Barbara Bryant
• 30 vet Asia/Pacific• Co-Founder –
boutique rep firm of Bryant & Tripptree
• Firm appointed, PATA Regional Director
• Former Director Hong Kong Tourism-LA
• Establish HK Film Dpt• VP Sales/Marketing
Mandarin Oriental Hotels
Slide: 3
ATME EXECUTIVE CHINA THINK TANK
Barbara Bryant, PATA North America Regional Director
February 12-13, 2009
Ron ErdmannDeputy DirectorOffice of Travel & Tourism Industries
Ron Erdmann
• Admin international travel research
• Consults with clients on use and application of information
• Role is to create and improve upon international marketing
intelligence
• Prior nearly decade with U. S. Travel & Tourism Admin until closed
• Experienced in developing and promoting rural tourism
6Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Research
Presented by:
Ron ErdmannOffice of Travel and Tourism IndustriesInternational Trade AdministrationU.S. Department of CommerceFebruary 2009
Presented to:
ATME:Think Tank
7Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
OTTI Resources on China
• Visitor volume to U.S. from China (monthly from I-94 form)• U.S. resident travel to China (non-stop) (monthly)• Other Data collected on DHS I-94 form (monthly—port, visa type, age of
travelers, address in U.S., etc.)
• Visitor volume forecast (semi-annual)
• Visitor spending (annual)• Visitor profile (annual)• U.S. resident travel to China (annual)• Chinese visitation to all countries (annual)
• China Outbound Study (one-time special study)• China Travel Trade Barometer (quarterly planned)
8Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
The China Outbound Travel Market
9Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Outbound Travel
25,330.9
40,891.4
5,643.2
11,174.03,151.4
4,808.4
1,216.2
1,834.7
0
10,000
20,000
30,000
40,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007p 2008f 2009f 2010f 2011f
0
2,000
4,000
6,000
8,000
10,000Total Outbound Travel
Total Long-haul Travel
Data from China National Tourism Office and Global Insight – Global Travel Navigator May 2008
10Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Outbound Trends(total outbound travelers)
Destination 2001 2002 2003 2004 2005 2006 2007f 2008f 2009f 2010f 2011f 06/01 11/06 11/01
GRAND TOTAL 11,170 15,097 15,711 21,536 22,753 25,120 28,299 31,585 34,775 38,183 41,789 13,949 16,670 30,619
Asia 9,346 12,695 13,521 18,914 19,920 22,066 24,986 27,929 30,784 33,816 37,019 12,720 14,953 27,673
Europe 1,398 1,963 1,831 2,164 2,270 2,387 2,588 2,850 3,108 3,395 3,717 989 1,330 2,319
North America 319 322 234 304 387 465 508 568 625 690 745 146 280 426
Middle East 35 46 54 73 92 117 126 140 156 173 193 82 76 158
Latin America 32 33 32 41 43 44 49 54 59 64 70 12 25 37
Africa 33 33 33 33 33 33 33 33 33 33 33 0 0 0
Caribbean 7 6 6 7 7 8 9 10 11 12 13 0 5 6
Hong Kong 4,449 6,825 8,467 11,886 12,730 13,761 15,639 17,544 19,386 21,324 23,349 9,313 9,588 18,900
Macao 1,309 1,726 1,431 2,191 2,370 2,627 2,986 3,350 3,701 4,071 4,458 1,319 1,831 3,149
Singapore 460 666 560 880 858 1,037 1,189 1,322 1,449 1,585 1,727 577 690 1,267
Thailand 801 798 607 779 762 914 993 1,104 1,222 1,361 1,524 113 610 723
Korea, Republic 482 539 513 627 710 897 1,019 1,113 1,202 1,298 1,402 415 505 920
Japan 391 452 449 616 653 812 906 998 1,089 1,187 1,295 421 484 904
Vietnam 625 660 693 778 753 791 883 982 1,078 1,183 1,295 166 504 670
Italy 394 531 480 728 725 758 815 897 977 1,063 1,157 365 399 763
Russia 461 725 680 661 691 722 791 871 953 1,050 1,164 261 442 703
Malaysia 453 558 351 550 352 439 504 560 614 671 732 -14 292 279
