Quality Key to China (PRC) Outbound
“PATA’s view is that the healthy growth of the emerging Chinese outbound market requires partnership and co-operation; continuous attention and collective effort; between the public sector and private sector, as well as between Chinese authorities and approved destinations,” said PATA Regional Director - China Ms Kate Chang.
Ms Chang told delegates participating in the PATA-Nielsen China (PRC) Outbound intelligence workshop at PATA Travel Mart 2007 today that in working together with destinations such as Hong Kong, the CNTA was already cracking down on zero-cost tours.
At home, CNTA has set up a web page for consumers to register their complaints. Nearly 900 complaints about outbound tours were logged in
2006 (78% more than 2005), and from January-June this year, Chinese travellers had logged 466 complaints.
Complaints pertained to shopping tours, quality standards, hidden costs, accommodation standards, shortcuts in tour programmes, and surcharges for younger or older tour members (those perceived to have less purchasing power for arranged shopping tours).
“Given the growth in the number of outbound trips taken by Chinese travellers the number of complaints seems very small,” said Ms Chang.
“However, according to Chinese culture, people do not like to complain unless it is a big deal to them.”
To help reduce the number of complaints, CNTA has formulated an official contract template to guide Chinese citizens in their dealings with tour operators.
CNTA has also published an official price guide for 17 common outbound tour routes to help travellers identify reasonable all-inclusive value.
Chinese tourists can now travel to 132 approved destinations, 91 of which are already receiving tour groups from China.
“Competition is hotting up and one of the ‘dream’ destinations for many Chinese, the US, is now in negotiations with the CNTA for Approved Destination Status” said Ms Chang.
For destinations competing for Chinese travellers, reputation based on honesty, quality and value will be a critical factor for success.
ACNielsen China Executive Director, Customized Research Services, Mr Rene Bos and ACNielsen China Head of Travel and Leisure Research Dr Grace Pan gave workshop participants an understanding of Chinese travellers’ behaviour and their outbound travel preferences.
The following is Nielsen’s summary of Mr Bos’ and Dr Pan’s
China Outbound Travel Monitor 2007
Understanding China (PRC) as a Travel Generator, Chinese travelers’
behavior and their outbound travel experiences
1) Mr Rene Bos: Social Economic Trends - The Changing Chinese Consumers
** How developed are China’s markets ?
* Key cities: Beijing, Shanghai and Guangzhou. Representing 7%of total urban population. Average annual disposable income approx 2000 USD representing around 82 billion USD.
* Tier 2 cities: 29 capitals and prefecture cities. Representing 305 of total urban population average annual disposable income approx 1250 USD representing around 200 billion USD.
* Tier 3 cities: 251 urban cities. Representing 63% of total urban population. Average annual disposable income approx750 USD.
* Firstly, the eastern part of the country, with a focus on Beijing, Shanghai and Guangdong / Guangzhou, followed by second and third tier cities (will) show strong economic growth.
** A growing ability and willingness to spend money on leisure
* Luxury goods shopping (while traveling)
* Travel: According to the Global Online Consumer Confidence survey by Nielsen, with more than half (53%) of Chinese consumers willing to spend their spare cash on holidays/vacations we should be seeing more Chinese on hotel deck chairs than any other nationality from Asia Pacific’s 13 countries.
** Chinese get online!
* Chinese online users as a key consumer group: 137m online population in China, it is a trend that affects all industries and can’t be overlooked. For example, car penetration among the online population is much higher than the average population; and car owners are increasingly choosing to go online to research and compare vehicles.
* How marketers reach new consumer groups will also start to change.
Given the astounding growth in China’s online population, the internet will become the most efficient way to quickly understand consumers across China’s vast markets. We may also see innovations in how marketers use the web to reach consumers as standard online advertising may not be enough to catch the eye of China’s technology savvy online population.
** Growing Disposable Incomes. And a growing willingness to use credit cards or to borrow money
Chinese are getting more mobile – the rapid growth of car ownership, Chinese consumers perceptions and behavior towards travel and leisure.
* Up four percent to 19% in 2006, passenger car ownership will continue to increase and with it the second-hand car market will continue to develop rapidly. We will see the auto market developing on two axes; a high end segment primarily for business usage and a medium to low end segment for functional usage.
* With the world’s growing fascination with China, over the next decade it is set to become the second largest travel and tourism industry in terms of travel expenditure in the world after the United States. Constituting almost 34% of Asia’s total tourist arrivals it is also the key driver behind tourist growth in the region and is expected to grow at least 10% per year. This growth will be underpinned by the continued relaxation of government regulations following full WTO access.
** The growing Middle Class
* A huge future young, affluent middle class; 175m people now, but up to 500m by 2025.
* Given that this younger and wealthier demographic is the key consumer segment for both manufacturers and retailers in China, we should still see a buoyant consumer market going forward.
* The bulging young middle class have fueled the growth of the travel and leisure industry, and are becoming one of the main consumer groups of luxury goods.
** Chinese (outbound) travel and tourism grows significantly
* Helped by a rising Chinese currency
* Increased public holidays
* Reduced travel restrictions
* Increasing number of countries receiving ADS status
* Incentive travel
* Diversification of travel products and services
* Promotions by destinations
* (Perceived) Safety is key factor and possibly show stopper
2) Dr. Grace Pan: Outbound Leisure Travel
** Traveling for leisure takes the lead on purposes of outbound travel
* Leisure (85%) is top of the list in terms of purposes of outbound travel, followed by business needs (37%) and visiting relatives (19%).
Source: China Outbound Travel Monitor (Sep 2007)
** Where to travel for business and for leisure
* The most popular destinations for Chinese travellers are still Asia because of geographic proximity, however, the number of trips to Europe and Oceania are increasing rapidly, in particular for business purposes. Source: China Outbound Travel Monitor (Sep 2007)
** Dream destination
* Europe (32%) is top of the list as the most popular dream destination for Chinese consumers. 23% of respondents chose somewhere in China, and 13% of respondents chose Australia or New Zealand as their dream destination. Source: Nielsen Online Omnibus (Feb 2007)
** Top 10 planned destinations in the next 12 months
* Hong Kong SAR is the most popular planned destination by Chinese leisure travellers in the next 12 months, followed by Singapore, France, Macau SAR, Thailand, Australia, etc. Source: China Outbound Travel Monitor (Sep 2007)
** How do Chinese leisure travellers book leisure travel?
* Conventional travel agents still take the lead, more than 6 out of 10 leisure travelers used a travel agent; however, nearly half book their trips online either via online travel agents or accommodation and transportation websites. These trends suggest that conventional travel agents will be challenged by online travel agents. Source:
China Outbound Travel Monitor (Sep 2007)
Where do Chinese leisure travellers look for information?
* Traditional information sources have been challenged by the internet. Chinese leisure travellers heavily rely on internet for source of information; nearly 8 out of 10 leisure travellers checked out destination websites and close to two thirds of leisure travellers used an online travel forum.
** Who are Chinese leisure travelers?
* Three market segments for the outbound travel market
– Mature couples >35 years of age
– Families with children
– Young singles and couples
For PATA Strategic Intelligence Centre commentary on the issues raised during today’s intelligence workshop, please email communications@PATA.org. Pictures from PATA Travel Mart 2007 will be available online at www.PATA.org/mart2007. For more information contact: PATA Corporate Communications Ms Min Min Wong Tel: +66 (0)2 658-2000 extension 107 Email: minmin@PATA.org PATA Marketing Communications Mr David Gillbanks Tel: +66 (0)2 658-2000 extension 108 Email: david@PATA.org