ESSENTIAL TRENDS 2 012 Essential China Travel Trends DRAGON EDITION A China Travel Trends publication produced in collaboration with Dragon Trail, COTRI and PATA

PUBLISHER & EDITORIAL DIRECTOR PROJECT MANAGER Jens Thraenhart Stefan Reindl

MANAGING EDITOR CREATIVE DIRECTOR Shuk Wa Tsang Dominic Naughton

ADVISORY BOARD Ms. Kate Chang, Regional Director Greater China, Pacific Asia Travel Association (PATA) Mr. Xu Jing, Director Asia Pacific, United Nations World Organization (UNWTO) Professor Geoffrey Lipman, Director, GreenEarth.travel & ICTP Professor Zhang Guangrui, Director Tourism Research Centre, China Social Science Academy Ms. Nancy Cockerell, Advisor Policy & Research, World Travel & Tourism Council (WTTC) Ms. Bernadette Dennis, Managing Director AP, Hospitality Sales & Marketing Association Intl (HSMAI) Professor Wolfgang Arlt, Director, China Outbound Tourism Research Institute (COTRI) Mr. George Cao, Co-founder & CEO, Dragon Trail Interactive Dr Xu Chen, Researcher, China Tourism Academy (CTA)

Essential China Travel Trends is published by China Travel Trends. Copyright © China Travel Trends. All rights reserved. All content contained within this publication has been made available generously by the contributing authors. China Travel Trends takes no responsibility over the accuracy of the content, stats, facts, and statements made in the articles. No part of the book may be reproduced in any manner or form whatsoever without the authorisation and written permission of China Travel Trends. All enquiries to China Travel Trends. www.ChinaTravelTrends.com & www.ChinaTravelTrendsBook.com.

Dragon Edition - China Travel Trends 1 Regulation 107 Contents Setting milestones for China’s hotel industry Liu Shijun and Lu Kailin, China National Tourism Administration Hotel Profitability 115 Oversupply depresses profitability at China Outbound Tourism 21 Damien Little, Horwath HTL In search of deeper meaningful travel experiences MICE Regulation 123 Chinese outbound travel to exceed 80 million trips in 2012 Turn red tape into road signs for successful events Prof. Dr. Wolfgang Georg Arlt, COTRI Kate Chang, PATA A Decade of Travel Trends 33 Meetings & Conventions in 129 Chinese outbound travel more than doubled in the last ten years Beijing chasing Paris and London in congress industry Dennis Pyka, IPK International, Munich Daniel Tschudy, Editor, events magazine Luxury Travel 39 Aviation 137 China’s affluent set taking more trips China’s rapid growth of airports, airlines, and air capacity Rupert Hoogewerf, Hurun Report Mario M. Hardy, UBM Aviation Travel Consolidation 47 Green Evolution 143 Expanding China’s luxury travel hinges on travel consolidators Green growth, travelism and China’s development paradigm Lin Xu, VariArts Travel Group Professor Geoffrey Lipman, Green Earth Travel Tour Operation 55 Mobile Marketing 151 Foreign competition will lift China’s outbound travel quality Mobile boom fuels travel app popularity Marcel Schneider, TUI China George Cao, Dragon Trail Internet & Social Media 67 Human Resources 157 China’s youth market challenge marketers to new way of thinking Recruiting and retaining talent in China Connecting with Chinese consumers online Lesley Reynolds, Portfolio Jens Thraenhart, Dragon Trail Customer Satisfaction 101 China’s Growing Cities 163 Big opportunities beyond Beijing, , and Satisfaction index spotlights service gap Tier 3 Cities presenting opportunities for international hotel brands Dr Xu Chen, China Tourism Academy K K Fung, Jones Lang LaSalle

2 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 3 Beijing, April 2012 This “Essential China Travel Trends Guide – Year of the Dragon Edition” is designed to de-mystify some of the trends and issues international travel companies are facing when they enter the Chinese market and are looking to attract Chinese consumers. To do business successfully in China, or anywhere for that matter, companies need to understand the consumer and the trends – and both are changing very quickly in China. We thank all our authors, advisors, partners, and sponsors for their valuable contributions. In particular, I would like to thank Ms. Shuk Wa Tsang of V Concepts Asia Pacific for her editorial expertise, Mr. Dominic Naughton of The Naughton Group Kong for his design skills, Mr. Stefan Reindl of China Travel Trends for developing the web presence of this book, and Ms. Kate Chang of PATA China for Chairing the Editorial Advisory Board. Without them this booklet would have never been possible. We hope you find the read intriguing, inspiring, motivating, From the Publisher entertaining, educational and valuable. For any help related to entering the Chinese market or marketing to CHINA IS NOW THE LARGEST OUTBOUND TOURIST SOURCE country Chinese consumers, the producers of the book, Dragon Trail (an award- in Asia, having overtaken . In 2011, 70 million Chinese travelled winning digital marketing company), COTRI (a leading China Outbound overseas, spending US$69 billion, a 22% and 25% increase over last year research firm) and PATA (an authoritative body when it comes to tourism respectively. In 2009 (when we published the first edition of China Travel development in Asia Pacific) are more than pleased to be of assistance. Trends book) and 2010, China’s travel market grew dramatically despite We invite you to download the e-version of this book too at www. the recession, and total gross bookings exceeded US$62 billion. China’s ChinaTravelTrendsBook.com. total travel market is expected to reach $73 billion by 2012. The Boston Consulting Group has forecast that China is expected to become the Happy reading. world’s second-largest travel and tourism market by 2013. By 2020, there will be a 100 million global travellers from China, according to the United Nations World Tourism Organization. This further confirms a general trend towards more outbound travel among China’s growing middle classes. China currently accounts for 6% of revenue of global tourism, and this will increase to 8% in 2013 and 14% in 2020. Jens Thraenhart Following the success of the first version of the China Travel Trends, Publisher & Editorial Director, China Travel Trends published by ChinaTravelTrends.com in the Year of the Tiger, and produced (www.ChinaTravelTrends.com) in collaboration with Dragon Trail, COTRI (China Outbound Tourism Co-Founder & President, Dragon Trail Research Institute), VariArts, and GreenEarth.travel, we are pleased to (www.DragonTrail.com) present the second version in the Year of the Dragon. Chair, PATA China The Dragon Edition is published by ChinaTravelTrends.com, and (www.PATA.org) produced in collaboration with Dragon Trail, COTRI, and PATA (Pacific Asia Travel Association).

4 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 5 6 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 7 “The travel and tourism industry in China (PRC) has become a global Thoughts from the Global phenomenon with double-digit outbound tourist growth. Chinese government entities have led by example showing vision and Travel & Tourism Industry financial commitment to building tourism infrastructure in uncertain economic times. Countries that wish to enjoy the job creation opportunities from receiving high spending Chinese tourists need to act accordingly rather than create barriers to entry, via ill-conceived taxation. There is a growing realisation amongst new generation PATA activists that the needs of Chinese visitors can be empathetically addressed for mutual benefit. I am consequently delighted to support this timely China Travel Trends update which insightfully recognises that the Internet and social media are essential tools for travel research and planning.” Martin J. Craigs, CEO, Preface by Mr Zhu Shanzhong Pacific Asia Travel Association (PATA) www.pata.org Vice Chairman , China National Tourism Administration (CNTA) “According to UNWTO forecast Tourism Towards 2030, North-East Asia will www.cnta.gov.cn become by the year 2030 the most visited sub-region in the world and China will be leading this growth. China’s support to the development of tourism Boosted by economic reforms and recent major events such as the 2008 Beijing Olympic Games and is reflected in the decision to upgrade its tourism strategy from sectoral to a state-level national the 2010 Shanghai Expo, the increasingly open tourism industry in China has seen rapid growth. strategy. China became a leading example for many countries around the world in this respect. Already China’s tourism has blossomed from a small base to becoming third in the world in inbound tourism the world’s fourth most visited destination, and the third most important outbound market, China is and outbound tourism expenditure and the largest market. Foreign exchange expected to become the leading destination and the fourth largest outbound earnings from inbound tourism increased 173 folds during 1978 to 2010, at an annual rate of 17.5%. market in the next decade.” Domestic tourism earnings increased 11.3 folds at an annual growth of 16.4% during 1994 to 2010. Taleb Rifai, Secretary-General In 2011, overnight overseas tourist arrivals reached 57.58 million, up 3.44%. Foreign exchange United Nations World Tourism Organization (UNWTO) www.unwto.org earnings totalled US$48.5 billion, up 5.78%. Some 70.25 million outbound trips were made by Chinese travellers, up 22.42%. Domestic trips totalled 2.64 billion, up 13.2%. Total tourism income “In May 2010 we celebrated the 20th anniversary of WTTC in Beijing, topped RMB 2.25 trillion, up 20.1%. capital city of a country at the very forefront of change in Travel & Tourism. Despite the continuing challenges stemming from the global financial Having transformed into a major pillar of the national economy, tourism is playing a more and more crisis and economic depression, China has already confirmed its promise, both as a increasingly important role in driving the economy, stimulating consumption, increasing job opportunities, important tourism destination for domestic and international travellers, but also – and more facilitating the balanced development of urban and rural areas, promoting cultural exchanges, impressively in recent years – as the world’s fastest-growing outbound market. It is hardly surprising cultivating environment protection awareness and enhancing mutual understanding and that the leading stakeholders in the global Travel & Tourism industry are all ensuring a growing friendship between China and the world. presence in China in order to reap the benefits of this growth. We were honoured to hold our 10th This booklet helps promote understanding of China tourism’s latest trends . We sincerely invite you Global Summit in Beijing and we look forward to a continuing close relationship with our friends and to see for yourself today’s China, and look forward to seeing even greater support to China’s tourism colleagues in China.” industry. David Scowsill, President & CEO, World Travel & Tourism Council (WTTC) www.wttc.org

8 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 9 “Aviation’s centre of gravity is shifting eastward. Airlines expect to carry 877 “With year-on-year growth and new destinations being explored, the million more passengers in 2015 than in 2010. Of these new passengers, 212 Chinese traveller is now one of the most prolific. Understanding the million will travel to, from or within China. To put the impact of that into needs of these travellers is now even more important and the hospitality perspective, by 2015 we expect that one out of every seven journeys by air industry needs to put appropriate training processes in place if they want will be related to China. Aviation and tourism are a force for good in our world – generating wealth to capture this important market. As China propels itself to one of the largest global generators both material and of the human spirit. China is preparing to reap the benefits of global connectivity of outbound travel and tourism, it is imperative for sales, marketing, and revenue management by building world class infrastructure. The challenge is for the rest of the world to keep pace with professionals in the to understand the dynamics of this unique market. the phenomenal and game changing opportunities that China’s growth is making possible.” Countries around the globe look forward to learning more about the dynamics of the Chinese Tony Tyler, Director General and CEO traveller as they prepare to accommodate them in the future.” International Air Association (IATA) www.iata.org Robert A. Gilbert, President & CEO, Hospitality Sales & Marketing Association International (HSMAI) www.hsmai.org

“China is becoming an important destination for inbound tourism as the 4th largest outbound market worldwide. After participating in the symposium on “With its growing and vast middle-class, public and private investments in legislation of the tourism law where IHRA contributed actively to the legislation transportation and tourism infrastructure, and increasing use of technology, China of lodging in China, and through the presence of two major hotel associations is clearly one of the most important markets for any travel organisation. Travel working actively to promote our hospitality industry in China, we recognise that China is the industry marketers cannot ’think’ they know China. They must make the effort destination setting an example to several public sectors worldwide for years to come.” to truly understand its consumers in order to successfully engage, sell, serve, and Dr. Ghassan Aidi, President and CEO, support them. This dynamic market offers great potential for the entire global travel industry, from International Hotels and Association (IH-RA) www.ih-ra.com the largest global brands to local establishments. The opportunity is there -- it’s up to you to benefit from it.” Henry H. Harteveldt, Chairman, “The fast-growing China outbound travel market is changing the Association of Travel Marketing Executives (ATME) www.atme.org way of business for many destination marketing organisations around the world, including how to market to Chinese consumers and how to deliver relevant destination products and services for this market. This guide gives an in “Technology is driving a lot of the changes that are currently depth look at the shift of China travel trends and how DMOs can use these trends while developing being witnessed as one of the biggest story of our time. and executing strategies for the various segments and different demographics in China.” With more than half a million Internet users in China, more Michael D. Gehrisch, President & CEO than anywhere else in the world, we have to understand the true impacts of technology to the Destination Marketing Association International (DMAI) hospitality industry in China, and for foreign companies looking to enter the Chinese market or www.destinationmarketing.org wanting to attract Chinese consumers. The second edition of the China Travel Trends book is an invaluable guide to de-mystify some of these issues.” Frank Wolfe - President & CEO, Hospitality Finance & Technology Professionals (HFTP) www.hftp.org

10 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 11 “With China growing dramatically as a major tourism destination and “The six-nation Greater Mekong Sub-region – encompassing Cambodia, Laos, generator, this timely book offers great insights into the way that global Myanmar, and , as well as the Chinese provinces of and organisations can engage dynamically and profitably with these markets. Guangxi – is greatly impacted by the ever-increasing Chinese travel market. As Technology will be naturally a critical factor for serving this emerging demand responsible tourism growth is vital for developing tourism destinations in the for helping the supply side to organise efficient value chains to deliver the products and services Mekong region, it is important for tourist boards and travel suppliers in these effectively. The International Federation for Information Technologies in Travel and Tourism (IFITT) six countries to understand the travel research, buying, and consumption behaviors of Chinese is bringing together a community of the world’s experts on tourism and technology and is keen to consumers, both from a tour group as well from an FIT standpoint. The mandate of the MTCO is engage with the decision and policy makers in supporting the development of Chinese tourism. In this to support development by protecting the region’s culture, heritage, and its sense we welcome this book and we will actively engage for its wide distribution.” people, and to promote authentic, responsible tourism experiences. This guide is an important tool Professor Dimitrios Buhalis, President, for our stakeholders to get ready for this emerging trend.” International Federation of Information Technology in Travel and Tourism (IFITT) Mason Florence, Executive Director, www.ifitt.org Mekong Tourism Coordinating Office (MTCO) www.mekongtourism.org Europe has been experiencing a growth in travel from Chinese visitors, especially during the past couple of years. Due to the complexity in marketing to Chinese “As we are experiencing the fast growth of the burgeoning consumers, as well as the difference in travel products and services required China travel market, we are also witnessing a shift from to deliver a satisfactory and relevant tourism experience for Chinese travellers, traditional Chinese tour groups to more experiential and www.adventuretravel.biz European DMOs, as well as travel suppliers, need to tailor their offerings to this authentic travel. The global trade is poised to understand the needs of the Chinese emerging and fast growing market. The European Travel Commission is fully embracing this traveller on one hand, while on the other hand, new adventure travel products are being created in China itself. This concise book is an important top level guide for ATTA members to get a grasp of important emerging market and has launched a Chinese version of the visiteurope.com portal and this important trend.” its activities in the Chinese market. Recognising China as an important growth market, there is a huge opportunity for all European destinations to attract Chinese travellers. This guide provides a useful Shannon Stowell, President, resource for travel suppliers and destinations to get to know the Chinese market. Adventure Travel Trade Association (ATTA) www.adventuretravel.biz Nicholas Hall Acting Executive Director, European Travel Commission (ETC) “To paraphrase President Clinton – ‘it’s China Stupid’ - and the great www.etc-corporate.org opportunity with China is the myriad of destinations and cultures, the hundreds of million of smart inquisitive people and a governance that is committed to green growth and quality Travel & Tourism as a key driver. We look forward to helping turn that opportunity into reality.” Professor Geoffrey Lipman, President, International Council of Tourism Partners (ICTP) www.tourismpartners.org

12 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 13 Preface

Preface announced programmes designed for Chinese tourists. These include adding popular Chinese dishes to full-service Jens Thraenhart menus (including a traditional Chinese breakfast), featuring President, Dragon Trail one or more Chinese television stations in the guestrooms, and Kate Chang introducing guestroom amenities such as slippers, tea kettles, Director, PATA Greater China and a selection of Chinese teas. Some hotels have also brought in a concierge who speaks fluent Mandarin. Wolfgang Arlt Director, COTRI With all that said, the start of the second wave of China’s outbound tourism, will change the Chinese tourists as we know them today. The “New Chinese Tourists”, knowledgeable, sophisticated, travel-savvy and predominantly below 45 years of age, are entering the scene. New Chinese tourists look for deeper The Changing experiences and closer contact with local host populations during their self-organised trips. Earlier they took photos of Chinese Traveller themselves in front of the Sydney Opera House or the Eiffel Tower, but are now drawn more to new places and activities. THE CHINESE MIDDLE CLASS IS ALREADY LARGER THAN THE New Chinese tourists offer an increased chance for destinations entire population of the . In 15 years, the Chinese and tourism service providers off the beaten track to get a piece middle class will reach 800 million. It has changed, and will of the Chinese outbound market. continue to change, the dynamics of the world we live in, and have huge impacts on the global travel and tourism industry. Many travel brands are trying to capture the attention of Chinese demand for international travel is still young. But it is this very valuable new customer segments, but not without expected to grow by 17% annually over the next decade, driven challenges and disappointments, due to various reasons. by rising incomes and aspirations. There will be an average First, the way many Chinese consumers are finding out about of 25 million first-time Chinese travellers every year, or 70,000 new destinations and travel services, such as hotel or cruise brands, every day, for the next 10 years. International travel from China is via the Internet. With over 500 million Internet users in China in would become a major source of growth for providers in the December 2011, more than 80% of Chinese travellers research and destination countries. educate themselves about destinations and brands online. An increasing number of second and multiple time Second, unlike in the West, the people with the highest net Chinese visitors are more likely to travel independently, and worth in China are usually under 45. Because of the Cultural not part of a group, meaning that they have a greater choice Revolution in the 1960s and ‘70s, people older than 45 generally of timing and destinations. They have the opportunity aren’t well educated, live in government subsidised housing, and to explore ‘off-the-beaten-track’ venues and can look for have spent the bulk of their careers in state-owned enterprises. holidays and activities that suit their personal interests. The younger generation is better educated and is more likely The rise of Chinese Tourism has gotten the attention of a lot to work in private firms, including foreign-capital enterprises. of travel, tourism, and hotel companies. The big US hotel chains In addition, the cities with the fastest growing number of such as Starwood, Hilton, Marriott, and Inter-Continental have millionaires are in third, fourth, and fifth tier (including Dalian,

14 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 15 Preface

Inexperienced Experienced Experienced feelings of travelling abroad – those who are a little fearful due travelers mass market affluent travelers to food and language difficulties – but full of anticipation for the travelers lower-taxed luxury goods they are likely to amass. Attitudes and Travel is for Travel is to explore Travel is good for Post-80s and 90s young adults are not following a ’s aspirations sightseeing – the cities outside relaxation and more the better nearby regions stress relief flag with matching red caps; there is a rise in independent, Travelling around Outbound travel Prefer to return to self-organised travelling, albeit still in small numbers, interested the world is a is an indication of places that offer in experiencing foreign cultures, reflecting on it with their own lifetime dream status and special relaxing activities education and perspectives. occasions and a slower pace of life In many ways, China is still “an emerging economy” and Trip activities Packed schedules Sightseeing and Entertainment, marketers are still unsure of how to target its new consumers. of must see sites relaxing shopping, Cracking China’s consumer market is easier said than done – and Historical and and luxury there have been some notable stumbles. U.S. home-improvement museums accommodations rather than giant Home Depot shut down five of its 10 stores since entering overscheduled the market in 2006, while Best Buy, the world’s largest consumer sightseeing electronics retailer, closed all of its branded stores in China in 2011. Trip planning Travel agencies Fewer packaged Websites are the for packaged tours and more main channel for Understanding the new Chinese Tourist, the changing tours and booking independently travel planning demographics and consumer behaviour is critical to be assistance planned trips Premium successful in China. Word of mouth, Online search and theme-based TV, and websites booking tour packages for The incomes of Chinese in second-, third-, and fourth-tier cities outbound trips rising resulting in a change in consumption patterns that “will drive Share of total travel spending market dynamics in unprecedented and unpredictable ways”. 2010 56% 23% 21% Chinese consumers are at the forefront of tech and digital 2020 33% 26% 41% trends and are greatly increasing their use of computers and mobile phones to research and purchase. Additionally, Chinese , , , Nanning, etc.), and about 50% consumers are increasingly being influenced by digital and social of the wealthy were not even classified as wealthy four years media marketing – 90% of respondents to a 2011 Forbes survey ago. Some 70% of them are NOT living in the four biggest cities of more than 300 China-based senior executives indicate that (Shanghai, Beijing, Guangzhou, and Shenzhen), and 35% are NOT digital and mobile marketing are a critical part of the mix for living in first or second tier cities. reaching Chinese consumers, especially the younger and affluent demographic. Third, a structural change is happening in the way Chinese travel. A recent study by the Boston Consulting Group revealed

that 95% of Chinese tourists are dissatisfied with the current Table Sources: BCG Chinese Consumer , July 2010; BCG consumer travel products and services, both domestic and outbound. interviews. Note: We define inexperienced travelers as those with fewer than three years of travel experience who have taken fewer than three trips in the past 12 While group package deals are still chosen among most middle months. Experienced mass-market and affluent travelers have made more than three trips in the past 12 months. Share of the total value of the class, especially those not from first-tier cities who have mixed domestic and outbound overnight leisure markets.