Germany 237 270 268 293 313 327 358 395 430 468 509 90 181 272
United States 232 226 157 203 270 320 353 394 433 479 516 88 195 283
Australia 158 190 176 251 285 309 344 376 407 441 478 150 170 320
Canada 87 96 76 102 117 145 155 174 192 210 229 58 84 142
Sw itzerland 49 69 63 100 137 144 154 170 185 201 219 94 75 170
Indonesia 32 37 41 51 112 117 134 149 164 179 195 85 78 163
Belgium 62 113 107 114 109 114 122 134 146 159 173 52 60 111
Netherlands 81 82 78 82 97 113 121 134 146 158 172 32 59 92
United Kingdom 58 64 68 95 92 99 109 120 131 142 155 41 56 97
Data from China National Tourism Office and Global Insight – Global Travel Navigator May 2008
11Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
U.S. Market Share of Long-haul Travel
U.S. Market Share of Long-haul Travel
17%16%
13%14%
13%
9%7% 8%
9% 10%12% 12% 12% 12% 12%
12%12%12%12%12%12%13%12%14%16%16%
18%18%
21%22%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007p 2008f 2009f 2010f 2011f
U.S. % share of long-haul Long-haul % share of outbound
12Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
What is Known about China Outbound Travel?
Total Outbound
• 25 million in 2006• Only 12% to long-haul destinations; 70% to Hong
Kong/Macau/Singapore.• Strong growth across most top 20 destinations, especially Hong
Kong, Macau, Korea, Italy, Australia.• Tripling of travelers to Hong Kong from 2001-2006 (4.5M to 14M)• Top long-haul destinations in 2006: Italy (807K), Russia (720K),
Germany (442K), US (321K), & Australia (309K).• Total travel to all long-haul destinations was 3.2 million in 2006,
forecast to grow to 4.8 million by 2011.
Sources: Global Insights Inc. Global Travel Navigator; OTTI, UNWTO
13Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Chinese Visitors to the U.S.
000s of visitors16th
14Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Spending in the U.S.
$335 $378 $424
$907
$1,243$1,291
$947
$1,424$1,326$1,185
$858$1,115
$1,534
$2,071
$2,699
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Millions of Dollars10th
15Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
What is Known about China Outbound Travel
to the U.S.?• Outbound to the U.S.:
– 397,000 visitors to the U.S. in 2007—near doubling in six years.– Flat visitor volume from 1993 to 2003. – 25% growth through November 2008, but slowing considerably.
• U.S. share of Chinese outbound travel has declined for two reasons:– Long-haul travel has declined as a share of total outbound– U.S. share of long-haul had declined until four years ago. Share of
long-haul has increased.
Sources: Office of Travel & Tourism Industries (OTTI) & Global Insights Inc. Global Travel Navigator
16Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
What is Known about China Outbound Travel
to the U.S.?• Trip Characteristics:
– Port of Entry: San Francisco (21%), Chicago (17%), LA (17%), NYC (10%).– Destinations: concentrated in a few states (CA-57%, NY-32%, followed
by: NV, DC, IL)– Main Purpose of Trip: Business -51%; Visiting Friends & Relatives (VFR) -
23%; Convention - 11%; & Leisure/vacation 9%. – Accommodations: 83% stay in hotels.– Stay length: mean average of 28 nights, but is influenced by a few
staying for a very long period of time. Median is 11 nights. – Activities: Chinese are less active travelers than average travelers.
• OTTI tracks 25 Activities• Top activities 2007: Shopping (88%), Dining in Restaurants (80%), Sightseeing in Cities
(51%), Visit Historical Places (47%), Visit National Parks (29%), Visit Amusement/theme parks (28%) …..
Source: OTTI , Survey of International Air Travelers, 2007.
17Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
What is Known about China Outbound Travel
to the U.S.?• Trip Characteristics (continued):
– Gender: 70% male. Female proportion is increasing.– Age: Males—41 mean / 39 median; Females—36 mean / 35 median.– Income: lower than most origin countries.
• $63,900 (mean)• $36,700 (median)
– Spending: highest spending per traveler of any country ($5,200 at destinations, i.e., excluding airfares). High spending relative to income may reflect saving for “dream vacation” and souvenir purchases made on behalf of friends/relatives.
– Looking ahead:• Trip characteristics will likely change if group leisure increases.
Source: OTTI , Survey of International Air Travelers, 2007.
18Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
U.S. China MOU on Group Leisure Travel
• Under to U.S. law Chinese can visit so long as they receive a visa.
• Under Chinese law, Chinese travel agencies can only sell packaged leisure tours to Chinese to countries with whom they have a bilateral agreement or ADS
• In December 2007 U.S. China Tourism MOU Signed
• MOU implemented in 2 phases– Phase 1: July 2008 covers 9 provinces (over 70 % of the market)– Phase 2: U.S. is ready to implement when China agrees
19Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
U.S. China MOU on Group Leisure TravelKey Provisions
• China National Tourism Administration (CNTA) authorized travel agencies may work with tour operators who are vetted by associations with programs approved by CNTA
• U.S. travel destinations able to market their brand in China
• To date NTA is the only U.S. association with a program
• In China the Government sets and monitors standards
• In the US the industry sets and monitors standards.
20Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Supply Side Considerations
• Liberalized restricted agreement (no open skies)
• Non-stop current cap of 10 flights/day per “side”– U.S. at cap (based on January non-stop OAG schedule.– China at half the cap level.– Thus, based on current caps, short-term growth in non-stop
flights must come from Chinese carriers. Long-term growth must come from upward-adjusted caps.
– 57% of all traffic between China and U.S. (inbound+outbound) is non-stop. Non-stop is growing as a share of all traffic.
21Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Who’s Flying Whom?
• Traffic Mix: – US Flag = 58%, & Foreign Flag = 42% of total air traffic– 62% U.S. Citizens vs. 38% Non-Citizens
• Chinese to the U.S.:– 40% fly foreign flag carriers– 60% of U.S. carriers
• Americans to China:– 57% fly U.S. carriers– 43% of foreign flag carriers
22Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Outbound Travel Study
• Purpose: to develop a fuller understanding of the China outbound travel market in support of increasing tourism exports to the U.S.
• Collaboration among:– Alfred P. Sloan Foundation, Travel & Tourism Industry Center, University South
Carolina– U.S. Department of Commerce, Office of Travel & Tourism Industries (OTT)– U.S. Travel Association– Over 20 U.S. destination and travel-industry partners
• Multi-phase comprehensive project:– Qualitative and quantitative components– Methods: Telephone / focus-group / in-depth interviews– Surveys of long-haul travelers, U.S. visitors, Chinese government officials,
Chinese travel trade– Focuses on Chinese long-haul travelers outside of Asia
23Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
phone interviewsin China
(n=1600)
in-person customer interviews in the
U.S. (n=400)
Phase 3
11 customer focusgroups in 11
Chinesecities
(n=8/session)
governmentofficial interviews
(n=20)
travel trade interviews
(n=30)
telephone surveyin 11 Chinese cities
(n= 7,000)Phase 1
China Outbound Travel Study Phases and Elements
Phase 2
Secondary Source Review
(Demographics, Economics, Politics)
24Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Phase I Telephone SurveyMethodology
• Purpose: gain better understanding of Chinese long-haul travel market– Potential of U.S. destinations and businesses– Chinese views of the U.S.
