Spring 2018 Special Edition

Spring 2018

Special edition

China’s Outbound Tourism Market

COTRI Market Report Spring 2018 Table of Contents

3 Editorial 5 Foreword

6 CHAPTER A – A DEVELOPMENT OF CHINESE OUTBOUND TOURISM 6 2017 Chinese Market Update in a Nutshell 7 Border Crossing Numbers Still Growing 8 Changes in Spending 9 Destination Shifts 11 China as Top International Source Market in 2017 13 Market Driver Update 2017 20 Second Half of 2017 Updates

25 CHAPTER B – A DEEPER LOOK 25 Growth in the 55+ Market Segment 29 Comparing the Mainland Chinese and Hong Kong Source Markets

3938 CHAPTER C – NEW OPPORTUNITIES 38 Finding the Right Chinese Travellers 42 Is Central Europe Ready to Welcome Thousands of Chinese Travellers? 50 WeChat for Travel Brands: Strategies for Success

56 CHAPTER D – DESTINATION DEVELOPMENT 56 Iceland 65 South America

77 CHAPTER E – OUTLOOK 2030

79 CHAPTER F – ITB CHINA SPECIAL 79 Developing Destination Marketing Strategies to Win Chinese FITs 82 Connecting with the High-Value Independent Chinese Traveller 86 Travel Boom from China to Finland – Coincidence or Not? 90 Key Opinion Leaders Inspire Themed Travel 94 Improving Chinese Visitors’ Experience in Navigating through Global Cities by Analysing 54 and Understanding their Consumption

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Editorial

Welcome to the sixth issue of the COTRI Market Report. Since autumn 2015 COTRI China Outbound Tourism Research Institute has been providing a twice-yearly update on the - still fast-moving - development of China’s outbound tourism. This Spring 2018 edition offers a special treat to all its readers: In addition to the “normal” content of CMR we are able, thanks to the gener- ous support of our partner MB Exhibitions (Shanghai) Co., Ltd., organiser of the ITB China fair in Shanghai, to add a special ITB China section. In this section you will find five articles written all from a Chinese perspective. Either the author is Chi- nese, or the author is working in China or the author is working for a Chinese company – in any case, different points of view and different aspects are presented from representatives of leading organisations and companies. The editorial of the CMR Autumn 2017 started with the sentence “World history entered a new stage this autumn with modern China for the first since Chairman Mao’s times openly voicing its intention to take centre stage and offering its economic and political system to the rest of the world.” This editorial can claim again the start of a new stage, this time even for two reasons. First of all, President Xi Jinping was not only re-elected for a second term in office, but whereas between 1982 and 2018 the constitution stipulated that the president could not serve more than two consecutive terms, there are no term limits attached to this office anymore following an unanimous decision by all 2,970 members of the National People’s Congress in favour of the necessary constitu- tional amendments. Closer to home for the global tourism industry, the announcement of the establishment of a national Ministry of Culture and Tourism during the National People's Congress provided the second game- changer. Since the 17th of March 2018, CNTA China National Tourism Administration has ceased to exist, its former chairman Li Jinzao now installed as Vice Minister for Tourism. The move obviously did not come without previous warning, as within days after the start of the new ministry, a well-designed website went up (http://www.mcprc.gov.cn/) and even the Wikipedia entry was updated. The significance of this step is discussed in more detail in Chapter A of this edition, but certainly it underlines the importance tourism is given within the Chinese government. As usual, next to the analysis of the current trends of China’s outbound tourism, special topics are given more attention. In this issue Iceland and South America are the geographical foci, whereas the ‘Sunset Glow’ travellers, or Best Agers, are discussed as an important and growing segment of the Chi- nese tourism source market. 54

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“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.” This sentence, attributed to the famous mathematician John Allen Paulos, is certainly (excuse the pun) true in today’s world. Nevertheless COTRI has, bolstered by the fact that our 2017 forecast of 145 million outbound trips seems to have been bulls-eye right, ventured to produce a forecast for China’s outbound tourism development up to the year 2030. As you will see, barring Black Swan events, China should produce close to 400 million annual border crossings by the year 2030, two thirds of which will go further than Greater China (Hong Kong, Macau and Taiwan).

To all exhibitors and visitors of the ITB China 2018 we wish a successful fair and a good time in Shang- hai, and for all of our other readers and their friends and colleagues we hope for a peaceful and profitable rest of the Year of the Yang Earth Dog (Wu Xu 戊戌).

Prof. Dr. Wolfgang Georg Arlt FRGS FRAS Director COTRI

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FOREWORD

Dear readers of COTRI Market Report Spring Edition 2018,

ITB China 2018 is proud to partner with COTRI for the publication of this edition. China’s new marketplace for the Chinese travel industry is held for the second time in Shanghai from May 16-18, following the successful start in the previous year. ITB China is an international offshoot of ITB Berlin, the world’s leading travel trade show, taking place annually in Berlin. ITB’s three-day B2B travel show in Shanghai is exclusively focused on the Chinese Travel Market. At ITB China, around 800 top and hand selected buyers from Greater China meet with industry professionals from all over the world. Various networking events and a unique state of the art matchmaking system in order to enhance networking offer different ways to maximize business opportunities. Coinciding with our travel trade show, ITB China Conference takes place enabling un- precedented knowledge transfer throughout the tourism exhibition. To support the exhibitors at ITB China 2018 further in getting up-to-date information about the development of Chinese outbound tourism, this edition of COTRI Market Report, the leading bi-annual publication for this important market, is published in cooperation between COTRI China Outbound Tourism Research Institute and the organisers of ITB China. I hope that you will find a lot of new information which will help you to have an even more successful engagement with the Chinese outbound market.

Welcome to ITB China 2018! David Axiotis General Manager ITB China

5 COTRI Market Report Spring 2018 CHAPTER A DEVELOPMENT OF CHINESE OUTBOUND TOURISM

2017 Chinese Market Update in a Nutshell

Marking 20 years of outbound 20 Anniversary of the start of travel: outbound travel

Continued growth: 145mn Border-crossings beyond Mainland China

Sudden disruption of growth – South Korea YoY change in Chi- the decline in arrivals in South -48.3% Korea, the USA an Taiwan is con- nese tourists arrivals tinuing:

‘Trendy’ places and inspiration: Arctic, Antarctic, Northern Africa, 180% Annual growth in Chinese tourist Serbia, the UK arrivals to Serbia ‘Hot’ for different reasons

Mobile end: Destination mar- 65% Share of Chinese travellers using keting: Applications, Electronic mobile payment in their overseas payment trips

Low increase in spending: Expenditure growth rate in 2017, in 3% comparison to 12% in 2016

YoY growth rate of customised travel 14%

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Border Crossing Numbers Still Growing

Border crossings from Mainland China grew steadily in 2017. The 2017/16 yearly YoY growth rate of 6% was indeed a slight recovery from the shocking 3% in the 2016/15 period, particularly since the market had maintained a double-digit growth rate for more than a decade before. The recovery, albeit slight, can be read as a positive message and disproves some earlier specula- tions that rates of Chinese outbound tourism will stop increasing on account of slowdown in GDP growth. The recovery of the growth rate can also certainly be interpreted as showing that economic conditions and GDP growth rates in China may have an impact on China’s outbound tourism growth, but many other factors also contribute to market changes. In 2017, the overall number of border-crossings beyond Mainland China reached a new peak of 145,000,000, registering a growth of around 6%, which should remain stable in 2018 according to the COTRI forecast. The market share of border-crossings to Greater China decreased for the seventh year in a row, with 69.4 million border-crossings resulting in Hong Kong, Macau or Taiwan as their final destination, compared with the 75.6 million to all other worldwide destinations. Greater China accordingly accounted for 48% (2016: 49%) of total border-crossings made by Mainland Chinese travellers, while rest of the world border crossings were accordingly 52% of the total, a one point increase of 2016’s 51%.

Border-Crossings From Mainland China

54Source: COTRI

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Changes in Spending

In terms of outbound tourism expenditure, 2017 saw the Chinese remain the world’s highest-spending tourists by nationality for the sixth year in a row. In 2017 travellers from China spent an estimated 258 billion USD (figure by the UNWTO), corresponding to a year-on-year increase of 3% and equating to an average of USD 1,780 per person. Long-haul destinations such as the US and Europe registered a higher on-location spending than short-haul destinations. Middle-aged and senior travellers, as well as families, constituted the segment which spent the most in both distant and near destinations.

CHINESE OUTBOUND TOURISTS’ TOTAL EXPENDITURE (2010-2017, in billion USD)

Source: 2010-2015: COTRI, 2016-2017 UNWTO

The 2016 expenditure figure initially published by the UNWTO – using foreign trade statistics – was 261 billion USD, but this was revised to 250 billion USD in April 2018. The growth of only 8 billion USD – slightly more than 3% – means that average spending per border crossing fell slightly from 1,825 USD per trip to 1,780 USD. This downward trend came in spite of the growth in travel beyond Greater China – which involves higher levels of spending – and the appreciation of the Chinese Renminbi in 2017, which should also should have played an important role in promoting Chinese tourists’ spending abroad. Notably, the spending patterns of Chinese outbound tourists are changing; travellers are spending less on sightseeing and on shopping, and instead showing a preference towards more experience-based activities and other less ‘mainstream’ pursuits. 54

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Nevertheless, accommodation and dining are still the categories in which Chi- nese travellers spend the most, while their shopping expenditure is still higher than that of almost all other nationalities.

Furthermore, 2017 saw 65% (almost two thirds) of Chinese outbound travellers using mobile payment platforms during their overseas trips. The reasons for this shift can be put down to the convenience, speed, security and famili- arity that comes with the use of these platforms, which are ubiquitous in Chi- nese cities. Furthermore, paying via mobile circumvents the inconvenience of having to deal with, and exchanging, foreign banknotes.

Destination Shifts

Upon examination of the fifteen most popular destinations among Chinese outbound tourists for 2017, it is evident that the travel restrictions for package tours imposed on South Korea and Taiwan played a very important role in influencing the destination choices of travellers from China. South Korea witnessed a significant year-on-year drop of almost 50% in annual Chinese tourist arrivals compared to 2016. The continuing political tension between mainland China and Taiwan resulted in a further decrease of 20.7% from 2016 to 2017. The measures accordingly benefitted other Asian and neighbouring destinations. Indonesia, for instance, in 2017 registered a strong year-on-year growth rate of 42% compared to the previous year. Vietnam also saw an increase of 48.6% from 2016 to 2017. The number of Chinese tourists visiting the USA also declined, with the country’s relative political instability and uncertain relations with China.

TOP 15 CHINESE OUTBOUND DESTINATIONS BY NUMBER OF ARRIVALS 2017

Arrivals of Chinese Visitors Destinations (2017) YoY Change in % (in Mn.) Hong Kong (1) 44.4 3.9 Macau (2) 22.2 8.5 Thailand (3) 9.8 12.0 Japan (5) 7.4 15.4 South Korea (4) 4.2 -48.3 Vietnam (10) 4.0 48.6 Singapore (9) 3.2 12.7 USA (8) 2.9 -2.8 Taiwan (6) 2.8 -20.7 Malaysia (11) 2.3 7.4 Italy (7) 2.1 21.3 Indonesia (13) 2.1 41.6 France (12) 2.0 19.0 Germany (14) 1.6 13.5 54 Russia (15) 1.5 16.4

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On the contrary, Chinese tourism to Europe grew considerably, with more than 6 million visits (with Europe as the first stop) made to European countries in 2017. According to Ctrip statistics, Europe has become the second most popular destination for Chinese outbound tourists after Asia. According- ly, it can be understood that fear of terror attacks in European destinations in the minds of Chinese outbound travellers are less pressing than before. Eastern European countries experienced a particularly sharp surge in the number of travellers from China: Chinese tourist arrivals to Serbia rose by 180% in 2017 and almost all countries in Eastern Europe, saw a year-on-year growth in Chinese visitors’ number of more than 30%. The success of Europe- an destinations comes amid the background of the 2018 EU-China Tourism Year, which is endeavouring to draw further attention towards the continent among Chinese outbound travellers. At the same time, many Middle-eastern and African countries have also dis- played their willingness to attract tourists from China through the introduction of relaxed tourist visa policies for Chinese nationals. In the second half of 2017, for example, Qatar introduced a visa exemption policy for Chinese nationals in August, while Iran started to offer visas-upon-arrival to Chinese passport holders at international airports in Iran in September. Eleven African countries jointly launched a visa application centre in Shanghai in August. In November, Rwanda announced it would provide Chinese citizens with visas upon arrival visa from January 1st, 2018. Moreover, the Belt and Road Initiative is continuing to play an important role Moreover, the Belt in drawing attention to countries on the Mediterranean Sea such as Egypt and Road Initiative is and Turkey, which in 2017 saw 85% and 48% growths in Chinese arrivals re- continuing to play an spectively. Both countries’ tourism sectors are starting to recover from the important role in turbulence following terror attacks in recent years, circumstances helped by drawing attention to the noticeable increase in Chinese and Russian arrivals compensating for a countries on the loss in tourists from Europe. Mediterranean Sea Turkey, in particular, is taking advantage of its central position between Asia such as Egypt and and Europe, helping it to align itself as a strategic partner for China, one of its Turkey, which in 2017 largest investors and its leading economic partner in East Asia. The two na- saw 85% and 48% tions’ cooperation is also being enhanced in the area of tourism within the growths in Chinese framework of BRI and the Turkey-China Tourism Year in 2018. arrivals respectively. Furthermore, Egypt has remained among the top Arab destination among Chinese travellers, a position which has been sustained through the efforts of the Egyptian Tourism Office in 2017, as well as the country’s diplomatic mis- sions in China.

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China as Top International Source Market in 2017

Chinese tourists’ impact on the global hospitality industry remains highly prevalent, influenced largely by the unique demands of Chinese travellers, which help push host countries looking to benefit from the Chinese outbound market to look to adapt their services appropriately. The asymmetry between international tourists and a dominant market share of Chinese travellers can have considerable implications. First of all, since Chi- nese tourists bring the highest level of purchasing power, their position as a leading source market can have a strong impact on the local economy. This can be particularly notable in developing countries. However, when destinations start to see significant numbers of tourists arriv- ing from China and begin to overwhelmingly offer products tailored specifically to their tastes, this can have a negative effect on arrivals of other nationalities, as well as potentially damaging the country’s overall destination image. Further problems can also arise when a destination is too reliant on Chi- nese visitors in its tourism sector and becomes over dependant on a single source. A leading example of this issue is South Korea, which depended on China as a tourism market for a number of years, which led to an economic slowdown and a loss of around 7 billion USD following a massive drop in Chinese visitor arrivals in 2017. However, China still remained South Korea’s largest tourist source market in 2017.

China retained its position as the world’s largest outbound source market in China retained its 2017, in the context of continually decreased market share of border- position as the world’s crossings to Greater China. It was also the largest tourist source market for largest outbound Thailand, Indonesia, Singapore, Cambodia, Japan, South Korea, Vietnam, Rus- source market in sia, Maldives, and North Korea. 2017, in the context of Chinese tourists in these ten countries accounted for up to a third, in some continually decreased cases even more, of their total numbers of foreign visitors in 2017. market share of China has been the dominant global tourism source market for the majority border-crossings to of countries in East and Southeast Asia and is further consolidating its leading Greater China. position every year. China has been Vietnam’s largest international tourist market for a number of years, while 2017 saw it maintain its position as Indo- nesia’s largest source market for the second year running. Furthermore, 2017 marked the first time that Chinese arrivals to Cambodia exceeded one million. The arrival of Chinese travellers to Cambodia broke through one million for the first time in 2017. In54 the Philippines, China rose to the position of the second largest tourism source market, trailing behind leader South Korea and leading the United

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States and Japan. This development was underlined by the positive development of bilateral relations between Beijing and the Manila since October 2016, as well as the introduction of the “visa on arrival” policy for Chinese tour groups, business travellers and conference delegates introduced by the Philippine government in August 2017. Chinese trips to Russia reached 1.5 million in 2017, which made China the country’s leading source of tourist arrivals, while China is gaining importance as the most important Asian source market for a number of European destinations. LIST OF DESTINATIONS WHERE CHINESE TOURISTS RANK WITHIN TOP THREE INTERNATIONAL ARRIVALS BY NATIONALITY Destination Ranking 2017 Ranking 2016 Change 2017/2016

Antarctic 2 2

Australia 1 2

Cambodia 1 2

Canada 3 3

Hong Kong 1 1

Indonesia 1 3

Japan 1 1

Macau 1 1

Malaysia 3 3

Maldives 1 1

Nepal 2 2

New Zealand 2 2

Philippines 2 3

Singapore 1 2

South Korea 1 1

Sri Lanka 2 2

Taiwan 1 1

Thailand 1 1

Vietnam 1 1

North Korea 1 1 Countries in bold represent Russia54 1 2 the countries for which China was the first source market.

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Market Driver Update 2017

Chinese Travellers’ Developing Attitudes Towards Outbound Travel

For many Chinese travellers, the purpose of outbound travel has shifted from simple sightseeing towards enjoying high-quality overseas experiences, as well as looking to meet certain demands, such as medical treatment. For younger generations especially, outbound travel has become a key lifestyle component and is seen as an opportunity to experience local cultures and engage in specialised activities, rather than simply going shopping. Chinese holidaymakers’ outbound travel demands are becoming increasingly diverse and they are seeking out high-quality travel options. Customised travel deals allowing customers to purchase travel products tailored to their personal tastes have grown rapidly in popularity, with Ctrip revealing that 40% of their outbound deals sold in 2017 were customised offers.

Income

The incomes of the top 10-15% of the Chinese population has a direct impact The incomes of the on their outbound travel intentions, as well as their modes of travel. China’s top 10-15% of the rapid economic growth and the corresponding socio-cultural changes that Chinese population have taken place have resulted in unequal development in different parts of has a direct impact on China and its consumer demographics. The per capita income of first-tier city their outbound travel residents has grown faster than that of those from second-tier and lower-tier intentions, as well as cities. Similarly, the per capita income of residents living in eastern China has been growing faster than that of residents in other parts of the country. their modes of travel. The concept of “New first-tier cities” is one that it being discussed extensively in China. Evaluated by business resources, geographical location, population mobility, diversity, and future malleability, 15 cities including Chengdu, Hang- zhou, Chongqing, Wuhan, Suzhou, Xi’an, Tianjin, Nanjing, Zhengzhou, Chang- sha, Shenyang, Qingdao, Ningbo, Dongguan, and Wuxi are categorised as “New first-tier cities” as of 2018. These “New first-tier cities” have attracted talent via attractive Hukou policies, comfortable living circumstances and through being able to provide lower levels of stress and pollution. The difference in income level between residents in these “New first-tier cities” and those from the original first-tier cities Beijing, Shanghai, Guangzhou and Shen- zhen is seen to be narrowing. Supported by increased numbers of visa application centres and international flights connections, the “New first-tier cities” are seeing significant growth in outbound travellers. With the population of “New first-tier cities” continuing to54 grow in the future, their position as outbound travel source markets will following accordingly.

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VISA APPLICATION CENTRES IN “NEW FIRST-TIER CITIES” “New First-Tier Cities” Visa Application Centres Changsha Austria, Belgium, Croatia, Czech Republic, France, Finland, Germany, Greece, Ire- land, Italy, Latvia, Netherlands, Poland, Slovenia, Spain, Sweden, Switzerland, UK

Chengdu Australia, Belgium, Canada, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Ireland, Italy, Latvia, Netherlands, New Zealand, Poland, Portugal, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, UK, USA Chongqing Austria, Belgium, Cambodia, Canada; Croatia, Czech Republic, Denmark, France, Finland, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Poland, Slovenia, South Africa, Spain, Sweden, Switzerland, UK Dongguan Residents from Dongguan can use visa application centres in neighbouring Guang- zhou Hangzhou Austria, Belgium, Canada, Croatia, Czech Republic, France, Finland, Germany, Greece, Denmark, Estonia, Hungary, Ireland, Italy, Latvia, Lithuania, Malta, Nether- lands, Poland, Portugal, Slovenia, South Africa, Spain, Sweden, Switzerland, UK Nanjing Austria, Belgium, Canada, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Latvia, Poland, Portugal, Slovenia, Spain, Sweden, Switzerland, UK Ningbo Residents from Ningbo can use visa application centres in neighbouring Hangzhou Qingdao Japan, South Korea, Thailand

Shenyang Austria, Belgium, Canada, Croatia, Cyprus, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Japan, Latvia, Poland, Portugal, Russia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, UK, USA Suzhou Residents from Suzhou can use visa application centres in neighbouring Shanghai Tianjin Residents from Tianjin can use visa application centres in neighbouring Beijing

Wuhan Austria, Belgium, Canada, Croatia, Cyprus, France, Finland, Germany, Greece, Ire- land, Italy, Japan, Latvia, Poland, Portugal, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, UK, USA Wuxi Residents from Wuxi can use visa application centres in neighbouring Shanghai Xi’an Austria, Belgium, Cambodia, Croatia, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Latvia, Malaysia, Netherlands, Poland, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, UK Zhengzhou Luxembourg

Western China is also starting to catch up as a promising outbound travel source market in China. The income levels of western China’s more affluent residents has been increasing, resulting in a healthy growth in outbound departures and overseas expenditure among travellers from these regions, albeit from a small base. In terms of outbound travel, Sichuan is the most developed inland Chinese province. Chengdu’s Shuangliu International Airport saw a total passenger volume of 50 million in 2017 and the scheduled 2020 opening of Chengdu Tianfu International Airport – the city’s second – is expected to bring an additional annual capacity of 90 million passengers. 54

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Currency

The appreciation of Chinese RMB against local currencies makes Chinese travellers’ outbound trips more cost-effective as Chinese residents’ spending power increases. Tour operators are likewise able to acquire services and accommodation in such countries at more affordable rates, yet further pushing down the costs of outbound travel products. 2017 saw the Chinese renminbi strengthened against numerous foreign currencies and consequently stimu- lated Chinese travellers’ interest in visiting certain destinations. As shown in the graph below, the renminbi saw its most significant growth against the Philippine peso (+12.5%) between January 31st, 2017 and January 31st, 2018. Chinese arrivals to Philippines concurrently saw a year-on-year growth rate of 43.3% in 2017. The appreciation of the renminbi against the Hong Kong dollar – which is pegged to the US dollar – helped make Hong Kong a more cost-effective outbound destination in 2017. Chinese arrivals went up 3.9% from 2016 to 2017, with the last quarter of the year witnessing a year-on-year growth rate of 8%. On the other hand, the euro climbed 5.5% against the renminbi in 2017, with the biggest increase happening in the first half of the year, thus making trips to Eurozone destinations more expensive for Chinese travellers.

