→ Following a week of talks by senior officials from both the U.S. and China, President Barack Obama and Chinese President Xi Jinping last week announced the U.S.-China Tourism Year for 2016, an initiative that celebrates last year’s reciprocal extension of visa validity and supports increased travel and tourism exports. Partnering under the framework of the U.S.-China Joint Commission on Commerce and Trade (JCCT), the two sides will work together to expand and shape U.S.-China travel and tourism. Throughout the year, the U.S. Department of Commerce and the China National Tourism Administration (CNTA), in collaboration with Brand USA and other partners, will design and execute a year of events and activities that will promote and further open travel between the United States and China, expand market access, and advance initiatives to ensure a quality visitor experience for increasing numbers of travelers to and from both nations.

→ Brand USA is now the lead organization on the U.S. side for the annual U.S.-China Leadership Summit. The ninth annual Summit was held in mid-September in Los Angeles, attracting more than 200 delegates. The first U.S.-China Leadership Summit was held in 2007, in Charlotte, N.C. Locations of the summit alternate between the U.S. and China yearly. The U.S. Travel Association initiated the summit in coordination with (China National Tourism Administration CNTA).  After having prime responsibility every year for planning the summit on behalf of the United States, U.S. Travel phased out of this role in 2014, when it shared responsibilities with Brand USA.

→ In an update on the activities of the NTA China Inbound program, Haybina Hao, NTA‘s director of international development, reported that enrollment in NTA’s China Inbound Program reached 200 operators this year. When NTA launched its China Inbound Program in 2008, it qualified some 60 receptive tour operators for the program.  

→ After being overlooked as a key target group in the decade since Chinese domestic and international tourism numbers began to take, the senior market is getting a serious look from tour operators and travel agents. News accounts of late have cited instances in which older Chinese have expressed the opinion that they were not treated with respect (in one article a tour guide said the travel industry doesn’t actively seek business from senior travelers because they pose too many risks while providing too little profit) nor were they offered products that accommodated their budgets as travel companies went after the target big-spending, 25-54 demographic group.

But a recent article in the Singapore-based online news publication, AsiaOne, pointed to the sheer size of the market as one reason that travel suppliers have begun to cultivate by developing more product for the over-55 population. Consider the following:

What seems to be appealing to operators is that, although the margin for parsimonious seniors is low, the senior market is one that favors group travel, which helps to offset the low profit margin they realize. As such, travel companies and the government seem to be responding. The China Association of Travel Services, for instance, is working on guidelines for the industry that will focus on services, safety and healthcare for senior tourists. The standard, which is now being drafted, will require travel products to suit the psychological and physiological characteristics of older travelers.

Snapshot of Key Numbers

On the Senior Travel Market in China

* According to China’s Bureau of National Statistics

Air travel bookings from China have slowed sharply over the past three months, especially to Europe and the USA, closely mirroring a decline in the country’s stock market, according to ForwardKeys, a Valencia, Spain-based business intelligence company. Total outbound international bookings from China during the period fell from a growth of 21 per cent year-on-year (for the period ending with August 2015), to just 1 per cent, since the Shanghai Composite hit its peak. Meanwhile, the U.S. State Department indicates that the number of visas granted to Chinese travelers to visit the United States reached a record level—increasing 47 percent year-on-year for the same period ending August 31.

The slowdown in bookings that analysts say is related to the condition of the Shanghai Composite was compounded by lower Chinese purchasing power as a result of the weaker Chinese yuan vs. the U.S. dollar. The data from ForwardKeys, which monitors future travel patterns by analyzing 14 million reservation transactions each day, shows the biggest fall was in August when growth in outbound bookings turned negative. However, departures from China during the September to December period will still grow compared with the same period last year, the analysis showed. Also, travel during the upcoming Golden Week national holiday, from October 1 to 7, seems not to have been affected by the stock market drop because bookings were made months in advance.

However, bookings to Europe and the U.S. for November and December are lagging behind the volumes for the same period last year. The weaker Chinese currency is clearly making an impact on travel decisions, according to ForwardKeys, whose founder and CEO, Olivier Jager said: “Once again our data reveals how changes in the broad economic climate can have a great impact on the travel industry. The prospects for the low season after Golden Week are still uncertain because Chinese travelers are becoming late bookers. Nevertheless, despite the slump in travel to Europe and the U.S., overall departures from China will turn back to growth from September to December.”

Meanwhile, Surge in Visa Numbers Continues: Ever since the U.S. and China signed an agreement last Nov. 10 that extended the period of validity for tourist visas to each nation from one to ten years, there has been an explosion in the number of Chinese who have sought and received the new 10-year visa.

Source: U.S. Dept. of State, Report of the Visa Office 2014, Statistical Table No. 19

† Information provided by the State Department Visa Office to Inbound Report: Through August 31, 2015, there have been 2,264,531 NIVs issued at Mission China.  This is a 47 percent increase compared to the 1,539,079 NIVs that were issued during the same date range in FY-2014

Note: Figures do not include Hong Kong

It is difficult to speculate what impact the huge increase in 10-year visa holders will have on Chinese travel to the USA—the data do not break down first-time visa approvals vs. repeat visa approvals—but the number granted during the current Fiscal Year, which ends Sept. 30, 2015, is already well above the total arrivals if Chinese travelers to the USA in 2014—2,188,000.

Leading China expert Evan Saunders, who keynoted the recent Active America China Summit in Las Vegas, said that nothing should come as a surprise when it comes to measuring and analyzing the statistical dynamics of the market, which has changed utterly in its composition in just a decade. What used to be a predictable sample of group vs. independent traveler segments has changed to the point at which some two-thirds of outbound travelers are FIT. And, noted Saunders, the founder and CEO of Attract China, a firm that helps U.S. travel suppliers navigate the China market, as the market has evolved to a primarily FIT market, it has evolved in other ways as well.

In trying to put the dynamics of change in the travel industry into context, Saunders illustrated his point by showing how the skyline of Shanghai has changed from 1987 to present day.

Despite the dominant position of the FIT market segment, Saunders cautioned summit delegates on two points: first, “group travel will never go away” and, second, “the independent Chinese travelers has different needs … remember, they were actually group travelers just a few years ago.” He emphasized the uniqueness factor by noting that the Chinese travelers “are not the American tourists, they are not South Korean tourists … they are Chinese travelers.”

Key Differences: Saunders quickly went through some of the key differences between group and independent travelers.

• Group travelers want to see as much as they can within their limited budget, while independent travelers are not that concerned with price, they focus more on experiences.
• For ground transportation, group travelers still take the bus, while independent travelers look for options– rental automobiles, or event bicycles
• Groups go to Chinese restaurants to eat, to find familiar dishes, while independent travelers want to experience American cuisine.
• For translation needs, groups generally depend on their tour guide, while independent travelers: hires an English speaking tour guide; install translation apps on mobile devices; show pictures to natives; use body language; and make a detailed travel plan that makes them less reliant on strangers for help.

Things in Common: All Chinese tend to travel most during the same periods, avoiding departures in November and December, while clustering their departures during familiar holidays and vacation times. Last year, 17 percent of independent travelers departed on their holidays in January and February, with another 60 percent traveling from May through October. Major holiday periods are illustrated here.

Also, despite the group-FIT differences, most Chinese are looking for the same amenities when they travel abroad. That is, they want: free WiFi at hotels; tea kettles and slippers in their hotel rooms; Chinese cuisine served in their hotels; designated smoking areas (China is largest smoking country in the world); and merchants and vendors that honor the China UnionPay credit or debit card (the largest bank card I the world, Union Pay has a greater market share than Amex, Visa and Mastercard combined).