Thanks to growing affluence and a gradual loosening of restrictions on travel, tourists from mainland China are packing their bags in ever greater numbers.
With marketers in the travel, hospitality, retail and entertainment sectors all keen to tap into this increasingly lucrative segment, on behalf of Media market research agency TNS quizzed people from first through to third-tier cities planning a trip outside mainland China over the next 12 months to explore this fast-developing trend.
One revealing insight we gleaned was a marked preference to stay in three-star hotels, regardless of income, underlining the alternate allures of value and aspiration that are the key influencers in how tourists from mainland China spend their money. “They know how to bargain and want a good price, but they’re becoming more sophisticated,” says TNS project manager, Neel Banerjee. “Marketers of hotels and airlines should also watch out for this. Price is always going to be a big consideration, but service is probably the way into their hearts. They want bang for their buck.”
When asked what hotel brands they were considering for their next trip, over half of respondents said they are looking at staying in a Holiday Inn, while two in five said Sheraton was on their consideration list. Crucially, 30 per cent said they had no particular preference. “Price is very important, because they tend to spend more money on shopping and outside the hotel, rather than really enjoying the hotel’s facilities,” remarks Barbara Pang, vice-president of marketing for Shangri-La Hotels and Resorts. “I think a lot of three-star hotels do realise the potential, and are trying to capitalise on it, but they don’t always understand what makes mainland travellers tick.”
Like many hotels, Pang says the emphasis Shangri-La places on relationships with travel and tour agents is stronger in mainland China than in other markets. Focusing on luxurious facilities would be the wrong way to talk to mainland travellers. “If you try to be too fancy, it may not work,” she adds. “They’re interested in travel and shopping.” While promoting features such as spa treatments and even business centres might not trigger many bookings just yet — proximity to shopping districts and great value for money is more likely to click with mainland shoppers — this will not necessarily be the case a few years from now. Younger travellers especially should start seeing hotels as destinations in themselves, rather than just a place to sleep between shopping and touring. “This market will mature quite quickly,” Pang predicts.
Airlines are also grappling with the particular dynamics of the mainland market. “We could never compete with a lot of the other carriers on filling up the back of the plane with tour groups,” says Vince Viola, senior VP, McCann Asia-Pacific and MD of McCann Hong Kong’s Cathay Pacific Central Team.
Both Cathay and its Dragonair sibling fared relatively well when we asked people planning to travel by air which airlines they are considering, cited by about one in four and one in three of our sample respectively. They still lag far behind the two leading brands, China Eastern and Air China, however. Air China is part of the consideration set for a whopping 80 per cent of mainland flyers.
“We focus on brand awareness for Cathay Pacific and that means the ads in mainland China are quite different to other markets — they are a lot simpler, and we talk a lot about the modern fleet,” Viola says. “Cathay’s task is also to attract travellers into or through Hong Kong, something it does differently for the China market than elsewhere. When you’re talking to someone in China, trying to sell on the cultural history of Hong Kong is tough. We talk about the dynamism of the city, the shopping, the internationalness of Hong Kong, and we focus on events like the Rugby Sevens.”
In coming years, though, Viola is convinced that mainland travellers will better appreciate the benefits of paying more for better convenience and a higher standard of service. “Luxury brands like Louis Vuitton and Chanel are doing well in China, and we think ultimately people in markets like Shanghai and Beijing will feel it’s good to pay a bit of a premium to fly Cathay Pacific — there’s the same kind of badge value associated with it,” he says. That will lead to a change in the advertising, to echo the tone used by other luxury brands such as watches — “very stylish, very premium-looking”. Viola adds: “For now, humour and esoteric stories about why people travel don’t work as well in China as they do in other markets.”
When shopping, mainland travellers tend to look more for logo-driven brands, points out Doris Ho, director at brand consultancy Sprout Brands. “There are some brands that really do that well, like Armani Exchange, Gucci and LV — they all fly off the shelves.” When we asked which particular brands prospective travellers would be looking to buy on their next trip, Sony came out as the most desired by a long way. Sony was followed by Christian Dior, Nokia, Lancôme, Louis Vuitton and Chanel — not known for being cheap, but all with a strong reputation for quality, reliability and, for the luxury brands especially, an in-store experience that accentuates the exclusivity of the brand.
“While they are value-driven, they also have high aspirations, so they’re willing to pay more for brands that let them realise their aspirations in more ostensible ways, especially if they can bring it home,” Ho notes.
This polarity is narrowing however, Ho points out, with Chinese tourists increasingly looking to be inspired by brands and their experiences. “They tend to pick brands with a good reputation,” she adds. “Now is the time for brands to position themselves as an experience to some of the more discerning shoppers.”
About a third of people TNS surveyed set aside at least Rmb 6,000 (US$775) for shopping during their holiday, citing choice, quality and price as primary reasons why shopping abroad plays such an important role in holidaying abroad. Over half of the people questioned see shopping as an integral part of being on holiday while shopping also emerged as the top secondary activity while away.
Hong Kong emerged as the top destination for the coming 12 months, followed by Macau, favoured by older travellers. Singapore, Thailand and Korea also came out as preferred destinations. But if money were no object, almost half say they’d rather go to Europe, signalling a real opportunity for European tourist boards. There are now 25 European countries that mainland Chinese can visit as individuals, and many others they can see as part of a tour group. “Destination marketers, if they aren’t already doing so, have to plan as to how they will overcome these perceptions of Europe being unaffordable, the nervousness factor, and plan how they’ll welcome them to come and spend,” Banerjee suggests.