% CHANGE OF CHINESE RMB AGAINST FOREIGN CURRENCY FROM JAN.31ST, 2017 TO JAN.31ST, 2018

Political Environment

The Chinese outbound tourism market is sensitive to the Chinese government’s politics and policies. The case of South Korea in 2017, a once-popular overseas destination for Chinese travellers, is one such example of the role that54 such issues can play in the outbound travel market. The political tension

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caused by Seoul’s deployment of the US-backed Terminal High Altitude Area Defense (THAAD) missile system, led to a ban on Chinese outbound travel package tours to the country and led to a 48.3% decrease Chinese arrivals between 2016 and 2017. While relations between Beijing and Seoul have warmed since late 2017 and South Korea relaxed its tourist visa policies to attract greater numbers of Chi- nese visitors to the 2018 PyeongChang Winter Olympics, the decline of Chi- nese travellers continued in 2018 with a year-on-year decrease of 30.5% in the first quarter. The Asia-Pacific Economic Cooperation (APEC) forum and China’s Belt and Road Initiative, however, can help drive Chinese tourist arrivals to relevant destinations. The Belt and Road Initiative has helped draw Chinese travellers’ interest towards ‘Silk Road’ destinations. The cooperation on tourism between China and Belt and Road Initiative countries under the Belt and Road framework – including schemes such as tourism years and tourist visa liberali- sation policies – further drive Chinese tourists towards such destinations. Chi- na’s deeper engagement with numerous Eastern European states has similarly helped drive success in the outbound tourism market. Over four million trips were made to Vietnam by Chinese nationals in 2017, equating to a year-on-year arrival increase of almost 50%. China was accordingly the country’s largest tourist source market during the same period. Indications of Beijing’s political direction can be surmised at its Lianghui, the two annual national-level conferences organised by the two most powerful state organs – the National People's Congress (NPC) and the National Com- mittee of the Chinese People's Political Consultative Conference (CPPCC). Tourism is a topic appears in the Government Work Reports every year.

TOURISM AS TOPIC IN THE ANNUAL CHINESE GOVERNMENT WORK REPORT Year Tourism 2015 To welcome a new age in which tourism is popular To integrate tourism resources and other regional resources and 2016 to develop as a whole in certain regions. A specific number was mentioned for the first time about tour- 2017 ism, stating that “about 130 million Chinese citizens” travelled outbound in 2017.

The most important change of the past years with regard to tourism however happened at the NPC in March 2018. State Councillor Wang Yong announced that within the institutional restructuring plan of the State Council the Minis- try of Culture and CNTA China National Tourism Administration are to be merged into a new Ministry of Culture and Tourism. 54

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The move, according to the official announcement, “… is aimed at coordi- nating the development of cultural and tourism industries, enhancing the country’s soft power and cultural influence, and promoting cultural exchanges internationally”. There had been rumours for many years that the CNTA would either be up- graded to full ministry status or that it would be swallowed up by the Ministry of Culture. It seems that, assuming that the State Council plan will not en- counter any opposition in the NPC, the Ministry of Culture now has won this battle. For outbound tourism it is very interesting that “enhancing [China’s] soft power and cultural influence and promoting cultures exchanges internationally” are the main arguments, pointing clearly towards outbound tourism as opposite to domestic or inbound tourism. It also spells out in remarkably clear words what China’s outbound tourism is all about from the government’s point of view: Soft power and increased influence. Good news therefore about this confirmation of the ongoing support of the Chinese government for outbound tourism despite the hundreds of billions of USD deficit when considering the spending by Chinese travellers abroad compared to the spending of international visitors to China and the anti-hedonism campaign still going on in many other fields. The history of the CNTA dates back to 1964, when it was established within CITS China International Travel Service. At this stage, government function and enterprise management was combined; CNTA and CITS had different names but shared the same staff. In 1982, as part of the policy of separation of enterprise from administration, CITS became specialised in all travel- related service, while CNTA concentrated on national tourism management. Still, CNTA still has been until now commercially active, for instance as the organiser of CITM China International Travel Market, the main Chinese tourism fair.

Social Culture

A fair amount of Chinese travellers’ motivation of outbound travel stems from A fair amount of the books they’ve read and movies, TV series, or reality shows they’ve Chinese travellers’ watched in which destinations may feature. Among younger Chinese de- motivation of mographics particularly, the influence of popular stars should not be ignored. outbound travel Visiting the filming locations of popular movies and following itineraries seen stems from the books in reality shows are particularly attractive travel options. they’ve read and “Love Letter” and “Amélie” are particularly prominent examples, which have movies, TV series, or influenced several generations of Chinese to visit Hokkaido and Paris respec- reality shows they’ve tively. In recent years, the hit TV series “Game of Thrones” has notably drawn watched in which Chinese travellers to filming locations in destinations including: Morocco, 54 destinations may Northern Ireland, Iceland, Croatia, Malta, and Spain.

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GROWTH OF CHINESE TRAVELLERS TO COUNTRIES WHERE “GAME OF THRONES” WAS FILMED

Travel-based reality shows have become particularly in China since 2013 and, in the preceding years, such programmes have brought numerous destinations to the attention of hundreds of millions of Chinese viewers. In order to boost audience ratings, such travel programmes seek to find little-known details in well-known destinations, or otherwise film in relatively unknown locations. On both fronts, the appetite for such places among Chinese audiences is boosted significantly. One of the most popular travel-oriented Chinese reality shows in 2017— “Chinese Restaurant” – was shot in Ko Chang, Thailand. What had once been a niche destination suddenly became an overnight ‘must-see’ among Chinese travellers and sales of trips to the island on the websites of large OTAs increased rapidly. Ko Chang, however, is far from the only overseas destination to witness sudden growth in interest among Chinese travellers after being featured in a reality show. Turkey, notably, became a trendy destination choice after being featured in the programmes “Sisters Over Flowers” and “Divas Hit the Road”.

Portable Wi-Fi Devices

Having access to the internet all the time during outbound travel is a basic need of most Chinese visitors, especially for the younger group such as post- 80s and post-90s, who rely on the Internet to plan their trips, book flight, and accommodation, communicate, translate, and share their trips on social media. The portable Wi-Fi market in China started to grow fast in 2013. With the growth of China outbound travel market, Wi-Fi rental business also increased quickly in 2017. Budget portable Wi-Fi products with unlimited data and can be connected to multiple devices became a must-have for many Chinese out- bound54 travellers in 2017.

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Chinese Internet giants such as Tencent, Baidu, and Xiaomi and Telecommuni- cation tycoons such as Huawei all offer portable Wi-Fi devices. The popularity of such devices has grown rapidly alongside the increased importance of mobile Internet for Chinese outbound travellers. Ctrip’s rental business of portable Wi-Fi device increased 45 times from 2014 to 2015, and continued to grow by 200% from 2015 to 2016. Skyroam, Roanmingman, Vip Wi-Fi, and Roam Wi-Fi currently lead the market of portal Wi-Fi device rental for outbound travel in China.

Mobile Payment

In recent years, mobile payment services such as Alipay and WeChat Pay have become an integral part of daily life for Chinese consumers. When overseas, services such as favourable exchange rates, discount offers and location- based services have made them particularly indispensable among outbound travellers. As of March 2018, Alipay is available in hundreds of thousands of restaurants, supermarkets, duty-free shops and airports, among others, in 40 countries and regions worldwide. Furthermore, Alipay’s tax refund service is supported in 29 countries. WeChat Pay, on the other hand, was launched later than Alipay but has nevertheless grown rapidly. As of February 2018, WeChat Pay could be accessed As of February 2018, in 25 countries and regions. WeChat Pay could be accessed in 25 Translation Devices countries and regions. Language barriers can represent a particularly difficult issue for some Chinese travellers when overseas. As China’s outbound travel market has continued to grow, so too has the demand for translation services, especially among FITs. Accordingly, the past two years have seen a rise in the use of translation devices among Chinese holidaymakers overseas. One example of such a product is Youdao’s “Translation Egg”, which was launched in October 2017 and supports translation between Chinese and 27 other languages. Two months later, Baidu and Ctrip jointly released a similar device that can be connected to Wi-Fi. Currently, the price of most translation devices ranges from 1,000 RMB to 3,000 RMB (160 USD to 475 USD). Although the demand for such translations services is high among Chinese outbound travellers, few actually buy such devices and choose instead to rent them, which is seen as more cost- effective for a single outbound trip. Big Chinese OTAs such as Ctrip, LY.com, and Tuniu all provide rental for such devices and many travel agencies even provide them for free as a value-added service to attract customers.

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Second Half of 2017 Updates

Barometer Maps Shows Changes of Destinations

The improvement of flight connections and the relaxation of visa requirements in many countries has played an important role in the continuous growth of China’s outbound tourism. According to Ctrip, the largest online travel agent (OTA) in China, in 2017 more Chinese travelled independently, or through customised, semi-FIT tours, than those that purchased traditional package tours. The year saw FIT travellers grow to 42% of the market and semi-FITs to 14%. Moreover, the share of younger and more educated travellers, many of them web-savvy millennials, is exceeding that of ‘typical’ middle-aged Chinese tourists. In South Korea, for example, the ban on package tours in the third quarter of 2017 saw the market segment for Chinese visitors between the ages of 0 and 29 rise to 41%, while the 50 and over age group accounted for only 20% of the total, thereby reflecting the tendency among younger travellers to travel independently of package tours. The growth in importance of this demographic has also led to greater emphasis in the market of travellers seeking out local cuisine, more unique experiences and other adventure, in preference to shopping when overseas. The effect of such growth is reflected in Ctrip’s annual “Chinese Polar Travel Re- port”, which highlighted a 400% year-on-year growth in Chinese visitors travelling to witness the Northern Lights in 2017.

CHINA OUTBOUND TOURISM BAROMETER MAP (H2 2017 / H2 2016)

20 COTRI Market Report Spring 2018 More exotic, challenging and less well-known destinations experienced a considerable surge in Chinese visitors’ arrivals. Visitors to Morocco, for example, increased YoY by 157% in 2017, driven by the introduction of the country’s visa-free policy for Chinese tourists in 2016. The barometer map above provides information about the year-on-year change in the overall flow of Chinese outbound tourists in the second half of 2017 compared to the equivalent period in 2016. While more and more Chi- nese are taking their first trips beyond Greater China to regional Eastern and Southeast Asian destinations, there is also healthy growth in long-haul destinations, especially among independent, young and wealthier Chinese travellers. Destination Visa Policy Updates- H2 2017

Country Changes in Visa Policies When

Europe Estonia Opening of 13 new Visa Application Centres around China. July

No more need for an invitation requesting a short-stay visa Romania September for business, tourism or private visits.

Bosnia and Her- A mutual visa waiver agreement was signed on November November zegovina 28th, 2017 and it is yet to be ratified. Russia Vladivostok offers electronic visas. August 72-hour transit visa for Chinese passport holders who take From June 10th, 2017 Asia Kazakhstan Air Astana or SCAT Airlines and connect their flight at Astana to the end of 2018 or Almaty to a third country. Visa on arrival is open to members of tour groups accredited Philippines by the DOT, businessmen, investors, athletes and delegates August to conventions and exhibitions. Visa exemption for Chinese citizens that have been issued an individual visa in the past five years, or, for a limited time, From December 1st, South Korea those buying tickets for the PyeongChang Winter Olympic 2017 to March 31st, Games valued over 200,000 KRW (circa 185 USD), and Chi- 2018 nese public passport holders. Middle East Qatar Visa free entry for 30 days. August 30-day on-arrival-visa for Chinese citizens who hold valid visa Oman November of US, Canada, UK and Schengen member states. Iran Visa on arrival, valid for 3 months. September Africa Gabon 90 days visa on arrival at designated ports of entry December South America Bolivia 90-day on-arrival-visa November 90-day visa with multiple entries are issued with a 5-year Brazil validity period. The visa could be extended for another 90 October days. With increasingly liberalised tourist visa policies for Chinese nationals helping to drive growth in arrival numbers to destinations worldwide, numerous governments are looking to streamline their own policies in order to attract a greater share of the 145 million Chinese outbound tourists seen in 2017. The second54 half of 2017 saw 13 countries improve their visa services by opening new visa processing centres, or their visa regulations by simplifying entry pro-

21 COTRI Market Report Spring 2018

cedures. With the exception of Malaysia, these destinations were typically those that are less popular among Chinese tourists and were looking to capi- talise as they opened up to the Chinese outbound market. The easing of visas appears to be one of the most effective strategies that countries entering the Chinese market can adopt. The Philippines are ex- pecting to attract two million Chinese travellers in 2018, thanks to the introduction of visas on arrival for several categories of Chinese visitors. Neverthe- less, the visa exemption South Korea offered to Chinese tourists for the 2018 PyeongChang Winter Olympics met with little success. According to the Passport Index, the Mainland Chinese passport was graded with a passport power rank of 67 in 2018. According the Ministry of Foreign Affairs of the People's Republic of China, the number of countries which have visa free or visa on arrival policies was 67 at the end of 2017.

VISA REQUIREMENTS FOR CHINESE CITIZENS (End of 2017)

Added Direct Flight Connections in H2 2017 In the second half of 2017, the number of direct flights to international destinations starting in China rose sharply. 2017 saw 18 new direct flight routes to Thailand launched, many of which came from second tier cities. Australia was also a notable beneficiary in 2017, in context of both the 2017 Australia-China Tourism Year and the signing of a bilateral open skies agreement at the end of 2016. The Philippines’ aforementioned improved political relations with China were also supported by a growth in direct air routes between the two countries. The overtures made towards Chinese tourists by Russia – supported by the introduction of its visa-free policy for groups of more than five visitors in 2016 – was also furthered in the second half of 2017 with the launch of more direct flights, mainly to second and third tier Chinese cities. 54 Alongside the introduction of 10-year multiple entry visas for Chinese pass-

22 COTRI Market Report Spring 2018 port holders Israel saw the opening of new and more frequent routes from the capital Tel Aviv to the first tier cities of Beijing and Shanghai. Both destinations are served by Hainan Airlines, the first airline to operate regular flights between the two countries’ major cities. These new routes are likely to further boost the number of Chinese visitors to Israel, already up by 42% in 2017, thanks also to the reduction in the ticket price permitted by the improvement of flight connections. In July, Beijing Capital Airlines launched a new direct flight from Lisbon to Bei- jing, contributing to the surge in Chinese arrivals to Portugal by more than 40%. Likewise, tourists from China to Serbia grew rapidly in the last quarter of 2017, with each month seeing an arrivals increase of more than 200%, thanks to the introduction of a new route from Belgrade to Chinese capital. NEW DIRECT FLIGHT CONNECTIONS IN H2 2017 Country Destination China Tier Airline Operating from Australia Cairns Guangzhou 1 China Southern Airlines December Brisbane Shanghai 1 China Eastern Airlines November Brisbane Shenzhen 1 Hainan Airlines September Brisbane Beijing 1 Air China December Melbourne Chongqing 2 Tianjin Airlines September Melbourne Zhengzhou 3 Jetstar December Sydney Qingdao 2 Beijing Capital Airlines September Cairns Shenzhen 1 Hainan Airlines December Belgium Brussels Shanghai 1 Hainan Airlines October Brunei Bandar Seri Begawan Nanning 3 Lucky Air July Bandar Seri Begawan Kunming 3 Lucky Air July Czech Republic Prague Xi’an 2 China Eastern Airlines October Egypt Aswan Xi’an 2 Egypt Air Leisure July Greece Athens Beijing 1 Air China September Indonesia Batam Changsha 2 Lion Air July Jakarta Beijing 1 Air China September Denpasar Zhengzhou 3 Lion Air October Israel Tel Aviv Shanghai 1 Hainan Airlines September Tel Aviv Beijing 1 Hainan Airlines September Italy Milan Guiyang 3 Neos Air July Laos Vientiane Guangzhou 1 China Southern Airlines September Macau Macau Beijing 1 Beijing Capital Airlines July Malaysia Langkawi Shenzhen 1 AirAsia August Kuala Lumpur Chongqing 2 Malaysia Airlines October Nepal Kathmandu Chengdu 2 Tibet Airlines August Philippines Manila Shenzhen 1 Shenzhen Airlines August-September only Clark Shanghai 1 China Eastern Airlines October Cebu Shanghai 1 Juneyao Airlines October Manila Wuhan 2 China Southern Airlines November Cebu Xianyang 3 Okay Airways November Portugal Lisbon Beijing 1 Beijing Capital Airlines July Russia Moscow Qingdao 2 Beijing Capital Airlines July Moscow Haikou 3 VIM Airlines July 54 Vladivostok Tianjin 2 Tianjin Airlines July Moscow Jinan 2 iFly Airlines December

23 COTRI Market Report Spring 2018

Country Destination China Tier Airline Operating from Serbia Belgrade Beijing 1 Hainan Airlines September Singapore Singapore Hangzhou 2 China Eastern Airlines August Singapore Harbin 3 Flyscoot December Seychelles Seychelles Chengdu 2 Air Seychelles July-August only Seychelles Beijing 1 Air Seychelles Sep/Oct additional flights Spain Madrid Qingdao 2 Beijing Capital Airlines October Taiwan Taipei Changsha 2 China Airlines September Thailand Bangkok Shenyang 2 China Southern Airlines July Bangkok Nanchang 3 Spring Airlines July Chiang Mai Guangzhou 1 Thai Lion Air July Phuket Haikou 3 Hainan Airlines July Krabi Shanghai 1 Shanghai Airlines August Koh Samui Chongqing 2 Bangkok Airways July Pattaya Yuncheng 3 Shenzhen Airlines November USA New York Chongqing 2 Hainan Airlines October New York Chengdu 2 Hainan Airlines October Los Angeles Shenzhen 1 Air China December United Kingdom London Qingdao 2 Beijing Capital Airlines November Vietnam Da Nang Tianjin 2 Okay Airways July-September only Cam Ranh Nanjing 2 Vietnam Airlines July Cam Ranh Wuxi 2 Vietnam Airlines July

Destinations Deploying WeChat in Marketing

Among the many social media advertising and marketing platforms in China, tech giant Tencent’s WeChat platform has become the most popular and the most successful since its launch in 2011. With nearly one billion monthly users as of 2017, WeChat is becoming an essential channel for travel brands who are willing to invest in the Chinese outbound tourism market. Recognising its importance, an increasing number of national tourism organisations (NTOs) and travel organisations utilise teams specialised in looking for the most effective way to entice Chinese travellers by means of WeChat and other Chinese social media platforms. Travel brands can choose between two distinct types of WeChat accounts: one including a wider range of options, which however limits the number of monthly posts to four (service account), and the other allowing daily posts (subscription account). NTOs generally opt for a subscription account. In addition, in November 2017, WeChat launched the “City Experiences mini- programmes”, in cooperation with NTOs, starting with Tourism Australia, Vis- itBritain and Dubai Tourism. These interactive programmes are designed to support Chinese tourists and improve their experience abroad through maps, audio guides and general information about the destination and its attractions, especially targeted towards FITs and Millennials who tend to travel alone.54 In the foreseeable future, it will be possible also to book and pay for attractions via these mini-programmes.

24 COTRI Market Report Spring 2018 CHAPTER B

A DEEPER LOOK

Growth in the 55+ Market Segment

The demographics of the Chinese outbound tourism market have under- gone considerable changes in the past few years. Notably, the most striking feature to underline has been the decrease of the dominance of the middle age group and the increase of the distinct market segments of young and senior citizens, who these last years showed an upward trend.

PROPORTION OF BORDER CROSSINGS MADE BY CHINESE OUTBOUND TRAVELLERS IN DIFFERENT AGE GROUPS

As the graph above illustrates, the 30 to 49 year-old age group is still the largest among the Chinese outbound travel market, though its dominance is becoming less pronounced; in 2016, this age group made up less than 50% of Chinese total border crossings for the first time. On the contrary, the proportion of older travellers has reached 20% over the last two years. Since Chinese outbound travel only took off around 15 years ago, so many of these ‘sunset’ travellers will already have some international travel experience, but still have many54 more destinations to tick off on their bucket list.

25 COTRI Market Report Spring 2018

‘Senior’ travellers are those referred to as being 55 years and over and are either already retired or about to retire; this group has of course more time and resources for overseas travel. Notably, 54 is the average age of retirement in China, while approximately one in five people in China is 55 or older. More specifically, out of a population of 1.4 billion, 150 million Chinese are between the ages of 55 and 65, while another 160 million of them are more than 65 years old. Projections predict that the population of Chinese citizens aged 65 and above will reach 220 million in 2030. With ageing societies becoming a serious issue in many indus- trialised countries, such as Germany and Japan, China is also anticipating demographic challenges in the future. In less than fifteen years one quarter of China’s population will be over 60, making China officially an “aged” society. Different factors have played an important role in this ageing process. Firstly the one-child policy, suspended in 2016 after 36 years, has contributed greatly to a reduction in the birth rate and a decrease in the share of young people in the society. Increased life expectancy also has been partly responsible for this demographic shift towards an older population. Between 1960 and 2015, the average life span of the average Chinese citizen increased from 50 to 76 years. When compared with the respective figures in Europe of 70 and 78 years, Chi- na’s progress is particularly pronounced. According to a recent survey, 80% of older Chinese citizens are willing to travel abroad. Currently, this age group constitutes between 10 and 30% of all arrivals, depending on the destination. Again the one-child policy had an impact on this demographic segment, owing to the fact that current retired people have fewer children and grandchildren to spend their money on, meaning that they have more funds available for travel. Many also benefit from good pen- sions provided by governments and large state-owned enterprises.

