Political events in the United States and Europe have taken center stage on the world landscape in recent months, leaving experts wondering how these political changes will affect the global business climate.

China has been a particular focus of speculation, as political changes will affect both the overall balance of power over the long term, and global trade in the short term.

One area that is often overlooked is China’s economic impact on the global economy resulting from Chinese tourism expenditures. Chinese tourists overtook both the United States and Germany years ago to become the number one spending tourist globally – spending more than US$137 billion outside of China in 2015 – a number that is expected to increase to more than US$255 billion by 2025, making it more than double that of the United States, and more than Germany, the UK and Russia combined. (https://jingdaily.com/report-chinese-travelers-to-spend-255-billion-abroad-by-2025/)

As experts look to predict how political cicumstances will affect this massive powerhouse of global spending, they must take into account ease of travel, visa policies and airlift to specific locations. However, perhaps the most important factor in understanding how Chinese tourism behavior will change in the future is Chinese consumer behavior and preferences as it relates to travel.

In order to more accurately predict changes in this behavior, China Luxury Advisors turned to the foremost experts in Chinese tourism – the Chinese travel trade, and interviewed Chinese tour operators around the globe, as well as Chinese tour guides on the ground in the United States and Europe. These operators are on the front lines of Chinese tourist behavior on a daily basis, and the most attuned to shifts in behaviors. We asked them how the political climate is shifting consumer tourism behavior, and what they expect to happen in the future:

United States

When asked about the potential impact of the US election on Chinese tourism, many tour operators were skeptical that it would have much of an impact on the prevailing Chinese tourism trend favoring the United States, unless tourism visa policies were to change. As David Wang from Galaxy Tour commented, “whoever becomes the president doesn’t matter a lot to Chinese tourists. Chinese still want to travel to the United States. However, if the tourist visa policy becomes very strict to Chinese, the Chinese tourists won’t be able to come to the United States.”

Benny Feng from NSA International added, “Sino-China tourism is the irresistible trend” and Ma Jie of Lucky Tour said “Chinese tourism can contribute to the American economy a lot. The trend of Chinese tourism will not stop.”

The top two concerns for continued strength in Chinese tourism to the United States is the impact on the value of the RMB/US dollar exchange rate, and if the election would have any impact on security concerns in the United States. Safety is always the number one concern for Chinese tourists. Any perceived Instability will have a negative impact on growth.

David Li from Blue Connection commented “the election itself doesn’t affect tourism, but the currency does. Now it’s more expensive to convert CNY to USD, so it will be more expensive for Chinese tourists to travel to the U.S.  If this trend continues, the number of the tourists coming to the United States will decrease.”

Deming Zhu from Shanghai Airlines Travel reiterated this point, “Chinese consumers are more concerned about the exchange rate than the election results. If the policy of the new president is driving the RMB down, then it will be bad news for Chinese tourism to the United States.”

Europe

While Western Europe is evaluating the impact of recent elections, Chinese tourists have already changed their behavior significantly in Europe.

A tour operator from the company Comfort Travel explained “while Western Europe still dominates the market, Eastern European destinations are gaining popularity.”

Security issues in France, Belgium and other Western European countries have caused a dramatic shift in European itineraries, to favor locations in Eastern Europe, Northern Europe, and the UK.

Several tour operators cited the growing popularity of the Nordic countries, especially Denmark and Iceland. In particular, Northern Lights tours are hot products among the tour operators in China right now. Chinese Online Travel Agent, CTrip, recently called Iceland and Hungary the “dark horses” of today’s Chinese tourism market.

Chinese tour operator, Spring Tour, commented “Eastern European countries like the Czech Republic and Russia are growing quickly. We are also seeing secondary European destinations such as Spain gaining in popularity, mostly due to the security issues in France and Belgium.”

Tour operator, UTour, also commented that Eastern European destinations, Croatia, Serbia and Czech Republic are all increasing among individual travelers.

The Brexit decision has not had a negative impact on Chinese tourism behavior, with the UK experiencing a recent increase in Chinese tourism since the decision as Chinese tourists look to take advantage of the weaker pound.

Other trends that the tour operators are seeing in Europe include a rise in honeymoon tours, increases in family trips, growing popularity of self-drive trips in Europe and the rise of photography tours.

Looking forward, there will be continued scrutiny on the effects of the refugee crisis. A representative from Comfort Travel commented, “the European market is expected to perform better next year, however, the refugee crisis is likely to cause instability in the region and halt any major growth.” A representative from UTour echoed these comments, “Chinese travelers are likely to avoid areas hit most by the refugee crisis, despite the weak Euro.”

