Report Overview

Given China’s huge outbound travel market and unmatched tourism expenditure, it’s no wonder travel brands and destinations around the world are doing all they can to attract its travelers. In this report, we examine Chinese outbound travel from two perspectives. First, we examine the behaviors and preferences of Chinese travelers in general, and we note key differences based on age and the region of the country from which they come. We then use this consumer analysis to identify three best practices for travel brands and destinations to attract Chinese outbound travelers, and we present real case studies to illustrate each.

What You'll Learn From This Report

  • Market size and expenditures of Chinese outbound travelers
  • Technology adoption trends in China and how they impact outbound travelers’ behavior and expectations
  • Key demographic segments of Chinese outbound tourists
  • Key trends in the types of trips and activities preferred by Chinese travelers
  • Major technology brands and features that Chinese tourists use throughout their travel journey
  • Best practices for travel brands and destinations to attract Chinese travelers with case studies

Executive Summary

With 135 million in 2016, more outbound travelers originate from China than any other country in the world. The room for growth in this market is even more staggering, considering that less than 10% of China’s population even has a passport. Given just its sheer size, it’s no wonder travel brands and destinations around the world are doing all they can to attract this market. It’s spending power makes it even more appealing. The UNWTO reports that China’s international tourism expenditures, which are the highest in the world, are about two times as large as the second-highest market, the U.S.

The Chinese outbound tourism market can be a difficult market to penetrate, however. Because of government internet censorship, a unique, locally grown digital travel ecosystem has emerged in China. Brands and destinations elsewhere need to understand the major players and how to most effectively use the channels most relevant to them to reach travelers. Chinese consumers as a whole have also developed unique consumer and media-consumption habits. China is truly a mobile-centric market, dominated by mobile social media channels, like WeChat, as well as mobile payments. Finally, for a number of geographic and political reasons, China has developed unevenly. The eastern coastal, urban regions have developed ahead of the western regions economically, accompanied by a higher quality of life. This uneven development is reflected in outbound travel behavior and preferences as well.

In this report, we examine in depth the China outbound travel market, providing a scope of the size of the market and its potential for growth. We then connect key habits of Chinese consumers to their unique behaviors and preferences as travelers. We identify emerging trends in terms of the types of trips and activities that are increasingly sought after by this group, while pointing out distinctions based on factors like age and region-tier of residence. Based on this consumer analysis, we identified three best practices for travel brands and destinations to attract Chinese outbound travelers, and we present real case studies to illustrate each.

Chinese Outbound Tourism Rises with Much More Room for Growth

Political changes that paved the path for fast economic growth in China started in the early 1980s. Since then, outbound tourism from China has continuously grown, with an especially precipitous rise starting in about 2009. Consider the fact that it took all of eight years (1993-2000) for the country to reach 10 million outbound tourists. After that, the pace increased so rapidly, the world saw over 100 million outbound tourists from China by 2014.

The latest data shows this trend continuing. In 2016, the World Tourism Organization (UNWTO) reported 135 million outbound tourists from China. For comparison, the U.S. followed China as the second largest outbound tourism market, with 80.2 million tourists traveling internationally in 2016 according to the U.S. National Travel and Tourism Office. The statistics for the full year of 2017 have yet to be released, but the China National Tourism Administration (CNTA), the government authority responsible for the development of tourism in the country which was recently dissolved into the country’s Ministry of Culture and Tourism, reported that the first half of 2017 saw 62 million outbound travelers, which is 5.1% higher than the number for the same period of 2016, signaling that the 2017 numbers are likely to continue the upward trend.

 

Exhibit 1: Chinese outbound tourism continues to grow.

Source: UNWTO and CNTA

 

Given that less than 10% of the country’s population even has a passport, according to China’s Ministry of Public Security, and the continous growth of its middle class, China is poised to continue to produce more outbound tourists in the years to come.

It’s not only this market’s sheer size and potential for growth that makes it so appealing, but its spending power, which is also unrivaled and increasing. China’s booming economy is reflected by the affluence that’s emerging among its citizens. A 2017 report from McKinsey & Company estimated that China will have more millionaires than any other country in 2018 and will have the most affluent households in the world by 2021. The burgeoning affluent class and growing average disposable incomes means that Chinese travelers have an increasing ability to spend money on travel. In fact, Chinese outbound tourism expenditure has increased by double digits every year since 2012. In 2016, the last full year with available data, Chinese outbound tourism expenditure increased 12%, or $11 billion, over 2015, to a total of $261 billion according to the UNWTO World Tourism Barometer. To put the magnitude of this spending into perspective, the U.S. came in second place that year with $122 billion of outbound tourism expenditure, followed by Germany at $81 billion.

The majority of the current outbound tourists are from the first-tier tourist-generating regions which contain the largest cities, highest per capita GDPs, and highest concentration of affluent residents. Second-tier regions are quickly catching up in economic growth. This, along with their relatively high populations, will feed a new wave of outbound tourists in the near future. The relatively less populated third-tier regions, on the other hand, are still in the early stages of economic development, so it will take some time before their impact on the outbound tourism market is fully realized.

