Chinese outbound tourism was already changing before the pandemic. In its aftermath it will be utterly transformed. Understanding what these changes are and how to adapt to them will decide which destinations are the big winners in the post-lockdown world. By John Millichap.
The Covid pandemic is a watershed moment for the travel and tourism industries. The old certainties are gone and it's still unclear what will take their place. And if that’s true in general, it’s particularly true for Chinese outbound tourism.
Over the past few decades this has been the rock on which Southeast Asia's leisure travel industry has prospered. From 2000 to 2018, the number of trips by Chinese tourists to ASEAN countries increased by an average of 16% per year. In 2018 just over 25 million Chinese visited the region, or roughly one third of all foreign tourists, far outstripping those from North America, Western Europe and Australia.
This rising tide has brought new jobs and new investment but it has not come without cost. In the rush to capture market share many destinations have sacrificed the very qualities that are today most sought after by the new wave of high-value Chinese tourists: diversity, originality, authenticity and the environment.
Gone are the days when Chinese outbound tourism meant busloads of low-yield visitors who spent little and cared less about local custom and culture. China’s middle-class travelers today have different priorities from previous generations – and bigger wallets.
They are more travelled, better educated, have a greater range of interests and demand more from their vacation. Understanding this key group and the best ways to engage them will be fundamental to building successful and sustainable tourism in the post-pandemic era. Suddenly there is a chance to hit the reset button and the time to begin planning is now.
Key Groups
Chinese outbound travel up to 2019 could be characterized by its increasing diversity. Three general groups can be identified, however that each make up roughly one third of Chinese outbound travellers.
• Package Tour Groups
Typically will comprise those who have never ventured overseas before and seek the reassurance of a group environment in which all details are arranged by the tour operator. Package groups tend to deliver the lowest yield of all outbound tourists and are expected to be the last to recover when restrictions are lifted.
• Customized Tour Groups
Normally smaller and tailored to a specific theme or activity or group of activities. Examples include golfing holidays, health-and-wellness breaks and women-only groups. They reflect the growing sophistication and wider interests of Chinese travellers. Popular among middle-class and family groups, they normally deliver a correspondingly higher-yield.
• Self-Organized Vacations
The highest yield of all Chinese travellers and likely to recover fastest once restrictions are lifted. They are normally well accustomed to foreign travel, are often business owners or their families and typically seek high-end, luxury destinations and activities. They place a high value on originality and exclusivity and do not mind paying top prices for them.
Pent-Up Demand
China’s domestic travel and tourism industries have shown themselves to be adaptable and highly resilient. Heavy discounts, state exhortations to get out and spend, and a buoyant economy, predicted to grow by around 8% in 2021, have all helped.
By Golden Week 2020 most restrictions on domestic travel had been lifted, including travel outside residents’ home provinces. Almost 500 million people thronged scenic spots and shopping malls across the nation during the eight-day break, which began on 1 October and combined Mid-Autumn Festival and National Day. Total retail and tourism takings during the first five days topped CNY500 billion (US$73.65 billion), according to data from China's Ministry of Culture and Tourism, a seven-fold increase on spending on the long Labour Day weekend a few months in May.
A report published shortly after by McKinsey showed consumer confidence and demand for domestic travel approaching pre-pandemic levels, with hotel-occupancy rates and numbers of domestic flight passengers already close to 90% of 2019 levels.
Significantly, recovery in China's domestic travel and tourism has largely been led by those at the top end of the income scale. In previous years they might have spent the holiday season abroad. In 2020 and 2021 they have flocked to destinations in Western China and Hainan Island, which boast beautiful scenery, outdoor activities and beach resorts.
High demand for hotels in remote locations like Lhasa reflect a continuing desire to find 'faraway places', according to a report by Ctrip, China’s biggest online travel agency.
For destinations across Asia awaiting the return of Chinese tourists this is a tantalizing picture and suggests that when it finally does resume it could do so at a rush
Who Is The Post-Covid Traveller?
Even before the pandemic the character of Chinese outbound tourism was changing. Chinese tourists of all kinds have traditionally preferred ‘see and do’ vacations. For them, sunny beaches and cocktails by the pool have tended to hold less appeal than for, say, travellers from the chillier climes of western Europe and North America.
