Implications from the Latest figures: New Directions in the Chinese Outbound Market March 12 th, Las Palmas, Spain PROF. DR. WOLFGANG GEORG ARLT FRGS FRAS COTRI CHINA OUTBOUND TOURISM RESEARCH INSTITUTE
Introduction of COTRI COTRI is the world s leading institute for research and consulting services related to the Chinese outbound tourism market, and cooperates with all leading international and Chinese tourism organisations. (China Daily, March 2016) COTRI offers services around to customers around the world since 2004 as an independent institute research and consulting, led by Prof. Dr. Wolfgang Georg Arlt FRGS FRAS. Offices are located in Hamburg/Germany and Beijing/China, with a global network of regional partners on all continents. COTRI IN GERMANY COTRI China Outbound Tourism Research Institute West India House Eiffestraße 68 D-20537 Hamburg COTRI IN CHINA COTRI China Office 21th Fl, Wangjing Greenland Center B Hongtai East Street, Chaoyang District Beijing 100102 2
COTRI s founder and director Prof. Dr. Wolfgang Georg Arlt FRGS FRAS 中 First visit to People s Republic of China in 1978 中 1991-1999 owner of Inbound Tour Operator China -> Europe with offices in Beijing and Berlin 中 Since 2004 COTRI founder and director 中 Professor for International Tourism Management at West Coast University of Applied Sciences Germany (Heide) 中 Visiting professor at universities in China, United Kingdom and New Zealand 中 Fellow Royal Geographical Society (London) 中 Fellow Royal Asiatic Society (London) 中 Research Fellow Japanese Society for the Promotion of Science (Tokyo) 中 Board member PATA Pacific Asia Travel Association (Bangkok) 中 Vice President Western Europe ITSA International Tourism Studies Association (Beijing/Greenwich) 中 Fellow of International Association of China Tourism Studies (Guangzhou) 中 Member of UNWTO Expert Panel (Madrid) 3
China s outbound tourism Greater China (Hong Kong, Macau, Taiwan) continues to lose market share. The Rest of the World in 2017 still saw double-digit YoY growth rates. 4
Chinese outbound tourism to Spain Mainland Chinese citizens arrivals in SPAIN 2011-2017 (Source: COTRI) QUARTER ARRIVALS 2011 ARRIVALS 2012 ARRIVALS 2013 ARRIVALS 2014 ARRIVALS 2015 ARRIVALS 2016 ARRIVALS 2017 1 st QUARTER 21,925 26,720 40,400 50,711 82,493 67,464 89,114 2 nd QUARTER 44,857 41,191 50,647 67,300 117,841 75,701 146,261 3 rd QUARTER 22,341 53,430 82,414 84,982 136,024 131,818 173,754 4 th QUARTER 25,146 55,758 78,638 84,856 60,776 99,604 104,596 5
Chinese outbound tourism to Spain 200,000 Quarterly Arrivals Mainland China to Spain 2011-2017 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1st QUARTER 2nd QUARTER 3rd QUARTER 4th QUARTER ARRIVALS 2011 ARRIVALS 2012 ARRIVALS 2013 ARRIVALS 2014 ARRIVALS 2015 ARRIVALS 2016 ARRIVALS 2017 Source: COTRI 6
Three main drivers for China s outbound tourism in : 1. Visa and connectivity Simplified visa procedures 27 destinations offer visa-free entry for Chinese citizens 39 destinations offer visa on arrival or E-Visa for Chinese citizens Visa free entry: Asia UAE Jeju Province, South Korea Indonesia Quang Ninh Province, Vietnam North America Barbados Bahamas Grenada Antigua and Barbuda Dominica Haiti Saint Kitts and Nevis Turks and Caicos Islands Jamaica South America Ecuador Europe Serbia San Marino Oceania Fiji Tonga French Polynesia Northern Mariana Islands Samoa Africa Mauritius Seychelles Réunion Morocco Tunisia Antarctic South Georgia and the South Sandwich Islands 7
Three main drivers for China s outbound tourism in : 1. Visa and connectivity More direct flight connections In 2017 more than 100 new air connections were started, with more in the pipeline for, mostly connecting second tier airports in China and abroad. 8
Three main drivers for China s outbound tourism in : 1. Visa and connectivity 9
Three main drivers for China s outbound tourism in : 2. Information More information available Most global destinations have intensified their provision of information to both Chinese outbound tour operators and to potential FIT visitors, using fairs like the new ITB China or Social Media in the form of WeChat channels entries, online trainings, and increasingly videos. With each year of Chinese travellers visiting more diverse destinations the chance is getting bigger for potential travellers to know somebody (in real life or online) who already visited a specific destination and can give advise, making it easier to to organize a trip without the help of a tour operator. IT and AI provide increasingly sophisticated tools to receive customized information before and during the trip. 10