For this report, we use the definitions used by the UNWTO for outbound tourist-generating regions that are presented in the 2017 report Penetrating the Chinese Outbound Tourism Market. Please see the note at the end of the report for details about how these regions are defined.

Understanding Chinese Outbound Tourists

Technology Usage and Preferences

In general, Chinese tourists are very tech savvy. Understanding their digital usage and preferences is crucial for identifying the right channels and platforms to reach them and providing the services they desire.

Mobile-first mindset

One of the key characteristics of Chinese consumers is their extremely high mobile internet usage. According to the China Internet Network Information Center’s “The 41st Statistical Report on China’s Internet Development,” the penetration of mobile internet users out of all internet users reached 97.5% in 2017. To put this into perspective, mobile internet use penetration was expected to reach 93.4% in 2017 in the U.S., according to eMarketer. Mobile phones have become the most used and often the only device used to access the internet in China.

 

Exhibit 2: Mobile internet use penetration reached 95% in China in 2016.

Source: China Internet Network Information Center

 

Social-media centric

High mobile usage in China today is largely tied to mobile-focused social media channels, like WeChat and Weibo. When it comes to social media in China, WeChat is king, having surpassed one billion monthly active users earlier this year according to its parent company, Tencent. Weibo, on the other hand, reached 376 monthly active users as of November 2017. Weibo is a micro-blogging site which is most similar to Twitter. Posts, like Tweets, have a character limit, which is currently 140 characters. WeChat (which we discuss at length in our report WeChat Marketing Strategies for Global Travel Brands 2018) has gone beyond just content posts and has become extremely integrated into everyday life for its users. It acts as a messenger app, includes a Facebook-like news feed called “Moments,” where content posted by friends and family appears, and Official Accounts that allow companies, organizations, and high-profile individuals to have a presence on the platform. It also includes WeChat Pay, a mobile wallet and payment platform, which we will discuss more below. With all that it encompasses, it’s no surprise that WeChat captures more time spent on mobile apps than any other in China, capturing nearly 30% of average daily hours spent on mobile apps according to an estimate by QuestMobile and Kleiner Perkins.

 

Exhibit 3: As of April 2017, WeChat captured 29% of all time spent on mobile apps.

Source: QuestMobile + Kleiner Perkins

 

Ease with mobile shopping and mobile payment

Smartphones have also heavily impacted the way that Chinese consumers shop. Mobile commerce is the preferred digital shopping method, especially among younger generations. According to Euromonitor, 66% of all digital purchases in China were made on mobile as of 2016. E-commerce giants Alibaba and JD.com dominate this space, and WeChat is a major facilitator of mobile shopping. While WeChat users are browsing articles on the platform, they expect to be able to click a link and be taken directly to where they can purchase the item or experience they’re reading about. This seamless process has conditioned Chinese consumers to expect this level of ease in all types of transactions.

Even when Chinese consumers shop in brick-and-mortar stores, mobile payment has fast become the preferred way to pay for goods and services. In 2016, mobile payments in China totaled $5.5 trillion according to iResearch, while in the U.S., the total was just $112 billion according to a Forrester Research estimate. The use of cash in China has been declining steadily as mobile payments grow in popularity. Chinese citizens spent the equivalent of about $10 trillion in cash in 2016, 10% less than what was spent in 2014.

 

Exhibit 4: Mobile payment use is rapidly increasing in China, and slow to catch on in the U.S.

Sources: iResearch, Forrester Research

 

China’s mobile payments market is dominated by two of the country’s largest tech companies, Alibaba and Tencent, with their respective mobile wallets, Alipay and WeChat Pay. Together, these mobile wallets capture around 90% of total mobile-payment market share (54% Alipay and 37% WeChat Pay) according to Analysys International. Alipay and WeChat Pay see the large majority of the 97 billion transactions that are made through non-banking mobile wallets. UnionPay, the state-backed bank-card provider, recently launched its own mobile payment system in an attempt to keep up with this trend. UnionPay also has a near monopoly when it comes to payment cards in China, with 97% market share of payment cards in 2017 according to Worldpay. It is important that travel brands and destinations keep these payment behaviors in mind if they want to facilitate easy transactions for this high-spending tourist market.

Travel Behavior and Preferences

As China’s middle-class grows, along with its outbound travel market, Chinese tourists have become fast to adapt to new trends and adopt new preferences and interests. To cater to the interest of this vast group, travel brands and destinations need to be constantly on the lookout for new trends.

Mobile preferred throughout the traveler journey

The mobile-first mindset among Chinese consumers impacts each stage of their journey as travelers, from inspiration, to booking, and in-destination behavior.

  • Research
    Smartphones have become the preferred device to research travel. EyeforTravel’s Chinese Consumer Report 2017-2018 found that smartphones are the primary device used to research travel for travelers of all ages, but especially younger travelers.