In the past most studies have tended to show shopping as this group's preferred vacation activity. Yet by 2019 this was already being replaced by a variety of pursuits related to personal interests and a growing desire to learn more and be more engaged in the desinations they were visiting. This could include experiencing local arts and culture, participation in sports and wellness activities, sightseeing and trying new cuisines. This is especially true for middle-class and high-end travellers – and especially if these pursuits are perceived to be original, 'authentic' or characteristic of a particular destination. Content that is in some way educational is also highly valued by those travelling with children. It is likely these qualities will continue to grow in importance once international travel resumes.
Δ Looking on the bright side. The return of the Chinese travel market will be led by young, digitally savvy urbanites with a taste for the outdoors. Photograph: Jonathan Browning
Underlying this transformation is a change in traveler demographics.
At one end of the spectrum are the children of wealthy, middle-class families – younger millennials and Gen-Zs. They are perhaps overseas educated, well informed and may have travelled widely. They are also among the world's most devoted social media users. China’s 20-something, sports-and-wellness crowd is a big growth market that is hungry for new experiences, especially when they bring social media kudos.
At the other end of the scale are older travellers aged 55 and over. This cohort may have come to overseas travel late in life, having spent their 30s and 40s building businesses and careers.
Middle-Class Travellers
• High-end Chinese travellers do not travel for beach holidays. They are interested in experiences and activities.
• China's economy has bounced back quickly. Savings have grown and there is plenty of money waiting to be spent.
• They are more sophisticated, especially at the top end. They know what they want and have had plenty of time to research desinations and compare costs.
• Specialist travel is a key growth area, whether this is golf, wine tasting, art, architecture, culture or sports.
• There is greater diversity than ever, including more young travellers and more older travellers. Both groups will have high expectations.
While both groups will pursue different sorts of activities, in general their preferences will coalesce around a broad desire for authenticity, originality and quality.
Today, it's difficult to talk with much confidence about the 'typical' Chinese tourist. The best that can be said is they are better informed, more sophisticated and more sure of what they want from a holiday than ever before. Adapting to this diversity is the challenge for destinations.
Building Back Better
Destinations should not assume pre-pandemic offerings will have the same appeal as before. Understanding who is your target audience will go a long way to clarifying which existing offerings can be adapted or what sort of new ones might be created.
City destinations, in particular, will face a particular challenge in convincing Chinese tourists that an urban setting can still offer
Many Chinese are wondering what kind of welcome they might receive once overseas travel resumes.
Many Chinese are wondering what kind of welcome they might receive once overseas travel resumes.
a safe environment. Heightened hygiene and social distancing measures inevitably need to be strongly emphasized in all messaging, while activities tailored for small groups – on and off site – will help give extra reassurance.
Outdoor pursuits and secluded destinations, such as island resorts or forest retreats are likely to see the strongest demand, yet here too the same rules apply. The size of boat trips, yoga and cookery classes, nature-spotting groups, and the like, need to be limited, while sporting activities such as golf, horse riding and scuba diving, which offer an in-built measure of social distancing, could be highlighted. For families with children, emphasize the educational content of experiences and activities.
Build-Back Checklist
• China tourists need to feel welcome. Don't give them a reason to doubt it.
• Understand your target audience.
• Adapt existing products and develop new ones based on learnings. Can some courses be shortened or compressed?
• Recognize ‘bragging’ culture is important. Help with documentation, certificates, proofs of experience or participation. Provide plenty of selfie moments.
• For families with childrens, stress the educational content of activities and experiences.
• Most important, encourage recommendations on social media. Help your guests to become your best advocates.
Throughout, the omnipresence of social media should be assumed. This is true not only for Chinese tourists, of course, yet for them it plays an outsize role in all aspects of a vaction, from the planning stage right through to post-vacation reviews and experience sharing. Bragging rights are important. Create plenty of selfie moments and provide lots of opportunity for them to be used. Consider creating certificates of completion or attendance that can be shared. Introduce prizes or bonuses for guests that share the most.
Much has changed in the world since lockdown. Many Chinese are wondering what sort of welcome they might receive once overseas travel resumes. It is vital that destinations
make all efforts to allay these fears. Any ‘anti-China’ bias, real or imagined, will be loudly amplified on social media back home. Sufficient positive comment should be actively encouraged to overwhelm the odd negative experience that crops up.
