U.S. travel suppliers and DMOs should think of all Chinese travelers as potential luxury travelers. This is one of the key messages of Charlie Gu, director of the Los Angeles-based China Luxury Advisors, makes when he discusses the ins and outs of the luxury travel market in China. And it was one of the points Gu wove throughout his presentation during NAJ’s Active America-China Summit held recently in Fort Worth, Texas.
Ninety-three percent. This is a figure Gu used to point out just how rarefied the luxury travel market in China is, because 93 percent is that part of the Chinese population that do not have a passport. Only 7 percent of Chinese have a passport. And while 7 percent is a small number, it means that, of China’s 1.386 million population, 97 million individuals do have a passport.
For residents of China, leisure travel is an activity that is relatively recent—the Chinese government gave the U.S. travel businesses the authorization to promote their product less than a decade ago, in December 2007—but there are some realities that have emerged in this brief period that are now factors that travel marketers should be aware of in developing their strategies. Following are some of the other points made by Gu:
—Travel is now viewed by many in China as a necessary adjustment to their lifestyles.
—The decline of the Chinese yuan (it is off about 5.5 percent against the U.S. dollar vs. a year ago) is not a deterrent for the luxury traveler, said Gu, suggesting that it could mean that such travelers “might get one less hand bag” during their shopping stops.
—Because of the November 2014 agreement between the U.S. and Chinese governments that extended the period of validity for each nation’s visa in the other country from one to ten years, “we will see more repeat visitors” to the USA from China.
—“Peak travel” periods will occur throughout the year as Chinese travelers will take advantage of the increased number of flights and connections between China and the U.S.
—Chinese investment in the United States will continue to grow, meaning that visitors will begin to “lay down partial roots in the U.S.” and creating a reason for frequent return visits.
—High-end group travel is evolving; “the size of groups is diminishing.”
—New experiences being sought out by luxury travelers include golfing, skiing, wine tours, self-driving, move location tours and adventure travel.
—There is a blurring of the line between group travel and FIT travel; FIT is rising. A recent study indicates that 75 percent of FIT travelers are Millennials.
—“Digital Dominates” as the overwhelming majority of luxury travelers transact their business digitally, using the now-familiar Ctrip, Qunar and Alitrip, as well as other online travel companies. “Essentially, it’s a virtual mall,” said Gu, “where businesses can set up their virtual store.”
—To the question, “What can you offer?” Gu suggested that U.S. suppliers first find a Chinese partner before trying to answer it.
Finally, said Gu, the definition of luxury travel is changing—from the conspicuous spending that used to characterize it, to experiential travel product. Luxury travelers, he emphasized, “want a much broader experience in a destination,” with one recent study suggesting that luxury travelers will be spending more on travel itself than on luxury goods through shopping.