• Focus: on Chinese who…– Have traveled outside of China– Are at least somewhat likely to travel outside of China– Are at least somewhat likely to/interested in visiting the United States
• Method:– Telephone interview– 7000 randomly selected Chinese adults, ages 18 and older from 11 urban areas– 3 “tier 1” cities; 8 “tier 2 cities” accounting for virtually all outbound travel
25Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Cities Surveyed3 Tier 1; 8 Tier II
26Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Outbound Travel
• Low outbound travel incidence– 8% 1+ leisure trips outside mainland China past 3 years– 10% 1+ leisure trips outside Asia past 3 years– 21% are “at least somewhat” likely to travel outside of Asia in the next two
years
• Most travel to nearby Asian countries– U.S. top non-Asian country (9%)– Most visitations connected to Landmark/Sightseeing cities and cities with China
towns
27Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Possible future travel
• 21% of Chinese “at least” somewhat likely to travel outside of China in next two years– Most likely destinations are Asian– France ranked third (12%)– America ranked sixth (10%)
• 35% are “at least somewhat” Interested in traveling to America– A significant amount would like to but are unlikely to travel to America
• When asked to pick one dream destination– America was number one– Only two Asian countries made top ten– Difference between desire and perception of possible or likely
28Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Chinese attitudes
• America is…– Dominant; Exciting; Successful
• America isn’t– Friendly; Safe; Familiar
• Want to come to America to…– Learning and Discovery– Experiencing a different culture– Seeing something new and different
• Interests– Seeing and experiencing something new and different important to Chinese tourist– Sightseeing cities, landmarks, and tourist attractions scored high– Rest and relaxation--scored moderately high.– Interest in traditional vacations to resorts & beaches was low. Chinese tourist has a
different ideas on rest & relaxation or how to facilitate it
29Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Dream Destinations The United States is the most frequently cited dream destination
for Chinese citizens, followed by France.
(n=7,000)
United States 13%
France 10%
Australia 7%
Japan 5%
United Kingdom 4%
Canada 4%
Singapore 4%
“The statue of Liberty is so famous as a national symbol – I would be eager to see it. The
USA’s advanced economy is another attraction for me, as I
want to experience this in-person.“
Traveler, Xian
“Hollywood in LA and Disneyland – such modern
developments attract me to the U.S. very much.”
Traveler, Wuhan
“ Europe has a deep cultural background and is full of historical attractions. In addition, each historical
attraction has its own style and this enables each different country in Europe to present a
different culture.”Traveler, Chongqing
“You can go to see the glaciers and national parks in Canada – such natural sceneries are the
most famous attractions of Canada.”
Traveler, Wuhan
30Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Activity Importance vs. U.S. Perception
35%
34%
34%
32%
27%
28%
28%28%
31%
31%
31%
37%
38%
44%
Chinese communities
Smalltowns/Countryside
Art galleries/Museums
National parks
City sightseeing
Beach/Waterfront
Historic/Heritage sites
Extremely Important (5)
U.S. Offers a lot (5)
“The performance by the native Hawaiians was
fantastic – it gave history and drama to us tourists.”
Traveler, Guangzhou
“The buildings’ architecture in New York was unique – every building had its own
design and structure.”Traveler, Wuhan
“The most impressive sight I saw is the Grand Canyon –
it is really a miracle.”Traveler, Shenzhen
31Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Phase II Focus GroupsMethodology
• Purpose: Qualitative assessment of…– views of the U.S. as a country and leisure destination– competing destinations– destination choice process– marketing insights for U.S. business and destinations to promote travel exports
• Method:– 8 participants per group
• 4 previous leisure travelers to the U.S. (or business trip with leisure component) in past 3 years
• 4 previous leisure travelers to other long-haul destinations (or business trip with leisure component) in past 3 years
– One focus group in each of same 11 tier 1 and tier 2 cities from Phase I phone survey
32Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Common Themes
• Desire and affinity to experience the outdoors and natural wonders
• Taking lots of pictures/ having ample time at sightseeing locations to take lots of pictures
• Fear of violence in America/ wide spread gun owner ship
• The need to have mandarin translations/ uncomfortable with not knowing what is said or is going on
• The feeling that Americans are nice but do not respect them or believe they have money to spend and make our hospitality worth while
• Mandarin Hotline to contact incase of emergency
33Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Study Phase IIITraveler Segments
• USA FocusHave visited the U.S. - 400 in person Interviews
• China Traveler MarketPhone Interviews with 1,600 Identified Chinese Travelers– Outside Asia
Have traveled outside of Asia, but have not visited the U.S.
