China: Outbound Tourism, Cash Cows or Empty Pockets?

Travel and Tourism

As China becomes the largest source of outbound tourism, Chinese tourists are getting mixed reviews. They are welcomed by some and scorned by others. So what is their impact on host travel destinations?

According to the China Outbound Tourism Research Institute (COTRA), China is now the world’s largest “tourism source market”, accounting for one out of 10 international border crossings in 2014, which represented an 18% increase over 2013.

China’s outbound tourism numbers surpassed 100 million for the first time in 2014, totalling 107 million, which represented a rise of 19.49% over the year before, according to the China National Tourism Administration (CNTA).

The bulk of outbound Chinese tourists travelled to other travel destinations in Asia, which absorbed about 70% of outbound Chinese tourists.

Hong Kong received the largest number, followed by South Korea, Thailand, Taiwan, Macau, Japan, Singapore, Malaysia, Indonesia, and France – in that order.

Please note: while China, Hong Kong, Macau, and Taiwan collectively comprise “Greater China”, each entity issues its own travel documents and visas and maintains its own customs. Travel among them is therefore considered to be “international”.

If France was the only non-Asian country to make the top 10 list, Europe as a whole was the 2nd most popular travel destination of outbound Chinese tourists by region – with a few notable exceptions.

The United States, Italy, Vietnam, Switzerland, Australia, Germany, Russia, the United Kingdom, New Zealand, and the Philippines rounded out the top 20.

Absent from the list were travel destinations in Africa, the Middle East, and Latin America.

Changing Preferences

The first half of 2015 reflected some important changes in the travel preferences of China’s outbound tourists.

Hong Kong dropped from first to 4th place after South Korea, Taiwan, and Japan, CNTA figures reveal.

Macau, meanwhile, dropped from 5th to 9th place, with Thailand, France, Italy, Switzerland, and Germany rounding out the top 10.

Did tensions between Chinese tourists and locals in Hong Kong lead to the drop in the number of Chinese tourists visiting the former British Crown Colony?

There have been arguments between locals and Chinese tourists on the MTR. And local protesters have been known to harass Chinese shoppers at shopping malls.

Spending Patterns

According to The World Tourism Cities Federation (WTOF), Chinese outbound tourists spend an average of roughly US$3,225, or 2,410 euros, per capita on their trips abroad, which should be good news for the travel destinations they visit.

While the surge in China’s outbound tourism should theoretically be seen a boon to the economies of host travel destinations, not all of those in the tourism industry are laughing their ways to the bank.

Sure, Chinese tourists spend a lot on luxury goods at designer boutiques (because designer brand products are much cheaper abroad than they are at home).

But Chinese tourists also tend to be  stingy when it comes to accommodation – and stingier still when it comes to food and beverage.

Chinese tourists have a reputation for consuming cups of noodles in their hotel rooms rather than dining out at restaurants and cafes.

According to the WTOF, shopping accounted for their largest single expenditure (57.76%) followed by accommodation (17.82%), transportation (10.88%), food (5.84%), tickets to attractions (3.72%), entertainment (3.72%), and tipping (0.13%).

Profitless Volume?

“China is now the largest and fastest growing outbound travel market in the world,” says Pacific Asia Travel Association (PATA) CEO Mario Hardy.

“However, for many tourism operators, it has become ‘profitless volume’. Our members need to constantly adapt and evolve to stay competitive in today’s world.”

To help its members more effectively target and serve Chinese tourists with a “potential high yield”, PATA has partnered with China Ready and Accredited to offer its members the China Ready and Accredited Program, which been endorsed by the Chinese government and the country’s private sector.

The body will provide training in culture and the needs and expectations of Chinese tourists as well as offering quality service accreditation. 

“We will be working through our chapter members, and aim to facilitate the introduction of the China Ready and Accredited programme across the whole network,” Mario says.

According Geoff Buckley, a Director of China based China Ready and Accredited (and past MD of Tourism Australia), targeting the right people will be easier said than done.

High Value Tourists

“The obvious solution is to target the high value/high yield segment of this market, but with 1.3 billion people in China – and an extraordinarily complex media landscape – such segmentation is not an easy or cheap task,” Geoff says.

“To effectively connect our accredited business to these Chinese consumers, CRA has partnered and is supported by some unique, high level organizations in China such as UnionPay International, the world’s largest payment scheme, with over 4 billion cards issued, and every Chinese outbound traveller has a UnionPay International card.”

For better or for worse, the number of Chinese outbound tourists will continue to grow. Whether they will be considered a blessing or a curse remains to be seen. 

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