16 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 17 MANAGE • CONTROL • REPORT YOUR CHINESE SOCIAL MEDIA PRESENCE MORE EFFECTIVELY Top 10 China travel trends

1. Chinese outbound travel continues to grow in travellers number and trip frequency. 2. Leisure travel drives Chinese outbound travel demand. Sightseeing and shopping are key purposes of leisure trips. It is highly seasonal with peak periods in May, October and December. ENGAGE • EXPERIENCE • INFLUENCE 3. Chinese outbound travellers are travelling further for destinations beyond THE CHINESE SOCIAL Hong Kong and Macao. MEDIA DASHBOARD 4. Young professionals with high income is the major consumer segment driving outbound travel demand in China. 5. 80% of travellers are searching for information about destination prior to their travel, and the major information channel is online. 6. is still dominating the booking channel, while online agents are growing quickly, especially for long haul trips. 7. Average spending per visit shows double-digit increase, with 35% of budget spent on shopping. 8. Sharing of travel experience through online platforms is increasingly popular, especially among young generations. 9. Chinese consumers are moving towards an experience-based choice model from a price-based choice model. INTERACTIVE 10. The new Chinese tourists are demanding higher quality services, and moving from traditional tour groups to individual experiences. CHINA TRAVEL BUZZ POWERED BY DRAGON TRAIL 18 China Travel Trends - Dragon Edition WWW.DRAGONTRAIL.COMDragon Edition - China Travel Trends 19 China is the world’s biggest producer of carbon dioxide, passing the U.S. in 2006 Netherlands Environmental Assessment Agency

Outbound Tourism Prof. Dr. Wolfgang Georg Arlt, Director China Outbound Tourism Research Institute

Wolfgang Georg Arlt has been engaged in European- Chinese business and tourism relations for 35 years. He is the founder and director of the China Outbound Tourism Research Institute (COTRI), based in Beijing and Heide, Germany. COTRI co-organises the annual China Outbound Travel & Tourism Market (COTTM), where it presents the New Chinese Tourists Welcoming Award.

20 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 21 Outbound Tourism

China is expected to be the world’s largest source of outbound tourists by 2020, accounting for about 100 million trips a year Wikipedia

In search of deeper meaningful travel experiences Chinese travellers are demanding more sophisticated travel experiences, reflecting the growing maturity of a sector that now generates greater receipts than inbound visitor earnings.

CHINA’S OUTBOUND TOURISM IS Have money – will travel entering its second phase, bringing In line with its impressive economic new opportunities and challenges growth, China has developed into to destinations and tourism service the biggest Asian outbound tourism providers worldwide. Chinese source market. Within a dozen travellers are increasingly looking years, the annual number of border for travel experiences that go crossings has multiplied from less beyond simply ticking off major than 10 million in 1999 to almost 70 sights and the dubious pleasures million in 2011. These days, Chinese of forced shopping. Accompanied tourists can get group visas for by sharply focused marketing, almost any part of the world, while products that go beyond well- many countries have also removed trodden travel paths can emerge as or lowered barriers for individual “hot” properties to attract affluent tourism. In China’s emerging visitors from China. consumer society, “international” provides enviable social cachet, an indicator of a person’s status and affluence. Have money – will travel.

22 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 23 Outbound Tourism

China outbound tourism 1995-2011 in million border-crossings

65 growth rates for travel volume and group that is knowledgeable, 57.38 spending in 2010 and 2011. The sophisticated, travel-savvy, and 45.84 47.5 Chinese outbound travel sector below 45 years of age. 40.95 now spends US$10 billion more New Chinese tourists look for 34.52 32 28.85 31 annually than the country earns deeper experiences and closer from inbound tourism. contact with host populations. 20.22 16.6 China is already the biggest There is less need to shop for 10.47 12.13 7.14 7.59 8.18 8.43 9.23 domestic tourism market in the others, as their friends and world by number of trips, and colleagues are also travelling. With

‘95 ‘96 ‘97 ‘98 ‘99 ’00 ‘01 ‘02 ‘03 ‘04 ‘05 ’06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘11 COTRI research projects that photos of global landmarks such (Q1&2) (Q3&4) the country’s outbound market as Sydney Harbour and the Eiffel will capture 10% of the global Tower snapped years ago, they are Source: COTRI, CNTA, CTA international tourism market within ready for new places, experiences Two millenniums of travel for reasons other than the decade. This growth will propel and activities. staying at home emigration. Even after the launch China to top position as global Chinese travellers, especially For centuries, the Chinese have of the “Opening and Reform” tourism’s biggest source market those going beyond neighbouring been travelling within their country policy in 1978, less than 1% of the before 2020. countries and regions, are not for pleasure and integration into population annually had a chance spending time and money just the spatial dimension of Chinese to fulfill their wish to see the China’s new emerging tourists for relaxation. Travel provides culture. They criss-crossed the outside world. Chinese tourists have turned into a opportunities to acquire greater country as officials, traders, major target group for destination social prestige and knowledge. poets, pilgrims, nature seekers or China’s travel boom decade marketing organisations and These factors are as important refugees. In stark contrast, the new tourism companies around the motivators for travel as business, Outbound travel, however, is millennium has seen rampant world. But a new challenge awaits overseas studies and visiting not part of that tradition. There is growth in outbound travel, with 70 destinations and travel suppliers friends and family members neither a Marco Polo nor an Ibn million border crossings projected who have only just learned from abroad. The New Chinese Tourists Battuta in the collective memory for 2011. Some 70% of all outbound experience that Chinese group are driven by the same motivation of , no treasure trips from only tourists have their own distinct but they are taking it to the next hunters and no missionaries happened within the last six years. expectations, needs and behaviour level. Even if their command going to faraway places. In the Even 2009’s worldwide economic and that success in this market of English is perfect, they are 20th century, turmoil and wars crisis, which halted global tourism requires careful product adaptation, happy to see Chinese culture in the first half and a policy of growth, failed to stop China’s new forms of marketing and being respected when overseas isolation and frugality for much outbound expansion. China’s differentiated means of fulfillment. destinations make the effort to of the second half prevented outbound market rose 4% in 2009 Here’s the challenge: the ‘New provide information in Chinese the development of outbound before bouncing back to 20% Chinese Tourists’, an emerging characters.

24 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 25 Outbound Tourism

Prof. Dr. Wolfgang Georg Arlt, Director, Estimated international travel expenditure in billion US dollars China Outbound Tourism Research Institute Germany USA China UK Italy Japan Netherlands Chinese outbound travel to exceed 80 million trips in 2012 0 10 20 30 40 50 60 70 80 90 Source: www.china-outbound.com China has had yet another year of massive growth in terms of Chinese spending more than ever Chinese Millionaires Wealth Report outbound tourism, confirming the predictions made by COTRI at the CTA have reported that the tourism 2011 published by Hurun. (see beginning of 2011. The China Tourism Academy (CTA) put the final spending of Chinese consumers is article on page 39) figures as approximately 70 million trips overseas in 2011, an increase now over US$69 billion, a massive It has been reported that in of more than 20% by 13 million from the 57.4 million trips in 2010. increase on the US$55 billion spent the past year there has been a by Chinese tourists in 2010. Figures 91% increase in Chinese traveller CHINA RANKS IN THIRD PLACE AS terms of both receiving and sending from Commerzbank show that spending on shopping in a global outbound tourism source tourists in the next five to seven China holds a steady third position destinations, likely due to the huge market. Germany and the USA hold years”. A study by Commerzbank in terms of spending. increase in numbers of travellers on to the two top positions, yet the in Germany arrives at a similar Without any major setbacks to and the luxury market becoming gap between the three countries is conclusion; according to Jutta Kayser- dissuade Chinese spending, the more developed. decreasing and predictions that the Tilos, an economist at Commerzbank, affluent middle and upper classes future of international tourism lies “against the backdrop of continued are “showing off to the world their Evidence that New Chinese Tourists with China still stand strong. strong growth of the Chinese increased purchasing power in the are emerging economy, it is expected that the title major tourism destinations”. The New Chinese Travellers opts China hot on the heels of the of “Travel World Champion will soon to travel independently away from largest tourism source markets go to China”. For many destinations, Luxury tourism develops traditional group tours. According Taleb Rifai, Secretary-General of including non-neighbouring China’s upper class is constantly to a report by Global Blue, the the UNWTO United Nations World countries like Australia or the Maldives, growing, and soon there will be majority of wealthy Chinese Tourism Organisation, recently China is already the most important more millionaires in China than any people choose to make their own claimed “we can expect to see China inbound tourism source market other country. Luxury travel has bookings, and travel as free and become the number one country in today. made vast leaps, according to the individual tourists.

26 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 27 Today, Chinese tourists are approved to travel to over 100 outbound destinations The Financial Times

There has been a vast increase base will be demanding particular compared to the number of standards in order to meet their people who have claimed to do unique needs, challenging the so in previous years, proving that assumption that “western” this segment of the market is tourist behaviour is the norm in developing rapidly. international tourism. The Chinese economy will Expected 80+ million border face serious challenges in the crossings in 2012 months ahead, with a return to Fifteen years ago, when the double-digit GDP growth rates UNWTO forecast that by 2020 unlikely for the foreseeable future. there will be over 100 million Nevertheless, status-enhancing Chinese people travelling abroad overseas trips will continue to be it appeared to be wishful thinking, an important aspect of the affluent as the number was still below Chinese consumers’ expenditure. 10 million at that time. However, Looking to 2012, CTA expects an this 100 million mark will only be increase in Chinese outbound two more years away if growth tourism of 12%. continues at 20%. COTRI predicts that “unless there This high growth is likely are major natural disasters or a to be maintained, as Chinese new contagious disease scare, in citizens are benefitting from 2012 COTRI expects the number advances in transportation and of border crossings from mainland communication, and policies set China to surpass 80 million and by the government in China and the average spending per trip to overseas continually becoming surpass US$1,000”. more open. The expanding tourist Source: www.china-outbound.com

28 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 29 CHINESE OUTBOUND TOURISTS WILL CONTINUE TO TRAVEL ALL OVER THE WORLD. For more information: www.china-outbound.com ARE YOU READY FOR THEM? RESEARCH • TRAINING & COACHING • CERTIFICATION 30 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 31 By 2020, China’s consumer consumption nation-wide will amount to 22 percent of the total global consumption, behind only the U.S. (35 percent). BCG Consulting’s November 2010 Report: “Big Prizes in Small Places: China’s Rapidly Multiplying Pockets of Growth”

A Decade of Travel Trends Dennis Pyka, Director World Travel Monitor® IPK International

Dennis Pyka has over 15 years of experience in the travel industry. He has been working as a Data Manager for IPK International since the year 2000, responsible for IPK’s World Travel Monitor®, an ongoing tourism study in 60 countries worldwide. He is in charge of all aspects of World Travel Monitor® data analyses and statistical projections.

32 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 33 A Decade of Travel Trends

Destination areas of Chinese outbound travel 2010 Destination Area Year 2010 Year 2000 Change 2000/2010 Asia / Pacific 67% 62% +5% share Europe 24% 25% -1% share The Americas 8% 10% -2% share Africa 1% 3% -2% share

Source: World Travel Monitor® 2000 and 2010, IPK International Munich 2011 Chinese outbound travel more than doubled in the last ten years – outbound monitor Authoritative international travel survey shows China has become market has come a long way by 12%, showing that the Chinese the 12th biggest travel market worldwide, with a doubling in the within a decade. outbound market has become number of international trips in a decade. In 2010, the mainland Chinese much more holiday-oriented than made 15.7 million international it was in 2000. WORLD TRAVEL MONITOR® (WTM®), Chinese outbound spending* per trip by trips, up from 7.4 million such trips Asia Pacific gained share as a inaugurated since 1988 by IPK groups 2010 in 2000, making mainland China travel destination, while all other International to track international the 12th biggest outbound travel continents lost shares. overnight travel of 60 major market worldwide in terms of “real” The top holiday destinations in outbound markets worldwide, outbound trips (lasting one night 2010 were Korea (1.3 million holiday added Chinese outbound travel to or longer). trips), Thailand (1.2 million), Japan the survey in 2000. The number of trips grew at an (1.2 million), (1.1 million) Every January and February, average of 8% per annum over the and (0.8 million). Top long 30,000 computer assisted personal 10-year period, but the number of haul holiday destinations were the interviews are carried out with international overnight stay grew USA (0.6 million), Russia (0.6 million), randomly selected Chinese aged 15 relatively slower at only 2% p.a. due France (0.4 million), Germany (0.4 years and older. The results for China to much shorter stays abroad. million) and Italy (0.4 million). (excluding overnight travel to Hong <1.250 Euro Outbound holiday trips showed The most preferred outbound Kong and Macao) are collected in 1.251-2.500 Euro the strongest growth for the holiday types in 2010 were tour the global WTM® database. 2.501-5.000 Euro decade, at 156%, whilst business holidays (66% of all outbound The key findings of the Chinese 5.001 Euro+ travel was up 63%. holidays) followed by sun and

Outbound Travel Monitor® 2010 Source: World Travel Monitor® 2000 and 2010, IPK International Other outbound trips like visiting beach holidays (22%) and city Munich 2011. *Travel spending includes transportation, showed that China’s outbound accommodation, meals and other incidental costs friends and relatives (VFR) declined breaks (7%).

34 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 35 Table 2: Top six destinations of international travellers* 2010

Rank Destination Inbound Trips (millions) World Share (%) 1 USA 56.3 10% 2 46.4 9% 3 Germany 42.7 8% 4 France 39.0 7% 5 Italy 35.4 6% 6 China (mainland) 31.7 6%

Source: World Travel Monitor® 2010, IPK International Munich 2011 - *Global outbound travel lasting one night or longer, excluding travel between mainland China, Hong Kong and Macao

The top five activities / motives spending nations worldwide. on tour holidays were city Information and booking sightseeing, visiting objects of behavior showed the most dynamic interest, enjoying meals and drinks, change, with the increase in the shopping, enjoying the landscape share of internet usage leaping from and the atmosphere. 9% in 2000 to 75% in 2010. The top five activities / motives on However, travel agencies remain sun & beach holidays were enjoying the dominating point of sales meals and drinks, discovering the with a 63% share in all outbound nature, shopping, relaxing as well as bookings, followed by internet swimming and sunbathing. bookings (28%) and other direct Top destinations bookings with the accommodation were Korea (0.3 million), Japan or a carrier in 2010. (0.3 million), USA (0.3 million), Importantly, female travellers Russia, Vietnam and Germany (with outnumbered male by 2010. Male 0.2 million trips each). outbound travellers constituted China’s position in the global 54% in 2000, but female travellers market is much stronger when it made up the majority (55%) in comes to travel spending. With an 2010. Chinese female outbound average spending of 2,302 euro per holidays were the best performing outbound trip in 2010, the Chinese segment of Chinese outbound continue to be among the top five travel over the past 11 years. For more information please also see: www.ipkinternational.com

36 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 37 China will be the world’s leading travel destination around 2016-2018, according to the United Nations World Tourism Organization. UNWTO 2010

Luxury Travel Rupert Hoogewerf, Founder, Hurun Report

Rupert Hoogewerf co-founded the China Rich List (formerly known as the Hurun Rich List) in 1999, with the results of the first four years published in Forbes magazine. Since then, the list of the country’s wealthiest citizens has become an eagerly awaited annual event. A qualified chartered accountant, Hoogewerf spent seven years at Arthur Andersen. He graduated from Durham University in 1993 with a degree in Chinese and Japanese.

38 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 39 Luxury Travel

Preferred international luxury destinations

Rank Destination 2011(%) 2010(%) 2009(%) 1 France 13 11.1 9.5 2 U.S. 12.7 15.9 14.8 3 Australia 11.6 9.8 11.7 4 Japan 9.6 8.9 4.5 5 Maldives 8.9 5.4 6.4 6 Singapore 7.5 7.8 6.2 7 Italy 5.8 7.3 5.7 8 Switzerland 5.7 NA NA China’s affluent set taking more 9 Dubai 5.3 5.9 6.4 holiday trips 10 4.9 6.7 9 Source: Hurun Research May 2011 With their net worth swelling, China’s affluent set is demanding more when travelling. A survey of China’s wealthiest shows them increasingly likely to splash out on flying business class, shopping survey were published in the China Billionaires have longer and staying with well-known hotel brands. Luxury Travel White Paper. . Almost half of them take more than 20 days holiday a year. THANKS TO RISING PROPERTY In order to gauge the travel More time for holiday-making They travel overseas more often, prices and a fast-growing GDP, the habits and decision-making of The survey shows that on average with one-third going abroad more ranks of millionaires in China have China’s luxury consumers, Hurun the affluent set abroad three than five times a year been swelling. Boasting a million Report conducted a survey of times a year, with 20% of them millionaires, China is now home to millionaires and billionaires in going abroad more than five times Richer travellers are younger and the largest number of self-made 2011. One-on-one interviews were a year. Millionaires take an average more likely to be female millionaires and billionaires in the undertaken with 401 millionaires, of 15 days holiday annually; one- The Chinese luxury travellers are world (a millionaire is any individual each with assets of at least RMB third take 10-20 days and one-third generally 15 years younger than with personal wealth of RMB 10 10 million, between April and take more than 20 days. In 2010, their European and American million or more). November. Among them 45 90% of millionaires travelled counterparts. However, millionaires The rise of private wealth coupled people have assets of at least RMB abroad for 2.3 times on average, under age 30 travel the least with the appreciation of the 100 million. staying eight days on average (two- whereas older millionaires more and easing of visa applications are In addition, Hurun interviewed third took less than a week). While often travel for business. fuelling demand for luxury travel. 62 individuals with more than RMB the duration of overseas stays was Females make up a larger Indeed travel has been identified as 10 million in total assets from April unchanged over the past three proportion of wealthy Chinese and the preferred entertainment among to May, 60% of those interviewed years, the number of overseas trips they take more vacations than their the affluent set. were male. Findings from the rose 10% in two years. male counterparts.

40 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 41 Luxury Travel

Preferred domestic luxury destinations SHOWCASE Rank Destination 2011 (%) 2010 (%) 2009 (%) TRAVEL 1 Sanya 24.1 18.4 18.2 2 Hong Kong 18.1 14.5 10.2 EXPERIENCES 3 Yunnan 9.7 13.8 19.4 4 Qingdao 6.7 3.9 5.8 TO INSPIRE 5 Shanghai 6.5 6.8 3.8 6 6.2 6 7.2 www.tripshow.com 7 Macao 5.8 3.8 4.7 8 Dalian 5.6 5 4 9 Beijing 4.2 6.7 3.8 10 3.7 5.1 6.9 Source: Hurun Research May 2011

More spend on shopping than Millionaires are likely to book business class travel holidays themselves online The Chinese luxury travellers The survey also shows that almost mainly travel for sightseeing 60% make travel reservations and shopping. In 2010, Chinese themselves; 26% by secretaries and millionaire travellers spent RMB 23% by family members. 190,000 in travel costs and on They prefer making hotel and average RMB160,000 on shopping. flight reservations via professional The preferred luxury products websites and agents, hotel were clothes, jewellery, watches, membership services and the cosmetics and fabrics. official websites of airlines. Surprisingly, more millionaires More than 40% prefer not to flew economy class on their first travel on public holidays. trips. The percentage of those who Some 80% chose not to travel will move to the front end of the with a tour group. The average airplane increases for subsequent number of people travelling trips. In 2010, almost 60% flew together was four and more than business class. half travelled with family. THE VISUAL SOCIAL MEDIA PLATFORM THAT CONNECTS BRANDS WITH AFFLUENT CHINESE TRAVELLERS 42 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 43 Trip Show – powered by Dragon Trail Luxury Travel

Hotel choices and travel details - Important Factors Why Chinese travel abroad to purchase luxury goods

Preferred travel time % Rank Factor % Luxury goods overseas are Non-public holiday 36 1 Brand 64 72% cheaper than Summer 23 2 Service 58 at home Golden week 17 3 Facilities 56 Spring Festival 14 4 Location 50 There is more variety overseas 69% Labour Day 9 5 Star 44 6 Transportation 33 Reservation by % The service 7 View 31 and shopping Self 57 experience is 45% 8 Price 25 Secretary 26 better overseas 9 Food 22 Family members 23 0 25% 50% 75% 100%

Friend 14 Preferred hotel types % Source: World Luxury Association 2012 Local business partner 11 Luxury hotel brand 55 Local employee 9 33 Others 6 Serviced apartment 13

Hotel booking % Best Luxury Hotel Brand Rank Destination choices linked to Having undertaken higher Professional 27 Shangri-La 1 education education overseas, the travel Travel service 27 Hilton 2 US, Australia, Japan and Thailand preferences of the second are the most popular destinations generation wealthy class are Hotel membership service 18 Park Hyatt 3 for the first overseas trips, and markedly different from their Local friend 16 The Ritz-Carlton 4 Thailand, Singapore, Japan and parents. As education drives luxury Hotel official website 11 Peninsula 5 Europe are popular choices for travel, the US is the preferred Decide on site 2 Grand Hyatt 6 second trips. The duration of destination for travel, followed by second trips was less than a week, the UK and Canada. More than half Sheraton 7 Flight booking % shorter than the one-week average choose English-speaking countries. Kempinski 8 Professional travel website 33 of first trips. The richer they are, the younger Marriott 9 France and Japan are they are sent abroad. Travel service 27 Hyatt Regency 10 increasingly popular but Hawaii More than half prefer high-end Airline official website 18 is losing ground. Sanya, Hong chain hotels and one-third prefer InterContinental 11 Air ticket office 9 Kong and Yunnan are the most boutique hotels for their overseas Sofitel 12 Agent 6 popular domestic destinations but trips. Brand is the deciding factor in Sources: Hurun White Paper on individuals with more than RMB 50 accommodation choice, followed by Others 6 Chinese Luxury Market Special Survey 2011, 2011 Hurun Best of the Best Survey million in assets prefer Macau. service, facilities and location.

