Did you know Chinese tourists are now the hottest demographic in the global travel industry? Why? Two reasons: China's millennials (ages 18 to 35) make more trips abroad and spend more than all American tourists combined!
"Chinese tourists are the most powerful single source of change in the tourism industry," said Taleb Rifai, secretary general of the World Tourism Organisation (UNWTO), as reported in the South China Morning Post.
Mr. Rifai pointed to the fact that China is not only the biggest domestic market in the world (with 4.4 billion trips per year) but also the leading global outbound market, (with over 135 million international departures in 2016). Moreover, Chinese tourists are also dishing out --"Chinese travelers spend double the international average, so their impact in local economies can be huge," Rifai said.
"The potential of the Chinese market is far greater, because only six percent of Chinese people own a passport. So, we expect 200 million Chinese to travel abroad in just a few years' time," he said.
No wonder global travel companies and tourism boards are racing to work out how best to attract this lucrative market. Companies who have already established themselves as a conduit for Chinese travelers already command huge leverage.
Alex Wang, 42, co-founded the travel service provider Zanadu which launched in 2012. His company is a high-end travel service provider catering to higher incomes and residents of China's first or second-tier cities. The company has doubled its business every year since inception and made over 100 million RMB last year.
So, what is the secret of their success? One reason which is out of their control but which they have marketed on, is the change in Chinese consumers' tastes as they have grown in sophistication. This widely documented change(sources here and here) has affected the luxury, tech, automobile, fashion, food and beverage sectors among others. It has been quite noticeable in the travel sector, says Wang.
"When we launched Zanadu booking five-star hotels for leisure was a new concept. Back then Chinese tourists might buy 100k worth of goods but stay in three-star hotels," says Wang. Wang is referring to a time not so long ago when Chinese tourism was whipping around on an arduous 10-city European tour with just enough time to snap those all-important pictures before getting back on the bus. Shopping trips were also a key part of the tour and thousands of Euros would be spent on luxury goods such as Louis Vuitton.
Although those days aren’t quite over, the focus on materialistic goods has waned and the new Chinese traveler is much more interested in “experience.” The Internet and millennials have had a huge influence on this as younger travelers consistently share pictures of incredible locations, meals, lodgings, and what they're doing on WeChat, Weibo, etc.
This goes hand in hand with greater levels of discernment as Chinese consumers become savvier. "It's an overall trend in China," says Wang, who refers to it as consumption upgrade, which means that as Chinese consumers become more experienced and aware of their options they’ll seek more quality and become more sophisticated in their decision process.
Wang has noticed this especially true in lodging, therefore Zanadu provides more unique and higher quality lodging options for its clientele such as boutique hotels. It also provides greater levels of choice. Zanadu offers vacation packages to Thailand, Bali, and the Maldives as beach holidays and diving are popular. Ski trips are becoming increasingly popular with Scandinavian countries doing well using the Northern Lights as an attraction.
They also offer charter flights as far as Africa or the North Pole as travelers with higher disposable income look for increasingly exotic locations and experiences to amaze their peers. Asked whether Zanadu needs to approach travel business partners Wang says they are "bombarded" with queries by service providers from all around the world.
"Most places want access to this huge and growing customer base, especially the high-end segment. A lot approach us," says Wang. But he says these service providers must make sure they do their homework.
"Chinese have become the biggest spenders, but that doesn't mean they don't look at the price/value proposition. If you want to charge more you really have to offer something that's worth it. You need to justify that thinking and clearly communicate it", he said.
Taking care of early adopters is also vital so they will spread the word for you.
Wang knows the importance of this, as mass-market communication and marketing methods do not really work in attracting the segment of the market he is in.
"The cornerstone of our whole business is in producing quality content", he says. Zanadu has a mobile app and produces content on Weibo, WeChat and do offline and online marketing. Having a big following is important for even if many cannot afford Zanadu's offerings they can still aspire to it. But they don't neglect more traditional marketing methods.
"Print offers unique qualities that is unmatched by other media. If we can get our print products into the right hands, this can do good marketing and even conversions," says Wang, referring to their magazine which is placed in many luxury hotels.
A lot of their content is visual and they are not afraid to innovate, with VR offerings and unique content such as following a Chinese hiker as they hike the Pacific Crest Trail (a recent campaign). But Wang warns that it's becoming harder and harder to gain traction online, as well as becoming more expensive.
But with the already huge importance of the Chinese consumer base to the global travel industry, and the future potential of the market, the effort and expense to reach the Chinese traveler might be worth it, especially in the long term.
In the future, we'll be looking at some of the techniques, strategies and tricks that can help to attract and entice Chinese travelers. Stay tuned.