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China Luxury Advisors and Fung Intelligence Group are pleased to announce the release of our third annual proprietary joint research report on Chinese Outbound Tourism Shopping Trends.

In the past 12 months, more Chinese have traveled overseas compared to the prior year and are continuing to drive retail spending at tourist destinations globally. Chinese outbound tourists will account for an estimated US$315 billion in travel revenue in 2017, according to our estimation, making them the world’s biggest spenders on foreign travel. By 2021, we estimate that 192 million Chinese tourists will travel overseas, and that their total overseas spending will reach US$419 billion.

In this report, we cover the following topics:

– Travel destinations visited in the past 12 months; reasons for selecting the destination for the most recent trip

– Spending in respective areas, products purchased and outlets visited; services used at retailers and their importance

– Frequency and purpose of overseas travel

– Travel arrangements for their most recent and upcoming overseas trip; main information source used for planning their trip

– Demographics including age, gender, income and city of residence

Key Trends Observed

Chinese outbound tourists have evolved into experienced and sophisticated travelers—some 67% of surveyed tourists have traveled more than once in the past 12 months, visiting an average of 2.3 destinations. Apart from shopping, they crave a lifestyle and experiences while traveling abroad.

– Japan has emerged as the most popular destination, visited by 55% of surveyed tourists in the past 12 months, followed by Hong Kong (35%) and South Korea (27%).

– Chinese tourists from lower-tier cities have become the growth engine of outbound tourism. Based on their most recent overseas trip, survey respondents said they spent on average US$2,449, 10% higher than tourists from tier-1 cities at US$2,330. They also travel as frequently as their counterparts from tier-one cities, at an average of 1.9 times per year.

– Chinese tourists are extremely mobile-savvy, 98% of surveyed tourists used their smartphone abroad to keep in touch with others and to search for travel-related information. Some 72% of surveyed tourists use online resources such as travel websites, blogs and social media to plan their trips.

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To contact the author to discuss this report in more depth, please email renee@chinaluxuryadvisors.com.

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.

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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/)