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If you thought global Chinese travelers were already spending jaw-dropping amounts worldwide, you haven’t seen anything yet, according to a new report by Bank of America Merrill Lynch. By 2019, the report finds, the global travel industry is poised to see an influx of Chinese spending worth some $264 billion, much of that powered by China’s younger generation.
By 2019, BoA Merrill Lynch estimates, the number of outbound Chinese travelers will surge to 174 million, a sizable increase from 2014, when 109 million ventured abroad and spent $164 billion. To put this in perspective, the report notes that $264 billion is roughly the size of Finland’s entire economy (and bigger than that of Greece).
The main demographic driving spending growth in the next five years will be Chinese millennials, defined as 25- to 34-year-olds, which comprise 35 percent of all outbound Chinese tourists. Younger travelers aged 15 to 24 are another vital demographic, accounting for an additional 27 percent.
So what does this mean? It means it’s vital for the global travel and retail industries to understand the demands of this demographic, which is set to revolutionize the way Chinese tourists travel and shop. Current trends offer a glimpse at how China’s young traveler will behave at home and abroad in the years ahead. As experience becomes an increasingly important priority for Chinese travelers, they’ll allocate more of their budgets toward activities and dining, while opting for far-flung or exotic destinations over the well-worn global tourist hubs. However, this doesn’t mean they won’t want to show off to friends—on the contrary, sharing experiences to social media will remain a fundamental component of trips.
While they won’t forget to shop, China’s younger travelers will only intensify their search for unique, niche brands, prizing individuality above all else. This means that large-format shopping centers will need to do more to attract young Chinese travelers, as they’re far less likely to show up on a tour bus than their parents, and will increasingly self-book personalized itineraries rather than using traditional tour operators. However, this offers shopping centers and luxury boutiques huge opportunities: for example, providing free wi-fi and using it to engage Chinese shoppers via WeChat can drive greater footfall, encourage longer stays, and provide opportunities for unique activation.