to end consumers is usually above 50% usually above 50% – Most of these travel agencies also have significant sales to organizational – Most of these travel agencies also have significant sales to organizational buyers (business and // or government) buyers (business and or government) – Most of the wholesale comes through non-exclusive reseller networks – Most of the wholesale comes through non-exclusive reseller networks Wholesale margin is slim (2%–5%) Wholesale margin is slim (2%–5%) Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang (Shanghai), Spring International (Shanghai), Spring International Integrated Integrated Travel Agents Travel Agents Interactions Main channel for reaching end consumers are newspapers Main channel for reaching end consumers are newspapers Consumers do preliminary research on their own. By the time they visit or call the Consumers do preliminary research on their own. By the time they visit or call the travel agencies, they have a pretty good idea of where they want to go and are travel agencies, they have a pretty good idea of where they want to go and are looking for detailed product information looking for detailed product information Resale networks are established through personal relationships and trade shows Resale networks are established through personal relationships and trade shows Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a wholesale transaction wholesale transaction Sell to organizations through personal relationships or formal biding process Sell to organizations through personal relationships or formal biding process (usually annually) (usually annually) Source: Interviews with the Chinese TradeMarketing SA in China Second Edition 2007 38 Copyright © 2007 SA Tourism – not to be used without permission
  • 39. Channel Business travel specialists help organizational buyers to set up their itineraries Overview Business travel specialists focus on serving organizations Business travel specialists focus on serving organizations – They have have few retail outlets (often only one location) – They have have few retail outlets (often only one location) – Over 70% of their outbound business are from organizations – Over 70% of their outbound business are from organizations – They usually have long term relationships with buying organizations – They usually have long term relationships with buying organizations – Approximately 100–150 business specialists nationally – Approximately 100–150 business specialists nationally The biggest of these business travel specialists are in Beijing The biggest of these business travel specialists are in Beijing – Ministries of Chinese central government are among the biggest customers – Ministries of Chinese central government are among the biggest customers – Local governments tend to go to local travel agents – Local governments tend to go to local travel agents – There are considerable less business travel specialists outside of Beijing – There are considerable less business travel specialists outside of Beijing Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Business Travel Business Travel Travel International (Beijing) and CTS Shenzhen Port, etc. Travel International (Beijing) and CTS Shenzhen Port, etc. Specialists Specialists Interactions There are two ways of getting organizational business There are two ways of getting organizational business – Through long term relationships with organizations – Through long term relationships with organizations – Through a formal bidding process (but one needs to have a reputation in order – Through a formal bidding process (but one needs to have a reputation in order to be invited to the bidding) to be invited to the bidding) Businesses are less price sensitive and require more services Businesses are less price sensitive and require more services – Business travel specialists are less price sensitive – Business travel specialists are less price sensitive – They prefer inbound operators who have the ability to customise itineraries (e.g., – They prefer inbound operators who have the ability to customise itineraries (e.g., Crown) Crown) Source: Trade InterviewsMarketing SA in China Second Edition 2007 39 Copyright © 2007 SA Tourism – not to be used without permission
  • 40. Channel Business Travel Specialists and Sponsored Travel Sponsored travel destination choice is typically driven by the consumers or decision-makers in the organization Companies sponsor leisure Companies sponsor leisure Destination is chosen by the Destination is chosen by the Travel agencies provide Travel agencies provide travel because .. .. .. travel because organizer organizer access to travel products access to travel products It is a form of compensation, It is a form of compensation, Typically the trip organizer Typically the trip organizer The destination is already The destination is already especially in SOEs especially in SOEs chooses the destination chooses the destination determined by the time the travel determined by the time the travel It is a relationship building tool, It is a relationship building tool, – The person could be a sales – The person could be a sales agent becomes involved agent becomes involved especially with government especially with government person, a department person, a department Travel agents put together the Travel agents put together the agencies agencies manager or a sponsored manager or a sponsored itinerary and handle all of the itinerary and handle all of the government official government official bookings bookings The travel participants have The travel participants have Usually someone from the travel Usually someone from the travel Companies have set annual significant influence on significant influence on agency accompanies the group agency accompanies the group Companies have set annual destination choice destination choice as a guide as a guide travel budgets travel budgets Most of the organizers are SOE // Most of the organizers are SOE In this market, travel agents In this market, travel agents In some instances they invite In some instances they invite government officials government officials spend most of their time building spend most of their time building travel agencies to bid on the travel agencies to bid on the and maintaining relationships and maintaining relationships budgets budgets More often companies have a More often companies have a few long term relationship travel few long term relationship travel agencies to assist all their travel agencies to assist all their travel needs needs Sponsored travel will require a consumer focused strategy Sponsored travel will require a consumer focused strategyMarketing SA in China Second Edition 2007 40 Copyright © 2007 SA Tourism – not to be used without permission
  • 41. Channel Retail Travel Agencies Retail travel agencies help fill in the (often large) gaps in the integrated travel agencies’ distribution network Overview There is no retail only agency in the strict sense but a significant There is no retail only agency in the strict sense but a significant percentage of travel agents do resell low volume destinations products percentage of travel agents do resell low volume destinations products – Sometimes because they don’t have the required scale to form groups to – Sometimes because they don’t have the required scale to form groups to that destination that destination – They might be outside of the major urban areas in rich provinces such as – They might be outside of the major urban areas in rich provinces such as Guangdong and Zhejiang Guangdong and Zhejiang – They may or may not have the necessary outbound tour licenses – They may or may not have the necessary outbound tour licenses There are over 9,000 travel agencies in China There are over 9,000 travel agencies in China – These are mostly independent economic entities – These are mostly independent economic entities – Divisions within these travel agencies could be owned and operated by – Divisions within these travel agencies could be owned and operated by Retail Only Travel Retail Only Travel independent contractors (without licences) who pay a fee to the agency independent contractors (without licences) who pay a fee to the agency Agencies Agencies – 528 travel agencies have licences to organize outbound tours – 528 travel agencies have licences to organize outbound tours For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS Hangzhou, etc. Hangzhou, etc. Interactions Retailers advertise in local newspapers to drive traffic to their outlets Retailers advertise in local newspapers to drive traffic to their outlets They pass on the consumer to wholesalers for a commission They pass on the consumer to wholesalers for a commission – Sometimes the retailers do lose the opportunity for repeat sales to the – Sometimes the retailers do lose the opportunity for repeat sales to the wholesaler wholesaler – But consumers rarely repeat to long-haul destinations – But consumers rarely repeat to long-haul destinations Source: Interviews with the Chinese TradeMarketing SA in China Second Edition 2007 41 Copyright © 2007 SA Tourism – not to be used without permission
  • 42. Channel In self-funded travel, the current market dynamics require scale Demand // Demand Number of TA Number of TA Number of Number of Number of Group Number of Group Intended Intended (Demand) (Supply) Forming TAs Forming TAs Travellers Travellers Product Product Momentum Momentum Decreased Cost Decreased Cost Increased Promotions Increased Promotions Increased Tour Varieties Increased Tour Varieties Improved Sales Skills Improved Sales Skills Effects On Increased margin Increased margin Increased frequency Increased frequency Decreased price Decreased price Increased products Increased products Reduced price Increases awareness of Attracts more Allows for greater Number of increases affordability of SA as a destination and consumers as well as conversion rates toward Intended SA trips and reduces competitiveness of price more consumer types SA products Travellers competitive price gap Reduced price signals Signals that other travel Indicates that product is N/A Number of that greater volume can agents are gaining selling well Group-forming be generated significant volume TAsMarketing SA in China Second Edition 2007 42 Copyright © 2007 SA Tourism – not to be used without permission
  • 43. Channel Group Formation Group formation failure happens in the final three weeks prior to travel 2 Months 1 Month 3 Weeks 1–2 Weeks Departure Initial Booking of Flights Trade Initial Date and Ground Components Finalize Price Process Selection (nothing confirmed) Failure occurs due to lack of Visa Processing Airlines delay providing final price scale because (1) would rather fill seats Fee Collection with higher paying customers, (2) Consolidation effort usually fails Final deadline (≈ 1 week) are wary of group failure and (3) due to conflict of interest among driven by visa have poor communication with the travel agencies (ie fear of losing application trade valuable LH customers) duration Form or Marketing Efforts and Group Formation Fail Decision Consumer Decision about Approx. 90% of those Gather Brochures who commit actually join Process Travel Dates If Forms, the group Pay Full Fee Talk with Friends, Talk with Do Other Research Travel Agents If Fails, Look for Other Destination and / or Other TA Tentative Decision Commit to Group Depending on the travel agency about Destination (destination and time) consumer may pay a deposit which will be returned in case of group formation failure SA Needs to Increase Scale of Group Forming Travel Agents SA Needs to Increase Scale of Group Forming Travel Agents Source: Monitor Trade Interviews; Monitor Quantitative SurveyMarketing SA in China Second Edition 2007 43 Copyright © 2007 SA Tourism – not to be used without permission
  • 44. Channel Group Formation The key determinant of timing is visa application processing, and secondarily airline bookings Group Formation Cut Off Points 2 Weeks 1 week Less than a week 2 days South Africa Note — this process varies somewhat by Note — this process varies somewhat by location. E.g. TAs in Guangzhou must mail location. E.g. TAs in Guangzhou must mail Currently SA visa documents to SA embassy in Beijing vs. documents to SA embassy in Beijing vs. processing time varies bringing directly to Australian consulate in bringing directly to Australian consulate in Guangzhou Guangzhou from 1 to 2 weeks — Australia unpredictability forces travel agents to assume the longer period Australia has a streamlined visa Flight booking is application process complicated because Thailand with consistent neither SAA nor CX timing have had local presence Visas are fast Direct flights and Do to high volume local presence of and local presence, Domestic airlines simplify airline seats are booking process With Cathay’s recent easy to confirm No visa required entrance into the China market, communication Simple ticketing should improve process By reducing visa processing and booking times, SA could By reducing visa processing and booking times, SA could become a beneficiary of other destinations’ group failure become a beneficiary of other destinations’ group failureMarketing SA in China Second Edition 2007 44 Copyright © 2007 SA Tourism – not to be used without permission
  • 45. Channel Group Formation South Africa is particularly impacted by group failure dynamics because of lack of scale For to-scale destinations, most volume will just switch dates or tour packages, not destination Timing 1 Same destination, Stick with different date Limited Current TA Destination Different destination, 2 same date ≈ 50% Timing Same destination, 3 and Agent Different date >5% Switch to Group Other TA Destination Different destination, Failed 4 and Agent ≈ 20% Traveller same date Agent Same destination, 5 >5% Same date For SA, over half of attempted groups fail Do Not Period Same destination, Travel in 6 next vacation period This Period ≈ 25% Period and Different destination, 7 Destination next vacation period Note: Some small (and for SA insignificant) volume will switch to FIT Source: Monitor Trade InterviewsMarketing SA in China Second Edition 2007 45 Copyright © 2007 SA Tourism – not to be used without permission
  • 46. Channel In the Chinese market, to deliver scale SAT will need to . . . Ensure that increased Demand // Demand TAs increase volume 2 Number of TA Number of TA and concentration Conduct direct promotion through 1 other media to target segments 1 Control the number of group forming TAs to protect scale Number of Number of development Number of Group Number of Group Intended Intended (Demand) (Supply) Forming TAs Forming TAs Travellers Travellers Facilitate group formation by Product Product 5 shortening visa and Momentum Momentum ticket timelines Decreased Cost Decreased Cost Increased Promotions Increased Promotions Increased Tour Varieties Increased Tour Varieties Improved Sales Skills Improved Sales Skills Increased margin Increased margin Increased frequency Increased frequency Decreased price Decreased price Increased products Increased products Cooperate with Build bridges with Educate wholesale select travel agents the trade to enhance and retail arms to to tailor promotions access to help them push SA. to target segments information about Equip them with 2 products selling and / or training tools 4 3Marketing SA in China Second Edition 2007 46 Copyright © 2007 SA Tourism – not to be used without permission
  • 47. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 47 Copyright © 2007 SA Tourism – not to be used without permission
  • 48. Consumers: Our Target Market Travel Propensity Wealth and travelling population are concentrated in the coastal areas Share of Outbound Tourists by Province Heilongjiang Pop: 38.2MM Beijing: 30% 23 TA Annual Urban Disposable Income Guangdong: 22% Tier 1: < 10,000 RMB Tianjin Jilin Shanghai: 12% Inner Mongolia Pop: 27.1MM Tier 2: > 10,000 RMB Pop: 15 TA Pop: 23.8MM 10.2MM 10 TA 13 TA Liaoning Pop: Xinjiang 42.2MM Pop: 36 TA 19.6MM Beijing 15 TA Hebei Pop: 14.9MM Pop: 68.1MM Shanxi 15 TA 69 TA Ningxia Pop: Shandong Pop: 5.9MM 33.4MM Pop: 91.8MM Qinghai 4 TA 17 TA 32 TA Pop: 5.4MM Gansu Henan Pop: 26.2MM Shaanxi Jiangsu Pop: 5 TA Pop: 9 TA Pop: 74.3MM 97.2MM Anhui 37.1MM 36 TA 19 TA Pop: 14 TA Xizang/Tibet Hubei 64.6MM Shanghai Pop: 2.7MM Chongqing Pop: 60.2MM 10 TA Pop: Sichuan 19 TA 3 TA Pop: Pop: 17.4MM 31.2MM 35 TA 87.3MM Jiangxi 13 TA 15 TA Hunan Pop: Zhejiang Pop: Pop: 67MM 42.8MM 47.2MM Guizhou 17 TA 13 TA 29 TA Pop: 39MM Fujian Note: “TA” represents the number of travel agents 7 TA Yunnan Pop: 35.1MM authorized to sell international tickets 21 TA Pop: Guangxi Source: National Bureau of Statistics of China, China 44.2MM Pop: Statistical Yearbook, 2005; CLSA Asia-Pacific 16 TA 48.9MM Guangdong 22 TA Pop: 83MM Markets, Chinese Tourists: Coming, Ready or Not 111 TA Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Guangzhou Hainan Xinjun, The Current Situation and the Pop: Characteristics of China’s Outbound Market 8.2MM 9 TAMarketing SA in China Second Edition 2007 48 Copyright © 2007 SA Tourism – not to be used without permission
