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The Chinese Outbound Tourism The Chinese Outbound Tourism Market: a global perspectiveMarket: a global perspective

COTRI China Outbound Tourism Research Institute Prof. Dr. Wolfgang Georg Arlt

London, March 26, 2014

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Who is talking to you?Who is talking to you?

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COTRI China Outbound Tourism Research InstituteCOTRI China Outbound Tourism Research Institute

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The world's leading independent research institute for The world's leading independent research institute for information, training, quality assessment, research and information, training, quality assessment, research and consulting relating to the Chinese outbound tourism marketconsulting relating to the Chinese outbound tourism market

Established: 2004 Offices: Heide (Germany), Beijing, Shanghai, Guangzhou (China)COTRI Country Partner in: Argentina, Australia, Bhutan, Bosnia and Herzegovina,

Cambodia, Chile, Croatia, England, Estonia, Finland, France, Ireland, Italy, Kenya, Kosovo, Laos, Latvia, Lithuania, Macedonia, Mauritius, Mexico, Montenegro, Morocco, Myanmar, New Zealand, Peru, Russia, Scotland, Serbia, Slovenia, Spain, Thailand,Tunisia, USA, Vietnam, Wales

COTRI Germany Headquarter:Fritz-Thiedemann-Ring 2025746 Heide / GermanyPhone +49 481 85 55 523Fax +49 481 85 55 121Email [email protected]

COTRI China Headquarter:Suite 412 Lido Office Tower6 Jiangtai RoadBeijing 100004Phone +86 10 6417 9226 Email [email protected]

COTRI Office Shanghai:Suite 1512 Shui On Plaza333 Huaihai Rd. Shanghai 200021COTRI Office Guangzhou:Suite 2412 South Tower WTC371-375 Huanshi East Rd.Guangzhou 510095

www.china-outbound.com 44

Prof. Dr. Wolfgang Georg Arlt FRGSFirst visit to People’s Republic of China in 19781991-1999 owner of Inbound Tour Operator

China -> Europe (offices in Beijing and Berlin)COTRI founder and director since 2004Professor for International Tourism Management

at West Coast University of Applied Sciences (Heide)Visiting Professor at universities in China and

United KingdomFellow Royal Geographical Society (London)Research Fellow Japanese Society for the Promotion

of Science (Tokyo)

Latest publication: Editor ofZhang Guangrui: China’s Tourism Development COTRI eBook COTRI eBook 2013

COTRI Blog at Forbes.com:www.forbes.com/sites/profdrwolfganggarlt

Editor:China Outbound MarketChina Outbound MarketIntelligenceIntelligence

COTRI founder and director


COTRI Country Partners


Why are we all here today?Why are we all here today?

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CHINA – INTERNATIONAL TOURISM SOURCE MARKET NO. 1 IN THE WORLDCHINA – INTERNATIONAL TOURISM SOURCE MARKET NO. 1 IN THE WORLD IN TERMS OF BORDER-CROSSINGSIN TERMS OF BORDER-CROSSINGS


CHINA – INTERNATIONAL TOURISM SOURCE MARKET NO. 1 IN THE WORLDCHINA – INTERNATIONAL TOURISM SOURCE MARKET NO. 1 IN THE WORLD IN TERMS OF SPENDINGIN TERMS OF SPENDING


The big pictureThe big picture

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Travel has been an important part of the (self-)education process in Imperial China, but outbound travel has no tradition

Xu Xiake (1587-1641), China’s most famous traveller, was no Ibn Battuta or Marco Polo

Chinese are still learning to be an international tourist, lack of role models

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1 History 1 History


Demand pushing open the gatesDemand pushing open the gates

After 1989 (Tiananmen movement and Fall of Berlin Wall) resisting the demand for outbound tourism (politically dangerous and expensive) is no longer feasible

Since 2004 incremental paradigm change toward “Soft Power” approach of using outbound tourism

2013 new party leadership curbing official pleasure travels and conspicuous consumption, but for the first time officially “encouraging” outbound tourism

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2 Demand 2 Demand


Chinese Outbound Travel will continue to grow despite bursting of Chinese Outbound Travel will continue to grow despite bursting of credit bubble in China (credit bubble in China (Chinese GDP +2% and deflation in 2015Chinese GDP +2% and deflation in 2015?)?)