– Within AsiaHave not traveled outside of Asia, but plan to (but not U.S.)
– Potential Have not traveled outside of Asia, but plan to (including the U.S.)
34Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
China Study Phase IIIFocus of Questions
• Images of the U.S. as a Leisure Travel Destination
• Atmosphere or Mood of US Expected to Experience
• Distinctive Tourist Cities & States in U.S.
• Distinctive Tourist Attractions in the U.S.
• Activity Participation & Comparison of US to others
• Factors when deciding on a leisure destination, with comparisons of the US to other destinations
• Use of Media & MORE…………………….
35Office of Travel & Tourism Industries, International Trade Administration, U.S. Department of Commerce (February 2009)
Some Additional Sources of Information on China
• USTravel – China Study Phases I – III, see US Travel Website
• U.S. Department of Commerce
• Office of Travel & Tourism Industries – www.tinet.ita.doc.gov
– Monthly Arrival Figures
– Monthly Air Traffic Data to and from China
– Annual Survey of Chinese Travelers to US & U.S. to China
– Inbound Forecasts (2 per year) & Annual Spending Estimates
• U.S. Commercial Service Offices in China
– See Website - http://trade.gov/cs/
– Also Offering China Webinar February 18th - See OTTI TInews
Heather HardwickVice PresidentMenlo Consulting
Heather Hardwick
• Specialty is marketing analysis, strategic planning, branding and product development
• Strong expertise in educational travel, adventure travel, group travel and cruising
• Frequent speaker
MENLO CONSULTING GROUP, INC.
Examining the Outbound Travel Market from China
Heather HardwickVice President
Menlo Consulting GroupFebruary 12, 2009
MENLO CONSULTING GROUP, INC.
China Market Overview
Most populous country in the world
World’s fourth largest economy
World’s third largest country by area
Key cities and gateways include Beijing (15M), Shanghai (17.5M) and Guangzhou (10M)
World’s #1 Internet users and mobile communications users
MENLO CONSULTING GROUP, INC.
Most populous nation and growing
1,360
1,307
1,134
981
1,200
1,263
900
1,000
1,100
1,200
1,300
1,400
1980 1990 1995 2000 2006 2010p
Pe
rso
ns
(M
illi
on
s)
Source: World Bank World Development Indicators; Chinese State Population and Family Planning Commission
Population of China
MENLO CONSULTING GROUP, INC.
China’s Growing Middle Class
0
25
50
75
100
125
150
2005 2007 2009 2011 2015
Ho
us
eh
old
s (
Mil
lio
ns
)
Source: McKinsey Quarterly
Upper Middle Class(HHI ~USD 5K-12.5K)
Lower Middle Class (HHI ~USD 3K-5K)
Number of Chinese Households in Middle Class
MENLO CONSULTING GROUP, INC.
GDP is expected to continue to grow, albeit at a somewhat slower rate
8.6%8.5%8.2%
7.2%
6.0%
10.4%10.1%
11.1% 11.4%
9.1%
0%
2%
4%
6%
8%
10%
12%
2004 2005 2006 2007 2008p 2009p 2010p 2011p 2012p 2013p
Ye
ar
ov
er
Ye
ar
Gro
wth
Ra
tes
(%
)
Sources: China National Bureau of Statistics; The Economist
Actual and Projected China GDP Growth Rates
MENLO CONSULTING GROUP, INC.
Chinese outbound travel is booming
8.4 9.2 10.5 12.1
16.620.2
28.931.0
34.5
41.0
0
10
20
30
40
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Pe
rso
ns
(m
illi
on
s)
Source: CNTA, compiled by Pacific Asia Travel Association (PATA)
Outbound travel from China and Hong Kong
MENLO CONSULTING GROUP, INC.
