Chinese travellers “spend more but shop less” – new report underlines key changes in outbound market

CHINA. Shopping spend as a percentage of overall travel expenditure by Chinese overseas visitors fell in 2016, according to a new report from global consulting firm Oliver Wyman.

Average trip spend rose +3.5% last year, the company said, but expenditure on shopping declined from 41% to 33% of trip expenditure in the same period.

The report, ‘Prepare for Turbulence: The Chinese Traveler of Today and Tomorrow’, reveals that shopping dropped from the second-biggest motivation for travelling to third, behind sightseeing, recreation and entertainment. The decline was mainly driven by decreased shopping for resale – the so-called ‘daigou’ market – which fell from 8% to 3% year-on-year.

“For a decade, outbound Chinese travellers have been the wind beneath the wings of industries, including air travel, hospitality, department stores and luxury goods,” wrote Oliver Wyman Partner and author of the report Hunter Williams. “Every year sees more outbound Chinese travellers than the last, with the number expected to reach 150 million as early as 2017. These travellers have gained a reputation as big spenders, and many businesses worldwide are targeting them closely.

PRESENCE ON CHINESE PLATFORMS NECESSARY

As the Chinese travel overseas more, they are becoming more sophisticated and planning their own holidays, the report points out. Less than one in 40 holidays were mostly planned by travel agents in 2016, down from one in seven in 2015. Nearly three quarters now plan their own trips – or more than nine out of 10 including trips planned by or with travel companions.

“That means companies need to be at the forefront of travellers’ minds as they research their holidays. In shopping, for example, more than 60 percent of Chinese travellers plan ahead, relying on word of mouth, brands’ official websites, Chinese e-commerce platforms, and travel forums. Brands and stores need a presence in each of these information sources.

“Hotels should use Chinese-language platforms, as Chinese travellers rely heavily on online reviews, especially when they go overseas. TripAdvisor alone isn’t enough: customers look for reviews on Chinese-language platforms such as Mafengwo, Dianping, Tuniu, Qyer, and Lvmama – so hotels need to feature on these, as well as on the key aggregators Ctrip, Qunar, and Elong.”

“However, the rising numbers don’t automatically translate into boosts for travel-related businesses. China is a dynamic, developing country undergoing a wide-ranging social and economic transformation, which is changing how people travel, where they go, and what they do on holiday. As the archetypal Chinese traveller disappears, businesses need to adapt, which means understanding the subtleties and diversities of tourists’ preferences and motivations.

“Chinese travellers continue to shift their spending towards more meaningful experiences such as exquisite dining, extraordinary cultural journeys and even adventurous sports,” said Williams. “At the same time, cross-border e-commerce has grown rapidly, overseas travel has democratised, and there is greater availability of products at home, meaning there is less need for buying overseas for resale”

Travellers who rank shopping as the main reason to travel are generally from lower income brackets than those who rank shopping as the second and third motivations to travel, the report noted. Therefore, the most “intent shoppers” are not the biggest spenders in either shopping or total travel spending.

For example, retail spend as a proportion of overall trip expenditure in the UK declined from 42% to 33% despite the weakness of the Pound following Brexit (23 June, 2016). A particular fall was seen in daigou spend, which dropped from RMB1,800 (US$265) to RMB1,000 (US$147) per person from 2015 to 2016. Similarly, retail spend in the USA dropped from 41% to 28% of travel expenditure with only 5% of respondents ranking shopping as number one reason to go to the country.

The report reveals major shifts in the tastes of Chinese travellers, who are becoming more independent as they become more sophisticated.

“Cookie cutter” holidays have greatly declined in popularity as a result – fewer than 1 in 40 holidays were mostly planned by travel agents in 2016 vs. more than 1 in 7 in 2015. “They are also staying longer in distant locations, traveling more with their families and even spending less on shopping,” wrote Williams. “They now travel more with immediate family and especially children, resulting in growth in average group size from 2.9 to 3.1 travellers per group.”

