Spend the night at a hotel in Shanghai or Beijing, and in the morning you can expect to be treated to traditional Chinese breakfast dishes like congee and dim sum. What you may not expect is to see these same dishes appear alongside bagels and blueberry muffins at a hotel in the US or Europe. But in fact, this sort of culinary mingling is occurring with increasing regularity. It’s just one of the ways hotels are looking to appeal to the growing ranks of international travelers from China.
The outflow of travelers from China, which not so long ago amounted to barely a trickle, is fast becoming a flood. Before the end of the decade, the World Travel Organization expects China will overtake Germany and the US as the top source of outbound travelers.
Given the growth of the market on the one hand, and Americans and Europeans tightening their belts on the other, it should come as no surprise that companies are jostling to attract tourists from China. It’s not just hotels offering Chinese-style breakfasts. Wineries in France are adding Mandarin-speaking tour guides to their staff, and luxury goods stores in New York are selling dragon year-themed merchandise.
“[The Chinese people] have great passion for food, they have great passion for shopping, they have great passion now for exploring the world,” said Andrew Flack, vice president of global brand marketing at Hilton Hotels and Resorts. China’s outbound tourists have taken these passions and stitched them together, creating opportunities that the hospitality, tourism and luxury goods industries in destination markets around the world are only just beginning to appreciate.
From humble beginnings
In 2011, travelers from mainland China made more than 70 million outbound trips, compared to just 10 million in 2000. As experts are quick to point out, however, this figure is somewhat inflated, as the majority of those who left the mainland last year traveled only as far as Hong Kong or Macau. While trips to these two destinations account for a disproportionate share of the increase in outbound travel from China, trips to so-called long-haul destinations have swelled in number as well. In the US, for instance, the number of Chinese visitors has more than tripled in the past five years.
There are a handful of factors that have contributed to the dramatic growth of outbound tourism from China. The most significant, of course, has been the rise of China’s middle class. Increased disposable income has boosted the demand for outbound travel. Moreover, tourism authorities around the world have helped to accommodate this increased demand by making it easier for Chinese travelers to obtain visas.
While the recent growth of outbound tourism from China has been impressive, the change has been more than just quantitative, according to Wolfgang Georg Arlt, director of the China Outbound Tourism Research Institute (COTRI). “The more important development,” he said, “is that qualitatively there has been a segmentation of the market.”
Congee for breakfast
Most transcontinental travelers from China are still package tourists. They travel in large groups, whisked from one destination to the next on whistle-stop bus tours. For more and more Chinese travelers, however, it is “the depth of the experience” that matters, explained Arlt. These are tourists “who have already been to the Eiffel tower,” he said. When visiting France, they favor shopping for high-end goods in Parisian boutiques or sipping wines in the Bordeaux countryside.
This is the new face of China’s outbound tourism: relatively young, independent, affluent. These travelers are keen to flex their spending muscle, and companies in long-haul destinations like the US and Europe have been happy to oblige, rolling out initiatives designed to cater to this growing segment of the market.
For instance, Hilton Hotels and Resorts last year launched its Huanying program, which is now offered at 70 locations in 23 countries. “The essence of the program is that it offers some guaranteed Chinese service experiences for visitors of Chinese origin,” explained Flack of Hilton. The program, which takes its name from the Mandarin word for ‘welcome,’ features services and amenities that will be familiar to Chinese travelers: slippers, a hot water boiler and a Chinese language television channel, in addition to the traditional Chinese dishes served at breakfast.
Luxury goods stores are also well positioned to capitalize on the growth of China’s outbound tourism market. “Generally speaking [Chinese outbound tourists] spend a lot more on shopping than many other outbound tourists,” said Russell Arthur Smith, interim dean of the Cornell-Nanyang Institute of Hospitality Management. Wealthier Chinese tourists are particularly drawn to luxury goods stores because the products they sell – jewelry, antiques and other high-end items – are subject to high taxes in mainland China.
To cater to this lucrative market, Tiffany and Burberry now employ Mandarin-speaking sales staff at a number of their major stores. Harrods, the London department store, has installed terminals which allow Chinese consumers to use UnionPay, a Chinese banking card service.
Such initiatives are still relatively young, but already they are yielding encouraging results. Hilton’s Huanying program, for instance, helped the company realize growth well above the China outbound market’s rate of expansion. “For quarter one of this year, we found that the number of bookings into the participating hotels had more than doubled year-over-year,” Flack said. Likewise, following the installation of its UnionPay terminals, Harrods saw a 40% increase in sales to Chinese tourists.
China’s cooling economy is likely to slow outbound tourism from China, though perhaps not by as much as one might expect. In the US and Europe, people tend to cut back on travel expenses when times are tough, but that’s not necessarily the case in China. “A lot of this activity is about gaining prestige, gaining status,” explained Arlt of COTRI, adding that especially amid an economic slowdown, “it is important to show to your peer group, to the other people you’re working with, that you’re still in the game, that you can afford it.”
Annual growth in outbound tourism may not reach last year’s heights, but it is still likely to outpace GDP growth. And as the number of outbound tourists from China climbs, the number of Chinese tourist-friendly initiatives is likely to increase as well. Indeed, Marriott Hotels launched a program in Asia earlier this year which is similar to Hilton’s Huanying program. The company has already announced plans to expand the program to locations worldwide in 2013.
Arlt recalled that he has Chinese friends who “have complained that they go to a museum and there is an explanation in English, French, Spanish and Japanese, but not in Chinese.” Even if they can speak English, he said, given China’s rising prominence, they feel somewhat slighted by the omission. With the rise of outbound tourism from China, however, it seems the days when Chinese tourists had reason to feel neglected or overlooked are coming to an end.