Asia Travel Re:Set #19 – 100 Million Chinese Outbound Travellers in 2021?
Asia Travel Re:Set #19 – 100 Million Chinese Outbound Travellers in 2021?
"What has the pandemic taught the world about the Chinese travel market?"
Hello. Welcome to Asia Travel Re:Set.
“Making qualified predictions about the future patterns of outbound travel from a continent-sized country with a population of around 1.4 billion people is at best tricky. One thing that analysts mostly agree upon, however, is that China is having a transformative impact on the way the global tourism industry operates, finances and promotes itself.”
That paragraph formed part of the introduction to my book, The New Chinese Traveler: Business Opportunities from the Chinese Travel Revolution. It was published in 2014, the year that Chinese outbound border crossings surpassed 100 million for the first time. The introduction continued:
“The multi-layered strategies being put into place by tourism providers to cater to Chinese travellers will develop tangentially. Earning a ‘winning share’ of the Chinese market is a white-hot subject of debate that is unlikely to take flight any time soon, particularly as most projections indicate that – pending an economic downturn, which can never be discounted – Chinese outbound volumes and annual outbound spending are locked on an upward curve.”
That economic downturn arrived in 2020 in the form of COVID-19. The pandemic has brutalised the global travel sector.
However, with vaccines starting to be approved, and China enjoying a stellar October Golden Week with 637 million domestic trips, destinations and travel businesses worldwide are anticipating the return of Chinese holidaymakers to their shores.
Last week, the China Outbound Tourism Research Institute (COTRI) forecast that 100 million Chinese overseas trips may be made in 2021. There are variables to consider, of course, but it represents the kind of optimism that was sucked out of 2020.
But this will not simply be a retread of 2014, the first ‘100 million’ year. The scope and scale of Chinese outbound travel had diversified significantly by 2019. While 2020 has been a year on pause, we can expect dynamic and, most likely, even more disruptive changes up ahead.
Understanding patterns of demand in domestic Chinese travel and consumption is essential. Destinations will also need to deploy their most imaginative marketers - many of whom were despatched during pandemic-year cost cuts. Re-scaling creative capacities could prove decisive as expectations of a travel reboot gather momentum.
Here in South East Asia, rarely a day goes by without a new media story about a putative travel bubble with China (or certain provinces in China). Frequently those pieces are published in Thailand or Bali. Sometimes Cambodia or Laos.
More than 30 million Chinese arrivals were recorded across the 10 countries of South East Asia in 2019. The COVID-19 pandemic has reiterated to the region’s governments just how vital the spending power of Chinese tourists is to their lifestyle economies.
Once China’s airport gates reopen, expect fierce competition - and price discounting - among ASEAN nations to entice Chinese vacationers. Singapore has already removed the quarantine requirement for visitors from China.
But price and access are only two factors.
The aspirational nature of Chinese tourism means those heading overseas for the first time in more than a year will be experientially aggressive. They will be eager to experiment and push the boundaries of customised travel, and seek out experiences that match their own imaginations. Destinations should rethink their engagements across the entire journey because travellers may well be more discerning than ever.
This week, I’ll be presenting at the ADVANTAGE: TOURISM Masterclass series (more details below), which analyses the broad array of opportunities and challenges for travel stakeholders presented by China’s outbound market in a post-COVID world.
So, in today’s newsletter, I’m taking a backseat.
I’ve collated insights from Chinese travel specialists, plus intriguing new statistics and must-read articles that set the scene for the next phase of the Chinese travel revolution. Whenever it may begin.
Thanks for being onboard.
Gary
Each Sunday, Gary Bowerman charts the week’s key developments for travel economies across Asia Pacific.
If you are enjoying this issue so far, please feel free to…
The Sunday Itinerary
- DashBoard
The statistical takeaways from Trip.com’s Q3 financial results.
- ReaderBoard
5 China travel articles to bookmark this week.
- QuoteBoard
4 expert insiders answer the question: “What has 2020 taught the world about the Chinese travel market, and how can these learnings be applied in 2021?”
- 100 Million Chinese Travellers in 2021?
Interview with Prof. Dr. Wolfgang Georg Arlt, Founder and CEO of the China Outbound Tourism Research Institute (COTRI).
