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The Rise of Independent Travel
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Rise of the chinese traveler

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Rise of the chinese traveler

  1. 1. Rise of the Chinese Independent Traveler SKIFT REPORT #1 2013 WWW.SKIFT.COM
  2. 2. Get the twice-monthly Skift Trends Report for the latest intelligence on the travel industry. Each edition in our new series of reports will brief you on a specific trend, providing insight into the current state of the market, the con- text around the trend, and where the industry is heading in the near future. After you subscribe, you will receive 24 reports direct to your inbox for an entire year. Reports are delivered as a downloadable PDF. Subscrib- ers also receive access to our archive. For any comments or questions, email us: Subscribe and check previous reports at: Subscribe to the Skift Trends Report
  3. 3. Mainland China became the world’s biggest source of foreign tour- ists in 2012. The United Nations World Tourism Organization counted 83.2 million Chinese citizens traveling abroad, a 395.7% increase from 2002. These newly affluent travelers spent $102 billion while they traveled, making them the biggest-spending tourists. Despite slowing economic growth at home, the trend continues una- bated. In the first five months of 2013, 37.9 million Chinese traveled abroad, an increase of 17.3% over the year before. The massive increase in Chinese outbound travel is not lost on gov- ernments, brands and hotels. Especially as Western economies falter, leaving citizens with less cash and confidence to travel abroad, tour- ism organizations across the world are proactively luring in their share of these increasingly affluent visitors to their countries. This could become more challenging as the market for Chinese tourists becomes increasingly sophisticated and fragmented. This report examines the trend toward independent, rather than group tourism and how travel providers can reach them. Introduction Chinese celebrity Qu Wanting Courtesy: SKIFT REPORT #1 2013 2
  4. 4. Table of contents About SkiftIntroduction 2 Rise of the Chinese Independent Traveler 4 4 4 5 5 6 7 9 10 11 11 13 Reaching independent tourists 14 The Fully Independent Chinese Outbound Tourist 17 Endnotes 18 About Skift 19 SKIFT REPORT #1 2013 3
  5. 5. 1 2 Group travel still dominates Understanding the draw of group tours 10 characteristics of independent outbound Chinese tourists Younger Richer More educated More sophisticated travelers More connected Demanding Enjoys indulging Eager for unique travel experiences 2 1 3 4 5 6 7 8 SKIFT REPORT #1 2013 4
  6. 6. 4 Independent travel 3 Where they go 60 40 20 0 Asia Latin America North America Europe Percentage of Chinese visitors that arrive inde- pendently, according to hoteliers Source: 2013 Plan extensively Stay in one destination for longer periods 9 10 SKIFT REPORT #1 2013 5
  7. 7. 5 6 7 Demographic characteristics of independent Chinese Tourists 40 35 30 25 20 15 10 5 0 70 60 50 40 30 20 10 0 25 20 15 10 5 0 <30 Below15 15-24 25-34 35-44 45-59 60andabove 30-60 60-100 100-150 150-200 >200 Middle school Below 15001500-30003000-60006000-90009000-1200012000-15000 15000-18000 Above18000 Junior college Bachelor’s degree Master’s degreeand above Highschool/ Vocational training LEFT: Annual income (RMB) RIGHT: Education LEFT: Age RIGHT: Expenditure SKIFT REPORT #1 2013 6
  8. 8. 9 Younger, and hungry for the best 60 40 20 0 personal-income growth Loyaltobrands Willingtotradeup Oftenearlyadopter ofnewproducts/ services Seekfeedback/com- mentsonInternet beforebuying Percent of responders 1 2 3 Source: Actress Gao Yuanyuan Courtesy: SKIFT REPORT #1 2013 7
  9. 9. 10 18-34 years 35-65 years Willing to pay 1 2 Rising Expectation 3 Individualism 4 Online activity 5 6 Younger vs. older con- sumers Source: SKIFT REPORT #1 2013
  10. 10. Seeking individuality, authenticity Actress Gao Yuanyuan Courtesy: SKIFT REPORT #1 2013 9
  11. 11. Planning longer, staying longer Threestar Fourstar Fivestar Youthhostels Bedand breakfast Other Hotel preferences of Chinese independent tourists Source: 2013 Western Hotel Chains on Sina Weibo SKIFT REPORT #1 2013 10
  12. 12. 11 12 13 14 Enormous influence of social media Star power 5 Marketing strategies for reaching independent Chinese travelers 2 1 3 4 5 SKIFT REPORT #1 2013 11
  13. 13. 16 17 15 Yao Chen’s wedding at a New Zealand resort Source: SKIFT REPORT #1 2013 12
  14. 14. 19 20 21 22 23 24 Sponsor viral content Screengrab from Sho Luo’s YouTube Page Source: Page SKIFT REPORT #1 2013 13