  • 49. Consumers: Our Target Market Travel Propensity Beijing, Shanghai and Guangdong appear to be the travel centers Per Capita Annual Disposable Income of Urban Number of Authorized Travel Agencies for Households, 2004 (Top 5 Provinces) Outbound Travel, 2006 (Top 5 Provinces) 30,000 125 111 100 20,000 16,683 15,638 75 69 14,546 RMB 13,628 11,467 Number of 50 10,000 Agencies 36 36 35 25 0 0 Shanghai Beijing Zhejiang Guangdong Tianjin Guangdong Beijing Jiangsu Liaoning Shanghai Share of Outbound Tourists, 2004 (Top 5 provinces) 40 30 22 Percent of Outbound 20 Tourists 12 4 4 0 Beijing Guangdong Shanghai Zhejiang Jiangsu Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound MarketMarketing SA in China Second Edition 2007 49 Copyright © 2007 SA Tourism – not to be used without permission
  • 50. Consumers: Our Target Market Travel Behaviour Chinese travelling behavior varies across these three geographies Guangdong Guangdong Beijing Beijing Shanghai Shanghai Some sponsored travel, Some sponsored travel, High concentration of sponsored travel High concentration of sponsored travel Some sponsored travel, Some sponsored travel, primarily from local primarily from local significant portion of significant portion of Consumers less willing to spend out of own pockets Consumers less willing to spend out of own pockets sources sources which is from wealthy which is from wealthy Prices not as transparent as in Guangdong Prices not as transparent as in Guangdong surrounding regions surrounding regions Consumers are more Consumers are more Price sensitive Price sensitive willing to spend out of willing to spend out of Consumers are less Consumers are less Fast to adopt new trends Fast to adopt new trends own pocket .. .. .. but are own pocket but are willing to spend out of willing to spend out of highly “value” conscious highly “value” conscious Australian Visas Issued by own pockets own pockets Geography (2000–2001) 80,000 Consumers have Consumers have Prices are not as Prices are not as greatest access to price greatest access to price 66,903 transparent as in transparent as in information (due to information (due to Guangdong Guangdong proximity to HK) proximity to HK) 34% Beijing Not only price sensitive Not only price sensitive Rapid acceptance of Rapid acceptance of but value sensitive as but value sensitive as 39,259 new products new products Visas 40,000 well well 25% Shanghai 57% Slow acceptance of new Slow acceptance of new products products 41% Guangzhou 26% 17% 0 Business Visas Tourist Visas Source: Trade Interviews; Australian EmbassyMarketing SA in China Second Edition 2007 50 Copyright © 2007 SA Tourism – not to be used without permission
  • 51. Consumers: Our Target Market Travel Behaviour Differences in travel behaviour reflect culture differences between China and western countries as well as the development of a travel culture Cultural Differences Emerging Travel Culture Individualism emphasized in West far more Widespread opening of travel market occurred than in Chinese culture only over last decade – Children are taught to be different in West – Majority of travellers are relatively – Children are taught to have discipline in inexperienced China – Travel culture is only gradually forming — no “Experience recreation” is popular in the West critical mass of adventurous travellers but not in China – Relatively conservative travellers – E.g., extreme sports are popular in the West, Accustomed to sponsored travel but not in China – Traditional type of travel – E.g., most Chinese have never gone camping – Sponsored travel is usually in groups The ability to travel internationally is a status Like to see as much as possible symbol in China Chinese Travellers Like To (Running horses and seeing flowers). To observe but not to experience something different Like to go back to a comfortable room at the end of the day but also want nightlife and different cuisine Like to travel in groups Want to see lots of landmarks and take pictures of themselves with the land mark and show the pictures back home Source: Interviews with the Chinese Trade; Monitor AnalysisMarketing SA in China Second Edition 2007 51 Copyright © 2007 SA Tourism – not to be used without permission
  • 52. Consumers: Our Target Market Travel Behaviour Generally, Chinese prefer to travel in group package tours Group Tourist to Thailand, Singapore and Malaysia, 2000 Group Visa Is Simplified by ADS Group Visa Is Simplified by ADS 100% Visa barrier is high for some travel Visa barrier is high for some travel 77.3% destinations destinations Percent of 60.4% 64.0% – Success rate is higher if applying through a – Success rate is higher if applying through a Leisure travel agency Travellers 50% travel agency Taking Group ADS is the most accessible form of visa ADS is the most accessible form of visa Package Tours – ADS by definition, only applicable to group – ADS by definition, only applicable to group travel travel 0% Thailand Singapore Malaysia Greater Convenience Greater Convenience Better Value for Money Better Value for Money Most Chinese face language barriers when Most Chinese face language barriers when Group travel is cheaper than individual travel Group travel is cheaper than individual travel travelling overseas travelling overseas – Better bargaining position – Better bargaining position – Need language services to help them get – Need language services to help them get – Less trial and error – Less trial and error around around Low level of variety among travellers Low level of variety among travellers Typical Chinese have little knowledge about Typical Chinese have little knowledge about – Lack of flexibility lowers cost – Lack of flexibility lowers cost foreign countries foreign countries Psychological benefit of group travel Psychological benefit of group travel – Need help to plan and book itineraries – Need help to plan and book itineraries – Feel safer – Feel safer Can’t convert RMB into foreign currency freely Can’t convert RMB into foreign currency freely in China in China – Need currency service – Need currency service Source: WTO; Monitor Analysis; Tourism Boards of Thailand, Singapore and MalaysiaMarketing SA in China Second Edition 2007 52 Copyright © 2007 SA Tourism – not to be used without permission
  • 53. Consumers: Our Target Market Destinations Travelled Thailand, Malaysia and Singapore are the primary international holiday destinations of Chinese travellers Please Tell All the Countries You Have Been to in the Past 5 Years for HOLIDAY Purposes (Multiple Allowed) 40% 37% Beijing 1.4% of our Shanghai sample have Guangzhou visited SA in the Shenzhen past five years Long-Haul Short-Haul 27% 21% Percent of 19% 20% Respondents 16% 13% 13% 12% 11% 9% 8% 6% 6% 6% 6% 0% Thailand Malaysia Japan Korea, Germany Italy Netherlands Vietnam South Singapore Australia U.S. France New Zealand Canada U.K. Source: Monitor Quantitative Research (F1 — Base: All Respondents)Marketing SA in China Second Edition 2007 53 Copyright © 2007 SA Tourism – not to be used without permission
  • 54. Consumers: Our Target Market Travel Spend Chinese travellers in aggregate are the seventh highest spenders, spending US $15.4B per year How Much Do You Expect to Spend on Leisure Spend per Person on Best Holiday in Travel in the Coming Year (RMB)? Past Five Years (RMB) 50%a The price of 40% package tour to SA is between 10,000 to Average spend per 18,000 RMB person = 20,550 RMB Average annual 32% budget = 21,293 RMB 30% 28% 31% 30% 24% Percent of Percent of 20% 25% Respondents Respondents 20% 13% 14% 10% 5% 4% 0% 0% Below 5,000 10,001~20,000 Above 50,000 Below 5,000 10,001~20,000 Above 50,000 5,001~10,000 20,001~50,000 5,001~10,000 20,001~50,000 Source: Monitor Quantitative Research (F20, F23 — Base: All Respondents)Marketing SA in China Second Edition 2007 54 Copyright © 2007 SA Tourism – not to be used without permission
  • 55. Consumers: Our Target Market Positivity and Interest in South Africa Though 14% of our market is positive towards SA, only 6% is extremely likely to visit SA in the next 5 years When You Think About SA as a Holiday How Likely Are You in Going to SA in Destination, How Positive Are You? Next Two Years? Very Positive 14% Extremely Likely 6% Positive 21% Likely 10% Neutral 27% Not Sure 16% Negative 20% Unlikely 22% Very Negative 18% Extremely Likely 46% 0% 25% 50% 0% 25% 50% Percent of Respondents Percent of Respondents Source: Monitor Quantitative Research (F35a, F35c — Base: All Respondents)Marketing SA in China Second Edition 2007 55 Copyright © 2007 SA Tourism – not to be used without permission
  • 56. Consumers: Our Target Market Barriers to Travel to South Africa Biased perception about SA people, safety concerns and lack of knowledge present strong barriers for Chinese travellers to visit South Africa Which Reasons Describe Why You Do Not Want / Haven’t Yet Been to SA? Not Comfortable with African Blacks 44% Personal Safety 42% Dont Know Enough 41% Concern on Health 30% Language 27% Other Better Destinations 25% Not Good for Independent Travel 22% Flight too Long 21% Expensive 20% Prefer Asia 17% Food 16% Not for Family 16% Not Enough Time 13% SA too Poor 12% Visas are not perceived to be Visa 6% a barrier Other 5% 0% 25% 50% Percent of Respondents Source: Monitor Quantitative Research (F45 — Base: All respondents)Marketing SA in China Second Edition 2007 56 Copyright © 2007 SA Tourism – not to be used without permission
  • 57. Consumers: Our Target Market Accommodation Preference in South Africa Chinese tourists prefer to stay in high end accommodations Preference of Accommodation in SA 50% China All Visitors 37% 31% Share of 25% Respondents 19% 17% 18% 16% 15% 12% 9% 10% 8% 7% 0% Prefer at Prefer 5 Star Combination of Prefer at Least Prefer Staying Other Least 5 Star But Can Also 5, 4, and 3 Star 3 Star with Friends Accommodation Do 4 Star Accommodation Accommodation and-or Family — Save Money Note: “China” are visitors to SA who live in China with Chinese nationality; question was only asked in 2002 survey Source: South African Tourism Exit Survey 2002 and 2003Q1–2Marketing SA in China Second Edition 2007 57 Copyright © 2007 SA Tourism – not to be used without permission
  • 58. Consumers: Our Target Market Consumer Market Definition and Size By extending our market definition to include the urban population of the wealthiest provinces (instead of only the 4 main cities), the market size can be expanded to 12.9M people Using the Urban Population in Using the Greater Urban Population in Beijing, Shanghai, Guangzhou, and the Wealthiest Provinces in China as the Shenzhen as the Starting Point: Starting Point: China Market Definition 46.6M 241.9M Between the ages of 25 and 60 27.2M 129.6M Who have travelled internationally on leisure trips (outside of close Asia) in the last 5 years 2.9M 15.0M And, who have a household income of 10,000 RMB + per month (or have been on 2.5M 12.9M sponsored trips) CURRENT MAXIMUM Total Number of potential number People in Our of people in our Market EXTENDED market Source: China City Statistical Yearbook, 2002, Based on 2001 Census Data and 4% Urban Population Growth Rate; Monitor RDD Survey, Oct 2003Marketing SA in China Second Edition 2007 58 Copyright © 2007 SA Tourism – not to be used without permission
  • 59. Consumers: Our Target Market Where to Focus: Sizing the Relevant Market – Narrow Definition Using the urban population in Beijing, Shanghai, Guangzhou and Shenzhen as a filter, the market size is 2.5M people CU RR EN T FU = 2.5M 1,298.8M NN 100% Total Total Chinese population* EL Number of (100% of total) People in Urban population in Our Market Beijing, Shanghai, 46.6M Guangzhou, and Shenzhen (18.6% of total) Between the ages of 25 and 60 27.2M (10% of total) Have travelled internationally on leisure trips in the last 5 2.9M years (outside of close Asia) (1.2% of total) And, who have HH income of 10,000 RMB+ per month (or 2.5M have been on sponsored trips) (1.0% of total) * Source for total population: http://www.cia.govMarketing SA in China Second Edition 2007 59 Copyright © 2007 SA Tourism – not to be used without permission
  • 60. Consumers: Our Target Market Where to Focus: Sizing the Relevant Market in Greater City Region A decision was taken to use the extended market definition, effectively enlarging the size of the actual market from 2.5M to 12.9M Travellers EX TE ND ED FU = 12.9M Total 1,298.8M NN 100% Total Chinese population* (100% of total) EL Number of People in Our Market Urban population in 241.9M wealthiest provinces (18.6% of total) Between the ages of 25 and 60 129.6M (10% of total) Have travelled internationally on leisure trips in the last 5 15.0M years (outside of close Asia) (1.2% of total) And, who have HH income of 10,000 RMB+ per month (or 12.9M have been on sponsored trips) (1.0% of total) * Source for total population: http://www.cia.govMarketing SA in China Second Edition 2007 60 Copyright © 2007 SA Tourism – not to be used without permission
  • 61. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 61 Copyright © 2007 SA Tourism – not to be used without permission
  • 62. Consumers: Target Segments Where to Focus: Breakdown of Total Market – Narrow Definition of 4 Cities Actual Size: 2.5M Travellers CU RR EN T 1,298.8M FU = 2.5M Total Chinese population* NN 100% Total Number (100% of total) EL Urban population in of People in Beijing, Shanghai, 46.6M Our Market Guangzhou and Shenzhen (4% of total) Between the ages of 25 and 60 27.2M (2% of total) Have travelled internationally on leisure trips in the last 5 2.9M years (outside of close Asia) (0.22% of total) And, who have HH income of 10,000 RMB+ per month (or 2.5M have been on sponsored trips) (0.19% of total) Organised Purpose Experienced Upcoming Focus Wanderlusters Travellers Wanderlusters Wanderlusters = 1,218k Segments 335.5k 285.5k 408k 189k 49% * Source for total population: http://www.cia.govMarketing SA in China Second Edition 2007 62 Copyright © 2007 SA Tourism – not to be used without permission
  • 63. Consumers: Target Segments Where to Focus: Breakdown of Total Market in Greater City Region Four focus segments were identified, representing 49% of the market size EX TE ND ED 1,298.8M FU = 12.9M Total Chinese population* Total Number (100% of total) NN 100% Urban population in EL of People in GREATER REGIONS OF Beijing, Shanghai, 241.9M Our Market (18.6% of total) Guangzhou and Shenzhen Between the ages of 25 and 60 129.6M (10% of total) Have travelled internationally on leisure trips in the last 5 15M years (outside of close Asia) (1.2% of total) And, who have HH income of 10,000 RMB+ per month (or 12.9M have been on sponsored trips) (1.0% of total) Organised Purpose Experienced Upcoming Focus Wanderlusters Travellers Wanderlusters Wanderlusters = 6,284k Segments 1,731k 1,473k 2,105k 975k 49% * Source for total population: http://www.cia.govMarketing SA in China Second Edition 2007 63 Copyright © 2007 SA Tourism – not to be used without permission
  • 64. Consumers: Target Segments Organised Wanderlusters: Segment Overview Demographics Trip Behaviour Information Sources Purchasing Behaviour Organised General Characteristics Avg. Age 37 Seasonality Travel anytime 47% Top 5 Sources (General) Friends / relatives 56% Purchase Channels**** (For international travel) Wanderlusters Married Children 82% 66% Travel Oct 30% Newspapers TA 33% 25% CTS CITS 45% 30% Top Region(s) Travel Partner Travel magazines 23% CYTS 18% – Guangzhou 33% Spouse only 43% TV travel programmes / Others 12% – Shanghai 32% Friend 36% documentaries 13% – Beijing 20% Family 23% Reasons for TA Usage Helping decide activities 58% Social Characteristics Group Travel Making bookings 54% HH Income p.a., (‘000s RMB) Open to 65% Offer variety of packages 43% – <10 26% – 10–15 34% Time Taken between Booking – >15 40% and Taking Trip Higher education 67% <2 weeks 30% Higher profession* 36% 2 weeks–1 month 58% >1 month 11% Segment Size Importance of Past / Future LH Travel Trip Reason and Activities Perceptions of South Africa Associations***** % of Market 13.4% Frequency of Vacations Trip Reason (Top 5)** Average of Score of 1–7 Positive # of People 1,731k Avg. # of vacations: 2 or more Scenery 85% Safe and secure Plentiful Wildlife 86% HH Travel (in last 5 years) Relaxation 77% environment 6.33 Welcoming to tourists 82% Spend p.a: >15,000 RMB Experience foreign Rest and relaxation 6.17 Luxury Safaris 65% Past 5 Years culture/ food 71% Authentic travel All year round destination 60% Thailand 60% Beach 71% experience 6.09 Value for money 58% Conversion Challenge Singapore 46% Architecture 66% Easy to get around 6.04 Malaysia 38% Offers wide variety of Negative Awareness of SA 58% Australia 37% Main Activities (Top 5)*** experiences 5.96 Apartheid 77% Japan 19% Taste local food 96% Offers historical and Very hot 74% Positivity towards SA 27% Visit cities 95% cultural experience 5.92 Politically unstable 68% Consideration 33% Future (Upcoming 3 Years) Shop 92% Welcoming People 5.79 AIDS 66% Japan 21% Relax on beach 92% Value for money 5.74 Expensive to fly to 60% Plans to go next Australia 16% See most local icons 90% Offers beach experience 5.61 Dangerous 49% 18 months 18% France 14% Offers natural wildlife (Annualized: 12%) United States 12% experience 5.49 Canada 9% All year round travel 5.19 * Those people with a ‘higher level profession’ are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking dataMarketing SA in China Second Edition 2007 64 Copyright © 2007 SA Tourism – not to be used without permission
