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On China Transcript: Tourism

updated 3:58 AM EDT, Thu June 19, 2014
STORY HIGHLIGHTS
  • This month's "On China" discusses the country's outbound tourism
  • Because of the booming economy in China, more tourists choose to travel abroad
  • Chinese tourists prefer destinations in Asia Pacific and book tickets, hotels through mobile
  • Tourism market dynamics within China change within months

Editor's note: This month's episode of On China with Kristie Lu Stout is on outbound tourism. It airs for the first time on Thursday, May 29, 4:30 p.m. HKT. For all viewing times please click here.

Beijing, China (CNN) -- CNN's flagship monthly feature program dedicated to covering China takes on one of the hottest global topics: the surge of Chinese tourists across Asia and around the world.

From the government's guidelines for how Chinese travelers should and shouldn't behave, to investment opportunities for those looking to get in on a burgeoning business, On China:

Join CNN's Kristie Lu Stout as she explores China's ever expanding role on the global stage and how the modern Chinese tourist is shaping the world we live in today.

Her guests this month: Martin Rinck, president of Asia Pacific, Hilton Worldwide, Jane Sun, COO of Ctrip.com International Ltd. and Xu Chen, researcher at China Tourism Academy.

READ: First rule of Chinese tourism: Give them what they want

Kristie Lu Stout: We are in Beijing airport, on track to the world's biggest transport hub, and we've seen this incredible surge in the number of Chinese tourists traveling overseas. Last year, 100 million Chinese left the country to travel overseas. That number is set to double by year 2020. Why? What are the driving forces behind this growth?

Jane Sun: I think a couple of reasons. First of all I think the Chinese GDP growth rate is very strong. Income level is increasing significantly. And secondly, most of the countries are erasing restrictions on the visa restrictions. So more and more people can travel abroad without any restrictions.

Kristie Lu Stout: More money, more visas, what else?

Martin Rinck: And I think if you come and add to the fact that China is becoming connected to the world with 180 airports today, a further 80 currently under construction, the connectivity outbound for Chinese is just so much easier today.

Xu Chen: It has been one of the longest dreams for the Chinese travelers to going outside, traveling overseas. And now the government lifts more restrictions on the outbound travel, so more Chinese can get much easier to travel abroad. And the second one is that there are more affluent Chinese, or the middle class is increasing within Chinese community, so now more people can afford it. And third one is that, sometimes traveling abroad is even much cheaper than traveling domestic.

Martin Rinck: Uhe point if you look for Chinese right now, if they would decide to go to Sanya and stay in Hainan Island, or if they were to go abroad to Bali or Phuket, in terms of travel time, it's pretty much the same travel time. And in terms of cost, it's probably half the cost to go to Bali and Phuket. So the attractiveness of taking this international trip and going outside of China, rather than staying within China, makes it so much more appealing.

On China: China outbound tourism trends

Kristie Lu Stout: You mentioned Bali and Phuket. But what are the top destinations overseas for Chinese tourists?

Xu Chen: The most popular destination, if you count Hong Kong and Macau in, would be Hong Kong and Macau. And then South Korea, and followed by Southeast Asia, and U.S.A.

Martin Rinck: In the top 10 destinations, you only have 3 destinations which are outside Asia Pacific. So with the United States, Italy, and France being outside, the remaining 7 destinations are within Asia.

Kristie Lu Stout: Let's paint a portrait of the modern-day Chinese tourist. What does he or she look like?

Jane Sun: I think for the older generation, they like to travel within groups. But more and more young people are making more money. When they travel, they tend to be what we called F-I-T, frequent independent travelers. So they do online research for the cities, for the transportations, and they book tickets and hotels.

Kristie Lu Stout: So the first timers, those are the package tourists, right?

Jane Sun: Yes.

Kristie Lu Stout: And then after that experience, then they become independent travelers, is that right?

Jane Sun: Yes, exactly.

