COTTM China Outbound Travel and Tourism Market presentation - April 2013

www.china-outbound.com

Introductory Workshop for Exhibitors

COTTM 2013

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Organiser: COTRI China Outbound Tourism Research Institute Presenter: Prof. Dr. Wolfgang Georg Arlt, COTRI Anders Ellemann Kristensen, CEO Albatros Travel


Introductory Workshop for Exhibitors

10.00-10.10 h Introduction 10.10-10.30 h Prof. Dr. Arlt: China’s Outbound Tourism 2013 10.30-10.45 h Anders E. Kristensen: How to do successful business with Chinese tourism companies 10.45-11.45 h Q&A from the audience 11.45-12.00 h Summing up

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China’s Outbound Tourism 2013

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New Chinese Tourists looking for

niche products, new destinations

and investment opportunities

Prof. Dr. Wolfgang Georg Arlt Director COTRI

[email protected]


COTRI China Outbound Tourism Research Institute

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The world's leading independent research institute for information,

training, quality assessment, research and consulting relating to the

Chinese outbound tourism market.

Established: 2004

Headquarter: Heide/Germany

China office: Beijing/China

COTRI Country Partner in Bosnia-Hercegovina, Croatia, Estonia,

Finland, France, Ireland, Italy, Kosovo, Latvia, Lithuania, Macedonia,

Mexico, Morocco, New Zealand, Serbia, Slovenia, Tunisia, UK

Germany: Fritz-Thiedemann-Ring 20 25746 Heide / Germany Phone +49 481 85 55 523 Fax +49 481 85 55 121 E mail [email protected]

China: 101/2B Gui Gu Liang Cheng 1 Nong Da Nan Rd., Haidian District Beijing 100084 / P.R. of China Phone +86 134 2603 6722 E mail [email protected]


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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: Fritz-Thiedemann-Ring 20 25746 Heide / Germany Phone +49 481 85 55 523 Fax +49 481 85 55 121 E mail [email protected]

China: 101/2B Gui Gu Liang Cheng 1 Nong Da Nan Rd., Haidian District Beijing 100084 / P.R. of China Phone +86 134 2603 6722 E mail [email protected]


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GOOD NEWS:

China to continue pushing outbound tourism China will continue encouraging its citizens to travel overseas,

despite the economic slowdown at home.

During a meeting with UNWTO Secretary-General, Taleb Rifai, the

Chairman of the China National Tourism Administration (CNTA), Shao

Qiwei said that tourism remained one of the Chinese government’s ‘key

strategic pillars’ for economic growth, and that outbound tourism will

also boost China’s development in the long-term.

“With 148 countries now included in the list of ‘Approved Destination

Status’ (ADS), the government, and particularly CNTA, will continue

to promote the travelling of Chinese people abroad as we believe

in the mutual benefits of collaboration. By continuing to send Chinese

travellers to Europe, the benefits will eventually flow back to China,”

Shao said in Madrid.

In 2012, 80 million Chinese travelled abroad.

22.01.2013


But a word of caution: “The government, and particularly CNTA, will continue to promote the

travelling of Chinese people abroad.”

Good news: Support, but „continue“? This is the first time ever CNTA 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 own research institute CTA gives 83.2 million border crossings (not different persons!) for Chinese outbound in 2012.

Chinese sources are important but official information and oversimplifying media reports should be taken with a pinch of salt.

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Chinese Outbound travel – approaching the 100 million border-crossings mark

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Travel has been an important part of the education process in Imperial China, but outbound travel has no tradition: Xu Xiake (1587-1641), China’s most famous traveller, was no Ibn Battuta or Marco Polo, he was interested in China only Exceptions: Buddhist monks and Zheng He (1371-1433), the “Chinese Columbus”

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Before the start of Reform and Opening policy in 1978, travel and 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.

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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

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Becoming Global No. 1 China has developed into the number one producer of many things - Gold, TV sets, Cell Phones, Solar Panels, Beer, Apples, Cars, Carbon Dioxide and much more. In cases where the country is still only number two, like tomatoes and space stations, this is going to change soon. In tourism, China is just arriving at the top position.

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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

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Growth slowing down…

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… and China’s HNWI getting nervous…

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Survey results from Bank of China/Hurun (10/2012): 44% of all Chinese with more than 10 million RMB (app. 1.25 million Euro) in personal wealth (about one million households) are considering emigration 85% of all Chinese with more than one 10 million RMB in personal wealth are planning to send their child to study at a foreign university


… but outbound travel continuing to expand

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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%


The “New Chinese Tourists” – Opportunities and challenges

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2012: Diversification of destinations Hong Kong and Macau loosing market share

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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%


Niche products and destinations gaining ground

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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 things

and 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


New Chinese Tourists – why do they exist?

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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


New Chinese Tourists – becoming “normal” (a.k.a. like us)?

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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”


Travel motivation

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Travelling long distance means for Chinese outbound travellers first of all:

Investment in - Personal prestige within the group - Self-esteem - Social capital - Learning But also: - Business opportunities - Investment in Real Estate / companies


Travel goals

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If inter-continental travel is investment, the services and products offered have to be organised in a way to guarantee a good Return 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


How to learn to provide service quality the way the New Chinese Tourists want it and how to communicate it to the market?

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CHINA OUTBOUND TOURISM RESEARCH INSTITUTE


Training and Quality Assurance by CTW Chinese Tourists Welcoming Programme Visibility in China on www.welcoming Chinesetourists.cn


Developing successful niche products

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Consulting, Market Research, Strategy Development and Coaching for Tourism Product adaptation and Marketing optimisation China Market Entry Support for Investment-related Service Providers in cooperation with


Travel future

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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.


TOP 5 things to understand about the New Chinese Tourists

1. “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 trip

2. 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 group

4. NCTs are less interested in sightseeing and more interested in experiences, which have to be intensive, short and carrying bragging potential

5. 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

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Thank you for you attention – looking forward to your questions and comments during the Q&A discussion! Contact: [email protected]

Have a successful COTTM 2013 in the Year of the Water Snake!

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COTTM China Outbound Travel and Tourism Market presentation - April 2013

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Transcript of COTTM China Outbound Travel and Tourism Market presentation - April 2013