The ADVANTAGE: TOURISM Masterclass series on 9 & 10 December will provide vital information to prepare for better and more sustainable engagement with the Chinese outbound market in post-COVID-19 times.
Speakers include Prof. Wolfgang Georg Arlt, Richard Adam, Gary Bowerman, Gazi Haxhia, Dr Rudy Snippe, Pascal Beij and Olivier Henry-Biabaud.
Three individual webinars are offered (each includes a Q&A panel):
9 December 16:00 (Beijing time) Asia Pacific
10 December 10:00am (Berlin time) Europe, Africa and the Middle East
10 December 11:00am (New York time) North, Central and South America
More Information HERE
Register (for free) by clicking HERE
What has 2020 taught the world about the Chinese travel market, and how can these learnings be applied in 2021?
“Within not much longer than a decade, many destinations have become dependent on the world‘s most complex and biggest source market, China, which has made them vulnerable. New initiatives to strengthen regional value chains, local welfare, sustainability and domestic tourism should be on top of the agenda to develop resilience.
As Chinese outbound tourism is increasingly developing towards quality experience, destinations have to keep up with it and adapt. China outbound tourism is more dynamic and lifts the bar faster than any other source market. Real value provision is key.”
Richard Adam, Executive and Board Member in Destination Development, and Chair of the ADVANTAGE: TOURISM Masterclass series
DashBoard
Key takeaways from Trip.com’s unaudited Q3 financial results, released to the US Securities & Exchange Commission this week…
RMB5.5 billion: Net revenue in Q3, down 48% year-on-year but up 73% from Q2.
RMB2.5 billion: Accommodation reservation revenue, down 40% year-on-year, but up 98% from Q2.
RMB1.9 billion: Transportation ticketing revenue, down 49% year-on-year by up 66% from Q2.
RMB326 million: Packaged-tour revenue, down 80% year-on-year but up 151% from Q2.
RMB282 million: Corporate travel revenue, down 16% year-on-year but up 74% from Q2.
“In Q3, the global travel industry continued to be under significant pressure from the COVID-19 pandemic. However, in China, we have already seen most of our major business segments return to pre-COVID level of activities in recent months… As a result of the continued negative impact due to COVID-19, the Company expects net revenue to decrease by approximately 37% to 42% year-over-year for Q4.”
Trip.com statement, 2 December 2020
Meanwhile, Tongcheng-Elong saw its Q3 revenue increase by 59.5% from Q2, and Qunar said 9.34 million first-time flyers in China have booked flight tickets on its platform so far in 2020, a 5-year record.
In addition, Huazhu Group said the Q3 occupancy for all its hotels was 82.0%, compared to 87.7% in Q3 2019 and 68.8% in Q2 2020.
The sense of industry positivity was summarised by Dai Bin, President of the China Tourism Academy:
"The willingness to travel in the fourth quarter has reached the pre-pandemic level in China. The best time of the travel industry has not come yet, but the worst time is already over. We are embracing the dawn of market recovery."
- ReaderBoard
Five articles to bookmark this week (click the underlined links to read)…
Still wondering who those Chinese ‘Special Tourist Visa’ travellers to Thailand really are? China Daily tells an interesting tale.
Analysis of the first year of operations at Beijing Daxing International Airport, by OAG
Domestic travel during the pandemic has elevated expectations for duty free shopping in Hainan Island, Jing Daily
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QuoteBoard
You heard it here…
This week’s QuoteBoard sought out insights from four businesswomen who specialise in the Chinese outbound travel and hospitality sector. I asked Anita Chan, Joanne Tang, Joanne Chan and Helena Beard the same question:
“What has 2020 taught the world about the Chinese travel market, and how can these learnings be applied in 2021?”
Here are their compelling responses…
Anita Chan
“#RevengeTravel #IndependentTravel #Digitalisation I talked about revenge travel back in March, and in 2020 we can see this happening in the China market from their domestic travel boom.
Chinese are fearless, love to travel and the pandemic has not changed this. Chinese will travel overseas when they feel safe to do so, and it will be in revenge travel mode in 2021.
But since group tours were stopped for a long period due to the pandemic, it forced Chinese to travel independently, more self-drive and explore new, less crowded and special interest destinations. Now that they have experienced it, some may shift from group tours to independent travel for overseas travel in 2021.