SHARE OF SENIOR TRAVELLERS IN SELECTED LONG-HAUL AND SHORT- HAUL DESTINATIONS (2017)

26 COTRI Market Report Spring 2018 Senior travellers, or the ‘Sunset Glow’ travellers as they are commonly called in China, typically come from first tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen or from the leading second tier cities like Chengdu, Nanjing, or Tianjin. In 2016, for example, the most targeted long-haul destinations among seniors were the USA, Switzerland and Italy, while Japan, Thailand, Singapore, Vi- etnam and Australia were the most popular short-haul ones. In Singapore the share of older visitors was almost 30% of the total number of Chinese tourists. Singapore appears to be the perfect destination for senior tourists mainly thanks to the practicality and the ease of travelling there. Sin- gapore presents firstly a culture and habits which are very similar to those of China. In fact, many Singaporeans speak at least one Chinese language, which mitigates the problem of language barriers, and the country is recognised as very culturally welcoming to tourists from China. Moreover, its good accessibility in terms of flights and visas, as well as good infrastructure and organisation, makes Singapore a destination targeted chiefly by families and senior tourists. With 23% of arrivals in 2017 being 50 years and older, Europe is typical of a long-haul destination in the Chinese outbound tourism market. European destinations are increasingly popular among Chinese and especially among wealthier senior travellers. In addition, Europe appears to be an excellent destination for package tours and customised group tours, which are still preferred by older tourists.

DISTRIBUTION OF CHINESE TRAVEL- However, the ‘Sunset Glow’ travel- LERS TO EUROPE BY AGE (2017) lers’ seasonality differs from the mainstream Chinese outbound market, owing to the fact that they are not limited to public or school holidays. In fact, they show a strong preference to travel in autumn and spring, when prices are lower and the weather is less extreme.

Unlike younger people, who typically use online platforms to plan their trips, senior travellers tend to prefer traditional brick-and-mortar travel agents, where they can benefit from in-person service and feel less at risk. Some brands and travel agents specialise in the senior Chinese market, even if their number remains low for the moment. Ctrip, Bai Lü Hui and Sun Travel are the most54 active in this sector.

27 COTRI Market Report Spring 2018

CHINESE SENIOR VISITORS’ TRAVEL SEASONALITY (IN %)

Winter

Spring

Summer

Autumn

CHINESE SENIOR TRAVELLERS’ PREFERRED BOOKING CHANNELS

Lastly, Chinese culture sets an expectation for children to respect and care for aging parents, so it is common to see elder Chinese either have their trips arranged and paid by their children, or travel together in groups of three generations. It should be noted that the Chinese senior travel market is underserved. There are in fact a number of challenges to face: There is a lack of age-appropriate products and services which do not just simply modify normal itineraries and products by reducing the number of

28 COTRI Market Report Spring 2018 activities, but take into account travellers’ physical limitations, language barriers and food requirements. Seniors markets have stronger legal prerequisites to protect travellers, so there is a higher liability requirement upon service providers. Seniors markets utilise different channels in terms of sourcing information and bookings than the rest of Chinese tourists, therefore there should be different marketing and communication strategies and tactics. However, there are also many opportunities related to this segment, considering the strong surge of the ‘Sunset Glow’ market in domestic travels and the significant anticipated expansion of this into outbound travel. In particular, while many Chinese outbound travellers tend to seek out novel attractions where there are not too many Chinese tourists, destinations already well-established among the market can seek to attract the older segment with their abundant facilities, well-priced accommodation and plenty of direct flights. Chinese families, in fact, travel with three generations (both the senior and the young ones) and often are willing to spend more to ensure they can travel in comfort: e.g. a cruise trip that entertains all, or customised group arrangements that specially cater to all wishes. The senior Chinese outbound tourist demographic are more time-rich than The senior Chinese other groups and frequently choose to travel during shoulder and off-peak outbound tourist seasons for longer periods and at lower costs (e.g. March to June, September demographic are to November). Notably, senior Chinese travellers are notable for their strong more time-rich than desire for souvenirs and gifts for family and friends. other groups

Comparing the Mainland Chinese and Hong Kong Source Markets

Overview of the Hong Kong Outbound Tourism Market

Hong Kong is a trade and export-oriented economy, and outbound travel is accordingly a vital part of many Hong Kong residents’ lifestyle as well as a trendy form of leisure. Hong Kong’s economy expanded by 3.5% year-on- year in real terms in 2017, in line with global average GDP growth. As one of the leading economies in Asia Pacific, Hong Kong’s GDP per capita reached 46,200 USD in 2017. As such, an increasing share of Hong Kong’s population has the means to seek and enjoy leisure travel abroad. Hong Kong resident departures reached 92 million in 2016 and the total amount of outbound departure from Hong Kong is rising strongly (shown by the graph below with 2017 as estimated54 number).

29 COTRI Market Report Spring 2018

OUTBOUND DEPARTURES OF HONG KONG RESIDENTS 2012-2017 (IN MILLIONS) INCLUDING TRIPS TO MACAU AND MAINLAND CHINA

OUTBOUND DEPARTURES OF HONG KONG RESIDENTS 2013-2021 (IN MILLIONS) EXCLUDING TRIPS TO MACAU AND MAINLAND CHINA

With a population of 7.4 million, Hong Kong residents are estimated to have made almost 100 million trips beyond the Special Administrative Region in 2017. As mentioned above, Hong Kong’s export-oriented economy means that it is inevitable that a large percentage of its population travels for business purposes. Reflecting the strong economic, social and cultural ties between Hong Kong and Mainland China, almost 90% of outbound departures from Hong Kong are for the Mainland, with the bigger part of these trips ter- minating already in Guangdong province – a trip many Hong Kong residents make daily. About 6.5 million annual trips were to neighbouring SAR Macau, a number which has been stable in recent years but might increase with the opening of the bridge and tunnel road connection between Hong Kong, Ma- cau and Zhuhai in Guangdong Province on July 1st, 2018. Beyond these destinations, close to 6 million Hong Kong residents travelled in 2016 and 6.8 million outbound trips beyond Mainland China and Macau are forecasted for 2021. With large proportion of relatively well-off residents, Hong Kong promotes itself54 as the place where “East-meets-West” and as being home to worldly

30 COTRI Market Report Spring 2018

residents, who are both accustomed to having foreign visitors while also taking outbound trips themselves. Having been strongly influenced under the British education system and culture from the colonial era, Hong Kong residents are more exposed to Western culture and lifestyle from an earlier age, particularly if compared to the majority of Mainland Chinese people. In addition, Hong Kong is one of the most densely populated places in the world with an estimated population density of approximately 6,700 persons per square kilometre, which is for instance double that of Helsinki and Stock- holm, around five times that of Oslo and almost ten times that of Copenha- gen. As such, travelling overseas is also part of a deeply rooted lifestyle that Hong Kong residents cherish to escape from the crowded environment and the limited choice for leisure activity venues. Further fuelled by being extremely well-connected to the rest of the world through various direct flights and the wide use of English, Hong Kong residents also enjoy the benefit of more than the 160 countries and territories granting Hong Kong SAR passport holders either visa-free or visa-on-arrival treatment as of March 2018. According to the Passport Index, the Hong Kong SAR passport was granted a score of 18 in terms of its power by their total visa-free score, placing it the top 20. Other similar indexes report more or less similar results. In early 2016, impacted by terrorist attacks in Europe and the fear of infec- tious diseases spreading overseas, the Hong Kong outbound tourism market showed a slowdown. The market recovered however notably towards the end of the year. In 2017, the two biggest growth periods of Hong Kong outbound travellers departing from Hong Kong International Airport appeared in January and April. In January 28, the first day of the Chinese New Year, 58,000 Hong Kong residents left Hong Kong via the International Airport, a number representing an increase of 50% from the previous year. YEAR-ON-YEAR CHANGE OF NUMBERS OF HONG KONG OUTBOUND TRAVELLING RESIDENTS USING HONG KONG INTERNATIONAL AIRPORT 2017

313 COTRI Market Report Spring 2018

Across the year, departures to Japan were the main force that drove up the increase of passenger volume at Hong Kong International Airport in 2017. Departures to Europe significantly contributed to passenger increases in May, July, and August of that year. The fluctuation between March and April was due to the fact that the Easter holiday break fell into April this year while into March in 2016. Hong Kong outbound travellers see safety and security as the most important factor when overseas, but culinary experiences are also high on their agenda.

MOST IMPORTANT FACTORS WHEN SELECTING A HOLIDAY DESTINA- TION (HONG KONG RESPONDENTS)

Comparison between Outbound Travel from Mainland China and Hong Kong

Are travellers from Hong Kong different from Mainland Chinese travellers and should different products and services and different forms of marketing be developed for them? The answer is, in a nutshell: YES. The Hong Kong outbound travel market started much earlier than its Main- land counterpart and is thus more mature. The Hong Kong outbound tourism market also receives less governmental “guidance” and restraints. Tourism marketing, particularly in terms of social media marketing, is more similar to that of Western countries – while in Mainland China, Google, Facebook, Twitter, Instagram and other social media platforms commonly used in West- ern markets are not accessible and marketers need to be aware of and familiar with their Chinese equivalents. Based on their greater experience in international travel, Hong Kong outbound travellers also demonstrate different traits compared to their Main- land counterparts. 54

32 COTRI Market Report Spring 2018

Travel Mode

The Hong Kong outbound travel market has large percentage of independent travellers, with many particularly travelling to closer destinations such as Ja- pan and Mainland China. Surveys and statistics show that less than one-third of trips are made as part of tour groups, with a shift towards semi- independent and fully-independent travel in recent years. This trend is pre- dicted to continue. As discussed earlier, travellers from Hong Kong have started their overseas travels from young age with their families, so they have already ticked off many destinations before they start to travel by themselves, whereas most Mainland Chinese until very recently had not crossed a border before their 18th birthday. For Hong Kong residents there have also since many years been fewer restraints including visas, languages or flight connections compared to what the Mainland Chinese market faced when it took off in the late 1990. Currently, 81% of the Hong Kong residents consider themselves as FITs when travelling outbound, while 5% state that they often use tour services.

Travel Seasonality

The Christmas and New Year season holidays are peak seasons in a year for Hong Kong residents to make long-haul overseas travels. Asian countries such as Japan and South Korea are popular destinations but they can be reached during shorter breaks.

Hong Kong residents enjoy only one- to two-week paid holidays according to length of employment.

HONG KONG PUBLIC HOLIDAYS (2018)

33 COTRI Market Report Spring 2018

MINIMUM ANNUAL LEAVE OF EMPLOYEES IN HONG KONG

Years of Work Employment Days of Paid Annual Leave 1-2 years 7 Days 3+ years Add one day per year until reaching 14 days

If comparing the proportion out of total population, more Hong Kong travellers use the Chinese New Year period (between January and February) to travel than their Mainland relatives. Traditionally, the Chinese New Year festival sees families gather together to celebrate with banquets and traditions. However, geographically Hong Kong is relatively small and there are many chances for families within Hong Kong to meet across the year. Therefore there is no urgent need to have to meet during the Chinese New Year time for many Hong Kong residents. Another social cultural factor that prompts more outbound travels out of Hong Kong during this period is the recent rise of Mainland Chinese visitors and the corresponding congestion for Hong Kong locals. Another peak of outbound travel for Hong Kong tourists fall into the Easter holiday and Qingming (Tomb Sweeping) Festival (early April). As the Qing- ming Festival is usually very close to or overlapping with the Easter holiday in Hong Kong, intended Hong Kong travellers are more likely to consider this period a very appropriate time to make short-haul tours to Japan, South Ko- rea, Taiwan, and Southeast Asian countries such as Thailand. During the 2017 Easter holiday, Hong Kong International Airport operated 90 additional flights to meet the demand of Hong Kong outbound travellers. In addition, Hong Kong residents also trend to take frequent short breaks to combine weekends with public holidays as Hong Kong is within easy reach of many popular holiday destinations in Asia Pacific and its residents enjoy the convenience of visa-free access and convenient flight connections.

Spending

In 2016, Hong Kong outbound travellers spent 24.1 billion USD in total, ranked the third in Asia and tenth in the world. Each Hong Kong outbound visitor (with the exception of trips to Mainland China and Macau) spent on average 3,280 USD, which ranks them in the first place among the ten biggest outbound tourism markets worldwide and outspent by far the 1,040 USD than the Australian outbound tourists who ranked second. Affluent FITs dom- inates the city’s outbound market. Hong Kong travellers pursue enjoyment and pleasure when they travel. About half of their travel expenditure is spent on shopping and food. Hong Kongers54 ’ travel spending is expected to continue growing. Almost half of the

34 COTRI Market Report Spring 2018

respondents taking part in a survey during the 2017 ITE International Travel Expo Hong Kong said they planned to increase their outbound travel budgets. INTERNATIONAL (NOT INCLUDING MACAU AND MAINLAND CHINA TRIPS) TOURISM EXPENDITURE BY HONG KONG TRAVELLERS (IN BILLION USD)

Currency exchange rates are an important factor that Hong Kong travellers consider when they plan for overseas trips. The Hong Kong dollar (HKD) is pegged to the US dollar and, at times when the US dollar is stronger, Hong Kong residents will naturally become more interested in taking advantage of destinations with weaker currencies. Seen from a longer-term perspective, exchange rate fluctuations can have a notable impact on destination choices. Only if seen from a long term perspective, the change in currency will impact destination choices. For example, during the 2016 Chinese New Year, the appreciation of the Hong Kong dollar caused the price of packaged tours to Thailand, Malaysia, and Singapore to decrease between 3% to 11%, while the price of long-haul packaged tour to the USA and South Africa also declined 13% and 12% respectively.

Favourite Destinations

Hong Kong outbound travellers’ most favoured outbound travel destinations are concentrated in Asia, thanks to the geographical closeness, flexible traffic connections and relatively low costs. Mainland China, Taiwan, Japan, South Korea are among the top visited destinations by Hong Kong outbound travellers. South East Asia destinations are also among favourite choices for the Hong Kong market. Hong Kong has been the largest inbound market for Mainland China in recent years. In 2016, 81 million trips were made to Mainland China by Hong Kong residents,54 constituting 59% of all non-Mainland Chinese and international

35 COTRI Market Report Spring 2018

tourist arrivals to Mainland China. Expenditure-wise, Hong Kong travellers spent 30.5 billion USD in Mainland China in 2016, representing 25% of Main- land China’s total receipts from inbound tourists. As tourism flows from Hong Kong to Mainland China opened following its return in 1997, Hong Kong residents typically took package tours to the Mainland’s eastern regions in order to see as much as they could in one trip. As political and economic ties between Hong Kong and Mainland China deepened, Hong Kong residents started to explore second and third tier cities in the central and western China that can offer high quality of customer services. The sheer number of Mainland Chinese outbound travellers has resulted in NTOs and DMOs worldwide focusing on it, given its position as the largest global outbound source market. However, even though Hong Kong is much smaller in population, the percentage of the population which can afford international or even inter-continental travel is much larger. Hong Kong residents have not only more money to spend, but also have far greater experience in international travel and can rely on their own experience as well as on a well-established competitive tourism industry. The great majority of trips from Hong Kong are ending in Mainland China, many of them just across the border in Shenzhen or other cities in Guang- dong Province. Even discounting these trips, Hong Kong residents make on average more than one outbound trip per person, per year. Only about 25% of all US citizens travel across a border once a year, and only half of them beyond the neighbouring countries Canada and Mexico. Therefore, Chinese living in Hong Kong, as well as overseas Chinese and the many Mainland Chinese residing temporarily outside of China for studies or as expats, are constituting markets which should not be overlooked. Being Chinese they all share a lot of basic cultural traits, however, they also are different in many ways. Business and MICE travel is an important element for the Hong Kong outbound tourism market, given the extreme integration of Hong Kong into the globalised world economy. Luxury travel is another element where the proportion within the total market is of higher potential than that of Mainland China. Compared to their Mainland Compared to their Mainland counterparts, Hong Kong outbound travellers counterparts, Hong have mostly been brought up in families with a three to four decade history Kong outbound of international travel, meaning that most of them started to visit foreign countries, often outside Asia, while they were still children. Their ‘bucket list’ travellers have mostly of destinations to tick off is much shorter and their conviction that interna- been brought up in tional travel is an undisputed part of daily life and consumption patterns families with a three much more ingrained. They are also more likely to speak English or other for- to four decade history eign54 languages and have less problems in communicating with citizens of of international travel

36 COTRI Market Report Spring 2018

other countries as they share the same collective memory of movies, music, YouTube videos etc. with the rest of the world. Also in contrast to Mainland Chinese travellers, Hong Kong residents are less concerned about possible slights or criticisms of the place in which they grew up. On the one hand, it is less likely that hosts will want to discuss politics with them, given Hong Kong’s lesser global importance, while they also feel under less pressure to see themselves as “ambassadors” of their place of origin. The travel industry in Hong Kong is well developed with a number of big play- The travel industry in ers and a lot of specialised service providers. However, due to the sophistica- Hong Kong is well tion of the travellers and the many new opportunities provided by internet, developed with a apps, social media and other such platforms, the majority of travellers prefers number of big players to travel as FITs, which, unlike Mainland China, in many cases really means and a lot of not only without the assistance of a tour operator, but also as a single travel- specialised service lers or as just a couple of two people. providers. To successfully grow the market, it is therefore not only necessary to further analyse the development of the market carefully, but also to use all communication channels available to get in contact with the potential travellers themselves. It is one of the truisms of the Chinese outbound tourism source market that you have to use Chinese social media like WeChat, Weibo, Youku, QYER etc. For Hong Kong however, it is not only the necessary to use non-simplified Chinese characters, but it is also worth remembering that for these markets the “normal” international channels are still relevant. Similarly, the use of Mainland Chinese celebrities and KOLs is less impactful for the markets. While local or Korean celebrities and KOLs are preferred, Hong Kong - based travellers less likely to rely so much on the example of such influenc- ers, having more experience and information available from other sources. Finally, in many countries, Hong Kong arrivals are not separately counted or presented in national tourism statistics. As also Hong Kong statistics are providing precise information on the means of transport of persons leaving Hong Kong, but not on the destination, the situation with regard to available data is another field which needs improvement.

37 COTRI Market Report Spring 2018 CHAPTER C

NEW OPPORTUNITIES

Finding the Right Chinese Travelers Written by Alexander Glos, CEO at China i2i Group

Every travel supplier, no matter if you are a destination, hotel, attraction, shopping center - everyone wants more Chinese travelers. What kind of Chinese travelers are really best for you? Choosing the right Chinese inbound travelers that will most effectively feed your profit centers is the key - whether they are shoppers, groups, individuals, exhibition participants – this is critical in determining your strategy and focus for years to come. The first step is to paint the picture of the Chinese travelers that you really want. Don't dream, be realistic, and make sure it fits candidly to your tourism ecosystem. What part of your system are you trying to feed - hotels, shopping, attractions, festivals or trade fairs? Then, the challenge becomes Then, the challenge how to find them. Because no matter what picture you paint, China is pro- becomes how to find ducing those kinds of tourists. With a total outbound flow of over 140 million them. Because no international travelers, it's pretty much guaranteed that somewhere in that matter what picture mass of travelers is the kind of tourists that you really want. you paint, China is The contest is not deciding what you want, but how to find them. Everybody producing those kinds knows China is big, nearly 1.4 billion people, and although over 140 million of tourists. international travelers is a big number, this actually translates into at least 60 million actual individual travelers, because Chinese travelers typically don't travel once a year, there's plenty of repeat international Chinese travelers. Truly active international Chinese travelers, the top 20% of this 140 million, actually makes up more than 33% of the total outbound travel market from China, yet this segment is approximately 7 million people or about 0.5% or one half of one percent of all Chinese people! So how do you find only the right 1 of 200 – the über international Chinese travelers? You can spend 100 million USD marketing on Chinese national tel- evision, you can paste every street in China with your advertisements and you can certainly fill all Chinese social media accounts with content and ad- 54

38 COTRI Market Report Spring 2018 vertising. However, if you want to be smart about it, you really need to focus. Targeting Chinese travelers who have had experience in traveling to similar destinations or in some ways can showcase that they are interested in what you're actually offering is the way to go. This is easier said than done. How do you find that needle in the haystack? We recommend that organizations focus on finding Chinese travelers by activity. What this means is finding Chinese travelers who have already traveled to a similar destination and try marketing to them. For example, if you are an island and beach destination in the South Pacific, let's say Tahiti, a good target might be to find Chinese travelers who have already visited similar types of destinations, like the Maldives. By approaching travel agencies and tour operators that have extensive experience in marketing and promoting travelers to the Maldives, and these companies also have extensive databases of clients who have already been to the Maldives, then this would be an excellent target to find potential tourists that might want to visit you in Tahiti. Why would a travel agency or tour operator in China want to help you if you are Tahiti? Simple, because Chinese travelers do not typically visit the same destination over and over again. But they have similar likes and desires about their travel experiences and so they're likely to look for similar types of travel experiences. These travel agents and tour operators want to sell to their clients again and again and again. So by offering a new product – a new destination, that satisfies their existing client desires, these agents and operators will want to work with you and target travelers who are more likely to be re- ceptive to a new travel experience. Shopping is a huge component of Chinese international travel – think of it like Shopping is a huge free desert to get the traveler to the restaurant. It’s not the reason why Chi- component of Chinese nese will visit your destination, because after-all Cartier sells the same prod- international travel – ucts everywhere – but it will certainly entice the Chinese to stay longer and think of it like free spend more. desert to get the As much as 50% of global luxury brands are purchased by international Chi- traveler to the nese travelers around the world. Although this money doesn't typically fall restaurant. directly into the travel ecosystem for most destinations or travel suppliers, it is certainly very impactful in respects to local economies. Whether it's tax money, or simple sales, the bottom line is that Chinese travel spending in your local destination is international trade. The average Chinese international traveler spends upwards of 3,000 (ca. 3,625 USD) per person just on shopping per trip. That's more profitable to a local destination than trying to sell cars to China. Multiply this by the millions of international travelers, for example just visiting Europe, and suddenly you're talking about billions. Last year, this translated into approximately 260 billion54 USD in sales.

