ADVERTISING MONEY CAN BUY!

China Traveller – January 2012

 

Destination Placement in Chinese Movies


The marketing strategy of consumer product placement in film and TV is everything but new and well documented. The most explicit example being Cast Away starring Tom Hanks that was little more than a product placement ad for Wilson, FedEx and Jeep. The placement of destination brands (destination placement) however has without doubt shifted from the subtle to in your face obvious over the past five years. For good reason to as the Mecca for movies, Hollywood, must be without doubt the greatest and most sustained promotional campaign the US could ever hope for in terms of tourism appeal.

 

On the international stage the evidence of increased tourism arrivals to a country following successful box office sales of a movie filmed on their soil is well documented. Lord of the Rings is a classic example of a destination, New Zealand, which reaped the tourism rewards of an internationally popular film. Mindful of the Kiwi’s success, neighbouring Australia, through the Australia Tourism Commission, spent in the region of AUD$40 million to promote the country branding flick Australia staring Nicole Kidman and Hugh Jackman. Pity the movie was such a disappointment. Perhaps an unintentional Australia branding film, The Boys are Back staring Clive Owen, was more effective in portraying the land of Oz as a great holiday destination despite the serious plot. Other examples of films that have generated strong destination branding include Woody Allen’s Vicky Christina Barcelona and Eat Pray Love starring Julia Roberts in a spiritual quest taking her role to Italy, India and Indonesia. The cartoon Madagascar was punted as the movie to improve tourist arrivals to their exotic destination (“daddy, daddy, I want to go to Madagascar to see lions”) but regrettably the financial crisis stopped such hopes dead in their tracks.

 

The exceptionally large cinema viewing audience in China has driven western film producers of late to produce China characteristic, or at the very least China friendly, films. Examples include Kungfu Panda, 2012 and Transformers. Higher international box office sales means more profit for film makers, and with one quarter of the world’s population, currying favour with the Chinese cinema audience is good for business.

 

Enter the country branding industry. With countries being viewed and compared as brands in the same light as traditional consumer products, country branding in China is taking on a whole new significance. With China on the rise to produce 100 million outbound travellers by 2020 it is hardly surprising that a number of destinations have lobbied Chinese film makers to shoot on their lands, but with varying results to date.

 

The Chinese produced film If You Are the One staring Ge You and Shu Qi made Hokkaido, Japan’s second largest island, an instant hit amongst China’s tourists. According to reports the movie was filmed without financial or any other overt support from the Hokkaido tourism department but resulted in significant branding of the destination in China supported by subway billboards city wide depicting the picturesque island to promote the film. Local tour operators subsequently launched If You Are the One tour packages resulting in Chinese outbound travel to the island climbing by 175% between 2007 and 2008 from 26,950 to 47,400 respectively. Air China and Costa Cruises also got in on the action with brand footage in the movie. If You Are the One 2 subsequently featured local Beijing sites including the Great Wall’s Mutianyu, Tanzhe Temple and the artist 798 district. Deputy Director Gu Xiaoyuan of the Beijing Tourism Administration highlighted the fact that their cooperation with the film was an experiment in their marketing strategy. Travel companies like C-trip also cashed in on the movie’s popularity by launching themed tourism products that fans could follow.

 

National tourism bureaus have proven their willingness to provide significant support to film producers with the objective of securing superior coverage of their product in the Chinese market thus far. The Tourism Authority of Thailand for example provided the producers of Go! Lala, Go! starring Xu Jinglei and Huang Lixing, with logistical, food & beverage and accommodation support to shoot on-site at their beach destination of Pattaya. It is estimated that their destination placement cost Thailand less than a million Renminbi. The French region of Bordeaux also benefitted from their destination placement in the Chinese film Eternal Moment starring, again, Xu Jinglei and Li Yapeng. Director and actress Xu Jinglei is without doubt one of the pioneers in the destination placement business also having completed projects in South Africa and serving as Sri Lanka’s Tourism Ambassador.  Her more recent movie, Dear Enemy also included Hong Kong, the UK, Australia and South Africa. It is understood that their tourism promotion bureaus were approached for support but it is unclear how much was received in the end.

