Experience is Key to the $498 Billion Chinese Travel Market

    As Chinese tourists spend less money on shopping and more on entertainment, it's increasingly important for brands to cater to their demand for experiential travel.
    Chinese tourists at the Grand Palace in Bangkok, Thailand. (Jing Daily)
    Jing DailyAuthor
      Published   in Travel

    Chinese tourists at the Grand Palace in Bangkok, Thailand. (Jing Daily)

    Although official Chinese government statistics claim that Chinese tourists spent $164.8 billion overseas last year, this week the Financial Times came out with an even more staggering estimate: $498 billion. When it comes to what these travelers are spending on, shopping is still a main priority, but one key area is gaining central importance: experiences.

    According to a new FT survey, shopping still reigns supreme as the leading travel spending segment across all household income groups. Those making over 350,000 RMB a year (about US$56,000) spent an average of 16,440 RMB (US$2,600) on shopping during their trips, more than double the next-highest spending priority—accommodation, which accounted for only 7,165 RMB (US$1,159) of their total spending.

    This massive disparity results from the fact that many Chinese tourists often skimp on hotels so they can take advantage of tariff-free shopping and spend more on gifts that gain “face” upon their return home. However, this all seems to be changing. Chinese travelers aren’t just focusing on buying tangible items to take back anymore—they’re also prioritizing spending on experiences to actually enjoy their trips, even if it doesn't result in items they can show off. According to the FT survey, shopping actually saw a 34.4 percent year-on-year decline in spending for the previously mentioned income group.

    Where was that money going instead? Entertainment, better hotels, and “other services.” In fact, entertainment spending grew by 31.1 percent and accommodation grew by 6.7 percent over the same time period, while “other services” saw 78.6 percent growth. This trend coincides with the growing popularity of independent travel among Chinese tourists, fueled by easier visas and more independent travel options on sites like Ctrip's ToursForFun, meaning tourists are setting their own itineraries instead of sitting on buses that spend most of their time going from mall to mall.

    While this is clearly good news for luxury hoteliers and entertainment venues, the data also provides some insight that can help retailers better adapt to Chinese travelers’ changing preferences. Instead of banking on the fact that Chinese tourists will view shopping as a necessity, brands should ensure that their boutiques become a destination, offering Chinese shoppers a rewarding retail experience with excellent service. As a growing number of independent Chinese travelers look to enjoy every part of their trip, it’s no longer enough to sit and wait for the tour bus to roll up and the cash to roll in.

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