44 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 45 CHINA’S GDP 2010-2011: GDP (purchasing power parity): US$9.872 trillion (2010 est.) GDP global rank: #3 (behind the European Union and the U.S.) GDP, real growth rate: 10.3% (2010 est.) GDP, per capita: US$7,400 (2010 est.)

Travel Consolidation Lin Xu, CEO, VariArts Travel Group

Lin Xu was trained as a China scholar at Stanford University after completing a business degree at Peking University. She worked as an executive in the United States, France and China before starting VariArts Travel Group. After founding a successful and unique destination management company, VariArts Travel DMC, she continued with a vision to create the first high-end travel consolidator in China, China Luxury Travel Network (CLTN.net) to consolidate China’s premium travel resources and distribution channels.

46 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 47 Travel Consolidation

More specialist suppliers are emerging in China capable of providing unique luxury holiday experiences for international travellers, but this segment is still undersold, especially Expanding China’s luxury travel compared to other Asian hinges on travel consolidators destinations. China’s capability in delivering luxury travel experiences lies in This demand for guaranteed, consumers are becoming aware scaling up, but the domestic travel trade lacks the wherewithal to quality service coupled with of China’s expanding capacity for exploit the segment’s potential. Travel consolidators will help this the industry’s quest to diversify luxury travel, but there is a lack segment take flight. and differentiate themselves of agents in their countries that from the competition has are well acquainted with China WITH 16% ANNUAL GROWTH immense lucrative potential that spurred the emergence of new, and its tour products to service forecast for domestic travel and a exists at the luxury end of the specialist vendors. Among them them. As a result, China remains 10% annual expansion for inbound market and its intention to develop are vendors offering private undersold despite its diversified travel, China’s domestic travel the sector. shopping services, helicopter/ portfolio and infrastructure industry will be worth RMB 3.9 private jet services, special interest for travelers, especially when trillion by 2020. Numbers such China is undersold to international services delivering educational compared to and Thailand, as these have led many research luxury travelers travel, mountain climbing which boast advantages in organizations to predict that China International high-end consumers training, cooking and culinary experience and language will soon eclipse Japan as the have become more value-sensitive experiences and volunteering capabilities in dealing with second-largest travel and tourism following the global economic experiences combining travel international clientele. market in the world. downturn. They are willing to pay with opportunities for worthy The knowledge gap behind Relatively untapped, the luxury a premium only if product and causes. They not only provide China being undersold is being travel segment in China has service quality are guaranteed. value-for-money products but rectified: The Internet and social become the industry’s fastest- They also demand unique and are also geared to cater to a wider media is transforming the travel growing sector. By opening its exclusive experiences such as demographic with regards to age, decision-making process – most doors to international players, those offering experiential and special interests, etc. noticeably resulting in shorter China has underscored the educational themes. International high-end booking lead times, more

48 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 49 Travel Consolidation

itineraries to in-depth, single destination programs with specific themes, such as China’s domestic travelers education or family travel, are also maturing, creating enjoyed with a small group of family and friends. Online enormous potential for the research and bookings are luxury end of the luxury becoming increasingly popular, especially among the younger market, but agents targeting age groups (25 to 45 years old). this niche lack the resources Word-of-mouth, increasingly shared via online peer platforms to fully exploit the potential. (e.g. www.daodao.cn), continues to play an important part in the decision-making and purchase process. Demand from second- transparent pricing, greater and third-tier cities is rapidly consumer awareness of value- catching up with that of larger added and novel products, etc. As cities, but that demand is not a result, agents in respective source being met on the supply side. markets are increasingly likely to At the top end, increased income buy directly from local suppliers and a stronger yuan are fuelling rather than through global tour spending on high-end and luxury operators. products. The culture of gift giving is driving these consumers to Rise in domestic demand spend a substantial amount of their highlights supply shortfall travel budget on shopping, and At the same time, China’s many are willing to pay top dollar domestic tourists are maturing for more exclusive items when and increasingly turning to traveling abroad. unique experiences and authentic But even as demand for luxury accommodation, as evidenced by holiday products such as tours the change in the ratio between based on specialized themes, international and domestic guests unique programs, off-the- for boutique hotels – from 9:1 to beaten-track attractions, and new 6:4, even up to 4:6 in some cases. destinations grow, supply has been They are moving on from slow in adequately catering to this whirlwind tours with packed premium segment.

50 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 51 buyers and suppliers, and capitalize China’s GDP growth for 2012 is on online technology to enhance forecasted to be 9.5% the presence of new local suppliers, Goldman Sachs There is a role for travel support hotels’ online distribution, consolidators to pool trip planning, online customization of tour packages and peer opinion together a diversified exchange. range of products in the Travel consolidators can ensure that a diversified and creative marketplace, thus offering range of packaged products is greater price advantages to available for agents to market to their clients while ensuring high help this segment thrive. service and product standards are maintained across all regional travel destinations. The consolidated business volume While many boutique luxury will also accord the trade, and travel agencies have emerged, they thus consumers, a greater pricing lack the wherewithal to create an advantage than possible through adequate range of unique travel individual buying power. products and services and are If travel consolidators can unable to offer price advantages or effectively rise to the challenge market themselves due to a lack of and successfully meet the needs market knowledge and budget. of the evolving industry, China’s luxury travel will likely realize Opportunity knocks for its potential and, in so doing, overseas professionals and redefine the travel industry travel consolidators worldwide through the critical Such shortcomings underscore mass of its outbound, domestic the need for human resource and inbound travel volumes. development, while providing opportunities for overseas professionals to take part in this rapidly developing market. There is certainly a role for travel consolidators – to provide a well- developed marketplace with its own set of standards to connect

52 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 53 China will overtake the USA to become the largest world economy in 2017 Euromonitor International

Tour Operation Marcel Schneider, CEO, TUI China

Marcel Schneider spent several years working in banking before gradually moving into the travel industry. He has held various senior management positions in Switzerland and was also of Diethelm Travel Thailand (1999- 2004) before his appointment as TUI China CEO in 2005.

54 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 55 Tour Operation

step-by-step. The ever-increasing outbound numbers provide ample evidence the strategy is working. Still, the new foreign entrants will have to contend with numerous The fundamentals of the challenges when competing outbound and inbound against well-established local tour operators for a slice of the pie. sectors provide the industry Foreign players will have to go the opportunity to explore up against local operators that greater flexibility, creativity have had an unhindered head start in the outbound sector for decades and higher service standards. and have thus accumulated Foreign competition will lift a depth of experience, good China’s outbound travel quality reputation, high brand recognition and strong and efficient The opening of China’s outbound travel sector to foreign- distribution networks. to service delivery, training capitalised tour companies will lead to greater competition that Furthermore, in China’s highly and product innovation and a will ultimately benefit Chinese travellers and pave the way for competitive outbound sector, philosophy that ensures overall the gradual opening of the market to more international players. competition almost always boils quality offered by the three foreign Meanwhile, the inbound sector continues to flourish with much down to price – the lower the better. companies participating in the This is unfortunate as travel has a lot room for all players to explore. pilot project. to do with emotions and feelings. As with every business category, Hence quality, service delivery and it is ultimately the consumer’s PROJECTED BY THE UNWTO TO – TUI China, American-Express product innovation should be as right to choose whether to travel produce 100 million outbound and JTB – to enter this potentially important determinants as price in with a small or large, a Chinese or travellers by 2020, China’s potential lucrative market. the travel buying process. a foreign-owned company as long as an outbound travel source The decision is a strategic one Increased competition is as these companies cater to their market generates incredible aimed at raising the industry key to developing a market’s needs in a sustainable manner. excitement. Until recently, however, standard of China’s outbound environment as it ultimately In time, with increased only wholly Chinese-owned travel market. Although China’s delivers greater quality and value competition, only those companies companies were eligible for an outbound potential is widely for the consumers. that understand and deliver on outbound business license. recognised, we have to remind In my view, it is opportune consumers’ requirements will That changed in May 2011 ourselves that the market is still for China to gradually open remain standing. In this sense we when the China National Tourism not fully developed. I believe CNTA its outbound market to more will eventually see the market Administration (CNTA) announced is heading in the right direction international players after it has becoming more self-regulating, a pilot project permitting three by strategically introducing new given Chinese consumers a taste with a focus that goes beyond foreign-capitalised tour operators destinations and regulations of an entirely different approach extremely low pricing.

56 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 57 sustained long-term growth. Between 2010 and 2020, the number of The opening up of China’s The growing maturity of the households in China with an annual disposable outbound travel to three inbound market coupled with income above US$10,000 (in nominal terms) will a diversification of products on almost quadruple– from 57.1 million households in 2010 to 222 million by 2020 foreign-capitalised tour offer will in my opinion – ensure Euromonitor International operators in a pilot project sustained growth of the industry. Five trends in particular underpin will give consumers a this observation: different level of quality 1. Group business will still feature travel experience, prominently from Western underscoring the advantages source markets. of opening the market to 2. Diversification of access such as international direct flights to more international players. second- and third-tier mainland cities will add capacity to receive For now, the three new foreign greater numbers of overseas entrants can expect a challenging arrivals. road ahead. They will have to create outbound business divisions 3. Demand for tailor-made travel from scratch, carve out their own products, activities and special unique approach based on their interest programs will increase. inherent advantages to develop 4. High-speed rail links and luxury tailor-made quality products that carriages on niche routes will meet the mainland consumers’ make train travel more popular. demands. Only then can they expect to gain an equal footing 5. Previously lesser-known with their local counterparts in destinations for overseas terms of brand awareness. travellers such as , , Yunnan, , Staying ahead in the inbound , Island and game the will increase in While the outbound sector popularity thanks to deeper and continues to fuel much of the holistic understanding of China’s excitement, China’s inbound tourism attractions. travel market nevertheless offers excellent business opportunities While traditionally popular sites with the promise of strong and such as Beijing, Shanghai, Xi’an and

58 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 59 Tour Operation

TUI China vision of China foreign inbound arrivals 2011 – 2020

Average annual growth rate 8.7% The inbound sector is 70

maturing, with visitors Millions 60

demanding more immersive 50

and interactive experiences. 40 It also highlights the need 30 for developing sophisticated 20 personalised services in order 10 to attract return customers. 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Not including arrivals from Hong Kong, Macau SARS and Taiwan the River cruise will remain tours (e.g. Hutong tours in Beijing), He stated “local authorities to China every year, we believe top-selling programs, newer local cuisine cooking classes, should work together to make the inbound potential is far more destinations such as , calligraphy lessons, trips to the tourism a strategic pillar industry”, significant – it can reach 60 million , , Hangzhou, local wet markets etc. adding that training should be visitors by 2020, representing a , and will I have also noticed increased enhanced to lift professional skills compound annual growth rate become popular add-ons as the demand for soft adventure and ethics, as well as response to of 8.7%. market evolves and matures. holidays such as biking, hiking, emergencies. It is indeed essential In addition to the traditional Hangzhou’s , for trekking, rafting etc. Blessed with for China to develop sophisticated source markets of Europe, North example, is likely to attract greater diverse landscapes – from deserts personalised services and America, and the Far East, the foreign attention since becoming to jungles and from grass plains to products to attract return emerging economies of South a UNESCO World Heritage site in ice-capped mountains – China is customers, which is severely Asia, South East Asia and South August 2011. an ideal destination for adventure lacking currently. America will add further impetus Another opportunity lies travel. Statistics indicate there is much to China’s inbound growth. in offering a greater cultural These factors bode well for the potential for China’s inbound I am excited about the immersion. While China’s historical industry since the government travel development – CNTA opportunities that China’s and cultural appeal is undeniably has deemed tourism “strategic” to official statistics shows China outbound and inbound travel attractive to foreign tourists most the country’s economic growth. received 26 million foreign arrivals sectors present. The fundamentals tours, however, tend to deliver China's Vice Premier, Wang Qishan, (excluding Hong Kong, Macao are aligned and there is much only a skin-deep experience. As was reported in Xinhua as saying and Chinese Taipei) in 2010. Based room for greater flexibility, such, I see increased demand for that the industry needs further on our research and analysis, creativity and higher service cultural immersion activities such reform and innovation if it is to including direct analysis of the standards for the industry to as city neighbourhood walking achieve its full potential. 50,000 Western tourists we bring explore.

60 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 61 As China progresses into its 12th 5. Create a China advisory board. Bring together Chinese experts with in-depth Five-year Plan, with expectations knowledge and experience to help your company navigate and understand China. rising across the board in areas such 6. Make sure you have the right people with the right resources, knowledge as education, healthcare, science, base and tools to manage issues and a crisis. Many international companies have technology and the environment, learned the hard way that there is no substitute for preparation and experience foreign multinational travel and in managing a crisis. Nowhere is this truer than China – where the handling of tourism companies will be better the crisis can so often become a crisis in itself. Knowing how the media work and influence each other in a crisis in China is just one example of essential crisis positioned to manage related risks communications knowledge. and opportunities bearing in mind the 7. Map your key Chinese stakeholders around the core issues - and following 10 tips: proactively develop relationships with them. It's too late to call many of them if the crisis has already hit. In China's relatively opaque operating environment it How to position international often takes time to work out who to call in the first place. 8. Develop an integrated communications and public affairs plan specifically travel companies in China for China – that is based on substantive research and analysis (as opposed to guess work and outdated assumptions). An integrated plan addresses your core 1. Avoid being seen as applying 'double-standard' to China, for example, not stakeholders through various channels and programmes – with clearly defined adhering to the same high standards on service, environmental or safety in China goals that align with and support long-term business strategy. as you would in other markets. 9. Redouble your focus on compliance and corporate ethics. Corruption and 2. Tell your corporate story on how you are supporting China's ethical issues are damaging for reputation and business prospects, especially development. Make it real – with examples that demonstrate an understanding when the government and media are zeroing on these issues. Apart from of China's development goals and development stage. A China-focused corruption, other focus areas include pricing fraud, labour rights violations, sustainability report is an excellent platform to tell such a story holistically. Engage environmental pollution. stakeholders when telling your story. 10. Go digital. China has the most internet users in the world and is one of the most 3. Build or strengthen partnerships with credible local stakeholders that engaged countries on social networks. Chinese companies are quickly catching up contribute to Chinese development needs and goals. Corporate responsibility to Western companies in using social media. According to Digital Influence Index, programmes are an excellent platform for this - as long as they are sustainable, relevant to 85% of Chinese consumers view the internet as the most influential channel, your company, make a real impact and are communicated in a measured way. and 95% of Chinese consumers trust a company more that is engaged and 4. Educate your company leadership and key departments on the evolving active on weibo (micro-blogging). Digital strategies need to be woven into your China context (or get educated if you are the leader), through research and communication capabilities and be part of your institutional radar system. analysis, reporting, training or other programmes. A dedicated seminar with presentations from external and internal stakeholders and experts can be great way to focus the top minds of the company on this fast evolving country.

Source: China Travel Trends, 2012

62 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 63 92% OF NETIZENS PARTICIPATE CHINESE TOURISTS IN SOCIAL MEDIA SPENT US$69 BILL. ABROAD IN 2012, IN CHINA NEARLY DOUBLE FROM 2009

48% OF CHINA’S 520 Million MILLIONNAIRES WANT TO KNOW Internet LIVE IN BEIJING, SHANGHAI, AND Users GUANGZHOU in China MORE ABOUT (2011) IN 2012, THERE WERE 80 MILL. OUTBOUND THE CHINESE TRIPS FROM CHINA TRAVEL MARKET? CHINA TRAVEL TRENDS .com

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Download the e-book at ChinaTravelTrendsBook.com 64 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 65 Chinese young professionals – representing 6% of Internet users in China – have an astounding 99% internet penetration Boston Consulting Group

Internet & Social Media Jens Thraenhart, President & Co-founder, Dragon Trail

Jens Thraenhart is co-founder and President of and digital marketing firm Dragon Trail, helping travel brands develop a China presence leveraging social media, digital marketing and internet technologies, as well as publisher and editorial director of China Travel Trends. Educated at Cornell University with a Masters of Management in Hospitality, Mr. Thraenhart was recognised as one of the. travel industry’s top 100 rising stars by Travel Agent Magazine in 2003, and was listed as one of HSMAI’s 25 Most Extraordinary Sales and Marketing Minds in Hospitality and Travel in 2004 and 2005. As a global e-tourism expert, he has led marketing and Internet strategy teams with the Canadian Tourism Commission and Fairmont Hotels & , and has consulted for many global companies. He has served on various boards, including HSMAI and IFITT, and is currently the Chair for PATA China.

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multiple destinations are being Bear in mind also the following replaced by multi-directional pointers when reaching out to developments such as in-depth China’s youth consumers: and theme tours. 1. Don’t try too hard to be trendy just Younger Chinese people in because you are communicating particular are sophisticated, with young people. Never with a growing appetite for underestimate the subtle nuances interesting Western brands, in people’s desire to be different. famous historic locations and art Forget about picking up trends but focus on creating arenas for young galleries. They seek respect and people to express themselves. global integration, they want to China’s youth market be a part of it all and they work 2. Make use of the instinctive hard – many at international competitiveness of those born challenge marketers to post-1980s. They tend to compare firms as well as in entrepreneurial themselves with their peers. new way of thinking domestic companies. For them, Consumer competitions such as travel is an important part of online campaigns and contests The increasingly sophisticated youth in China sees travel as a way self expression. How they spend will encourage them to actively their valuable time is a way of engage, especially if the results are of self expression. Marketers should note their online habits, their visible and comparable to peers. generational difference and their individuality when reaching out demonstrating who they are. 3. The younger the target audience, to them. Online real-time interaction the less influenced they will be by “celebrity endorsers”. Instead, they CHINA’S AFFLUENT CONSUMERS Younger Chinese see travel as becoming a way of life will turn to the opinion leaders are typically 20 years younger self expression The Internet is the medium amongst their peers. This creates than those in Western countries. The way Chinese customers choose through which many Chinese some challenges for marketers, Among them, the youth market to travel is undergoing a structural consumers are finding out about since the new leaders of opinion new destinations and travel may be harder to identify than the – specifically people born in the change – Chinese tourists are traditional celebrities. On the other 70s, 80s, and 90s – is the prime increasingly pursuing personalised services. With over 485 million hand, it creates opportunities segment. tour experiences, shifting away internet users in China (more in terms of credibility, closeness As the Internet becomes the from the traditional concept of a than the entire population of to the brand and creativity. It most important channel to tour group. Europe), more than 80% of Chinese is possible to target the new travellers research and educate opinion leaders by studying their connect with affluent consumers A recent study by the Boston communication patterns online. all over China, traditional media Consulting Group revealed themselves about destinations The key is to identify them and and events are no longer the best that 95% of Chinese tourists and brands online. According to to build long-term relationships way to reach these consumers. are unsatisfied with the current the Digital Influence Index, social with them. Brands need to adapt their travel products and services media is the most influential As it turns out, Chinese youth are not marketing strategies and the way available both domestic and medium in modern China, ahead so very different from young people they interact with customers when outbound. Package tours of travel agents, newspapers, all over the world after all. it comes to Chinese youth. with busy schedules covering magazines, or TV.