  • 65. Consumers: Target Segments Organised Wanderlusters: Customer Portrait® Purchase and Purchase and Beliefs and Beliefs and Desired Experience Desired Experience Usage Environment Usage Environment Associations Associations Demographics Travel Desires Channel 57% females Considers scenery and relaxation most important when choosing Travels in groups because they are Above average share (33%) in Guangzhou and destinations convenient and makes visas easier to obtain below average share (20%) in Beijing Popular holiday activities include tasting local foods, visiting cities, Highly likely to use one of China’s large Work experience reflects regional differences shopping and relaxing at the beach travel agencies for the following services: – Relatively high share of 21% are self- Australia is the most favourite holiday destination – Decide on activities at destination, employed or work at family firm making bookings, provide different – Relatively high share of 14% are business Potential Travel to South Africa packages to choose from owners Would like to visit SA on a group package tour Lower education level — 32% only have high As with their other holidays, segment would also prefer to relax at South Africa school education the beach and to see natural beauty in SA Generally do not hold strong negative Higher income level — 40% earn over RMB Above average length of stay and spend per person: 13 days for perceptions of South Africa 15,000 per month household income a price of RMB 24,000 per person – Lower than market average believe that apartheid still affects SA and AIDS is an Past Travel Profile important issue Self-paying travellers Few (15%) have friends and relatives who have been to South Africa High number of destinations in past 5 years Top barriers are lack of knowledge on what to – All have travelled to 2+ destinations Many travel during golden weeks, as a large Purchase and Purchase and do in South Africa, concerns about health and safety, and fear that they will face a language share (45%) have no paid vacation days Usage Behavior Usage Behavior barrier Interest and Awareness Low worldly Behaviour Profile Lower interest and awareness of South Africa Very few (19%) prefer independent travel Friends and relatives, newspapers and travel Most make bookings 2 weeks to 1 month before travelling agents are where most first hear about Very high dependence on travel agents and word-of-mouth when seeking information about destinations destinations High share (43%) travelled with only their spouse on their favourite holiday Spend Highest holiday budgets amongst the 4 priority segments – 100% have budget of RBM 15,000 or more per year 72% spent RMB 15,000 or more on their favourite holiday Channel Travel agents are used for almost all bookings, with the two most popular being CTS and CITSMarketing SA in China Second Edition 2007 65 Copyright © 2007 SA Tourism – not to be used without permission
  • 66. Consumers: Target Segments Organised Wanderlusters: Consumer Portrait® Story A well-travelled Chinese woman looking for a new destination A well-travelled Chinese woman looking for a new destination Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on international holidays every so often. She has taken numerous trips with her husband, always to different destinations, international holidays every so often. She has taken numerous trips with her husband, always to different destinations, whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries of her hectic life. of her hectic life. Convenience and reliability are most important in the buying process Convenience and reliability are most important in the buying process Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel Services (CTS), and turns to them first. Services (CTS), and turns to them first. Why not South Africa next? Why not South Africa next? On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to have more packages for her to choose from. have more packages for her to choose from.Marketing SA in China Second Edition 2007 66 Copyright © 2007 SA Tourism – not to be used without permission
  • 67. Consumers: Target Segments Experienced Wanderlusters: Segment Overview Demographics Trip Behaviour Information Sources Purchasing Behaviour Experienced General Characteristics Avg. Age 35 Seasonality Travel anytime 32% Top 5 Sources (General) Friends / relatives 45% Purchase Channels**** (For international travel) Wanderlusters Married Children 87% 53% Travel Oct 31% Travel magazines TV travel programmes / 24% CTS CITS 47% 35% Top Region(s) Travel Partner documentaries 21% CYTS 23% – Shanghai 40% Friend 31% TA 19% Others 19% – Guangzhou 27% Spouse only 30% Newspapers 16% – Beijing 26% Family 20% Reasons for TA Usage Helping decide activities 59% Social Characteristics Group Travel Making bookings 43% HH Income p.a., (‘000s RMB) Open to 53% Offer variety of packages 38% – <10 43% – 10–15 27% Time Taken between Booking – >15 30% and Taking Trip Higher education 82% <2 weeks 27% Higher profession* 38% 2 weeks–1 month 49% >1 month 24% Segment Size Importance of Past / Future LH Travel Trip Reason and Activities Perceptions of South Africa % of Market 16.3% Associations***** # of People 2,105k Frequency of Vacations Trip Reason (Top 5)** Average of Score of 1–7 Positive HH Travel Avg. # of vacations: 2 or more Scenery 86% Safe and secure Plentiful Wildlife 92% Spend p.a. (‘000s RMB): (in last 5 years) Relaxation 78% environment 6.33 Welcoming to tourists 76% Experience foreign Rest and relaxation 6.17 Luxury Safaris 74% <10 13% Past 5 Years culture / food 75% Authentic travel All year round destination 72% 10–20 48% Thailand 51% Beach 75% experience 6.09 Value for money 70% >20 39% Singapore 41% Architecture 73% Easy to get around 6.04 Malaysia 36% Offers wide variety of Negative France 26% Main Activities (Top 5)*** experiences 5.96 Apartheid 82% Conversion Challenge Australia 24% Taste local food 98% Offers historical and Very hot 78% Awareness of SA 58% Learn about culture 96% cultural experience 5.92 AIDS 71% Positivity towards SA 27% Future (Upcoming 3 Years) See most local icons 94% Welcoming People 5.79 Politically unstable 66% Japan 21% Visit cities 93% Value for money 5.74 Expensive to fly to 57% Consideration 33% Australia 17% Relax on beach 92% Offers beach experience 5.61 Dangerous 51% Plans to go next United States 14% Offers natural wildlife 18 months 18% France 12% experience 5.49 (Annualized: 12%) Switzerland 11% All year round travel 5.19 * Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking dataMarketing SA in China Second Edition 2007 67 Copyright © 2007 SA Tourism – not to be used without permission
  • 68. Consumers: Target Segments Experienced Wanderlusters: Customer Portrait® Purchase and Purchase and Beliefs and Beliefs and Desired Experience Desired Experience Usage Environment Usage Environment Associations Associations Demographics Travel Desires Channel An average age of 35 While on holiday, almost all like to taste local food and learn Believes the advantages of group travel lie in About half males / half females about the culture convenience, little effort, and ease of getting a Most are married and about half have kids – Also likely to want to seeing local icons, relax on the beach, and visa Almost half living in Shanghai, working for either SOEs visit cities Travel agents are influential, as more than half use or MNCs – More likely than others to want to meet local people and stay them for helping to decide on activities at the with local people in their homes destination, and over one-third get advice on Highly educated — 82% have university education Important factors when choosing a destination include scenery, destination choice Past Travel Profile South Africa relaxation, architecture, and foreign culture / food All are self-paid travellers Favourite past destinations include Thailand and Australia Many positive perceptions about SA: believes that Well-travelled, with one-quarter having been to five South Africa offers plentiful wildlife, is welcoming to or more destinations over the past five years Future trips are likely to include Japan, Australia, USA, and France tourists, and has good value for money – TSM are most popular past destinations, Potential Travel to South Africa However, very few believe SA is a developed followed by France, Australia, Germany, Japan, If visiting SA, extremely likely to want to view wildlife country and most think it is very hot, politically South Korea – Also interested in relaxing on the beach and enjoying natural unstable, and still affected by Apartheid More likely than others to travel when the weather is scenery; less likely than others to want to do the wine route More likely than others to have friends or better at destination than in China; – Most would want a group package tour, though more likely relatives who have visited SA; though, this word – One-third travel in October than other segments to want to stay at a resort and have a of mouth is likely to be neutral Interest and Awareness luxury holiday Top barriers preventing a trip to SA are concern Highly worldly, by definition, and especially likely to Would spend about RMB 25,000 per person for 1–2 week holiday about personal safety, lack of knowledge, and read international news in South Africa concerns about health Influenced by friends, travel magazines, and TV travel programmes Purchase and Purchase and Very aware and actively interested in SA; 40% have even searched the Internet for SA information Usage Behavior Usage Behavior Behaviour Profile Channel Many in Segment 5 prefer independent travel and only Internet is significantly the most popular information about half (lower than other segments) typically book full source; others sources used may include word of mouth, package group tours travel agents, and travel magazines Most book about one month before going on their holidays, When travelling independently, more likely than others to book but tend to plan for slightly more time directly from airlines or hotels Spend Most likely to travel with friends or a spouse Much higher budgets than the average, with about 40% Very unlikely to travel with colleagues spending over RMB 20,000 each year on holidaysMarketing SA in China Second Edition 2007 68 Copyright © 2007 SA Tourism – not to be used without permission
  • 69. Consumers: Target Segments Experienced Wanderlusters: Consumer Portrait® Story Seasoned traveller looking for a new country to visit Seasoned traveller looking for a new country to visit Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby. Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby. Interest in both group tours and independent travel Interest in both group tours and independent travel “The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative “The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at the destination though. the destination though. Why not South Africa next? Why not South Africa next? For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the various package types available, and the travel documentary he saw on South Africa has given him a positive impression and various package types available, and the travel documentary he saw on South Africa has given him a positive impression and desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip to desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip to South Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. South Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision. tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision.Marketing SA in China Second Edition 2007 69 Copyright © 2007 SA Tourism – not to be used without permission
  • 70. Consumers: Target Segments Upcoming Wanderlusters: Segment Overview Demographics Trip Behaviour Information Sources Purchasing Behaviour Upcoming General Characteristics Avg. Age 35 Seasonality Travel between Jul–Oct 85% Top 5 Sources (General) Friends / relatives 48% Purchase Channels (For independent travel) Wanderlusters Married Children 73% 49% Travel Partner Newspapers Travel magazines 25% 19% TA / Tour operator Direct from airline 57% 20% Top Region(s) Friend 30% TV travel programmes / Internet TA 18% – Shanghai 36% Family 27% documentaries 17% Direct from hotel 7% – Guangzhou 31% Alone 20% Internet 16% – Beijing 17% Reasons for TA Usage Group Travel Helping decide activities 35% Social Characteristics Open to 56% Making bookings 33% HH Income p.a., (‘000s RMB) Deciding destination 31% – <10 34% Time Taken Between Booking – 10–15 41% and Taking Trip – >15 25% <2 weeks 33% Higher education 67% 2 weeks–1 month 53% Higher profession* 32% >1 month 14% Segment Size Importance of Past / Future LH Travel Trip Reason and Activities Perceptions of South Africa Associations**** % of Market 7.6% Frequency of Vacations Trip Reason (Top 5)** Average of Score of 1–7 Positive # of People 975k Avg. # of vacations: 1 in last 5 Relaxation 81% Safe and secure Plentiful Wildlife 84% HH Travel years Scenery 79% environment 6.33 Welcoming to tourists 66% Spend p.a >10,000 RMB Value for money 76% Rest and relaxation 6.17 Luxury Safaris 54% Past 5 Years Beach 72% Authentic travel Value for money 53% Thailand 18% Experience foreign experience 6.09 All year round destination 50% Conversion Challenge South Korea 14% culture / food 70% Easy to get around 6.04 Awareness of SA 58% Japan 14% Offers wide variety of Negative Australia 10% Main Activities (Top 5)*** experiences 5.96 Very hot 82% Positivity towards SA 27% United States 8% Taste local food 94% Offers historical and AIDS 76% Visit cities 93% cultural experience 5.92 Apartheid 72% Consideration 33% Future (Upcoming 3 Years) Learn about culture 91% Welcoming People 5.79 Politically unstable 66% Plans to go next Australia 20% See most local icons 89% Value for money 5.74 Dangerous 60% Japan 18% Relax on beach 84% Offers beach experience 5.61 Expensive 57% 18 months 18% France 15% Offers natural wildlife (Annualized: 12%) Singapore 9% experience 5.49 Europe 9% All year round travel 5.19 * Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking dataMarketing SA in China Second Edition 2007 70 Copyright © 2007 SA Tourism – not to be used without permission
  • 71. Consumers: Target Segments Upcoming Wanderlusters: Customer Portrait® Purchase and Purchase and Beliefs and Beliefs and Desired Experience Desired Experience Usage Environment Usage Environment Associations Associations Demographics Travel Desires Channel Half male, half female, with an average age of 35 Good value for money is an important consideration in Most do not use travel agents to help decide – A large share (27%) is single and 51% do not have destination choice on activities at destinations kids yet Travels to relax and to enjoy beautiful natural scenery Travel in group tours mainly for convenience and 31% live in Guangzhou and another 36% live in Enjoys tasting local food and visiting cities, similar to most Chinese safety Shanghai travellers South Africa 76% earn over RMB 10,000 household income per month – Also more likely to enjoy more atypical activities of staying Personal safety is the main barrier to travel to SA Past Travel Profile with locals in their homes, off-road driving, golfing and – Also more likely to mention high costs and All are self-paying travellers gambling lack of time to see the country as barriers All have visited only 1 destination in the past 5 years Japan is very popular — Japan is the 3rd most common destination Strong positive perceptions that South Africa they have travelled to in the past and the 3rd most likely destination to offers plentiful wildlife and is a welcoming – 18% went to Thailand, 14% to South Korea and 14% to travel to in the future Japan destination to tourists Potential Travel to South Africa Common negative beliefs that SA is very hot, Most have travelled during the summer months of July through September If travelling to South Africa, interested in seeing wildlife and the natural faces an AIDS issue, and is still affected by beauty apartheid Interest and Awareness They would prefer to travel in a group package tour One-quarter know friends and relatives who have Highly worldly, with 70% eating foreign foods regularly On average, plan to spend RMB 19,000 per person for a 10 day trip been to South Africa, though many of them give and 49% participating in adult hobby classes (e.g., history) it a neutral rating Interested in SA and a high proportion (22%) have asked travel agents about holidaying in South Africa Friend and relative recommendations are the most popular ways to first hear about a destination Purchase and Purchase and Usage Behavior Usage Behavior Behavior Profile Channel Total planning time (from origination to actual trip) is 57% rely on travel agents and tour operators when about 1–2 months they do independent travel Over half regularly travel in group package tours CTS and CITS are the most popular travel agencies Most common travel companions are friends and family used Spend 46% looks into 3 different sources of information when High enough holiday budgets and holiday spend to deciding on holiday destinations and planning them afford a holiday in South Africa* – Most popular information sources are Internet and – 52% have annual holiday budgets RMB 15,000+ per friend and relative recommendations person – 63% spent RMB 15,000+ per person on their favourite tripMarketing SA in China Second Edition 2007 71 Copyright © 2007 SA Tourism – not to be used without permission