 

Exhibit 5: Smartphones are the primary device Chinese travelers of all ages use to research travel.

Source: EyeforTravel

 

  • Booking
    Chinese consumers are also unsurprisingly leading the way when it comes to mobile booking. According to a 2016 survey by Worldpay and Opinium, 25% of Chinese consumers book their travels on mobile, compared to just 6% on average across the other countries surveyed (Australia, Brazil, China, Germany, India, and the U.S.). Chinese government-enforced internet restrictions have allowed a locally grown travel website ecosystem to emerge, including online travel agencies including Ctrip, eLong, and Qunar, and online forums or trip-planning sites like Mafengwo and Tunui. Ctrip is the clear leader in China for travelers who book online, capturing a 70% share of online bookings for outbound travelers in 2016 according to an estimate by Hong Kong-based investment group, CLSA.
  • Payment
    Chinese tourists also prefer to use their typical payment methods, especially mobile payments, while booking travel and on purchases in-destination. Skift Research spoke to Karlijn Vogel-Meijer, director of social for KLM Royal Dutch Airlines about the company’s use of WeChat for our WeChat Marketing Strategies report. She informed us that about 30% of the airline’s Chinese customers pay for their flight tickets using WeChat Pay, which it just began accepting in August 2017. Travel brands and businesses in-destination are increasingly adopting mobile payments to meet the demand, but there is still a lag in adoption that could be hindering Chinese tourists from choosing to buy from certain companies. A 2018 survey by Hotels.com and Ipsos, for example, found that the most important aspect of a hotel for Chinese travelers is that it accepts UnionPay or Alipay. This was selected more than all Chinese-language related services and cultural amenities. Despite this, only 7% of the hoteliers surveyed indicated that they were investing in improving their ability to accept these payment methods, while only 18% already accepted them at the time. This gap in supply vs. demand can be a huge hindrance for businesses looking to attract Chinese travelers. A 2017 survey by Nielsen and Alipay found almost all Chinese travelers surveyed (91%) indicated that they would be inclined to spend more while traveling if mobile payments were supported by more vendors.

Traditional travel agents are still important

Even with mobile bookings on the rise, most Chinese outbound travelers are still booking travel plans with traditional travel agents. When Skift Research spoke to Maria Sun, COO of Ctrip for our report A Deep Dive Into Ctrip and the China Online Travel Market 2017, she informed us that 70-75% of travel bookings are still made offline in China, with the assistance of the many traditional travel agents or tour operators there. According to the UNWTO, by the end of 2016, there were over 28,000 traditional travel agencies in China and 13.6% of them (3,806) had been approved by the China National Tourism Administration to provide outbound travel services to Chinese travelers.

 

Exhibit 6: Digital bookings are on the rise in China, but traditional travel agents are still widely used.

Source: eMarketer + iResearch Consulting Group

 

Regional differences are a key factor in travel behavior

Despite the overall trends, travel booking method is one area among others that tends to vary based on traveler characteristics, especially the region-tier they come from. The UNWTO reported that 49% of the traditional travel agencies certified to provide outbound travel services are located in first-tier regions. Travelers from outside of first-tier regions often use first-tier agencies, however, due to their proximity to major international airports and other travel service providers. In fact, 60% of all Chinese outbound travelers who use traditional travel agencies use those that are located in first-tier regions.

Chinese travelers also have differing travel preferences and motivations based on their varying disposable incomes and comfort levels traveling abroad. Travelers from first-tier regions, who tend to have the most money to spend on travel and more international travel experience, are a key driving segment behind many of the trends we see in Chinese outbound travel. Residents of lower-tier regions will continue to mature as travelers as their disposable incomes grow and their quality of life improves. As this maturation happens, they are likely to follow a similar evolution as their first-tier compatriots when it comes to the things that motivate them to travel and what they look for in-destination.

Young travelers define the future of Chinese outbound travel

Younger travelers are also a key driving segment of travel trends in Chinese outbound tourism. In 2016, travelers between 18 and 34 made a total of 82 million trips abroad, accounting for about 60% of all international trips from China. On these trips, they spent over $150 billion according to estimates by Bloomberg Intelligence. Having grown up in relative prosperity and political freedom, this segment has developed its own priorities when it comes to what’s important in life. This, combined with their comparatively heavy use of mobile apps and social media channels like WeChat, has pushed them to search for the most shareable, enviable, and memorable experiences in life, which often come from travel.

Luxury shopping prevails, but experience rises in popularity

The motivation for travel is one way that Chinese outbound tourism has evolved and continues to change in general. Chinese travelers are often stereotyped as being heavily motivated by shopping to travel. Shopping is indeed an important activity to Chinese tourists, as they can often find high-end, unique products at better prices abroad. Whether at home or abroad, wealthy Chinese citizens are not shy about spending on shopping. A 2017 McKinsey report estimates that Chinese households spend twice as much per year on average as French or Italian households on luxury goods, and they represent almost one-third of the entire global luxury consumer market. A staggering three-quarters of this luxury-goods spending happens abroad. Overall, shopping tends to claim the highest proportion of spending by Chinese tourists abroad. Survey data from Nielsen and Alipay found shopping claims 25% of spending while traveling, while data from China Luxury Advisors and Fung Global Retail & Technology reports 55%.

