Editor’s note: As we ring in 2018 today, let’s reflect on some of the most important trends in Chinese luxury travel market last year. This story was originally published on Jing Travel.
Much like in any rapidly developing market, 2017 has been a year with a lot of notable news and events surrounding the business of global Chinese travel. With the year soon coming to an end, the time has come to look back at the past year—and perhaps make a few predictions for the next. Likely more important than anything else, 2017 has proven once another year of strong growth and new trends in a market that remains as dynamic as ever. In fact, the continued rise of the Chinese independent traveler means that the market is more dynamic than ever.
From an international relations point of view, there hasn’t been any bigger news than China’s decision to ban sales of group tours to South Korea. While it indeed isn’t the first (or only) time that China has decided to use tourism as a foreign policy tool, the case of South Korea is nevertheless exceptional.
Last year, Jing Travel ranked South Korea as the fourth most visited Chinese tourist destination of the year. The incredible allure of South Korea’s tourism products and influential popular culture made it a staple destination of Chinese travel. As a matter of fact, the ban came as a surprise to many for that very reason. Would China dare to ban travel to a destination as popular as South Korea?
As it turns out, the answer is a resounding yes—and that has sent a clear message to other destinations that are increasingly dependent on Chinese tourist revenue: diversification is key, independent travelers are more sustainable, and the free market in Chinese travel is only as free as the Chinese government decides that it should be.
The Chinese ban on group tours to South Korea underlined the fact that China’s free independent travelers (FITs) are the by far most important group of travelers. Not only are they more profitable and constitute an ever-growing portion of the market: they’re also less susceptible to government interference.
The continued rise of the Chinese independent traveler hasn’t gone unnoticed on either the supply or the demand side of the industry. In China, OTAs and startups are scrambling to provide the best tools (and marketplaces) for Chinese independent travelers to find and plan their next vacation. Overseas, hotels, destinations, and other major tourism stakeholders are actively adapting products and marketing efforts to cater to this growing customer segment.
Just one year ago, Ctrip acquired Scotland-based Skyscanner in what was its biggest overseas acquisition to date. Since then, Skyscanner has grown increasingly integrated into the Ctrip ecosystem—albeit still very much a separate brand. In addition to integrating Ctrip bookings into the Skyscanner platform, Skyscanner has also become the new home of Trip (trip.skyscanner.com), a travel recommendation platform acquired by Ctrip earlier this year.
In fact, when Ctrip acquired Trip, it didn’t only acquire an award-winning travel recommendation service, but also a genuinely premium domain name in the travel industry: Trip.com. While the services previously offered on Trip.com are now available on Skyscanner, the Trip.com domain name is repurposed as the new face and brand of an increasingly internationally active Ctrip.
With international acquisitions such as Skyscanner and Trip under its belt, it now looks like Ctrip is preparing to go bigger in the international market in 2018. We expect to learn more about what Trip.com has in store for the travel industry in the coming year.
If there’s one thing that remains central to the international Chinese travel experience, it’s shopping. And perhaps more central to shopping than anything are the transactions. For China’s mobile payments giants, the relative ubiquitous nature of mobile payments in their domestic market have prompted Alipay and WeChat Pay to take the battle overseas—and for Chinese tourists’ spending. Becoming the go-to option for global Chinese travelers also means becoming the go-to option for China’s most affluent consumers.
And even though the narrative has changed to focus on Chinese mobile payments rather than the UnionPay of yesteryear, UnionPay is still intent on remaining the primary payment method for Chinese travelers. With UnionPay under increased threat from Alipay and WeChat Pay, it seems likely that it’ll intensify its efforts to win the hearts and minds of Chinese travelers and the businesses that serve them in 2018.
Sure, companies such as HNA, Anbang, and Dalian Wanda are still very much alive—but they don’t exactly seem healthy. For these conglomerates, 2017 has been a tough year after the Chinese government decided to crack down on their business practices, particularly in terms of overseas acquisitions. Unlike 2016, the crackdown on these actors resulted in 2017 not becoming another record year of Chinese travel and hospitality acquisitions and investments.
A turnaround in 2018 seems unlikely. While there are some hopes that the relative calm after the party congress will once again add fuel to Chinese overseas acquisitions, companies like HNA are still slowed down by government oversight both at home and abroad, and perhaps most importantly: rising costs of debt.
WeChat remains a key part of the travel experience—not to mention daily life—for virtually every Chinese consumer. This has not changed in 2017, and that despite growing popularity of various other platforms, perhaps most notably in livestreaming.
While 2017 could have been business as usual for WeChat: more overseas companies accept its payments, and a growing number of international travel brands represented on its platform—WeChat decided to go one step further this year. Instead of sitting back and enjoying the fruits of its growing brand recognition, WeChat proactively launched the CityExperience mini-program, a type of destination-specific and WeChat-integrated guides available for partnering destinations around the world.
Many destinations have asked what the best approach is to marketing and WeChat, and WeChat developed something that it hopes become the absolute answer to this conundrum. Don’t be surprised if many destinations decide to partner up with WeChat in 2018 to launch their own CityExperience initiatives.