So, Chinese will be looking for less “popular” but high-quality destinations that align with their personal values. And, COVID-19 has speeded up digitalisation. If we believe independent travel will increase, Chinese will do a lot of research online to get inspiration and planning for their trips and even when they arrive at their overseas destination.
Getting a proper online presence will be essential to capture the China outbound market in 2021 and beyond.”
Anita is CEO of Compass Edge, which provides online distribution and marketing services and China-ready strategies for independent hotels, and Head of Hospitality at The Asian General Chamber of New Retail.
Joanne Tang
“Following 170 million outbound trips in 2019, China was set to strengthen its position as the number one outbound market in the world in 2020. The effective control of the virus within China gave the confidence to Chinese citizens to travel domestically very rapidly. Today, domestic flights are at 95% of the 2019 level.
Live streaming sales promotions and virtual meetings were held by the major trade players to keep the market dynamic.
Chinese travellers are very resilient and their thirst to discover the world has not been quenched. Pending a safe and effective vaccine, a wave of ‘revenge’ travel is to be expected.
How to capture a slice of that giant cake? Get ready now!
Build or maintain relationships with the local trade and your target customers with a presence in the market, or with the assistance of a specialist or a representation office that can help you navigate the market effectively and drive returns once the borders safely reopen.”
Joanne is Founder & CEO of Infinite Luxury Group, which provides communications, sales and marketing representation services for hotels, travel, wellness and luxury brands based in Asia and the Middle East.
Joanne Chan
“Despite 2020 being a ‘pandemic year’, China still counts the world’s largest outbound tourism group. It has shown its resilience and growth while the rest of the world is still finding its feet. Numerous surveys with Chinese netizens point to one important factor: revenge travel and revenge spending.
Chinese people want to travel even more than before (pre-pandemic). Because they have learnt that life is very precious, they now want to see as much of the world as possible, experience different cultures and make new memories.
It has also shown us that the Chinese will likely be the first off the blocks when global borders are opened. This is evident from the group of travellers who arrived in Thailand in October, despite the fact that they needed to serve their 14-day quarantine in government-approved hotels or hospitals.
In 2021, brands involved in the travel and hospitality space should focus all of their energies and marketing investments on the world’s largest outbound tourism market.
It is also worth noting that less than 10% of the population has a passport. Countries who want to welcome Chinese tourists should ensure that their messaging about health and safety is loud and clear. Engage them positively, and they will come.”
Joanne is Global Business Director of IPPWORLD in Singapore, a creative translation agency that helps hotels and travel brands be multi-market ready in all languages.
Helena Beard
“The swift recovery of the domestic travel market in 2020 has reinforced the reputation of China as a nation of travellers, with a strong desire to explore. It has also shown the adaptability of the market, as tourists choose to holiday in different ways, opting for self-drive transportation options, and new rural locations and remote destinations.
Despite the ban on outbound travel, there is a continued desire to be inspired for the future. Online searches for destination-based keywords and aspirational travel content have remained high throughout the pandemic, and engagement with our tourism clients’ social media accounts remains strong.
We have learnt that those travel and tourism brands which have continued to keep their social media accounts active and to invest in their digital presence, will be the ultimate winners as we emerge from the pandemic in 2021.
We have also learned a lot about the entrepreneurial nature of the Chinese travel trade. Outbound agents, unable to sell tours, have switched their attention to other ways of making money during this time, with many setting up online shops to sell tourism related goods. We have seen the CEO of Ctrip live streaming to sell domestic tours and tickets with huge success.
This drive to survive and absolute belief in the future of the travel industry has reassured us that our agent and operator partners are eager to resume sales of outbound travel as soon as they possibly can.
We have every reason to believe that, once the crisis is over, the market will return and the Chinese travel trade will be ready to support its growth.”
Helena is Founder and Managing Director of China Travel Outbound, a UK-based travel PR and representation agency specialising in China whose clients include English Heritage, Royal Museums Greenwich and Gatwick Airport.
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100 Million Chinese Travellers in 2021?
Interview with Prof. Dr. Wolfgang Georg Arlt, Founder and CEO of the China Outbound Tourism Research Institute (COTRI).