•Long-distance outbound travel for Top 5 percent of Chinese society is investment, not holiday

•Direct investment : Business travel, real estate and company investment for profit and for passports

•Indirect investment : “Leisure” travel for self-esteem and peer group confirmation of status and prestige

•Long-term investment : Formal and informal education, market knowledge, experiences

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3 Investment 3 Investment


Chinese outbound traveller seek Return on InvestmentChinese outbound traveller seek Return on InvestmentIf international travel is investment, the products offered should be organised in a way to guarantee the Chinese visitor a good Return on Investment (ROI):•Value for money and for time •Guaranteed quality as seen from a Chinese point of view•No more time spent as needed for prestige gain•Supporting the specific bragging value of a product: famous, typical, oldest/highest/awarded, celebrities choice, unusual (but not unknown), authentic (but not against expectation), hard to get, VIP only, as seen in TV and movies•Connecting fun und investment•Giving face to China and all Chinese •Safe and without risk

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4 ROI 4 ROI


““The” Chinese outbound tourists does not exist (anymore). The” Chinese outbound tourists does not exist (anymore).

The four most important groups: •Mass-market package tour participants, often first-time traveller, from second/third tier cities, interested in cheap trips, sightseeing and shopping for prestige•More affluent and more experienced self-organised travellers, interested in value for money, intensive short experiences and shopping for lifestyle affirmation, “money-rich but time-poor” •Business/official travellers, interested in luxury and conspicuous consumption (when nobody watches)•Chinese temporarily living outside of China (Chinese expats, students), travelling themselves and receiving guests

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5 Segmentation 5 Segmentation


Chinese traveller continue to embrace self-organised travelChinese traveller continue to embrace self-organised travel

According to COTRI research, almost all adult affluent Chinese have been outside Mainland China at least once, 90% of all adult affluent Chinese have already visited Europe

Each year more travel experience, higher percentage of overseas university graduates, and more information available combined with new Chinese tourism law pushes affluent Chinese to travel self-organised

With the domino effect of easing of visa restrictions well under way in 2014, need to use tour operator for visa diminishes

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6 Package Self 6 Package Self


A history of waves:

100 million aspiring Chinese living in 2nd and lower tier city inhabitants are still waiting for their turn to see the Mona Lisa and to visit European brand stores with package groups for as little cost as possible

50 million more experienced travellers moving from ticking off sights and from buying the most famous brands to finding destinations, travel styles, hotels and products which fit the lifestyle of their specific peer group

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7 Future7 Future


Getting happy and profitable Chinese customersGetting happy and profitable Chinese customersConcentrating as much on direct bookings and direct (social media)

marketing as on working with Chinese tour operatorsProviding prestige by using Chinese language, symbols, decoration,

quality labels, credit card services – but in an unobstrusive wayProviding services for money-rich but time-poor guests – no

waiting!Turning the attraction/hotel/sight into a destination with a story –

something to tell at home about Anticipating the needs of Chinese visitors – Chinese photographer

for honeymoon couples, exclusive limited edition souvenirs which can only be bought on the spot or in O20 (offline to online) shops

Time to learn more about your Chinese customers. Time to learn more about your Chinese customers.

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8 Action 8 Action


Thank you for your attention, Thank you for your attention, looking forward to your comments looking forward to your comments and questions!and questions!

Have Fun and Profit in the Have Fun and Profit in the Wood Horse Year! Wood Horse Year!

ContactContactCOTRI China Outbound Tourism Research InstituteProf. Dr. Wolfgang Georg ArltTel. +49 481 8555 523Mail [email protected] www.china-outbound.comBlog www.forbes.com/sites/profdrwolfganggarlt/

Thank You!

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