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COTTM China Outbound Travel and Tourism Market presentation - April 2013


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COTTM China Outbound Travel and Tourism Market presentation - April 2013

  1. 1. Introductory Workshop for Exhibitors COTTM 2013Organiser: COTRI China Outbound Tourism Research InstitutePresenter: Prof. Dr. Wolfgang Georg Arlt, COTRI Anders Ellemann Kristensen, CEO Albatros Travel 1
  2. 2. Introductory Workshop for Exhibitors10.00-10.10 h Introduction10.10-10.30 h Prof. Dr. Arlt: China’s Outbound Tourism 201310.30-10.45 h Anders E. Kristensen: How to do successful business with Chinese tourism companies10.45-11.45 h Q&A from the audience11.45-12.00 h Summing up 2
  3. 3. China’s Outbound Tourism 2013New Chinese Tourists looking forniche products, new destinations and investment opportunities Prof. Dr. Wolfgang Georg Arlt Director COTRI 3
  4. 4. COTRI China Outbound Tourism Research InstituteThe worlds leading independent research institute for information,training, quality assessment, research and consulting relating to theChinese outbound tourism market.Established: 2004Headquarter: Heide/GermanyChina office: Beijing/ChinaCOTRI Country Partner in Bosnia-Hercegovina, Croatia, Estonia,Finland, France, Ireland, Italy, Kosovo, Latvia, Lithuania, Macedonia,Mexico, Morocco, New Zealand, Serbia, Slovenia, Tunisia, UK Germany: China: Fritz-Thiedemann-Ring 20 101/2B Gui Gu Liang Cheng 25746 Heide / Germany 1 Nong Da Nan Rd., Haidian District Phone +49 481 85 55 523 Beijing 100084 / P.R. of China Fax +49 481 85 55 121 Phone +86 134 2603 6722 E mail E mail 4
  5. 5. Prof. Dr. Wolfgang Georg Arlt FRGS First visit to People’s Republic of China in 1978 1991-1999 owner of Inbound Tour Operator China -> Europe (offices in Beijing and Berlin) COTRI founder and director since 2004 Professor for International Tourism Management at West Coast University of Applied Sciences (Heide) Visiting Professor at universities in China and United Kingdom Fellow Royal Geographical Society (London) Research Fellow Japanese Society for the Promotion of Science (Tokyo)Germany: China:Fritz-Thiedemann-Ring 20 101/2B Gui Gu Liang Cheng25746 Heide / Germany 1 Nong Da Nan Rd., Haidian DistrictPhone +49 481 85 55 523 Beijing 100084 / P.R. of ChinaFax +49 481 85 55 121 Phone +86 134 2603 6722E mail E mail 5
  6. 6. GOOD NEWS:22.01.2013China to continue pushing outbound tourismChina will continue encouraging its citizens to travel overseas,despite the economic slowdown at home.During a meeting with UNWTO Secretary-General, Taleb Rifai, theChairman of the China National Tourism Administration (CNTA), ShaoQiwei said that tourism remained one of the Chinese government’s ‘keystrategic pillars’ for economic growth, and that outbound tourism willalso boost China’s development in the long-term.“With 148 countries now included in the list of ‘Approved DestinationStatus’ (ADS), the government, and particularly CNTA, will continueto promote the travelling of Chinese people abroad as we believein the mutual benefits of collaboration. By continuing to send Chinesetravellers to Europe, the benefits will eventually flow back to China,”Shao said in Madrid.In 2012, 80 million Chinese travelled abroad. 6
  7. 7. But a word of caution:“The government, and particularly CNTA, will continue to promote thetravelling of Chinese people abroad.”Good news: Support, but „continue“? This is the first time everCNTA China National Tourism Administration is saying it is„promoting“ outbound tourism.“In 2012, 80 million Chinese travelled abroad.”Delightful number mentioned by the Chairman, but his ownresearch institute CTA gives 83.2 million border crossings (notdifferent persons!) for Chinese outbound in 2012.Chinese sources are important but official informationand oversimplifying media reports should be takenwith a pinch of salt. 7
  8. 8. Chinese Outbound travel – approaching the 100 million border-crossings mark 8
  9. 9. Travel has been an important part of theeducation process in Imperial China, butoutbound travel has no tradition:Xu Xiake (1587-1641), China’s most famoustraveller, was no Ibn Battuta or Marco Polo,he was interested in China onlyExceptions: Buddhist monks and Zheng He(1371-1433), the “Chinese Columbus” 9
