Impact of Chinese Travellers in Europe
In August 2011, Hilton Hotels and Resorts launched the Hilton Huaying programme, which offers creature comforts to Chinese visitors travelling abroad, upon arrival at their hotel, in their rooms and at breakfast. In October 2011, the brand released a blue paper, “How the Rise of Chinese Tourism Will Change the Face of the European Travel Industry”, which was researched by the School of Oriental and African Studies (part of the School of London). Euromonitor International discusses highlights from the paper below.
Profile of the Chinese outbound traveller
According to monthly surveys conducted by the China National Tourism Administration (CNTA), Chinese outbound travellers tend to be well educated, wealthy and from the country’s major cities or eastern coast. 85% of tourists are under the age of 45 years and 40% of outbound tourists work in the education, information technology, computer and software, finance and scientific research fields.
Educational Level of Chinese Outbound Tourists 2010 (%)
Source: China National Tourism Administration
Furthermore, average per capita spend is around RMB3,000 (US$440) on outbound trips. 34% of travellers spend between RMB5,001 (US$735) and RMB10,000 (US$1,470), while 16% spend more than RMB10,000 (US$1,470).
Individual Monthly Income of Chinese Outbound Tourists 2010
The allure of Europe
In addition to its culture, history and attractions, Europe is considered a prestigious place to visit, and a trip to the region is regarded as status enhancing. Many Chinese travellers to the region will try to visit as many countries as possible, which increases the prestige. Trips to Europe usually last between one and two weeks. It is not unusual for tours to squeeze in 10 countries in 10 days, although many only offer four to five country stops. Despite its allure, the high cost of European travel and language barriers are two significant obstacles to travel.
Chinese nationals only need a visa for the Schengen area to travel to the 25 Schengen countries. The UK is not part of the Schengen zone, so Chinese tourists need to obtain a second visa for the UK, which deters a stop there on multi-country tours.
Types of Chinese travellers to Europe
|Chinese Arrivals to Select European Destinations 2010||Arrivals from China (‘000s)||% Growth||Inbound spending by Chinese Travellers (US$ million)||% Growth|
Source: Euromonitor International
The types of Chinese travellers to Europe can be summarised as follows:
- Tour groups: The bulk of Chinese tourists visit as part of a tour group. Travelling within a tour group makes it easier to get a visa. Furthermore, the package is all inclusive, usually including inexpensive hotels and coach travel, to keep costs low. It also includes a Mandarin-speaking guide.
- Individual travellers: This is a small but growing niche among the educated middle class. Typically, only those with good English or European language skills travel individually due to the lack of Chinese signage. Types of individual travellers include: Chinese students studying in Europe; Chinese expatriates living in Europe; couples with living abroad experience; adventurous young professionals and wealthy retirees.
- Students and their families: Approximately 130,000 Chinese students are currently studying in Europe, with the majority in the UK. Students themselves tend to travel, but family and friends also visit and travel around with them.
- Business travellers: The Chinese also visit Europe on business. In 2010, Chinese exports to the European Union grew by 32% to reach US$311 billion. About 20% of Chinese exports are to the European Union. Business travellers typically stay at premium or luxury hotels and are more particular about the quality and service of their hotels than leisure travellers.
- Family groups: Nuclear family groups visit Europe and sometimes one or both sets of grandparents will accompany them. According to the CNTA, 47% of Chinese outbound travellers travel with their family, while 24% travel with friends.
Shopping is an important activity for Chinese travellers visiting Europe as they like to offer gifts purchased during their trip to friends and family upon their return. Also, the high sales tax on luxury goods in China means that luxury goods in Europe can be around half the price. According to London Luxury, an association for luxury retailers on Bond Street, Chinese shoppers spent £200 million (US$333 million) in Bond Street (London, UK) in 2010, representing an increase of 155% over 2009. Chinese shoppers spent an average of £600 (US$1,000) per store visit on Bond Street in 2010.
But, it is not just luxury shopping that benefits. Because of demand, many tour groups stop at less expensive shopping centres and outlets throughout Europe. In the UK, many tour groups stop at Bicester Village outlet shopping centre and the Clarks Shoes factory outlet in Somerset.
Retailers have responded by making it easier for Chinese travellers to spend their money. They have hired sales associates that speak Mandarin and other Chinese dialects, and have begun offering Chinese language product information and websites. They also now stock goods that are popular among Chinese travellers. Burberry, which employs these tactics, reported that 30% of its sales in its UK store were to Chinese customers.
Another significant step is the acceptance of credit cards issued by China Union Pay (CUP), which holds the monopoly on all card payments in China. There were 239 million credit cards in circulation in 2010—all of which are operated by CUP. During this year, shopping centres and duty-free shops in 18 countries, including France, Italy and Turkey, signed agreements to accept CUP cards. In the UK, Harrods reported an increase of 40% in sales to Chinese customers after installing 75 CUP terminals.
Individual travellers and niche tourism offer opportunities
More Chinese travellers are expected to travel to Europe without a tour group and instead with their friends and/or family as it becomes easier for these smaller groups to get visas. The increasing popularity of individual travel provides a lot of opportunities for the European travel and tourism industry, especially an opportunity to grow specialist holidays such as wine tasting in France and luxury car driving in Germany.
One growth opportunity lies in cruises. According to the CNTA, 790,000 cruise trips leaving from Chinese ports were purchased in China in 2010, up 20% from 2009. As Chinese travellers become more familiar with cruising, river cruises and Mediterranean cruises may become more popular as these are all-inclusive packages that couple multi-country visits with shopping, very similar to the currently popular overland tours bought by Chinese travellers.
Marketing and hospitality are key to competition
According to the aforementioned blue paper, European countries face a great deal of competition for Chinese travellers from other Asian destinations, as well as from the US and Australia. It is therefore important for European countries to market Europe in China in order to continue its prestige reputation and to inspire Chinese travellers to pay the higher costs involved in travelling to the region. While a physical presence from tourism boards and industry players is a necessary requirement, it is also necessary to work with Chinese partners involved in the industry (including hotels, airlines and travel agencies), not only to reach travellers, but to understand travel trends. With growing internet and mobile penetration rates, digital marketing and social networks are important means of reaching Chinese travellers.
And, once Chinese travellers have arrived in Europe, it is important to execute their trip well. Mandarin-speaking staff and increased Chinese language signage go a long way in making Chinese travellers feel welcome, as will cultural touches, such as those offered by the Hilton Huaying programme.