Despite the high expenditure, a number of recent studies have found that shopping is declining as a motivating factor to travel for Chinese tourists. A survey by Hotels.com and Ipsos found that 35% less Chinese travelers cited shopping as a prime reason to travel in 2017 compared to 2016. Oliver Wyman also reported an overall drop in shopping expenditure by Chinese outbound travelers from 2015 to 2016, from 41% to 33%, even as total travel spending increased over the same period. This decline moved shopping from the second largest spending category to the third, pushing it behind spending on sightseeing, recreation, and entertainment.

 

Exhibit 7: Spending on shopping by Chinese outbound travelers decreased 8% year-over-year from 2015 to 2016.

Source: Oliver Wyman

 

The increasing expenditure on travel experiences rather than shopping is tied to larger trends in the types of trips that Chinese travelers prefer. As the market matures, Chinese tourists are looking for more than the stereotypical large group bus tour that goes just to the main sightseeing spots in the most popular destinations. Like travelers from many other markets, they are increasingly looking for more personalized and unique travel experiences. With their increased economic standing and freedom to explore new locales, Chinese travelers now see travel as a way to improve their quality of life and enrich themselves. Travel is taking on a more personal meaning. This is especially true for younger travelers and those from first- and second-tier regions, as they gain more experience abroad and find tools to help them travel confidently, even on their own. A recent report by McKinsey found that 86% of Chinese citizens born post-1990 believe that success means pursuing a happy life, compared to just 43% of all other age groups combined. This indicates that the personal, life-improving meaning of travel will continue driving the emerging trends we are seeing in the Chinese outbound travel market.

Guided tours and packaged travel slowly gives way to independent travel

The changing motivations to travel have impacted how Chinese tourists are traveling and the types of activities they prefer while on vacation. Chinese travelers have embraced independent, or at least semi-independent, travel more in recent years. The survey by Nielsen and Alipay asked Chinese outbound travelers what types of travel they prefer. The results show that 34% still prefer guided, packaged travel, while 49% prefer independent travel, 42% prefer semi-independent travel, and 25% prefer customized travel. The distribution here is notable when compared to the same data for the non-Chinese travelers surveyed (from the U.S., U.K., France, South Korea, and Japan). Just 13% of travelers from these countries prefer packaged travel, 70% prefer independent travel, 29% prefer semi-independent travel, and 21% prefer customized travel.

Many of the Chinese tourists who prefer packaged tours are likely from lower-tier regions, especially third-tier. As the UNWTO explains, the financial value of packaged tours and the security of traveling with a group of compatriots is often ideal for tourists that are on tighter budgets, are less likely to speak other languages, and are generally less comfortable traveling abroad. Survey data from China Luxury Advisors and Fung Global Retail & Technology illustrate these varying preferences, by dividing respondents’ most recent travel arrangements by their city tier of residence. We can see that travelers from lower-tier cities are most likely to have traveled as a part of a group or with the help of a travel agent or tour guide compared to those from first-tier cities. As Chinese tourists from lower-tier regions continue to mature as travelers, we can expect the number who prefer traveling fully independently to continue to increase.

 

Exhibit 8: Chinese travelers from lower-tier cities are the least likely to have traveled completely independently.

Source: China Luxury Advisors + Fung Global Retail & Technology

 

Exhibit 9: More Chinese travelers plan to travel at least semi-independently in the future.

Source: China Luxury Advisors + Fung Global Retail & Technology

 

Rising popularity of customized travel

With the rise of fully independent travelers (FITs) and semi-independent travelers, we also observe new trends in the types of trips Chinese outbound travelers prefer to take. Customized travel is one type that has caught on quickly in China in recent years and continues to grow in popularity. Customized travel itineraries are often put together with the assistance of a traditional travel agent, tour operator, or an online travel agency. According the the UNWTO, these types of trips focus more on the free choice of the tourists, and are tailor made to their preferences. Customized travel itineraries may be led at least in part by guides, or can be directed by mobile apps that act as guides.

Ctrip and the China Outbound Travel Research Institute recently reported that the number of customized tours in 2017 increased 130% year-over-year, and 40% of these trips took place abroad. Europe was the most popular destination for customized travel, receiving 10% of these trips outside of Mainland China. European customized tours in 2017 lasted 12 days on average and typically included stays and activities in just one or two countries, giving travelers plenty of time to engage with and spend money in each destination. Customized travel is also already catching on for travelers in lower-tier regions. While 50% of the cities customized travel tourists departed from were in first-tier regions, cities in second-tier regions saw 100% growth in departures year-over-year.

