The Lowdown on Chinese Tourism By Dana Nino, EVP of Geoswift US

The Lowdown on Chinese Tourism 
Written by Dana Nino, EVP of Geoswift US

The travel vertical in and out of China represents an enormous opportunity in the global travel market

MANY travel companies will agree that although China has become a huge strategic milestone for their business, it is still bringing with it apprehension and uncertainty. Stringent policies, intense local competition and scrutiny, tend to encourage a slow, careful, well-thought-out entry strategy. This helps to avoid a demise similar to that of the others that have gone before them. However, the enormity of the opportunity is too enticing to ignore. Last year alone, more than 135 million Chinese travelled overseas spending almost US$261 billion.

It is important to understand the nature and behaviour of Chinese tourists. These days Chinese tourists are evolving, with regards to their tastes and preferences. For instance, they have become more inclined towards booking customized trips such as cruises, skiing, and medical services, as compared to shopping-related trips. Data from China Tourism Academy show that there has been a 400% increase in customized trips.

Chinese travellers are frequenting popular destinations such as Thailand, Japan, South Korea, US, Maldives, Indonesia, Singapore, Australia, Italy and Malaysia. In fact, the US has recorded a tenfold increase in the number of inbound Chinese tourists since 2005, accounting for 3.9% of all international arrivals to the United States. They have stayed for an average of 16 days , and spent an average of US$7,200.

Based on such a trend, there is compelling opportunity for firms in the online travel sector, such as Airbnb, Expedia and Booking.com, as well as airlines and car rental agencies to channel more effort towards improving the user experience of China’s outbound tourists. This may involve customizing web offerings and checkout pages to suit the Chinese audience. For example, websites in Chinese would be naturally helpful. Also, Chinese people may be less likely to have a Visa or Mastercard available for booking online. Therefore, accepting local payment methods such as Union Pay, WeChat Pay, and AliPay, would help ensure better adoption.

While catering to the needs of Chinese travellers, it’s also important to factor in common pain points hindering their travel experience. In a recent survey by Hotels.com, Chinese travellers singled out the lack of Chinese payment facilities, language-compatible staff, and local transport arrangements as some of the biggest challenges they face.

As a host country, China too, has its set of challenges for inbound tourists. Travellers entering China are usually concerned about the foreign exchange costs and the ability to pay through a recognized payment method. Finding an accommodation with ease and accessibility is another concern. Accommodation services like AirBnB, VRBO, Homeaway, etc. are not as well known or readily available in Mainland China. However, this seems to be gradually changing.

Building out China’s host community is crucial in ensuring that foreign travellers have the number of options available that they expect. This process takes time and has been slower in China than other regions globally. In the past, there had been reluctance for Chinese homeowners to offer their homes on hosting sites, due to concerns over security, privacy and payment fraud. The sentiment is changing recently as more market education and positive feedback has been circulating via social media, travel blogs etc. Targeted events that feature top local social media influencers will help attract new hosts in key travel regions in China and allows an opportunity to educate potential hosts on best practices and answer questions and concerns they may have on the hosting experience.

It has been observed that, using Chinese social media influencers to market travel hosting services to local Chinese travellers is key to expanding brand recognition in the local market. Given that 83% of Airbnb users in China are under age 35, social media plays an important role in local adoption and education. Key opinion leaders vehemently advocate for foreign-based hosting services based on their own personal experiences and appreciation of the services, so they are helping US travel companies expand their brand and reputation through social media and travel blogs at an impressive scale.

It’s a well-known fact that government regulators and local competition in China can be fierce, so partnering, merging or even acquiring a local travel company can be a smart way to promote cooperation vs competition.

Residents of larger cities in China still tend to prefer to use the local travel methods for ride sharing and accommodations. Therefore, tailoring a local look and feel to your business is critical. Partnering with local companies and establishing relationships with local government will help ensure a smooth entry.

For Chinese and foreign tourists, add-on services such as travel lending, guided tours and insurance could also be a great way to broaden customer base. Especially given that lending is popular among younger travellers in China. This may also enhance loyalty and increases average spend.

With large scale expansion into China, there can be business-related necessities that prove challenging, like the potential difficulty in making pay-outs to the hosts, travel partners, tour guides, and suppliers needed to run a business. Generally, pay-outs are not as straightforward in China as they are globally. And often requiring extensive paperwork and back-up documentation from the sender. Local requirements can and do change on short notice. Partner with a market expert to consult on the most cost-effective, user-friendly model that will satisfy regulatory requirements, while maintaining a positive user experience and an efficient, reliable payment channel, which recipients expect.

The travel vertical in and out of China represents an enormous opportunity in the global travel market, with all the complexities and challenges you would expect from such a dynamic, volatile, and ever-evolving economy. For those that succeed however, the rewards are unprecedented.


Source: The Asset, 2018

Feb-21-2018 / Latest News, Media Coverage

Let us know how we can be at your service.