Where is the Chinese tourism industry heading in 2009?
Published: 03 Oct 2008
(October 1st, 2008 London, UK: Roy Graff, Director, WTM-ChinaContact forum)
Without argument, 2008 had been the year China featured most prominently in the media all over the world. Much of this was not complimentary it has to be said, as the year started with riots in Tibet and a largely embarrassing global torch relay. With a tragic twist of fate, the huge earthquake, which hit Sichuan province in May, provided a counter measure to the hostile media in the West. A terrible natural disaster in terms of lives lost and damage to infrastructure and property, it also proved extremely damaging to the tourism industry in the short term.
Being a popular tourist destination, Sichuan lost the tourism revenue many people rely on. The government restricted official and business travel while the focus was on relief and rebuilding, as a way of saving costs and avoiding the excess that sometimes accompanies official trips abroad.
When it came time for the Olympic Games opening ceremony, the eyes of billions of people around the world were on China and tens of thousands of reporters descended on the capital Beijing. The execution of the Games and the media coverage of these 2 weeks in August have had long ranging effects on tourism development in China. This article looks at international tourism in the Chinese context (China’s inbound and outbound travel sectors) with a review of the past year and a look at what can be expected in 2009.
An expert analysis of China’s tourism industry will take place towards the end of the year during Europe’s leading international travel trade fair, World Travel Market. Bringing together China tourism experts from academia, government and private sector is the 4th annual WTM-ChinaContact forum. It combines the varying view points of its speakers and panelists to consider the future growth of the industry and the business opportunities that it offers. Beyond being a trade forum, it is designed to generate discussion and provide practical advice to delegates on access to the huge China market. In previous years, delegates came from all continents and included national and regional tourism boards, hotel group representatives and independent hoteliers, specialist tour operators, travel agents, tour attractions, transportation suppliers, airline professionals, travel technology companies and tourism marketing specialists.
The forum will show how despite the problems and challenges, China is on course to dominate the global tourism industry and those that begin engagement now stand to benefit. Those that ignore the opportunities will discover later that a global brand does not guarantee success in the Chinese market.
China’s Outbound travel market
For the past 8 years travel industry watchers have seen a fast paced opening up of China’s tourism sector with a succession of worldwide destinations approved for Chinese to visit as tourists. Growth averaged over 12% and even SARS could not slow that down. The Chinese government this year promised to continue liberalizing the sector and begin licensing foreign travel companies to sell outbound tourism in China (so far only Chinese owned companies are allowed to sell outbound tour packages and travel services). Since 2004, non-Chinese companies have been able to apply for an in-bound tourism license and this is the logical next step.
When we look at long haul destinations more closely, we can see that some differences in approach and experience emerge.
Europe
Things were looking good in 2007 though Europe was going through a rethink of the type of tourism they were attracting from China. Strong marketing and promotion activities by European tourism boards led to a surge in European group travel sales and increase competition. Unfortunately those in place to supply services were often small operators with personal connections who offered identical products and competed with each other on price alone. With a lack of understanding of the intricacies of the Chinese market and few established operators in Europe really properly engaged with China, the result of price competition was poor quality, complaints and bad experience for many European hotels and service providers. Following a series of disappearances by some tour groups in Europe, the EU looked again at the Approved Destination Status agreement signed with China and the entry visa procedures. Visas to Europe and UK have since become more difficult and require more personal interviews, leading to a slowdown in the growth of tourism to the region in 2008.
At the 2007 WTM-ChinaContact forum held in November, tourism experts concluded that Europe should be focusing on up-market tourism from China including luxury travel, cultural experience tourism and corporate travel. They recommended a unified approach that connects Europe along its themed culture and heritage. This recommendation was passed to European governments and tourism promotion bodies by ChinaContact in the UK and the China Outbound Tourism Research Institute based in Germany. However a lack of coordination among European governments on tourism marketing means that each country develops its own separate marketing strategy while Chinese generally still see Europe as a single destination.
For 2009, growth could slow down further if decisive action is not taken to counter the competitive threat of the USA and ease the visa restrictions. A Coordinated approach to marketing Europe is still very much called-for. The trend towards theme tours and cultural experience will grow as tourism numbers may decrease but quality and length of stay increase.
Australia/New Zealand
Australia, an early pioneer of long-haul travel from China has been extremely active in the market with both trade and consumer marketing that proved very successful. As in Europe later, Australia witnessed a drop in quality, increased price competition and increasingly poor experience by visitors from China. The same problems of business communication and cultural differences at all levels led to a proliferation of unscrupulous operators squeezing margins and pushing for shopping commissions. The concept of zero commission tours where land operators make their money solely from shopping kickbacks started in China and Hong Kong, followed by Thailand and then Australia.
The Australian authorities went back to the China National Tourism Administration last year to renegotiate the ADS agreement and draw a new list of approved tour operators to tackle this problem. Prices of tour packages were fixed and communicated to the trade to ensure visitors receive a quality experience. Hard lessons were learned which should make life for the travel industry easier, just as competition with other destinations makes getting the tourists over even harder.