  • 72. Consumers: Target Segments Upcoming Wanderlusters: Consumer Portrait® Story A less experienced traveller seeking beautiful natural scenery A less experienced traveller seeking beautiful natural scenery Ivy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both Ivy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan because her parents had gone and come back with beautiful pictures of Mt. Fuji. because her parents had gone and come back with beautiful pictures of Mt. Fuji. Prefers group tours with some free time Prefers group tours with some free time Though it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs Though it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local delicacy. delicacy. Why not South Africa next? Why not South Africa next? She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only 7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and 7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and CITS retails stores near her office to see what kind of group packages they offer to both destinations. CITS retails stores near her office to see what kind of group packages they offer to both destinations.Marketing SA in China Second Edition 2007 72 Copyright © 2007 SA Tourism – not to be used without permission
  • 73. Consumers: Target Segments Purpose Travellers: Segment Overview Demographics Trip Behaviour Information Sources Purchasing Behaviour Segment 8: General Characteristics Seasonality Top 5 Sources (General) Purchase Channels**** Purpose Avg. Age Married 40 90% Travel anytime Travel Oct 63% 14% Friends / relatives Travel magazines 35% 22% (Total Accommodation) CITS 30% Travellers Children Top Region(s) 71% Travel Partner Internet Newspapers 21% 15% CTS CYTS 28% 20% – Shanghai 50% Colleague 52% TV travel programmes / Others 13% – Beijing 30% Friend 17% documentaries 16% – Shenzhen 15% Spouse only 16% Reasons for TA Usage Making bookings 52% Social Characteristics Group Travel Helping decide activities 46% HH Income p.a., (‘000s RMB) Open to 49% Offer variety of packages 36% – <10 55% – 10–15 20% Time Taken between Booking – >15 25% and Taking Trip Higher education 95% <2 weeks 29% Higher profession* 38% 2 weeks–1 month 47% >1 month 24% Segment Size Importance of Past / Future LH Travel Trip Reason and Activities Perceptions of South Africa % of Market 11.4% Associations***** # of People 1,473k Frequency of Vacations Trip Reason (Top 5)** Average of Score of 1–7 Positive Avg. # of vacations: 2 or more Scenery 80% Safe and secure Plentiful Wildlife 88% HH Travel (in last 5 years) Architecture 73% environment 6.33 Welcoming to tourists 81% Spend p.a.(‘000s RMB): Relaxation 70% Rest and relaxation 6.17 Value for money 75% Past 5 Years Beach 65% Authentic travel All year round destination 68% <10 24% Thailand 37% Historical sites 64% experience 6.09 Good weather 65% 10–20 46% Singapore 34% Easy to get around 6.04 United States 30% Main Activities (Top 5)*** Offers wide variety of Negative >20 29% France 26% See most local icons 96% experiences 5.96 AIDS 86% Conversion Challenge Australia 24% Visit cities 94% Offers historical and Apartheid 82% Awareness of SA 58% Taste local food 92% cultural experience 5.92 Very Hot 64% Future (Upcoming 3 Years) Learn about culture 92% Welcoming People 5.79 Politically unstable 63% Positivity towards SA 27% Australia 20% Relax on beach 88% Value for money 5.74 Expensive to fly to 54% Consideration 33% United States 20% Offers beach experience 5.61 Dangerous 47% France 17% Offers natural wildlife Plans to go next Italy 10% experience 5.49 18 months 18% Hawaii 9% All year round travel 5.19 (Annualized: 12%) * Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking dataMarketing SA in China Second Edition 2007 73 Copyright © 2007 SA Tourism – not to be used without permission
  • 74. Consumers: Target Segments Purpose Travellers: Customer Portrait® Purchase and Purchase and Beliefs and Beliefs and Desired Experience Desired Experience Usage Environment Usage Environment Associations Associations Demographics Travel Desires Channel Predominantly a male segment Besides having beautiful natural scenery, unique architecture is Travel agents are used for fulfilment Higher average age of 40 also a key criteria for choosing a destination primarily: for making bookings on trips Most are married and have kids When on holiday, likely sees most of the local icons, visits the segment decided Half live in Shanghai and one-third live in Beijing cities, and tastes local cuisine Group travel is attractive because it is more Australia and the United States are the most likely future convenient, safe and cheap; not as likely to The majority work in state-owned enterprises / destinations as well as the most common favourite past use group for language or visa reasons government and another 31% work for multinational companies destinations South Africa Past Travel Profile Holidays within Asia are less popular Strong positive perceptions of South Africa, Potential Travel to South Africa including good wildlife and welcoming to tourists All sponsored travellers On a trip to South Africa, the desired activities are seeing the AIDS is the strongest negative perception of Extremely well travelled: all have visited 2 or more SA destinations in past 5 years natural beauty and relaxing at the beach Most want to travel in a group a package tour Over one-third have friends or relatives who Most do not travel at any particular time of the have travelled to SA compared to other year A significant portion (40%) want a mix of an active holiday and relaxing time on the beach segments 90% receive vacation days from their employer An average trip to SA should last about one week and cost RMB – World of mouth is more positive than – Those with vacation days generally will take market average 8+ days off each year 10,000 to 15,000 per person Top barriers include concern for personal safety, Interest and Awareness health, and lack of knowledge Highly worldly segment who are particularly – More likely than others to be concerned by likely to interact with foreign suppliers and Purchase and Purchase and lower value for money and lack of time to clients and go on international business trips Friend and relative recommendations are less Usage Behavior Usage Behavior see the country important when compared with the overall market and Internet is more important as Behaviour Profile Spend sources of influence for hearing about holiday Preferences for group vs. independent Average-sized holiday budgets which are likely to be destinations travel are mixed RMB 15,000 to 20,000 per year – 38% prefer independent travel — Spend on favourite trip is slightly higher than budget, much higher than market average at RMB 20, 000+ per person Relatively short time between origination Channel and making a booking Highly involved travellers — 65% use 3 different – 30% make reservations within 2 sources to evaluate and plan a holiday weeks of choosing destination – Internet is by far the most common source of Very likely to travel with colleagues on information holiday – Also significantly more likely to use travel magazines, and country tourism boardsMarketing SA in China Second Edition 2007 74 Copyright © 2007 SA Tourism – not to be used without permission
  • 75. Consumers: Target Segments Purpose Travellers: Consumer Portrait® Story Sponsored traveller out to see the world Sponsored traveller out to see the world Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway. Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway. An educated and informed traveller An educated and informed traveller Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the local culture of a foreign country. local culture of a foreign country. Why not South Africa next? Why not South Africa next? One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South Africa over France as the destination of their sponsored trip. Africa over France as the destination of their sponsored trip.Marketing SA in China Second Edition 2007 75 Copyright © 2007 SA Tourism – not to be used without permission
  • 76. Consumers: Target Segments China Priority Segments Summary Upcoming Organised Experienced Purpose Segment 3 Segment 3 Segment 4 Segment 4 Segment 5 Segment 5 Segment 8 Segment 8 All self-paid travellers All self-paid travellers All self-paid travellers All sponsored travellers All high worldly All low worldly All high worldly Mostly high worldly Purchase Purchase Average age: 35 Average age: 37 Average age: 35 Average age: 40 and Usage and Usage Half males / half females More females (57%) Half males / half females Mostly males (76%) Inexperienced travellers Well travelled + high budget Very well travelled Very well travelled Environment Environment Travel July–October Travel during golden weeks One-third travel in October Most flexible re: timing Destination choice: value for Destination choice: scenery Destination choice: culture, Destination choice: scenery and money, relax, scenery and relaxation architecture, scenery architecture Activities: local foods, cities, Activities: local foods, cities, Activities: culture, local foods, Activities: local foods, cities, local Desired Desired meeting locals shopping, relaxing cities, relaxation icons Experience Experience In SA: wildlife + natural In SA: relax at beach + natural In SA: wildlife, culture, relax at In SA: see all icons, then relax at scenery scenery beach beach SA for 7–11 days at 19K rmb SA for 10–15 days at 24K rmb SA for 10–15 days at 25K rmb SA for 6–10 days at 17K rmb Travel agents less influential Travel agents very influential Travel agents influential: Travel agents useful for fulfilment Group travel: convenient, safer Group travel: convenient, itinerary + destination choice only 1/4 know others that travel to easier to get visas Group travel: convenient, Group travel: convenient, safer, Beliefs and Beliefs and SA: neutral WOM Few know others that travelled easier to get visa cheaper Barriers: safety, health, high to SA 1/3 know others that travel to 1/3 know others that travel to SA: Associations Associations costs, lack of time Barriers: lack of knowledge, SA: neutral WOM positive WOM health, safety, language Barriers: safety, health, lack of Barriers: safety, health, lack of knowledge knowledge, value for money, lack of time Info sources: Internet, word of Info sources: travel agents, Info sources: Internet, travel Info sources: Internet, magazines, mouth word of mouth agents, WOM, mags tourism boards Purchase Purchase Little independent travel Little independent travel Half like independent travel Half like independent travel and Usage and Usage Planning time: 1–2 months Planning time: 1–2 months Planning time: 2–3 months Planning time: 1–2 months Behaviour Travel with friends + family Travel with spouse Travel with spouse or friends Travel with colleagues Behaviour Mid-level spend High spend High spend Mid-level spend Use TAs for all bookings: CTS Use TAs for all bookings: CTS Use TAs for most bookings: If make own booking; TAs: CITS and CITS and CITS CTS and CITS and CTSMarketing SA in China Second Edition 2007 76 Copyright © 2007 SA Tourism – not to be used without permission
  • 77. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 77 Copyright © 2007 SA Tourism – not to be used without permission
  • 78. Current Chinese Travellers to South Africa: Demographics Age Chinese travellers to South Africa are typically aged between 25 and 44; the number of arrivals aged 18 to 24 has seen strong growth over the period 2002-2005 China: % of Volume by Age, 2002–2005 Combined 50% 40% 34% 33% 30% Percent of arrivals 20% 16% 10% 9% 6% 1% 1% 0% 18-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs 65+ yrs Refused ’02–’05 20.0% 5.5% 5.6% 2.4% 9.4% -7.9% - CAGR Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 78 Copyright © 2007 SA Tourism – not to be used without permission
  • 79. Current Chinese Travellers to South Africa: Demographics Income and Occupation Chinese visitors to South Africa are distributed fairly evenly across different income categories China: % of Volume by Income, China: % of Volume by Occupation, 2003–2005 Combined1 2002–2005 Combined 100% 100% 75% 75% Percent 50% 50% of 43% arrivals 26% 25% 25% 24% 22% 20% 19% 14% 12% 10% 6% 3% 2% 0% 0% < R5, 000 R5,000 to R10,000 to R20,000 to > R40,000 Business Clerical - Executive Other Professional Retired Student R9,999 R19,999 R39,999 sales ‘03-’05 ‘02-’05 -8.9% 23.4% 17.0% -27.6% -8.8% 156.4% -6.6% 10.3% 7.8% 1.7% -19.8% 30.9% CAGR CAGR Note: 1Breakdown of income category data not available for 2002 Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 79 Copyright © 2007 SA Tourism – not to be used without permission
  • 80. Current Chinese Travellers to South Africa: Demographics City of Residence The majority of Chinese visitors to South Africa hail from Beijing and Shanghai Top 15 Cities of Residence, 2004–2005 Beijing 28,942 Shangai 12,703 Peking 4,541 Guang Xhou 3,395 Shenzhen 2,889 Shenyang 1,803 Fuzhou 1,580 Tiajin 1,336 Victoria Harbor 1,205 Xiamen 875 Nanking 736 Sian 419 Chengdu 414 Changsha 410 Haimen 373 0 10,000 20,000 30,000 40,000 Arrivals (Thousands) Source: Combined SAT Departure Survey Dataset, 2004-2005Marketing SA in China Second Edition 2007 80 Copyright © 2007 SA Tourism – not to be used without permission
  • 81. Current Chinese Travellers to South Africa: Demographics Travel Partner Chinese visitors tend to travel alone Volume of Tourists by Travel Partners, 2003–2005 70 60 57 50 40 Arrivals (Thousands) 30 19 20 20 18 10 10 5 3 0 Alone Children under 18 Colleagues Family/children Friends Spouse/partner Tour group over 18 ’03–’05 22.6% 39.1% 19.6% 29.8% -16.2% -7.0% 70.6% CAGR Source: Combined SAT Departure Survey Dataset, 2003-2005Marketing SA in China Second Edition 2007 81 Copyright © 2007 SA Tourism – not to be used without permission
  • 82. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 82 Copyright © 2007 SA Tourism – not to be used without permission
  • 83. Current Chinese Travellers to South Africa: Travel Behaviour Key Numbers General Business All China VFR Business Holiday Tourism Arrivals Total Volume (’02–’05) 82,639 15,316 51,779 13,979 175,737 Total Volume (’03–’05) 64,024 12,303 40,439 11,309 138,608 TFDS excl. Capex (’03–’05) R515MM R81MM R423MM R62MM R1,196MM Value / Volume Index (’03–’05) 0.8 0.66 1.05 0.55 NA Average Spend / Day (’03–’05) R820 R329 R565 R736 R511 Total Prepaid Spend (’03–’05) R891MM R105MM R557MM R162MM R1,820MM TFDS excl. Capex to Prepaid 0.58 0.77 0.76 0.38 0.66 Spend (’03–’05) 2005 Average Length of Stay 11.0 25.5 16.1 8.0 16.0 Avg. Number of Provinces Visited 2.4 1.8 1.5 1.4 2.0 (2002–2005) Note: Spend without Capex Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 83 Copyright © 2007 SA Tourism – not to be used without permission
  • 84. Current Chinese Travellers to South Africa: Travel Behaviour Seasonality of Travel Seasonality out of China has worsened with peaks occurring in February, May, September and November; the peaks are closely correlated with the Golden Weeks national holidays in China Seasonality, 2005 16% China All Visitors 12% 11% 11% 10% 9% 10% 9% 9% 9% 8% 9% 9% Share of 8% 8% 7% 8% 8% 7% 8% 9% 8% 8% Respondents 8% 6% 7% 6% 4% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 84 Copyright © 2007 SA Tourism – not to be used without permission
  • 85. Current Chinese Travellers to South Africa: Travel Behaviour Times Visited The majority of arrivals are first time visitors Change in Volume by Times Visited, 2002–2005 160 3.9 0.7 138.6 Lived in SA 4.6 2.4 Before 13.4 1.4 4.3 5.2 120 76.6 2.9 10+ Times 20.8 6–9 Times Thousands 80 of Arrivals 4–5 Times 104.1 2–3 Times 37.1 0.7 40 7.4 0.5 0.5 First Time 27.5 0.6 0 2002 First Time 2–3 Times 4–5 Times 6–9 Times 10+ Times Lived in SA 2003–2005 Before ‘02–’05 CAGR 6.3% -1.1% 23.5% 38.7% 54.8% -100.0% Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 85 Copyright © 2007 SA Tourism – not to be used without permission