39 COTRI Market Report Spring 2018 Many luxury brands are closely associated with national identities and local destinations. This is especially true in relation to French and Italian brands, which actively market their connection to their historical homes. Chinese actively want to shop in the brand's home market. Many reasons contribute to this, including pricing, product authenticity, selection, but largely the motivation is status and the cachet of being at “The Maison”, and sharing this with their 1,000 closest friends on WeChat. Using WeChat (If you don’t know about WeChat, search right now for it – a billion Chinese use it every day) is a key component of finding the right kind of travelers for you. By joint communications, push messaging, even advertising on WeChat Moments, you can connect with people who have already proven their interest in these luxury brand products and are highly likely to visit their national destinations. It's even possible to deeply segment this approach by focusing on WeChat platforms such as wine, automobiles, international education, art, music and history. For example, sending messages on the Beethoven WeChat platforms in China, will certainly target Chinese that are interested in German music, history and culture and will have a higher degree of attraction to a German travel experience and destination. Targeting repeat travelers is also an effective strategy for finding the right kind of travelers. Travelers who have already visited your destination are potential repeat travelers, but also travelers who have visited nearby destinations or similar destinations in the region. For example, typical gateway destinations ...typical gateway receive a large percentage of total inbound Chinese travelers. Nearly 90% of destinations receive a all Chinese travelers to France visit Paris. But they do not visit Paris exclusively. large percentage of They also travel to other destinations in France and Europe. But targeting Chi- total inbound Chinese nese bound for Paris, and convincing them that your destination is only one travelers. Nearly 90% hour away and offers a unique experience that they cannot find in Paris, is a of all Chinese successful strategy. travelers to France Some suppliers have focused on connecting with Chinese travelers when they visit Paris. actually apply for their travel visas to certain countries. After all, anyone who's applying for an international travel visa intends to travel. And it's very easy to identify this because if they're getting a French Schengen visa, they certainly intend to travel to France. Marketing to people through this contact point, either directly at the visa service centers, or with visa service companies in China managing visa applications, is a highly effective way to find the right kind of traveler for you. Segmenting your approach to group, FIT, corporate and business as wellas MICE is also a good approach. Many Chinese still elect to travel internationally for the first time in a group. It's easier, it's comfortable, they feel safer. How- ever, increasingly the conversion from group to individual travelers is significant. Although group business continues to increase from China, individual 54

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travel, corporate and business travel is growing at a far faster rate. This opens the door to a more lucrative and higher spending inbound Chinese traveler but at the same time creates more challenges in trying to find them. Focusing exclusively on social media outlets, especially those that are travel and shopping focused, often can be misleading. In some cases, as much as 90% of the followers, in particular on travel or shopping social media platforms, don't actually travel. They are traveling through the social media outlets, they are dreaming to go, but they're not actually boarding flights and spending the money. China is a big country – there are many dreamers! Finally, be careful what you ask for. Some destinations started out working in China many years ago, received consultation that they should focus exclusively on the group business from China, and then they found that the group business was not exactly right for their tourism profit centers. They generated the business, they get the group business, but the group business doesn't really satisfy their hotel owners, the shopping centers are not making the sales and they are not seeing an increase in local tax revenue. They get good numbers They get good of travelers, but not the results they really wanted. They have the wrong the numbers of travelers, Chinese travelers for them. but not the results Hence, the most important decision to make is what do you really want. After they really wanted. you paint that picture, outlining the strategy and the methodology in attracting that type of target Chinese traveler, is relatively automatic.

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Is Central Europe Ready to Welcome Thousands of Chinese Travellers? Written by Tomasz Janczak, Founder of Chinese Outbound Travel

Challenges for the 2018 the EU-China Tourism Year

According to the ECTY “European destinations have strengthened their position in this market, attaining 13.4 million Chinese arrivals in 2017, accounting for a share of 14% of all outbound travel from China”. Ctrip.com revealed that Europe was the second most-visited continent among the Chinese outbound market in 2017, accounting for 9.3% of total trips. 29% of Chinese travelers that visited Europe in 2017 were aged 50 or older, which shows that Europe has become a regular long-haul destination for Chinese travelers. And interestingly, we can see more and more countries from the Central & Eastern European region among the most visited by Chinese travelers; Austria, the Czech Republic and Russia, to name a few. There are several reasons why these countries are gaining momentum on engaging with the world’s biggest outbound travel market:

 The more advanced travelers, who already visited many popular international destinations turn to lesser-known, better value-for-money regions.

 For safety-conscious Chinese travelers, the countries of Central & East- ern Europe are definitely seen as safe destination, as recent terrorist events did not affect this part of the world.

 For older generations of Chinese travelers, the countries of the former Soviet bloc seem to be much “closer” to the Chinese due to sharing a similar political system, which included also basic education about each of the “Warsaw pact” members.

 The Belt and Road initiative intensifies business travel, which is usually the first step to learning a new destination. While countries of Central & Eastern Europe are included in the “new Silk Road” corridor, business people start to travel more frequently in both directions.

 The Belt and Road initiative also influences regional partnerships, which aim to smooth the business relations between regions, but the long- term strategy also includes cultural and tourism promotion. Ideal example is Lodz and Chengdu, cities where end stations of direct rail connec- 54 tion between China and Poland are located.

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 More and more high schools and universities from Central Europe go into partnerships with Chinese counterparts, offering educational programs for young Chinese. While this is not directly influencing travel business, it is expected that during upcoming months there will be more Chinese coming to visit. According to 2012 data from the United Nations World Tourism Organization (UNWTO), the Chinese have been the biggest spenders on international tourism. More recently (2015), the World Tourism Cities Federation (WTCF) estimated Chinese travelers spend more than 200 billion USD, which is over 17% of the global total of expenditures. The same reports show that by 2019 more than 174 million Chinese travelers will spend more than 300 billion USD overseas. While the benefits to European economies are clear, there are no products’ brands, which would become a “must have” for Chinese travelers, who visit countries such as Poland, or Hungary, so most probably there is not a high probability that the amount spent for shopping will increase dramatically during the upcoming months. One of the few products, which could be considered as the “spending driver” for Chinese travelers visiting Central & Eastern Europe, is amber. Already well known in China, as “one of the seven treasures of Buddhism” this natural stone is gaining value on the Chinese jewelry market, increasing the production by -6 7% every year. While there are several sources of amber, the highest quality is coming from Poland and Lithuania, but based on the research made among Polish incoming tour operators, hardly any Chinese visitors realise that ...hardly any Chinese fact and are not aware of the possibility to purchase amber in its country of visitors realise that origin. fact and are not Similarly to branded fashion products imported “privately” by Chinese tour- aware of the ists, amber could become another “business opportunity”, as the custom tax- possibility to purchase es for it vary in China from 20 to 130%. amber in its country “Tatratea”, which is low-percentage spirit out of Slovakia could in the future of origin. become another “shopping hit” for Chinese fans of alcoholic cocktails. Thanks to a joint venture by the manufacturer of Tatratea and a Chinese investment

Visa Restrictions Slow Down China-Europe Tourism Growth

The Global Henley Passport Index issued in February 2018 reveals that holders of a Chinese passport are granted visa-free or visa-on-arrival access in more than 60 countries worldwide, but only Serbia has a mutual visa exemption with China, Turkey offers e-Visa, and Ukraine has recently introduced visa-on- arrival. 54

43 COTRI Market Report Spring 2018 ECTY hopes to provide incentives for visa facilitation between Europe and Chi- na, but until the regulation is approved, Chinese tourists still have togo through a lengthy process to apply for the Schengen visa. So far, Turkey is playing its cards right. 2018 also happens to be the Turkish Tourism Year in China, an opportunity to increase the number of Chinese tourists coming to Turkey in 2018: "Around 250,000 tourists came to Turkey last year. There is no reason not to increase this number to 500,000”, said Turkish Culture and Tourism Minister Nu- man Kurtulmus. Serbia, a landlocked Eastern European country with an economy based primarily on providing services, was never considered a mass-tourism destination. But Serbia has a diverse range of touristic products to offer. Like many regions of the former Yugoslavia, Serbia was hit especially hard by the 2008/09 economic crisis. So, new bilateral trade and visa-free agreements with China in 2017 paved the way for a huge win-win for both countries. At the time Marija Labo- vi, CEO of National Tourism Organization of Serbia, commented to China Daily: “Visa-free policy provides convenience for Chinese travelers, and we sincerely hope that more visitors come to enjoy their vacations in Serbia. By the end of this year, Serbia’s capital city Belgrade and Beijing will have direct flights as well.” Ukraine introduced a visa-on-arrival policy for Chinese citizens in 2016, and in Ukraine introduced a 2017 it recorded a total of 31,114 visitors, an increase of 51.4% compared visa-on-arrival policy 2015. The country is betting strongly on its capital, Kiev, to attract even more for Chinese citizens in Chinese tourists. Chinese visitors are also interested in tours to the Chernobyl 2016, and in 2017 it nuclear power plant, where Ukraine has already prepared high-skilled Chinese- recorded a total of speaking tour guides. 31,114 visitors, an "Chinese tourists are interested in Soviet objects. In this regard, Ukraine can offer increase of 51.4% a lot. Also, we know that the Chinese love amber and we can offer them individual compared 2015. tours to Rivne region, which is the birthplace of the sunstone," Victoria Zarutska- ya, head of the Kolos agency, told China Daily. A new Polish visa center was officially opened on April 23rd 2018 in Xi’an. It is already the 15th center in China, which is great progress when compared to only 4 locations available until the end of 2017. As getting a visa is usually the first step while planning the international trip, better availability and a shorter waiting period should undoubtedly increase the number of Chinese tourists visiting Poland.

Growing Efforts to Become “China Ready”

A report titled Chinese Tourists in Cracow, Poland: Their Profile, Expectations, and Perceptions published in 2016 by the Polish Journal of Sport and Tourism cuts54 straight to the chase:

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“In order to attract Chinese tourists, there is a need to intensify expenditure not only on promotion (mainly online) but also on the removal of language-based communication problems.” The authors of the report, Paulina Guszkiewicz and Karolina Nessel, found that most Chinese tourists visiting Poland visit the country for the first time often as a point of transit to other European destinations. Chinese tourists are interest- Chinese tourists are ed in tradition, culture, landscapes, and historical sites. They are often frugal, interested in tradition, seeking low-cost accommodation and dining. culture, landscapes, Tourist boards in many European countries have been in a frenzy to take ad- and historical sites. vantage of the Chinese tourist boom and to attract more Chinese travelers. They are often frugal, Examples include, the EU funded Lubie Polske (I like Poland) effort or Hungari- seeking low-cost an Tourism Agency, which signed the deal with Ctrip- the biggest Chinese accommodation and online travel agent. It’s another milestone in both the development of tourism dining. and trade between China and Hungary and the long-term cooperation between China and the CEEC. Hungary was the first European country to sign a MOU relating to China's Belt and Road Initiative. CEEC China-Central Eastern Europe Countries Tourism Coordination Center was established in Budapest in May 2014 and its goal is the coordination of tourism promotional activities of 16 Central & Eastern European countries in the Chinese market. The cooperating countries joined forces to develop common tour packages and coordinate their marketing activities in order to diver- sify and broaden their tourism offers, thus become more competitive and successful on the biggest global outbound travel market. But an underlying problem threatens mid-term and even long-term benefits. In markets where hospitality and tourism products fail to meet Chinese traveler expectations, the lost opportunity costs may be staggering. The bottom line here is, any traveler dissatisfied with a destination or provider will be much harder to convert into a repeat visitor. But despite limitations, the Chinese willingness to travel overseas remains positive. Europe remains the number one destination for Chinese planning to travel long-haul according to the Long-Haul Travel Sentiment Survey and Index by the European Travel Commission (ETC), the European Tourism Association (ETOA) and the Eurail Group. This report revealed other interesting statistics:

 93% of Chinese respondents who intend to visit overseas destinations in the first four months of 2018 are likely to choose a European destination.

 67% of Chinese respondents expect their next holiday to Europe to last approximately one week and consist of visits to multiple European countries.

 60% plan to visit France, followed by 36% opting for Germany, and 30% 54 for Italy.

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CHINESE TRAVELLERS

Hotels, tour operators, and attractions are being urged to make themselves “China-ready” by providing information in Mandarin or Cantonese and adapting their products to the Chinese market and culture. There’s a whole new wave of literature aimed to prepare hotels, businesses, and even destinations to become „China Ready.“ Is it about the label? Not really. Being ready for Chinese outbound travelers means having the knowledge of what it really takes to meet Chinese tourist’s expectation. Rafał Burski, E-Commerce & Revenue Director of Satoria Group, a Polish hotel company, which recently engaged its staff with “Chinese Tourist Welcome” training programme, says: “We saw more and more Chinese guests staying in our hotels, but we never really invested resources to find out what could be done better. Chinese Tourist Welcome was a perfect solution for us, as it as- sures Chinese travel operators and Chinese customers traveling for business or leisure that they are dealing with a business that understands, respects, and agrees to act in accordance with the principles of the new China Tourism Law, and that the business has a commitment to upholding the same high stand- ards in accordance with the laws relevant to its country.”

Groups vs Individuals

Taking into consideration the fact that Central & Eastern Europe would be a destination of choice for the second or third trip to Europe, the region can benefit from welcoming more educated and experienced travelers from China, who wouldn’t mind to travel individually or in the small groups. Currently the majority of Chinese travelers are those coming with the circle tours around Europe, which are not very high spenders, and the average length of stay is rather short, and very rarely longer than 2 nights per stop. It is also the reason, why most of the travel related businesses in the region do not really bother with this segment, as based on statistical data from an inter- national54 hotel group having properties across Central & Eastern Europe, Chi- nese guests are below 1% of the total production. For companies like this, it

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it will be very challenging to convince the decision makers to make any effort to get more (and higher value) business from China. But without doing that, this higher hanging fruit will never land in their basket. It’s a typical case of the decision-making process “the chicken or the egg” – shall we first wait for some opportunity to get FIT’s from China and then invest, or rather take a minimal risk and invest in the marketing to increase the chance to get FIT’s in-house? On the other side, there are hotels in Budapest or Prague, where Chinese guests are responsible for generating over 12% of total revenue. For such businesses, it’s time to make the next step and become more selective about guests’ segments coming from China. Thanks to the know-how gained during last few years of collaborating with group operators and established relations on the Chinese market, these hotels are in the ideal position to benefit from the changing trend in Chinese outbound tourism and the increase in FIT’s and business travelers.

Playing the Numbers

Based on Mastercard City Index, among the top 20 most visited cities there are only two cities form the CEE region: Prague (20 position) and Vienna (18th position). The inflow of tourists into Central & Eastern Europe varies per country, and the main markets are:

 Russian Federation: 24.5mn.  Poland: 17.5mn.  Hungary: 15.2mn.  Ukraine: 13.3mn.  Czech Republic: 12.1mn. These 5 countries generate over 80mn. tourist arrivals out of 106.5mn. who travelled to the region, making up close to 80%. So how do the Chinese numbers compare?

 Czech Republic: 0.5mn.  Hungary: 0.17mn.  Poland: 0.13mn. For most countries, the share of Chinese tourists is still below 1%, and that could be the reason that there is not really a strong focus on promotion or education about the Chinese market, its potential, etc. For example, the Polish Tourism Organization organized in 2014 the series of trainings covering the Asian source market (China, Japan, India) and since then there were no further initiatives improving the level of know-how among travel industry representatives, even if the same organization proudly announces that the increase of 54 Chinese visitors to Poland grew in 2017 by 60%, reaching 130,000.

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From the other side, Slovenia, which saw 65K visitors from China in 2017 actively educates its tourism professionals. Confucius Institute in Ljubljana organ- izes the road show “Mis-understanding the Chinese traveler”, which will gather hoteliers and tour operators to different locations across the country to share the knowledge about Chinese history, culture and business potential, with a focus on tourism. Comparing the numbers, it’s worth noting that the spending power of Chinese visitors is much stronger compared to others, for example: international tourists spent 10.9bn. EUR (ca. 13.05bn. USD) in Poland in 2017. The Chinese share was 0.2bn. EUR (ca. 0.24bn. USD) – a 2% share – while the number of Chinese tourists’ share was just 0.7% (0.13mn. vs 17.5mn.)

A Matter of Technology

Technology plays a crucial role in attracting Chinese tourists, and WeChat is an essential tool. WeChat has transformed the way the Chinese consumers and business owners find information, communicate, and do transactions. Several city tourism entities from Europe have already joined WeChat offering the CityExperience Mini Program designed to introduce their destinations to Chinese tourist in a familiar manner, all from the convenience of a smartphone and the WeChat app: The CityExperience Mini Program boasts informative text and maps, as well as audio and visual guides to popular attractions, shops, and restaurants. CityEx- perience is also useful for itinerary planning, with suggested durations for each attraction, and useful information such as addresses, contact numbers, and sample itineraries. Mini-games and mini-programs are already gaining traction in China:

 Daily, users spend on WeChat mini-programs up to 9.8 minutes per day

 87% of WeChat mini-programs users spend more than 200 RMB (ca. 31.50 USD) per month through the mini-programs.

 43% of WeChat users open mini-programs 4-6 times per day, followed by 35% who open them 1-3 times per day.

 76% of mini-programs are connected with an official brand account.

 Mini-programs are opened mainly by women: 54%. These statistics that show the CityExperience Mini Programs prepared by destinations around the world make sense, but there is not enough data to show how effectively CityExperience Mini Programs recently launched in Europe have appealed to Chinese travelers.

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Businesses in Europe need to make many changes to become “China ready.” A presence on WeChat and other Chinese social networks is not enough, although joining WeChat Pay to subsidize the rollout of Chinese payment systems at their destinations could help. The Chinese use mobile payments on a regular basis with Alipay and WeChat Pay as the main players. In fact, China saw 9 tril- ...China saw 9 trillion lion USD in mobile payments volume in 2016, according to iResearch. 2017 rec- USD in mobile orded a total of approximately 12.8 trillion USD in the first 10 months alone. payments volume in Since mobile payments are so big in China, it’s obvious that the Chinese find 2016, according to this manner of payment easy and convenient, so European countries should try iResearch. 2017 to accommodate their needs. recorded a total of approximately 12.8 Still, a Long Way to Go to Be Ready for Chinese Travelers trillion USD in the first Besides offering mobile payments, there are many other things governments 10 months alone. and local authorities could do to attract more Chinese visitors, as detailed by Jing Travel: reduce limitations on flights from China, subsidize the private sector in the right ways, collaborate with neighboring states or countries to create a compelling “package” for Chinese tourists, facilitate visa application procedures, etc. The list goes on. To make the next step, you need to know where you are, and where you want to be. It’s exactly the same with the approach towards the Chinese outbound market. It’s necessary to realize the potential of China, but at the same time the resources needed to get there. The worst thing to do is to make a first step which would be also the last one. The Chinese market is huge, but as huge as it is, it is demanding and challenging to enter. It’s rather a marathon than a sprint, but the reward at the finish can be truly great. The access to the information about China is rather limited, and there are so many myths, which are difficult to verify. That’s why it’s so critical to choose the reliable partner, who will provide realistic market data, necessary to support the first business decisions. Whatever the case, the future is bright for businesses that embrace this opportunity from the get-go.

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WeChat for Travel Brands: Strategies for Success

Witten by Sienna Parulis-Cook, Communications Manager, Dragon Trail Interactive

Among the many social media advertising and marketing platforms in China, WeChat has become the most popular and the most successful one since its launch in 2011 by tech giant Tencent. With over 1 billion users as of March 2018, WeChat is an essential channel for travel brands who are willing to invest in the Chinese outbound tourism market. National and regional tourism organizations (NTOs & RTOs), destination marketing organizations (DMOs), as well as other travel brands and businesses, often have official accounts on WeChat and work with specialized marketing teams to find the most effective way to entice Chinese travelers through the social media platform. Travel brands can choose between two distinct types of WeChat official accounts: Service accounts include a wider range of functionalities, such as WeChat payment, but limit the number of monthly posts to four. This type of account is used by most airlines and cruise lines. Destinations, on the other hand, generally opt for subscription accounts, which allow for daily posts. New in January 2017, mini-programs are one more way that travel destinations and businesses can reach Chinese tourists on WeChat. Functioning like apps but contained within WeChat, the mini-programs’ location-based services are particularly well suited for in-destination use by fully or semi- independent travelers (FITs and SITs), with features like maps and audio guides, and listings and recommendations for nearby restaurants, attractions and shopping. Some destinations, including Zurich and Canada’s Banff & Lake Louise, have Some destinations, independently developed WeChat mini-programs, and in November 2017, including Zurich and WeChat launched its first series of “City Experiences mini-programs”, in co- Canada’s Banff & operation with NTOs, starting with Tourism Australia, VisitBritain and Dubai Lake Louise, have Tourism. In the foreseeable future, these travel-focused mini-programs will independently allow users to also book and pay for attractions without having to leave developed WeChat WeChat. mini-programs. Dragon Trail’s WeChat rankings and Analysis

Since the start of 2017, Dragon Trail Interactive, a China-based digital marketing and solutions agency for the travel industry has started publishing weekly rankings of the best performing WeChat public accounts for overseas tourism boards, airlines and cruise lines. These weekly rankings and quarterly reports reveal the top-performing accounts, as well as the winning strategies for travel marketing content on WeChat. Accounts are ranked according to the highest overall number of views for their content posts.