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Characteristics of Chinese young adults How Chinese consumers discover luxury brands China’s eldest China’s middle China’s youngest child: 1970s child: 1980s child: 1990s Outdoor Advertising 7.0% Newspapers 8.5% Magazines 33.1% Responsibility Key focus in life Fun Excitement Happiness TV 8.6% Core values Family Friends Self

Word of Mouth 9.3% Internet value Time Saver Social arena Extension of self

Luxury Websites 15.8% Online Portals 17.7% Outlook on Follow trends Choose trends Create trends trends

Source: Survey by Fortune China, 2011 Online Collecting Sharing Creating Real time is a way of life for of development in the society. content information information information the Chinese. They need to get Although they grew up in the same news and respond as things are country, their world views and views Communications Nothing Accessible and High level of happening. Even though they of themselves are very different. strategy overwhelming trendy interaction spend no more time on email Communications strategies than their counterparts in the US, often fail to consider the enormous Engagement tools that are anything less than differences between the consumer Information Peer involvement Self expression strategy real time seem outdated to them. “generations” born in each of the Young Chinese consumers want last three decades. When brands Make friends Make friends Make friends with those that with those that with those answers. They want to feel in the contemplate who their ideal versus Friends have power and share the same that have loop. They want to feel valued. For actual consumer is, they have to influence interest tattoos brands, helping customers feel “in be specific about which subset of the know” is important, especially “youth” they are targeting. Have Have Have Money for the younger generations. Clear strategies for targeting savings debt daddies urban versus rural or male versus Demands from Ignoring pressure Pampered by Understanding young Chinese female consumers is no longer Financial children, spouse and live in parents and consumer groups enough. Every campaign must pressure and parents the now grand parents The term “youth” is too broad. Due carefully consider the gulf of Topics that relate to Topics that make Exciting topics to to China’s accelerated changes over differences between the different Discussion everyday life: one get ahead: be shared: the past 30 years, people born in age groups (see table). topics • Seasonal fashion • Career • Sensations the 1970s, 1980s and 1990s have • Property prices • Trends • Gossip grown up in vastly different stages

70 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 71 Many travel brands trying to 3. Leverage the Internet as a medium. Internet usage in China is very active and capture the attention of the fast growing –­ the country boasts the world’s highest number of internet users, at increasingly affluent customers in 500 million by October 2011, representing a penetration of just over 35%, [CNNIC]. Forrester Research predicts that in 2014, 75% of the 1.3 billion mobile devices China are meeting challenges and owners will access the Internet via their mobile devices, compared to the current disappointments due to various level of 30% of the 950 million mobile users. [CNNIC] reasons. Through our experience in The is also different and complex, and local expertise and leveraging the complex and active relationships should be leveraged when marketing online or dealing with local Chinese internet and social media regulations. For example, use Baidu for search marketing, Ctrip and Elong for landscape for travel organisations online travel agent distribution, Laoshou for group buying. to reach and connect with Chinese The role of the Internet is even more crucial for reaching high net worth individuals consumers, we have identified eight based in second, third, and forth tier cities, where companies may not have a essential rules for engaging this physical presence. lucrative segment. 4. Develop a multi-channel plan. Offline and online channels converge in China. As such various media need to be used in tandem with a consistent message to Top 8 tips for marketing to create the right channel. Digital and social media are the most influential media in China, even more so than affluent Chinese consumers in Europe, Australia, or North America – in 2010, 85% of Chinese people believe that the Internet will be more influential in the next two years, compared to 22% 1. Spot the China travel trends. As the China travel market is growing both in the US. [e-Marketer] domestically and outbound, it’s worthy to note that offline travel agents are still Bear in mind too that PR works differently in China than anywhere else in the the dominant distribution channel, though online channels are growing. Bear in world – for one it is not free. PR in China leverages the power of celebrities and key mind too that Chinese consumers are moving towards an experience-based choice opinion leaders. It uses a mix of social media, traditional media and events. model from a price-based one. They are demanding higher quality services and are seeking more personalised travel experiences. 5. Develop a relevant Chinese website. Chinese consumers usually check company websites before clicking onto online forums and social media sites. When 2. Understand the Chinese consumer. Be seen as offering Chinese-ready planning your company website, it’s important to consider hosting it in China to services – from providing hot-water cookers for instant noodles and slippers in avoid potential censorship, achieve faster download speed and improved search the hotel room, to offering Chinese dishes such as congee at breakfast, Chinese engine placement on Baidu, which has over 80% market share in China. language menus in restaurants, Chinese-speaking staff and Chinese audio guides for destinations and museums. Keep tabs with affluent Chinese consumers’ Tailor-make website content in Simplified Chinese rather than merely using a demographics (see article on Luxury Travel on page 39). Remember that affluent translated version based on English and not completely relevant to the Chinese Chinese consumers are not all the same, and should be segmentised accordingly. consumers, as irrelevant content will only serve to turn off site visitors.

72 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 73 When in China, forget Facebook, Twitter, Youtube or other international social Global internet landscape of the future: China Vs Rest of the world networks, for the Great Firewall of China has blocked them. The Chinese digital Global brands need a separate China strategy media landscape is dominated by local players, so it’s critical to set up and constantly optimise brand profiles on Chinese social media sites. China has the most competitive social 7. Tell a good story. In order to engage people online, lead your content with a internet on the planet good story rather than promotional offers, sprinkled with interesting topics for Officially, Facebook, Twitter Chinese consumers, such as shopping, celebrities, and culture (e.g. historical & Google+ are banned communist locations in Germany – Karl Marx) in China; unofficially, via IMPACT VPNs and mobile, they are Integrate influencers such as celebrities and key opinion leaders (KOL) for specific growing. Can they impact local players? topics into brand campaigns. KOLs in most cases have large followings and thus the ability to influence trends and purchase decisions. Looking for social innovation: follow China. Developed content (i.e. video clips) should be shared online (i.e. brand website and Copycat platforms social media), as well as offline (i.e. big screen in Sanlitun Village in Beijing, screen will reverse from China to R.O.W. on the back of the seat in taxi cabs). Social platforms in China Make it easy for consumers to engage with brands online by enabling uploading make money. Investors of photos and videos, blogs and micro-blog posts for experience sharing. Integrate will follow Chinese social media into Chinese-language brand websites. Encourage your Source: Global Web Index 2012 customers to share their experience of your products on your Chinese social media Avoid linking to non-Chinese content or adding blocked social media links (i.e. profile, perhaps by offering incentives. Facebook, Youtube, Twitter), as this will also diminish the online experience for the Chinese consumers and will be perceived as a lack of respect to the Chinese 8. Build relationships via campaigns. Develop web campaign platforms with consumers. integrated incentive schemes. Make it viral through social media to reduce advertising cost and increase participation. 6. Be connected in social media. China’s online community is the world’s most active participants of social media, with 92% of online users engaging in social Focus primarily on capturing permission-based consumer data and increasing media in some form. There are twice as many “active creators“ (people that write fans/followers on social media and micro-blogging sites. This will contribute to blogs, upload photos and videos, etc.) in China than in the West. developing a holistic and long-term China marketing strategy, as opposed to short-term ROI sales driven campaigns. The captured data can be used for future While the West is debating the advantage of brands having a presence in social digital, social media, and email marketing campaigns. media, the Chinese are embracing it with no qualms. A Fleishman-Hillard study shows that, unlike in the West, a brand named in a micro-blogging platform will Local presence, as well as travel and technology expertise are important factors not dent consumers’ confidence in the brand. On the contrary, the Chinese are when executing complex digital marketing campaigns. A solid technology partner more forthcoming to brands tapping conversations on micro-blogging platforms. is vital especially when running campaigns, to ensure data quality and protect the This is worth noting for brands given that 62% of Chinese Internet users share database from online hackers. negative opinions online, versus 41% worldwide.

Source: China Travel Trends

74 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 75 100% 100% 100% TRAVEL DIGITAL CHINA

FOLLOW THE DRAGON TO CHINA DIGITAL AGENCY & TRAVEL TECHNOLOGY COMPANY • Relevant Chinese website development • Innovative travel technology solutions • Engaging content & social media marketing • Performance-based integrated digital campaigns • Transform your brand to the Chinese market • Reach the changing affluent Chinese consumer • Connect with over 500 million internet users • Mobile website & application development

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76 China Travel Trends - Dragon EditionBEIJING • SHANGHAI • XI’AN WWW.DRAGONTRAIL.COMDragon Edition - China Travel Trends 77 By 2015, China’s Internet population is Jens Thraenhart, President & Co-founder expected to reach more than 650 million….. Dragon Trail however, that still would only represent less than 50% of China’s total population Boston Consulting Group

Connecting with Chinese consumers online GIVEN THE SIZE OF CHINA AND take control of where they want its population, a digital presence is to go and what they want to far more important and potentially experience, instead of what travel effective than a physical presence, agents and tour operators are which also has the benefit of accustomed to sell. Having a good reaching a far greater audience in Chinese language website is a must all over China, and even Chinese but not all that is required in this people outside of China, while the respect. traditional entry strategy focused Chinese tourists will look online primarily on the three main first for information about destinations, tier cities of Beijing, Shanghai, and hotels, and transportation. Many Guangzhou. This is of particular also now book their travel online, importance as, based on research usually through one of the large by China Market Research Group, travel websites such as Ctrip or the fastest growing millionaires eLong, but they also look for hotel in China are in second, third, and websites for further information fourth tier cities, like Dalian, , on rooms, services provided, and and Chengdu. While this strategy photos. However, currently many is not only more cost effective and international hotel chains either yields a higher ROI, it leverages the offer no information in Chinese or power of the Internet and social the information is severely reduced, media in China to have consumers mixed with English content and

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The experience sharing after trip (%) Information channel (%)

Online Portal 49 Recommend to 78 77 77 81 81 your friends Online Travel Agencies Sites 39 Online Search Engine 35 45 67 54 35 29 Writing blog or log Online Travel Agent 33 Word of Mouth 29 Posting on travel 33 33 37 33 27 websites Travel Vertical Search Engine 28 Travel Agent 27 Posting on social 28 33 31 29 20 networking sites Online Site of NTO 27 Online Site of Hotel or Airline 27 Writing blog 28 37 34 27 17 Newspaper/magazines 24 during the travel Purchased Travel Books 24 Writing comments 18 15 21 19 12 Free Pamphlets 22 on booking website Promotion Posters 22 TV/Radio 20 Posting on BBS 15 14 19 16 10 Tour Guides 15 Source: Neilsen Outbound Travel Monitor 2011 Source: Neilsen Outbound Travel Monitor 2011 links to English language websites, 95% of Chinese Internet users latest data by CNNIC, number of Internet as a research tool, more or just not relevant for the Chinese believe that a company that is Internet users in China has reached than any other medium, and consumer. engaged on micro-blogging is over 500 million, which is over e-commerce, while still small, However, more than official more trustworthy. Word of mouth one-third (36%) of total China is growing rapidly for travel websites, Chinese travellers are has always been important for population. This makes China purchases. Currently travel more likely to get their information Chinese outbound tourists. the top country with the highest websites attract 42 million average through social media of one kind or However, whereas in the past this number of Internet users in the monthly unique visitors and another. Online video-sharing sites meant seeking recommendations world, higher than the United roughly 14% of Chinese Internet offer videos of tourist destinations, from friends and relatives, this is States. The top 5 websites in China users visited a travel category site blogs and microblogs recount now extended to whole networks are: Baidu, QQ, Taobao, Sina and in the first quarter of 2011. good and bad travel experiences, of known and unknown people Youku, with the reach of 88.9%, traveller review websites, like online. Social media is quick, 67.6%, 50.1%, 46.4% and 38.0% Chinese website Daodao.com (Chinese version influential, popular and ‘cool’. respectively. Regardless of a company's of TripAdvisor), are very popular Used appropriately, its marketing Popular sites such as Facebook, market entry strategy to Chinese and influential in decision making potential is enormous. YouTube, and Twitter have fallen consumers, it must back its Chinese processes before booking hotels victim to the Great Firewall of marketing with a solid website. or choosing holiday destinations. Chinese digital overview China, and are in fact blocked Poor website performance lapses According to the Digital Influence As we know, Internet has been in China. There, local Internet cost companies in terms of both Index, social media is the most growing very fast in China, and companies rule the digital real revenue and brand reputation. influential medium in modern more and more Chinese are using space. According to the Nielsen And worse, Chinese consumers China, more than travel agents, Internet in their daily life and work. Outbound Travel Report 2011, associate poor Chinese websites newspapers, magazines, or TV. By end of 2011, according to the Chinese consumers use the with a lack of respect and bad

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Experience in information search (%) running campaigns, to ensure data sites and becomes blocked in be included in a website to make quality and protect the database China) or even natural disasters it more appealing to collectivist 80 from hackers. Local representation, (the Chinese Taipei earthquake cultures, like emphasizing the especially with intimate knowledge essentially cut access to overseas family theme. 61 and relationships in the travel sites from China for days or even and Internet space in China are weeks in some cases). Finally, Power Distance: Since China’s critical in order to ensure successful China-hosted websites are better score is high on power distance, strategy execution. indexed by local search engines, cultural customisation may be Considering a .CN domain such as Baidu. achieved by adding elements name has various advantages. Many companies have that emphasise this value. For Dot CN, China's Internet address, attempted to reach Chinese example, displaying awards or is a recognised and respected consumers from data centres honors that a company or brand brand that allows businesses in Hong Kong, Singapore, and has received, or associations to and organisations to build other Asian nations. These efforts other recognised brands, as well Leisure Business (Guanxi is the idea of the have proven ineffective. Content as celebrities and influencers. Source: Neilsen Outbound Travel Monitor 2011 network of relationships among originating from outside of China various people that do business) must first pass through a filtering offline experiences. Just as with ‘Wei’ stands for “micro” and ‘bo’ Western consumers, Chinese between themselves and their process, which can result in partial stands for “blog” consumers quickly abandon poorly Chinese prospects. More than delivery of web pages or full-page performing websites and seek out 60% of all Chinese Web sites are delivery at reduced speed. In both Micro-blogging has been the growing phenomena in China. The sites that consistently deliver the in the .CN domain [CNNIC, 2010], cases, delivering content from Chinese Twitter equivalent is Sina best end-user experience. making it a widely recognised abroad reduces the quality of the Weibo, launched in August 2009, In the travel industry, it is very Internet brand. More importantly, end-user experience. and in numbers also very active is important to have a web presence it reassures Chinese customers When it comes to culturally Tencent Weibo, launched in April that can stand up to competition that the business recognises the relevant web design, a couple 2010. Tencent Weibo’s user base is primarily in third and fourth tier both in terms of aesthetic (how importance of speaking from a important cultural attributes need cities, while Sina Weibo is more in professional is your site) and localised cultural perspective, to be taken into consideration first and second tier cities. Other visibility (how easy it is for your especially if it a foreign company. when designing a website for Chinese microblogging platforms customers to find your website, While it is true that most sites Chinese consumers. include Sohu Weibo, NetEase Weibo, especially in the search engines), hosted elsewhere are accessible and 163 Weibo. According to Sina’s as well as access (how fast does the in China, it makes sense to have Collectivism: As China is a unaudited financial report, there are now over 300 million registered website load). Therefore, a relevant your Chinese portion of your collectivist country, the targeted users on Sina Weibo. Tencent is Chinese website and website website hosted in China. Not only websites may be culturally growing even faster and reached 310 hosting in China is critical in order will you have the benefit of faster customised to a degree by million users back in October 2011, to ensure organic local search connection speed, but you will be emphasizing values important however its activity ratio is not as engine optimisation, and optimal more protected against potential in collectivist cultures. Research high, compared to Sina Weibo, which accessibility. A solid technology IP blocking (if it happens that your suggests there are several launched the weibo.com domain name in April 2011. partner is vital, especially when host has been serving subversive web-specific features that can

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China search engine market – November 2011 search engine optimisation indicates that roughly 54.7% of was equal to PPC (pay per click netizens in China users today own advertising) in China. Although PPC or visit blogs, and 47.3% have is important, organic search engine a page on one or more social optimisation is critical. networking site (SNS). More than Bing 0.49% Since Baidu is China's top search 25% write 10 or more posts on Baidu Image 0.52% engine (80% market share), ranking forums, blogs or SNS every day, Baidu Video 3.03% Baidu 80.42% highly on Baidu is a must for any and 92.3% of Netizens visit social SoSo 3.51% websites. Baidu is particularly media pages at least three times a China-centric. To rank highly on week, while 27.1% have pages on Sougou 5.53% Baidu a website needs to be (a) five or even more different social Google 5.79% localised in the Chinese language networks. and (b) hosted inside China. Baidu's Rather than eliminate social search results are different than media, restrictions on foreign Google's. It is possible to "pay your websites and social media Source: http://www.cnzz.com/ way to the top" for your keywords have resulted in a flourishing Baidu has also moved into Even the best English website on Baidu, which is widely accepted home-grown, state-approved vertical channels, including copy won’t simply translate into by Chinese users and differs ecosystem in which Chinese- travel, by making a big Chinese. There are also many from SEO techniques in most owned properties thrive, which investment in Qunar.com. Baidu examples of companies with poor western regions. However Chinese differ in various ways from Western knows people in China often search engine optimisation is platforms. This variation is not all surf without a destination, are translated web pages or even some grateful for suggestions from using free online translation tools. still important, as the "natural" due to censorship. In China, local trusted sites like Baidu, and Ideally, the website undergoes ranking is part of the formula that variations of Internet usage are are less sensitive to conflicts a cultural transformation, which determines the fee. driven by language, culture, levels of interest, which may be due includes writing content optimised of economic development, and to lower understanding, and for Chinese search engines, writing Chinese social media the underlying digital ecosystem. greater tolerance. content to articulate the brand A broader impact of China’s deep YouTube, Facebook, and Twitter are message, and packaging the involvement in social media is that blocked in China, but their Chinese content so it makes most sense and some netizens only experience equivalents are expanding. By is relevant to the Chinese market the Internet through social media some measures, usage of Chinese (as the English website might have platforms, and therefore would not social media is some of the most content irrelevant for the Chinese distinguish between social media intense in the world. In China, consumers but is missing vital and the Internet itself. To them, the more than in many countries, content important for decision Internet is social media and vice social media has become deeply making). versa. integrated into people’s lives. The latest China Social Network According to the 2010 TNS Chinese Search Engine Marketing Report 2011 (China Internet Digital Life Report, China is the first Until very recent, organic website Network Information Center) country in the world for number of

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netizens who join social networks be considered a lost opportunity. to find information about brands. Now, the penetration and impact And the Internet is a trusted source, of social media is such that failing as 2010 Global Web Index indicates to understand what consumers are that netizens trust reviews and saying about a company online has insights on social media three times become a business risk. more than a recommendation from an acquaintance. Online Video Sharing: Facing the thirst for information Different social media usage and consumption of Chinese patterns tell a great deal about the netizens, international brands are Internet and the country involved. entering full force the Chinese social For example, Chinese netizens media space. Not long ago it was use online video platforms quite not unusual for even internationally differently from how reputed brands not to have a use YouTube. Rather than short Chinese-language version of their videos of cute animals or silly website. Today, most brands have domestic mishaps that may be a branded page in social networks popular among YouTube watchers, like Kaixin001 or Renren, as well as Youku and Tudou are filled with Sina or Tencent Weibo. This is true longer form content, up to 70 for multinational corporations with percent of which is professionally a huge retail footprint in as well produced. Users in China spend as brands that have been slow in up to an hour per day on the penetrating the Chinese market or sites, compared with less than 15 that have lagged behind in terms of minutes spent by Americans on brand definition in China. YouTube. In the way they present Chinese netizens actively engage programs, the Chinese sites in discussions that could directly seem more like online television affect companies. A recent study stations or a replacement for by OgilvyOne in China found that digital video recorders. Though 55 percent of China’s netizens had individuals in China produce and initiated or participated in online post videos, a large portion of discussions about companies. online video content is longer- Understanding social media is format professional videos. Much no longer a luxury for companies of this content consists of foreign operating in China—it is an programs pirated, subtitled, and imperative. Formerly, a lack of uploaded hours after broadcast in China social media landscape engagement with netizens could the United States.

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Due to the blocking of popular Western social networking sites such as Facebook and Top 10 Chinese OTA by share of visits in November 2011 YouTube, China has developed domestic sites that display similar functionality to their foreign counterparts. Tieyou.com 2% Qunar 42% Like Facebook, Renren.com started as a social networking platform available Tunlu 2% exclusively to college students and – althought now open to the general public zhangocity 3% – it still remains most popular with those attending unversity. In April 2011, the elong 4% company announced it had reached 31 Launched: 2005 million active monthly users and filed to Trip.taobao.com 5% Famous equivalent: Facebook raise $584 million in a U.S. IPO. 17u 7% Kaixinoo1 allows users to upload photos, write blogs, and dowload Farmville-esque Ctrip 15% Kuxun 17% apps such as Happy Farm and Friends for Sale. More so than Renren, it appeals to Launched: 2008 a broader member base of young urban Famous equivalent: Facebook professionals. Source: Experian Microblogging: easily add comments when re- Since its launch, Sina Weibo has emerged Some differences between Chinese posting a friend’s message. as the most popular microblogging service in China, claiming nearly 60 and foreign social media are rooted Though mobile phones are percent of the microblogging market and in culture and language. At first used to send less than 20 percent reeling in 250 million registered users glance, Sina Weibo is a latecomer of Twitter updates in the United as of October 2011. Each day, 25 million messages are sent on the platform. By to the microblog phenomenon. States, nearly half of Sina Weibo’s comparison, Twitter has more than 200 But launched in 2009, just about updates are sent via mobile phone. Launched: 2008 million users and 50 million messages three years after Twitter, Sina This phenomenon points to the Famous equivalent: Twitter send per day. Weibo is by far the most popular growth of China’s mobile Internet, Youku not only allows users to upload microblogging platform in China one of the biggest trends in China. videos of any length, it also offers a video with over 250 million users. Similar library of popular films, TV shows, and to Twitter, Sina Weibo allows users Social Networking: clips. Because copyright laws in China are to post 140-character messages, Throughout much of the West, only loosely enforced, the site can display Launched: 2006 unlicensed content that YouTube may not and users can follow friends and particularly the United States, Famous equivalent: YouTube be able to. find interesting comments posted Facebook holds sway as the default by others. Small but important social network, gathering all Jiepang offers a location-based social differences in the platform have demographics. The same does not mobile app for the Chinese Internet population. Like its American equivalent, made some say it is a Twitter clone, hold true in China, where a handful Foursquare, users can “check in” at various but better. For example, unlike of social networks attract segmented Launched: 2010 locations throughout the country and Twitter, Sina Weibo allows users to audiences, ranging from upmarket Famous equivalent: Foursquare earn rewards and discounts. post videos and photos, comment urban youth to university students

Source: eMarketer January 2011 on other people’s updates, and and migrant workers.