 

As for the results of these destination placement efforts, If You Are the One was viewed by nine million Chinese cinema goers and as previously stated resulted in Hokkaido arrivals increase of 175% year-on-year. If You Are the One 2 was viewed by almost 13 million people and was ranked third in China’s top ten box office in 2010. Go! Lala, Go! was viewed by almost four million people while Eternal Moment was viewed by nearly six million viewers at cinema’s in China.

 

While the industry remains in its pioneering stage it is true that some destinations have already benefited from placement in Chinese films. But no country destination to date has reaped the full potential of hosting a Chinese box office winner than has dramatically improved Chinese tourist arrivals to their land like Lord of the Rings did on an international stage for New Zealand tourism. Who will be first?

January 18th, 2012 | Michael Jones | Tags: , , , , , , , , , , , , , , | No Comments »

THE YEAR OF QUALITY TRAVEL?

China Traveller – January 2012

Tour Operator Quality Standards Must Improve In-line With Growing Consumer Expectations


Since China first opened up its outbound tourism market almost three decades ago by awarding Approved Destination Status (ADS) to Hong Kong and Macau in 1983, it seems customers have been complaining about the less enjoyable aspects of group package tours such as “forced shopping”.  With rapidly rising consumer rights in line with rapidly rising disposable incomes on the Mainland, this all came to a head in 2010 when an elderly Mainland gentleman died from a heart attack while on a forced shopping trip in Hong Kong. The Mainland tourism authorities took note.

 

As the only westerner employee in a Beijing company office I had the opportunity to experience a local group tour to Thailand in 2003 first hand, as part of the company’s year end incentive trip.  Having already travelled through Thailand previous on my own I was very much taken aback by the tour’s itinerary, which included numerous random sites of little interest, and other less pleasant aspects such as forced shopping and sex related entertainment to get more money from customers outside of the official itinerary. I also found the tour guides to be unprofessional who spoke about very little other than nonsense.  I have seen exactly the same problems in tour packages of other country destinations that I am familiar with, the inclusion of sites on the itinerary that pale in comparison to others, and a daunting minute by minute schedule that could not possibly allow for a moment of peace and enjoyment.

 

To be fair, it would be disingenuous for most of the group package customers to complain about poor quality products when the price of those packages are taken into account. When one pays just slightly more than the average return flight ticket price for a one week trip to a particular destination, logic dictates that it is too good to be true. Allow me to use my country as an illustration. The average return flight ticket to South Africa is RMB8,000 with Emirates, yet the majority of the one week group packages to South Africa are priced from RMB8,500 – RMB12,000. This form of pricing in the industry is correctly termed as gambling, as the tour operators make close to zero profit on the actual sale of the group package, but rely on commissions from additional spending on items like diamonds and casino gambling (or worse) to make a profit. If the customers buy diamonds they make a profit, if they don’t, the tour operator company makes a loss for the trip. To keep costs down, the tour operator includes random sites that cost little to reach, economical hotels often far away from the CBD or any area with some form of activities, and cheap Chinese meals, begging the question, what’s the point of going at all?

 

Nevertheless, inline with rising consumer rights the China National Tourism Administration (CNTA) launched a pilot project in May 2011 granting for the first time outbound travel business licenses to foreign invested global tour operators with an eye to raising the industry’s standards. The three companies included JTB, AmericanExpress & Europe’s TUI China. TUI China CEO Marcel Schneider is already on public record as saying that their company will not compete on price, previously he was quoted as saying: “I believe that healthy competition will bring benefit to everyone, both companies and consumers alike…a competitive price is attractive, but we don’t want to provide the cheapest product with a low price to the consumer. I believe quality if far more important than quantity. With the higher expectation of travel experience, more and more consumers will chose higher-end in-depth tours in the future.”

 

Considering the Mainland preference for “lively” over quiet, and the fear of travelling unaided due to language and cultural barriers, it is almost impossible to envisage the future death of group travel in favour of the rapidly growing FIT market. But that should not allow for complacency. While the handful of foreign invested tour operators currently have a golden opportunity to show leadership and raise industry standards, they will not be alone as can been seen in the evidence of an almost explosion of local higher-end niche tour operators and travel clubs emerging recently. Clearly a market for high quality and innovative group travel products already exists, so not only has the Mainland tourism authorities taken note, so have Mainland consumers.