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Based on the full-year 2017 data in the table below, the best five performers in the NTO category, among 43 organizations, were Destination Canada, Tourism Authority of Thailand (Beijing Office), Tourism Australia, Japan Na- tional Tourism Office and Tourism New Zealand. Among these, only Destina- tion Canada maintained a stable position in the top 3 rankings for each quarter of 2017, with a total of nearly 2.1 million views and more than 10,000 likes at the end of the year. For DMOs, the top five accounts out of the 57 tracked in 2017 were: Hong Kong Tourism Board, Dubai Department of Tourism & Commerce Marketing, Macao Government Tourism Office, Los Angeles Tourism & Convention Board, and Ontario Tourism Marketing Partnership. Overall, the keys to make an NTO account successful on WeChat are the content of the posts and the posting frequency. Top themes for successful content on WeChat, as well as posting strategies to reach a larger audience are analysed in following the section.

DRAGON TRAIL’S WECHAT RANKING OF OVERSEAS NTOs 2017

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DRAGON TRAIL’S WECHAT RANKING OF OVERSEAS DMOs 2017

Winning Content Nature

A report from Kantar Media, tracking the changes of social media that occurred in the past two years, reveals that images, videos and music are the most important features in the top 100 most popular articles on WeChat. Vis- uals certainly play a fundamental role in destination marketing on WeChat, with particularly good results for accounts that posted photo-rich, visually stunning articles focused on natural landscapes. Photos of marine life and mountains in Australia, cherry blossoms in Japan, pristine New Zealand landscapes and the Northern Lights in icy Finland were among the most popular NTO posts of 2017 on WeChat. As most Chinese outbound travelers live in large, often polluted cities, the appeal of beautiful nature photography featuring richly colored, empty open spaces is undeniable. This yearning for unspoiled nature is seen elsewhere in Chinese outbound tourism, too – searches for overseas travel on Ctrip spike during periods of intense pollution; and “lung-cleaning” travel has led to the creation of overseas tour itineraries such as the “Banff Fresh Air” package.

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Celebrities

Used frequently by DMOs, as well as NTOs, celebrity-driven content is a very different tactic to nature-driven posts, but one that also gets great results. The effect of Key Opinion Leaders (KOLs) is well established in Chinese outbound tourism marketing, and tying Chinese celebrities to a destination can have hugely positive effects on post views. The top DMO post of 2017 was “New Year: Invitation letter from celebrities A Sa and Joey Yung to visit Dubai,” featuring a short video and many photos of the two Chinese stars shopping and eating around Dubai. The post got over 95,000 views. Other notable examples of celebrity-driven content include: the Hawaii Tourism Authority’s article on actress and singer Ady An’s wed- ding in Hawaii; New Zealand’s article, “Follow Me from New Zealand to a Lifetime Together”, featuring KOL Xiao Lujiang in New Zealand landscapes, leading an unknown man by the hand; and the announcement of actor Huang Xiaoming as South Australia’s tourism brand ambassador. In 2018, In 2018, Tourism Tourism Vancouver has also had several highly successful posts featuring Vancouver has also their “winter ambassador,” actor Tao Guo. had several highly successful posts Anniversaries featuring their July 1, 2017 marked Canada’s 150th anniversary, and both the NTO and “winter ambassador,” smaller Canadian DMOs used the celebrations surrounding this to dominate actor Tao Guo. the WeChat rankings for weeks. Not only did a post on the anniversary by Destination Canada get the second-most views out of any NTO article for the entire year, but Ontario and British Columbia also got lots of attention for their posts on celebrations surrounding the anniversary. This was not the only anniversary to impress WeChat users – Tourism Quebec got nearly 50,000 views for its article on the 375th anniversary of Quebec; Hong Kong scored with their post on celebrations to mark the 20th anniversary since Hong Kong was returned to China from Great Britain; and Finland achieved the fifth most-viewed NTO post of the year for its article celebrating the country’s 100th anniversary.

News & Practical Information

Practical guides are a surefire content strategy for destinations and travel businesses, inspiring would-be visitors and helping them to plan and navi- gate their trip. Hong Kong, perpetually at the top of the WeChat rankings for DMOs, often publishes themed guides, with topics such as visiting Hong Kong with children, going to art galleries or dining recommendations. While airlines usually focus their content on sales and promotions, practical guides, such as packing tips and advice for long plane journeys, are also well received.

53 COTRI Market Report Spring 2018 While advice and guides are part of the article themes for some of WeChat’s top travel accounts, announcements about news regarding flights and visas can propel less visible brands to the top of the rankings. In 2017, Las Vegas’ account soared into the top of the rankings for Q1 because of a single article announcing direct flights from Beijing. So far in 2018, a similar scenario with This is Edinburgh’s account topping the WeChat rankings for DMOs following their announcement of new direct flights from Beijing has occurred. Visa updates are also met with huge amounts of interest, both for well-established and emerging destinations. In 2017, New Zealand’s announcement of a new five-year visa got close to 40,000 page views. Around the same time, the Tu- nisian National Tourism Board – rarely spotted among the top 20 NTO accounts – got 11,000 views for its article announcing visa-free travel for Chi- nese tourists.

Food

Food came up now and again in 2017 as a winning theme for WeChat content, especially for DMOs like Hong Kong and Los Angeles. But perhaps because food is becoming a more important part of the Chinese overseas travel experience, it is also emerging as a leading topic for popular WeChat posts by travel brands in 2018. According to Chinese travel website Mafengwo’s 2017 report, the amount spent on overseas shopping dropped 37.2% last year, while at the same time, spending on food grew by 14%. So far in 2018, the Japanese National Tourism Board – the firm leader among NTOs, has used food as a major theme for its WeChat account. The NTO had top posts for four (out of 13) weeks about food, ranging from articles on sushi to recommendations for Western-style cuisine in Tokyo to a photo gallery of Other leading travel creative bento boxes. Other leading travel accounts on WeChat, Air Asia, New accounts on WeChat, Zealand and Thailand, all got high view rates for posts about local cuisine and Air Asia, New Zealand restaurants during Q1 2018 as well. and Thailand, all got high view rates for Engaging Users posts about local cuisine and As the WeChat media environment becomes more crowded, there is an overall trend for falling reading rates across all kinds of official accounts. Reading restaurants during Q1 rates, which were 15% in 2015, dropped to just 5% in 2017. Accounts now 2018 as well. need to do more to engage users, encouraging user-generated content and active followers. In 2017, Tourism Australia rose from 4th place for NTOs in Q1 to 1st place in Q2, and part of this success must be attributed to their #MeInAustralia campaigns every week. The NTO added a call to action to the end of its WeChat posts, asking followers to share their experiences about a weekly topic, using the hashtag, with a small prize awarded to the winner.

54 COTRI Market Report Spring 2018

These engaging competitions have proliferated in the first months of 2018. Viking Cruises has managed to climb up the rankings significantly since they announced a competition during the first week of January to win a free Euro- pean river cruise for the family. The quarter also saw a selfie competition from Dream Cruises, a self-drive photo contest from Travel South and calls for WeChat Moments photos from LA, and for short videos of Thailand, all in the top weekly posts.

Posting Strategies

In addition to the themes of their content, travel brands on WeChat should also pay attention to the frequency of their posting. Many of the top-ranked accounts for 2017, including Thailand, Dubai and Macao, were also the most prolific posters, with an average of over 6 posts a week. Of course, some des- Of course, some tinations are more popular for Chinese tourists than others and may achieve destinations are more top rankings without needing to post quite as much. Hong Kong posted an popular for Chinese average of only 3.7 times per week in 2017, but this still made it the account tourists than others with the 4th highest posting rate among DMOs, only behind Macao, Dubai and may achieve top and Los Angeles. With some of the most-viewed posts throughout 2017 and rankings without the start of 2018, Tourism New Zealand could easily rise in the rankings if needing to post quite they just increased their posting frequency, which is currently around twice a week. as much. Skift’s ‘WeChat Marketing Strategies for Global Travel Brands’ report identi- fied a strong relationship between frequency of posting and an account’s ranking. They found that accounts could increase their reach by up to six times and make it to the top 20% by posting at least three times a week. The report also revealed that the top 20% of posters, in terms of quantity, got 60% of the total page views for travel accounts on WeChat.

Conclusions

When developing a WeChat strategy, travel brands and destinations should consider who their target audience is and what kinds of experiences and topics will most appeal to this audience – whether this be outdoor adventures or shopping with celebrities. They should also plan to publish content that re- flects some of the most popular article topics as outlined here, publish at least three articles a week, and create seasonal engagement campaigns with giveaways to make sure their existing fans stay active.

55 COTRI Market Report Spring 2018 CHAPTER D

DESTINATION DEVELOPMENT

Iceland

Iceland has been considered to be a “dark horse” destination by Chinese tour operators in recent years – despite of starting from a much lower basis in terms of overnight numbers, Iceland’s performance increase in Chinese visitors’ overnights have outnumbered most other Nordic destinations. CHINESE VISITORS' OVERNIGHTS IN MAJOR NORDIC COUNTRIES (2011-2017)

Iceland is therefore an interesting case to exemplify how a long-haul destination, without direct flights or streamlined visa policies, could continuously evoke Chinese travellers’ interests over the past half-decade. Iceland is also an excellent example for demonstrating how destination marketing can strive to effectively educate Chinese visitors travelling out of peak seasons and alle- viate capacity pressure. It is however also an example of the dangers of ‘54overtourism ’.

56 COTRI Market Report Spring 2018

Strong Growth in Arrival Numbers

China is still far from being the largest international source market for Ice- land, ranking 6th behind the US, UK, Germany, Canada and France, and accounting for around 4% of the total number of international visitors in 2017. However, the YoY annual growth rate of Chinese arrivals maintained above 25% between 2011 and 2017, and in 2017 Iceland welcomed 10 times more Chinese visitors than 2011.

TOTAL NUMBER OF CHINESE VISITORS’ ARRIVALS TO ICELAND (2012-2017)

Purpose of Visit and Destination Image

Overall, the majority of Chinese visitors travel to Iceland for leisure purposes, although the country is also expanding its MICE industry. Iceland’s glaciers, Aurora Borealis, waterfall, geysers and geo-thermal hot springs are depicted in Chinese social media as somewhere at the “end of the world” or the “ultimate travel destination” – colourful landscapes and vast nature parks, mysterious and black sand beaches, pristine ocean, blue glaciers and, sparse visitors. Iceland is thus featured in Chinese media and travel agents’ brochures as a destination with extremely clean air and water, which is particularly appealing for Chinese travellers who come most likely from first-tier cities such as Beijing and Shanghai, where the level of pollution has reached a worrying level in recent years. Consequently, they are in search for pure air, outdoor activities and relaxation as a way to escape from the stress and the insalubrious environment of their big home cities. In addition, high levels of perceived safety are another drawcard why Iceland is 54attracting such an increasing number of tourists from China. Iceland, along

57 COTRI Market Report Spring 2018 with other Nordic countries, has always been perceived as safer than the traditional Western European destinations for Chinese visitors, especially due to the fact that it was not impacted by the unfortunate series of terrorist attacks in 2015-2016. Even some negative events, such as a bus carrying Chinese tourists crashing in December 2017, will not deter Chinese visitors’ desire for Iceland fundamentally because similar accidents unfortunately happen in Chi- na and other parts of the world from time to time. The exotic image of the country and the very closeness to wild nature makes Iceland the perfect location for upper middle class Chinese visitors, who are constantly seeking new destinations, are attracted by rich experience and mildly adventurous challenging trips and by scenery seen in films rather than shopping. Iceland, with its distance and the current condition of no direct flights, which is perceived as the ultimate travel destination by distance and costs, remains prestigious. The increase awareness of Iceland in China can be attributed partly to some eventful factors. For example, the awareness of Iceland in China surged after the Icelandic player Viðar Örn Kjartansson joined Chinese football club Jiang- su Guoxin-Sainty in 2015. Then Iceland national football team’s unprecedent- ed win over England in the UEFA European Championship 2016 created several viral WeChat articles explaining how a country as small as Iceland – particularly if compared to the relative size of China’s population and landmass – can steadily progress in its football performance through dedicated football education. The most recent qualification of Iceland for the 2018 FIFA World Cup for the first time in its history is likely to attract more Chinese people, as there is huge number of football fans in China – 100 million fans for Man- chester United alone – who suffered yet another humiliation when China failed again to qualify for the FIFA World Cup in Russia. Finally, Iceland’s popularity among intended Chinese visitors has grown also thanks to various films that are widely followed in China, such as “Game of Thrones” and “The Secret Life of Walter Mitty”.

ASIAN FOOTBALL CONFEDERATION, WORLD CUP 2018 QUALIFICATION – THIRD ROUND

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2018 FIFA WORLD CUP GROUP D

Improved Accessibility

Signing Tourism and Trade Agreements

Like many other European countries, Iceland signed a Memorandum of Un- derstanding with China in 2004, which conferred to Iceland the “Approved Destination Status” (ADS), opening the door for Iceland to receive Chinese outbound tourism to the island in ADS groups. The expansion of cooperation and bilateral exchanges between the two countries and a new orientation of Iceland after its severe economic crisis of 2008- 2011 lead to the signing of the Free Trade Agreement in 2013, which was the first ever such agreement that China signed with a European country. The Free Trade Agreement benefits Chinese government’s endeavours to further its influence in the Arctic region as well as investment into Iceland’s tourism industry.

Flight Connections

There is no direct flight between Iceland and China, which makes it less convenient and more expensive for Chinese tourists to arrange trips to the country compared to other long-haul destinations with direct flights. For this reason, the majority of Chinese tour operators tend to include Iceland in a more extended itinerary using Helsinki or Copenhagen as stopovers. The combination with other Nordic countries can also help make the most value out of one single trip by including more countries on the list. Meanwhile Iceland- alone products are also trendy for Chinese FIT travellers, who will arrange their flight connections by combining other parts of Europe Popular combinations in a trip to Iceland include visits to also other four Nor- dic countries: Finland, Denmark, Norway and Sweden. In addition, for the very high-end customers, Iceland + Greenland is considered to be once-in-a- life-time experience to be ticked off from one’s bucket list. 54

59 COTRI Market Report Spring 2018

Major airlines that currently serve the Keflavík airport include Finnair, Scan- dinavian Airlines and two local operators, Icelandair and WOW Air. With the strong growth of visitors from China, Icelandair, Iceland's main airline, has registered a double-digit growth of Chinese passengers since 2012. Icelandair has announced its commitment to launch the first direct flight to China in 2018 but without providing more details so far. Similarly, WOW Air, which is specialised in long-haul routes, is planning to expand to Asia in 2019, targeting also Eastern China. Once the direct flight between China and Iceland is launched, it will only take 10 hours. In addition, direct flights between China and Iceland will also mean potential growth of Chinese visits to destinations such as Greenland and the Faroe Islands since Iceland is the most convenient place to transfer to these destinations. Given the attractiveness of Iceland, it is correct that the Icelandic tourism industry and lobbying groups claim that the launch of direct flights between China and Iceland can be the game changer. However, questions for a destination like Iceland with relatively small size and population as well as fragile ecosystem should ask include that, does Ice- land want so many visitors coming with cheaper flights? Can Iceland’s tour- Can Iceland’s tourism ism industry and resources cater to large influx of Chinse visitors? How to industry and better manage seasonality and dispersion of Chinese visitors? resources cater to large influx of Chinse Visa Policy visitors? How to better manage Iceland’s regulation requires Chinese citizens to carry a visa, except for hold- seasonality and ers of diplomatic passports. Despite being an EFTA State (European Free Trade Association) and not a member of the European Union, Iceland isa dispersion of Chinese Schengen member and a part of the Schengen area since 1996. visitors? . Therefore, Chinese travellers can travel to Iceland on approved Schengen visas issued by other Schengen member states. The current Schengen visa allows Chinese tourists to travel freely within the Schengen zone and to stay for a maximum three months. In addition, ADS visas can be granted to ADS Tour Groups travelling to Ice- land for a period of the stay up to 90 days within 180 days. By the end of 2017, Iceland has established four visa application centres in Guangzhou, Hong Kong, Shanghai and Beijing. Dozens of visa application centres of other Schengen countries in China have eased the accessibility of visa to Iceland for Chinese visitors.

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Destination Marketing

In 2010, in order to face the slowdown in tourists’ arrivals because of the eruption of the Eyjafjallajökull volcano, Iceland launched a series of campaigns not necessarily tailored on Chinese visitors, but which certainly helped wooing more travellers from China. “Inspired by Iceland” and “Iceland naturally”, put in place by Promote Ice- land, targeted small groups with large budgets, a growing segment among Chinese tourists, and stressed the image of Iceland as a safe and lung- cleansing destination, all main factors in Chinese visitors’ choice. In addition, the promotion initiative “Iceland all-year-round” contributed to decrease the seasonal volatility, attracting a higher number of Chinese tourists even outside of summer. The famous Aurora Borealis, a distinctive characteristic of Nordic countries, plays an important role in Iceland’s marketing strategy and consequently in Chinese tourists’ decision to visit the country. Nature photography is a hot topic among WeChat users and an asset that many other national tourism boards exploit largely in order to lure Chinese tourists on WeChat platform. Visit Iceland, however, does not have official WeChat or Weibo accounts. If compared to other Nordic destinations such as Finland or Norway that have heavily invested in destination marketing in China, Iceland appears to be less proactive – there is no representative office in China and such job is carried out randomly by the Consulate of Iceland in China. The official Visit Iceland website has parts still in English and only connects to English social media. In addition, it loads extremely slowly – in some case taking more than 1.5 minutes – an unacceptable loading time for intended Chi- nese netizens.

Tourism Demand and Offer

Iceland is one of the most popular destinations for group travellers, even if a growing segment of them prefers customised group trips or prefers travelling independently. This trend was even more evident in 2017, when the country figured among the top five alternative destinations to South Korea, following the travel ban. An important part of these tourists is made up by repeat54 visitors, who have already visited Europe at least once and who are looking forward to discover a more exotic destination. In their trip to Iceland

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they look for a more in-depth experience and a different way to visit, which does not involve mainstream activities such as shopping and sightseeing. Re- peat Chinese tourists are more interested in local culture and in authentic experiences and are more inclined to spend for having unique feelings. This is especially true for young FITs, who are usually wealthier and who think that the “cost” is less important than the “experience”. In order to answer to this type of demand, Iceland offers a wide range of unique activities -all year-round, which attract Chinese visitors in every season. Among the most popular ones, travellers from China prefer outdoor activities such as whale watching, hiking, cycling, horse-riding, caving, visiting glaciers and volcanos and witnessing the Northern Lights. However, if compared to other well-known Nordic neighbours and Western European countries, despite the recent events such as football, films and even the 2010 volcano eruption that have created some PR and media sensation,

SAMPLE ITINERARY: FINLAND-DENMARK-ICELAND- NORWAY-SWEDEN- FINLAND 13 DAYS (11 NIGHTS)- 25,438 RMB (CA. 4,010 USD) OPERATED BY TUNIU

Day 1: Bejing- Helsinki – Copenhagen Hamlet Castle in Helsingor City Hall, Nyhavn, The Little Mermaid, Day 2: Copenhagen - Nordzealand – Gefion Fountain, Frederik’s Church, Fred- Copenhagen eriksborg Castle, Amalienborg, Superkilen Golden Circle, Thingvellir National Park, Day 3: Copenhagen - Reykjavík – Vik Gullfoss, Geysir, Reynisfjara Beach Day 4: D4 Vik Jökulsárlón, Vatnajökull National Park Whale watching, Blue Lagoon, Hallgrí- Day 5: D5 Vik – Reykjavík mskirkja Vigeland Sculpture Park, Royan Palace, Day 6: Reykjavík - Oslo City Hall, Oslo Opera House, Nobel Peace Centre, Akershus Fortress Hardangerfjord, St. Mary’s Church, Day 7: Oslo - Hardangerfjord- Bergen Vøringsfossen Day 8: Bergen - Sognefjorden– Flam Sognefjord, Flam

Day 9: Flam - Geirangerfjord– Flam Geirangerfjord, Briksdalsbreen

Day 10: Flam – Karlstad Vänern Stockholm Palace, Stockholm City Hall, Day 11: Karlstad - Stockholm – Turku Storkyrkan, Kastellholmen, Drottningholm Turku Castle, Uspenski Cathedral, Temp- peliaukio Church, Sibelius Monument, Day 12: Turku - Helsinki – Beijing Helsinki Senate Square, Helsinki Cathe- 54 dral, Kaivopuisto Day 13: Beijing

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Iceland is still less known and considered to be extremely expensive for the majority of Chinese tourists. Therefore, however, packaged tours regularly offer combinations of Iceland with the other Nordic countries, such as Finland, Norway, Sweden and Den- mark. This type of itinerary tends to attract Chinese travellers, who visit North- ern Europe for the first time. They tend to be more willing to discover as much as possible of the Nordic region and consequently choose such “complete” tours to make the most use of one single trip. An example of this type of itinerary can be the one proposed by Tuniu, which offers a 13-night trip through Iceland, Finland, Sweden, Norway, Denmark. This tour costs 25,438 RMB (ca. 4,010 USD) and touches all the most popular and mainstream attractions of the Nordic countries. For the high-end Chinese market, the stand-alone Iceland-only product is also popular on Ctrip.com. Despite no direct flights, Chinese visitors can choose to join Ctrip’s semi-guided groups in Iceland for either an in-depth (7 to 10 days) or a brief exploration (2-3 days). These visitors can have stopovers at any Eu- ropean flight-hubs such as Helsinki, depending on their interest and access options. The most popular regions are the Southwest (where Iceland’s capital Reykjavik is located) and the east of Iceland. The most visited attractions include the Blue Lagoon, the Golden Circle, with the geysers Geysir and Strokkur and the Gullfoss waterfall, and Skógar.