Themed travel as an interesting niche

Another type of travel that is becoming increasingly popular with Chinese outbound travelers is themed travel. Themed travel, which may fit within the category of customized travel, is usually based around a particular interest or hobby, like photography, flowers, sports and fitness, or cultural exploration. Travel agents and tour operators put together themed tour itineraries, or independent travelers can plan them on sites like Ctrip, which categorizes tours and activities by themes to make the planning simpler.

Slow, authentic experiences are taking precedence

No matter what type of trip they take, Chinese tourists are looking more and more for what the UNWTO calls “slow travel.” This means that they take more time at each destination in order to get a more in-depth and local experience. Taking time to walk around, enjoy local cafes, and otherwise more low-key activities can help them get the unique and authentic experiences they crave. Visiting off-the-beaten path destinations helps them achieve this too. For instance, China became the second most important source market for Antarctic travel in the 2016 to 2017 tourist season, producing about 5,000 visitors. Self-driving travel is also rising in popularity for similar reasons, as it gives travelers the control to drive unique routes, visit uncommon destinations, and choose their own pace. Companies like Zuzuche.com are dedicated to renting cars to Chinese FITs for overseas travel and providing resources to help them plan this type of trip, while destination marketing organizations like the Los Angeles Tourism and Convention Board and Travel Oregon provide information about self-driving travel through their Chinese social media accounts.

Best Practices for Travel Brands and Destinations

The behavioral preferences and patterns laid out above clearly demonstrate that Chinese travelers are a multifaceted group with varying attitudes, preferences, and comfort-levels traveling abroad. Travel brands and destinations that hope to attract Chinese travelers should first do their due diligence to figure out which segments of the market are most relevant to them in order to appeal to them most effectively. It’s also crucial for travel brands and destinations to adopt marketing strategies that ensure they can reach and provide seamless service to the largest volume of this lucrative market.

1. Participate in or create a “China readiness program”

Implementing China readiness programs is one strategy that many travel brands and destinations are utilizing to appeal to Chinese travelers. These programs are usually multipronged and encompass a number of things companies and destinations can do to assure their facilities and services are prepared to meet the unique needs of Chinese travelers. Businesses that meet certain standards related to language resources, cultural amenities, and technology needs of these travelers can be certified where these programs exist. Some businesses have created their own programs, and others work with third-party certification organizations. Having a certification of this type helps win the trust of Chinese travelers and can help increase brand visibility in China. Even without participating in an official certification program, businesses and destinations can encourage more Chinese visitation by training staff and implementing services to cater to the unique habits and preferences of this group.

Case Studies:

  • VisitBritain
    VisitBritain’s GREAT China Welcome Charter, launched in 2014, is designed to help Chinese tourists easily find travel service providers in Britain that are making themselves “China-ready” by adapting services and making Chinese-language information readily available. Businesses have to provide evidence of one or more criteria from a list including employing Mandarin- or Cantonese-speaking staff, accepting UnionPay for transactions, and having translated websites, apps, or literature available. It is free for businesses to join the program, but by joining, they agree to continue making themselves more China-ready, and also to work with VisitBritain and other businesses in the program to help make Britain “the most welcoming European destination for Chinese visitors,” according to the program’s website. The program also benefits its members by helping expand their reach into the China market. They can use the program’s logo in collateral to market their China-readiness, and they receive exclusive opportunities to market to and connect with Chinese consumers and the travel trade. While it’s difficult to attribute visitor numbers directly to this program, we can see that Britain experienced 45.7% growth in visits by Chinese tourists from 2014 to 2015 (the first full year after the initiation of the program) according to VisitBritain. This growth could, in part, be tied to the visibility British tourism received in China as a result of the GREAT China Welcome Charter.
  • Destination DC
    Destination DC’s Welcome China program is its effort to attract Chinese travelers by helping them feel welcome to the area. The program encourages travel- and tourism-related businesses in the D.C. area to register in order to receive certain benefits. These include being featured in all of Destination DC’s Welcome China marketing and social media, facilitated networking with the Chinese travel trade, and opportunities to access tourism data, resources, and educational classes. The Welcome China program has specific requirements that businesses must meet depending on business type (attractions and cultural institutions, hotels, restaurants, service providers, shopping, and sightseeing and transportation). Attractions and cultural institutions, for example, must meet any three of the following requirements: Chinese language map/materials, Chinese language content on website, accept UnionPay or provide UnionPay ATMs, audio tours in Chinese, Chinese food and drink options, free Wi-Fi, signage in Chinese, Chinese subtitles in videos, Chinese social media accounts (WeChat/Weibo), and have at least one Mandarin-speaking staff member. At the time of this writing, 36 businesses in the D.C. area have become registered Welcome China members, running the gamut from museums, to restaurants, department stores, and chain and independent hotels. Destination DC is aiming to continue adding more members in order to increase the number of visitors from China, which reached 304,000 in 2016.
  • AccorHotels
    AccorHotels launched the Optimum Service Standards program in 2011 in order to attract Chinese travelers to its hotels by serving to their unique preferences. The program, launched initially in Australia and New Zealand, encompasses training and education for staff members related to the Chinese travelers’ culture, expectations, and preferences. It also requires hotels to meet a set of criteria including providing Chinese-language welcome kits and maps, accepting UnionPay, providing Chinese-language newspapers and television channels, Chinese menu items, and more. As part of this program, AccorHotels worked with the third-party organization China Ready & Accredited, which helps businesses meet standards in order to better serve Chinese customers and gain their trust. Businesses that are accredited by the organization are able to display its logo on the premises, and they are featured on China Ready’s Chinese website. AccorHotels was the first international hotel group to receive China Ready Accreditation. In 2016, over 50 AccorHotel locations had been accredited by the program. In April 2018, the company’s Chairman and CEO, Sebastien Bazin, announced that it plans to have 250 hotels trained in the program by 2020.