USA
In late 2007, the United States finally inked pen to paper on the bilateral tourism agreement with China that allows Chinese citizens to travel to the US as tourists. While the US was receiving about half a million Chinese visitors annually, they were arriving on business or student visas. The new agreement which took effect in July of this year means Chinese can apply for group tourists visas and do not need to arrange a business meeting or book an English language course. The US has put quotas in place to very gradually grow the number of Chinese tourists over the next few years. The emergence of USA as the latest major tourist destination (Israel and Tahiti also joined the ADS system this year) means tougher competition for existing popular destinations such as Australia, France, Germany, Italy or UK. It is also a wake up call for the US receptive tourism industry to start developing a China market strategy and look for opportunities in the market. This will be led by the various state tourism and convention bureaus who are now beginning to investigate the market and look for representation solutions via marketing agencies or directly managed representative offices. What the best solution is for each state depends on their previous involvement in China, existing contacts, budget and relevance of the destination to Chinese.
In 2009, we can expect more state tourism boards to appoint a representative for China and begin localizing their information for this market. Marketing needs to be matched by a preparation of the hospitality sector including training of hotels, guides, attractions and restaurants.
China inbound tourism
In 2007 there was widespread excitement at the prospect of a huge surge in tourism to China on the back of a global Olympic marketing campaign and China’s growing importance on a global platform. UN World Tourism Organization predicts that China will be the largest tourism destination before 2020, possibly as early as 2015. Milestones such as the Olympic this year and the World Expo in 2010 in Shanghai are contributing factors, as is the integration of China into the world economy which attracts business travel and encourages a meetings and incentive sector to emerge.
Unfortunately, China has been featured in negative reporting in 2008 with stories on the riots in Tibet and interruptions of the Olympic Torch Relay starting the year. The Sichuan earthquake in May closed off one of China’s most popular tourist destinations for the rest of the year and security restrictions ahead of the Olympic Games limited access to entry visas for normal tourists and business people.
Now just as there are signs that things are returning to normal – easing of visa restrictions and opening up of Tibet and Sichuan to tourism – a new health crisis has again given China a very negative image. The tainted milk scandal is giving the impression to outsiders that food is unsafe in China. For first time visitors hygiene and food safety are major concerns and China must act in a fast and decisive way to bring back confidence. This was done well after the SARS outbreak and involves allowing free access to media, both local and foreign. A transparent campaign to clean up the dairy industry and give more power to consumer advocates coupled with a global campaign to reassure people is urgently needed.
As a general course, the tourism ministry CNTA should have a crisis management plan that takes effect during such incidences (which in a developing county do happen from time to time). Though short term China can expect to lose visitors over such issues, if the marketing and promotion is handled in a professional and forward looking way then China will get back those visitors that have put their visit plans on hold.
Promoting lesser known destinations
While well known tourist attractions continue to be popular with visitors from China and abroad (sites such as the Great Wall, The Forbidden City, Terracotta Warriors) China possess a wealth of sites of cultural and natural beauty that are known only to domestic tourists or intrepid backpackers. It is an imperative of the industry that tourism revenue is spread across communities geographically and benefits all sections of society. It also servers to ease pressure off popular attractions that struggle to contain the masses of visitors while maintaining the integrity of the site and conserving its heritage.
These topics and more will be explored at the China Inbound session of the WTM-ChinaContact forum. The way in which Chinese domestic tourists travel defers from what Western tourists are looking to experience, so a different visitor experience should be prepared for different types of tourists. For example sections of the Great Wall that have not been renovated are attractive to Western tourists for their authenticity but cannot receive masses of visitors. Managing the flows of visitors to the Great Wall and opening new sections to visits can help, as well as promoting different areas in different tourist markets.
In rural areas close to major cities, day and weekend trips by city dwellers to villages are now popular and include home-stays and meals with local village families. Such a simple and authentic experience can also be prepared for Western visitors including business people looking to relax on the weekend. The tourism authorities will need to provide information aimed at independent Western travelers who shun group tours and want to make their own arrangements.
Eco-tourism is not well developed in China compared with other countries of SE Asia or South America. There is no standard definition or set of guidelines to authenticate eco-tours in China and this is badly needed. Such tours attract high profits that often benefit local communities more than standard tours and have a smaller impact on local habitats.
Theme tours are now beginning to become more popular – culinary tours, musical journeys, minority cultures, martial arts… the possibilities in China are endless and resourceful tour operators who are able to find reliable and trusted local suppliers in China can sell unique, exciting tour products to a willing audience.
Joined-up marketing
One of the difficulties in marketing a destination as large and diverse as China is that it requires the cooperation of national and provincial governments and different government departments with private business. In this China can learn from the experience of more mature popular tourist destinations, especially those in Europe. However China has a unique proposition and its marketing strategy must match that. Using the opportunity of the WTM-ChinaContact forum, Chinese destination marketing officials and companies have an opportunity to explore new ways of marketing China and learn from the experience of others while meeting travel companies face to face to learn about their customers’ needs and expectations.
The WTM-ChinaContact forum is in its 3rd year and has been hailed as the most professional and authoritative trade forum on China’s tourism industry anywhere outside China. Delegates do not only raise their understanding of how to engage China’s tourism sector but come out with new inspiration for their business and useful contacts for the future.
Registration is open online and early bird rates are valid until 12 October 2008. Seats are limited and registration at standard rates will be open until the day of the forum, subject to availability.
To learn more or register,
visit www.future-of-travel.org or call +44 20 32399688.
Email future@ccontact.com
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