 

Local tour operators that adhere to this growing trend will reap the reward of growing market share at the expense of their less innovative competitors, but country destinations remain vulnerable as well as it is their brand that is tarnished along with poor quality tour operator’s. While many country tourism promotion bureaus already promote recommended itineraries and service standards to tour operators within the ADS system, more creative methods will have to be employed to ensure they actually do adopt the recommended itinerary and service standards to protect their brand.

January 18th, 2012 | Michael Jones | Tags: , , , , , , , , , | No Comments »

Why country branding is no longer a luxury

putin1China Traveller

November 2009

 

When I was still at university the buzz at the time was all focused on Samuel P. Huntington’s controversial book The Clash of Civilizations and the Remaking of World Order which created a bit of a stir as few could have anticipated the 911 attacks and the United State’s (supported by Britain) excessive response to not only invade Afghanistan but Saddam Hussein’s Iraq as well, creating the impression that the Christians were on a crusade against the Muslims again, with inevitable hatred generating consequences. Another emerging theory at the time, although less exciting, was that future conflicts would be caused by natural resources, and in particular, water shortages resulting in bad science fiction type movie ‘water wars’.

 

Little did we know as students at the time that in the not so distant future we would personally witness the emergence of a combination of cut throat competition for natural resources and growing nationalist assertiveness with the potential to result in open conflict. Diminishing natural resources around the globe coupled with the economic skyrocketing of the world’s most populous nations (China and India) with an insatiable appetite for the finite supply of resources has already resulted in levels of economic warfare. Renewable resources are the talk of the day but with Eastern and Western nations alike staking their claim in South America and Africa’s resource reserves they are clearly doing more than hedging their bets. The battle lines for other resources have also been drawn including access to finance and a return to human trading, the poaching of the best and the brightest minds to supplement aging societies. Competition for limited resources of all types has dramatically increased over the past two decades creating the perception of a ‘winner takes all’ eventual outcome. Is your country brand perceived to be a winner?

 

Countries today face far stiffer competition when it comes to economic activities such as trade, investment, tourism and recruitment. But although they remain strictly economic prerogatives they are nevertheless unduly influenced by politics, by the nation’s people, a reality that is only expected to strengthen with increased nationalism triggered in turn by the cycle of increased economic competition. Political leaders, and even business leaders to a large degree, seldom take purely economic fundamentals into consideration, we are after all social orientated humans and not efficiency optimizing robots, and as such country branding, the perception of one’s sovereign state, has never been more crucial for survival or success.

 

The recent emergence of sovereign wealth funds (SWF’s) is evidence of the escalation of economic warfare between sovereign nations. While SWF’s are state-owned investment funds normally established by governments with budgetary surpluses, and composed of financial assets with the objective of maximizing long-term return, they have raised national security concerns. Some fear that SWF’s can be utilized to secure strategically important industries for political rather than financial gain resulting in legislation in some countries already requiring prior government approval for significant foreign acquisitions in strategically important companies.

 

Despite China’s progress in the overall rankings of the recently released Country Brand Index, it is clear that the country brand of China is not a particularly trusted one. This has serious implications for its outward economic objectives as seen when the US previously blocked China’s CNOOC from acquiring Unocal. China’s SWF, China Investment Corporation (CIC) has allocated approximately US$66 billion of its total US$200 billion fund for foreign acquisitions while it’s China – Africa Development Fund, with a gradual budget of US$5 billion, will focus mainly on Africa’s natural resources. The non-adherence to local regulations resulting in dangerous and improper working conditions have already resulted in numerous outbreaks of protest by African workers at Chinese managed operations in Africa. It is thus entirely possible for an African government, or its workers, to resist or outright reject Chinese business initiatives based on protest reports emanating from a perception of irregular economic management. Sticking to this example, China would be well advised to clear the ground for their Africa investments through proactive public relations that target the people, as lucrative government to government relations only account for one aspect, governments do after all, change. The same is valid for China’s image in other regions. This is not to say that Africa would necessarily welcome other ‘Africa resources rush’ countries such as America, Britain, France, India and Russia with open arms. Often to the contrary, the West’s historical role in the colonization of Africa and suspicion of renewed paternalist attitudes disguised as human rights has encouraged many an African government to welcome China’s ‘no strings attached’ trade and development.   