Chinese tourists will continue to keep a keen eye on security and the Euro/RMB exchange rate, both of which will have the primary impact on short-term gains and losses to countries in Europe.

A representative from Spring Tour explained, “if Europe can improve regional security, the Europe market will rebound in 2017.”

A representative from UTour added “the exchange rate has a significant impact on travel decisions. A weak RMB is likely to slow down outbound travel.”

China Luxury Advisors conducts quantitative and qualitative research to better understand global Chinese tourism trends, including frequent “street interviews” to gain insights from Chinese travelers.

This week we asked tourists about their booking and travel methods and preferences. If you work closely with travelers from China, here’s what you need to know, in their own words:

Children are the focus. Ms. Chen and Ms. Wang, both women in their 40’s and on a family vacation, remarked, “we visited a few well-known universities, like Stanford. Our kids are still young, but we are thinking to send them here to study when they are older.”

Increasingly, we have seen educational content as a key motivator for many family vacations abroad, as well as sightseeing and shopping, or visiting children studying in colleges. It is important for companies to cater to multi-generational families by providing amenities and services targeted towards children, parents, and grandparents alike.

Suggestions include options to explore well-known colleges within the United States or a specific state, providing college information in Chinese such as contact information for admissions counselors, and offering university guides.

Provide bundled options. Mr. Wang, a tourist from China in his early 20’s, shares his enthusiasm for bundled packages. “If there’s a reasonable package for airlines and hotels, I would purchase the packages, instead of booking them separately.”

Destinations should seek opportunities to participate in bundled options, such as partnerships with car rental agencies for self-driving options or buses to simplify commute to and from tourist destinations, and should develop other creative partnerships to provide added value to Chinese tourists.

Create a presence on popular travel forums. Before every trip, Mr. Wang checks travel information on Ctrip, QiongYou, Mafengwo (马蜂窝), Qyer (穷游) and Qunar. Mr. Wang, like many Chinese tourists, will base his travel plans on information gleaned from these key travel forums. Make sure that you audit your destination on popular travel forums, and ensure that you have a consistent presence with correct information, and active postings.

Reputation and familiarity are key. Mr. Zhu, a father in his 30’s from Nanjing, told us, “we booked our flights through official websites of the airline companies, but before that, we compared prices on Ctrip and Qunar. We did this when booking a hotel, and finally booked it on Booking.com.” Ms. Chen and Ms. Wang also followed this process, booking plane tickets on China Eastern Airlines’ official website, and their hotels on Booking.com.

Chinese travelers are highly aware of security and safety and prefer booking on official websites and through familiar and comfortable channels. Destinations should ensure that they have an official Chinese website, and that it is available and easily searchable in China—especially on Baidu—to ensure authenticity and comfort.

Destinations that follow some of these simple steps will go a long way in bridging the gap with Chinese tourists.

By Renee Hartmann

As anyone who has visited a U.S. National Park this summer can attest – peak Chinese tourism season has arrived. With continued strong growth in Chinese tourism worldwide, the summer of 2016 will see more Chinese tourists traveling overseas than ever before.

Despite upticks in Chinese tourism numbers during Chinese New Year and the October National holiday, July and August will see the highest numbers of Chinese traveling overseas. Expectations are that summer 2016 will also see more Chinese individual travelers than ever before, as Chinese tourists increasingly venture out on their own, away from group tours and set itineraries.

Alex Li, of Chinese tour operator CAISSA, agreed that the FIT (Free & Independent Tourists) segment will drive future growth, commenting, “the mix of group travel and FIT is currently about 40% group and 60% FIT. The FIT market is only going to grow in the future.”

As the Chinese tourism market has grown, however, the makeup of the FIT segment has also shifted subtly, as Li indicates: “a majority of Chinese FIT falls into the semi-FIT category. Families, friends, colleagues, club members often travel together in a fully customized small group format. They have 100% control of their hotel, transportation and itinerary. We expect multi-generation family groups will lead the growth, and are also seeing increases in destination weddings, dating trips and other themed travel packages.”

As Chinese tourist characteristics and habits shift, we expect Chinese tourists to increasingly seek off the beaten track destinations, and for tourists to actively pursue in-depth authentic local experiences.

Carol Chen from Chinese Tour Operator Diadema explained, “group packages are increasingly segmented — often with a theme such as wine, private jet, cruise, shopping, hiking, scuba diving and adventure tours.”