Current Issues

The tourist boom in Iceland, even if it represents an asset for the local economy, has also a considerable downside. In fact, the exponential growth in tourists’ arrivals is degrading the most popular natural locations. Most of them, like54 the Geysir and the Skógafoss waterfall, have even reached their tolerance limit, according to the Environment Agency of Iceland.

63 COTRI Market Report Spring 2018

SAMPLE ITINERARY: ICELAND 10 DAYS (7 NIGHTS, HALF-GUIDED TOUR) - 33,910 RMB (CA. USD 5,375) OPERATED BY CTRIP

Day 1: China- Reykjavík Hallgrímskirkja Church, Reykjavík's City Hall, Lake Tjörnin, National Museum of Day 2: Reykjavík Iceland, the Pearl, the Sun Voyager, Grotta Lighthouse Gullfoss, Geysir, Silfra Crack in Thingvellir Day 3: Golden Circle Route National Park, Kerid Crater Seljalandsfoss, Reynisfjara Beach, Day 4: Seljalandsfoss, Reynisfjara, Reynisdrangar, Dyrhólaey, Gljúfrabúi Dyrhólaey waterfall, Fontana Vatnajökull, Jökulsárlón Glacier Lagoon, Day 5: Kirkjubæjarklaustur, Vatna Na- Diamond Beach, Feather River Canyon, tional Park trekking Hofskirkja grass roof church, Glacier hiking

Day 6: Skógafoss trekking Mýrdalsjökull, Skógafoss, Snowmobiling

Whale watching, Blue Lagoon, Harpar Day 7: Blue Lagoon Hall Performance

Day 8: Reykjavík, free activity Helicopter tour or volcano exploration

Day 9 - 10: Reykjavík – China

These last years the ratio of tourists to the inhabitants has been one of the highest in the world, thanks also to the surge of Chinese travellers. This overcrowding generates on one side many complaints from the local people for visitors’ bad behaviour, including that of Chinese tourists, and for the exceeded capacity limit of the island. On the other side, from netnographic analysis it results that most of Chinese visitors find fault with the underdevelopment of public transport and the lack of adequate infrastructures, as well as the diffi- culties54 in finding an accommodation, because of the overcrowding, and the consequent high costs of staying.

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Future Development

Thus, Iceland will need to improve its infrastructure and its hotel room capacity, in order to face the unregulated growth of Airbnb and especially in view of a considerable increase in Chinese tourists’ arrivals once direct air routes will be opened in 2018. However, attracting visitors from China needs to be done in a more sustaina- ble way which takes into deeper consideration the tolerance limit of the natural locations and the overcrowding in the most popular attractions, such as the southwest region. Less targeted areas should be promoted among Chi- nese tourists in order to improve the distribution of tourism over the country. Greater efforts should also be undertaken to reduce seasonality even more so that the pressure on capacity is softened. The possibility of limiting the access to the most endangered natural attractions is still considered, despite the fail- ure of the Nature Pass proposition in 2015. Lastly, talking about segmentation, Iceland’s tourism marketing strategy is ...Iceland’s tourism moving toward focusing more on high-spending Chinese visitors, as well as on marketing strategy is the increasing segment of FITs travellers, whose number rose overall by 9% in moving toward 2017, and semi-FITs. focusing more on high -spending Chinese South America visitors, as well as on the increasing Chinese Arrivals to South America and Market Conditions segment of FITs travellers, whose

In 2017, the number of annual Chinese outbound tourists reached almost number rose overall 145 million border crossings, of which South America only took up about by 9% in 2017, and 0.2% of the whole market. South American countries started offering semi-FITs. streamlined visa services to intended Chinese travellers just two years ago. Following that development, the number of Chinese travellers visiting South American countries has been increasing rapidly. Compared to 2016, Peru received 22.5% more Chinese travellers in 2017; the arrival of Chinese travellers to Chile climbed up 34%; 6% more Chinese travellers visited Brazil Amer- ican countries have kept promoting tourism in China, while Chinese arrivals to Brazil, Peru, and Chile all rose significantly and steadily after the Rio games. Ctrip’s data show that the growth of Chinese travellers to Argentina, Bolivia, Peru, Jamaica, and Peru all doubled in the past year. Brazil received 61,250 Chinese travellers in 2017, which still makes up less than 1% of all Chinese international travellers. As an active participator in the Belt and Road initiative, Brail hopes to benefit its tourism industry by attracting54 more Chinese travellers.

65 COTRI Market Report Spring 2018

CHINESE TRAVELLERS TO BRAZIL, PERU, AND CHILE FROM 2015-2017

Chinese arrivals to Peru has more than doubled from 2012 to 2017. Peru has adopted digital marketing strategy to promote its tourism resources including nature, culture, and shopping etc. It also launched a Chinese website especially for Chinese travellers and opened a WeChat account. Peru is now focusing on Chinese high-spending travellers and working with a professional marketing company to promote its tourism resources in China as well as using CTW online training to empower its tourism industry. The China market was the fastest-growing segment for Chile in 2017 with a year-on-year increase of 34%. After being associated with Taiwan for many years, Panama established diplomatic relationships with China on June 13th, 2017. The relationship between the two countries has developed quickly since then. Panama was the first Latin American country to sign the Belt and Road Initiative MOU with China. Panama received about 22,000 Chinese travellers in 2017. It is expected that the arrival of Chinese travellers will double in 2018 with the ease of visa policy and launch of a direct flight. Owning a fortunate geographical setting, Panama is an important aviation hub which could connect the whole Latin America. Chinese travellers can easily make in-depth trips to South America via Panama.

Visa Policy

Novelty and ease in visa policies play stronger roles in attracting Chinese travellers to further away and less-connected regions, such as South American and African destinations. For example, Northern African countries including Mo- rocco and Tunisia introduced visa free policies for Chinese nationals in 2016 and saw explosive growth in arrival numbers in the final months of 2016 and in 54

66 COTRI Market Report Spring 2018 in 2017. Mexico and other Latin American destinations such as Cuba and Panama also benefited from eased visa requirements allowing Chinese ordi- nary passport holders to travel to various South American destinations if they held US, Canadian, UK and/or Schengen visas. In late 2016, South American countries, such as Chile, Peru, Brazil, and Ecua- dor, further relaxed visa restrictions for Chinese nationals. Ecuador has had a visa exemption policy for Chinese nationals in place since March 1st, 2016. From July 2016, Chile has stopped charging Chinese citizens visa application fees and allowed Chinese travellers holding the US or Canadian visa above six months to entry Chile. Since September 21st, 2016, Peru has exempted visa requirements for Chinese citizens holding a visa from the US, Canada, UK, Australia or Schengen countries. On June 15th, 2017, Argentina launched a ten-year multiple entry visa, which allows Chinese citizens a stay of up to 90 days in the country. Brazil also decided to issue Chinese nationals a five-year multiple entry visa valid for stays of up to 90 days, which could then be extended for another 90 days when necessary. Brazil is also considering offering electronic visas to Chinese citizens. In 2018, Brazil will set up eight more visa application centres in China, which will increase the number of Brazilian visa application centres to twelve and shorten the average processing time of visa application from 45 days to five days. Chinese travellers holding a valid visa from the US, Canada, Australia, UK, and Schengen countries and have used the visa as least once are exempted from a visa to enter Panama. Panama also started to simplify its visa policy for all Chinese citizens and offer three-year visa with multiple entries with a reduced cost (no more than 50 USD) from October 17th, 2017.

For Chinese tourists, visa exemption and visa-on-arrival policies make over- For Chinese tourists, seas destinations more appealing, since “spontaneous” trips become possi- visa exemption and ble in this context. Relaxed visa policies such as electronic visas, simplified visa-on-arrival policies visa application processes and shortened processing times also greatly en- make overseas courage Chinese tourists to visit certain countries as the preparation work destinations more before outbound trips is greatly reduced. Chinese visitors will also regard the simplified visa processes as a sign of being welcome in the respective desti- appealing, since nation. “spontaneous” trips become possible in Influenced by the increasingly closer diplomatic and economic ties, as well as this context. closer cultural communication between South American countries and Chi- na, many states in the region are looking to further ease visa restrictions for Chinese citizens. As a result, positive Chinese arrival trends will continue and the growth rate are likely to go up in the next three years.

67 COTRI Market Report Spring 2018 OVERVIEW OF VISA POLICIES OF SOUTH AMERICAN COUNTRIES TO CHI- NESE CITIZENS

Country Date Visa Policy Argentina Jun. 15th, 2017  A 10-year visa with multiple entries of maximum 90 days for business and individual tourism trips.

 Allowing Chinese tourists holding a valid visa issued by the US or a Schengen country to apply for an ETA through the official website of the National Migration Office in Argentina.  A 5-year visa with multiple entries of maximum 90 days, renewable for up to 90 days, every 12 months, for tourism, business and family visits. st Brazil Oct. 1 , 2017  In 2018, Brazil will set up 8 more visa application centres in China, which will increase the number of Brazil visa application centres to 12 and shorten the average processing time of visa

Bolivia Dec. 2017  Visa-on-arrival.  Visa-free entry of maximum 90 days to Chinese Chile Jul. 7th, 2016 visitors holding a US or Canadian visa with over 6-month validity.  Removal of visa requirements of entry, exit, and st Mar. 1 , 2016 transit visas throughout its territory by a maxi- Ecuador mum stay of 90 days for tourism activities and non-profit activities in general.  Visa-free entry of maximum 180 days for Chi- nese citizens holding a visa from the US, Cana- Peru Sep. 21st, 2016 da, UK, Australia or Schengen countries, with at least 6 months remaining, for tourism or business trips. Suriname Mar. 1st, 2016  Visa-on-arrival.  Visa-free entry of maximum 30 days for Chi- nese citizens holding a visa from the US, Cana- da, UK, Australia or European Union countries th Panama Oct. 17 , 2017 and have used the visa at least once.

 A three-year visa with multiple entries with a reduced cost (no more than 50 USD). Flights The South American continent is, geographically-speaking, the continent situated farthest away from China. Due to uncertainties of flying over the Pacific Ocean for too long as well as technological and economic factors, there is no direct flight operating between South America and China so far. AirChina’s CA90754 (Beijing – Madrid - São Paulo) used to be the only flight connecting Chi- na and South America operated by Mainland Chinese airlines. On April 5th,

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2018, another direct flight between China and Panama, the “Beijing-Huston- Panama City” route, was launched. Flights which last over 12 hours and span more than 10,000 km cost much more than shorter flights as the fuel has to be transported all the way. There- fore, having a stopover in Europe, North America or Middle East can improve the profitability of airlines for routes between China and South America. Cur- rent popular flights with stopovers between South America countries and China all take more than 24 hours. Convenience and cost-effectiveness of flight connections are critical factors that influence Chinese travellers’ choice of outbound destinations. Given their distance compared with other overseas destinations, South American countries are therefore not in an advantageous position when it comes to connectivity.

POPULAR FLIGHTS WITH STOPOVERS BETWEEN SOUTH AMERICA AND CHINA

City in China Connecting City City in South America Buenos Aires, Argentina Beijing Lima, Peru Dallas, TX, USA Shanghai Santiago, Chile

São Paulo, Brazil

Beijing Buenos Aires, Argentina Dubai, UAE Shanghai Rio de Janeiro, Brazil

Beijing Addis Ababa, Ethiopia São Paulo, Brazil Shanghai

Although the high price and long flying times between South America and China favour affluent Chinese travellers with longer vacation times, they are nevertheless the two biggest concerns of Chinese travellers who’ve visited South America and from those planning a trip to the continent. Seeing the increasing demand from more Chinese travellers and frequent trade between South America and China, China’s airlines have been developing their flight network in South America. Hainan airlines invested 450 million USD to Brazil’s Azul and became Azul’s largest stakeholder. China Southern Airlines has put South America in their plan of future flight development and aims to launch direct flights from China to Brazil and Argentina in the next five years. The Argentinian Tourism Board is also cooperating with three airlines from China to develop a direct flight between Shanghai and Buenos Aires.54

69 COTRI Market Report Spring 2018

Safety Concerns

Chinese travellers perceive that visitor safety to be a severe issue for South America’s image as a tourist destination. Such concerns can upset Chinese tourists and affects their travel choices and eventually cause negative experiences. Violence, political unrest, economic recession, and the spread of con- tagious diseases have negatively influenced Brazil’s tourism in the past two years. Chinese travellers are very concerned for their safety and health such as robbery and altitude sickness in South America after reading relevant news and reports before their trip. China’s media also warns Chinese travellers about the safety issue in South America. Chinese tourists are reminded to keep a low profile (not wearing jewellery or using expensive cameras or mobile phones), not carrying a large amount of cash, as well as not going out alone at night. South American countries are not alone having safety issues against tourists; for example, France and Italy are also among destinations that Chinese visitors are often reported as being mugged or having their belongings stolen otherwise.

Political Environment

Safety and political stability remain prominent factors that impact Chinese outbound travellers’ destination choices. Terror attacks and threats as well as refugee influx in most Western European destinations were among many other events that have contributed to a relatively unsafe image of Western Europe, Turkey and Greece in recent times. Major global events such as a series of terror attacks in Europe, the US presidential election in late 2016 and the political instability resulting from UK’s Brexit decision, nationalistic trends in Turkey and several European countries have further fuelled Chinese travellers’ shift in destination choices. The Chinese government has developed close ties with majority of the South American countries. The history of Chinese immigrants to South America can be traced back to early 19th century. Some estimates put the number of Chi- Some estimates put nese currently living in South America at 700,000. the number of In 2014, China’s president Xi Jinping attended the BRICS summit held in Bra- Chinese currently silia and had multi-party talks with leaders of South American countries. In living in South November 2016, Xi visited Chile, Ecuador, and Peru and attended the APEC America at 700,000. summit in Lima. In September 2017, Brazil’s president Michel Temer attended the 2017 BRICS summit held in Xiamen. South America countries are also active supporters of the Belt and Road Initiative. Both Argentina’s president Mauricio54 Macri and Chile’s president Michelle Bachelet attended the 2017

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Belt and Road Summit. Within the framework of Belt and Road scheme, Chi- na will support South America in the development of clean energy and elec- tricity networks. Since President Trump took office, the US has been shedding its role of “world leader” and seeing this role shifting towards China. China is having an increasingly greater influence in Latin America than the USA. The Chinese government has used its approval and support to outbound tourism to certain destinations, or the opposite (such as in the case of South Korea and Tai- wan), as a Soft Power tool. With the positive ties between China and South America, these destinations will be an appealing choice for Chinese travellers in the next three years, powered by the political and policy support from Chi- nese government as well as increased funds from China’s direct overseas investments.

South America as a Transit Point to Antarctica

Since the establishment of the first Antarctic Station, the Great Wall Station, in 1985, China’s interests in the Antarctic have evolved from symbolic to sub- stantial including the growing interest of China’s affluent travellers in recent years. In 2004, only 37 Chinese citizens visited Antarctica. This number jumped to 5,289 in the winter season 2016/2017, making China with a market share of 12% the second biggest tourism source market after the USA. A recent survey showed that almost all Chinese HNWI travellers have the intention of visiting Antarctica as well as the Arctic. Since the route to Antarcti- ca via South America is preferred by Chinese travellers, many of them stop and travel in South American countries on their way heading to Antarctica. The main route to Antarctica is made via specialised cruise from Argentina to The main route to Antarctica, which takes about two days to arrive and return respectively. Antarctica is made via specialised cruise Profile of Current Chinese Travellers to South America from Argentina to Antarctica, which Currently, Chinese travellers visiting South America are primarily high-end travellers who are aged between 40 and 65 and rich in money, time, as well as takes about two days travel experience. Most of the affluent Chinese retirees are “best-agers” be- to arrive and return tween the ages of 55–65 and, unlike the majority of middle-aged affluent trav- respectively. ellers, are not “time poor” and able to afford to go on trips that are less frantic and last several weeks. South America has long been a favourite resort for wealthy European and American travellers. Consequently, there has been mature and developed reception infrastructures and luxurious hotels in South America, which also meet the demands of high-end Chinese travellers. In the coming years, middle-aged and older travellers Chinese are expected to re- main54 the major group of Chinese tourists to South America.

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However, with Chinese outbound tourism having started more than ten years ago, the first cohorts of teenagers who have travelled internationally with their parents since childhood are entering the market. They are referred to as linglinghous (born after 2000), adding to the majority groups of “Millennials” or balinghous and jiulinghous (those born after 1980 and 1990 respectively). A report published by Fliggy recently revealed that balinghous and jiulinghous make up 79% of their Chinese outbound customers. Fliggy (formerly Alitrip) is concentrating on the younger market, so this number cannot be taken for the whole outbound tourism market, but also according to Ctrip more than 60% of the total market are Millennials. Loving a sense of free- dom, being big-hearted, focusing on experience, and not being afraid to spend money are four main characteristics used to describe these young Chi- nese outbound travellers. The popular Chinese reality show “Sisters Over Flowers” filmed several episodes in Peru while parts of the series “Divas Hit the Road” were shot in Bra- zil, drawing young Chinese audiences’ attention to South American countries. Many viewers expressed that they have never imagined the scenery in South America could be so amazing. Also, influenced by their peers who have already travelled to South America, young Chinese tourists’ interest in visiting the continent is increasing. With the appearance of various tour products on market, travelling to South America is becoming more affordable for young Chinese travellers. In the coming years, it is believed that both the absolute number and percentage of young Chinese tourists to South America will increase significantly. The structure of the age group of the Chinese tourist market for South America will change. Young Chinese travellers and “best- agers” will constitute two clearly recognisable different source market ele- ments.

Motivation and Purpose of Trips

For Chinese tourists, the South American continent carries a sense of mys- For Chinese tourists, tery because of its remoteness as seen from China. It is also famous for its the South American hospitality and exotic nature. Its native and Mayan cultures, unique land- continent carries a scape, historical heritage, local wine and food and sporting events are the sense of mystery most important factors that attract Chinese tourists to visit South America. because of its South America is especially a desirable destination for affluent and sophisti- remoteness as seen cated Chinese travellers who might be tired of visiting traditional destina- from China. tions such as Europe. A fair amount of Chinese tourists’ motivation of visiting South America stems from the books they’ve read and movies they’ve watched about the continent. The most famous and influential examples are “One Hundred Years of Solitude54 ” by Gabriel García Márquez and the movie “Happy Together” by the

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famous Chinese director Wong Kar-wai. Books by other popular and pioneer writers such as Echo (a very famous Taiwanese female writer) also sparked many Chinese tourists’ passions for visiting South America. Before the simplification of visa policies, business travellers used to dominate the Chinese tourist market. Due to the closer and more frequent business and economic collaboration between South America countries and China, the increase of Chinese business visitors will remain stable. But its percentage in the overall Chinese tourist market will decline in the coming years.

Expenditure

Packaged tour products to South America range from around 6,000 to 11,000 USD. High-end products offered by HHtravel (a subsidiary of Ctrip, targeting luxury travellers) range from 15,000 USD to 38,000 USD. According to Ctrip, the average expenditure of Chinese travellers to South America reached over 8,300 USD in the first half of 2017. Chinese travellers on average spent 11,000 USD per person in Brazil during August 2016 because of the increased price of flights and accommodation resulting from the Rio Olympic Games. In the coming years, with the increase of Chinese tourists visiting the continent, the total expenditure spent in South America by Chinese tourists will certainly increase. However, as tour operators are likely to compete for the South American market by undercutting the price of South America tour products, the average expenditure by Chinese tourists is also likely to drop. The possibility of more varied flight connections might also help decrease the The possibility of average cost of travelling to South America. Therefore the increase in spend- more varied flight ing will not reach the same percentages than the increases in arrivals. connections might also help decrease the Annual Income average cost of Different surveys put the number of members of the middle and upper mid- travelling to South dle class in China to between 250 million and 400 million Chinese, repre- America. Therefore senting about 20-30% of the total population. This group has an annual in- the increase in come per household ranging from 12,000 USD to 34,000 USD. In 2013, the spending will not average annual income of China outbound travellers was 17,750 USD, which reach the same was twice the average annual income of all Chinese. Only one quarter of Chi- percentages than the na outbound tourists’ annual income was less than 11,300 USD in 2013. increases in arrivals. In the first half of 2017, Chinese consumers spent on average over 10% of their expenditure on travelling. Obviously, 10% of an annual income of 12,000 USD will not sustain major travel expenditures. The solution to this puzzling situation lies in the fact that most outbound travellers are not only spending54 money from their salaried income but also from wealth which was

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accumulated in previous years from activities in the real estate and stock market or from other sources. Currently, Chinese visitors to South America are mainly high-income residents from first tier cities. In the future, Chinese outbound travellers will spend more of their income and wealth on outbound travelling. Even if trav- Even if travelling to elling to South America will not remain as a privilege for the highest end of South America will the Chinese social spectrum, the annual income level of Chinese tourists to not remain as a South America will still be far above average. privilege for the Tier of Cities highest end of the Chinese social Chinese tourists to South America are primarily residents from first-tier cities spectrum, the annual (Beijing, Shanghai, Guangzhou, and Shenzhen), and developed or “New sec- income level of ond-tier cities” such as Shenyang, Chengdu, and Xi’an. Chinese tourists to For South America, residents from first tier cities will still be the biggest tour- South America will ist source market in the coming years. However, the growing normalisation still be far above of tours to South America will increase the portion of Chinese tourists from average. second tier cities.

Peak Travel Season

For the Chinese, the southern hemisphere summer is the best season to visit South America. As a long-haul destination in the southern hemisphere, South America sees its peak of Chinese visitors during winter holidays in China such as the New Year’s Day, Spring Festival, and winter vacation (for students only). In the next three years, the Spring Festival period is expected to be the peak season for Chinese tourists to visit South America. However, due to the more flexible holiday arrangements of Chinese tourists, the time period for travelling to South America will become more dispersed.