 

2. Think beyond social media with strategic partnerships and integrated digital marketing

The travel brands and destinations that have had the most success gaining awareness, business, and visits from Chinese travelers have implemented multipart, integrated marketing strategies, including key partnerships with Chinese tech companies. Technology has become a key driver in the maturation of the Chinese outbound travel market and is helping facilitate the rise in FITs and semi-independent travelers. Major Chinese tech companies, including Alibaba (and it’s travel marketplace, Fliggy), Tencent (especially through WeChat), Baidu (China’s most popular search engine), and Ctrip are all taking steps to assist independent travelers, by making the travel journey easier and less intimidating.

WeChat
WeChat has gained a prominent role in many parts of the travel journey, from inspiration and booking, to payment and guidance in-destination. Many travel brands are taking cues from other industries and are enabling seamless transactions from content posted on the platform, easing the process of booking without the help of a travel agent. Destinations are also using WeChat mini-programs as in-destination, Chinese-language guides, making independent travel less intimidating.

Ctrip
Ctrip has implemented its VTM (virtual team manager) service, which provides travelers with details about local attractions and shopping, in addition to emergency and safety information. The service also helps connect travelers who are visiting the same destination, and connects them with local guides for more spontaneous tours and activities. According to Ctrip, about 10 million travelers used the VTM service in 2017, which is 15 times more than 2015, the service’s first year.

Ctrip is also keenly aware of trends in outbound travel and improves its user experience accordingly. For example, it named 2016 “Year One of Customized Travel,” and added a customized travel platform to help travelers plan this type of trip or find agencies to plan it for them.

Baidu
Baidu and Ctrip partnered to create a feature for the Ctrip app that uses the smartphone’s camera to translate any kind of text in augmented reality, which can be useful for reading signs and other text-based information while traveling. Baidu has also created a translation device that immediately translates spoken words. The device doubles as a Wi-Fi hotspot in order to provide connectivity for all the internet-based assistance that is making travel easier for FITs. The translation device is currently available to purchase or rent through Ctrip’s app or website.

Clearly, Chinese tech companies have a lot to offer for any travel brand or destination, whether it’s through a formal, strategic partnership, or solely through the adoption of the tools they’ve created. Either method can be just one part of a larger marketing plan. It is critical that travel brands and destinations broaden their scope beyond just one channel. They must understand how to use the main marketing channels the most effectively, like how a WeChat account can complement a Weibo account, and how each can link seamlessly to booking platforms. Forming strategic partnerships with relevant Chinese tech companies can help facilitate seamless transactions and can be key to reaching a larger audience of potential customers in the most relevant ways.

Case Studies:

  • Marriott International:
    In August 2017, Marriott International formed a joint venture with Chinese e-commerce giant Alibaba. When it was announced, the venture was described as a way for the two company’s digital offerings to be brought together more seamlessly. They launched an “exclusive booking portal” accessible through Alibaba’s online travel marketplace, Fliggy, where Chinese consumers can browse 600 Marriott hotels in the Asia Pacific region. They plan to add all Marriott locations in the future. Alibaba will also market Marriott hotels to its 500 million mobile monthly active users, and eventually, the venture will link Marriott’s loyalty program to Alibaba’s. The venture also means that Marriott is rolling out Alipay to its locations, and is supposedly on track to do so at one quarter of them by midway through 2018.
  • Los Angeles Tourism and Convention Board:
    The Los Angeles Tourism and Convention Board (LATCB), integrates a number of digital marketing channels to expand its efficacy and reach. When Skift Research spoke to William Karz, LATCB’s vice president of digital marketing, for our WeChat Marketing Strategies report, he told us about some of the board’s strategies. When it comes to WeChat, LATCB manages two accounts: one consumer-facing, and one travel-trade facing (this is also a great example of best practice #3). These accounts serve distinct purposes, but they complement one another by marketing Los Angeles to consumers who are likely to plan travel independently, and to members of the travel trade, who can then promote the destination to their clients. LATCB was also one of the first destinations outside of Asia to buy advertising on WeChat’s Moments feed, which until a couple of years ago, was reserved only for content posted by friends and family. Karz cited Moments advertising as a key driver to increasing the number of WeChat pageviews LATCB has received over time, including a jump from 77,000 page views to 200,000 from the second quarter of 2017 to the third. He also told us how LATCB works with content partners, like the video-streaming company Youku, to expand its reach to the partners’ 15 or 20 million followers. Through all these channels, LATCB is able to reach digital audiences beyond its own WeChat following, while using WeChat to educate the travel trade also means that it is able to indirectly reach Chinese travelers who may not be on WeChat at all, or who don’t use the platform to plan travel.
  • Visit Finland:
    According to Visit Finland, Finland received 63% more Chinese tourists in 2017 than in 2016, and China was its second highest spending tourist source market. In an effort to encourage more Chinese visitation, Visit Finland has taken a number of strategic steps. Since 2016, Visit Finland has partnered with Fliggy to expand Finland’s tourism distribution channels. Together, they created a tour product specifically targeted toward Chinese FIT travelers called Aurora Project. This product bundled all parts of the trip including air travel, ground transportation, accommodations, and excursions to view the northern lights. Visit Finland has also partnered with Alipay to facilitate rolling out mobile wallet acceptance in merchants across Finland beginning in December 2016. Since efforts began, Finnair became the first airline to accept Alipay for inflight purchases, the Helsinki Airport followed, along with major hotel chains like Holiday Inn, and more. The efforts have been so successful, Alipay has declared Finland the first country to offer Chinese tourists “a fully cashless experience.” To demonstrate this, Alipay sent eight of its users to Iceland for six days in January 2018, where they used the mobile wallet to pay for everything. This experiment and Visit Finland’s additional efforts will help make Finland a more attractive destination for Chinese travelers.

 

3. Build relationships with the Chinese travel trade and local partners

Building relationships and working with the Chinese travel trade (including travel agents, tour operators, and travel media) and other local partners is often crucial to truly penetrating the Chinese market. Because so many Chinese travelers still rely on travel agents or tour operators to plan at least part of their trips, it is imperative that businesses and destinations strategize beyond consumer-facing online marketing if they hope to reach a large audience in China. Connecting with the local travel trade is especially important for destination marketing organizations in order to build awareness and educate agents and operators about the destination and to encourage them to suggest it to their clients. Building relationships with the local travel trade can also help a destination become more China-ready by learning about what Chinese travelers are looking for from those on the ground.

Case Studies:

  • Tourism Australia
    In 2011, Tourism Australia initiated the China 2020 Strategic Plan, outlining steps to continue developing Chinese travel in the country. One aspect of this multipronged plan is an emphasis on strengthening Tourism Australia’s distribution network in China, which includes training and educating travel agents. In order to to facilitate this process, it ramped up its Aussie Specialist Program (ASP) in China, an online training program for travel agents to teach them about Australia’s tourism offerings and educate them on best practices to promote the country as a destination. As of December 2016, there were over 8,500 certified Aussie Specialists in Mainland China, more than any other country, according to Tourism Australia. The program also includes a portal for Australian travel brands and tour operators to advertise their products and services directly to ASP agents around the world. Tourism Australia also introduced the Key Distribution Program (KDP) to China in 2014. Through this program, Tourism Australia targets specific travel distributors (wholesalers, retailers, and online travel agencies) to help drive bookings. The selected distributors must meet a high level of quality in terms of their knowledge of Australia, promotion tactics, as well as their product development. Tourism Australia works with these partners to develop tourism products that best serve the segments of Chinese travelers most likely to visit Australia, especially FITs.
  • Tourism New Zealand:
    Tourism New Zealand has embraced a two-pronged approach to work with partners in its own country and in China to better cater to the 400,000-plus Chinese tourists that visit New Zealand each year. As part of its “Heart of the Long Cloud” campaign, Tourism New Zealand works with the New Zealand travel trade to help encourage Chinese tourists to visit less-visited regions of the country and to plan trips during non-peak seasons. Tourism New Zealand, along with regional tourism organizations, collaborate with local tour operators to develop products and itineraries that will best appeal to Chinese FITs. One Wellington-based tour operator reportedly invested $50,000 into technology in order to offer foreign language tours as a result of the campaign. This tour operator and many others who participated in the campaign report increases in Chinese clientele since the campaign began, according to Tourism New Zealand. Tourism New Zealand has also built networks in China in an effort to most effectively reach Chinese tourists, while also promoting less-visited regions and off-peak travel. A partnership with the Chinese outbound travel website Qyer has helped promote unique regions and suggests itineraries and activities via “Q-Guides.” Tourism New Zealand also initiated the Premium Kiwi Partner (PKP) program. Through this incentive-based program, Tourism New Zealand works with a select group of New Zealand-based tour operators and China-based travel sellers. These entities are encouraged to collaborate to develop targeted, high-quality tourism products or itineraries for Chinese travelers, especially to less-visited regions and during off-peak seasons. The Chinese sellers are incentivized to reach sales goals based on the number of tourists they sell these types of itineraries to. PKP partners get to take advantage of marketing opportunities provided by Tourism New Zealand and they can also use the PKP logo in their own marketing.


