China’s National Day Golden Week Holiday earlier this month (Oct. 1-7) generated a huge volume in both domestic and international activity by Chinese travelers, generating a spate of coverage trying to analyze or predict whether sluggish economic conditions in the world’s largest national economy would put the brakes on outbound travel in the near-term future. In its latest projection on the matter, for instance, the World Bank reduced its projection for growth in China’s economy in 2015 from 7.1 percent to 6.9 percent.
The consensus, it seems to the Inbound Report’s review of news articles, is that the sluggish economy probably won’t have much of an impact. A sampler of some of the points made in various publications includes the following:
—A study published by HSBC found that outbound Chinese traveler numbers are expected to hit 242 million by 2024—a number more than double last year’s amount, which was estimated by HSBC to be 116 million.
—Another report by the Fung Business Intelligence Center and China Luxury Advisors found that outbound Chinese traveler spending will hit $422 billion by 2020, up from an estimated $200 billion this year.
—Perhaps, most significant—given the size of the arrivals numbers and spending projections—were the numbers in the just-released Visa Global Travel Intentions Study 2015, which indicated that the USA is positioned to benefit from its status as the favored long-haul destinations of Asian travelers.
The Visa study reported the following findings regarding the ways in which Chinese overseas travelers plan for, budget for and actually spend during a trip:
—Almost one in two Chinese travelers has shopped for luxury goods on their most recent trip.
—One in two Chinese travelers have shopped at airport duty in free stores
—Chinese travelers love to buy local food specialties as souvenirs. Three in five did so on their most recent holiday
—The spending power of Chinese travelers has increased over the past two years. Also, for Chinese travelers creating the best travel experience is valued more than the actual cost of it. On average, Chinese travelers partake in more activities than the global average.
Budget Approach of the Chinese Traveler vs the Global Traveler
| Approach | Global Traveler | Chinese Travelers |
|---|---|---|
| Search for the best experience and then sum up the amount before making adjustments | 46% | 46% |
| I will keep strictly to the budget I planned | 29% | 18% |
| Source: Visa Global Travel Intentions Study 2015/Prepared by Millward Brown | ||
Travel Activities: Global Traveler vs. Chinese Traveler
| Activity | Global Traveler | |
|---|---|---|
| Visited the local night scene such as clubs, bars, etc. | 30% | 57% |
| Trekked/backpacking | 16% | 27% |
| Participated in local festivals | 20% | 28% |
| Source: Visa Global Travel Intentions Study 2015/Prepared by Millward Brown |
The indicators from the “middle class” in China suggest that there is no slow down in demand for the USA and other countries). A record breaking Golden Week and strong OTA performance (even during economic challenges) are good trends. Our 4 offices in China (Beijing, Hong Kong, Guangzhou, and Shanghai) see growth across the board. Look at Cruise Line investment as a good example of “playing to where the puck is headed”. The Chinese travel industry is still finding its feet and the mega deal this week with the stock swap between Ctrip and Qunar will have an impact, which we haven’t seen yet and I am confident other deals will follow as a result. As they say – watch this space! (Also keep an eye on India, rapidly becoming the next outbound market to focus on.)