By: Edwin Fuller
Founder and President of Laguna Strategic Advisors
Recently, I attended a US-China Travel and Tourism Cooperative Event in Chicago hosted by the US Travel Association (USTA) and Brand USA. It was an exceptional conference that attracted such significant industry and government luminaries as US Commerce Secretary Penny Pritzker, US Ambassador to China Max Baucus, USTA CEO Roger Dow, Chinese Vice Premier Wang Yang, Chinese Minister of Tourism Li Jinzao, senior travel officials representing major Chinese travel companies, the Mayors of Wuhan and Qingdao and a host of US travel industry executives.
While we all expected to learn about the rosy future of Chinese travel to the US, we were blown away by the actual projections of what’s ahead.
- Chinese society is rapidly evolving into a consumer-driven economy. Last year, household expenditures grew almost 11%.
- Within five years, China’s outbound travel market will number around 200mn people. Even today, the sheer volume of outbound Chinese travelers is 3 times greater than its 2004 level and is growing exponentially.
- The US ranks second only to France with 54% of China’s citizens picking it as their primary aspirational long-haul destination.
- Last year, nearly 2mn Chinese visitors arrived in the US, up 21% over 2013. Industry officials expect to record another 25%-30% increase this year, about 50% higher than previous growth projections for 2015.
- Chinese travelers rank Number 1 globally in terms of overseas tourism spending, exceeding $130bn. In 2013, they spent about $21.1bn in the US and this number is expected to grow another 21% in 2014 after all travel-related receipts for the year are tallied.
- The US Commerce Department projects that President Obama’s new visa policy which extends validity limits to 10 years for Chinese leisure and business visitors and 5 years for student travelers and significantly eases the visa application process could mean that as many as 7.5mn Chinese visitors will come to the US by 2021 (3 times as many arrivals than in 2013) and will inject an estimated $85bn into the domestic economy.
- By 2016, China is expected to overtake the US as the Number 1 business travel market in the world and will account for 20% of all global business travel spending.
- Today, the average Chinese visitor spends between $6,000 and $7,200 per trip to the US, making this group the highest spending per person visitor group to the US. Among China’s middle and upper classes, 19% of their annual salaries is spent on overseas travel—dramatically more than any other US travel source country.
What all this means is that we can expect to see a rapid increase in the number of repeat Chinese visitors (currently 45% of the total), a huge increase in FIT/Semi-FIT traveler volume (currently these folks account for just 30% of the volume), accelerated Chinese visitor growth in communities beyond the traditional US gateway cities, shorter shoulder and longer peak seasons, more tourists from secondary Chinese cities and more MICE groups coming to the US.
Meanwhile, the profile of today’s Chinese traveler continues to evolve. Leisure travel is soaring, accounting for 63% of all outbound Chinese travelers. While package tours continue to dominate, traveler interest is shifting from a multi-destination to a multi-experiential focus and a new, highly educated and sophisticated Chinese long-haul traveler is emerging.
While their top 3 preferred destination attributes continue to be affordability, quality of food and safety, this group is primarily interested in shopping, sightseeing, fine dining, natural parks, art galleries and museums and entertainment attractions. These “Gen 2” travelers now account for 75% of China’s FIT market and 73% of its luxury market. Today, they comprise an urban population of 200mn, but within a decade, this group will be 3 times the size of the US baby boomer generation—and they will have as much clout to be impactful and effect change.
I could go on and on reciting more dazzling statistics. But the bottom line is clear. The long-expected impact of Chinese travel on the US travel industry and our communities is upon us and we need to prepare today to welcome these new visitors as quickly as possible because it’s no longer a case of “business as usual.”
To get started, begin by viewing on You Tube an excellent training video created by the Orange County Visitors Association to help prepare our local citizenry to host these new visitors here. You’ll gain valuable insights into the nature of these discerning visitors and how best to interact with them—in your businesses, at social events, at tourist attractions or simply in passing.
Then, work with your local authorities to translate key local road signage and directions into Mandarin Chinese. Follow suit by translating your selected promotional materials such as restaurant menus. If you’re a hotelier or restauranteur, consider offering a daily Chinese-language newspaper and access to a Chinese language news channel on your in-house TV.
Participate in local business and tourism organizations that are targeting the Chinese traveler and join in their promotional programs.
As you become more comfortable and knowledgeable about this important segment of our tourism source markets, you’ll find your efforts more than amply rewarded.
Xie Xie! Thank you!
Originally posted on Forbes