Using Social Marketing
For many brands the first step is often an owned Weibo or WeChat channel. By itself, however, this is unlikely to be sufficient to make significant impact – regardless of how impressive and costly the content. For, while big follower numbers can often be achieved quickly, many brands eventually discover that engagement on official social media channels is typically quite low. Moreover, official channels are normally less successful at reaching new audiences.
The most valuable social media asset by far is a destination’s own customers.
The most valuable social media asset by far is a destination’s own customers.
This not to say that official social channels are not important. As an ‘official’ source of news and announcements they still have an important part to play in any overall
social media mix. However, collaboration with Key Opinion Leaders (KOLs) or Key Opinion Consumers (KOCs) is often a more effective way to boost visibility and reach new audiences. China’s influencer industry is vast and highly varied, however. Big names charge correspondingly high fees. As a result, selecting the right influencer for a brand’s particular needs requires a cautious approach and thorough due diligence.
Harnessing Word of Mouth
The most valuable social media asset by far is a destination’s own customers. Building world-of-mouth buzz is the ultimate goal of any campaign and there are numerous textbook examples that attest to its extraordinary potential. Conjuring this mass effect is notoriously difficult, however. (If it were easy all brands could achieve dazzling results.) The best that most brands can hope for is to create satisfied customers who contribute a steady drip of positive comments and reviews that aggregate over time.
Achieving this means tailoring activities as accurately as possible to the desired target audience and executing them to the highest standard at the point of delivery. Yet even with all this, most consumer reviews seldom give a true and complete picture of all a guest has experienced and all that a destination has to offer. People forget and make mistakes.
And it’s for this reason that an owned Weibo or WeChat channel is useful as an official source of information. As with all social media efforts, social listening offers a valuable insight into customer experience and current conversations – as a way to identify popular
The foundation of any social campaign is a compelling narrative.
... Significantly, it could even be a different story to the one offered to audiences elsewhere in the world.
The foundation of any social campaign is a compelling narrative.
Significantly, it could even be a different story to the one offered to audiences elsewhere in the world.
offerings or places where improvements can be made, and give speedy forewarning of any errors or negative comments.
Whichever way it is delivered, whether through official channels, partnered or sponsored content, advertising or word of mouth, the foundation of any social campaign is a compelling narrative – something that links all a brand’s offerings, however indirectly, and which resonates with audiences. Significantly, it could even be a different story to the one offered to audiences elsewhere in the world. Yet identifying that story is fundamental. The function of any social campaign is solely to distribute and amplify it.
The Return of Chinese Outbound Tourism
At present the earliest predicted date at which outbound travel restrictions might be lifted is the Golden Week national holiday at the beginning of October. Although with infection rates on the rise in many places, including a recent outbreak in Nanjing, and vaccine rollout in Southeast Asia still stuttering, this has the feel of optimism at full stretch.
The next soonest plausible date is Chinese New Year 2022 (31 January-14 February). The creation of travel bubbles between the mainland, Hong Kong and Macau is likely to be the first stage in the resumption of outbound travel. Beijing would gain much credit for allowing families on either sides of the borders to meet in time for the biggest family holiday in the Chinese calendar.
A little further out, the Beijing 2022 Winter Olympics in February will necessarily involve the arrival of several thousand foreigners in the capital. It is reasonable to assume recognition of foreign vaccines to be agreed by this time and for border protocols to be in place and working smoothly.
China is watching closely as the delayed 2020 Tokyo Olympics unfold. If the games proceed without a sharp spike in infections, it may serve to give Beijing an extra nudge.
Nothing is certain, however. Much will depend on the speed of vaccine rollout and trajectory of infection rates. Accepting that these could still vary dramatically, another potential scenario for spring 2022 is the creation of travel corridors between designated destinations where Covid rates have remained consistently low, such as the Maldives or Singapore.
At the other end of the scale, The Economist Intelligence Unit gloomily predicts outbound tourism might not resume until the fourth quarter of 2022 or spring 2023.
One thing seems fairly certain, however. When restrictions are finally lifted it will be at short notice, possibly with only a couple of weeks’ warning. The resumption of international travel will be by flight only, thereby allowing greater control at border crossings, and at the beginning will likely be restricted to business travel only.
Whenever, and however, outbound travel from China restarts, the clock is ticking. Chinese tourists know the moment is approaching and are already planning their first post-lockdown trips. Over the next few months destinations have the opportunity to plan and refine their offerings, position themselves ahead of the competition and engage with future customers. Even if the end is not yet in sight, the beginning of the end may already be underway.