  15. 15. Group travel was and is popular because it simplifies the process of securing visas and hotel bookings and arranging the itinerary. It also takes away the intimidation of visiting a foreign country with an alien tongue and offers comforts of home such as Chinese cuisine. While independent tourists prefer to trade some comfort and conven- ience for the freedom to build their own itinerary and choose where to shop on their own, brands and destinations must still provide those comforts of the group tour. Govern- ments around the world are easing visa restrictions and other barriers to travel. For instance, U.S. President Barack Obama ordered the State Department to increase non-immigrant visa processing25 in China and Brazil by 40% and ensure that 80% of applications are processed in 21 days or less in 2012. France, by contrast, can process a visa for a Chinese citizen in as little as two days. Though independent tourists are much more open to experiencing lo- cal cultures and think of themselves as different from the older folks on package tours, much of the same wisdom about catering to Chi- nese tourists still applies. Mandarin-language websites, social media presence (especially Sina Weibo, WeChat, and QQ), marketing collateral and public relations with local press are still important. Hiring Mandarin-speakers and training all staff in Chinese culture and customs is crucial. If staff are perceived as rude by Chinese visitors, they are likely to take it as an affront to their entire country. Little things like slippers in hotel rooms go a long way. Chinese expect that as much as Westerners expect a familiar-looking toilet in their hotel. “On-site, it’s important to maintain the in-language theme that you’ve used to attract travelers to your destination. If you’ve gone to great lengths to market to the Chinese traveler, but on-site you haven’t taken into account their preferences for language, food, recreation or amenities, it will be damaging to your brand long-term,” says Dan O’Sullivan, Vice President of Sales for EMEA at TransPerfect, a pro- vider of language and localization services. “The same social media Reaching independent tourists The massive increase in Chinese outbound travel is not lost on governments, brands and hotels. SKIFT REPORT #1 2013 14
  16. 16. platforms that you’ve used to effectively market can then be used to publicize your shortcomings in the on-site experience.” Almost all school children in China study English, and between 1978 and 2011, 2.25 million students left China to study26 , mainly in Eng- lish-speaking countries. But it is not wise to assume that fully inde- pendent tourists do not need native language support. The survey by Yixian Xiang found that despite being far more educated, only 12.8% of fully independent Chinese tourists can speak English and 44.6% had some skill in the language. Independent tourists are less afraid of interacting with foreigners in a language they don’t speak very well, but making it easy for visitors to get around with Chinese goes a long way. Wolfgang Georg Arlt, professor for tourism management and director of the COTRI China Outbound Tourism Research says that Chinese language signage is not so much about utility as it is about respect for Chinese culture. “This is about ‘face,’ not practicability,” he says. Other measures such as hotels serving Chi- nese breakfast foods and providing room slippers also makes even these young, experienced travelers have bet- ter experiences. “They are still Chinese and many younger Chinese are very patriotic, to say the least,” he says. Brand recognition is still very important. Starwood Hotels, which operates the W, Sheraton and Westin as well as other brands, says that they are at an advantage because they have a long standing relation- ship with Chinese guests since they were the first international brand to open in China. “When Chinese travel abroad, they tend to stay at the hotel that they are familiar with. This actually gives Starwood a strategic advantage to attract Chinese guests,” the company said in a statement. Another important practical matter is making it known that your store accepts China UnionPay, the country’s only domestic bank card. This should be prominently marked in windows and in promotional mate- rials. Independent tourists are less afraid of interacting with for- eigners in a language they don’t speak very well. SKIFT REPORT #1 2013 15
  17. 17. The importance of brand presence in China is also true for luxury re- tail. Bain & Co. reports27 that Chinese do 65% of their luxury shopping abroad, mainly because these products could be 40% more expensive in China. Many retailers even take losses on Chinese locations in hopes that awareness of the brand translates into sales once custom- ers come abroad. It helps cement their status as a prestige brand, so an item bought at the flagship store is even more coveted. SKIFT REPORT #1 2013 16
  18. 18. The Fully Independent Chinese Outbound Tourist Below15 15-24 25-34 35-44 45-59 60andabove Independent Chinese tourists are younger... Thailand, the most popular outbound des- tination for Chinese, saw a 58% increase in independent arrivals in 2012. Taiwan only allowed independent tourists from the Mainland in 2011. In the first five months of 2013, group tours declined by 1.6% while independent tourism increased by 244%. ... and more educated. Of 597 million social network users, 66% follow brands 61% would write about positive experiences 53% would write about negative experiences 82.9% 46.3% 0 640,000 792,600 119,000 410,000 780,000 2011 2012 1,010,000 Sources: Look East SKIFT REPORT #1 2013 17
  19. 19. at Endnotes SKIFT REPORT #1 2013
  20. 20. Skift is a business information company focused on travel intelligence and offers news+data+services to professionals in travel and profes- sional travelers, to help them make smart decisions about travel. Founded in 2012 by media entrepreneur Rafat Ali, Skift is based in New York City and backed by Lerer Ventures, Advancit Capital and other marquee media-tech investors. About Skift Connect with Skift For any comments or questions, email us: SKIFT REPORT #1 2013 19
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