Note about the Chinese region-tier definitions used in this report:
There are many ways that regions and cities in China are classified, or tiered, based mainly on indicators of economic development. For this report, we are using the definitions used by the UNWTO for outbound tourist-generating regions that are presented in the 2017 report Penetrating the Chinese Outbound Tourism Market. According to this classification, there are three outbound tourist-generating regions based on per capita GDP, per capita disposable income of urban residents, and the population of affluent individuals.

  • Tier 1 tourist-generating regions encompass some of China’s biggest cities including Beijing, Shanghai, Guangdong, Tianjin, Zhejiang, Jiangsu, and Fujian. They have a per capita GDP of more than USD 10,000, and are the top provinces according to per capita disposable income of urban residents. Tier 1 regions are home to over half of the country’s middle- and affluent-classes. All of these factors contribute to high frequency of and demand for outbound travel.
  • Tier 2 tourist-generating regions encompass mostly the central provinces of China. These regions have a per capita GDP of about USD 5,000-10,000. These regions are just trailing behind tier 1 tourist-generating regions in terms of economic development, and so their residents’ propensity to travel is growing.
  • Tier 3 tourist-generating regions include mostly China’s remote western provinces. These regions have small populations in relation to the others, as well as less advanced economic development. These factors contribute to residents of these regions having lower demand for outbound travel.

Endnotes and Further Reading

  1. Alizila, “Finland First to Offer All-Alipay Travel to Chinese Tourists,” February 2, 2018.
  2. Bloomberg, “An Army Chinese Millennials Is Reshaping Global Travel,” November 2, 2017.
  3. China Daily, “定制游(dìngzhì yóu): Customized tour,” April 19, 2018.
  4. China Luxury Advisors and Fung Global Retail & Technology, “Deep Dive: Chinese Outbound Tourists — More Diverse, More Sophisticated,” August 10, 2017.
  5. China Travel News, “Baidu Wi-Fi translator live on Ctrip in US, Japan, Canada and Hong Kong,” December 25, 2017.
  6. eMarketer, “US Digital Users: eMarketer’s Updated Estimates for 2017,” September 7, 2017.
  7. Euromonitor, “Digital Consumers Set to Rise as More Countries Become Connected,” October 27, 2017.
  8. GB Times, “Chinese wanderlust for Antarctica grows as South Pole tourism gets cheaper,” February 21, 2018.
  9. Ipsos and Hotels.com, “Chinese International Travel Monitor 2017,” 2017.
  10. Ipsos, Tencent, RDCY, “2017 Mobile Payment Usage in China Report,” August 2017.
  11. Jing Daily, “What’s a Computer? How M-Commerce Triumphed in China,” February 17, 2018.
  12. Jing Travel, “Ctrip’s VTM Aims to Provide Digital Tour Group Services for FITs,” March 15, 2018.
  13. Jing Travel, “How Chinese Travel Changed in 2017 According to Ctrip,” February 12, 2018.
  14. Lexology, “CNNIC publishes the 41st statistical report on China’s Internet development in China,” February 26, 2018.
  15. Marriott International, “Alibaba Group and Marriott International Announce Innovative Joint Venture to Redefine Travel Experience,” August 7, 2017.
  16. McKinsey, “Chinese luxury consumers: More global, more demanding, still spending,” August 2017.
  17. McKinsey, “What can we expect in China in 2018?” December 2017.
  18. The Ministry of Public Security, “Report of the State Council on the Implementation of the Exit-Entry Administration Law,” November 15, 2016.
  19. Nielsen and Alipay, Outbound Chinese Tourism and Consumption Trends, 2017.
  20. Oliver Wyman, “Chinese Travelers Spend More But Shop Less,” July 11, 2017.
  21. Skift, “Online Travel Booking Grows in China, But Traditional Agents Still Dominate,” May 20, 2016.
  22. Skift, “Three Things to Know About How Chinese Travelers Book Their Trips,” April 26, 2017.
  23. South China Morning Post Magazine, “Going cash free: why China is light years ahead in the online payment revolution,” September 9, 2017.
  24. UNWTO, Penetrating the Chinese Outbound Tourism Market — Successful Practices and Solutions, September 2017.
  25. U.S. National Travel and Tourism Office, “U.S. Resident Travel to International Destinations Increased Eight Percent in 2016,” December 4, 2017.
  26. South China Morning Post, “Customised travel: The next big thing for Chinese Tourists?” January 21, 2017.
  27. tnooz, “Visit Finland tells story via digital partners for Chinese tourism push,” March 19, 2018.
  28. Tourism New Zealand, “China: Market Overview”
  29. Tourism New Zealand, “Heart of the Long White Cloud campaign launches in China,” June 7, 2017.
  30. Visit Finland, “Foreign Tourism Spending Increased by More Than 20% in 2017,” March 15, 2018.