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China’s top microblogs Social network users in China to reach 488 million in 2015 Unit: Millions of users 350 Social network users 488 % Change 447 300 300 395 250 233 250 329 84% 200 200 265 160 150 207 140 100 155 100 100 33% 50 50 28% 10 0 30 24% 0 1 20% 0 13% 9% Aug Oct Dec Feb Apr June Aug Oct Dec Feb Apr Jun Aug Oct 2009 2010 2011 2012 2013 2014 2015 09 09 09 10 10 10 10 10 10 11 11 11 09 11 Tencent Weibo Sina Weibo Note: internet users who use social networks via any device at least once per month

Source: eMarketer January 2011 Source: eMarketer January 2011 • Douban (www.douban.com), relationships, and professional graduation class. Many users some original forms of social media a more specialised social advancement. upload videos and photos of still flourish in China. Bulletin networking site, attracts art their activities. board systems (BBS), which were students and those passionate • QZone (http://qzone.qq.com), a primal form of the early Internet, about books, cinema, culture, the first and largest social Besides these key social networks, are forums that allow people to and music. Users connect networking site in China by there are various niche SNS that post basic messages online to get according to their interests and Chinese Internet giant Tencent, attract very passionate and loyal critical consumer comments about often hold offline activities, such attracts youth from teens followings. P1.cn has established products and services. Postings are as trips to local art exhibitions. through age 25, often from itself as having a focus on the anonymous, which encourages second- and third-tier cities. luxury lifestyle, and with its users to give unvarnished views. • Kaixin001 (www.kaixin001. A sizable portion of migrant by-invitation-only approach com), a platform designed for a workers, many of whom share is somewhat similar to ASW Chinese travel distribution more mature audience of young personal diaries in a blog-like (asmallworld.net) in the west. On At this point, most travellers use professionals, has a membership format, use QZone. the business social networking local bricks-and-mortar travel that is heavily dominated by side, Ushi.cn is working to become agents. Only 14% of China’s 500m white collar workers in Beijing; • RenRen (www.renren.com), the the LinkedIn in China, and was internet users have visited a travel Guangzhou, ; platform in China most similar backed by influential Chinese website [PhoCusWright]. This is Shanghai; and second-tier cities. to Facebook, attracts university business leaders. partly because they lack credit Users do not upload personal students who use the platform cards, or enough money to go content but rather share to connect and interact with Bulletin board systems anywhere. But it is also because information they find elsewhere, classmates. The site is organised Beyond these sites that have more real-world agents woo customers often relating to health, around users’ school and modern Internet functionality, by offering refunds for cancelled

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China social network users attitude towards interacting with brands on social networks

Social network sites are a good source of 23% word-of-mouth info on brand experience Use social networks to share brand info and experiences 22% the same way I do with family, friends in the real world. Think “friending” or pushing “like” 17% buttons for brands on social sites is silly Outside of selling rooms, Chinese as package travel site Tunio are More likely to consider a brand that has a 22% lot of “friends” or is “liked” by many hoteliers are not as active on the worth watching. When it comes Internet as in other markets. Nearly to overall website traffic, Qunar If I need to do research for a brand decision, a social 23% every OTA and meta search player leads the market in China. network site is the first place I will check has a substantial peer review Baidu, China’s largest search Do not consider info on social sites to 18% service, but there is no dominant engine purchased a controlling be good research for brand decisions. player like TripAdvisor in the U.S., stake in June 2011. In May 2011, 0 10% 20% 30% even though Tripadvisor has a Tencent, another online giant, Source: Jack Morton Worldwide 2012. ChinaInternetWatch.com Chinese language site under the snapped up 16% of eLong, a name of Daodao.com. Chinese online travel company trips and generally going the extra their orders – interesting though The economics of OTAs are that is part-owned by Expedia. mile. That said, the travel industry that 90% of bookings on Ctrip’s slightly different than in the U.S. Together, Baidu and Tencent has gone digital in other countries English language site are executed in that most OTAs operate on a threaten Ctrip, China’s biggest – online booking is cheaper and fully online. simpler commission-based model travel firm. allows easier price comparisons – The majority of bookings that is more cost-effective for Finally, there are also various so it will surely catch on. are for hotels and flights, while hotels. companies that are developing For the most part, the Chinese travel packages are still very China’s online travel market websites and online services to traveller uses the Web to search low, especially for international during the first quarter of 2011 sell luxury travel experiences for travel but calls a reservation travel. It is estimated that about exceeded US$2 billion in revenue online, including Ctrip, eLong, centre to book. China has a 12% to 15% of flight tickets and from third-party online travel MangoCity (mass market service-oriented culture, which hotel rooms are booked online agents, up 4.7% compared to the OTAs), CTS/CYTS (traditional lends itself to communicating over in China. Of that online market, fourth quarter of 2010, according travel agency), Qunar (travel the phone to make purchases. approximately 70% to 80% of to China Internet Watch. CTrip search engine), as well as new But the penetration rate of transactions are done through remains the No. 1 OTA in China, OTAs such as Tuniu, online transactions is growing third-party intermediaries versus capturing 47% of online bookings Manmanzou, and Travelzen, as very quickly, at about 50% per supplier direct, like airlines and in the first quarter. The next well new start-ups. One of them is year. The majority of OTA (online hotels. The focus of Chinese closest is eLong.com, owned by Jetsetter clone Affordable Luxury travel agency) bookings, around OTAs, such as Ctrip and eLong Expedia, which captured 8%, Network (myALN.com). While 60-70% are being conducted via is domestic, while Outbound and Mangocity, which captured still widely unexplored, this space call-centres, where consumers after still remains a small but growing 7% of the online booking will be very active over the next having researched online call in revenue source. market. Emerging players, such couple of years.

92 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 93 Brand Awareness There is no doubt that brand awareness is crucial to sustain the growth of a brand. Weibo supports a wide platform of different embedded media including videos, images, music, and emoticons. Many consider Weibo to be a relatively inexpensive method to improve brand awareness. However, it is not to say that brands will achieve that goal completely for free. Quality content and influential followers takes time and money to build. Social marketing research and influence tracking will also play an important role.

Integrated Interaction Before the mega wave of new media hit, traditional media, such as television, offered one-way communication to a large number of CASE STUDY: audiences. Weibo is a two-way communication channel which relies on direct interaction and engagement. One important factor is the nature of Sina Weibo the platform; brands need the constant exchange of information between users. Interactions between users help brands to notify signs of negative Sina Weibo, often referred to as “Chinese Twitter”, offers more in content and utilise the platform as a customer service tool. terms of content, structure and customization than its American Sina Weibo Twitter counterpart. The following table illustrates some significant differences between Sina Weibo and Twitter. Characters 140 140 Aside from the technical functions, user habits also differ; where Sina Preview in main panel; Preview in side panel; Weibo users share and comment more about entertainment whereas Pictures & Videos click to enlarge normal often hosted on third Twitter users focus on news. size party platforms Can add personal Weibo has effectively merged the social networking characteristics of Retweet/Comments Retweet content without comments SNS; the convenience and immediacy of instant messaging; the individual Comments are displayed touch of blogs; and the variety of subjects of BBS. With this growing trend, Comments are displayed Replies/Comments under the original tweet how can brands utilise this unique opportunity? as new tweets similar to Facebook Polls are displayed as Consumer Insights Polls tweet; click to enlarge and Currently not available Most comments and tweets posted on Weibo reflect the user’s personal participate perception and experience. It is no wonder that companies are now Emotion Icon Available Currently not available using social media, especially micro-blogs, to gather consumer insights Special user interface with Same user interface and and monitor consumers’ perception of brands. This allows brands to Verified Accounts added features features capture current market information and perform checks for their brand positioning. Furthermore, regularly checking competitors’ social media Game Centre Available in beta Currently not available activities is also useful. Contents generated by consumers will reflect App Centre Available Currently not available a competitor’s strength and weakness, which could lead to possible Groups Available Currently not available opportunities. Photo Album Available Currently not available In-house Account Analysis Available Currently not available 94 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 95 96 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 97 With fast rising wealth and money to 3. Travel international. Travel is now a top priority for the wealthy in China. For the spend, it’s no surprise the Chinese are more adventurous Chinese travellers, USA and classic European destinations are in a buying frenzy. China’s consumer no longer characteristic ‘milestones’. Sophisticated and experienced Chinese are heading to more exotic locations like Fiji and Polynesian islands for finding balance spending is growing at an average from their extreme work-life, and inspiration. annual rate of 18% compared to 4. Real estate overseas. Tough property laws are driving Chinese real estate 2.2% rise for the US, according to the investors abroad. The US, Canada, and the UK are prime markets for Chinese National Bureau of Statistics. buyers. In London, Chinese buyers are the largest single block of investors buying Some consumption trends in property, accounting for almost 11% of 2010’s sales. China are well known, such as the 5. Eat healthy. China’s rapidly growing middle class and wealthy seniors especially increasing demand for luxury goods, are buying imported fruits, nuts, yogurt, and other trendy health foods. China’s but others might come as a surprise. probiotic market, for example, is expected to grow 120% between 2009 and 2012. This list of Top 10 consumption trends 6. Going mobile. The networking possibilities smart phones offer, like mobile web is based on studies and reports and instant messaging services, are hot in China especially among urban youth. from international organisations 7. Wine gulping. Chinese bought about 126 million cases of wine in 2009. The such as the United Nations, the U.S. country will take over the title of world’s largest wine consumer from the US by Department of Agriculture, and 2015. Wine drinking is promoted by the Chinese government as healthier and research firms including Euromonitor classier than spirits. International and McKinsey & Co. 8. Pets friendly. Lots of disposable income means Chinese are expanding their families – fur families, that is. The one-child rule and an aging population has also made pets attractive. Dogs particularly are viewed as status symbols. A multimillionaire coal baron bought a Tibetan Matiff for about $1.6 million this year, Top 10 consumption trends while a Chinese woman paid $600,000 for the same breed in 2009. 1. Luxury is king. China is the fastest growing market for a plethora of luxury 9. Foreign education. With more middle-class families able to afford foreign brands. In 2006, Gucci had six stores in China; now it has 39. Likewise, Hermes education, China’s overseas student population has increased 24% since 2009. now boasts 20 locations, a number that has quadrupled since 2005. Luxury Britain’s University of Cambridge boasted 1,000 Chinese students last year, making consumption is poised to be a RMB $27 billion industry by 2015. up 8.3% of the student population. American summer camps for younger children are considered culturally enriching as well. An estimated 60,000 young children 2. Green preference. Wealthy Chinese are putting their money to good use: 84% of attended American camps in 2011, for roughly US$5,000 per person. consumers say they are willing to shell out more for products and services certified as “green.” Hybrid cars will make up 7% of China’s light-vehicle sales by 2020, 10. Corn. China’s purchase of corn is second only to the US, but it’s mainly for livestock, compared to just 2% in the US. China’s government also invested about $34.6 not humans, consumption. It will reach a record 5 million metric tons in 2012. This billion in renewable energy in 2009, twice as much as the US government. is driven by the increasing demand for high-quality grain-fed meat.

98 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 99 In 2000, China’s accounted for only 7.1% of the world’s total GDP (in PPP terms). In 2010, that figure increased to 13.3%. By 2020, it is expected to reach 20.7% Euromonitor International

Customer Satisfaction Dr Xu Chen, Researcher, China Tourism Academy

Dr. Chen has conducted and participated in numerous national research projects for the China National Tourism Administration and actively engaged in international collaborations in tourism research and communications. His research interest includes tourism economy analysis, destination and tourism enterprise branding, consumer behavior in tourism and internationalisation. Dr. Chen received his PhD from Clemson University in the US.

100 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 101 Customer Satisfaction

and hundreds of workers collect Satisfaction index of online platforms thousands of data and information Satisfaction Online platforms monthly in 50 major cities in China. Index Survey results are then translated Online reservation 95.22 into index scores and submitted Attractions 90.08 to city governments and national and regional tourism authorities for Shopping 86.06 reference. Overall city 84.58 What the index provides is a impression remarkable tool that can be used to Entertainment 81.79 enhance the overall coordination and recreation ability of tourism authorities, and Accommodation 78.47 motivate local governments to Dining 78.09 Satisfaction index spotlights attach greater importance to service gap tourism and relevant industries to Destination 70.97 improve their service quality. Locals’ attitudes 65.12 Much has been said about the quality of service, or the lack of it, in Transportation 60.09 Satisfaction rises but there is still China’s tourism industry. What is needed is a reliable mechanism to Value for money 58.45 measure how satisfied visitors are with their experience. The China room for improvement Travel agents 56.71 Tourist Satisfaction Index (CTSI) was created with that in mind. The Index for Q3 2011 showed a visible improvement in the overall Travel industry 12.28 INAUGURATED IN 2008, CTSI IS A service providers. The rating satisfaction level, a rebound that monitoring nation-wide research programme can then be used by tourism helped reverse the downward trend Satisfaction index of outbound that monitors and analyses the authorities to guide individual for the three previous quarters. travellers by city of origin degree of improvement in tourist cities on raising the service bar This was due largely to satisfaction Satisfaction experience and service quality in for local citizens and tourists and Origin in overall service quality and price Index major Chinese tourist cities. It also encourage local governments matching guests’ expectations. Shanghai 77.31 helps to determine whether China’s and enterprises to constantly Beijing scored the highest outbound travellers are happy with improve overall service quality. satisfaction rate, at 80.74, followed Guangzhou 76.72 the services they receive. In a way, it acts as a third-party by Hangzhou (80.38), Guangzhou Beijing 76.20 Based on surveys conducted watchdog for the Chinese tourism (78.33), Shanghai (76.78), and Chengdu 76.17 by the China Tourism Academy, economy to sustain competitive Xi’an (76.72). Tourists from the UK, Xi’an 74.87 a specialised institute under improvements. Australia, the US, Sweden and the umbrella of China National The China Tourist Satisfaction Macao gave higher satisfaction 74.75 Tourism Administration (CNTA), Survey uses an innovative model ratings, while those from Japan, the 74.37 the index serves as an evaluation comprising three components: Netherlands, Hong Kong, Chinese tool in weighing and testing the tourist questionnaire, comment Taipei and the were the performance of related tourism and appeal. Dozens of researchers least satisfied. Overall, short-haul

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The number of Chinese traveling outside the country rose to 54% from 2005 to 2009 UNWTO China Tourist Satisfaction Index has been a valuable tool for gauging the satisfaction level of their online communication were customers in their domestic, transportation, travel agents and travel industry management. inbound and outbound travel Service standard still yielded experience. relatively low satisfaction levels. Tourism industry service was rated at 76.02. Among the service areas, transportation, shopping and dining scored the lowest ratings, at 72.14, and neighbouring visitors tended 71.16 and 71.03 points respectively. to be less happy with their travel experience. Index a valuable tool for tourism Satisfaction levels for outbound management travellers continued to fluctuate, Given the attention the surveys with ratings for Q3 at 82.91 points received from the industry and – 3.11 points above the previous the society, party officials and quarter but 5.21 points lower than local governments in China have the same period last year. Those adopted recommendations to departing from Shanghai indicated rectify the issue and to widely higher satisfaction levels. Travellers mobilise the population to elevate going to Switzerland, Korea, satisfaction levels for tourists. Thailand, Malaysia and Singapore The efforts have begun to yield were the happiest, while those visible results in further improving travelling to Hong Kong, Spain, tourism service quality. Macao, France and the US were the In this way, the China Tourist least happy with their travel. Satisfaction Survey has become Satisfaction scores for online the mainstream tool in evaluating service was 79.57, down 4.13 points tourism service quality in China, from the previous quarter and 3.27 and a significant basis to drive points from the same time last improvement of tourism service year. Areas that needed to improve quality.

104 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 105 Chinese tourists to the U.S. spend more than visitors from any other country, according to the U.S. Travel Association – Ad Age

Hotel Regulation Liu Shijun, Director, India China National Tourism Administration Mr Liu was in charge of the national hospitality industry and tourism standardisation efforts at the CNTA as Deputy Director-General, Department of Industry Supervision and Management before being posted to Delhi. He has extensive experience and expertise in hospitality management, tourism, standardisation, international marketing and communications.

Lu Kailin, Section Chief, Hotel Division, Department of Industry Supervision and Management, CNTA Mr Lu is a key official in charge of hotel classification standards and hotel industry supervision. He authored The National Standard Classification and Accreditation for Star-rated Tourist Hotels and Explanations and Rating Instruction of Hotel Star- rating Standards in China.

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RevPAR comparison of international and Chinese hotel groups

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0 Setting milestones for China’s 2002 2003 2004 2005 2006 2007 2008 2009 hotel industry International hotel groups Chinese hotel groups Source: China Hotel Industry Study 2003 – 2010 (unit: RMB) Having come of age during the 11th Five-Year Plan period, China’s youth , and are registered average occupancy at hotel industry is poised to enter the international stage and also coming on stream. 53%, the lowest in 10 years. The challenge the hospitality standards of developed destinations. It’s worth noting that no-frills average room rate at RMB975 was budget hotel brands and boutique the lowest since 2003. CHINA’S HOTEL INDUSTRY HAD 32,000 hotels in 5,900 cities of 138 hotels are taking off. Three major become more diversified and countries. As such, hotels have groups alone – Jia, Jinjiang and Seven Revised guidelines and data sophisticated during the 11th Five- to navigate a fine line between Day – now operate a total of 1,300 management system ensure more Year Plan (FYP) period. partnership and competition with budget properties supplying 147,000 effective industry monitoring Increasingly, hotels leveraged such platforms when formulating rooms. Luxury boutique brands CNTA, the key authority regulating technology to deliver more their business strategies. such as Banyan Tree, Four Seasons hotel operation, has completed a efficient and personalised service, We have observed that hotels are and Amanresorts are also expanding two-year review of guidelines for such as in-room digital delivery of diversifying in terms of categories their footprint in China. the classification and evaluation information on hotel bills, flights, and markets. Traditional tourist Hotel investment is increasingly of star-rated hotels. The revised room service and entertainment, hotels are training their sights perceived as a strategic real estate guidelines, effective since early tablets in place of printed menus on domestic markets to capture play, as upmarket hotel projects 2011, reiterate that hotels must and customer relationship growing domestic travel demand. usually enhance the value and strictly adhere to the star-rating management systems tracking hotels with extensive perception of a real estate project criteria and have hospitality as guests’ personal preferences. meeting facilities are mushrooming and enjoy preferential treatment their core business. The guidelines Online booking platforms have in major cities. Resort development by local governments. also emphasise evaluation of become a major tool for reservations has picked up to cater to However, the increase in hotel service standards, sustainability, and sales. Ctrip, for example, offers sophisticated travellers. Other supply has diluted occupancy and crisis readiness, and product online real-time reservations for accommodation categories such as profitability. In 2009, Shanghai differentiation.

108 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 109 Hotel Regulation

ROP comparison of international and Chinese hotel groups International Hotel Companies launching China-focused Brands: The growth in hotel 200000 • Inter-Continental Hotel Group (IHG 180000 launched “HuaLuxe”. Hualuxe numbers in the 12th FYP 160000 Hotels and Resorts’ name is period is expected to slow derived from the Chinese word 140000 ‘hua’ for majestic and the English 120000 down. Limited returns word ‘luxe’ for luxury, and will 100000 have underscored the focus on four service areas, namely 80000 “tradition”, “rejuvenation”, “status” 60000 and “familiar spaces”. Plans to risks for hotel investment. 40000 launch in 100 cities across China Consequently, a correction in in the next 15-20 years and is also 20000 extending the Chinese-featured 0 the industry is inevitable. brand overseas. 2002 2003 2004 2005 2006 2007 2008 2009 • French hotel operator Accor SA International hotel groups Chinese hotel groups

launched a new brand Grand Source: China Hotel Industry Study 2003 – 2010 (unit: RMB) Mercure that is tailored to upscale To effectively lift and monitor Chinese travelers, and plans to financial results for analysis of return on investment for hotel hotel quality, CNTA has simplified open 65 Grand Mercure hotels in industry trends and planning. properties has been declining the star-rating evaluation process China by 2015. During the 12th FYP period, since 1994. While high real estate and shortened the required • Louvre Hotels Group from France has CNTA aims to make it the most value is still attracting investment re-evaluation to every three years partnered with Chinese group Jin authoritative and comprehensive into hotels, leading to 20% annual instead of five years. In July 2009, Jiang International Hotels to unveil databank on China’s hotel industry. growth in hotel inventories, CNTA also delegated the star-rating the Campanile & Jin Jiang co- CNTA also issued guidelines and limited returns have underscored branded initiative. The partnership, hotel evaluation task to the China as a way to cash in on the growing directives on sustainable hotel the risks for hotel investment. Tourist Hotel Association and it has number of Chinese tourists visiting operation in 2010 aiming to achieve Consequently, a correction in the since taken an overseeing role. France, applies to 15 Campanile the State Council’s expressed goal industry is inevitable. To deal with the hitherto hotels in Paris, Bordeaux, Lyon, of reducing star-rated hotels’ water Previously inactive trading overlooked issue of hotel Marseille and Nice, and will result in and power consumption by 20% of hotel ownerships in China is both brand names being displayed properties’ outlook, a set of at the entrance, Chinese-language within five years. More than 3,000 expected to heat up as private architectural design guidelines brochures, Chinese speaking staff, hotels have achieved the “Green capital increases and the policy for inns and star-rated hotels were Chinese food items in the buffet and Hotel” standard by the end of the structure for hotel ownership drawn up during the 11th FYP Chinese TV channels in each room. 11th FYP period. transaction matures. At the period for implementation in the • Kempinski Hotels & Resorts same time, certain China hotel 12th FYP period. announced the launch of its new More hotel trading and market groups have ventured overseas A data management system luxury brand Nuo, which will be correction expected for acquisition opportunities (for was set in place towards the end of developed only in China, and is Looking ahead, the growth in hotel example, Jinjiang’s acquisition of described as five-star, featuring the 11th FYP to consolidate hotels’ contemporary . numbers in the 12th FYP period the Interstate Hotels & Resorts Inc. annual, quarterly and monthly is expected to slow down as the in the US and Shenzhen New World

110 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 111 Key facts of China’s hotel industry in the 11th FYP period: • China registered 14,691 star-rated revenues and accounted for 61% hotels at the end of 2010, among of employment in the travel and them 603 5-star, 2,214 4-star and tourism industry and 72% of 6,399 3-star. business tax.