Xu Chen: I'm not quite sure that we can agree on that. We noticed that almost over 80% of the tourists are 45 years of age or less. So they are not just going to this tourist, the gathering areas.. like tourist scenic areas specific for foreign tourists. But, they are more willing to go into everyday people's living area, to blend in in their everyday life.

Kristie Lu Stout: Now in contrast to that, you have the luxury Chinese traveler, right? The ultra-luxury Chinese traveler. How did they want to see the world?

Jane Sun: We just recently sold a very top-end package tour which is $200,000 USD.

Kristie Lu Stout: $200,000 U.S. dollars?

Jane Sun: USD per person. 88 days.

Kristie Lu Stout: 88 days.

Jane Sun: around the world. And guess how long did it take for us to sell the package?

Kristie Lu Stout: How Long?

All: 8 minutes.. half an hour, one hour?

Jane Sun: 17 seconds!

All: 17 seconds?

Jane Sun: Right, so that shows the buying power for Chinese tourism is increasing quite large.

Kristie Lu Stout: What do get for $200,000 U.S. dollars?

Jane Sun: Normally we take them to the top travel destinations. Exclusive sites. And also the landmark hotels. Some places that you will never get to see as a tourist group.

Martin Rinck: And I think the one thing it's for certain, when you look at the changes right now from booked via travel agent to becoming self-booked, from going as a group to individual travel. It's just moving at an incredible pace. And I think of the 100 million that traveled abroad last year, 10% were interested in adventure traveler. So you suddenly start meeting people on a safari in Africa, or when you make a trip, a polar expedition to Antarctica. They are all over the place and going into every direction. It's not their traditional destination anymore, which they've chosen in the past.

Kristie Lu Stout: And when China's tourists are booking an adventure trip, or a luxury trip, or a package tour, what have you, how are they booking it?

Jane Sun: For our company, Ctrip, there's online booking. So we have a community, very active. People write their comments, write their review notes of the hotels on the travel sites. And then people read these sites, design their routes, and then make sure they book the best hotel within their budget.

Kristie Lu Stout: And how many are booking through mobile?

Jane Sun: More than 50% of the hotel bookings site... 50%, are on mobile.. so tremendous volume going on to mobile

Martin Rinck: China skipped the whole desktop/macbook/computer generation

Kristie Lu Stout: They went straight to mobile.

Martin Rinck: They went straight to mobiles. Some companies that are really proud to have a new website, but if it doesn't have the functionality to be read on a small device and has full integration on a mobile device, it's really of no use.

Kristie Lu Stout: So when they're booking their trips, China's tourists are already in the future. They're using their mobile devices. But what will be the next frontier in China outbound tourism? The next great destination that Chinese tourists will want to go out and explore? Any trends?

Martin Rinck: Once the Chinese traveler gets more accustomed to go abroad, the distances will get longer. And suddenly you will have Africa, you have South America, you have more destinations witinh Europe.. and lesser travel domestically, if I can call it as such, within Asia Pacific.

Kristie Lu Stout: Unfortunately in the news, there are a lot of reports of Chinese tourists behaving badly, while overseas. Whether its stories of defacing monuments, or snapping off a piece of coral from a protected coral reef. What have you seen and what's really happening here?

Martin Rinck: I think number one, it's important to say that travel is great, because it brings different countries and different cultures together. And yes, different cultures behave in a different way and have different habits and I think it's normal when a Chinese tourist travels abroad for the first time that he or she might not be too familiar with the habits of different countries. And as much as tipping or queueing in China is not necessarily the norm, when they go abroad, they obviously don't tip and don't queue. So I think, if you put it into context.. and think back when other nations started to travel, let it be the Americans, the Germans, the Russians, I think it was a similar phenomenon. The only..

Kristie Lu Stout: The ugly American tourist!

Martin Rinck: Didn't want to say it that way, but the only and the biggest difference is that the scale is just so different. 1% of the Japanese population went abroad, it was just about more than a million. When 1% of the Chinese population travels abroad, it's more than 13 million. So that's why it's, perhaps, more obvious.. and more, how to say, observed in different countries around the world right now.