Double digit growth has become the norm
12.3%
18.6%
11.3%
36.8%
15.9% 21.7%
42.8%
7.5%
0%
10%
20%
30%
40%
50%
2001 2002 2003 2004 2005 2006 2007 2008
Ye
ar
ov
er
Ye
ar
% C
ha
ng
e
Sources: CNTA, PATA
Growth rates in outbound travel from China and Hong Kong
MENLO CONSULTING GROUP, INC.
China’s growing travel spending
21.824.3
29.8
19.1
13.913.115.4 15.2
0
10
20
30
2000 2001 2002 2003 2004 2005 2006 2007
US
D (
Bil
lio
ns
)
International Tourism Expenditures
Sources: UNWTO, China State Foreign Exchange Administration
MENLO CONSULTING GROUP, INC.
Most outbound travel is within Asia
Source: relevant NTOs, compiled by Pacific Asia Travel Association (PATA)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2004 2006 2007
Tra
ve
lers
Singapore
Vietnam
Thailand
Korea
Japan
Malaysia
Australia
USA
Top Asia Pacific destinations for travelers from China
MENLO CONSULTING GROUP, INC.
Chinese travel to North America is taking off
0
100,000
200,000
300,000
400,000
Tra
ve
lers
Arrivals to North America from China PRC
Source: Pacific Asia Travel Association (PATA)
Canada
USA
MENLO CONSULTING GROUP, INC.
California has seen substantial growth from China in recent years
Source: International Trade Administration, Office of Travel and Tourism Industries.
Number of Visitors from China to CA, 1998-2007(in 000s)
134 149120
146
197227
109
158
71101
0
100
200
300
400
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
MENLO CONSULTING GROUP, INC.
California is making a move in the market
California opened an office in China in January 2009All (100%) Chinese view a Chinese Web site as the most important way for them to learn about California.Only 1% Chinese consumers and a handful of tour operators and media reps have been to California. Almost all Chinese know of Los Angeles and San Francisco. They also have special ties to China as sister cities to Guangzhou and Shanghai. One-third recognize San Diego.Motivations for visiting California include nature/parks, theme parks, and sunshine
Source: California Travel and Tourism Commission (CTTC)
MENLO CONSULTING GROUP, INC.
What drives Chinese tourists to California?
Events/Activities Consumer Media Tour Operator
Theme Parks 2 1 1
National Parks & World Heritage 1 2 2
Shopping 3 3 4
Entertainment & Nightlife 4 4 6
Art & Culture 2 5 5
Wine & Food 5 6 3
Source: California Travel and Tourism Commission (CTTC)
MENLO CONSULTING GROUP, INC.
Outlook for China
Continuing, albeit slowed, economic growth
Growth in outbound travel is expected to continue
Increasing linkages to international destinations and organizations
Competition for the Chinese traveler intensifying
With the MOU, and increased marketing in China, the USA stands to benefit from strong inbound traffic
MENLO CONSULTING GROUP, INC.