• Star-rated hotels’ room inventory • More than 70 hotel brands under the grew 6.3% annually. The increase banners of some 40 international in the 5-star category at an annual hotel groups were operating nearly average of 16% outpaced other 1,000 properties in China. categories. • Domestic hotel brands were gaining • Average occupancy rate of star- international recognition, with 10 rated hotels was 57.88% in 2009, local groups listed among the global with 2- to 4-star categories achieving top 50 by Hotels magazine. relatively higher averages. • The RevPAR and GOP of five-star • Star-rated hotels comprised 28% hotels operated by domestic hotel of China’s tourism enterprises, 53% groups were catching up with those of fixed assets, 40% of operating of the international hotel groups.

Group’s acquisition of Los Angeles’ on service and appeal rather than Sheraton Universal Hotel and price. We expect to see more Marriot Hotel). accommodation leveraging More state-owned properties are natural resources to create relaxing likely to be released into the market environment, provide immersive as the State Council in 2010 had cultural experiences and promote directed state enterprises whose eco-friendly and sustainable core business was not in hospitality lifestyles. to divest their hotel interests within On the service level, the three to five years. Some 2,500 “China Service” concept is being properties with a total value of promoted to foster a unique brand RMB100 billion will be up for grabs of Chinese-style service for visitors. under the plan. CNTA is incorporating “China Service’ into the standards for Propagating the regulating star-rated hotels and is “China Service” concept driving its development on various Meanwhile, driven by increasingly levels, through regional and local sophisticated consumer needs, policies, incubating domestic hotel China’s hotel industry will need to brands and developing human evolve and diversify to compete resources.

112 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 113 China, as a country, spent more than 1 billion hours online per day in 2009….double the daily total in the United States. This figure is expected to grow to well over 2 billion hours per day by 2015 BCG report

Hotel Profitability Damien Little, Director, Horwath HTL

Damien Little has 12 years of consulting experience and has undertaken more than 400 hotel-related projects in 12 countries across the Asia Pacific region. He has significant experience in China, having travelled to more than 70 cities across the country. He joined Horwath HTL in 2001.

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Tanked; 2) Stagnant; 3) Emerging; 4) performance over the last five Performers; and 5) Primary Leaders. to 10 years due to an endless All data presented is from the stream of new supply. While 5-star market and has been taken demand growth has been strong, from the 2011 China Hotel Industry it has been insufficient to allow for Study. Pipeline data has been improvements in occupancy or sourced from STR Global. growth in average rates. Examples include , Shenyang, Tanked markets Chongqing, and Xi’an – although overwhelmed by new supply Xi’an has certainly shown greater Tanked markets are those that have growth potential in the last few years. been totally overwhelmed by new These markets are heavily reliant supply and do not seem to have on domestic demand and, often, Oversupply depresses the ability to generate demand to local booking sources and accounts profitability at China hotels drag themselves out. There is also that keep rate levels competitive. a continued heavy pipeline of new Aside from Chongqing, where Abundant new hotel supply is hitting the bottom line of the entire additions set to enter these markets. demand growth has been strong, China hotel industry. Regions in various stages of development will Suzhou and are the others have struggled to record meet different fates. Some will tank, while the strongest regions will representatives of this category. any real improvements in either stay buoyant. Damien Little examines the impact of supply on the They have been hit extremely hard occupancy or average room rates, profitability of hotels in market types. with new supply over the last three limiting opportunities to invest in to five years and have suffered maintenance and upgrades. As a THE SPECTACULAR VOLUME OF number improved in 2010 taking a relatively prolonged period of result, properties in the markets new hotel supply that China has overall 5-star GOP back to RMB extremely low occupancy. Rates have generally aged. witnessed over the last 10 years 117,448 PAR but this is still 22% have been lowered driving down The result has been a low has generated plenty of headlines. below the 2005 peak. GOP. The 2010 GOP level of the 21 average rate below RMB 600 and In all the discussion on China’s The data, however, is broad 5-star hotels in these two cities was GOP levels not much better than impressive growth, what has in scope and hides many issues only RMB 53,810 per available room the Tanked markets in 2010 at RMB been overlooked is the impact on experienced by hotel markets at a ratio of only 24%. 69,717 at 32% of total revenue. profitability that oversupply has across the country. China is a very With significant additions still to Looking ahead, Chongqing will brought to many markets. large country and you cannot draw come, these Tanked markets – in continue to be hit hardest with Data from the China Hotel a single conclusion for what is a particular Tianjin – will not be new additions. The scale of the Industry Study shows that 5-star large collection of complex and seeing much relief anytime soon. new supply is likely to continue to hotels’ gross operating profit (GOP) varied markets. depress market performance in levels declined every year from a Taking that into account, I will Stagnant markets’ new supply the years to come. Shenyang and peak in 2005 of RMB 150,353 per explore the profitability levels of dampens rate growth Wuhan may struggle to support available room (PAR), to a record hotels in five different types of Stagnant markets are those the new inventories in the coming low in 2009 of RMB 91,752 PAR. The hotel markets that I will label as: 1) that have failed to improve their years, while Xi’an may have more

116 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 117 Hotel Profitability

The performance levels in these Hotel profitability of the five types of hotel markets in China markets are a step above the Primary Key Tanked Stagnant Emerging Performing stagnant markets, with higher Leading Data markets markets markets markets The total revenue per ADR levels driving improved markets GOP. Occupancy remains weak, Number 21 28 34 54 49 available room for the however, at only 60% in 2010 and of Hotels typically it is the leading one to two Total Primary Leading hotels in hotels in the market that are driving 6,483 9,985 11,969 21,376 19,815 Rooms 2010 was a staggering 1 performance and profitability. 68% higher than the Emerging markets typically Occupancy 50% 62% 60% 63% 63% lack any real depth in room night Tanked markets. demand and will have a hard time ADR (RMB) 673 528 619 824 1,427 coping with large amounts of new supply. Rev 336 325 371 522 893 Each of the emerging markets PAR (RMB) will see a moderate amount of new Total potential to improve performance supply. Ningbo, already struggling Revenue 220,406 216,883 321,411 372,176 591,424 with some quality hotels in the with recent supply additions, is (PAR) (RMB) economic development zone. On likely to be impacted the most GOP (PAR) 53,810 69,717 116,454 137,282 268,823 the whole though, most of these and may move into the Tanked (RMB) markets may not achieve much category in the next couple of improvement. years. Wuxi, Guiyang, Taiyuan GOP (% Total 24% 32% 36% 37% 45% and could be tested Revenue) Emerging markets see the most in regards to the depth Hotels In competition heating up of top-tier demand. However, as 25 31 49 73 47 Emerging markets are those that long as additions are spread over Pipeline are starting to mature as viable the next three to four years, these Rooms In 8,329 11,495 16,707 24,932 16,733 hotel markets for international markets should be able to absorb Pipeline brands. Cities in this category the supply. include , Wuxi, Hefei, rates. Cities in this category at 63% due to consistent increases Fuzhou, Foshan, Guiyang, Performing markets’ occupancy include Guangzhou, Shenzhen, in room supply. The volume of Zhengzhou, , Taiyuan and growth hit by new supply Hangzhou, Qingdao, Chengdu GOP generated per room is more Ningbo. All, except for Taiyuan, Performing markets are those that and . significant, albeit at a similar have a leading international have an established base of quality The Performing hotel markets percentage of total revenue as 5-star hotel in the market, but hotels and have largely been able are able to record a relatively that recorded by the Emerging competition generally remains to support the growth in supply higher premium in average room markets. limited – although in Ningbo, with strong growth in demand rates at above RMB 800. However, Some Performing markets will competition has already heated up. and at the same time grow room occupancy remains relatively soft see significant new additions,

118 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 119 particularly Chengdu, Guangzhou significant revenue from the and Hangzhou. While Performing premium ADR and food and markets with a larger base of beverage. Total revenue per existing quality supply are better available room for the Primary placed to handle new inventory, Leading hotels in 2010 was some may slip into the Stagnant RMB 591,424, 59%, a staggering category over the next five years, 168% higher than the Tanked with future growth in room rate markets. The higher revenue has levels curtailed by persistent low translated into a higher GOP at occupancy performance. The RMB 268,823 at an impressive markets with smaller existing 45% of total revenue. The GOP supply bases such as Chengdu, level PAR is almost double that Hangzhou, Qingdao and Nanjing of the next best category and CASE STUDY: are at most risk of this. five times that recorded by the Tanked markets. Chinese customers altering the hotel Primary leading markets stay While the supply pipeline for the landscape buoyant despite new stock Primary Leading markets remains The analysis for Primary Leading strong (and I have only included Mary Gostelow, who travels 300 from all over China so that regional markets has been restricted to pipeline hotels that we think could days a year, observes how the penchants can be accommodated, Shanghai, Beijing and Sanya and meet the minimum rate criteria expanding horde of Chinese for groups. has only included hotels that of RMB 1,000), these markets consumers are changing the way I used to be able to swim, often recorded an average room rate are well placed to absorb the hotels are used. alone, in hotels’ indoor pools as higher than RMB 1,000 in 2010. additions without compromising At breakfast, a more mature soon as they open in the morning. Shanghai and Beijing are clearly performance. Beijing would group of Chinese will watch For the last three days, in three the two leading hotel markets in seem best placed for this with a and follow their leader. If he different hotels, I have turned away China with considerably larger relatively small supply increase in chooses a Dalian congee, so will from pools, already over-occupied hotel supply, significant rate depth the coming years, while Shanghai they. Younger Chinese may well within 15 minutes of opening. and the presence of the best will feel more pain with relatively combine, American style, sweet The new wealthy, including hotels in China. The Sanya market strong additions. Sanya has pastries and fruit with savoury Hurun Report’s 900,000-millionaire has been a phenomenal growth the largest pipeline increase, items. roster, appreciate brands and the story over the last five years with yet for the last five years has A few years ago Chinese finer things of life. At Banyan Tree, impressive room rates and GOP demonstrated not only a strong travellers felt shy about foreign part of Galaxy’s Macau complex, levels. ability to absorb new supply, but foods. Now they relish fine dining you are presented with a case of The Primary Leading markets to continually push room rate (though they may well fill up on pot six Laguiole knives to choose with perform significantly above growth. This will surely be tested, noodles back to their hotel room). which to eat your Australian wagyu Performing markets in regards to but there are yet to appear any Constant boiling water in five star fillet, washed down of course with average room rates, recording a indications that this will not be the hotels is now a norm. Hyatt has Chateau Latour or, if you must go premium of 73%. They generate case moving forward. been training aspiring managers New World, Screaming Eagle.

120 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 121 MICE Regulation Kate Chang, Regional Director, Greater China, PATA

Ms Chang has become the face of PATA in China since joining the association in May 2005. Based in Beijing, she identifies, analyses and interprets trends, policies and opportunities in China’s tourism sector to assist PATA in creating and expanding activities and programmes to better support China’s tourism sector. A graduate of the Tourism & Hospitality Management School of Beijing International Studies University, Ms Chang was the Assistant Director in Australia for the China National Tourism Administration prior to joining PATA.

122 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 123 MICE Regulation

intentioned, frankly seem to be more of a complicating factor. The upshot is that event Use the regulations as road organisers, especially association meeting planners, foreign signs of what can and cannot companies and event delegates, be achieved for an event. As may find regulations as obstacles in holding a MICE event in China. with travel, a guide in the New national guidelines issued form of a trusted local PCO in early 2011 say that international can help steer international conferences held in China with public sector fiscal input or organisers on local rules and participation by government regulations. Turn red tape into road signs officials will be subject to stricter for successful events approval procedures and sterner budgetary oversight. Regulations are a fact of life in business. Respecting cultural Any bid to hold international scrutiny and may even be rejected differences and using red tape as guidelines to what is achievable conferences must now be approved if they fail to meet the new criteria. can go a long way to creating successful events in China. by the relevant authorities. The problem arose since too Importantly, events lacking many large events in China, I AM A BELIEVER OF THE CHINESE or protect vested interest. We also “substantial content” will not be especially those organised by proverb that “there are rules associate red tape with a fear of permitted. The new rules also foreign companies or associations, everywhere, be it in a nation or a making wrong decisions. state that descriptions such as tend to invite Party or State leaders family”. It is far better to understand What does this mean for MICE, “summit” or “international seminar” and senior officials to either speak and manage their impact than a key beneficiary of a surging cannot be used without approval. or attend. It seems the government trying to cut corners, especially economy such as China’s? All government departments, has indicated its desire to minimise when conducting business in including local governments, are casual government participation in china. Tougher rules complicate events also required to cap expenditure for private sector events while it seeks From its legal origins, red tape organisation hosting international conferences. to create a firm and transparent has today become a euphemism Since the global economic However, the authorities foundation for government-private for regulations that are supposed downturn, we have noticed that the correctly realise that small sector partnerships. to keep competing interests Chinese government appears to and medium size events are in check while protecting the focus more than ever on return on as important as large events, Using red tape as guidelines for common good. investment in developing the MICE cumulatively attracting hundreds PATA events However, we tend to believe business. New regulations to better or thousands of delegates. Size isn’t Based on PATA’s experience, with that regulations only slow the manage government involvement everything. Indeed, the authorities better understanding between the permission process and postpone in international events have since say that events with more than 100 authorities and private sector we decisions to cover up inefficiencies come in to play that, while well participants will come under closer can turn red tape into guidelines

124 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 125 green-lighted the event. China is investing about US$75 to $100 billion That’s not to say challenges were each year in clean energy for the 10 years Similarly, clear and non-existent. We still had to deal between 2010 and 2020 with visa restrictions for media Harvard Business Review continuous communications and Public Security’s rigorous is essential. Ensuring each collection of all delegates’ information. There were also partner is properly briefed budget restrictions and audits for limits suspicion and builds hosts under the new regulations. trust, which can go a long The event went well because PATA respects cultural differences way to helping an and exacting protocol procedures. event succeed. Based on PATA’s experience, I would strongly recommend that organisers maintain clear and continuous communications with that can create positive events the host destination and authorities. that satisfy Chinese regulators and Patience and managing expectations event organisers. are essential as is a high degree of In April 2011, PATA held its 60th flexibility to accommodate inevitable Anniversary Conference in Beijing last-minute changes. operating under the new rules. Overall, the new regulations, The event attracted about although vague in some 1,000 delegates from 66 countries aspects, will encourage greater representing more than 400 transparency and due diligence. organisations. There were 460 As such, I see the guidelines as international delegates, 540 local road signs that point the way to delegates, seven government successful events rather than red ministers, 35 diplomats from 29 tape to hobble the organiser. countries and 180 international and If event organisers read the signs local media. correctly – and work with a trusted Partnership was key to the local PCO – they can expect to have success of the event. With great more focused events that deliver support from CNTA, PATA obtained better fiscal management in China. approval from various government When properly read, the road bodies such as the Ministry of signs serve as a proactive and Foreign Affairs and Public Security. constructive tool to creating More importantly, the State Council successful events in China.

126 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 127 Meetings & Conventions in Beijing Daniel Tschudy, Editor, events magazine

Daniel Tschudy has been involved in the global tourism, hospitality and MICE industries for four decades. Originally from Switzerland, he spent 13 years working overseas – Canada, Germany, France, Japan and China. In 1987, he co-founded MCI, now the leading global congress- and association-management agency group. Tschudy also works as a journalist, speaker and consultant, with a particular interest in China and the region. He is editor of events magazine (Germany) and writes regularly for Handelszeitung, Switzerland’s leading economic newspaper.

128 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 129 Meetings & Conventions in Beijing

CTD wants Beijing to become the top congress city in Asia and sees the meeting and convention sector as a main tool to achieve the goal of reaching 10 million visitors Beijing chasing Paris and by 2016. London in congress industry Beijing has come a long way in its quest to become one of the Even Shanghai and Hong Kong Beijing’s notorious traffic woes world’s top capital cities for tourism and MICE. It is today one of have since fallen behind the capital. have become more than just an Asia’s Top 3 convention cities. However, it still has to overcome As CTD wants Beijing to become irritation – city transfers can get growing pains to truly live up to its place in the global league. the top congress city in Asia, unpredictably stuck in gridlock it offers substantial financial, at any given hour of the day or administrative and promotional the evening. On certain days, air support to international congress pollution is so bad that outdoor IN THE GLOBAL RANKING OF industry. The expenditure per organisers. CTD sees the meeting events have to be cancelled, while tourist arrivals to capital cities, night/per person of international and convention sector as a main sightseeing tours can become Beijing has yet to find its place corporate and association tool to achieve the goal of reaching really unpleasant. in the Top 10. However, given delegates is often two-and-a-half 10 million visitors by 2016. UK-based research agency 2010’s 4.9 million arrivals and the times higher than leisure travellers’. The capital city’s international The Right Solution observed in Beijing Commission of Tourism In 2010, nearly 100 international hub airport, fantastic sightseeing its 2011 China Meetings Industry Development’s (CTD) goal of congresses and conventions attractions coupled with efficient Research Report that international doubling its performance, Beijing were held in the Chinese capital. transport and a quality hospitality organisers’ satisfaction with venues could potentially overtake New Accordingly the International infrastructure are certainly and service providers in China York in tourist arrivals by 2016. The Congress and Convention conducive to achieving this had been sliding: in 2009, 60% future is looking bright for Beijing’s Association’s (ICCA) annual ranking objective. of all foreign respondents rated inbound tourism industry. of global meeting towns placed overall services as ”very good” or The meeting and convention Beijing in the 12th place globally The flip side of the coin ”excellent”; in 2010, the percentage sector is without doubt the most and 3rd in Asia, after Singapore (5th But growth, especially unbridled dropped to 44%. On the other lucrative segment of the inbound in world ranking) and Taipei (11th). growth, comes at a price. hand, 22% of all respondents

130 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 131 Meetings & Conventions in Beijing

By 2030, China’s carbon dioxide emissions could equal the entire world’s CO2 production today, if the country’s carbon usage keeps pace with its economic growth Beijing will need to bring its Wired Mag service quality on par with its tourism infrastructure if it is to better compete with regional rivals that have long established enviable service levels.

judged the services in 2010 as International visitors, and ”bad“ or ”just acceptable”. particularly the global meetings and Satisfaction levels have fallen incentive industry, require attentive as the tourism industry has had service both for delegates and the to bring in thousands of unskilled associations and companies that labour to support the rapidly bring them in. It is not enough to developing tourism sector. provide a clean bus at the airport Meanwhile, as the euphoria or a modern hotel room. The from 2008’s Olympic Games international market requires faster dissipates, so too has the city-wide administrative support, more courtesy drive. It’s fast becoming flexibility in time planning, more a thing of the past. English is still openness to short-term changes, a problem, even in some 5-star and a readiness in catering to properties, and that obviously does international standards. not help improve perceptions of In view of the overwhelming service quality. The fact is foreign quality challenge, Beijing will need travellers are no longer ‘news’ to to bring its service quality on par Beijing citizens or to the service with its tourism infrastructure if it industry. Such perceptions will is to better compete with regional only handicap Beijing’s drive to rivals that have long established become a truly global and leading enviable service levels. hospitality destination.

132 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 133 China is well known for its unique 4. Singing for your supper. Karaoke is increasingly popular so expect to be shown business environment and culture. into a large specially fitted lounge for the private use of your group. Make sure you A firm grasp of the differences have a few old hits up your sleeve to impress your hosts. between Chinese and western 5. Learn the Lingo. Learning a few simple greetings and more importantly, how business etiquette and culture can to pronounce names and titles, is invaluable preparation. For example, being able be invaluable in building business to greet "Director Xiao" in Mandarin as "Xiao Zong" (Shee-ow Dzong) will get you some credit and is significantly better than not using his title and mispronouncing contacts. his name. 6. Using an interpreter. Ensure you speak in short, clear sentences and use the most common version of a word (say "company" rather than "firm"). Most importantly, keep eye contact with the person you're communicating with, rather than the interpreter. If you're without an interpreter, avoid spending too much time talking directly with people in lower positions just because they speak better How to build business English. contacts in China 7. Think local. Getting both yourself and your company a Chinese name are a priority. The most common way is by combining the desire for a similar sound with 1. It's not what you know. Don't underestimate the importance of guanxi, the the need for an auspicious or strong set of characters. A Chinese website or simple network of connections that allows things to get done. Thousands of years of Chinese brochures will make you and your company even more approachable. family-oriented culture, coupled with more recent periods of shortages where you needed good connections to get essential products has resulted in an enduring 8. Be sensitive. Avoid sensitive issues, such as Chinese Taipei, Tibet, Tiananmen, concept of guanxi. China's human rights record and Falun Gong. Chinese in general are very patriotic, and highlighting any cracks in the system, however small, is not the done thing. 2. Show respect. You need to know and use the correct form of address during greetings, meals, drinks or conversations. If you're asked "Don't you find the 9. Do your homework. The pace of opening up reforms, the speed of development pollution in China terrible?" a truthful but respectful response could be "Well, it's and the scale on which internationalisation is taking place means corners may bad, but given China's fast economic growth, it's understandable". have been cut. If it looks too good to be true, it may well be. As with any new trading partner, make sure you check creditworthiness and background. 3. Eat well. Expect to be taken out to eat, where ordering expensive and rare dishes is the done thing. You can avoid any undesirable delicacies by listing some allergies 10. Take a long-term view. It takes hard work, dedication and an occasional shifting before your hosts order food or perhaps by saying your stomach isn't accustomed of the goalposts to nurture a fruitful relationship with a Chinese company. Be to certain foods. Drinks flow freely and simple toasts include wo" jing ni" (I self-aware and realistic, and remember that today's banquets, karaoke and show you respect), or "gan bei"(literally, ‘dry your glass’) after which you may be delayed signing of contracts could be the turning point for a profitable business expected to do so. relationship in the future.