Kristie Lu Stout: That was a very diplomatic answer, but I want to show you something. This comes from the Chinese government. Last year Beijing published a 64-page instruction manual for Chinese tourists when they go overseas, complete with illustrations. This one here talks about what you should wear and not wear while you're traveling overseas and how you should not expose your big belly lying on a bench, right here. This one about the etiquette of photography. Is this necessary? I mean do we really need to publish this for Chinese tourists to learn about how to properly behave overseas?

Jane Sun: I think China is a huge country. For the government to proactively post something to promote the politeness of tourism is really helpful. I think once they know what's the criteria, the standard, for being a good tourist, in the future, I think you will see a huge improvement from the behavior from the outbound travelers.

Xu Chen: But I do think it's really helpful especially like if the government gives the pamphlet, the booklet to travel agencies for the outbound travelers. It helps to establish a positive image of the Chinese tourist gradually. It's bad behavior, but it's exaggerated or amplified by the media. So that, now, one thing, one bad thing happens, everywhere in the world knows it. So it's just, okay, it's the Chinese traveler gets a bad image.

Martin Rinck: The interesting part is that the Chinese government is not the first government in doing so. The French government recently gave a similar guidebook out to the Parisians, because Paris has a reputation of being extremely rude, and it's called "Do you speak touriste?" The Singaporean government currently runs a kindness campaign to be very pleasant to foreign visitors who are coming into town. So it's not unheard of. I haven't seen those pictures and they look pretty intriguing, but it is not unheard of for governments to issue guidebooks in terms of behavior of the citizens either abroad or within their own country.

Kristie Lu Stout: There has been a backlash in certain areas, due to a perception of bad behavior, or just the shares of number and volume of Chinese tourists coming in, for example in Hong Kong. How do Chinese tourists factor that in? What do they think of that? Is there a growing risk that you will not be welcomed in certain corners of the world.

Jane Sun: I think it probably take some time. When people first go abroad, they're very curious and very excited. As they become more and more frequent travelers, they become more sophisticated, they see more, and I think that phenomenon will be evening out.

Kristie Lu Stout: Chinese tourists will become more sophisticated. And those who receive them: you know, whether the hoteliers, the retailers, travel agencies, etc, they'll also have to be more sophisticated and welcoming as well?

Jane Sun: I think it takes both sides to make it work.

Martin Rinck: But it's all about as Jane said, reconciling the cultural divide. And one part of the equation is for us to conduct cultural awareness training for our team members, to really better understand and appreciate the Chinese culture. And at the same time, educating the Chinese customers on things that are precious and that need to be treated in a certain way. And we have a beautiful resort in the Maldives, and when Chinese tourists come for the first time, they tend to like the coral very much, and break a piece off without realizing how precious the corals are and how long it actually takes for the corals to grow. So we run educational sessions with our customers in the resort at the same time to make them really understand and appreciate. So for me, rather than just complaining about it and saying it's not good behavior, I guess it's our responsibility as an organization, not just the awareness for the team members, but also education of the Chinese customers.

Kristie Lu Stout: So it's about awareness, it's about education, and behavior is changing for the better?

Martin Rinck: It is, it is.

Jane Sun: And I can add to Martin's comments. I think the kids in school are taught to be respectful for the nature. So when we are going on vacation, if I happen to touch some corals or shells, my kids will instantly say "Mama don't touch it! Because you need to leave this here". And I tell them "yes, that's very good. So I think from young generation on, it will get better.

Jane Sun: Chinese tourists spend about 70%, excluding air tickets and hotel, of their 70% of the spending is on shopping versus about 40% of the local spending from Korea guests spending on shopping. So I think the buying power for Chinese citizens are very strong, for a couple of reasons. One is the culture for Chinese consumers, they have a gift-buying culture. So when you go abroad you want to bring something that's special for your relatives. The other one again is the buying power and income level is increasing.

