Beijing, December 6, 2013 - It’s no secret that China represents a big opportunity for global travel and tourism companies. What’s not yet widely understood is how enormous that opportunity is—and how easily it could be lost if travel and tourism providers don’t grasp the dynamics now to reshape the market for tourism inside and outside China.
Consider these two snippets that hint at those market dynamics: between now and 2030, two of China’s fastest-growing tourist segments will be traveling without organized tour groups. And eight of Chinese tourists’ ten most desired destinations in the near future are far outside of Asia. Their top “dream” vacation spots range from Australia and New Zealand to the U.K. and Italy.
These are just two of the many important findings in Winning the Next Billion Asian Travelers— Starting with China, the most recent report on the travel and tourism industry from The Boston Consulting Group. Coauthored with TripAdvisor, the world’s largest travel website, the report sheds light on everything from the breathtaking speed with which China’s tourists are packing their bags for leisure travel to the extent to which they are willing to trade up to more expensive rooms and other services.
China’s Tourists Are a Force to Be Reckoned With
Chinese travelers are packing their bags in record numbers, and in doing so, they are about to shake up the global travel and tourism industry. According to the new BCG and TripAdvisor study, by 2030, tourists from China will make up about 40 percent of all outbound Asian travelers, and China will likely be the world’s largest domestic travel market.
Specifically, by 2030, Chinese urban travelers will take 1.7 billion trips (domestic and outbound) annually, up from 500 million today, spending $1.8 trillion on travel and tourism—nearly seven times their current expenditures.
“To win in China, travel and tourism companies need a tailored, thoughtful approach and a deep understanding of the characteristics of the market,” said Frank Budde, a Sydney-based partner at BCG and a coauthor of the report. “The country is big, diverse, and at an even earlier stage of development than other tourism markets. The key to success is to identify the market’s most profitable segments, understand their unique needs, figure out how best to reach those segments, and then make the most of your investment.”
Strategies for Success
Together, BCG and TripAdvisor have identified nine strategies that will help global travel and tourism companies succeed in the coming whirlwind of travel within and outside of China. Here is a glimpse of three of those strategies:
Follow the Money. BCG forecasts that by 2030, there will be as many as a billion Asian tourists traveling each year. China’s outbound leisure market will grow the fastest, with its travel and tourism spending expanding by 15 percent a year on average between now and 2030. But the real insight is in the categories that are growing fastest—and how fast they are expanding. Three categories are changing dramatically: young affluents (ages 18 to 30), senior professionals (ages 45 to 55, traveling without an organized tour group), and small groups of families and friends (ages 30 to 45, also traveling without an organized tour group). Combined, by 2030, these segments will account for an incremental 100 million annual trips and US$340 billion in annual spending.
The study also reveals a big increase in Chinese tourists’ willingness to “trade up.” In 2013, more young affluent travelers were planning to trade up than in 2010—particularly for lodging, shopping, and dining.
Anticipate new, high-volume destinations. Until very recently, most mainland Chinese travelers headed for Asian destinations—particularly nearby Hong Kong and Macau. But there is a sharp shift in interest much further afield. Nearly 45 percent of TripAdvisor China outbound unique visitors are looking at non-Asian destinations compared with just 20 percent of actual trips that were taken outside of Asia in 2012. In particular, interest in outdoor and adventure trips such as to Tanzania’s Serengeti National Park has more than tripled in the last year.
Capture Big Prizes in “Small” Cities. More than 80 percent of China’s middle-income and affluent populations live in places that many people would be unable to find on a map. Farsighted global travel and tourism providers are identifying cities other than Beijing and Shanghai: Australia’s Jetstar has launched service to Haikou, a tier 3 city and the capital of resort-rich Hainan province, and next year, United Airlines will start up three weekly direct flights between San Francisco and Chengdu.
The smaller cities are not to be ignored. TripAdvisor’s data show that more than 70 percent of unique site visitors researching outbound destinations live outside the four super tier 1 cities— Shanghai, Beijing, Shenzhen, and Guangzhou—each of which has a population of more than 10 million. Online traffic from those visitors is growing two to three times faster than from those who live in China’s four biggest cities.
Future BCG reports will cover other fast-growing markets for travel and tourism, such as India and Indonesia. For more information on the Winning the Next Billion Asian Travelers series, please contact Eric Gregoire at +1 617 850 3783 or firstname.lastname@example.org.
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or email@example.com.
About BCG’s Center for Consumer and Customer Insight
The Boston Consulting Group’s Center for Consumer and Customer Insight (CCCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCCI is sponsored by BCG’s Marketing and Sales and Global Advantage practices. For more information, please visit http://www.bcg.com/expertise_impact/capabilities/center_consumer_customer_insight/
TripAdvisor is the world’s largest travel site, enabling travelers to plan and have the perfect trip. TripAdvisor offers trusted advice from real travelers, as well as a wide variety of travel choices and planning features with seamless links to booking tools. TripAdvisor branded sites make up the largest travel community in the world, with more than 260 million unique monthly visitors and more than 125 million reviews and opinions covering more than 3.1 million accommodations, restaurants, and attractions. Based in Beijing, TripAdvisor China operates under the brand daodao.com and offers millions of quality reviews in Chinese alongside homegrown products developed specifically to meet the needs of the burgeoning China outbound market. Daodao has grown to become one of the most visited user-generated-content travel sites in China