Founded in 2004, COTRI is the world’s leading independent research institute for consulting, research and training relating to the Chinese outbound tourism market.
Prof. Arlt first visited China in 1978, and set up his first inbound travel firm from China to Europe in 1991. He is a visiting Professor at universities in China, UK and New Zealand, a PATA board member and a member of the UNWTO Expert Panel.
COTRI has predicted up to 100 million Chinese outbound trips in 2021, is that realistic?
For the whole year of 2020, we expect 18 million Chinese international trips, most of which happened in January. That represents about 10% of the total for 2019.
There are many millions of Chinese waiting eagerly to travel abroad again. With COVID-19 almost defeated in East Asia, and vaccines hopefully becoming available in a few weeks, we should see a wave of Chinese outbound travellers.
This could start for Chinese New Year travel to Asia, and after Easter to Europe. It will take time to get visa regimes and air connections back on track, that’s why we forecast about 100 million trips in 2021. In 2022, we are very likely to see a new record of outbound trips.
“In 2022, we are very likely to see a new record of outbound trips from China.”
Destinations worldwide are desperate for Chinese travellers to start boarding outbound planes again. Will the appetite for travel be similar or different to pre-pandemic times?
The reasons why Chinese people want to travel outbound have not changed. Two- thirds of Chinese international travellers are eager to come back onto the global market as soon as the availability of visa and air connections, and trust in the safety of travel, has been re-established.
Post-virus travel is likely to be less bling-bling, and focused on real life experiences. Information provided by DMOs and KOLs will be perceived as propaganda. Instead, KOCs (Key Opinion Customers) are the trusted source of online information.
To cater to a new emphasis on family, nature, authenticity, small groups and slowing down life, a different approach will be needed to avoid the previous problems of over-tourism and dissatisfied customers, staff and locals.
“Information provided by DMOs and KOLs will be perceived as propaganda. KOCs are the trusted source of online information.”
What has 2020 taught the world about the Chinese travel market, and how can these learnings be applied in 2021?
This year has taught us that many existing trends were reinforced and changes speeded up, like virtual travel, travelling in small groups with people you know - such as family, friends, colleagues - rather than package tours in a group of strangers. Also, more online shopping or shopping in China, so less time and money will be spent in the future for shopping abroad. Instead experiences, fine dining, gaining new skills like diving will be important.
These learnings can, and should, be used for more precise product adaptation and for saying goodbye to arrival numbers as the main yardstick of success with the Chinese market.
“This year many existing trends were re-enforced and changes speeded up, like virtual travel.”
Do you think those learnings will start to become more relevant as outbound travel flows develop through next year?
No, the winners will be those companies and destinations which prepare in advance for the changes in the market, and communicate effectively to potential visitors.
Given the expected slow start to the 2021 travel year, do you think the October National Holiday will be the best barometer for recovery in Chinese outbound travel?
The calendar for 2021 depends a lot on the speed of vaccination and a consequent lowering of case numbers. Optimistically, Chinese can start visiting neighbouring countries for Chinese New Year, and start visiting long-distance destinations - except the US - during Easter time.
By October, a lot of the pent-up demand will be released, after a summer with millions of international trips without new virus problems, so that October 2021 Golden Week should see more Chinese abroad than the October 2019 Golden Week.
“October 2021 Golden Week should see more Chinese abroad than the October 2019 Golden Week.”
With the first vaccines starting to be approved, the era of Vaccine Travel is about to unfold. It will bring a tangle of economic, political and social complications. Amid this nascent landscape, the travel industry is trying to forge a way ahead.
Already Qantas says it will require passengers to be vaccinated, while Singapore Airlines and Garuda will be involved in vaccine logistics in South East Asia. Meanwhile, governments are sourcing a cocktail of vaccines from East and West.
On this week’s The South East Asia Travel Show, we analyse the current vaccine procurement situation in South East Asia and Asia Pacific, and look ahead to 2021, the Year of Vaccine Travelnomics.
Click HERE to listen
And, that’s a wrap for Issue 19.
Until next Sunday, you can catch me on Twitter and LinkedIn, and at Check-in Asia.
Feel free to send thoughts and feedback to gary@check-in.asia
Next week, the newsletter heads Down Under to assess a torrid travel year in Australia.
Speak soon,
Gary