Three main drivers for China s outbound tourism in : 2. Information Digital travel sales share in China: PC vs. Mobile 1% 3% 11% 45% 64% 75% 77% 99% 97% 89% 55% 36% 25% 23% Market Share of Chinese OTAs (by Vacation Products Booking) 2011 2012 2013 2015 2015 2016 2017 Desktop/Laptop Mobile 11 2017
Three main drivers for China s outbound tourism in : 2. Information More information available Mobile for everything including payment 12
Three main drivers for China s outbound tourism in : 3. From Quantity to Quality Moving from Quantity to Quality Be careful what you wish for : Many destination find themselves in a situation of being visited by large numbers of Chinese mass-market package tour groups, which boost the arrival numbers but stay only for a short period of time at a destination (concentrating on the most famous destinations and sights during high season) and create very limited yields. With the growing importance of independent Chinese travellers (FITs), quality and value for money take the place of quantity and cheap price. Chinese individual travellers are tiring of travelling overseas and meeting mostly fellow countrymen in a destination, of shopping and sightseeing. They become more and more interested in new, authentic offers based on local culture and nature if provided and communicated in the right way. 13
The Chinese Outbound Traveller does not exist. Diversification of demand and behaviour The Chinese tourists does not exist (anymore). o The mass-market package tours frantically rushing around ticking off main sights with a selfie are still existing with 100+ million Chinese still waiting for their first trip abroad. o However, the interest of many more experienced Chinese tourists are changing, after the first phase of sightseeing tours they now look for experiences and immersion during customised or selforganised trips. o The destinations visited by Chinese outbound travellers are changing from must-see destinations to discovering new places, instead of postcard confirmation the more experienced travellers look for authenticity, following their own interests to visit mountain, clean natural spaces, culture activities, wineries or farms. 14
The Chinese Outbound Traveller does not exist o Group vs. FIT is not a simple either-or but a sliding scale. o On the one end are old-fashioned package tours All famous sights in 5 days mainly done for the me in front of selfie, on the other end are fully autonomous backpackers o In between are all kind of semi-self-organized packages, customised or bespoken tours with varying degrees of flexibility and in-build modules: Modular Travellers (COTRI) buying Fragmented Products (Ctrip) from Online Travel Agencies (OTAs), ranging from entrance tickets to organised themed tours. 15
The Chinese Outbound Traveller does not exist o Chinese FIT are different from Western FIT, most of them are not on a shoe-string budget, but spend more than group travellers.. o Most of them are seekers of prestige and self-affirmation, trying to find themselves abroad. They pursue serious leisure activities, choosing the activity, not the destination, first. o FIT Second Wave travellers more open to suggestions, but also more confident and demanding than ever. They can be attracted to new places, new activities, new times of the year, bringing not only more, but a different kind of business. o Still, almost all Chinese travellers are Money rich, but time Poor. 16
The Chinese Outbound Traveller does not exist Less than 10% of Chinese citizens possess passports The majority lives in China s 1 st and 2 nd tier cities Four Economic Regions As Tourist Source Regions 30 to 49 years group remains the largest age demographic (50% of total border crossings) But the younger and senior groups are on the rise 17
The Chinese Outbound Traveller does not exist More Chinese Outbound travellers (including trips to Greater China) chose to travel individually as opposed to travel with a group in 2016. Sightseeing and Shopping are still the most important activities at their chosen destinations for Package tourists Northern Chinese: Sun seekers Southern Chinese: Sunshine at home Icon made by Freepik from www.flaticon.c om Icon made by Zlatko Najdenovski from www.flaticon.com For FITs there is growing trend to pursue unique experiences, authenticity, and soft adventures in short, they wish to: to travel and live like locals 18