Source: Edward Holroyd Pearce (http://www.crccasia.com/insight/10-tips-build-business-contacts-china)

134 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 135 The number of Chinese traveling outside the country rose to 54% from 2005 to 2009 (to 47.7 million)…and “they spent more than French, Japanese or Canadian travelers.” U.N. World Tourism Organization; March 17, 2011

Aviation Mario M. Hardy, Vice President Asia Pacific UBM Aviation

Mario Hardy is based at UBM Aviation regional headquarters in Singapore and leads UBM Aviation business across the Asia Pacific region which includes offices in Beijing, and Tokyo. With more than 27 year’s professional expertise in the aviation industry, Mr Hardy began his career with People’s Express Airlines in 1985, before joining Canadian Airlines in 1987 where he spent 12 years in a number of sales, marketing and operational roles, leading to his appointment in a senior management role heading the Group Sales & Charter division in 1997. He joined OAG in 1999 and held several positions, leading to his appointment in 2007 to Vice President – Asia Pacific at UBM Aviation.

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Top 15 airports in China by capacity 2011

60

50

40

30 Capacity (seats) Millions 20

10

0

Xi ‘An Pudong Beijing Hongqiao Wuhan Xiamen China’s rapid growth of airports, Nanjing Kunming Chengdu Shanghai Shanghai Changsha Shenzhen Hangzhou Chongqing Hong Kong airlines, and air capacity Guangzhou China is already the world’s second largest economy after US and it Beijing has grown rapidly over out of the city in the village of is expected that it will overtake the US economy in 2016. As China’s the past 10 years on the back Nangezhuan, is expected to handle GDP increases and disposable income levels rise, the population of the rapid aviation growth in 120 to 200 million passengers a becomes wealthy enough to travel both within and outside the China. Beijing Capital International year. Shanghai International Airport country’s borders. Due to the population of China and surrounding Airport is not only an aviation (PVG) shows the highest average countries, there is a huge market opportunity for aviation gateway of Beijing and a window capacity annual growth rate at for international communication, 12.57% in China and Beijing Capital businesses operating to/from and within China, which is currently but also a radial centre for the International Airport (PEK) shows only in its infancy phase. China civil aviation network. The an average growth rate at 8.96%. recent opening of Terminal 3 at The international expansion of Beijing Capital Airport in 2008, a the Chinese carriers, which had sweeping structure designed that previously concentrated largely WITH MORE THAN 1.3 BILLION only 2 cities (New York and Los is far bigger than all of Heathrow’s on expanding their domestic people, China is the world’s most Angeles) with a population of over five terminals combined cannot networks and more recently on populous country representing 3m. Atlanta Hartsfield Jackson keep up with China’s booming air- consolidation in the country, is 20% of the world’s population. Airport (ATL) is the busiest airport travel demand. The city already has fueled by strong economic growth. China’s population growth is in the world by capacity since 1998 Beijing Capital International Airport This economic growth is fuelling stimulating the massive growth with Beijing Capital (PEK) in second and Nanyuan Airport, but they are development and aircraft demand seen at the Chinese airports. All place for the past two years, but not big enough to handle growing through an increased demand in the top 20 cities in China have a with Beijing’s rapid growth, it is demand and a third airport is being air travel in the country. The largest population of over 3m inhabitants, forecast to overtake Atlanta in 2012 built. Due to be completed in 2015, airline in the Chinese market by compared to the US, which has after 15 years at number 1. Daxing Airport, located 50km capacity is China Southern Airlines

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China domestic aviation market - segmentation by capacity 2011 - top 5 China’s Airport Boom

7% Other Airlines By 2010 – 47 new airports By 2020 – another 55 new airports

9% Shenzhen Airlines 30% China Southern Airlines

9% Hainan Airlines

To stimulate development outside of major cities such as Beijing and 20% Shanghai, the Chinese government plans to open about 100 new airports 25% China by 2020 at a cost of some $62 billion. The expansion sites – from Mohe, the Eastern Airlines northernmost town in China, to Hainan Island in the south to bachu in the far west – are like a treasure map for GE’s infrastructure units.

Source: OAG Schedules iNet China’s fleet mix 2010 – 2020 orders with its main hub in Guangzhou, The Chinese air travel market Aircraft Regional Single Twin Twin Twin Twin Total closely followed by China Eastern has the potential to grow 10 times Category aisle aisle aisle aisle aisle Airlines and Air China. from where it is today, assuming by long medium short ultra Year range range range large The mix of China’s predicted China will reach a similar level of fleet is steadily growing in propensity to travel as Europe and 2010 143 1,271 99 46 13 36 1,607 next decade. China’s aircraft the US and to become 4.3 the size 2011 149 1,370 112 46 13 37 1,727 fleet is projected to increase of the US air travel market. Beijing 2012 167 1,493 140 47 12 38 1,897 by 2020 to over 2,260 aircrafts. is expected to play a major role 2013 189 1,606 174 52 12 40 2,073 China’s inability to domestically in transport for the Asia Pacific mass-produce modern high- region and the main bridge with 2014 205 1,657 188 54 11 39 2,154 performance jet engines at a the rest of the world. This potential 2015 221 1,681 193 53 11 39 2,198 consistently high-quality will be presents huge opportunities for 2016 237 1,718 198 51 11 39 2,254 a challenge for their relatively the aviation industry and that in 2017 250 1,724 203 49 10 39 2,275 young aviation industry. years to come the top 20 airports Aviation Industry Corporation of of the world will be dominated by 2018 261 1,725 210 49 6 38 2,289 China (AVIC) is treating engine Chinese airports. 2019 269 1,723 209 48 3 37 2,289 development as a high priority as 2020 276 1,695 205 44 3 37 2,260 it plans to invest 10 billion RMB Total 2,367 17,663 1,931 538 105 419 23,023 (US$1.53 billion) into jet engine Source: OAG CAMRO research and development over the next 5 years in order to shorten this learning curve.

140 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 141 ANNUAL CHINA RESPONSIBLE TOURISM FORUM & AWARDS

Green Evolution Professor Geoffrey Lipman Chief Disruption Architect, Green Earth Travel

At the forefront of the global travel and tourism industry for nearly five decades, Professor Geoffery Lipman joined the International Air Transport Association in the 1960s and became its executive director before his appointment as the first President of the World Travel & Tourism Council from 1990 to 1999. Between 2006 and 2010, he served as Assistant Secretary General and spokesperson of the UNWTO, the World Tourism Organization, and prior to that acted as advisor to the Secretary General. Professor Lipman is also an Associate of Cosmos China and President of ICTP (International Council of Tourism Partners).

WWW.PATA.ORG WWW.PATACHINA.ORG

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that during the first half of this year, 32 million Chinese went abroad, an annual increase of 19%. More Sustainability is a major special destination agreements are coming on stream, which can only challenge and it’s spur outbound travel to the 100 accentuated in China by million mark projected by 2020. Of course the thorny issue of the speed and scale of sustainability is a major challenge development, as well – but that is the essence of green as the historically low growth. How to maintain essential expansion to increase wealth, jobs, environmental investment and social inclusion, starting point. Green growth, travelism and while sustainably controlling waste, China’s development paradigm water, biodiversity and energy; as well as managing the “black swan” There are clear signs travelism (travel and tourism) will be an crises that seem to be increasingly associated planning regime is the increasingly important element as China adjusts its socio-economic prevalent. ability to forge strategic directions model and plays a leading role in the long-term global green shift. This shift is a challenge for every of change more readily than in country but it’s accentuated in western politico-economic models. China by the speed and scale I learnt this in the 90s as President HAVING EARLIER DESIGNATED and internationally – will simply be of development, as well as the of WTTC when we worked closely travel and tourism as a strategic more possible for more and more historically low environmental with CNTA on the initial opening of pillar of economic development, people. Indeed, CNTA figures for starting point. tourism markets. China recently identified the sector the first half of 2011 show 1.4 billion There are many reasons to It is clear that in its own way and as a domestic consumption engine domestic trips with an annualised believe that China will also get this its own pace China is positioning in the 12th Five-year Plan. The growth of 12% and generating right, if solutions are considered in to be a leader of sustainable policy has for some years been more than a trillion yuan [CNTA and the correct strategic perspective development and particularly of backed by a rapid development UNWTO] . It is a chilling reality that and not simply looking at snap renewable energy. Indeed these of new airports, high-speed trains the number of domestic trips is shots in today’s early transition issues are also important elements and superhighways, providing about double the total amount of phase. It is well known that the of the current national plan. Earlier the essential arterial network for worldwide international travel. Long March started with a small this year UN Secretary General travelism. Growing automobile Moreover, the policies to step. Ban Ki Moon noted that “(China’s) production and purchase is grow outbound travel remain renewable energy investments are another factor as is the plan’s goal unchanged; as a planned part of China forging ahead as a leader of second only to Germany’s. With of boosting household income. China’s superpower engagement, sustainable development your manufacturing strength, you The opportunity to travel – for expanding trade policy and One of the advantages of the are well positioned to be a leader leisure and business, domestically globalisation. Again it is indicative, and its in what is shaping up as one of

144 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 145 Green Evolution

These will merge with measures Chinese outbound travellers business for smart grids, clean cities and renewable energy. For example this year the UN and China launched It is clear that in its own way a project to deploy energy- and its own pace China is saving light bulbs across China that is forecast to reduce energy positioning to be a leader consumption by up to 8%.

of sustainable development Unlimited One 100 million and particularly of Seizing green growth renewable billion outbound opportunities energy people travellers by renewable energy. Similarly tourism hotels and 2020 resorts will become green growth beacons in themselves. They are an important part of real estate development in China, because the main global marketplaces of they stimulate domestic and outbound market can be linked to connection possibilities of the the future.” Secretary Ban also foreign investment, attracted China’s emerging global business Middle East carriers and the noted that China’s impressive by visitor spending cash flow. agenda. potential becomes obvious. roster of new cities could become They are usually greenfield There is much talk about Taken one step further and this global beacons of sustainable developments and there are the nature of China’s overseas area can be targeted for new local development. many international building investment as an increasing part green growth travelism jobs in The economic mainstreaming and operational standards and of global economic rebalancing the , hospitality and of tourism has the advantage certification programs that will – so far what has not been fully services field. that its growth patterns and their become increasingly merged with appreciated is that with investment And if the travelism related resort interrelationships with other national or provincial models. We in resource industries in Africa for and infrastructure construction national priorities will be more can look forward to increasing example growing people flows can be directed towards the low keenly monitored and reviewed. international collaboration in follow automatically. These tourism carbon transformation of local It has the chance to be an integral this area, where an outstanding export flows for the host country communities, it opens up whole part of this repositioning and example exists in regard to Hainan can be captured for development new possibilities to creatively equally a beacon of China’s green Island, specifically designated for purposes – an essential element of target new climate adaptation, growth commitment. tourism investment. the green growth paradigm. aid for trade and carbon credit Embryonic green growth, Finally, synergies between Simply put, the sheer number of funds that can in turn transform travelism related policies for China’s geopolitical trade and Chinese travellers offers enormous conventional development aircraft, cars, hotels and travel tourism strategies can be a new possibilities, but couple that wisdom. The cash flow from a service providers will widen and revolutionary piece of the with more direct flights with new growing number of experience- deepen from national through international green growth and technology longer range aircraft seeking affluent Chinese visitors provincial and local levels. travelism agenda if the dynamic and the dramatically escalating can be the game changer.

146 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 147 Corporate Global Citizenship Positively shaping global society in multiple aspects

Corporate Corporate Social Social Governance/ Philanthropy Responsibility Entrepre- Practices neurship Committed Recognising and Following and consistent acting in the Business CASE STUDY: business practices giving to best interest innovation which advance social of diverse which profitably integrity and organisations stakeholders addresses social First Responsible Tourism Forum make ethical use needs underscores China’s key role of resources Economic Contributions Nancy Cockerell, from the World responsible tourism development. Creation of tangible benefits such as employment, GDP/Tax contribution, etc. Travel & Tourism Council, reports Over the past two years, despite from the first China Responsible the global economic recession and Tourism Forum (CRTF) held financial crisis, tourism demand the buy-in and engagement of suppliers, encourage best practice in Beijing on December 16th has exceeded all expectations – many stakeholders – including and accelerate innovation, as well 2011. Organised by the Pacific both in terms of China’s inbound local villagers, local governments, as helping to ensure that suppliers Asia Travel Association (PATA), arrivals and receipts but also, and non-governmental organisations stay ahead of demand. the conference stimulated more importantly, in terms of local (NGOs), tourists and volunteers. The Forum coincided with the discussion between the tourism demand for domestic and outbound But greater efforts need to launch of the new PATA China industry and government on the tourism. And this unprecedented be made by the destinations Board, the PATA China Beijing important issue of responsible growth is set to continue. themselves to raise awareness Chapter and first PATA Student tourism. While the economic impact has of the need for responsible Chapter in China at Beijing Organised in co-operation with so far been extremely positive, it tourism, and to attract and International Studies University. the Organising Committee of the risks jeopardising the sustainability engage responsible tourists – or “Our long-term goal,” Kate China International Heritage Towns of tourism development in the ‘conscious travellers’, to use the Chang, Regional Director of PATA’s Exposition, the forum brought longer term, whether in China or term coined by one of the CRTF’s Greater China office, told delegates, together more than 130 delegates other countries. keynote speakers, Anna Pollock of “is to help protect the heritage from government and industry, as The case studies presented DestiCorp. and culture of ancient towns and well as national and international covered projects designed If destinations heed this villages in China through public- experts in the field of sustainable, and developed to reinvigorate key message, they will be well private sector cooperation, while at or responsible, tourism. abandoned or neglected villages, rewarded since conscious travellers the same time carefully developing Speakers and participants generate new jobs through generate higher yields, help these towns and villages to boost confirmed in the presentations tourism, and restore and preserve promote and market destinations tourism and generate economic and ensuing discussions that China ancient heritage and customs. and companies through their growth and employment for local is at the forefront of grass-roots The different projects depend on patronage, favour responsible communities.”

148 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 149 China will be the world’s second largest consumer market by 2015 – (currently third behind the U.S. and Japan). Boston Consulting Group

Mobile Marketing George Cao, Co-Founder & CEO, Dragon Trail

After graduating from the Cornell School of Hotel Administration in 1996 with a master’s degree and a specialty in information technology and revenue management, George Cao developed Choice Hotel’s first automated revenue management system. Cao founded Search Party in September 2004, and shortly thereafter moved with his family to his native China to build and manage Search Party’s software development group. In 2005, the started Go 10000, China’s first meta-search and travel-focused social network. His Beijing-based travel technology firm is joint venture partner of brand engagement agency Dragon Trail, helping travel brands develop a China presence leveraging social media, digital marketing and internet technologies.

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Total mobile subscribers in China 3G mobile subscribers in China breakdown by Operators (millions) breakdown by Operators (millions)

China Telecom 129 China Telecom 39 China Unicom China Mobile China Mobile 203 655 54 China Unicom 43 Mobile boom fuels travel app popularity Source: Published data for January 2012 from China Mobile, China Unicom, China Telecom The growing prevalence of smart phones with internet access with an estimated 648.7 million that, China’s mobile internet users augurs well for mobile apps targeting travellers connections, equivalent to a 67% reached 318 million by the end of market share. June 2011. CHINA’S MOBILE INTERNET phones, surpassing the number Chinese leading market research Qunar Mobile is a full-feature app industry is growing at much of PC internet users. According to firm Analysys International indicates that covers information of flights, faster rates than many developed the released data from three telco that smart phones will take up hotels, train tickets, packages, and countries. China is set to surpass operators in China, there are 987.58 50% of China’s total mobile phone group-buying deals. It supports one billion mobile connections by million mobile subscribers in China market by 2013. Given this trend, product search, payment, booking, May 2012, according to Wireless by end January 2012. mobile apps have strong prospects. and LBS services. Search volume Intelligence. Another rapidly growing trend The download of mobile phone via Qunar Mobile has reached 10% About 22% of urban Chinese is instant messaging services, such apps in China already reached 863 of PC search volume, and airline mobile phone users browsed the as MSN Messenger and QQ. Just million in 2010, and it is expected to tickets’ mobile booking grows over Internet on their phones at least 1% of the population used instant surpass 20 billion by 2013. 100% every month. once a week in 2010, up from messaging on their mobile phones Mobile internet brings travellers Location check-in service 15% in 2009. Leading the trend in 2008, but two years later the a lot of freedom and convenience Foursquare’s equivalent in China are urban youth, with 41% using number jumped to 15%. during their journey, and becomes would be Jiepang. Jiepang has web browsing on their phones in There are three different 3G more and more essential for a location-based mobile app 2010, compared to 29% in the year providers in China – China Mobile, travellers. iResearch data also that allows Chinese users to earn before. Not bad for a mobile phone Unicom and China Telecom - each stated that the size of China’s shopping coupons and restaurant market that boasts almost a billion running a slightly different version online travel market reached RMB discounts depending on their total users and over 400 million of the mobile service. China 100 billion in 2010, with a year-on- check-in activities at different users with Internet-enabled mobile Mobile dominates the industry year growth of 58%. In addition to locations in China.

152 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 153 China and Germany are leading the “race for a Green Economy” and “have developed robust policy frameworks” Deutsche Bank report CASE STUDY: Social media campaign boosts Canada’s profile The Canadian Tourism either explore Canada’s west or Commission (CTC) harvested east coasts or complete a coast-to- over 1.2 billion overall media coast trip. Each completed virtual impressions in a virtual travel trip was eligible to win one of three “Hello Canada Campaign” “real” trips to Canada. executed in collaboration with To increase viral spread and Dragon Trail (www.DragonTrail. social media engagement, the com) in 2011. game encouraged participants The campaign, CTC’s first major to invite friends or spread the marketing campaign in China message on social media sites. since gaining the Approved The campaign achieved Destination Status (ADS) from the the goals of increasing brand Chinese Government in June 2010, awareness, capturing consumer leveraged digital marketing and data for future marketing social media to influence Chinese campaigns and building a consumers to choose Canada as one following on China’s major micro- of their next vacation destinations. blogging platform and Twitter The first of a multi-phase equivalent in China, Sina Weibo. campaign, it featured a highly In the six-week campaign period, interactive and engaging social over 3.3 million visitors were media driven online game, built on drawn to the campaign website Dragon Trail’s proprietary TripShow generating over 1.2 billion overall platform. media impressions. Over 230,000 Chinese consumers virtually clean consumer data records were travelled to Canada by literally captured, and the followers on Sina flying from Beijing, Shanghai, Weibo numbered 40,000. It was or Guangzhou to Vancouver or also named the “Best E-marketing Toronto to complete one of three Campaign 2011” by Travel Weekly virtual itineraries in Canada to China.

154 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 155 The Chinese are obsessed with the Internet Chinese people spend around 70% of their leisure time on the Internet McKinsey & Co.

Human Resources Lesley Reynolds, CEO, Portfolio

Portfolio has offices in London, Hong Kong and Shanghai (WOFE). Lesley has worked in Executive search and selection in the hospitality and leisure sector for 25 years and is one of the most knowledgeable in her field. Whilst leading a significant team of specialists, she remains hands-on executing senior corporate assignments. Her early career included various management roles in the luxury hotel market. Lesley is married and has two teenagers.

