Following its recent release, we reviewed Brand USA’s China Market Update and have condensed it for our readers. Spoiler alert: the really good material is in the section that lists the 10 Trends in the market.
China Market: Size
Source: Brand USA China Research, CIA World Fact Book
- China’s GDP is greater than the combined GDPs of India (#3); Japan (#4); Germany #5; Russia (#6)
- China’s economy is 20 percent greater than that of the U.S. on a Purchasing Power Parity (PPP) basis.
Source(s): Brand USA China research, IMF, World Bank
25-Year Trend Line:
China Outbound Travelers
(Millions)
Source(s): Brand USA China research: Travel China Guide
Timeline: Chinese Travel to the U.S.
Chinese Airlift: U.S. Gateways
16 U.S. Non-stop Gateways to China
Los Angeles Chicago
San Francisco Houston
New York Dallas
Honolulu Detroit
Seattle San Jose
Washington, D.C. Saipan
Boston Guam
Las Vegas Atlanta (this summer)
Current annual seat capacity between the U.S. and China stands at 5.1 million regularly schedule seats—a capacity jump of over 500,000 seats in the last 6 months alone.
Source(s): Brand USA China research
Chinese Airlift: China Gateways
(17 China Non-stop Gateways to the USA)
(China has 206 airports and is now building another 66 major new airports – a 32% increase in number of airports in China in just the coming 5 years.)
Current New China Gateways inThe Past 12 Months
Beijing Shenyang
Shanghai Shenzen
Guangzhou Qingdao
Chengdu Fuzhou
Wuhan Chongqing
Nanjing Jinan
Xian Tianjin
Hangzhou Zhenzhou (New 2018)
Changsha
Source(s): Brand USA China research
China—Trend #1: Online Bookings
- 20 percent growth in online purchases of travel in 2017.
- Over $800 billion in tourism products bought online in China 2017.
- Online tools are key in both destination selection and actual booking.
- Online platforms are the China outbound travel purchasing channels of the future.
Source(s): Brand USA China research; C-trip
China—Trend #2: OTAs Dominating
- 2018 Chinese New Year OTA bookings up 60 percent v. overall outbound market up 10 percent.
- Three OTAs dominate: C-Trip, Qunar and Tuniu, over 80 percent of China’s OTA sector.
- Air tickets (#2 after OTA booking) and accommodations (#3) are increasingly being booked on service providers’ websites directly.
- “Fly-Drive” and car rental are soaring in popularity
Source(s): Brand USA China research; C-trip; Agencies
China—Trend #3: Emerging OTAs
- Zuzuche now dominates the online car rental market, with over 76 percent market share in just three years.
- Fliggy, the online travel brand of e-commerce giant Alibaba, has gone from zero to 200 million users in less than three years and is now a key partner for many destinations.
- Mafengwo, the “TripAdvisor” of China, launched in 2010 originally as a social travel website/blog, has now transformed itself into a travel booking app which is key to reach Chinese FITs.
Source(s): Brand USA China research; Zuzuche; Fliggy; Mafengwo; China Daily
China—Trend #4: Shift to Mobile
- Mobile internet: 685 million users use their mobile to access the internet; 50 percent + 4G.
- Mobile payment: 87 percent of Chinese consumers in China used mobile payments in 2017–up from 69 percent in 2016.
- Dominant channel: media and entertainment in China are now primarily consumed on mobile.
- TV: 71 percent of Chinese watch TV on mobile several times a day—27 percent in the U.S.
- News: phone-based news apps have become the #1 source of information for Chinese social media is now the #2 source of information.
- Travel search & planning: over half of destination search & planning is done on mobile
- Bookings: 72 percent of online bookings on top 5 OTAs are done directly via mobile, and 81 percent of online hotel bookings are made on mobile.
- Booking apps: OTAs lead the way, with traditional Tour Operators / Travel Agents playing catch up.
Source(s): Tencent; China Internet Watch
China—Trend #5: Booming FIT
- Growing 10-20 percent per year, outperforming China’s overall outbound market.
- In certain states, FIT represents 40 percent of China travel and rapidly rising.
- Semi-FIT (air/hotel packages) represents an additional 40 percent of the market.
Source(s): Tencent; China Internet Watch
China—Trend #6: Beyond the Gateways Soaring
- Converging factors: Increased Chinese traveler sophistication, increased disposable income, and increased frequency of travel to the USA means Chinese travelers are no longer satisfied with cookie-cutter itineraries and are now rapidly going beyond the gateways.
- “Been there done that,” no more: Much like in the West, social pressure pushes sophisticated Chinese to “one up” their peers and classic itineraries/destinations are no longer enough.
- Attractive to the trade: High-end Chinese travelers are less price sensitive– the higher margins of tailor-made travel beyond the U.S. gateways are highly attractive to the Chinese travel trade who are happy to develop tailor-made itineraries.
- Opportunities for lesser known destinations: The tailor-made itineraries trend is a major opportunity for lesser-known destinations and attractions to boost Chinese business.
Source(s): Brand USA research
China—Trend #7: Booming Luxury Market
- Booming Chinese middle and upper class: is translating to booming luxury travel.
- Demanding exclusive travel: 5 & 6-star hotels, limos, helicopter transfers, private tours.
- New luxury travel agents: all major Chinese tour operators have created luxury travel subsidiaries
- Meituan: in less than 2 years, it went from a group buying site to China’s dominant luxury hotel online. booking site, recording a 300 percent increase in bookings in 2017.
Source(s): Brand USA China research; Meituan, Jing Daily
China—Trend #8: Family Travel Soaring
End of One-Child Policy is Reshaping China’s Travel Industry
- The end of China’s one-child policy resulted in 8.83 million newborn second children in 2017 (One-quarter of the entire population of Canada).
- 51 percent of all babies born in 2017 were second children for the first time ever in China’s history.
- 3-generation travel (boomers, millennials, babies) is booming.
- One-quarter of Chinese millennials plan to travel with their parents and their children.
- Even with children, 58 percent of Chinese travelers choose “fly & drive” options.
- Educational tourism (families with college-age children) soaring.
- Theme park visitation with younger children benefiting from the trend.
Source(s): Brand USA China research; China Daily
China—Trend #9: Rise of Tier Two Markets
Tier 1 Gateways
- Five years ago, there were only 3 cities in mainland China with direct non-stop flights to the USA: Beijing, Shanghai, and Guangzhou.
Tier 2 Gateways
- Greater China now has 17 gateways with direct non-stop flights to the USA
- China has 100 cities with a population of over 1 million – compared to just 10 in the USA
- China’s future growth in outbound travel will come from these Tier 2 markets
- This requires a 2-tier strategy to the China market: One targeting increasingly sophisticated FITs in tier 1 cities.
- A second parallel strategy targeting first time long-haul group travelers from China’s tier 2 cities.
Source(s): Brand USA China research; China Daily
China—Trend #10: China Airport Growth
- Airport Growth: Between 2006 and 2016, six of the world’s top 10 fastest growing airports were in China
- Case Study: Tianjin grew from 2.7 million to 16.8 million passengers during the decade
- New Airport Construction: China has 206 airports and is now building another 66 new airports; a 32% increase in number of airports in China in the coming 4 years
Source(s): Brand USA China research; Civil Aviation Authority of China