mmCCGGMENLO CONSULTING GROUP
PALO ALTO, CALIFORNIA
www.menloconsulting.com
Frank HaasAssistant DeanUniversity of HawaiiSchool of Travel Industry Management
Frank Haas
• Teaches courses in marketing and Executive Development in Tourism Program
• Undertaken planning projects for tourism, government and non-profit corporations
• Formerly VP Marketing Hawaii Tourist Authority
• $50 million dollar budget
The Chinese Travel Market:Open Carefully
Frank Haas
University of Hawai‘i at Mānoa
School of Travel Industry Management
In China … Everything is possible –
Nothing is easy
In China …
Negotiation starts
After the contract is signed
Bottom Line
Huge potential … but developing the potential will take work
Responsible Development
• Hysteria … or irrational exuberance – 100 million outbound tourists by 2020– 25 million outbound overnight trips in 2006 … 350%
increase since 1997
• Reality … – A significant and growing market, but … – 16.3 million of the 25.3M travelled to Hong Kong or
Macau (64%)– 392.6 U.S. arrivals in 2007 – projected to 578.5 in
2011 (rank = 20)
Good News: Time for Orderly Development
Motivation for Hong Kong and Macau Travel
What We Can Learn from the Development of the Japan
Market in Hawai‘i
To cover …
• Be prepared for culture shock … – Learn from experience
• The China market we’ve seen recently probably isn’t the market post MOA
• Relationships matter
• What we’ve seen with our 56,000 Chinese visitors
Historical Trends (arrivals)
01,0002,0003,0004,0005,0006,0007,000
Thousands
Total Domestic International
International Arrivals Percent
0%
5%
10%
15%
20%
25%
30%
35%
40%
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
International Arrivals Percent
0%
5%
10%
15%
20%
25%
30%
35%
40%
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
Early 70s – Hawai‘i Gets Serious
Chinese Arrivals in Hawai‘i
0
10,000
20,000
30,000
40,000
50,000
60,000
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Chinese Arrivals % of Total
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Opening a huge new market means dealing with first time
travelers … and first time encounters with Western culture
Culture Shock
Problem: Destination Was Focused on Domestic Visitors
• Limited staff possessing multiple language skills– Japanese visitors were dependent on
Japanese speaking guides– Confusion in accommodations
• Hotel amenities weren’t culturally appropriate; fixtures were “foreign”
• Lack of appropriate experiences – especially food
Language Limitations
• Visitors were dependent on their guides
• Guides were often driven by commission
• Result: visitors didn’t always get an ideal experience … and satisfaction suffered
• Guided tours caused large groups to visit attractions, restaurants, etc. en masse, overwhelming capacity
Confusion in Accommodations
• As the Japan market developed, first time visitors encountered strange/unexpected features and fixtures … – How to work the plumbing?? Electrical
appliances?? Call the front desk and no one speaks Japanese
– No green tea/teapots in the room– No drains in the bathroom floor
Lack of Appropriate Experiences
• Japanese were consumers of mass tourism as westerners were becoming more independent
• Japanese wanted quality Japanese food … breakfast, lunch and dinner
• No tipping
Cultural Differences
• Visitors carried large amounts of cash … vulnerable to robberies and purse snatchings
• Prevalence of smoking
• Golf
The Retail Experience
What we were selling …
What they wanted to buy …
Solutions Came with Critical Mass
The French Festival
Chinese visitors … so far … have not mimicked the early Japan
visitor
Because of lack of Approved Destination Status and entry
restrictions … Chinese visitors to date
have been senior government and business
officials
Visitor Spending$US Per Person Per Day
US West $155.90
US East $192.80
Japan $268.80
China $377.20
Some Emerging Issues(2003 Hawai‘i Post Arrival Survey)
• Chinese food (especially good Chinese food) is a driver of satisfaction
• Language barriers were linked to perceived cultural discrimination
• Negatives … – Service quality (knowledgeable in Chinese
service expectations)– Time constraints (guides pushing too many
activities)
If Chinese tourism booms … there will be a change in
character as class goes to mass
What We Think We’ll See
• Shopping will include “authentic” luxury items … and …
• Gifts and souvenirs for family and friends at home … and
• Vitamins, supplements and other “safe” products• Chinatowns and China connections are a draw• Need for acceptance of Chinese credit (China
Union Pay)
• More Chinese speaking staff … through training or new hires– HTA contract with the Community College
system
• Developing retail, food and beverage and hotel amenities that appeal to the Chinese
• Learn to manage diverse cultures in the visitor mix
• Political events pose a risk
• Over time, we’ll see the market evolve from GIT PITFIT– The market to Hawai‘i is about 30% FIT at the
moment, but that will change with volume
• Satisfaction may be sub-par until language and product are aligned … feeling of cultural discrimination
• Prepare for cultural differences – i.e. tipping, smoking, group mentality
Relationships Count
Titles and Official Status Matter
Understand that we have competition … regional Asian
travel
Mahalo … Arigato … Xie Xie
谢谢