“Chinese travellers rely heavily on online reviews, especially when they go overseas. TripAdvisor alone isn’t enough: customers look for reviews on Chinese-language platforms such as Mafengwo, Dianping, Tuniu, Qyer, and Lvmama” 

Shorter trips for short-haul destinations, longer ones for long-haul

In terms of travel duration, Chinese travellers are making shorter trips to Asia and significantly longer trips to long-haul destinations. Hong Kong remains the most popular destination despite seeing a -3% year-on-year drop in Chinese visitors in 2016. Hong Kong is “poised for a comeback”, the report noted, with nearly seven times as many respondents saying their impression of the city had improved (55%) rather than worsened (8%), and the majority perceiving it as “good value”.

The report claimed that South Korea slipped from its position as the top destination last year [the 2017 picture will be much starker due to the THAAD dispute with China – Ed], with the traveller planning to visit rate falling from 31% in 2015 to 17% last year. In contrast, Japan continued to rise, again being the fastest-growing destination and now also the most desired, with +4% year-on-year growth and 29% of respondents planning to visit in 2017.

Domestic travel on the rise

The report said that twice as many trips were made domestically in 2016 compared to 2015, with over 90% of respondents making at least one domestic tourism trip in the past 12 months. On the consumption front, they are much less interested in shopping when travelling domestically and also more price conscious, with 47% of respondents seeking value/price compared with 40% for overseas destinations.

With long-haul destinations becoming more popular among Chinese tourists, Oliver Wyman said it expects that a greater proportion of spend will be allocated to accommodation, dining and entertainment, while shopping spend as a percentage of overall travel spend is likely to continue to decline.

The report is based on a survey by Oliver Wyman of 2,000 Chinese travellers. It aims to reveal major shifts in the tastes of Chinese travellers, and indicates that the rising number of Chinese outbound travellers are less focused on shopping, travel more frequently with family and children, plan their own holidays and seek attractive themes or associations as well as dining opportunities.

Contact: www.oliverwyman.com

YAOK offers key pre-trip product perusal for VVIP travellers

The Moodie Davitt Report has entered into a key partnership with pioneering Chinese online luxury reservation and product display platform YAOK.
中国/国际。The Moodie Davitt Report与中国在线奢侈品预订和展示平台要客达成密切合作伙伴关系。

YAOK is an E-service system for international retailers serving the Chinese high-end traveller. It provides a platform for retailers, including travel retailers, to display luxury products and for customers to book appointments and reserve products in advance of their travel and/or store visit.

It taps into one of the world’s most influential databases of high net worth individuals (HNWIs). Retailers pay YAOK a small percentage commission on any sales specifically generated by the platform.

要客是一个专为国际零售商定制的为中国高端旅客提供全球奢侈品在线预约预定服务的应用系统。该系统为包括旅游零售商在内的零售商提供了一个奢侈品展示平台,消费者可在旅行或前往门店前,在该平台预定产品或预约到店。零售商借此平台可进入全球最具影响力的高净值人士数据库之一,且仅需就经该平台产生的销售向要客支付少量佣金。

YAOK was officially launched on 8 March and has already struck partnerships with several major European luxury houses and domestic market retailers. In each case significant incremental business has already been realised. By year-end some 500,000 HNWIs are expected to use the YAOK app.

于3月8日正式启动的要客平台,已与多家顶级欧洲奢侈品旗舰店及本地零售商建立了稳固的合作伙伴关系,并为其带来了显著业绩增长。至今年年底,预计约有50万高端人士将会使用要客app。

YAOK, which means VVIP in Chinese, refers to HNWIs with net wealth of over US$1.5 million. China has the world’s largest YAOK population, according to the Fortune Character Institute.

“要客”是指净资产在 1000 万人民币(150万美元)以上的高净值人群。中国要客是全球最大的高端财富群体,根据财富品质研究院的统计数据显。

For full details click here.

For details on YAOK please contact Martin Moodie at Martin@MoodieDavittReport.com, or Ying Wei at Ying.Wei@YAOK.com

获得更多要客详细信息,请联系Martin Moodie,Martin@MoodieDavittReport.com,或魏迎,Ying.Wei@YAOK.com

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