Lucrative Opportunities Are Emerging in China's Travel Sector

The Boston Consulting Group’s latest report on China, Taking Off: Travel and Tourism in China and Beyond, documents the growth of China’s travel market and its unique characteristics. By 2020, the volume of China’s outbound trips will approach that of the U.S, and its domestic market will be worth RMB 3.9 trillion (approximately $590 billion).

 

A quarter of all international travelers arriving in Japan and South Korea will come from China, while arrivals from China in Europe will quadruple. In North America, Chinese travelers will rank third among international arrivals. On average, there will be 25 million first-time Chinese travelers every year (or 70,000 every day) for the next ten years.

 

Yet only a handful of companies understand or are responding to the specific needs of these travelers, who tend to be younger than travelers in the West, less experienced, and more likely to take longer trips with large groups of friends, writes Hong-Kong based BCG partner Vincent Lui, a co-author of the report.

 

Survey respondents reported dissatisfaction on both the domestic and international fronts. When asked to rate the hotel they stayed at on their last domestic vacation, for example, Chinese travelers found basic accommodations lacking, with multinational-brand premium hotels scoring lowest.

 

Affluent travelers abroad complain that few hotels offer special services for Chinese, and premium-priced travel packages lack differentiation and interest. Online travel planning, although growing in popularity, is judged to be unnecessarily complex.

 

However, a few exceptional companies are responding to some of these needs, and they are winning share, notes BCG senior partner Hubert Hsu, another co-author of the report. Caissa, a Beijing-based travel agency, and Costa Cruises, an international cruise company, have successfully tailored their offerings to specific income segments.

 

Club Med is also gaining brand loyalty in China by nurturing customer relationships while Ctrip, a leading travel website, is offering sorely needed hassle-free travel planning. For its part, Shanghai Spring Tour is specialising in travelers from smaller cities.

 

China’s speedy ascension in the world’s travel and tourism sector, from sixth place in 2008 to second place in 2020, shouldn’t be ignored. Because the travel and tourism market in China is still in a relatively early stage of development, it offers some of the best opportunities among all Chinese consumer sectors, says BCG.

 

 

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