  • 86. Current Chinese Travellers to South Africa: Travel Behaviour Purpose of Visit to South Africa In both 2004 and 2005 the split between leisure and business travellers was relatively evenly distributed Visits of Chinese Travellers to China: Percent of Volume by Purpose SA, 2004 and 2005 2002–2005 Combined 100% 60% 6% 10% 11% 9% Other 47% 75% 40% 38% 39% 39% VFR Percent of Arrivals 50% Business 20% 25% 9% 44% 43% 7% Holiday 0% 0% General Business VFR Other 2004 2005 Holiday ’02-’05 CAGR 0.7% 7.6% 8.7% 41.6% Source: Combined SAT Departure Survey Dataset, 2002–2005Marketing SA in China Second Edition 2007 86 Copyright © 2007 SA Tourism – not to be used without permission
  • 87. Current Chinese Travellers to South Africa: Travel Behaviour South African Package Tour Types Package travel accounts for more than 40% of Chinese visitors to South Africa Independent Travellers – Package Travellers – Where Purchased? Package Type, 2005 Where Purchased? 100% 100% 1% 3% 7% 7% 4% 2% 1% 1% 2% 6% 16% 28% 6% 80% 80% 1% Independent 55% 3% 5% 1% 60% 60% 42% 85% 83% 40% 40% 76% Full-Package – 7.9% Package 43% Fully-inclusive Package –35.2% 20% 20% 20% 0% 0% Air Accom 0% 10% 20% 30% 40% 50% 60% Air Accom Travel/ Agent Retailer Tour Operator Direct from Airline/ Accommodation Myself Internet Other Stayed with Family or Friends (1) Package = Flight & Accommodation; Full Package = Flight, Accommodation & Food; Fully Inclusive Package = Flight, Accommodation, Food & Coach (2) Includes ONLY travellers whose primary purpose of travelling is holiday (3) Based on Q14) Which one of the following packages did you buy for your trip to South Africa? (4) Based on Q12) Where was airfare to SA/ accommodation in SA bought/paid for? Source: SAT Annual Tourism Report 2005; Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 87 Copyright © 2007 SA Tourism – not to be used without permission
  • 88. Current Chinese Travellers to South Africa: Travel Behaviour Reasons for Visiting Chinese tourists are keen to explore business opportunities in South Africa and are also attracted by the country’s natural beauty Volume of Chinese Tourists by Reasons for Visiting SA, 2005 10,000 9,000 8,620 8,000 7,000 6,579 6,430 6,207 6,000 5,806 5,617 Travellers 5,000 4,481 4,000 3,760 3,529 2,991 3,000 2,210 2,147 2,000 1,286 794 641 1,000 0 Diversity of different country To be able to relax Stop over Value for money Exploring potential Study/education The scenic beauty South Africas The wildlife opportunities different cultures Family/friends Experiencing a The climate attractions business ventures Business/investment uniqueness South Africas Business and escape interests Source: Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 88 Copyright © 2007 SA Tourism – not to be used without permission
  • 89. Current Chinese Travellers to South Africa: Travel Behaviour Top Activities Natural attractions, casino visits and the wildlife on offer are favourite Chinese tourist activities Volume of Chinese Tourists by Activity, 2005 40,000 30,000 27,116 24,562 22,541 22,002 Travellers 20,000 18,701 17,545 10,475 10,166 10,000 6,696 2,307 1,208 1,164 947 728 0 Adventure Medical Wildlife Beach Sporting Trading Health Visiting natural Social None Visited a Casino Cultural, historical Theme parks Business attractions and heritage Note: Excludes nightlife and shopping Source: Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 89 Copyright © 2007 SA Tourism – not to be used without permission
  • 90. Current Chinese Travellers to South Africa: Travel Behaviour Reasons for Satisfaction Most Chinese visitors were satisfied with South Africa’s scenic beauty; many tourists however felt that they had no outstanding experiences Top 15 Reasons for Satisfaction with SA, 2004–2005 The scenic beauty 35 I had no outstanding experience 16 The w ildlife/game parks/safari 16 Hospitality and friendly people 11 Visiting family/friends 6 Good serivce 4 Good infrastructure 4 The diverse experience 3 The culture & heritage 3 Weather/climate 3 Restaurants/food/w ine 3 The diverse experiences 2 Attractions 2 Business 2 Entertainment 1 0 5 10 15 20 25 30 35 40 Volume of Chinese Tourists (Thousands) Source: Combined SAT Departure Survey Dataset, 2004-2005Marketing SA in China Second Edition 2007 90 Copyright © 2007 SA Tourism – not to be used without permission
  • 91. Current Chinese Travellers to South Africa: Travel Behaviour Destinations within South Africa Among Chinese travellers, Gauteng, the Western Cape and the North West were the most visited provinces Provinces Visited by Chinese Travellers, 2005 Limpopo 1% Mpumalanga* Gauteng 6% North West 76% 23% KwaZulu Free State Natal 3% 12% Northern Cape 2% Eastern Cape Legend 5% >50% Western Cape 10-50% 55% <10% * Includes Kruger Park (1) Includes travellers whose primary or secondary purpose of travelling is holiday (2) Based on Q2a) During your visit to South Africa, which of the following provinces did you visit? (3) Based on Q7, what were the main attractions or landmarks that you visited in South Africa. Source: Combined SAT Departure Survey Dataset, 2005Marketing SA in China Second Edition 2007 91 Copyright © 2007 SA Tourism – not to be used without permission
  • 92. Current Chinese Travellers to South Africa: Travel Behaviour Geographic Spread Other than in Gauteng and the Free State, most Chinese visitors stayed in paid accommodation General Holiday Geographic Spread by Accommodation Type, 2002-2005 100% 5% 0% 11% 16% 21% 30% 35% 80% 45% 47% 60% 100% 95% 89% 84% 40% 79% 70% 65% 55% 53% 20% 0% Gauteng Western Eastern Cape Kwa-Zulu Mpumalanga Limpopo North West Northern Free State Cape Natal Cape Paid Accommodation Unpaid Accommodation Note: Paid accommodation includes all accommodation types except for staying with friends and family Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 92 Copyright © 2007 SA Tourism – not to be used without permission
  • 93. Current Chinese Travellers to South Africa: Travel Behaviour Seasonality by Province Arrivals of Chinese tourists are seasonal in most provinces Seasonality by Province, 2003-2005 Seasonality by Province, 2003-2005 Gauteng Western Cape Eastern Cape KZN China 4 3 Monthly arrivals indexed to 2 monthly arrivals 1 0 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2003 2004 2005 Mpumalanga North West Northern Cape Free State China 5 4 Monthly arrivals 3 indexed to monthly 2 arrivals 1 0 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2003 2004 2005 Source: Combined SAT Departure Survey Dataset, 2003-2005Marketing SA in China Second Edition 2007 93 Copyright © 2007 SA Tourism – not to be used without permission
  • 94. Current Chinese Travellers to South Africa: Travel Behaviour Other African Countries Visited Chinese visitors tend not to visit other African countries while in South Africa; only Zimbabwe receives some Chinese tourists from South Africa Other African Countries Visited, 2002-2005 Tunisia Morocco Algeria Libya Egypt. Western Sahara Mauritania Mali Niger Senegal Chad Eritrea Gambia Burkina Faso Sudan Guinea-Bissau Djibouti Guinea Benin Nigeria Ghana 0.7% Somalia Sierra Leone Cote Ethiopia Cen. Afr. Rep. Liberia dIvoire Cameroon Togo Uganda Equat. Guinea Kenya Congo 2.7% Gabon Dem. Rep. Rwanda Congo Burundi Seychelles Legend Tanzania >5% Angola Malawi 2.5% Zambia 4-5% 3.1% Mozambique 2-3% Zimbabwe 2.7 Namibia Madagascar 6.7% Botswana 1% 2.4% Mauritius Not mentioned / Score below Swaziland 1% 1.6% Lesotho (1) Includes travellers whose primary or secondary purpose of travelling is holiday 1.7% (2) Based on Q8d) Including this trip, what other African countries are you visiting? Source: Combined SAT Departure Survey Dataset, 2002-2005Marketing SA in China Second Edition 2007 94 Copyright © 2007 SA Tourism – not to be used without permission
  • 95. Current Chinese Travellers to South Africa: Travel Behaviour Spending in South Africa While Chinese tourists have been spending more in preparation for their trip to SA, they have been spending less once they arrive Average Prepaid Spend, 2002–2005 Average SA Spend Per Trip, 2002–2005 20,000 20,000 15,070 Expenditure per trip, excl capex (Rands) Expenditure per trip, excl capex (Rands) 15,000 15,000 14,019 13,329 11,872 11,107 10,884 10,000 10,000 9,458 8,705 5,000 5,000 0 0 2002 2003 2004 2005 2002 2003 2004 2005 Mean = R12,598 Mean = R12,598 Mean = R11,013 Mean = R11,013 Source: Combined SAT Departure Survey Dataset, 2002–2005Marketing SA in China Second Edition 2007 95 Copyright © 2007 SA Tourism – not to be used without permission
  • 96. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 96 Copyright © 2007 SA Tourism – not to be used without permission
  • 97. Potential Market and Their Perceptions Market Potential While Chinese travellers to South Africa remain small in contrast to the total outbound market, 33% now indicate that they are likely to visit the country in the future Loyalty Segments (based on all respondents), 2006 South Africa 11% 5% 17% 3% 4% 60% The combined “likely” segments translate to 4,257,000 likely” people (33% of 12.9M total market size) 0% 25% 50% 75% 100% Current & Likely Past & Likely Never, but Likely Current, but Unlikely Past, but Unlikely Never & Unlikely Current & Likely: Have visited for leisure in past 18 months (Q16b) and intend to visit for leisure in the future (Q14) Past & Likely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and intend to visit for leisure in the future (Q14) Never, but Likely: Have not visited for leisure in the past 5 years (Q16b) and intend to visit for leisure in the future (Q14) Current, but Unlikely: Have visited for leisure in past 18 months (Q16b) and do not intend to visit for leisure in the future (Q14) Past, but Unlikely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and do not intend to visit for leisure in the future (Q14) Never & Unlikely: Have not visited for leisure in the past 5 years (Q16b) and do not intend to visit for leisure in the future (Q14) Source: Brand Tracking Survey, November 2006 (n = 525)Marketing SA in China Second Edition 2007 97 Copyright © 2007 SA Tourism – not to be used without permission
  • 98. Potential Market and Their Perceptions Awareness Over Time Total Awareness and Familiarity (based on all respondents) 80% Top-of-Mind Awareness Unaided Awareness Aided Awareness Percent Very Familiar With 60% 54% 58% 44% 40% 36% 31% 47% 34% 20% 25% 15% 8% 9% 2% 2% 6% 1% 2% 0% Mar-04 Feb-05 Nov-05 Nov-06 Percent very 7% 10% 4% 7% familiar with Based on all n=813 n=681 n=399 n=525 respondents 2004 Aided (Q14): Which of the following international destinations for leisure purposes have you ever seen or heard travel information about? (By information we mean advertisements, special offers, brochures, website information, articles, travel posters, television programming, etc.) (Select all that apply) Unaided (Q13): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for enjoyment.” When you think about “international destinations for leisure purposes,” which countries come to mind? Top-of-Mind (Q13): First mention to unaided awareness question. Percent “Very Familiar” with Each Country (Q15): Of all respondents, the percentages who are “very familiar” with each as an international travel destination. 2005/2006 Aided (Q9): Which of the following countries have you heard of as an international destination for leisure purposes prior to this survey? Unaided (Q7): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for leisure and enjoyment.” When you think about “international destinations for leisure purposes,” which countries come to mind? Top-of-Mind (Q7): First mention to unaided awareness question. Percent “Very Familiar” with Each Country (Q11): Of all respondents, the percentages who are “very familiar” with each as an international destination for leisure purposes. Source: Brand Tracking Survey, November 2006Marketing SA in China Second Edition 2007 98 Copyright © 2007 SA Tourism – not to be used without permission
  • 99. Potential Market and Their Perceptions Reasons for Visiting SA vs. Reasons for Not Visiting SA Reasons for Visiting South Africa*, 2006 To relax 64% To experience a different culture 62% To see the scenery / beauty 58% Engage in a variety of activities 47% Warm climate 47% My friends / family recommended it 44% To fulfill a dream 41% Friendly people 36% I went as part of a group 35% My travel agent recommended it 33% 0% 25% 50% 75% Reasons for Not Visiting South Africa**, 2006 General issues of safety 60% Concerns for my personal safety 52% Uncertain about political climate / civil unrest 49% Concern about AIDS 30% Don’t know anyone there 30% Too much time to get there 27% Not a relaxing destination 27% Too expensive to get there 19% Too expensive once there 12% Nothing interesting to do there 10% Other (please specify) 2% 0% 25% 50% 75% * Based on those who have visited South Africa for leisure in the past 5 years ((n=121); 23% of all respondents); **Based on those who have not visited South Africa in the past 5 years for either business or pleasure ((n=186); 35% of all respondents); Reasons for Visiting South Africa (Q35a): Why did you choose to visit South Africa as a destination for leisure purposes? (Select all that apply); Reasons for Not Visiting South Africa (Q34): Why haven’t you visited South Africa for leisure purposes in the past 5 years? (Select all that apply) Source: Brand Tracking Survey, November 2006Marketing SA in China Second Edition 2007 99 Copyright © 2007 SA Tourism – not to be used without permission
  • 100. Potential Market and Their Perceptions Encouraging First Time Visitors Special offers on safari, a chance to explore off the beaten path and visits to surrounding countries are the most important factors encouraging visitation What Would Encourage First Time Visitors to Go to South Africa? (2006) Special offer on safari 57% Chance to explore "off the 46% beaten path" Use South Africa as a base to 46% visit surrounding countries Special offer on flights 29% See friends / family 21% Special offer on hotels 14% Nothing would make me want to 2% return Other (please specify) 3% 0% 10% 20% 30% 40% 50% 60% 70% Based on those who have not visited South Africa in the past 5 years and do not intend to in the future ((n=134); 26% of all respondents) Encourage Visitation (Q40): What, if anything, would encourage you to visit South Africa for leisure purposes in the future? (Select all that apply) Source: Brand Tracking Survey, November 2006Marketing SA in China Second Edition 2007 100 Copyright © 2007 SA Tourism – not to be used without permission
  • 101. Potential Market and Their Perceptions Drivers of Attraction for Future Visitors Interest in a different culture and scenic beauty are the two key drivers for future visits to South Africa Reasons for Interest in Leisure Visit to South Africa in the Future (based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure), 2006 To experience a different culture 68% To see the scenery / beauty 51% To fulfill a dream 42% To relax 32% To see the change since apartheid/see historic sites 26% My friends / family recommended it 26% My travel agent recommended it 25% Engage a variety of activities 22% Saw a special offer 21% Friendly people 20% Warm climate 19% To go on safari 14% Business 12% To visit friends / relatives 11% Other (please specify) 1% 0% 25% 50% 75% Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=91); 17% of all respondents) Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply) Source: Brand Tracking Survey, November 2006Marketing SA in China Second Edition 2007 101 Copyright © 2007 SA Tourism – not to be used without permission
  • 102. Potential Market and Their Perceptions Reasons for Not Returning Safety-related concerns prevent some Chinese visitors from returning Reasons for Not Returning to South Africa (based on those who visited South Africa for leisure in the past 5 years) Reasons for Not Returning for Leisure (n=52) General issues of safety (health, weather, roads, crime, etc.) 50% Concern about AIDS 38% Afraid of political climate/civil unrest 38% Too much time to get there 37% Concerns for my personal safety 35% Did not feel safe 27% Would prefer to visit other places first 19% Don’t know anyone there 17% Not a relaxing destination 13% Nothing interesting to do there 12% It’s boring 12% Too expensive once there 6% Too expensive to get there 4% Unfriendly people 4% Other (please specify) 2% Warning some bases below 75 Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=52); 10% of all respondents) Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply) Source: Brand Tracking Survey, November 2006Marketing SA in China Second Edition 2007 102 Copyright © 2007 SA Tourism – not to be used without permission
  • 103. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 103 Copyright © 2007 SA Tourism – not to be used without permission
  • 104. Activation Strategy Organised WanderlustersMarketing SA in China Second Edition 2007 104 Copyright © 2007 SA Tourism – not to be used without permission