The Brexit Effect

The U.K. may see an uptick in Chinese tourism this summer, as Chinese tourists demonstrate increasing interest in the U.K. following the Brexit vote, in an effort take advantage of the plummeting British pound to snap up Burberry Trench Coats and other luxury goods in the U.K.

Since Brexit, China has seen increased Internet searches for U.K. holidays and some local tour operators have reported increased bookings to the U.K., according to Shanghai Daily. Chinese media have also been publishing stories about how to take advantage of a weaker pound and suggesting Chinese consider investing in the real estate market in the U.K..

It remains to be seen whether Brexit signals a long-term trend for Chinese tourists, or simply a temporary bump. Uncertain visa policies in a post-Brexit Europe and complicated VAT policies and customs duty procedures may preclude Chinese tourism companies and tourists from adding the U.K. to their itinerary, or from maintaining a sustainable increase in Chinese tourism to the U.K..

Becoming China-Ready

When asked what recommendations she had for destinations to better attract and serve Chinese tourists, Carol Chen from Diadema advised overseas destinations to “develop unique, experience-driven products tailored to the interests of Chinese visitors. These products must be “China Ready,” meaning there are designed and developed specifically for the market.”

As Chinese customers increasingly travel independently and explore new destinations, it is important for destinations and retailers to continually upgrade their Chinese consumer strategies and tactics, and to ensure that they are not relying on outdated methods that ignore the rising number of experienced, young, individual travelers.

CLA recommends the following tactics for destinations to attract, convert and retain young, independent Chinese tourists.

Reaching Chinese Customers:

Create a Chinese website (optimized for mobile)
Audit your presence on Chinese travel forums
Establish a compelling, and interactive presence on Chinese social media platforms
Work with Chinese influencers in China and around the world
Don’t forget about the local Chinese media and community in your market
Tap into local Chinese community for Friends and Family recommendations
Work with Travel Trade to provide unique products and add-ons

Adapting Your Services for Chinese Customers:

Make sure to have Wi-Fi on-site
Create unique, educational products tailored for the market
Ensure on-site language support
Utilize WeChat to augment your in-store/at-destination customer experience, and to add customized services/amenities/information for Chinese customers
Invite FIT customers/students for a complimentary visit and gain valuable feedback and insights
Tailor services for a younger, more international audience
Don’t forget about multi-generational families and kids

Generating Repeat Visitors

Create a loyalty program for Chinese customers
Provide incentivizes for visitors to share content about your store on social media or recommend to a friend
Find creative ways to interact with consumers on-site and generate positive buzz and word of mouth
Provide opportunities for visitors to take photos and share
Monitor your travel forums and respond to questions
Create a CRM system on WeChat to stay in touch

For a full version of China Luxury Advisors’ recent interviews with Chinese tour operators download CLA latest intelligence briefing (http://www.chinaluxuryadvisors.com/download/752/)

Having already established itself as a major payments player within its home market, China’s dominant mobile platform, WeChat, has set its sights on global expansion, with a particular focus on payment solutions for globe-trotting outbound Chinese tourists.

Launched in 2014 to allow users to send digital “red envelopes” (worth small amounts of money) to friends during Chinese New Year, the use of WeChat Pay has grown exponentially over the past two years, with more than 8 billion digital red envelopes sent during Chinese New Year in 2016.

Having successfully rolled out these types of campaigns to incentivize its users to link their bank and credit card accounts to their WeChat accounts, WeChat Pay has built a robust business inside of China, allowing its users to pay for a host of goods and services. Aside from sending virtual red envelopes, WeChat Pay users can:

-Pay bills

-Hail and pay for taxis & car-sharing services

-Make offline payments at brick-and-mortar stores

-Pay medical fees

-Buy Fast food (e.g., McDonald’s)

-Make WeChat m-commerce purchases

WeChat recently announced that its WeChat Wallet service now supports transactions in nine currencies, including the Euro, US Dollar, Japanese Yen, New Zealand Dollar, Australian Dollar, Canadian Dollar and Great British Pound. This will allow overseas vendors to accept payments in their local currency, which are funded from Chinese citizens RMB accounts in China.

This allows for Chinese customers to spend money overseas without transferring money outside of China – a prospect that is getting more and more difficult for Chinese citizens as of late.

WeChat Pay has already been rolled out internationally in a number of Asian countries, and is going global at a rapid pace.

-In Malaysia, Thailand and the Philippines, users can pay for taxis using WeChat Pay.

-WeChat Pay has been integrated into e-commerce apps such as Lazada and FoodPanda in Asia.