  10. 10. Before the start of Reform and Opening policy in 1978, traveland leisure were held in contempt in the P.R. of China 1983 - 1996 VFR and delegations 1996: 8 mio. 1997 - 2004 ADS and chaotic growth 2004: 29 mio. 2005 - 2010 Gaining experience and scope 2010: 57 mio. 2011 - ? The Second Wave of China‘s Outbound Tourism: Sophistication and segmentation 2011: 70 mio. 2012: 83 mio. 10
  11. 11. Demand pushing open the gates After 1989 (Tiananmen movement and Fall of Berlin Wall) preventing outbound tourism (politically dangerous and expensive) is no longer feasible ADS Approved Destination System installed after 1995 to control and slow down demand for outbound leisure travel – unsuccessful Since 2004 incremental paradigm change toward “Soft Power” approach Since 2009 government support of outbound tourism – opening to selected foreign tour operators in 2011 unsuccessful 2013 new party leadership curbing official travels but first time officially “encouraging” outbound tourism 11
  12. 12. Becoming Global No. 1China has developed into the number one producer of manythings - Gold, TV sets, Cell Phones, Solar Panels, Beer, Apples,Cars, Carbon Dioxide and much more.In cases where the country is stillonly number two, like tomatoesand space stations, this is goingto change soon.In tourism, China is just arrivingat the top position. 12
  13. 13. Global No. 1, increasing segmentation In 2012, 83.2 million border-crossings and 102 billion US$ spending elevate China to the position as the biggest global outbound tourism source market, overtaking Germany and the USA. In 2013, both in terms of numbers of travels (forecast: 95+ million border crossings) and spending (forecast: 110+ billion US$) China will be the undisputed No. 1 global source market 5% of all Chinese (app. 65 mio.) can afford to travel beyond Greater China - app. equal (and mostly identical) with the group of Chinese car owners - app. equal to the total German population 14+ years old Chinese tourists are not only growing in numbers, a rapidly increasing section of the Chinese outbound source market, the “New Chinese Tourists”, look for experiences and new destinations offering high quality services according to the specific Chinese customs, values, and demands 13
  14. 14. Growth slowing down… 14
  15. 15. … and China’s HNWI getting nervous…Survey results from Bank ofChina/Hurun (10/2012):44% of all Chinese with morethan 10 million RMB (app. 1.25million Euro) in personal wealth(about one million households)are considering emigration85% of all Chinese with morethan one 10 million RMB inpersonal wealth are planning tosend their child to study at aforeign university 15
  16. 16. … but outbound travel continuing to expand China’s economic growth: single digit Wealth creation slowing down China’s outbound tourism: double digit Importance as consumption pattern grows in importance China for Hong Kong, Macau, Taiwan by far most important source market China also for growing number of other destinations most important source market, examples: Australia, Maldives For Europe: most important Asian source market, 2012 +20% 16
  17. 17. The “New Chinese Tourists” –Opportunities and challenges 17
  18. 18. 2012: Diversification of destinationsHong Kong and Macau loosing market share Hong Kong +11% Macau +5% Taiwan +57% Thailand +62% Singapore +35% Malaysia +25% USA +41% Switzerland +27% Germany +19% Spain +55% N. Zealand +35% Dubai +29% Japan Jan-Sept +71%, Oct-Dec -37% 18
  19. 19. Niche products and destinations gaining ground Package tours no longer deliver much bragging power More self-organized travelers from China are slowing down and spreading further afield Desperately seeking: Simplicity, authenticity (with Chinese characteristics) Getting away from it all, clean air and genuine products New Chinese Tourists are arriving in special locations, doing special thingsand are staying for more than just a snapshot Most of them have already been to Europe and come as repeat visitors Appearance of the first ever generation for whom international travel is a normal experience since childhood Niche products get a chance to profit from Chinese customers – and small niches in China are still big 19