Travel Modes

Due to the language barrier and complicated visa application, the majority of Chinese travellers visited South America in the past with packaged tours. But the packaged tours to South America are not to be confused with the traditional low-cost packaged tours chosen by first-time outbound travellers, but are rather expensive and high-end packaged tours or customised tours. Not only is South America the continent situated farthest away from China, Chinese travellers are also generally not familiar with either local culture or the54 languages (Spanish and Portuguese) spoken in South American countries.

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CHINESE HOLIDAYS IN 2018

As a result, travelling within a group to South America provides Chinese visitors with an increased feeling of safety, which is a key factor in the light of their concerns about travelling in South America. Among the packaged tourists visited South America via Tuniu (one of the leading OTAs in China), 40% of them travelled with family, 19% travelled with friends or partner, and 26% of them travelled alone. It is reasonable to predict that packaged or customised tours will remain the primary choice of Chinese tourists who travel to South America in the coming years. Less-experienced travellers from second and third tier cities will especially prefer packaged tours when travelling to South America since packaged tours pre-arrange everything for them and allow for everything to be explained to them in Chinese, which helps them explore the brand new world comfortably. However, the Chinese outbound market is maturing and travelling in package tour groups is often negatively covered by media. As a result, the Chi- nese free independent travellers (FIT) or self-organised tour market is rising sharply. The number of more experienced overseas travellers continues to increase as Chinese travellers take their second, fifth or tenth trip overseas — and, in the process, become more confident travelling on their own and pursuing more unique and personalised experiences. These experienced travellers are more likely to travel as FITs in small groups of couples, families, friends or colleagues, eschewing typical Chinese package group tours.

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The vast majority of independent outbound travellers, even excluding those that go to China’s SARs Hong Kong and Macau, choose to visit Asian destinations. However, in comparison to package group travellers, independent Chi- nese travellers are more likely to choose to visit more exotic places and explore more off-the-beaten-track locations and to be interested in interacting with locals and exploring different cultures. Notably, the majority of self- Notably, the majority organised affluent travellers are well-educated, under the age of 40 and are of self-organised more interested in activities and experiences that are in line with their own affluent travellers are interests and serve to affirm their lifestyle rather than simple sightseeing. well-educated, under The above description of Chinese FITs is consistent with characteristics of the the age of 40 and are majority Chinese tourists in South America. Although packaged and custom- more interested in ised tours will dominate the China tourist market for South America, it is like- activities and ly that the FIT market will also develop fast and increase its market share. experiences that are Length of Stay in line with their own interests and serve to The geographic long distance and long time required for round trip flights affirm their lifestyle make visiting South America an once-in-a-lifetime opportunity in the mind of rather than simple most Chinese travellers. As a result, they prefer visiting multiple countries in sightseeing. their trips to the continent and the average length of stay of their South America trips is over 20 days. In the next few years, the length of stay by Chinese leisure tourists in South America will still be on this level, as the majority will continue to be first-time visitors. Only if new forms of transportation which might reduce the time needed for travelling from China to South America dramatically will become available in the future will South America stop to be far away from China.

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CHAPTER E OUTLOOK 2030

For 2017 COTRI gave a forecast at the beginning of the year of a total of 145 million border crossings from Mainland China, of which the majority would have a destination beyond Greater China (Hong Kong, Macau, Taiwan) as the final goal. According to the analysis of COTRI this forecast has been verified by reality, based on data provided by the destinations. 69.4 million border- crossings had Greater China (48%) as final destination, 75.6 million (52%) went on to the rest of the world. For 2018 COTRI has updated its forecast, increasing it from 154 million to For 2018 COTRI has now 156 million border crossings happening within the current year. 73 mil- updated its forecast, lion will lead to Greater China, 83 million will go further afield. The relation increasing it from 154 will further move towards “real” international trips with 47% ending in Great- million to now 156 er China compared to 53% going onwards. This forecast is, as always based million border on a medium scenarios, not taking into account “Black Swan” events. crossings happening Taking into account the recent support of the Chinese government by estab- within the current lishing a Ministry of Culture and Tourism and the touristic effects of the Belt year. and Road Initiative, there is no reason to be too pessimistic about the future development of China’s outbound tourism. Assuming a global development without long-term increases of trade barriers and with a global economy in which China is continuously playing a more important role, the number of Chinese not only eager but also able to afford international travelling will increase and represent about 20% of the Chinese population or close to 300 million persons, double the approximately 150 million owners of a passport in today’s China. They will come from a wider range of first, second and third tier cities than today and will pursue a wider range of different activities, interests and serious leisure motivations. A bigger proportion of these travellers will be able to spend two weeks or more on their leisure travels per year, either because they are already retired or because they work in official organisations or big companies which grant longer periods of paid holiday. COTRI forecasts a development with a steady year-on-year growth of around 5% for trips to Greater China and 10% for trips to the rest of the world. This would result in a total number of outbound trips in 2030 of almost 400 million,54 out of which 2/3 would go beyond Greater China. The 200 million

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mark will be passed in 2022 and the 300 million mark five years later in 2027. President Xi Jinping will be able to announce the crossing of the 400 million th mark in 2031, well before his 80 birthday. Already in 2024 for the first time more than 60% of all trips will not have Hong Kong, Macau or Taiwan as final destination, with the absolute number of trips to the Rest of the World on the same level as the total number of border crossings in 2017. As the average length of trips will increase, both because more leisure time is available and because long-haul trips become more important compared to short trips to Greater China, the total spending will also rise. For the same reason however the average spending per person will decrease, as the holiday money will have to cover a longer period of time then. Percentage Arrivals Greater Arrivals Rest of Percentage Year Total (Mn.) Rest of the China (Mn.) the World (Mn.) Greater China World 2018 73 83 156 47% 53% 2019 77 91 168 46% 54% 2020 80 101 181 44% 56% 2021 84 111 195 43% 57% 2022 88 122 210 42% 58% 2023 93 134 227 41% 59% 2024 98 147 245 40% 60% 2025 103 162 265 39% 61% 2026 108 178 286 38% 62% 2027 113 196 309 37% 63% 2028 119 215 334 36% 64% 2029 125 237 362 34% 66% 2030 131 261 392 33% 67%

According to the UNWTO, international tourism will reach a level of 1.8 billion border-crossing trips by 2030, adding 500 million to the 1.32 billion of 2017. Already today about 11% of all these arrivals are generated by Main- land Chinese. According to the forecast presented above, the almost 400 million outbound trips which will originate in Mainland China, two thirds of them going beyond Greater China, will represent almost 250 million trips more than 2017, meaning that half of the additional outbound travellers added between now and 2030 will be Chinese. The current debate on overtourism has not taken this into account yet. If a dispersion of tourists in time and space to more different destinations and with less seasonal peaks and troughs is seen as the only possibility to cater for the additional half billion travellers, it will need attractive offers first of all for Chinese to avoid the col- lapse of main destinations like Barcelona, Venice, or infamously Boracay Is- land, in the coming years. 54

78 ITB China Special Section CHAPTER F ITB CHINA SPECIAL

Developing Destination Marketing Strategies to Win Chinese FITs Written by Roger Qiu, General Manager of the EMEA Region at Ctrip

Although China’s outbound traveler number has reached over 140 million in 2017, we still strongly believe that China’s tourism market has huge potential to develop. The first question then will be how to identify the target customers and how to communicate with them, through which channels. If we separate product categories into Group tour packages and FIT related products, FIT customers have reached almost 50%. On Ctrip’s platform, we have developed some new product types such as private group tours and tailor- made tours. We cannot define these two product types as traditional packages, because normally these customers know with each other (families, friends, colleagues, etc) and they want more customized services. According to Ctrip’s data, in 2017, Group tour packages accounted for 44%, FIT related products accounted for 42%, private group package and customized tours accounted for 14%. Before we talk about how to win Chinese FITs, let’s see some more Chinese customer profiles. Who is traveling around the world? People who were born in People who were born the 1970s’ and 1980s’ are the main customers, which accounts for 48% of the in the 1970s’ and entire customer pool. Tourists who were born before the 1970s’ account for 1980s’ are the main 17% of the total. And this segmentation mostly prefers Group tour packages customers, which because of language barriers and price sensitivity. Tourists who were born after accounts for 48% of the 1990’s account for 28% of the total and this segmentation is increasing rap- the entire customer idly and will increase consistently in the future. This will be the main target FITs pool. most destinations should focus on. According to Ctrip Virtual Travel Manag- ers’ (so called WeChat Guide) data, the young generation tourists book travel products in a later stage of the decision journey. More than 29% of tourists book their products 1 week before they travel. Their demands need a very quick response in the order procedure. Geographically, people from third or fourth tier cities choose more group tour packages instead of FIT products. Based on the information above, we can see that most FITs are young people who are from first or second tiers cities where the economy is quite advanced in China. These people are very technology oriented and want to be independ-

79 ITB China Special Section ent. They make decisions very late or just before they start the journey. They need more real-time based help during their journey. For instance, Ctrip has a WeChat Guide (Virtual Travel Managers) service to help our customers. The WeChat Guide service uses Ctrip’s database to find out who is going to travel to a certain destination during the same period. And Ctrip will invite these people to join in the same WeChat chat group. Ctrip will also assign a virtual tour guide into this chat group. This service can help our FITs to have a 24hrs service. In 2017, Ctrip WeChat Guide (Virtual Travel Managers) served more than 10 million people. Almost one in ten independent travelers used the VTM service. More than 100,000 guests looked for companions via VTM during their trips. More than 30,000 guests make friends via VTM offline events. VTM SOS service covered 180 destinations around the world with 94% success rate. 35% questions are about accidental inquiry. 33% people asked for lost items. 22% people ask for document and ID resubmission. And 10% of FITs have language difficul- ties. WeChat Guide service is a very important support service for FITs. FITs don’t have a tour guide, but they still need a service and communication system to support their journey. The Ctrip WeChat guide service can help answer all questions such as visa application procedures, transportation solutions, booking orders and itinerary recommendations. And most importantly, it can push local information and FIT products directly. Now the question is: is the local destination prepared for real-time based bookings? FITs are free and independent. Im- agine they receive information on an attraction, and are willing to go: can they book the tickets immediately through online channels? Can they get enough information online? Being mobile is one of Ctrip’s strategies and the actual situation in China. It’s It’s very rare to see very rare to see Chinese tourists holding a tour guide book or a map when they Chinese tourists go traveling. Instead of guide book and map, Chinese tourists use mobile and holding a tour guide Wi-Fi equipment. Attractions must be online and be mobile ready, not only in book or a map when information exposure but also in the products booking system, especially in re- they go traveling. al-time based orders. Instead of guide book China has the world’s largest market sample to test any new services or prod- and map, Chinese ucts. The service quality of a new application which serves 100,000 people and tourists use mobile which serves 10 million people is certainly different. China has the advantage of and Wi-Fi equipment. population not only in consumption power but also in improving services. I think overseas destinations can start to study China’s market from studying Chi- nese applications. As an online travel agency, traffic is very important. The young generation uses different mobile application every day. The short video applications such as Douyin and Kuaishou generate millions of visits worth in traffic every day. Ctrip has already collaborated with Douyin at the marketing level in order to reach the young generation, which is our main source of FIT customers. We have to

80 ITB China Special Section know what the young generation is using, watching, and experiencing in China. These online and mobile channels will be the key in communicating with future FITs. I won’t mention social media such as WeChat and Weibo in this article since it’s become common knowledge if you want to develop in China’s market. With the education level getting higher and higher, the Chinese young genera- With the education tion has fewer language problems, and they are not afraid of going abroad by level getting higher themselves. But still, each country has its own traditions, languages and service and higher, the standard. To increase the FITs’ experience is actually to “educate” them pre- Chinese young travel and in-travel. Destinations should have the ability to tell FITs about the generation has fewer local differences. Or a destination can accept the different behavioural habits language problems, from Chinese tourists. For example, how does a Chinese FIT calculate the tips? and they are not What if they forget to pay the tips? Will they still feel welcome when they be- afraid of going have differently because of culture difference? All Chinese tourists like to share their experience on social medias. And destinations must be sure that FITs abroad by spread positive information. Before conclusion, I would like to share the case study of Portugal which is still an emerging destination in China. Ctrip has collaborated with the Portugal Tourism Authority since 2016. Last year we launched an online campaign including online advertising (both PC end and APP end), social media campaign, EDM precise marketing and an online H5 game activity campaign. The campaign lasted for 6 months. The goal is to continually increase the brand awareness of Portugal as a tourism destination and increase the travel products sales performance. After the campaign, we achieved a 69% YOY increase in Ctrip brand group tour PAX and FIT package tour PAX. And we achieved more than 131% YOY increase in individual flight tickets sales and helped increase the group tour package sales of other agencies in China’s market, which sold their products through the Ctrip platform, by 178% YOY. To conclude, information access on the online and mobile levels, and using different marketing channels, will be very important to gain China’s FITs and young generation. China’s market is changing every day. All destinations’ key promoters should spend more time in China before launching any campaign. Or set up a local team to deal with China’s market. In the product level, try to be technology oriented and make sure the products can be available online.

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Connecting with the High-Value Independent Chinese Traveller Written by Dave Rumsey, Global CEO, ASAP+

As the Chinese Outbound travel market continues to evolve, destinations who want to attract high-value travelers need to have a clear strategy and execution plan that incorporates two key areas of understanding: Firstly, your target audience travels for experience. Destinations can no longer rely on shopping deals, famous sites and guided tours, this target audience places experience above all else when making a decision where to travel next. A recent Neilson study highlighted that experience outranked cost by a factor of 56% to 34%. The good news is that out of the total budget, 25% is still spent on shopping, but mobile payment methods and tax refunds are still key in attracting the higher spenders.

COST IS FAR LESS IMPORTANT THAN THE ‘EXPERIENCE’

A further breakdown of the activities that Chinese outbound travelers under- take while abroad further highlights the increasing maturity and sophistication of independent travelers.

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A further breakdown of the activities that Chinese outbound travelers under- take while abroad further highlights the increasing maturity and sophistication of independent travelers.

Secondly, your target audience is highly digital and has money to spend. They want to spend it via their mobile phone where possible and are using a highly sophisticated Chinese digital ecosystem before, during and after their travel experience. A recent report from IPSOS highlights that of those Chinese travelers surveyed, 40% stated that they regularly carry less than 100RMB (ca. 15 USD) in cash and expect to be able to purchase goods and services via their mobile phone, using either WeChat or Alipay. This study went on to say that the consumer preference for payments right across a selection of areas was via these mobile payment processes.

MOBILE PAYMENT DURING TRAVELS (% BY {PREFFERED PAYMENT METHOD)

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Destinations such as Visit Finland are leading the way by assisting operators in the destination with merchant facilities via the Chinese travelers’ preferred payment method and undoubtedly would be seeing an increased spending profile from Chinese tourists as a result. Icon shopping destinations, like Har- rods and Selfridges in London or Galeries Lafayette of Paris, have been offering Chinese preferred mobile payment options for almost two years now. Understanding Chinese consumer behaviour is key for any destination looking to attract a high-value and independent traveler. eMarketer recently released their annual forecasts and estimate that “adults in China will spend 2 hours and 39 minutes a day on mobile devices in 2018, up 11.1% over last year, accounting for 41.6% of their daily media time. By comparison, adults will spend 2 hours and 32 minutes per day watching TV, down 2% over 2017, representing 39.8% of daily media time.”

AVERAGE TIME SPENT PER DAY WITH DIGITAL VIDEO BY ADULTS IN CHINA 2016-2020 (HRS: MINS AND % OF TOTAL TIME SPENT)

Notes: ages 18+; time spent with each medium includes all time spent with that medium, re- gardless of multitasking; for example, 1 hour of multitasking on desktop/laptop while watching digital video is counted as 1 hour for digital video and one hour for desktop/laptop Source: eMarketer, April 2018

Ensuring that your destination is promoting itself on the platforms where your consumers are is important, but just as important is the format and digital video where destinations will attract the target independent traveler. It is also worth noting that as international roaming costs have fallen, consumer behavior when these travelers are abroad continues. It is estimated that WeChat is used at least once a day by 90% of high-value travelers while on vacation abroad. The Chinese International travel monitor last year sum- marized Chinese traveler usage in the following way: While the large OTA’s in China continue to dominate, challengers such as Mafengwo and Qyer are becoming increasingly popular with independent

84 ITB China Special Section outbound travelers. We recommend investigating these platforms further as niche providers who focus on User Generated Content. Independent travelers from China rely on recommendations and information that helps them differentiate between a standard experience and an experience that will be life changing and make them the envy of their friends, relatives and social media community.

Bottom Line

If you are a destination marketing organisation or tourism provider looking to attract a high-value independent Chinese outbound traveler, your marketing needs to reflect why your experience is unique. It is then imperative to ensure that all of the information required can be found on key Chinese digital platforms, translated and localised with the ability to book the experience via mobile.

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Travel Boom from China to Finland – Coincidence or Not? Written by Paavo Virkkunen, Head of Visit Finland, Executive Vice President of Business Finland

Travel demand from China to Finland has boomed during the past few years. China used to be a minor source market for travel to Finland, ranked outside the top ten; however, now China holds the fifth position, measured by registered overnights (362.138, +33,4%) – and altogether 432.000 visits to Fin- land (+62%) during 2017. Converting these figures into Export Value for the Finnish National Economy, the significance of the development becomes even more striking. The Chi- nese travel income is estimated around 400 million USD in 2017, and the growth during 2017 alone was 130 million USD. Altogether, Chinese travel to Finland is currently the second largest travel income source - only Russia being bigger, due to regular daily shopping trips to Finland. As the Chinese tourists’ expenditure per trip to Finland is absolutely the highest – more than 1,425 USD per trip, with growth of about 475 USD compared to the previous year (on average, tourists spend some 380 USD per trip in Finland) – the phenomenal growth requires some background analysis. Even though the boost has become visible only during the past few years, developing the basis has taken long time. The current air traffic connectivity between Finland and China is the most dense, when considering the relative size of Finland as a nation, compared with European major economies (Summer 2018 Finnair will have 7 destinations in China, altogether 38 week- Political air traffic ly flight frequencies between the nations). relations between Political air traffic relations between China and Finland have been estab- China and Finland lished already in the ‘70’s, and the first implementation of the arrangement have been established was the opening of the first direct non-stop route between Europe and Chi- already in the ‘70’s, na – namely Beijing and Helsinki – in June 1988. That route, and the strate- and the first gic development that has followed the opening, have been to a great extent implementation of the the foundation of the current boost. The long-term product development arrangement was the work by the Finnish travel industry, persistent marketing and sales work opening of the first within the Chinese tour operators and travel industry, and smooth coopera- direct non-stop route tion with the authorities have strengthened the foundation and credibility between Europe and of the good development. China – namely Certainly, this all would not have happened without the huge transfor- Beijing and Helsinki – mation of the Chinese national economy. The growth of the prosperous in June 1988. middle class, with the millennial generation adopting global travel trends and willingness to explore new, interesting phenomena and destinations,

86 ITB China Special Section possessing growing purchasing power for consumption – and, language skills enabling Free Independent Travel patterns – these are perhaps the most significant socio-demographic factors behind the development. The Chinese travel industry has also gone through a metamorphosis. Cur- rently, the Chinese consumer market is among the most sophisticated and digitalized markets globally. The development curve into mobile, digital and consumer-driven market behaviour is probably the steepest known. The reason for this is rather simple – there was no existing, solid, market-wide infrastructure for consumer business available, thus the leap into the modern mobile business network was the fastest means to catch the wave of growing

CHINESE OVERNIGHTS IN THE NORDIC COUNTRIES SUMMER SEASON (JUN- AUG) 2009-2017

CHINESE OVERNIGHTS IN THE NORDIC COUNTRIES WINTER SEASON (DEC- APR) 2009-2017

87 ITB China Special Section consumer demand. Currently the degree of digitalization in consumer business in China is undoubtedly among the highest in the world. So how was Finland as a travel destination able to reach its current, prominent position on the Chinese travel market? Part of the answer is surely the long-term development work that started already in the ‘70’s. But, every success consists also of a combination of good luck, an opportunity that needs to be taken, visionary action, and an understanding of the market mechanism – in particular, when thinking of consumer business. Highly digitalized, mobile social networks, growing interest and curiosity regarding the outside world and its phenomena, environmental development including rapid pollution and its consequences are just some of the factors for the growth. The trigger for Finland’s awareness as a travel destination was a reality TV- The trigger for show – We Are In Love – that is hugely popular in China. The producers were Finland’s awareness looking for a new “exotic” destination for a few episodes of the show, and as a travel destination through persistent sales work the production company decided to take the was a reality TV-show chance. During March 2016 the film crew shot three episodes in Lapland – – We Are In Love – mainly in Rovaniemi and Levi – and the episodes were shown in China during that is hugely popular April 2016, prominently displaying Finnish winter, Aurora Borealis, and activi- in China. ties in clean nature. The episodes turned out to be very popular – altogether the estimated coverage was some 450 million spectators – and it created lots of buzz in Chi- nese social media. As the Chinese travel industry is highly digital, they do also have their tentacles in social media. They discovered that Finland is pop- ping up as a “dot on the radar”, and key players like Ctrip, Caissa, Utour and Alibaba Group decided to take a closer look at Finland as travel destination. In particular the Alibaba Group Travel subsidiary Alitrip got very interested, deciding to arrange a rebranding event in Rovaniemi (Alitrip was rebranded into Fliggy), in November 2016, live-streamed through their network in Chi- na, and gaining an estimated coverage of close to 100 million spectators. Another significant new idea came up around the rebranding event. As Chi- nese consumers do not have easy access to global credit cards, lack of a suit- able payment instrument for shopping was perceived as a major challenge, and Alibaba had a solution for this dilemma – the Alipay mobile payment platform, that was easy to implement into the Finnish merchant scene, in particular in destinations where Chinese tourism was rapidly growing. This reflected with a rapid increase in per capita consumption of Chinese tourists in Finland; +49% 2017 vs 2016.