-Through collaboration with Naspers, WeChat rolled out its international payments solution in South Africa, allowing users to send and receive cash via WeChat Wallet, withdraw cash from ATM machines and pay any SnapScan merchant.

While we have not yet seen any vendors roll out this service in Europe, the United States, or Canada, we expect to see retailers, tourism destinations, hotels and cultural destinations begin to adopt WeChat Pay as an integral part of their payment solution for Chinese travelers in the near- to medium-term.

Retailers, destination attractions and hotels in Europe and the US are already leveraging WeChat’s robust and customizable functionality to engage Chinese outbound travelers, improve customer experience onsite, and develop sophisticated CRM solutions to communicate with Chinese travelers as they explore the world.

The ability to now accept payments will truly make WeChat the go-to app for engaging Chinese tourists worldwide.

As any brand or retailer well knows, young Chinese consumers are increasingly difficult to reach, motivate, and engage — particularly online. However, with the right approach and long-term view, true engagement with this sought-after demographic is still possible.

To strengthen its position as a “must-visit” for Europe-bound Chinese travelers, recently the Spanish department store El Corte Inglés celebrated Chinese New Year by hosting a group of four rising Chinese digital influencers in Madrid, showcasing the city (and Spain) as inspiring destinations for experience-hungry travelers.

El Corte Inglés shared an insider’s view of Madrid, highlighting locations that encompass the historical as well as the contemporary, from culinary and cultural highlights to the newest in Spanish fashion and style.

El Corte Inglés immersed the influencers — whose specialties spanned travel and fashion — in a four-day tour of the Spanish capital. The itinerary focused on “historical secrets” (a walking tour of the Madrid de los Austrias and Las Letras, photo shoots in the Salamanca district and at the Royal Palace, and a private visit to the atelier of luthier Felipe Conde) as well as glimpses of “modern Madrid” (a cocktail master class with Diego Cabrera, a private visit to the Reina Sofia Museum, fashion-walking tours of Tribal District, and a Real Madrid game).

The influencers stayed in two of the best hotels in Madrid, the Villamagna hotel and the Ritz by Mandarin Oriental, and enjoyed some of the country’s best culinary destinations. (Which included 175 year-old L’Hardys; two-Michelin-star chef Paco Roncero’s restaurant Domo in NH Eurobuilding; Gourmet Experience Callao by El Corte Inglés; and Ramon Freixa’s two-Michelin-starred restaurant at the Unico Hotel.)

As one of the influencers, Jinpeng Zhang, a popular travel blogger and author of five books on independent travel, commented, “This is my third trip to Madrid, and this experience curated by El Corte Inglés allowed me to see a whole new side of [the city] that I never even knew existed. I am so impressed with the food, culture and history that Madrid has to offer Chinese visitors.”

In addition to the cultural immersion, El Corte Inglés showcased Spanish fashion, hosting a styling, make-up, and photo session at the Royal Palace of Madrid, and an introduction to Spanish style trends hosted by ECI’s Director of Fashion. El Corte Inglés officially inaugurated the start of Chinese New Year with a reception at its Castellana flagship store, with attendees that included the Chinese Ambassador to Spain.

Popular fashion and travel columnist and photographer Mok, one of the four influencers, said, “Spanish people are known for their love for life, which is evident through their passion for arts, culture and food. Such passion is so contagious that you feel it at every street corner in Madrid, and in every conversation you have with a local.”

As a follow up to the tour, El Corte Inglés launched a photo competition, “Madrid Moments,” to further engage audiences on Weibo and WeChat. The contest features photos taken by the influencers on the recent Madrid tour, which fans can vote on for a chance to win gourmet Spanish food products.

The influencer tour was one of several online and offline initiatives launched by El Corte Inglés to celebrate Chinese New Year 2016, a tradition the retailer has followed for several years. In-store, ECI is honoring Chinese New Year with special luxury brand promotions and offers, as well as a luxurious floral decorations and a three-meter wishing tree (where customers can share their wishes for the Year of the Monkey). Online, the retailer has also launched a “digital wishing tree” to engage fans on China’s dominant mobile social platform, WeChat.

To date, ECI’s Chinese New Year engagement efforts have paid off, with the company’s official Weibo and WeChat fan bases already nearly doubling, even as the campaign continues.

One key takeaway, particularly for companies with locations exclusively outside of China: taking a more tailored, nuanced, and long-term approach to the market will always come across as more authentic than “one-shot” attempts to drive buzz.