  • 105. Activation Strategy Organised Wanderlusters The 4 Marketing “Ps” Product Product Promotion Promotion Would be a relaxing, natural scenery Would be a relaxing, natural scenery Educate the segment about what there Educate the segment about what there oriented holiday in SA with some oriented holiday in SA with some is to do in SA: is to do in SA: planned activities to taste local food, planned activities to taste local food, – South Africa can offer you a unique – South Africa can offer you a unique visit cities, and shop visit cities, and shop holiday experience of visiting the holiday experience of visiting the Trip format should be a group package Trip format should be a group package stunning natural scenery of the tip of stunning natural scenery of the tip of tour tour Africa Africa As there is a higher budget for this As there is a higher budget for this – There are also great beaches and – There are also great beaches and segment, package options should be segment, package options should be relaxation opportunities relaxation opportunities available (some variation in activities) so available (some variation in activities) so – South Africa is a developed and safe – South Africa is a developed and safe traveller can effortlessly choose the traveller can effortlessly choose the country to visit country to visit most suitable one most suitable one Place // Channel Place Channel Price Price Focus on large travel agencies. Train Focus on large travel agencies. Train 20,000–30,000 RMB per person for a 20,000–30,000 RMB per person for a agency sales force so they are agency sales force so they are 10–14 day trip (all inclusive of flights, 10–14 day trip (all inclusive of flights, knowledgeable about South Africa’s knowledgeable about South Africa’s accommodation, etc.) accommodation, etc.) offerings and can design packages that offerings and can design packages that Mid-point 24,000 RMB for a 13 day trip Mid-point 24,000 RMB for a 13 day trip are most suitable for these high-budget are most suitable for these high-budget Higher holiday budgets than other Higher holiday budgets than other consumers: consumers: segments segments – Travel agents are main source of – Travel agents are main source of travel information travel information – There is high reliance on travel – There is high reliance on travel agents to plan activities at agents to plan activities at destination, prepare packages, and destination, prepare packages, and make bookings make bookingsMarketing SA in China Second Edition 2007 105 Copyright © 2007 SA Tourism – not to be used without permission
  • 106. Activation Strategy Organised Wanderlusters: Drivers and Barriers Overall Drivers Overall Drivers Overall Barriers Overall Barriers Believe holidays are a time to relax and see Believe holidays are a time to relax and see Most do not receive any paid vacation days Most do not receive any paid vacation days beautiful natural scenery beautiful natural scenery Shopping abroad appeals to Segment 4 — Shopping abroad appeals to Segment 4 — they have a high income and shopping is a they have a high income and shopping is a main activity during their holidays main activity during their holidays International vacations are a regular part of International vacations are a regular part of life. They are experienced travelers and set life. They are experienced travelers and set aside a high holiday budget every year aside a high holiday budget every year Drivers for South Africa Drivers for South Africa Barriers for South Africa Barriers for South Africa Relatively high desire to go to South Africa Relatively high desire to go to South Africa Lack awareness of South Africa and Lack awareness of South Africa and knowledge on what there is to do there as a knowledge on what there is to do there as a Perceive South Africa as a destination with Perceive South Africa as a destination with tourist tourist beautiful natural scenery and is welcoming to beautiful natural scenery and is welcoming to tourists tourists Concerned about safety in South Africa, and Concerned about safety in South Africa, and to a lesser degree health and communication to a lesser degree health and communication Already traveled to many countries and Already traveled to many countries and difficulties difficulties South Africa is a destination they have not South Africa is a destination they have not been to yet been to yetMarketing SA in China Second Edition 2007 106 Copyright © 2007 SA Tourism – not to be used without permission
  • 107. Activation Strategy Organised Wanderlusters: Critical Leverage Points in the Buying Process The key stages for Organised Wanderlusters are Destination Awareness, Origination of Need / Desire to Take a Holiday and Destination and Trip Type Selection Key leverage point for Segment 4 — there is high conversion Key leverage point for Segment 4 — there is high conversion Destination Awareness Destination Awareness rate between awareness and positivity, desire, making plans rate between awareness and positivity, desire, making plans and actually going to South Africa and actually going to South Africa Origination of Need // Desire to Origination of Need Desire to Lack of information about what there is to do in South Africa is Lack of information about what there is to do in South Africa is Take a Holiday Take a Holiday Segment 4’s main barrier Segment 4’s main barrier Train travel agents to be knowledgeable about South Africa so Train travel agents to be knowledgeable about South Africa so Destination and Destination and they can share the information with Segment 4 they can share the information with Segment 4 Trip Type Selection Trip Type Selection Distribute posters and brochures widely amongst the major Distribute posters and brochures widely amongst the major travel agencies with pictures of South Africa’s natural scenery travel agencies with pictures of South Africa’s natural scenery Trip Planning Trip Planning Promote South Africa as the destination where they can relax Promote South Africa as the destination where they can relax while viewing stunning natural scenery while viewing stunning natural scenery Trip Booking Trip Booking Launch a campaign to portray South Africa as the world’s best Launch a campaign to portray South Africa as the world’s best place for diamond shopping place for diamond shopping Usage // Trip Behaviour Usage Trip Behaviour This segment prefers travelling via group package tours and This segment prefers travelling via group package tours and does so because they are convenient does so because they are convenient All South Africa products should be full group package tours All South Africa products should be full group package tours Post-trip Evaluation Post-trip Evaluation Offer several package options with variations in activities so Offer several package options with variations in activities so traveller can easily choose the package they prefer most traveller can easily choose the package they prefer mostMarketing SA in China Second Edition 2007 107 Copyright © 2007 SA Tourism – not to be used without permission
  • 108. Activation Strategy Experienced WanderlustersMarketing SA in China Second Edition 2007 108 Copyright © 2007 SA Tourism – not to be used without permission
  • 109. Activation Strategy Experienced Wanderlusters The 4 Marketing “Ps” Product Product Promotion Promotion Desires a trip to view the rich wildlife of Desires a trip to view the rich wildlife of South Africa offers rich diversity of (safe South Africa offers rich diversity of (safe South Africa, with some activities to South Africa, with some activities to and developed) cultural experiences and developed) cultural experiences experience Africa culture, to see natural experience Africa culture, to see natural and nature-based activities: and nature-based activities: scenery, and to relax at the beach scenery, and to relax at the beach – Beautiful natural scenery and wildlife – Beautiful natural scenery and wildlife Trip format should be a group package Trip format should be a group package – Famous cities such as Cape town – Famous cities such as Cape town tour tour with fresh local seafood with fresh local seafood Package options include upgrade to Package options include upgrade to luxury accommodation, as many in luxury accommodation, as many in segment do have higher budgets segment do have higher budgets Place // Channel Place Channel Price Price Direct to consumer communication via Direct to consumer communication via 20,000–30,000 RMB per person for an 20,000–30,000 RMB per person for an the Internet would work best, as they: the Internet would work best, as they: 8–14 day package (all inclusive of 8–14 day package (all inclusive of – Use Internet significantly more than – Use Internet significantly more than flights, accommodation, etc.) flights, accommodation, etc.) other information sources other information sources Mid-point is 25,000 RMB per person for Mid-point is 25,000 RMB per person for – Lack of knowledge about South – Lack of knowledge about South 13 days, or 1,900 RMB per day 13 days, or 1,900 RMB per day Africa is a key barrier Africa is a key barrier Higher price point reflects high budget Higher price point reflects high budget Additionally, educate travel agencies on Additionally, educate travel agencies on and holiday spend of segment and holiday spend of segment South Africa product offerings so agents South Africa product offerings so agents can help travellers decide on activities can help travellers decide on activities at destination at destinationMarketing SA in China Second Edition 2007 109 Copyright © 2007 SA Tourism – not to be used without permission
  • 110. Activation Strategy Experienced Wanderlusters: Drivers and Barriers Overall Drivers Overall Drivers Overall Barriers Overall Barriers Like to go on holiday to explore foreign Like to go on holiday to explore foreign Tend to have destination in mind before Tend to have destination in mind before cultures and try different kinds of foreign cultures and try different kinds of foreign going to travel agents and not easily going to travel agents and not easily cuisines cuisines influenced by agents influenced by agents Vacations are opportunities to see beautiful Vacations are opportunities to see beautiful natural scenery which one cannot find at natural scenery which one cannot find at home home Occasion to go to a place with better weather Occasion to go to a place with better weather than in China than in China Drivers for South Africa Drivers for South Africa Barriers for South Africa Barriers for South Africa High interest, positivity and desire to go to High interest, positivity and desire to go to Particularly worried about personal safety in Particularly worried about personal safety in South Africa South Africa South Africa South Africa Many positive impressions of South Africa, Many positive impressions of South Africa, Associate South Africa with apartheid and Associate South Africa with apartheid and including plentiful wildlife, welcoming to including plentiful wildlife, welcoming to AIDS AIDS tourists, luxury safaris, all year round tourists, luxury safaris, all year round destination and good value for money destination and good value for money Many have friends and relatives who have Many have friends and relatives who have been to South Africa and returned with good been to South Africa and returned with good word-of-mouth word-of-mouthMarketing SA in China Second Edition 2007 110 Copyright © 2007 SA Tourism – not to be used without permission
  • 111. Activation Strategy Experienced Wanderlusters: Critical Leverage Points in the Buying Process The key stages for Experienced Wanderlusters are Destination and Trip Type Selection and Trip Booking Destination Awareness Destination Awareness Segment 4 likes to do diverse types of activities on holiday, Segment 4 likes to do diverse types of activities on holiday, ranging from nature to culture ranging from nature to culture Origination of Need // Desire to Origination of Need Desire to Take a Holiday Take a Holiday Promote South Africa as a destination which has a variety of Promote South Africa as a destination which has a variety of offerings, from scenery and wildlife to an unique African- offerings, from scenery and wildlife to an unique African- European culture to fresh seafood European culture to fresh seafood Destination and Destination and Trip Type Selection Trip Type Selection There is a need to translate high interest, positivity and desire There is a need to translate high interest, positivity and desire to go into actually making plans. With high spending and rich to go into actually making plans. With high spending and rich Trip Planning Trip Planning travel experience, Segment 5 is also the target of competitors travel experience, Segment 5 is also the target of competitors Emphasize positive perceptions that South Africa is an all- Emphasize positive perceptions that South Africa is an all- year-round destination and good value for money to year-round destination and good value for money to Trip Booking Trip Booking differentiate from competitors differentiate from competitors Train travel agencies so they are more knowledgeable and can Train travel agencies so they are more knowledgeable and can help travellers decide on activities to do in South Africa help travellers decide on activities to do in South Africa Usage // Trip Behaviour Usage Trip Behaviour Offer more high-end packages with longer stays and optional Offer more high-end packages with longer stays and optional luxury upgrades luxury upgrades Include activities of viewing wildlife and natural scenery, Include activities of viewing wildlife and natural scenery, Post-trip Evaluation Post-trip Evaluation experiencing African culture and relaxing at the beach experiencing African culture and relaxing at the beachMarketing SA in China Second Edition 2007 111 Copyright © 2007 SA Tourism – not to be used without permission
  • 112. Activation Strategy Upcoming WanderlustersMarketing SA in China Second Edition 2007 112 Copyright © 2007 SA Tourism – not to be used without permission
  • 113. Activation Strategy Upcoming Wanderlusters The 4 Marketing “Ps” Product Product Promotion Promotion Would like a planned itinerary that Would like a planned itinerary that Addressing drivers: South Africa is a Addressing drivers: South Africa is a combines safari, great, nature, (and combines safari, great, nature, (and unique destination to see the striking unique destination to see the striking potentially the beach and a visit to potentially the beach and a visit to natural scenery of Cape Point as well as natural scenery of Cape Point as well as developed cities) developed cities) exotic African wildlife exotic African wildlife Should also include meals to taste local Should also include meals to taste local Addressing barriers: South Africa is a Addressing barriers: South Africa is a cuisine cuisine safe holiday destination that offers good safe holiday destination that offers good Ideal organization would be a group Ideal organization would be a group value for money as well as provides value for money as well as provides package tour including a Chinese- package tour including a Chinese- enough time to see all its important enough time to see all its important speaking guide, where everything is speaking guide, where everything is offerings in a short trip offerings in a short trip organized and convenient for the organized and convenient for the traveller traveller Place // Channel Place Channel Price Price Emphasis on information over the Emphasis on information over the 15,000–25,000 RMB per person for 15,000–25,000 RMB per person for Internet because: Internet because: 5–10 day trip (all inclusive of flights, 5–10 day trip (all inclusive of flights, – Seek information on the Internet – Seek information on the Internet accommodation, etc.) accommodation, etc.) more than any other place more than any other place Mid-point 19,000 RMB per person for 10 Mid-point 19,000 RMB per person for 10 – Involved travellers who want to have – Involved travellers who want to have days,190 RMB per day days,190 RMB per day rich information before choosing and rich information before choosing and Wide range due to wide range of Wide range due to wide range of planning holidays planning holidays desired trip length desired trip length Travel agents should be also educated Travel agents should be also educated in order to drive up desire by offering in order to drive up desire by offering good value for money and targeted good value for money and targeted packages packagesMarketing SA in China Second Edition 2007 113 Copyright © 2007 SA Tourism – not to be used without permission