Who is travelling? Chinese traveller demographics are changing. From a. majority of middle-aged travellers in the first wave of Chinese outbound tourism, now persons born after 1980 (balinghou s) and even after 1990 (jiulinghou s) make up almost 60% of all Chinese international travellers. Demographics are also becoming more diverse: The first cohorts of affluent 60+ citizens are entering the market, more children (linglinghou s, born after 2000) accompany their parents or go on school trips. 2016 growth rates for outbound travellers below 18 and above 55 years of age: +90% Average life expectancy for a person living in China 1960: 43 years / 2016: 76 years. More than 200 million Chinese citizens are aged 60 and over. Some of them have enough money or children with enough money to take part in outbound tourism. Gender balance: MICE more men than women, leisure more women than men 19
Who is travelling? 中 For affluent 1st tier city inhabitants international travel is already fixed part of consumption pattern, mostly travel self-organised or customised tour for fixed group 中 More and more segmentations into niches including big niches like health tourism, cruises, food and wine, adventure, educational etc. 中 Second Wave experienced Chinese travellers: Niche topics, themed tours, bespoke arrangements, activity based trips, moving from money rich but time poor to money and experience rich but time poor 中 Key motivation to choose destination: Not too many (but not none) Chinese have travelled yet to this place
Who is travelling? 中 Aspiring 2 nd and 3 rd tier city inhabitants catching up fast, most growth comes from lower tier cities 中 Older customers starting with package tour, younger travellers move directly to half- / or self-organised tour 中 For young families or 6+1 multigenerational groups self-drive / LV gaining importance 中 More likely to still ticking off the must-see list of destinations and sights 中 Key motivation to choose destinations: All KOLs and some of my friends have already been there
Example: Product Adaptation Why should Chinese tourists visit the Canary Islands? Because of Sanmao! From this month, a new route has been opened for Chinese travelers in commemoration of late influential writer Sanmao, a female writer from Taiwan who lived on La Palma and Gran Canaria islands between 1976 and 1979, after getting married to a Spaniard. One of Sanmao's most celebrated works is about her love story and adventures with her husband, who died in a diving accident in 1979 in La Palma, where he was later buried. Quero Ruiz's grave as well as the couple's residences on both islands are preserved till today and are open to the public. The sites have attracted a growing number of Chinese tourists in recent years. There were a lot of Chinese travellers visiting a normal house on our island, and many of them left letters in front of the house. Ines Jimenez Martin, counselor of tourism of Gran Canaria, said since "millions of Chinese people know the Canary Islands through her book, we want them to be able to relive and experience the life of Sanmao in Gran Canaria."
Conclusion: Catering for the Second Wave 中 Second Wave travellers more open to suggestions, but also more confident and demanding than ever 中 Second Wave Chinese travellers can be attracted to new places, new activities, new times of the year, bringing not only more, but a different kind of business, helping to mitigate Overtourism 中 But: To satisfy the Second Wave Chinese travellers needs more preparation and understanding to keep the balance between treating Chinese Second Wave guests as international citizens and still showing respect to the Chinese culture by providing the right kind of reasons to come, the right story to tell and providing the feeling of being more welcomed as Chinese traveller than any other kind of customer 23
China s outbound tourism You ain t seen nothin yet Thank you for your attention! Looking forward to your comments and questions For more information: Subscribe for free to COTRI Weekly on Contact COTRI arlt@china-outbound.com Tel. +49 40 558 99 576 Watch for free every two weeks: DragonTrail & COTRI: China Outbound Pulse Videos Interviews with Chinese travellers and insights from Prof. Outbound on Youtube.com 24