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Jun
2015

The travelling Chinese March 2013

Luxury travel market

According to the global tourism data from 2012 released by the World Tourism Organization, Chinese tourists set a record in terms of overseas consumption of US$102 Billion, a 40% increase compared to 2011. From 2000 to 2012, the volume of Chinese tourists travelling internationally increased 8 times, from 10 million to 83 million, as did consumption. With greater international touring experience and more personalized requirements, they have become vacation oriented rather than purely wanting to be sightseers. By 2015, 100 million Chinese will pack their bags and travel abroad, according to a report from the UN World Tourism Organization.

According to reports from Forbes, amongst others, there are now approximately 10.26 Million mass affluent people in China, with disposable assets of between 100,000 and US$1 Million. These people now have more interest in travelling, taking on average 20 days holiday per year, and travelling internationally three times, according to luxury travel agents we interviewed.

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Travel planning

For the affluent and wealthy, the Internet is the most widely used source for obtaining travel information, followed closely by magazines. Survey data indicates that more than half of the millionaires questioned prefer to research travel destinations themselves, and make decisions based on the information they have personally acquired given their greater knowledge and experience than in the past.

Many of their trips overseas are spread over the national holiday periods, with the National Day break in October being the most active time. A manager in a luxury travel agency told us, that the wealthy will often use them to make all the travel arrangements, based on their personal itinery. They will travel with a group of friends or family and 60% of these groups will contain 3-10 people, unlike regular tour parties that contain 10 to 20 people. Their typical tour period lasts for an average of 8.5 days (5 to 7 days in Asia, 7 to 10 days in Europe and America), and the average expenditure is approximately 8000 RMB per person per day.

Timing of overseas travel

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Data source: ILTM outbound travel agency survey 2012

Popular International Luxury Tourism Destinations

luxurytraveling1Source: Hurun Chinese Luxury Consumer Survey 2013

According to high-end travel agents, almost half the Chinese luxury travelers chose to fly business class on international trips. Some luxury travel agents specifically differentiate themselves by offering business class only to attract high-end travelers who see business or first class as a match to their social status and the overall trip investment. The preferred domestic airline is Air China, while Singapore Airlines is the most commonly selected international carrier; both have collaborated with domestic luxury travel agencies for a long time. In order to better connect with Chinese travellers,

Singapore Changi Airport group is to introduce a promotion website and mobile application specifically targeting Chinese market. In addition, they also expect to facilitate collaboration between the governments and local airlines.

Half of Chinese millionaires make hotel reservations themselves booking through travel agencies, whilst the other half seeks the assistance of local business partners or friends. When choosing a hotel, over half of Chinese millionaires regard the reputation of the hotel in China to be most important, followed closely by its geographical location. Hence, it is essential for hotels abroad to build their brand recognition and reputation in China to attract the local luxury travelers first, and then the travel agents. Transportation and hotel service are also considered fundamental factors in that most of Chinese tourists would like go to scenic spots and shopping malls which are usually located downtown. Shangri-La was regarded as the most favored hotel brand by Rich Chinese travelers in 2012 given its popularity and reputation in Asia.

The luxury travel market in China is still immature, requiring a mix of approaches to satisfy consumer needs. Agencies like HH Travel (owned by Chinese travel conglomerate Ctrip), which organizes a 10-day trip to Europe amongst others, are finding success through standardized tourism products. “We figured our clients had a better acceptance of standardized tourism products – more than 60 percent of them chose these packages last year and 20 percent of clients requested slight adjustments to be made,” according to You Jinzhang, President of HH Travel. However, other agencies are skeptical of pre-planned vacations, and insist that catering to their Chinese clients’ individual needs. “I don’t have any fixed schedules for our clients. If any of them approaches me, I’d ask what they want and make a private and customized travel plan for them,” according to Lu Leying of the Shanghai-based travel agency My Tour Traveling Consulting.

Currently both have a place in the market, for those who are getting richer with limited travel experience, standardized tour packages provide them a complete safari experience. However, those with greater international travel experience require a unique, personalised and exclusive trip experience.

Luxury travel trends

According to a domestic luxury travel agent we spoke to, the majority of luxury travelers in China are the middle class whose numbers will continue to grow over the coming years. There was a time when Chinese luxury travel revolved around shopping, but this is changing. Luxury travelers are now inclining to go abroad for a real vacation and to relax. As their knowledge and experience has increased, so have their needs for themed travel, such as sport or visits to isolated locations, or religious centres. HH Travel for instance, is famous for its 80-day package that takes travelers around the world. The company differentiates itself by providing customers with only business class air travel, accommodation in 5 star hotels, palaces, castles and manor houses, together with Michelin starred restaurant dining.

 


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