China has consolidated its position as one of the top global tourism source market in terms of both number of trips and money spent on international travel. At the same time, we have seen profound changes in the framework of outbound travel from Mainland China and in the behaviour of the travellers themselves, especially among the Chinese millennial travellers who will be the core driver of China outbound tourism spending in the next decade.
What does the growing China outbound tourism mean for businesses in Hong Kong? How can they make better use of the information to target the quality segment of Chinese outbound travellers?
Based on GfK ForwardKeys travel data, in 2015 China’s yearly outbound tourists reached 109 million with retail spending worth US$229 billion, a great milestone in China’s outbound tourism history. By 2020, outbound tourists from China are expected to rise to 200 million with retail spending of more than US$400 billion. (Source: ForwardKeys, World Urban Tourism Federation (WTCF), UNWTO (World Tourism Organization), China Luxury Advisors)
For three consecutive years from 2011 to 2013, Hong Kong remained the most preferred destination for China’s outbound tourists, with its cultural similarity, lower travel costs, short-distance travel and more importantly shopping facilities. However, things took a turn from 2014 onwards, and Hong Kong no longer enjoys its top preferred destination status, as outbound tourists seek to visit destinations such as South Korea, Thailand and Japan for unique and historical cultural experiences, not just shopping. (Source: ForwardKeys & GfK China Luxury Travel Research)
Knowing that outbound tourism will remain strategic to Hong Kong and its businesses, it is critical for Hong Kong to re-evaluate who it should attract and how best to capitalise on the growth of China outbound tourism given its limited land space and infrastructure. It is therefore not a question of quantity of visitors arriving Hong Kong but more so the quality of visitors.
According to GfK Consumer Life, 50 percent of China outbound travellers are Chinese millennials aged 15 to 29. The sheer size of the millennial outbound segment makes it commercially attractive compared to mature and older age groups. Coupled with that, 66 percent of Chinese millennials belong to the high income bracket, which is close to that of the mature and older age groups. Their financial standing is expected to rise as they advance in their career, where seven out of 10 millennials hold high occupational status—white collar, executives or professionals. The combination of numbers and strong financial standing makes this an attractive segment to focus on.
The need to understand Chinese millennials as individual travellers and consumers has never been more paramount. A sneak preview of GfK Consumer Life showed us that Chinese millennials are more ambitious than the previous generation. Brought up under the ‘one-child-policy’, naturally they became the sole bearer of the families’ hope to fulfil the ‘China Dream’. But at the same time, they also want to play hard. They are slightly more hedonistic than their seniors in their willingness to spend money to indulge and pamper themselves. Unlike previous generations, they also seek greater control of their lives to obtain happiness. They cherish freedom more than their parents or grandparents so as to pursue their passions and go after meaningful, adventurous and exciting experiences. They are also technologically savvy with almost everyone owning a smartphone and highly involved in sharing experiences on social-media platforms. They are therefore not the typical tourists who come in tour groups but rather they are highly independent travellers capable of planning and booking their own trips.
The shift from tourist to traveller would require any country or businesses to continuously innovate in order to appeal and maintain relevance to Chinese millennials. GfK's Innovation Roadmap provides a framework for countries and businesses to innovate by linking evolving millennial needs to new travel activities and experiences to help identify future strategic opportunities. Any decision a millennial makes, and alternatively, any benefit that is offered by a country or businesses can be traced back to the four overarching drivers (security, well-being, gratification and freedom) and the corresponding emotional benefit of the framework.
Derek Tan is director, consumer experiences, with GfK