China Featured Prominently In The Media
How did the Chinese outbound tourism sector fare in 2008?
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.
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 the 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 a simple 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.
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.
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 increased 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.
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.
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.
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 the 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.