  20. 20. New Chinese Tourists – why do they exist? 15 years experience since the official start of outbound leisure tourism More than 1.5 million Chinese have finished their studied outside China since 1978; most of them went back Currently app. 1 million Chinese students in USA and Europe each About 3 million households possess personal wealth of at least 1 million US$ Average age of Chinese millionaire: 39 years About 1 million households with personal wealth of at least 1 million Euro More than 60,000 households with personal wealth of more than 100 million RMB (app. 12 million Euro) More than 4,000 households with personal wealth of more than 1 billion RMB (app. 120 million Euro) 550 million active internet users 20
  21. 21. New Chinese Tourists – becoming “normal” (a.k.a. like us)? Package tours developed a negative image, mostly for lower end of upper class (“rich coalmine owner”), first-time visitors, or very specialised offers (bird photography in Bhutan) More experience and language skills lead to different forms of “semi-” or “partly”-organized trips with tour operators providing visa, air trip and maybe a few hotel bookings Self- or semi-self organized travellers are however not be confused with “individual” travellers in the western sense New Chinese Tourists are still Chinese: They are still happy to see signage and other information in Chinese as a sign of respect for their country, they will still rely mainly on peer group information from other Chinese, they will still travel outside Asia for prestige, education and investment, not for holidays, they are still “Money-rich, Time-poor” 21
  22. 22. Travel motivationTravelling long distance means for Chinese outbound travellersfirst of all:Investment in- Personal prestige within the group- Self-esteem- Social capital- LearningBut also:- Business opportunities- Investment in Real Estate / companies 22
  23. 23. Travel goalsIf inter-continental travel is investment, the services and productsoffered have to be organised in a way to guarantee a goodReturn on Investment (ROI): Value for money and for time Guaranteed quality as seen from a Chinese point of view No more time spent on an activity as needed for prestige gain Supporting the bragging value of a place/an activity: famous, typical, oldest/highest/awarded, celebrities choice, unusual, hard to get, VIP only, authentic, as seen in TV and movie Connecting fun und investment opportunities Giving face to China and all Chinese Without risk 23
  24. 24. How to learn to provide service quality the way the New ChineseTourists want it and how to communicate it to the market? 24
  25. 25. CHINA OUTBOUND TOURISM RESEARCH INSTITUTETraining andQuality Assuranceby CTW ChineseTourists WelcomingProgrammeVisibility in China
  26. 26. Developing successful niche productsConsulting, Market Research,Strategy Development andCoaching for TourismProduct adaptation andMarketing optimisationChina Market Entry Supportfor Investment-related ServiceProviders in cooperation with 26
  27. 27. Travel future The low price, low quality Chinese package outbound tourism will suffer from the pending economic crash in China, annual growth rates in terms of number of persons travelling may fall below the 20% mark. But the New Chinese Tourists will continue to go abroad, as the motives for international travel – prestige, networking, distinction, experience – will not change. The annual growth rates in spending on international travel will probably stay above the 20% mark. 27
  28. 28. TOP 5 things to understand about the New Chinese Tourists1. “New Chinese Tourists” (NCTs) are different from the first-time package- tour visitors: arriving in smaller, often self-organised groups, visiting less countries but more destinations in one country during one trip2. NCTs are middle-aged (25-40), Social media driven, often speak English, often studied abroad, are first-generation affluent, mostly work hard for their money, are therefore “money-rich” but “time-poor”3. NCTs are not coming to Europe for holidays and relaxation, but for seeking prestige, self-esteem and individual distinction within the group4. NCTs are less interested in sightseeing and more interested in experiences, which have to be intensive, short and carrying bragging potential5. NCTs are still Chinese, looking for signs of appreciation of China and the Chinese culture, seeing themselves as representing China and as part of the Chinese travel community 28
  29. 29. Thank you for you attention – looking forwardto your questions and comments during the Q&Adiscussion!Contact: arlt@china-outbound.comHave a successful COTTM2013 in the Year of theWater Snake! 29