  • 114. Activation Strategy Upcoming Wanderlusters: Drivers and Barriers Overall Drivers Overall Drivers Overall Barriers Overall Barriers Relaxation is by far the most important Relaxation is by far the most important Limited time to travel — do not travel Limited time to travel — do not travel part of a holiday part of a holiday on sponsored trips and most take 7 or on sponsored trips and most take 7 or less days of vacation each year less days of vacation each year Beautiful natural scenery makes Beautiful natural scenery makes destinations very attractive destinations very attractive Although they have a high holiday Although they have a high holiday budget, they are price sensitive want budget, they are price sensitive want Friend and relative recommendations Friend and relative recommendations good value for their money good value for their money excite them to go on holiday to excite them to go on holiday to particular destinations particular destinations Drivers for South Africa Drivers for South Africa Barriers for South Africa Barriers for South Africa High awareness and active interest in High awareness and active interest in Most of their friends and relatives who Most of their friends and relatives who South Africa South Africa have been to South Africa returned have been to South Africa returned with neutral to negative reviews with neutral to negative reviews South Africa’s natural beauty and South Africa’s natural beauty and wildlife seem very attractive wildlife seem very attractive South Africa’s personal safety and South Africa’s personal safety and health issues are worrisome health issues are worrisomeMarketing SA in China Second Edition 2007 114 Copyright © 2007 SA Tourism – not to be used without permission
  • 115. Activation Strategy Upcoming Wanderlusters: Critical Leverage Points in the Buying Process The key stages for Upcoming Wanderlusters are Origination of Need, Destination and Trip Type Selection and Trip Booking Destination Awareness There is a need for relaxation on holiday. Promotions should There is a need for relaxation on holiday. Promotions should Destination Awareness target their desire to go on one international holiday trip each target their desire to go on one international holiday trip each year, rewarding themselves for a hard year of work year, rewarding themselves for a hard year of work Origination of Need // Desire to Origination of Need Desire to Take a Holiday Take a Holiday This is the critical point for Segment 3 as we are “losing” the This is the critical point for Segment 3 as we are “losing” the most people here. Their high active interest and positivity drop most people here. Their high active interest and positivity drop Destination and Destination and sharply on desire and plans to go sharply on desire and plans to go Trip Type Selection Trip Type Selection Through an informative website, emphasize how the natural Through an informative website, emphasize how the natural beauty and wildlife of South Africa is one-of-a-kind. Turn their beauty and wildlife of South Africa is one-of-a-kind. Turn their Trip Planning Trip Planning already positive perceptions of South Africa into action and already positive perceptions of South Africa into action and distinguish South Africa from competitors with similar offerings distinguish South Africa from competitors with similar offerings Address their concerns of crime and AIDS with more positive Address their concerns of crime and AIDS with more positive Trip Booking Trip Booking media coverage (newspaper or TV) on any improvements media coverage (newspaper or TV) on any improvements South Africa has made in this area South Africa has made in this area Usage // Trip Behaviour Usage Trip Behaviour Offer packages of different length, some as short as 5 days, to Offer packages of different length, some as short as 5 days, to meet the wide range of desired trip duration meet the wide range of desired trip duration Offer more packages fit for this segment which take place Offer more packages fit for this segment which take place Post-trip Evaluation Post-trip Evaluation between July to October. This segment’s vacationing time is between July to October. This segment’s vacationing time is very concentrated during the months but constrained by their very concentrated during the months but constrained by their few number of vacation days few number of vacation daysMarketing SA in China Second Edition 2007 115 Copyright © 2007 SA Tourism – not to be used without permission
  • 116. Activation Strategy Purpose TravellersMarketing SA in China Second Edition 2007 116 Copyright © 2007 SA Tourism – not to be used without permission
  • 117. Activation Strategy Purpose Travellers The 4 Marketing “Ps” Product Product Promotion Promotion Would like an itinerary that allows one to Would like an itinerary that allows one to Building awareness by referencing other Building awareness by referencing other see all the unique sights of South Africa: see all the unique sights of South Africa: familiar destinations: South Africa familiar destinations: South Africa combining stunning nature, mountains, combining stunning nature, mountains, possesses the natural scenery and possesses the natural scenery and and the beach with modern city icons and the beach with modern city icons wildlife of Kenya as well as the modern wildlife of Kenya as well as the modern and architecture and architecture infrastructure of Australia and the US infrastructure of Australia and the US Desires group package tours that are Desires group package tours that are Promote South Africa as a destination Promote South Africa as a destination mix of active holiday and relaxing mix of active holiday and relaxing that recently gained ADS status and that recently gained ADS status and downtime downtime therefore, is a new “must-see” therefore, is a new “must-see” destination destination Place // Channel Place Channel Price Price Target organizational buyers for Target organizational buyers for Two price ranges: 6–7 days packages Two price ranges: 6–7 days packages companies and government companies and government for 10,000–15,000 RMB per person or for 10,000–15,000 RMB per person or organizations: organizations: 15–21 day package for 20,000–30,000 15–21 day package for 20,000–30,000 – Sponsored travellers do not have as – Sponsored travellers do not have as RMB per person (all inclusive of flights, RMB per person (all inclusive of flights, much direct interaction with travel much direct interaction with travel accommodation, etc.) accommodation, etc.) agents agents Mid-point is 17,000 RMB for 11 day trip, Mid-point is 17,000 RMB for 11 day trip, As they are very involved, educate As they are very involved, educate 1,500 RMB per day 1,500 RMB per day consumers on what South Africa has to consumers on what South Africa has to Wide range suggests varying budgets Wide range suggests varying budgets offer through Internet websites, country offer through Internet websites, country for different types of organizations that for different types of organizations that tourism boards, and travel magazines tourism boards, and travel magazines pay for the sponsored travelling pay for the sponsored travellingMarketing SA in China Second Edition 2007 117 Copyright © 2007 SA Tourism – not to be used without permission
  • 118. Activation Strategy Purpose Travellers: Drivers and Barriers Overall Drivers Overall Drivers Overall Barriers Overall Barriers Like traveling because it is relaxing and a Like traveling because it is relaxing and a Do not have full control over destination Do not have full control over destination time to enjoy beautiful natural scenery time to enjoy beautiful natural scenery choice choice Opportunity to explore different styles of Opportunity to explore different styles of architecture in the world architecture in the world Holidays are often sponsored and thus a Holidays are often sponsored and thus a opportunity to have fun for free or at a low opportunity to have fun for free or at a low cost cost Drivers for South Africa Drivers for South Africa Barriers for South Africa Barriers for South Africa South Africa is one of the few countries they South Africa is one of the few countries they Concerned about personal safety and health Concerned about personal safety and health have not been to yet have not been to yet in South Africa in South Africa Believe South Africa offers stunning natural Believe South Africa offers stunning natural Some lack of knowledge about what to do Some lack of knowledge about what to do scenery has good weather and is an all-year- scenery has good weather and is an all-year- there and what icons they can see there and what icons they can see round destination round destination Holidays in South Africa are good value for Holidays in South Africa are good value for money moneyMarketing SA in China Second Edition 2007 118 Copyright © 2007 SA Tourism – not to be used without permission
  • 119. Activation Strategy Purpose Travellers: Critical Leverage Points in the Buying Process The key stages for Purpose Travellers are Trip Planning and Trip Booking Destination Awareness Destination Awareness Sponsored travellers do not interact much with travel agents Sponsored travellers do not interact much with travel agents Origination of Need // Desire to Origination of Need Desire to Take a Holiday Take a Holiday Target organizational buyers for companies and government Target organizational buyers for companies and government organization organization Destination and Destination and Provide an informative Internet website, country tourism board Provide an informative Internet website, country tourism board Trip Type Selection Trip Type Selection and travel magazine articles — Segment 8 includes many and travel magazine articles — Segment 8 includes many travellers who seek information from several sources when travellers who seek information from several sources when planning holidays planning holidays Trip Planning Trip Planning Segment 8 prefers package tours that are a mix of active Segment 8 prefers package tours that are a mix of active Trip Booking Trip Booking holiday and relaxing downtime holiday and relaxing downtime Design packages which pack in a variety of activities, including Design packages which pack in a variety of activities, including seeing nature, mountains, local icons and architecture and seeing nature, mountains, local icons and architecture and Usage // Trip Behaviour Usage Trip Behaviour resting at the beach resting at the beach Offer two ranges of price points to cater to different budgets of Offer two ranges of price points to cater to different budgets of organizations sponsoring the trip (lower price for a 6–7 day trip organizations sponsoring the trip (lower price for a 6–7 day trip Post-trip Evaluation Post-trip Evaluation and a higher price for a 15–21 day trip) and a higher price for a 15–21 day trip)Marketing SA in China Second Edition 2007 119 Copyright © 2007 SA Tourism – not to be used without permission
  • 120. Agenda Market Overview Travel Patterns Channel Consumers – Our Target Market – Target Segments Current Chinese Travellers to South Africa – Demographics – Travel Behaviour Potential Market and Their Perceptions Activation Strategy Hong KongMarketing SA in China Second Edition 2007 120 Copyright © 2007 SA Tourism – not to be used without permission
  • 121. Hong Kong Market Overview HK enjoys a high standard of living and has an affluent population by global standards Top 15 Wealthiest Countries, 2005 Total Area: 1,092 square km Total Area: 1,092 square km Rank Country GDP per capita ($*) 1 Luxembourg 69,800 Population: 6,940,432 (July 2006 est.) Population: 6,940,432 (July 2006 est.) 2 Norway 42,364 GDP: U.S. $253.1B (2006 est.) GDP: U.S. $253.1B (2006 est.) 3 United States 41,399 GDP per Capita: $33,479* GDP per Capita: $33,479* 4 Ireland 40,610 GDP real growth rate: 5.9% (2006 est.) GDP real growth rate: 5.9% (2006 est.) 5 Iceland 35,115 6 Denmark 34,740 7 Canada 34,273 8 Hong Kong 33,479 9 Austria 33,432 10 Switzerland 32,571 11 Qatar 31,397 12 Belgium 31,244 13 Finland 31,208 14 Australia 30,897 15 Netherlands 30,862 * International dollars Source: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006Marketing SA in China Second Edition 2007 121 Copyright © 2007 SA Tourism – not to be used without permission
  • 122. Hong Kong Travel Patterns HK residents have the highest incidence of leisure travel among the Asian countries Incidence of Leisure Travel 50% Likely key drivers include: Likely key drivers include: 44.6% An affluent population An affluent population 42.7% – Among the highest per – Among the highest per capita GDP in Asia capita GDP in Asia – Low tax rate – Low tax rate 33.0% 32.6% % of total adult population – High disposable income – High disposable income Small state with limited Small state with limited 25.5% domestic tourism 25% 23.3% domestic tourism 20.5% possibilities possibilities Travel convenience as the Travel convenience as the regional passenger air hub regional passenger air hub Expatriates unlikely to be a Expatriates unlikely to be a 6.4% key driver key driver 4.4% 3.9% .. .. .. as non-Chinese as non-Chinese 0% nationals are only 7% of total nationals are only 7% of total Hong Singapore Australia Malaysia Japan Taiwan South China Thialnd Philippines HK population HK population Kong Korea Source: CTCMarketing SA in China Second Edition 2007 122 Copyright © 2007 SA Tourism – not to be used without permission
  • 123. Hong Kong Travel Patterns: Breakdown of Outbound Travel by Destination South and Southeast Asia, including destinations like Thailand, Singapore, the Philippines and Malaysia, are the major drawcards for Hong Kong travellers Outbound HK Travellers, Outbound HK Travellers, 2005 20051 80,000 4,000,000 Australia and New Zealand 254,229 72,300 70,000 Americas 348,384 Others 5,787 Europe and Middle East 416,908 60,000 3,000,000 North Asia 811,968 50,000 Thousands 40,000 2,000,000 China and 66,513 30,000 Macao South and Southeast Asia 2,163,346 20,000 1,000,000 10,000 0 0 Note: 1Excludes “Others” Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006Marketing SA in China Second Edition 2007 123 Copyright © 2007 SA Tourism – not to be used without permission
  • 124. Hong Kong Channel: Strategic Position of South Africa in Hong Kong Travel Market High market penetration Slowed growth high SA as a rates Tourist Price pressure of Product in commodity products Hong Kong High South Africa is an High market Maturity of established transparency and comparability Hong Kong destination within an Travel Market experienced market High consumer sophistication and experience Tendency of channel to low specialize Profitability driven by low high scale High Maturity of Product High market Variety of Competitive Frequency of Standardised share has packages pricing groups knowledge of been to SA has appropriate sales staff re exhausted product marketMarketing SA in China Second Edition 2007 124 Copyright © 2007 SA Tourism – not to be used without permission
  • 125. Hong Kong Channel: Hong Kong — A Problem of Shelf-Space Consumer Perspective Dominant Market Logic Channel Perspective Consumers have tiered destinations based on awareness and preference Market is defined by “off the Market is defined by “off the Scale is king Consumers choose destinations in the same tier based on departure date and shelf products” shelf products” – High volume concentration in top duration of trip players Group tours, perceived as cheaper and – Strong brand name, wide retail more convenient, is the preferred way coverage, and low price leads to of travel particularly for far away Successful products require Successful products require high market share unfamiliar destinations “shelf space” “shelf space” – Product standardization facilitates Consumers shop around in different retail stores for best value mass marketing and sales SA currently is a known but not SA has passed the new product preferred second tier destination for HK introduction / novelty stage and is a consumers highly standardized product regularly Successful marketing requires Successful marketing requires SA travellers are mostly between 30–40 available with all major wholesalers and strong brand strong brand years old, upper middle class, travelling integrated retailers with 8 day 5 night group tours Almost none — existence of repeat travel SA is currently positioned as a mid-to-high end destination for good value accommodation and food SAA has strong presence in the trade, which can be Competitor better leveraged to promote SA Perspective SAT has minimum presence in the market and in the tradeMarketing SA in China Second Edition 2007 125 Copyright © 2007 SA Tourism – not to be used without permission
  • 126. Hong Kong Channel: South Africa Leisure Travel Channel Structure* In Hong Kong, group package tours represent over 90% of total leisure travel to South Africa Product Intermediaries Retailers Consumers Owners 5%, 0% x%, y%: where x=% 5%, 5% of total flight volume, Ticketing Biz Travel y=% of total tour Airlines Consolidators Specialists product volume 20%, 0% 75%, 0% >5%, >5% Incentive 0%, 5% Tours SA Hotels 0%,5% SA Inbound 0%, 75% Integrated Tour Operators Retailers 70%, 70% 0%, 95% 0%, 25% >5%, >5% SA Attractions HK >5%, >5% Wholesalers 5%, 5% Self- 15%, 15% Sub-agents Sub- funded SA Transportation 15%, 15% Travellers Integrated travel agents, which are vertically and horizontally integrated, command 70% of the long-haul leisure travel market in Hong Kong * Only includes group package tour volume, which covers 90% of the total leisure travel market for South Africa Source: Channel InterviewsMarketing SA in China Second Edition 2007 126 Copyright © 2007 SA Tourism – not to be used without permission
