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  1. The Chinese Outbound Tourism Market: a global perspective COTRI China Outbound Tourism Research Institute Prof. Dr. Wolfgang Georg Arlt London, March 26, 2014

  2. Who is talking to you?

  3. COTRI China Outbound Tourism Research Institute The world's leading independent research institute for information, training, quality assessment, research and consulting relating to the Chinese outbound tourism market Established: 2004 Offices: Heide (Germany), Beijing, Shanghai, Guangzhou (China) COTRI Country Partner in: Argentina, Australia, Bhutan, Bosnia and Herzegovina, Cambodia, Chile, Croatia, England, Estonia, Finland, France, Ireland, Italy, Kenya, Kosovo, Laos, Latvia, Lithuania, Macedonia, Mauritius, Mexico, Montenegro, Morocco, Myanmar, New Zealand, Peru, Russia, Scotland, Serbia, Slovenia, Spain, Thailand, Tunisia, USA, Vietnam, Wales COTRI Office Shanghai: Suite 1512 Shui On Plaza 333 Huaihai Rd. Shanghai 200021 COTRI Office Guangzhou: Suite 2412 South Tower WTC 371-375 Huanshi East Rd. Guangzhou 510095 COTRI China Headquarter: Suite 412 Lido Office Tower 6 Jiangtai Road Beijing 100004Phone +86 10 6417 9226 Email COTRI Germany Headquarter: Fritz-Thiedemann-Ring 20 25746 Heide / Germany Phone +49 481 85 55 523 Fax +49 481 85 55 121 Email

  4. COTRI founder and director • Prof. Dr. Wolfgang Georg Arlt FRGS • First visit to People’s Republic of China in 1978 • 1991-1999 owner of Inbound Tour Operator China -> Europe (offices in Beijing and Berlin) • COTRI founder and director since 2004 • Professor for International Tourism Management • at West Coast University of Applied Sciences (Heide) • Visiting Professor at universities in China and United Kingdom • Fellow Royal Geographical Society (London) • Research Fellow Japanese Society for the Promotion of Science (Tokyo) Latest publication: Editor of Zhang Guangrui: China’s Tourism Development COTRI eBook 2013 COTRI Blog at Editor: China Outbound Market Intelligence

  5. COTRI Country Partners

  6. Why are we all here today?



  9. The big picture

  10. 1 History • Travel has been an important part of the (self-)education process in Imperial China, but outbound travel has no tradition • Xu Xiake (1587-1641), China’s most famous traveller, was no Ibn Battuta or Marco Polo • Chinese are still learning to be an international tourist, lack of role models

  11. 2 Demand • Demand pushing open the gates • After 1989 (Tiananmen movement and Fall of Berlin Wall) resisting the demand for outbound tourism (politically dangerous and expensive) is no longer feasible • Since 2004 incremental paradigm change toward “Soft Power” approach of using outbound tourism • 2013 new party leadership curbing official pleasure travels and conspicuous consumption, but for the first time officially “encouraging” outbound tourism

  12. 3 Investment • Chinese Outbound Travel will continue to grow despite bursting of credit bubble in China (Chinese GDP +2% and deflation in 2015?) • Long-distance outbound travel for Top 5 percent of Chinese society is investment, not holiday • Direct investment : Business travel, real estate and company investment for profit and for passports • Indirect investment : “Leisure” travel for self-esteem and peer group confirmation of status and prestige • Long-term investment : Formal and informal education, market knowledge, experiences

  13. 4 ROI • Chinese outbound traveller seek Return on Investment • If international travel is investment, the products offered should be organised in a way to guarantee the Chinese visitor a good Return on Investment (ROI): • Value for money and for time • Guaranteed quality as seen from a Chinese point of view • No more time spent as needed for prestige gain • Supporting the specific bragging value of a product: famous, typical, oldest/highest/awarded, celebrities choice, unusual (but not unknown), authentic (but not against expectation), hard to get, VIP only, as seen in TV and movies • Connecting fun und investment • Giving face to China and all Chinese • Safe and without risk

  14. 5 Segmentation • “The” Chinese outbound tourists does not exist (anymore). • The four most important groups: • Mass-market package tour participants, often first-time traveller, from second/third tier cities, interested in cheap trips, sightseeing and shopping for prestige • More affluent and more experienced self-organised travellers, interested in value for money, intensive short experiences and shopping for lifestyle affirmation, “money-rich but time-poor” • Business/officialtravellers, interested in luxury and conspicuous consumption (when nobody watches) • Chinese temporarily living outside of China (Chinese expats, students), travelling themselves and receiving guests

  15. 6 Package Self • Chinese traveller continue to embrace self-organised travel • According to COTRI research, almost all adult affluent Chinese have been outside Mainland China at least once, 90% of all adult affluent Chinese have already visited Europe • Each year more travel experience, higher percentage of overseas university graduates, and more information available combined with new Chinese tourism law pushes affluent Chinese to travel self-organised • With the domino effect of easing of visa restrictions well under way in 2014, need to use tour operator for visa diminishes

  16. 7 Future • A history of waves: • 100 millionaspiring Chinese living in 2nd and lowertiercityinhabitantsare still waiting for their turn to see the Mona Lisa and to visit European brandstoreswithpackagegroups for aslittlecostaspossible • 50 million more experiencedtravellersmovingfrom ticking off sights and from buying the most famousbrands to findingdestinations, travelstyles, hotels and productswhich fit the lifestyle of their specificpeergroup

  17. 8 Action • Getting happy and profitable Chinese customers • Concentratingasmuch on directbookings and direct (socialmedia) marketingas on workingwith Chinese tour operators • Providing prestigeby using Chinese language, symbols, decoration, qualitylabels, creditcardservices – but in an unobstrusiveway • Providing services for money-rich but time-poorguests – nowaiting! • Turning the attraction/hotel/sightinto a destinationwith a story– something to tell at homeabout • Anticipatingthe needs of Chinese visitors – Chinese photographer for honeymooncouples, exclusive limited editionsouvenirs which canonlybebought on the spotor in O20 (offline to online) shops • Time to learn more about your Chinese customers.

  18. Thank you for your attention, looking forward to your comments and questions! Have Fun and Profit in the Wood Horse Year! Contact COTRI China Outbound Tourism Research Institute Prof. Dr. Wolfgang Georg Arlt Tel. +49 481 8555 523 Mail Web Blog Thank You!