The emphasis of development of tourism from China to Finland is now very much in promoting Finland as summer destination, and bringing up new regions like Lakeland and Archipelago. The Chinese demand is currently very

88 ITB China Special Section

much concentrated in Helsinki and Lapland. As the demand trends are rapidly shifting into individualistic directions, it is essential to provide meansto support that development. A good example of this is for instance acceptance of the Chinese driver’s license for traffic in Finland, providing more possibilities for individual connectivity to travel services. The emphasis of development of tourism from China to Finland is now very much in promoting Finland as summer destination, and bringing up new regions like Lakeland and Archipelago. The Chinese demand is currently very much concentrated in Helsinki and Lapland. As the demand trends are rapidly shifting into individualistic directions, it is essential to provide means to support that development. A good example of this is for instance acceptance of the Chinese driver’s license for traffic in Finland, providing more possibilities for individual connectivity to travel services.

CHINESE OVERNIGHTS IN FINLAND

All in all, travel demand development from China to Finland is a significant service export growth item, providing prosperity, jobs and welfare for Fin- land, through the Finnish travel industry. This is particularly significant for scarcely populated areas, where availability of employment through other industries is rare, and other income possibilities meager. However, we need to remember that tourism is a long-term source of income, and we must not forget that sustainability and responsible use of the nature is of utmost importance. Let’s take care that we leave our most important tourism ingredient – the environment – to the next generations in better shape than we ourselves received it.

*Statistics Finland - Tilastokeskus **Visit Finland matkailijatutkimus 2017 ***Finnair 89 ITB China Special Section

Key Opinion Leaders Inspire Themed Travel

Written by Minxia Shi, President Assistant, Office of the President, Qyer

With the rise of consuming capacity and transformation of consumption patterns in China, travel has become an integral part of daily life for many people, and the travel industry has entered into a period of high growth. Ac- cording to official Chinese statistics, from 2006 to 2017, the number of outbound tourists continued to grow rapidly, with a compound growth rate of 9.74%. As of 2017, China's outbound tourists reached, according to official Chinese statistics, 130.51 million, an increase of 7% year-on-year. As travel becomes a common thing for more and more people, the expecta- As travel becomes a tion of Chinese travelers has experienced a shift from simply “going some- common thing for where” to “travel better, travel differently”. People are no longer satisfied more and more with the standard package tour, they are more interested in in-depth travel people, the that matches their own personalities and interests. expectation of On the one hand, travelers want to get travel products and services with Chinese travelers has higher quality, on the other hand, they also want more local and unique trav- experienced a shift el products, and to travel according to their own interests. from simply “going QYER.com, founded in 2004, is currently the largest Chinese outbound travel somewhere” to platform with over 88 million high-quality users and a large amount of in- “travel better, travel depth travel content. It’s dedicated to providing high-quality travel content differently”. and travel services for Chinese travelers. In a survey conducted by Qyer on travel preferences in 2017, 71% of users indicated that they are motivated to go on a trip by personal interests. Only 29% of users stated that they would not travel by interest. The most popular travel interests are food, movies, architecture, museums, anime pilgrimage, etc. According to a survey on users’ interests besides travel, more than 50% of the users are interested in food, movies, and photography. History and culture, outdoor sports, and museums also attract more than 25% of the users. Cars, anime, and e-sports games are favored by about 10% of the users. The tourism industry is following travelers’ changing preferences by continuous innovation. More and more thematic travel products have emerged, such as diving, skiing, photography tours, self-driving tour and parent-child bonding excursions. To satisfy travelers’ needs, the travel providers are providing more diverse products and destinations. For example, when we mentioned “Island Travel”, mostly we were talking about lying in the sun on the beach. However, today there is a wider range of products to choose from. During an island vacation, you can go hiking, surfing, rafting, sea fishing, have a 4WD adventure, do yoga or take a cooking

90 ITB China Special Section class. Travelers can have different experiences according to their own interests and hobbies. Beside the positive responses from the travel providers, the impact of KOLs on travellers' decisions also takes on more positive and profound changes. According to the Qyer survey of 2017, 52.52% of users will give special attention to "certified authors" when viewing travel content, and 85.07% of them will enter the author's home page to browse the author's other posts. In addition, as a PGC travel guide produced by Qyer, the Qyer Guide provides content generated by strictly selected authors and professional editors. At pre- sent, Qyer Guide has more than 230 million readings.

TRAVEL PREFERENCE OF QYER USERS, 2017

Source: QYER.com

As an original content platform, Qyer not only gathers a large amount of high- quality and structured PGC content and highly active UGC content, but also has many travel users and opinion leaders who provided in-depth content. For 14 years, Qyer has accompanied many travelers' journeys and witnessed the growth of many internet travel KOLs. When tourist attractions based on geographic location no longer satisfy travelers’ need, travelers will discover new routes and destinations to meet their own interests. There is a ski lover who spends two-thirds of the year traveling around the world for best ski areas, and takes his fans to unlock various types of snow fields. There is a beer enthusiast who has tasted more than 7,000 bottles of beer from more than 70 countries in the last 10 years, then opened his own World Beer Museum to share his passion with fellow beer lovers. There is a light painting photographer, who stands in freezing cold water for 11 hours just to take a perfect shot, and creates a series of dreamy photos of

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ruins around the world. There is a couple who work in the fashion industry and have a passion for vintage, who have visited more than 300 vintage markets in over 30 countries. The little shop they opened has attracted top Chi- nese stylists and the media. These KOLs have won many fans through their in-depth content. Their stories prove that more and more people are motivated to go on a trip for personal interest than for the destination. These KOLs found their passion by traveling and created in-depth contents during the trip, which perfectly interpreted the value of "Travel to Create”. At the end of 2017, Qyer organized the “2017 QYER Top 50 Travelers Summit” and gathered the most imaginative and active travelers in China. The Top 50 KOLs selected are all in-depth travelers who have great influence in the travel industry and across the internet, including Xiexie and Caicai（谢谢和菜菜）, the couple who travel the world to celebrate their love; Xiao Bianer（小辫儿）, founder of PassBy Bar and NBeer Pub; Nalei（那磊） and Zhangmiao（张淼）, global vintage seekers. These KOLs have in total more than 45 million followers on Qyer.com, their posts contributed a total of 160 million views and more than 500,000 “likes”, have been saved more than 1.2 million times. In May 2018, Qyer cooperates with ITB China to organize “IT'S MY World Trav- el Award” giving ceremony to commend the most influential travelers in the travel industry.

INTERESTS BESIDES TRAVEL OF QYER USERS, 2017

Source: QYER.com

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Thematic travel products endorsed by KOLs are showing great potential. These products are based on certain travel interests and are more vertical compared to general travel products. Their target market is a group of more mature travelers with clearer needs, a higher frequency of consumption and are more “sticky”. For example, the repurchase frequency of a KOL led ski- themed product can reach 3-4 times per year, which is a repurchase rate exceeding the industry average. As the originator of in-depth travel content, KOLs are active participants and influential communicators who are able to maximize the activity of a travel community. As more and more travelers begin to travel by their hobbies and interests, the integration of KOLs with content, communication, community, and products will have an increasingly important and far-reaching impact on the travel industry.

93 ITB China Special Section

Improving Chinese Visitors’ Experience in Navigating through Global Cities by Analysing and Understanding their Consumption Written by Yan Han, Deputy Secretary General of World Tourism Cities Federation

With its headquarters located in Beijing, the WTCF, as the first international organization focusing on cities, understands in-depth the opportunities and challenges of the Chinese outbound market to the global tourism industry or cities. To assist our member cities and institutions to adapt to the new trend, WTCF cooperated with a related research institution to draft the Market Re- search on Chinese Outbound Tourist (city) Consumption to elevate industry services to Chinese tourists based on our findings below. Since 2014, WTCF started to conduct market research on Chinese outbound tourist (city) consumption. Research items have been increased and research bases have been expanding, while the consistency and continuity of research contents have still remained. Through multi-perspective and multi- dimensional consumer research, WTCF hopes to better understand the development trends of China’s outbound tourism market systematically and comprehensively, and to summarize and display the consumption habits and behaviors of Chinese outbound tourists as well as relevant changes in this regard. WTCF is dedicated to providing valuable information to the world’s tourism industry, and providing suggestions to member cities and organizations to help them improve market operation and services.

Outbound tourism has become a habit of Chinese citizens, and tourism is now popular for all

More than 75% of Chinese tourists believe that tourism is an important More than 75% of means to improve their life quality and happiness. Moreover, one third of Chinese tourists Chinese tourists believe that tourism is of equal importance to love, mar- believe that tourism is riage, family wealth, career development, learning and education, health an important means guarantee and child-development. to improve their life Most Chinese tourists have at least one outbound travel every year. On aver- quality and happiness. age they each travelled abroad 4.87 times, and traveled to 3-4 overseas cities in the past year. Tourist sources have become more scattered, the scope of optional destinations has become wider, and tourism products have become more diversified. For frequent tourists, tourism has become a habit, as well as a necessary supplement and adjustment to life.

94 ITB China Special Section Outbound tourism gradually returns to the nature of tourism, and they are concerned about the cultural background and facilities conveniences For Chinese tourists, outbound tourism is no longer a whirlwind tour and shopping. With the increase of outbound travels and improvement in tourism awareness, Chinese tourists gradually returned to the nature of tourism while travelling abroad. They are now paying more attention to comprehensively experiencing the characteristic sceneries and cultures in destinations. They focus on whether they are able to feel characteristic cultures, to experience more local cuisine and services, as well as to enjoy natural sceneries and historical relics. Or we could say, the cultural element prevails. Plus, although more Chinese tourists can speak English, they prefer to speak their mother tongue. Therefore, tourists gave feedback to us that if the destination or city could provide the following things, they would feel at home and enjoy their stay, such as:

 Chinese signs, introductions or Chinese service;

 High-speed and free Wi-Fi accessibility;

 Besides China Unipay, Alipay or WeChat also works for the payment;

 Tax refund could be done by WeChat or Alipay; and etc. Chinese tourists are becoming more rational in overseas consumption and paying more attention to tourism quality

Before travelling abroad, Chinese tourists will spend a long time gathering Before travelling information through multiple channels, so as to understand more about tour- abroad, Chinese ism destinations and improve tourism experiences. Prior to departure, they tourists will spend a will make budgets and shopping lists, paying more attention to the perfor- long time gathering mance/price ratio of goods. While travelling abroad, Chinese tourists general- information through ly choose self-funded items to enrich their travel experiences. While making multiple channels, so independent tours, they will consider hiring travel companions or a guide, as to understand choose high-end hotels near attractions or transportation hubs. Convenience, more about tourism comfort and guaranteed services are the priorities for them. destinations and Chinese tourists improve their sense of tourism safety, and pay improve tourism attention to tourism risks prevention

As Chinese tourists gain more experience in outbound tourism, they now attach more importance to potential risks in outbound travel, and their sense of tourism safety is also improving. More than 90% of Chinese outbound tourists will buy overseas tourism insurance. Worth paying special attention to is that the proportions of accident insurance, travel accident health and medical assistance insurance voluntarily bought by Chinese tourists have increased greatly from 38.7% to 49.81% and from 11.53% to 22.57%, respectively.

95 ITB China Special Section

Online tourism has become an important part of outbound tourism for Chinese tourists

The Internet has a profound influence on the behaviors of Chinese outbound tourists, which shows in the various aspects of outbound tourism. Tourists may access the official websites of travel agencies and tourism websites through search engines to acquire relevant tourism information. They may also book tours through online channels. They acquire dining information on the internet from search engines and tourism websites; they book hotels, air tickets and entrance tickets to attractions and entertainment venues at the official websites of travel agencies/tourism websites, the APP booking systems of travel agencies/tourism websites and e-commerce websites; and then they share their tourism experiences on WeChat Moments. We also found that Profound Influences are Generated by Wide Application of Internet, Particularly the Mobile Internet, on Online Tourism. By December 2015, the number of Chinese netizens totaled 688 million, and the Internet penetration rate reached 50.3% with half of Chinese citizens ac- cessing the Internet. The usage rate of mobile Internet services was up to 90.1%, which is much higher than those of desktop and notebook computers (67.6% and 38.7%). On an average, each netizen may spend over 3 hours surfing the Internet.

The rapid development of Mobile Internet has had far-reaching influence on The rapid the online tourism. The average daily pageviews of the official websites of development of the largest online tourism in China are up to 67 million, and those of tradi- Mobile Internet has tional tourism agencies are about one million. had far-reaching Of the total business volume of online tourism agencies, group tour accounts influence on the for 34.8%, hotel reservation accounts for 29.2%, air tickets booking accounts for 27.3%, and other business accounts for 8.7%. As for the outbound tourism business for Chinese citizens, its volume proportion has increased to 32% in 2015 from 25% in 2014. The group purchasing power and team building of online tourism agencies are respectively higher and more professional than before, showing clearer price advantage and stronger market promotion and rewards. At the same time, traditional tourism agencies directly market their tourism programs online based on their long-established brand advantages, fixed tourist source market, systematic operation system and quality assurance. There may be some changes of the tourism consumption behaviour or habits of Chinese, but the trend of increase will be irreversible. The rapid update and popularization of internet and mobile internet technologies have greatly accelerated the resources integration and scale development of the

96 ITB China Special Section tourism industry. Changes in business models and development will never stop. We expect that the world’s tourism will develop in an orderly manner within the framework of global peace and development. Therefore, we would like to provide the following suggestions:

I. Adapting to new changes and new features of Chinese outbound tourism, exploring special culture and providing unique travel experiences An increasing number of Chinese tourists hope that they can enjoy local unique sceneries and experience local culture during outbound tourism. Thus, it is suggested that overseas tourism cities and agencies should further develop corresponding products and services, so as to enable Chinese outbound tourists to comprehensively integrate into the real life of local people during their short stay. Having the chance to experience the lifestyles, cultural Having the chance to architecture and natural sceneries totally different from China and other cities experience the and countries, will leave a unique travel impression upon Chinese outbound lifestyles, cultural tourists. architecture and natural sceneries II. Conducting segmented studies on Chinese outbound tourists and provid- totally different from ing differentiated, personalized and tailored tourism products and services. China and other cities With the increase in the quantities and frequencies of Chinese outbound and countries, will tourists, as well as higher requirements on tourism products and services, the leave a unique travel key to attracting Chinese tourists lies on conducting segmented studies on impression upon Chinese outbound tourists and providing differentiated, personalized and tai- Chinese outbound lored tourism products and services. When conducting segmented studies, it tourists. is suggested to put emphasis on the differences in age groups, income levels, tourism objectives, interests and hobbies of Chinese tourists. High-income groups are worth paying more attention to. A related survey indicated that the spending habit of this group leads the Chinese consumption-oriented economy to a great extent.

III. Enhancing online tourism services and improving online tourism experience As online tourism has become an important part of outbound tourism for Chi- nese tourists, overseas tourism cities shall strengthen the construction of Chi- nese-language official websites, micro-blogs and WeChat public accounts, enhance cooperation with Chinese travel agencies and tourism websites, and seek good, steady partners. Based on the focus points of Chinese tourists, overseas tourism cities shall improve the practicality and quantity of information, especially information regarding attractions, restaurants, shopping, accommodation and transporta-

97 ITB China Special Section tion. They shall enhance cooperation with domestic travel agencies, tourism websites and e-commerce websites in China and provide reservation and purchase services for the entrance tickets of attractions and entertainment venues. Effectively link up the travel guide in the information platform with service supply and advertising of destinations.

Organization Background

World Tourism Cities Federation (WTCF), which was voluntarily formed by famous tourism cities and tourism-related institutions in the world under the initiative of Beijing, is the world’s first international tourism organization focusing on cities. Established on 15 September 2012 in Beijing, the headquarters and Secretariat of WTCF are based in Beijing, and Chinese and English are its official languages. Guided by the core vision of Better City Life through Tourism, WTCF provides services to its members that cover the entire tourism industrial chain. It aims to facilitate exchanges and cooperation among members, spread the experience of tourism city development, promote tourism products and resources, and contribute to the development and prosperity of world tourism industry. Starting with 58 founding members, WTCF has now grown into an international tourism organization with 130 city members, 66 institutional members and 6 branches. City members cover 63 countries and territories. Its institutional members include travel agencies, mass media, airports, airline companies, hotel groups, cruise companies and financial firms. With its growing appeal, capacity, leadership and influence in the tourism industry, WTCF is cred- ited as the fastest-growing international tourism organization.

98 COTRI Market Report Spring 2018 About COTRI

COTRI China Outbound Tourism Research Institute is the world’s leading independent research institute for information, training, COTRI Germany Headquarters: quality assessment, research, and consultancy relating to the Chi- West India House nese outbound tourism market. Eiffestr. 68

20537 Hamburg COTRI has been providing consultancy services and conducting market research in China for international customers since 2004. Germany To produce meaningful and relevant results, COTRI can draw upon Phone +49 40 558 99 576 its well-developed network of experts and tourism industry leaders Email: [email protected] inside and outside of China, along with many years of experience in gaining reliable information in a high context communication society where asking a direct question is often the least promising way to get a useful answer. COTRI follows the development of the Chi- COTRI China Headquarters: nese travel market and helps companies and destinations to have influence all along the customers journey. COTRI also provides Bldg B-21F, Wangjing Greenland Center Quantitative Data for 60 destinations. Hongtai East Street, Chaoyang District The CTW Training Programme helps tourism service providers to Beijing 100102 position themselves at the forefront of the biggest global out- Phone +86 139 1151 0490 bound tourism source market by understanding the different market segments, learning to successfully adapt products and by com- Email: [email protected] municating the special attention given to the market to Chinese tour operators and self-organised travellers. The training is offered in both face-to-face and online format.

99 COTRI Market Report Spring 2018 COTRI Country Partners

COTRI is proud to work with a global network of COTRI Country Partners on all continents. These accredited associates are exclusive partners for their specific country or region. They offer COTRI products and services and are available in the local time zone, speaking the local language and with in-depth knowledge of the local tourism industry and the local development of Chinese visits to the region. Fur- thermore, COTRI Country Partners offer CTW training programmes in the local language and based on the local situation.

Czech Republic, Slovakia New Zealand: Chinese Academy: Jiri Pos Tai Poutini Polytechnic: Zane Smith [email protected] [email protected] USA England, Scotland and Wales: GeLi Consult: Julia Gessner Capela China: Gary Grieve [email protected] [email protected]

Republic of Ireland and Northern Ireland The Netherlands Centre for Competitiveness: Dr. Tony Lenehan Match with China: Monique Groeneveld [email protected] [email protected]

Greece, Egypt, Turkey and Cyprus Morocco and Spain Tourism Generis: Georgios Drakopoulos Morocco Golf Services: Farid Bennis [email protected] [email protected]

Portugal Switzerland Edeluc: Fernando Costa Freire Haller – Tournet: Barbara Haller Rupf [email protected] [email protected]

Poland, Hungary, Belarus and Baltic States France Chinese Outbound Travel: Tomasz Janczak Talents Travel: Caroline Paul [email protected] [email protected]

100

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ABOUT

For companies starting to engage with the Chinese outbound tourism, the China Out- bound Accelerator Pack presents an all-in- one solution offering COTRI products and services, designed to make your first steps into the market successful.

 A 20-page step-by-step manual, with checklists for your market entry;  A one-year subscription to the COTRI Market Report;  Quantitative data for a country of your choice for one year;  A list of the 50 most important Chinese tour operators, online travel agencies, social media marketing partners as well as the main sources for contacting Chinese Key Opinion Leaders;  A List of the 15 most important free online sources of information on Chinese outbound tourism;  A list of the 10 most important tourism fairs about Chinese outbound tourism in China and Southeast Asia;  CTW Chinese Tourism Welcome Online Training for two participants;  A 30 minute one-to-one online consulting call with a COTRI expert.

BENEFITS DELIVERABLES

The China Outbound Tourism Accelerator Pack gives The manual, COTRI Market Report and lists will be you the information you need to make a successful en- delivered as pdf-files. Quantitative data is as both try into the Chinese outbound tourism market. COTRI’s an Excel spreadsheet and pdf-file, and the login global experience in this source market can become details for the online trainings come in a docu- your own advantage as you begin to engage with Chi- ment. Consulting call at agreed time via telephone nese travellers, avoiding mistakes and pitfalls. or Skype. As you use your China Outbound Tourism Accelerator Pack, you will learn everything you need to know to PRICE start your involvement with Chinese tourists: All services, information sources and bespoke  How to develop a successful strategy for the Chi- consulting for € 999,- nese outbound tourism market; (plus VAT if applicable)  How to choose the right market segments in China and how to adapt your products to their specific needs;  How to facilitate and accelerate your integration Payment by bank transfer: into the market; Please request details from  How to find your unique advantages and integrate [email protected] T: +49 40 55 899 644 your offer within a network  How to attract Chinese customers also during low Online purchase and payment season and to underutilised spaces and activities. via PayPal and Credit Card on 54 www.china-outbound.com

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CHINA OUTBOUND TRAVEL PULSE

REAL INSIGHTS FROM CHINESE TRAVELLERS

Created by Chinese travel-focused digital marketing agency Dragon Trail Interactive and COTRI (China Outbound Tourism Research Institute) the China Outbound Travel Pulse Video Series is aimed at exploring different aspects of Chinese outbound tourism in an informative, yet light-hearted way.

“It’s best to travel after the first day of the Spring Festival.”

“Europe is more attractive than Asian destinations, but the distance is an issue.”

“Most Chinese will go to Japan to ski because it’s close and the snow is very good.”

“Europe is best for shopping.” Find us on YouTube “Travelling independently is more expensive and COTRI’s website than joining in a group, but you can do what 54 http://china-outbound.com/ you like.”

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