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their current employer, they will Manager shared with me that he move on swiftly. There is little loyalty had provided 45 managers in the witnessed amongst this workforce last 5 years - a deeply impressive and the CVs of candidates in this achievement, but a drop in group show job-hopping every 6-12 the ocean against the overall months as routine. The effect of requirement sought. this is that the emerging junior and Management Companies face middle management in hospitality an additional challenge because, businesses have large development although some owners are gaps as they have often not yet enlightened and are aware that matured as managers at the same GM’s may need to be bought in pace as the opportunities that have externally due to the shortage arisen for them. and to keep the talent pool fresh, Recruiting and retaining As a final point, it has been noted companies regularly face the issue talent in China that some Chinese companies are that some owner’s, having signed a inducing employees to join them particular management company, The hotel and travel industry in China is experiencing some big with ‘switching fees’, whether then expect that company to challenges from a perspective of talent and human resourcing. On the these are paid to sign on or on the deliver the required talent as part one hand there is a completely inadequate supply of service trained completion of a probation period, of their contract. people at all levels to satisfy the extraordinary pipeline of hotel, travel the bottom line is that the position is and related service infrastructure development signed for the coming a rosey one for Chinese employees. Retention We see employee retention as years. On the other, we are witnessing changing attitudes towards the Internal Management a key issue for businesses right compensation packages provided to expatriate foreigners. Development alongside fast rising labour costs. The Competitive Staffing Pool english speaking, customer service Every multi-national company, Independent hotels, often address At staffing level first, start by oriented staff. It can be stated that group and independent hotel or this topic more creatively. At considering the size and scale of part of the problem is the new travel business that one engages Shanghai’s, much acclaimed, Puli the issue. The service sector has generation of Chinese worker who with on the subject of talent Hotel, Martijn Van Der Valk, the for the last decade been the largest has grown up to assume that there provides a range of pro-active General Manager, indicates that within the Chinese economy. In will be more jobs tomorrow. examples on how they attempting an emotional connection and 2011 alone it was recorded that The Gen-Y, who has witnessed to partially address the topic career development have to sit there 1.4million more job openings at close quarters all the trappings through internal management alongside salary and benefits than there were applicants and of affluence has an appetite for a development. Several of the in order for them to retain the this was up from a whopping slice of this life for themselves. They large Group’s have their General core staff to continue to exceed figure of 1m the previous year. In have become highly aspirational Manager’s tightly KPI’d on the service delivery expectations. this space, hospitality, leisure and and many expect fast personal number of Managers they Martijn explains, “the emotional travel are competing with the development and regular salary can develop for their Group’s connection is more and more luxury retail market for the same rises – if they don’t find them with Management pool, one General important especially for new

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generation team members. They is unstuffy, open, non-threatening Minimum wages across China will stay for a “good boss”, for and supportive. We then reinforce/ Values based on current minimum wage “good colleagues”, for “good review and adapt our ‘people levels within each provincial capital friends in the company”. They philosophy’ every year to make Yuan (RMB) are sensitive and receptive to the sure we are keeping it fresh/current Below 850 level of care from the company to and of course ‘on-brand’. 850 – 900 them. We continue to very much And it appears the Swire Hotels focus on keeping a good work brand strategy has worked, 901 – 950 environment and we spend a lot Brian cites terrific team morale, 951 – 1000 of time, energy, money and other excellent operating results and 1001 – 1050 resources for the teams to make low team turnover plus 75% and to keep them happy. of management at the next 1051 – 1100 Brands that have entered the opening in East Beijing, have been More than 1100 market with a strong people promoted internally.

philosophy are able to show this According to Charlie Dang, Source: Dezan Shira & Associates has contributed to both attraction Beijing’s Managing Director for Streamlined Allowances for but venture further afield and not and retention. Brian Williams, Westin, it’s the authenticity of Foreigners only does the provision become Chief Executive of Swire Hotels the brand’s values that engage Whilst all the above point to a poor but an owner will flatly acknowledges he was able to the employees and contribute to position of the employee calling refuse to support the education create a very ‘Gen Y’ culture for retention. One of the Westin values the shots, a word of caution. cost as a benefit for more than his ‘House’ and ‘East’ brands, is ‘wellness’ and as part of the team The last few years have seen the 2 children. We are increasingly ”When we launched our group, I associates enrichment experience tide turning for the life of the witnessing a base salary and fixed decided that one way to ensure with the brand the hotel provides expat foreigner, often General benefits allowance, the same for the longevity and sustainable many of the same services for Manager. Whilst it seems obvious all managers in the same banding operating standards we needed the employees as for the guest. to state that mandarin speaking is (interestingly this is becoming was to have a ‘people philosophy Back of House between 5pm and becoming increasingly preferred evident further afield than China ‘ at the heart of everything we do 7pm, a team of 5 therapists are or rather essential for any post as other international companies – so we made sure that our People on hand to provide massage for outside of primary and secondary adopt this policy). are at the heart of the Brand. We 20 minutes per person; there is cities in China, the packages paid In conclusion, there is a wealth then made sure we created an yoga on Saturday morning and a to foreigners are increasingly being of opportunity and experience to environment that reinforced our competition by department for the trimmed. Culturally, in a country be gained in China. As a foreigner, brand standards in areas that most time spent in the gym in the which has for so long supported a mandarin, open-mindedness, our teams worked – great back week. These benefits combined one-child policy, should it come as flexibility and respect for all of house design, comfortable with other significant genuine a surprise that expats with no kids stakeholders (owner, management and casual team uniforms, employee engagement initiatives are preferred by Chinese owners? company and staff) along with state of the art team dining and have helped the Westin Beijing Education for expat children is at sensible package expectations and changing rooms and above all a become the top feeder hotel in the international level in the primary there is an insatiable requirement communications programme that Group. cities like Beijing and Shanghai for talent at all levels.

160 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 161 China’s Growing Cities K K Fung, Managing Director, Greater China Jones Lang LaSalle

K K Fung leads a team of more than 1,300 people across 12 corporate offices, in addition to another 10,000 staff working in client premises. Mr Fung works closely with market and business leaders to develop strategic direction, business priorities and operational advice across Greater China. Operating in the world’s fastest growing economy, this includes expanding the firm’s presence in the region and developing new business lines relevant to the real estate industry. Mr Fung’s career with Jones Lang LaSalle has spanned more than twenty five years. He joined the Firm (formerly Jones Lang Wootton) in 1984 after completing a degree in Land Economics from the University of Aberdeen, Scotland. KK Fung took over responsibility for Greater China, including Hong Kong and Macau, in 2009.

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China50 Evolution Curve 2012 Tier 1 2.5 Shenzhen Chengdu Tier 1.5 – 2 Shenyang Chongqing 2 Hangzhou Dalian Wuhan Property Index Suzhou Tianjin 1.5 Qingdao Nanjing Tier 3 Xiamen Xian Ningbo 1 Hefei Changsha Kunming Fuzhou Zhengzhou Wuxi Tier 1.5 – Transitional Changchun Jinan Harbin Foshan Dongguan Nanning Changzhou Tier 2 – Growth Big opportunities beyond 0.5 Guiyang Hohhot Lanzhou Nantong Tier 3 – Emerging Haikou Luoyang Quanzhou Beijing, Shanghai, and 0 Tier 3 – Early Adopter 0 0.5 1 1.5 2 2.5 Guangzhou Economy Index Jones Lang LaSalle highlights 50 secondary and tertiary cities The retail sector will provide the Cities are positioned on our City largest real estate opportunity in Evolution Curve based on a combination across mainland China that offers substantial commercial real of Economic and Property Indicators: the China50, on the back of strong estate opportunities. Economy – Economic size and growth, growth in the middle classes. metropolitan population, infrastructure, THE CHINA50 REPRESENTS A have the strongest momentum; International retailers are moving openness, labour, education, wealth and continental-sized market of global Wuhan and Xi’an offer good upside deep into the China50 to tap into business environment; scale. It is an economy of US$2.9 potential across multiple sectors. favourable demographics. They are Property – Investment volumes, stock, trillion, comparable to Germany. The balance of growth has expanding rapidly into cities such developer activity, corporate concentration, retailer concentration, internationally If it were a single entity, it would shifted from coastal to inland as Harbin, Kunming and Guiyang. branded hotels rank as the world’s fifth largest and northeast cities, highlighted For international hotel operators, economy. Its cities are growing not only by the impressive new opportunities are now fast, outpacing the rest of China. performances of Chengdu, emerging in Tier 3 cities, but The China50 will account for 12% Chongqing and Shenyang, but operators will need to be more of all global growth over the next also by the evolution of cities in flexible and adaptive in order decade. The 10 fastest-growing , such as Changsha, to compete effectively in these large cities in the world (by GDP) Zhengzhou and Hefei. untested markets. are all in the China50. Chongqing Some coastal cities, particularly The China50 will continue to offer immune from volatilities in the is the planet’s fastest-growing in the Pearl River Delta, have a compelling long-term growth global economy, but importantly, its large city. temporarily lost ground as they go story, but fears of excessive risk inland cities may prove to be more Chengdu has emerged as the through a restructuring process. may lead to some caution in the resilient than most, underpinned premier China50 real estate market; But momentum will return as they property market over the short by the structural growth of China’s Chongqing, Shenyang and Tianjin move up the value chain. to medium term. They will not be domestic economy.

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K K Fung, Managing Director, Greater China There are five city categories that have been defined as follows: Jones Lang LaSalle Tier 1 Core Cities: The China50 cities are benchmarked against four Tier 1 cities – Beijing, Shanghai, Guangzhou and Shenzhen. As China’s primary real estate markets, they are characterised by high levels of international business connectivity, deep corporate bases and well-developed international grade stock, and they are the country’s most liquid and transparent markets. The China50 cities do not include Tier 1 Core Cities.

Tier 1.5 Transitional Cities: A new city category identified in 2012 that includes cities such as Chengdu, Chongqing, Shenyang, Tianjin and Hangzhou. These cities lead the China50 in Tier 3 Cities presenting terms of economic and real estate maturity and activity. They have benefited from strong policy support from central government, and have seen significant opportunities for international infrastructure investment and high levels of FDI. With large, open and diverse economies, there is strong presence of domestic firms and MNCs, and they have hotel brands a critical mass of international retailers and hotel operators. They are witnessing massive commercial real estate development. Their real estate investment DRIVEN BY GROWTH OF DEMAND development and hotel owners markets are evolving rapidly, with growth in international grade stock and the from an expanding economy, a evaluating the potential to build first substantial en bloc transactions. They have strong potential across all major vibrant real estate market and local new properties or reposition commercial real estate sectors. governments’ planning mandates, existing hotel assets. With core new hotels have been developed products well established, Tier 1 Tier 2 Growth Cities: This category includes cities such as Xi’an, Qingdao, Ningbo and Wuxi. These in Tier 1 cities since the beginning cities can expect newcomers and cities have a high degree of wealth and/or international connectivity, as well as of the last decade, while cities such niche products, such as boutique strong underlying demographics to support robust retail markets and industrial as Hangzhou, Tianjin and Xiamen brands, to add diversity to the diversification. All are seeing increasing commercial real estate development. have followed suit over the past marketplace. They tend to have strengths in particular economic and real estate sectors. five years or so. Most Tier 1.5 and Tier 2 cities Hotel development has become (and some Tier 3), on the other Tier 3 Emerging Cities: a crucial factor in most cities’ overall hand, are just starting to see new These cities, which includes Kunming, Harbin and Nanning have moved into ‘lift-off’ phase, and are starting to see significant volumes of commercial real growth and positioning. Motivated hotels coming on line with more estate development. They are being targeted aggressively by retailers and hotel by large scale events, Beijing openings expected over the next operators. and Shanghai have already gone three years. Most of these new through a rapid growth phase, hotels were planned during the Tier 3 Early Adopter Cities: especially for internationally- 2007-2010 period and will include a These cities are beginning to have success in creating commercial real estate branded properties. These cities number of internationally-branded demand from domestic and pioneering foreign companies, who are looking to have started to prepare for the and managed properties. The establish first mover advantage. Examples include Guiyang, Taiyuan andUrumqi. next development cycle with supply of internationally-branded Market transparency is significantly lower than in the categories above. They are setting in place the conditions for ‘lift off’. local governments earmarking hotels in the main China50 cities new areas for master-planned grew by 19% between 2010 and

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World fastest growing large cities Internationally-branded 4 and 5 Star Hotels

Chongqing High Tier 1.5 – Transitional Tianjin Tier 2 – Growth Chengdu Tier 3 – Emerging Tier 4 – Early Adopter Wuhan Changchun Dalian Harbin Kunming Shenyang Low Qingdao Xian Wuxi Jinan Hefei Yantai Dalian Tianjin Harbin Zhuhai Haikou Tahjian Wuhan Foshan Fuzhou Suzhou Ningbo Urumqi Xiamen Hohhot Nanjing Guiyang Nanning Qingdao Kunming Chengdu Wenzhou Changsha Shenyang Nanchang 0 5 10 15 Hangzhou Dongguan Chongqing Zhongshan Changzhou Zhengzhou GDP% p.a. 2010 – 2012 Changchun

2011, compared with 10% in management capabilities are expansion opportunities exist through with stellar track records in Tier 1 cities. Chongqing, Tianjin, limited, overall room rates are low, in the more familiar Tier 1 and marketing, leasing and managing Chengdu, Dalian and Wuxi will be and a high share of demand for 2 cities, international operators commercial properties particularly exposed to increases both lodging and entertainment will continue to find themselves In the retail sector, domestic in guest room supply in the near derives from local government. compelled to pursue opportunities firms such as China Resources future. Such an influx of new For these reasons, international in Tier 3 markets. As such, the Land, COFCO and Longfor hotels is likely to set the scene for operators will be slow to expand ability to adapt to the Chinese Properties are developing intensive competition and many their footprint in Tier 3 cities, while customer will be imperative. branded retail concepts that are of these markets will take time to many domestic hotel operators The development of investment- being successfully replicated regain balance. will benefit from local brand grade commercial property has throughout the China50. We With Tier 1, Tier 1.5 and Tier recognition and their ability to traditionally been and continues to are now seeing retail schemes 2 cities facing supply pressures, service local needs. In order to be dominated by Hong Kong and by domestic developers - with many Tier 3 cities are appearing sustain a healthy pace of growth in Singaporean developers. Since the strong ‘hardware’ execution, an on developers’ horizons and China, international operators will publication of our China40 report attractive trade and tenant mix, presenting new development need to be more flexible in both however, a few Chinese-based and good asset management – opportunities. However, the hard and software requirements national and regional players have that are capturing a good share rules of the game in these mostly in order to compete effectively in emerged and are likely to become of consumer footfalls, thereby domestic markets are a departure these markets. While many will formidable players over the next providing stronger bargaining from the larger and more adapt a defensive mid-market five to ten years. Not only have power for these landlords. We developed markets. For instance, strategy, a first-mover ‘best hotel these players developed, or are expect that the experiences and in many Tier 3 cities, existing hotel in town’ approach is also viable on the cusp of developing, high- subsequent successes of these product is out-dated, owners’ in a number of markets. As fewer quality assets, but some have come domestic developers will provide

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China50 would be the fifth largest economy in the world In 2008, Chinese tourists passed all other nationalities as the biggest shoppers in France, according to a survey by the French government 20 The Financial Times

US$ Trillions 15 15

10 11

5 4.4 4.5 2.9 2.9 0 Germany China50 Japan India China USA

Nominal GDP (PPP), 2011. Source: EIU, IMF, IHS Global Insight them with sustainable competitive China real estate market, the rise advantage in the coming years, of specialist developers focusing resulting in greater competition for on particular geographies, international retail developers. sectors (healthcare, hospitality, Domestic players are still retail), products (mixed use, lagging behind their international mass-market, redevelopment), or counterparts, but if recent roles (mall operations, property developments in China’s residential management) is likely to be a sector is a guide, whereby a few more pronounced trend in the projects capture an outsized industry. share in any given market, then we should soon expect a handful of domestic players to rise to the top, and perform on par with, or even possibly outperform, their international peers. As the industry matures, we expect a few large, well-endowed players, such as Wanda, to emerge to capture the full extent of the real estate value chain. However, given the size of the

170 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 171 COTRI – China Outbound Tourism Research Institute Supporting Contributing (www.China-Outbound.com) COTRI is the worldwide leading independent research institute for Organizations analysis, consulting and quality assessment relating to the Chinese Outbound Tourism market. With the head office in Heide, Germany and a Chinese branch based in Beijing, COTRI offers a broad range of services, including market research, analysis, consulting and coaching for destinations, China National Tourism Administration - CNTA (www.CNTA.gov.cn) companies and individuals. The China National Tourism Administration (CNTA) is the Chinese government authority responsible for the development of tourism in the P.R. China. The CNTA is subordinate to the State Council, and is headquartered in Beijing, with DRAGON TRAIL (www.DragonTrail.com) regional branches in various provinces. CNTA has several overseas offices in 14 Dragon Trail is an award-winning travel countries and regions called CNTO (China National Tourism Offices) that are charged with promoting technology and digital marketing firm to help tourism to China. CNTA is also responsible for controlling the outflow of tourists from China abroad. travel and tourism organizations to reach and connect with Chinese consumers by leveraging the Chinese online and social media landscape to develop and seed relevant content, executing results- driven digital marketing campaigns, and enabling innovative technology solutions. China Tourism Academy – CTA (www.CTAweb.org) 100% CHINA – 100% TRAVEL – 100% DIGITAL In2008, the China Tourism Academy (CTA) was launched as a specialized institute directly under the China National Tourism Administration. CTA aims to establish itself as think GreenEarth.Travel (www.GreenEarth.travel) tank of the government, brainpower of the industry and highland of the academia specialized in GreenEarth.travel is a policy think tank that supports promoting the development and international exchange of the Chinese tourism industry, providing travel and tourism as a key contributor to the green technical support to the inspection of tourism development plans submitted by local governments, economy, with an emphasis on innovation and investment as a force for socio-economic organizing the training of high-level and professional talents in the tourism field and managing development. It provide services / tools for Green Growth Travelism (Travel & Tourism) to encourage international and domestic academic exchanges. countries, cities, communities, companies and consumers to practice “Quadruple Bottom Line” Sustainability, and embrace “Smart Travel” to be clean, green, ethical.

China Travel Trends (www.ChinaTravelTrends.com / CHINA Horwath HTL (www.Horwath.com) www.ChinaTravelTrendsBook.com) TRAVEL Horwath HTL (hotels tourism and leisure) is one of the TRENDS world’ s pre--eminent consulting specialists in the ChinaTravelTrends.com is an English language, one-stop resource .com website and community focused on the changing tourism, marketing, hotel, tourism and leisure industries, providing unequalled experience and expertise for client and consumer trends in China. Chinatraveltrends.com aims at giving international travel and projects around the world through a combination of detailed local knowledge and international tourism organizations insights about the complexity of the China travel market and its online understanding. Horwath HTL is currently the world’ s largest consulting organisation specialised in landscape. China Travel Trends has an online community of nearly 1,000 tourism industry hospitality, with 50 offices in 39 countries. Horwath HTL is the organizer of the annual China Hotel professionals interested in the Chinese travel market, and publishes the “Essential Guide to China Development and Financing Conference in Beijing. Travel Trends”.

172 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 173 Hurun Report (www.hurun.net) In 2010, Chinese tourists became the Established as a research unit in 1999 by British accountant world’s top tax-free shoppers in Europe Rupert Hoogewerf, Hurun Report Inc has grown into a Global Blue leading luxury publishing group based in Shanghai, China. Hurun Report Inc publishes four luxury magazines, including the monthly Hurun Report reaching the households of 105,000 proven wealthy Chinese individuals and their advisers, the Hurun Rich List which ranks China’s RMB billionaires and is widely considered the Who’s Who of Chinese business, as well as a White Paper in association with ILTM about the Chinese Luxury Traveler.

PATA – Pacific Asia Travel Association (www.PATA.org) The Pacific Asia Travel Association (PATA) is a not-for profit membership association that acts as a catalyst for the responsible development of travel and tourism within the Asia Pacific region. In partnership with private and public sector members, PATA enhances the sustainable growth, value and quality of travel and tourism to-from-and-within, the region.

TUI China (www.Tui.cn) An affiliate of World of TUI, the world’s leading tourism group, TUI China was established in late 2003 as the first joint venture with foreign majority share in the Chinese tourism industry. Its headquarters are in Beijing whilst its operations reach deep into the far corners of China. World of TUI generated approx.50,000 predominantly western tourists to China yearly and provides M.I.C.E services for renowned companies worldwide. In 2011, the company was awarded one of only three pilot outbound travel licenses for joint venture companies by the China National Tourism Administration and the China Ministry of Commerce.

UBM Aviation UBM Aviation specialises in the supply of aviation data and aviation information products, aviation market intelligence and news and events for the global aviation industry. We bring together buyers and sellers of air travel and transport, enabling the world’s airlines, their customers and suppliers to successfully conduct business.

174 China Travel Trends - Dragon Edition Dragon Edition - China Travel Trends 175 China Travel Trends 2012 Hailar Map of China Qiqihar Harbin

Yining Changchun Jilin

Kuqa Urumqi Turpan Shenyang Aksu Korla

Kashgar Baotou Beijing Tangshan Hohhot Tianjin Dalian Hetian Jaiyuguan Shijiazhuang Yantai Yinchuan Taiyuan Weifang Jinan Qingdao Golmud Xining Zhengzhou Lanzhou Luoyang Xuzhou Nantong Xian Nanjing Suzhou Wuxi Changzhou Jiaxing Shanghai Xiangyang Hefei Shaoxing Huangshan Yichang Ningbo Wuhan Jinhua Chengdu Shigatse Tsedang Chongqing Nanchang Tingri Gyangtse Changsha Wenzhou Indicates levels of economic Fuzhou Dali and property activity Guiyang Quanchou Tier 1 Core Xiamen Kunming Chinese Taipei Tier 1.5 Transitional Yangshou Shantou Tier 2 Growth Foshan Dongguan Guangzhou Shenzhen Tier 3 Emerging Nanning Macau Hong Kong Tier 3 Early Adopter Zhongshan Zhuhai Based on “China50, Jones Lang LaSalle, 2012”

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