As luxury retailers, hoteliers, restaurants, and tourism companies across the world wait with anticipation for the upcoming Chinese fall Golden Week vacation period that runs from October 1 to 7, many are wondering what’s in store amidst China’s continuing anti-corruption crackdown. In order to learn more, we checked in with China travel expert Gary Bowerman, who recently published a comprehensive guide on China’s tourism industry entitled The New Chinese Traveler: Business Opportunities from the Chinese Travel Revolution. Drawing on years of industry experience, Bowerman’s book outlines emerging trends in China’s outbound travel industry as well as an analysis of the motivations and preferences of China’s rapidly growing number of global travelers. In the interview below, he discusses his predictions for this season’s Golden Week as well as his long-term views on the future of China’s travel industry.
Golden Week is coming up, which means those traveling for the holiday period must face inconveniences such as long lines, traffic jams, and crowded tourist spots. Is it possible that as middle-class incomes rise, a growing number of Chinese travelers will avoid traveling during this time altogether for other periods?
Yes. The Chinese government is revisiting the Golden Week public holiday model, because although it has proved successful in tourist terms it has clearly become a victim of its own success, and Chinese travelers, both domestic and outbound, are angered by the logistical inconveniences and price hikes it inflicts. Chinese travelers that have become accustomed to taking vacations overseas now want to choose not just their next destination, but the dates during which they can go on that holiday.
That said, Chinese tourists are already traveling at times that many people may not expect. I visited Italy in June this year, not normally a time associated with Chinese outbound travel, and saw and spoke to plenty of (mostly young) Chinese tourists in Rome, Venice, and Florence. Similarly, when in Bali in August, the young Chinese couple that stood in front of me in the customs line was from Shaanxi province, and the couple that stood behind me hailed from Yunnan province.
The fragmentation of Chinese outbound travel has begun, and the hoped-for flexible paid vacation system would see greater numbers of Chinese travel overseas throughout the calendar year, particularly as seasonal-specific travel niches—such as winter sports, cruising, yachting, gastronomic and wine tours, and weddings and honeymoons—are growing fast.
What are some of the most popular international locations Chinese tourists are looking at for Golden Week?
Perhaps more than ever, huge expectation exists worldwide for Chinese visitation during this Golden Week. As opposed to the shorter national holidays, the October Golden Week enables adventurous vacationers to travel a little further. Of course, destinations within a four-hour flight radius, particularly Hong Kong, Macau, Hainan, Tibet, Taiwan, Japan, and Korea, will see large volumes. Australia and New Zealand, too, will once again prove popular. Further afield, numerous cities in Europe and North America are anticipating year-on-year Chinese visitation records to be smashed.
Island destinations, like Bali, Hawaii, Maldives, Mauritius and Seychelles—and even Sri Lanka—are also hopeful of experiencing a bumper week for Chinese tourism. In addition, safari operators in Africa, hiking guides in South America, café owners in Central Europe, and market traders in Mumbai will probably interact with more Chinese travelers than ever before.
It has now been a year since China’s tourism law has come into effect—have you seen any major global retail or tourism industry changes as a result?
I think global tourism boards, travel providers, and retailers are still coming to terms with the inevitable rebalancing of Chinese outbound tourism—which is moving ever more towards FIT and away from package group travel. Several destinations, including Macau, New Zealand, Korea, and Thailand, were surprised by the drop in Chinese arrivals during the 2013 October Golden Week, as the new law impacted group tour package prices and availability.
As independent travel surges in popularity, It is important to focus less on total visitor numbers and percentage growth statistics, and concentrate on more qualitative metrics like spending per visitor, geographic dispersion ratios of Chinese travelers across each country, and the utilization rates of different activities, attractions, and sites of natural or historic interest. While every national tourism board wants to demonstrate upward growth curves, the Chinese outbound market is evolving fast, and savvy destinations will increasingly create more nuanced, niche-specific tourism marketing campaigns—rather than simply embark on volume grabbing—in China.
Which countries are doing the best job of promoting themselves to Chinese travelers? Which ones need to make stronger efforts?
This is a tricky question to answer, because some nations, particularly in Southeast Asia, Northeast Asia, Australia, and New Zealand, did get a head start by being awarded Approved Destination Status ahead of countries in Europe and North America. ADS was a mark of official Chinese government approval for national tourism boards to market their destinations to Chinese tour group operators—before independent outbound travel was able to develop. Australia and New Zealand, in particular, have invested a lot of money and effort in recent years to better understand the diversifying segments within the Chinese outbound market, and to adapt their offerings to meet these varied needs.
In majority terms, Chinese travelers still travel mostly in Asia, and destinations on every continent are fighting hard for space in a crowded market to connect with and engage Chinese tourists. Switzerland and Canada have been very inventive in developing winter sports tourism, wine and culinary tours in France and Italy are increasingly popular, and LA is being very proactive to stand apart as an aspirational city for Chinese visitors to the United States. The big cruise operators are moving larger ships into the region in anticipation of a surge in multi-destination cruising from China, and that is a major trend to watch.
The latest marketing tactic (which has been strongly lobbied for by governmental officials from China over the last two-three years) is offering visa free access, and this is an important bargaining tool as Chinese tourists have long suffered from tough visa processes. Many countries that do not currently offer visa free access for Chinese travelers may take a strategic decision to do so in the near future, or risk losing out to competitor destinations.
Hong Kong used to be a prime shopping destination to avoid tariffs, but anti-mainland sentiment has dampened visitor numbers over the past year. Do you think this is temporary, or will growth stagnate?
I think there are a number of factors involved, but perhaps the two most important are 1) many middle-class Chinese have now visited Hong Kong more than once, and their horizons (and travel budgets) have broadened; and 2) for the group tourism market, the 2013 Tourism Law had a clear effect as the notorious super-cheap tourism packages that involved being coerced into shopping venues from which tour operators earned large commissions were outlawed. Hong Kong was one of the most infamous destinations for that practice. Another issue for Hong Kong is that its infrastructure was showing evident strains from the pressure of receiving so many mainland travelers, and it must address this very quickly.
Hong Kong will remain an aspirational destination for the vast numbers of Chinese in lower-tier cities that are becoming financially able to travel from the mainland—but it will need to become more inventive and forward focused in its tourism thinking and development or it will lose out to ambitious, big-spending competitor cities across Asia, and in the mainland itself.
Which global locations should luxury retailers be focusing on over the next decade to reach Chinese tourists?
The million-dollar question. If you visit virtually any airport in a major city with flight connections to China during Golden Week, you will spot special discount promotions in their (increasingly large and expansively stocked) duty-free stores for China UnionPay cardholders—the same applies during the other major Chinese travel period, Spring Festival. Chinese travelers aren’t just increasingly affluent, they also have a strong willingness to spend, so in the coming years, you will see lavish brand malls and Macau-style integrated resorts with diverse consumer offerings popping up everywhere from Birmingham to Bahamas, Sri Lanka to Sydney, Mauritius to Myanmar and Tokyo to Tallinn, and Chinese visitors will likely be among the biggest spenders in each one.
The important thing for retailers to watch is the development of air connections. Chinese and international airlines—both low-cost regional and long-haul carriers—are regularly launching new routes, or increased frequencies on existing routes, from China to destinations they believe will grow in popularity in the coming years. If airline CEOs are putting significant investment into these new or extra routes, you can be sure they expect large volumes of Chinese passengers to board their planes in the coming years.