  • 127. Hong Kong Channel: Hong Kong is an important hub for air travel in East Asia Hong Kong is a regional air hub channelling traffic between East Asia and major long-haul destinations in North America, Europe, and Australia Hong Kong is the Hong Kong is the Europe regional hub for SAA, regional hub for SAA, Seoul Beijing North America and the home base of and the home base of Tokyo Cathay Pacific Cathay Pacific Shanghai Over 50% of SAA’s Over 50% of SAA’s Taipei passengers arriving in passengers arriving in Hong Kong Hong Kong are in transit Hong Kong are in transit to other neighbouring to other neighbouring countries, such as countries, such as Japan, Korea, China, Japan, Korea, China, South and Taiwan and Taiwan Africa Australia / New Zealand Hong Kong consumers enjoy direct flights to most of the major long-haul destinations around the world as well as cheaper air fares, leading to one of the highest travel incidence rates in the regionMarketing SA in China Second Edition 2007 127 Copyright © 2007 SA Tourism – not to be used without permission
  • 128. Hong Kong Channel: Price and flight time to South Africa are comparable to competitors Price Average Price per Day Flight Time Direct Flight Destinations (HK$) Number of Days (HK$) (Hours) Frequency Europe 8,000–12,500 8–10 1,000–1,500 13 Daily U.S. and 6,000–7,000 5–7 1,000–1,400 12~16 Daily Canada* Australia and 7,000–9,500 5–7 1,000–1,400 7 Daily New Zealand Eastern 7,000–9,000 8 1,000–1,100 16 None Europe SA 8,000–13,000 8–10 1,000–1,500 12~13 Daily Kenya 10,000–12,000 8–10 1,200–1,500 10 3x per Week * Post 9/11, most tours to U.S. and Canada are semi-group tours, designed particularly to accommodate VFR trips Source: Channel Interview and VisitsMarketing SA in China Second Edition 2007 128 Copyright © 2007 SA Tourism – not to be used without permission
  • 129. Hong Kong Channel: Product Diversity South Africa has relatively low product diversity* as compared with other major long-haul destinations Number of Group Non-group Availability of Direct Products Package Tours Package Tours* Flight Europe** 10+ 4–5 U.S. and 6~7 1 Canada Australia and 4~5 5 New Zealand SA 1–2 0 Eastern Europe 5~6 0 — Central / South 5~7 0 — America * Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted ** Excluding Eastern Europe Source: Channel Interview; Retail Survey; Monitor AnalysisMarketing SA in China Second Edition 2007 129 Copyright © 2007 SA Tourism – not to be used without permission
  • 130. Hong Kong Channel: South African Product in the Market The standard 8 day 5 night product covers over 80% of the current SA leisure travel market in Hong Kong DAY 1 Depart to Johannesburg, SA Head to Cape Town and take cable car up Table Mountain. Shop in DAY 2 V&A shopping center and dine in Chinese Restaurant Start your route to Seal Island. Travel to Groot Constantia sampling DAY 3 wines. Sightsee at the Cape of Good Hope. Visit penguin beach after a lobster lunch Start the Garden Route, and continue through to Oudtshoorn. Stop at DAY 4 an ostrich farm after an ostrich lunch Breakfast in Oudtshoorn. Arrive at Cheetah Land and Crocodile DAY 5 Farm. Play with the wildlife. Take a steamboat to Knysna and stare in awe at the splendid sunset Depart from George Town. Arrive at Johannesburg at noon. Spend DAY 6 the rest of day visiting the diamond center. Dinner at Carnivore Restaurant Breakfast in Johannesburg. Then depart to see gold pouring and DAY 7 mine dancing in Gold Reef City. Shuttle to the airport after lunch DAY 8 Arrive in HK the next dayMarketing SA in China Second Edition 2007 130 Copyright © 2007 SA Tourism – not to be used without permission
  • 131. Hong Kong Channel: South African Product in the Market Unlike China, where scale is a major issue, SA products are widely accessible in the Hong Kong market but suffer from market fatigue China Market Dynamics Market currently maintains sustainable scale Demand // Demand Number of TA Number of TA Consolidated and Number of Number of Market Saturation Number of Number of Number of Group stable, high Intended (Demand) (Supply) Number of Group people already people already — SA as a one-off Intended Travellers Travellers Forming TAs Forming TAs switchability been to SA been to SA destination among TAs Introduce new Product Product Word of mouth products 2 Momentum Momentum as a major information source for consumers Decreased Cost Decreased Cost Increased Promotions Increased Promotions Increased Tour Varieties Increased Tour Varieties Improved Sales Skills Improved Sales Skills Increased margin Increased margin Increased frequency Increased frequency Decreased price Decreased price Increased products Increased products Reasonable Levels of Shelf space and Awareness promotion at retail Preference level enhances Variables Added to Preference awareness Explain HK Market Awareness Awareness Key HK 1 Intervention Point Build strong brand Low preference and target market saturation, rather than scale, are the key barriers to further increasing demand for SA leisure travelMarketing SA in China Second Edition 2007 131 Copyright © 2007 SA Tourism – not to be used without permission
  • 132. Hong Kong Channel: Several Core Themes Emerge Market Dynamics Market Dynamics As a mature market, the Hong Kong As a mature market, the Hong Kong outbound travel channel is highly outbound travel channel is highly consolidated and developed consolidated and developed For SA For SA Competition is fierce as it is easy for Competition is fierce as it is easy for Scale has been achieved Scale has been achieved consumers to compare and switch consumers to compare and switch among different retailers and wholesale among different retailers and wholesale products products Awareness does not necessarily translate Awareness does not necessarily translate into preference into preference Product availability and front-line staff Product availability and front-line staff ability to sell at the retail level are key to ability to sell at the retail level are key to Low product variety leads to market Low product variety leads to market generating sales generating sales saturation and low repeat travel saturation and low repeat travel Product variety helps attract new Product variety helps attract new consumer segments and create repeat consumer segments and create repeat travel travelMarketing SA in China Second Edition 2007 132 Copyright © 2007 SA Tourism – not to be used without permission
  • 133. Hong Kong Target Market: The relevant market is just under one million people Based on the HK departure record, annual outbound travel outside of China and Macau reached 5.8M in 2005 Hong Kong Resident Departures, 2000–2005 80,000 72,300 Total 68,903 Population 5,787 64,540 5,004 Hong Kong 61,096 60,936 6,865,600 58,901 4,709 60,000 4,799 4,428 4,611 Other Total Adult Population 5,422,300 Thousands 40,000 China 66,513 and 63,899 Total Leisure 59,831 Macau X44.6%* 54,290 56,297 56,508 Traveller 2,418,300 20,000 Total Out of Asia Traveller X35.2%* 851,000 0 2000 2001 2002 2003 2004 2005 * Of total adult population Source: Tourism Australia, Hong Kong Market Share 2005, 2006; U.S. Department of Commerce, Hong Kong Travel and Tourism 2001; Monitor AnalysisMarketing SA in China Second Edition 2007 133 Copyright © 2007 SA Tourism – not to be used without permission
  • 134. Hong Kong Target Market: Travel Behaviour HK travellers prefer group package tours, particularly for further, less familiar destinations Group Package vs. FIT and Non-group Package Tours 100% 5% 10% FIT and Non- group 30% Package Like group package tour Like group package tour Tour 40% because they are more because they are more 50% convenient and cheaper convenient and cheaper Group Package Particularly for further, less Particularly for further, less Tour familiar destinations familiar destinations Percent of Leisure 50% For SA, group tour remains For SA, group tour remains PAX 90% 95% the predominant form of the predominant form of leisure travel because .. .. .. leisure travel because 70% – With limited repeat travel, – With limited repeat travel, 60% most travellers travel to SA most travellers travel to SA 50% for the first time for the first time – Many HK people perceive – Many HK people perceive SA to be relatively unsafe, SA to be relatively unsafe, particularly Johannesburg particularly Johannesburg 0% Asia U.S. and Europe, SA New Canada* Australia / Destinations New Zealand * High UFR and less group package available after 9/11 Source: Monitor Trade Interviews; Monitor AnalysisMarketing SA in China Second Edition 2007 134 Copyright © 2007 SA Tourism – not to be used without permission
  • 135. Hong Kong Target Market: Destinations Visited Destinations1 Visited, 2005 700 Asia Americas, Europe and Middle East 615 Australia and 600 578 New Zealand 555 500 400 367 300 234 229 238 224 197 205 200 142 91 100 63 46 45 45 35 30 28 13 13 1 0 Thailand Taiwan South Malaysia Other Australia Canada South & France Germany Switzerland Korea Southeast Central Asia America Japan Singapore Philippines Indonesia Pakistan / USA New Zealand UK Other Middle East Italy India / Sri Europe Lanka 1 ExcludingChina, Macau and “Other” Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006Marketing SA in China Second Edition 2007 135 Copyright © 2007 SA Tourism – not to be used without permission
  • 136. Hong Kong Target Market: Travel Spend Hong Kong travellers are high spenders International Tourism Expenditure, 2004 (U.S.$Bn) Tourism Expenditure per Capita, 2004 (U.S. $) 80 2,500 71 2,197 70 66 2,000 1,936 1,842 60 57 50 1,459 1,500 1,355 1,352 1,310 40 38 1,181 1,131 1,007 29 1,000 30 21 19 20 16 16 16 14 13 500 10 0 0 Germany UK France China Canada Belgium Singapore Norway Belgium Ireland Sweden USA Japan Italy Nether- Russian Hong Hong Kong Austria Denmark Switzerland Netherlands lands Federation Kong Source: WTO, World’s Top Tourism Spenders, 2005Marketing SA in China Second Edition 2007 136 Copyright © 2007 SA Tourism – not to be used without permission
  • 137. Hong Kong Target Segment: The relevant market is just under one million people Based on the HK departure record, annual outbound travel outside China and Macau reached 5.8MM in 2005 The population of Hong Kong is our starting point 6.9M Total Adult Population 5.4M Total Leisure Traveller 2.4M 0.9M Total out of Asia Traveller Total number of people in our market Total number of people in our market Source: HK Consumer Research 2001, Canadian Tourism Commission; Monitor AnalysisMarketing SA in China Second Edition 2007 137 Copyright © 2007 SA Tourism – not to be used without permission
  • 138. Hong Kong Target Segment: SA Traveller Profile — Demographics Relatively Young: 78% between 25–44 years old* Relatively Young: 78% between 25–44 years old* Upper middle to high income* Upper middle to high income* Professionals: 58% are professionals* Professionals: 58% are professionals* More female than male** More female than male** More likely to be married More likely to be married Frequent traveller Frequent traveller * SA Exit Survey Results, Monitor Analysis ** Channel Interview, Focus GroupMarketing SA in China Second Edition 2007 138 Copyright © 2007 SA Tourism – not to be used without permission
  • 139. Hong Kong Target Segment: Overview Demographics Trip Behaviour Information Sources Purchasing Behaviour Hong Kong: General Characteristics Seasonality Top 5 Sources (General) Purchase Channels Market Avg. Age – 18–34 30% Travel July Travel Aug 11% 11% Friends / Family / TA Newspaper Adverts 78% 20% (Airfare) TA 79% Overview – 35–54 – >55 35% 19% Travel Feb 10% Internet / Website TV Adverts 10% 10% Tour operator Airline 9% 9% Travel Partner Travel Magazines 7% Company 3% Social Characteristics Significant other 44% Monthly HH Income Friends 27% (‘000s HK$) Children 25% – <15 11% Group Travel to SA – 15–40 36% Open to 90% – 40–75 35% – >75 18% Preference of Accommodation in SA 5 star but can do 4 star 44% At least 5 star accommodation 19% Friends / family 13% Market Size Likelihood of Importance of Past / Future LH Travel Activities Recommending SA Associations***** # of People 851k Frequency of LH Vacations Main Trip Type (Top 5) Would Recommend SA Average of Score of 1–7 PP Travel Avg. # of LH vacations: Tour no. of destinations 35% Yes, definitely 87% Safe and secure Spend per trip HK $15,900 – 1 33% Visit friends / relatives 20% Yes, probably 8% environment 6.05 – 2–5 53% Trip to big city 12% Possibly 2% Rest and relaxation 5.84 – >5 11% Enjoy nature / outdoors 8% No, probably not 2% Easy to get around 5.81 Conversion Challenge Most Recent LH travel Culture / history trip 7% No, definitely not 1% Value for money 5.80 Authentic travel U.S. 7% Main Activities in SA (Top 5) Awareness of SA 49% Australia 6% Restaurant, Theatre, Bar, experience 5.73 Offers wide variety of Canada 6% Nightclub 88% Positivity towards SA 17% experiences 5.72 UK 4% Shopping 75% All year round travel 5.63 Other Europe 3% Beach 40% Consideration 17% Welcoming People 5.61 Visit natural attractions 39% Future LH Travel Next 2 Years Offers historical and Wildlife / game viewing 38% Plans to go next Mainland U.S. 21% cultural experience 5.30 18 months 5% Canada 15% Offers natural wildlife Australia 13% experience 4.98 (Annualized: 3.33%) Europe Tour 7% Offers beach experience 4.93 UK 6% Information in red comes from Brand Tracking dataMarketing SA in China Second Edition 2007 139 Copyright © 2007 SA Tourism – not to be used without permission
  • 140. Hong Kong Current HK SA Traveller — Travel Behaviour* We can identify certain behavioural attributes . . . Experienced Traveller: 70% travelled long-haul Experienced Traveller: 70% travelled long-haul one to three times in the past three years one to three times in the past three years Travel with Group Package Tours: 70% Travel with Group Package Tours: 70% travel with all inclusive packages travel with all inclusive packages Short Stay: 70% stay less than 7 nights Short Stay: 70% stay less than 7 nights Book within the last month before departure Book within the last month before departure – However, might not confirm by the trade – However, might not confirm by the trade until 9–14 days prior to scheduled departure until 9–14 days prior to scheduled departure date date Highly price sensitive Highly price sensitive 76% travel to SA for the first time 76% travel to SA for the first time Source: SA Exit Survey Results; Channel Interview; Focus Group; Monitor AnalysisMarketing SA in China Second Edition 2007 140 Copyright © 2007 SA Tourism – not to be used without permission
  • 141. Hong Kong Current HK SA Traveller — Seasonality of Travel The peak seasons for leisure travel are during Chinese New Year in February and the summer vacation Seasonality, 2005 18% 16% 16% 14% 12% 10% SA benefits SA benefits 10% 10% 9% 10% somewhat from the somewhat from the 9% Percent of 9% 9% 8% summer peak summer peak 8% 8% 8% Travellers 8% season, which 8% 8% 8% 9% 9% season, which 7% 7% coincides with the coincides with the 6% 7% 7% 6% 6% low season in SA low season in SA 4% 4% 2% All Visitors Hong Kong 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Source: Combined SAT Departure Survey Dataset, 2002–2005Marketing SA in China Second Edition 2007 141 Copyright © 2007 SA Tourism – not to be used without permission
  • 142. Hong Kong Current HK SA Traveller — Accommodation Preference in South Africa HK travellers have a strong preference to stay at high end hotels when in SA Preference of Accommodation in SA 50% Hong Kong 44% All Visitors 31% Respondents Share of 25% 19% 19% 17% 15% 13% 13% 10% 8% 7% 2% 0% Prefer at Least Prefer Combination of Prefer at Least Prefer Staying Other 5 Star 5 Star but Can 5, 4, and 3 Star 3 Star with Friends and / Accommodation Also Do 4 Star Accommodation Accommodation or Family (Save Money) Note: “HK” are visitors who live in HK with Chinese or HK nationality Source: South African Tourism Exit Survey 2002 and 2003Q1–2Marketing SA in China Second Edition 2007 142 Copyright © 2007 SA Tourism – not to be used without permission
  • 143. ! # $ &# $ " $ % $# ( ) * + , ) - + # $ &# $ $ . $/ 0 ! 1 - ! -2 3 4 - - 0 56 0 ! -. 7 0 ! 0 ! 0 ! - 0 ! 8)9 )7 0 ! 0 ! " 0 ! -: -; " ) ! *
  • 144. : <% & $ . # : 7 9 &9 / $ = <% & $ . # . # 7 9 &9 / % % 7 7 9 $ $ %. <% & % $ # : 6 7 9 $ $ <% & % $ . # : 6 ! ! <% # / / # > 7 . &% $ # 7 ? ( " @ , ! .4 ! A 4 , @ , ! $ 9 $+ $ $ <% & $ . # : 7 9 &9 / $ = <% & $ . # . # 7 9 &9 / % % & 7 ! # $ 3 : 9 @ - 3 # B C # # -1 5 ! # $ $ + $ $ # <% &# &9 / # % 7 9 / . 9 # = <% &# &9 / # $ 7 9 / . % 7 ! ) ?" & 7 ! ! # $ & $ # D : 9 3 : #/ ( - 2 3 3 ! ! <% # . : / : 7 . &# : # > = <% # % $ > . 7 . &# > : ! !? 0 *!Marketing SA in China Second Edition 2007 144 Copyright © 2007 SA Tourism – not to be used without permission