Martin Rinck: You look at the recent move of Emirates in the Middle East, they increased their luggage allowance, because they recognized that when Chinese travelers go abroad, they come home with more than they left. So they need this additional 20 kilos in terms of luggage allowance. And just by making that change they won tremendous market share of the Chinese consumer. And those are the fine nuances really to understand the psyche, the culture, and what drives their behavior in order to gain your unfair share.

Kristie Lu Stout: For Chinese travelers to really enjoy their experience abroad, does the language barrier become an issue?

Martin Rinck: We launched a program in 2011, which is called the Hilton Huanying program, or the Welcome program, where participating hotels outside of China offer services such as Mandarin speaking front desk staff, in-room amenities like the tea kettle, like the slippers and Chinese language television channels, accepting Union Pay credit cards. And the amazing part is when we started with the program in August 2011 with 50 participating hotels outside of China, we now have 82. Those hotels doubled their percentage of Chinese travelers in a period of just two years. And that goes to show that offering Chinese-friendly service and understanding the needs of your customers, makes a huge difference.

Kristie Lu Stout: It pays back dividends doesn't it?

Xu Chen: I want to add on that, that we do this outbound Chinese travelers survey every quarter. And we noticed that for last year, for four consecutive seasons, lacking of Chinese service or Chinese language TV programs, or menus, were the most unsatisfying factors. So it's really worth noting that we probably need to add more Chinese services.

Jane Sun: And also on our website too, we rank the hotels in the service sites. The hotels with Chinese-specific services is ranked higher than the other hotels.

Kristie Lu Stout: And that influences consumer choice you think?

Jane Sun: Absolutely, absolutely.

Kristie Lu Stout: Anything else?

Martin Rinck: You have to be authentic, but most importantly nowadays, you have to be flexible. Because the market dynamics within China change within month, not years. So when you have a social media engagement strategy to connect with your customer base that works today, it might be the wrong strategy tomorrow. So in terms of staying on top of the changes of the market dynamics, and really reading and understanding consumer behavior. And when we talk about social media, we have the statistics of last year where 28 people left Weibo to go to WeChat. Now 28 million people who suddenly use a different platform. And if you thought you were engaging very well with them on Weibo, well you got to race after them because they are on WeChat. So the biggest thing to be successful is to stay on top of the game, really understand the market dynamics, and be flexible in your approach in order to win in the race for the Chinese consumer.

Kristie Lu Stout: I'm very impressed that you know that, but these days you have to as a hotelier, right? You have to.

Martin Rinck: Absolutely.

Kristie Lu Stout: There is this boom in outbound tourism from China. Leaving from airports like this one here in Beijing, all over the country. For viewers around the world watching our discussion, and figuring out how can I cash in on this, how can I capitalize on this trend. What would you tell them?

Jane Sun: China again is one of the fastest nation moving toward the next generation. So in order to compete in this market, be very fast, be very responsive to customers' needs, and be very open-minded. Because we know there is change. The change comes much, much faster than it is in a mature market. So welcome the change. With that attitude I think that they can capitalize on the opportunities ahead of them.

Xu Chen: For a business, you probably have to provide more Chinese language services. And interestingly, that we noticed that what the Chinese tourists were most satisfied with were shopping areas, shopping experience, because the UnionPay card is very easily accepted, and the Chinese language services well provided. And also now more Chinese enterprises, tourist enterprises are building their own companies or branches outside, overseas. How will that shift the structure of global tourist industry?

Martin Rinck: I think last, but not least, it's really to build in-market resources to really understand the dynamics and being able to capitalize on the outbound. We've been here for 25 years, we celebrated last year our 25th anniversary. And I wouldn't claim that we know and understand the market completely. We are still learning. And we are evolving with everything that is happening in China. And if we say 100 million last year, as you said in the beginning, we are just at the starting point on the launch pad, what I would call it, of a significant outbound exposure.

Kristie Lu Stout: Yeah, the opportunity here is mind boggling isn't it. Martin Rinck, Jane Sun, and Chen Xu, thank you so much for joining me. I really really learned a lot from that conversation about trends in tourism, leaving China, taking on the world. Thank you.

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