 

It has been claimed from different sources that if the entire world’s population consumed as much as America citizens we would require anything from three to four and a half world’s of resources. The per capita GDP rise in previously underdeveloped regions such as South America, Africa and Asia has resulted in an accompanying rise in consumption that environmentalists believe to be unsustainable. Until the world’s leaders and people come to their senses the ability to secure these dwindling resources, facilitated by increased globalisation, will largely depend on the country’s ability to project the perception of being a trusted, valued, even privileged partner.

 

Russia is a textbook example of a brand basket case country that is in dire need of a branding make-over. From its ill considered KGB era speeches that fail to frighten its intended audience, to the corporate raiding in the TNK-BP affair and neo-Nazi attacks on Africans and Asians coupled with police harassment/corruption targeting tourists in Moscow, the country has little going for its brand. And what a pity considering its inability to retain the excellent individuals it produces who excel on the international stage in a country of such vast and untapped nature that could, with a little effort, become one of the world’s top tourist destinations. But while Russia is struggling to survive the global sigh of relief to see George W. Bush vacate the White House accompanied by Obama’s welcomed election to the position of President and, more importantly, Commander-in-Chief, saw the United States successfully claim the first position in 2009’s Country Brand Index, up from 3rd place in 2008. As the world’s largest economy with a history of enshrined property protection, few would doubt America’s trade and investment structure, but it will take more confidence building measures to convince potential travelers that they are welcome in the US again after the multitudes of horror stories emanating from their short sighted airport customs & immigration officials conducting security theatre.

 

Holistic country branding for developing countries will be especially vital to their success as sovereign states as, unlike their brand strong counterparts in North America and Western Europe, who on closer/personal inspection might turn out to be disappointingly inefficient, narrow minded and downright boring, they continue to suffer from negative perceptions and stereotypes as old as the hills. Not every country can excel at every possible economic activity and the onus lies on (especially developing countries) government’s to identify their true niche economic areas of expertise and convey those messages in a sophisticated and sustainable manner to the outside world. The 2009 Country Brand Index has highlighted the yearning for authentic tourist destinations amongst potential travelers as a future trend so countries without competitive modern industries but who are nevertheless endowed with natural beauty and an authentic culture should be at the forefront of branding their tourist offerings.

 

Country branding sub-categories such as trade & investment, tourism and recruitment cannot act in isolation any longer however and must be stringed together under an umbrella country branding strategy. No matter how sensational a beach might appear, or no matter how enticing a business deal might seem, individuals are not going to be triggered into action if they perceive a country to be inhumane, dishonest, dangerous or any one of numerous negative attributes. Many years later the jury is still out on Samuel P. Huntington’s ‘Clash of Civilizations‘ theory, but the verdict is in on countries that are persistently perceived in a light inferior to the reality, their country brand custodians should take note.

 

November 27th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , | No Comments »

Calm Before the Storm

Calm before the stormChina Traveller

August 2009

 

While health officials continue to caution that H1N1 swine flu remains a serious risk to all nations one would be forgiven for thinking otherwise considering the lax attitude adopted by seemingly all travellers today. The shock of worst case scenario swine flu projections no doubt caused initial self restricting measures but there currently seems to be little dampening effect on regional and international travel due to any health concern.

 

Attitudes towards virus outbreaks seem to have softened a degree since SARS all but obliterated travel in Hong Kong and on the Mainland in 2003. Those who lived in Beijing during the height of 100 people getting infected with SARS per day back then will remember the damaging effects of bringing great swathes of the economy to a grinding halt, especially the travel and leisure industry.

 

Generally speaking, China’s consumers can be described as anything but risk prone adventurers. The government’s stringent measures to prevent an H1N1 epidemic, the multiple temperature measurements before getting out of the airport for all passengers and the strict quarantine of potentially affected passengers spoke volumes of China’s health official’s learning curve since SARS. Furthermore, a number of Chinese tour operators were quick to cancel trips to North America immediately upon the H1N1 outbreak in Mexico reinforcing the nations cautious attitude. China’s outbound tourism industry is still dominated by ADS styled group travel, which by definition is a risk managed form of travel. The consequences of group travel market domination are that cancellations due to perceived risk will be total as opposed to independent travellers who might still weigh up the pro’s (including elements articulated by the destination’s crisis communications team) and con’s individually. This further compounds a potential damaging period for affected destinations.      

 

A number of leading health authorities have started to voice their concern that amid global warming, virus outbreaks similar to SARS and H1N1 will become more routine. While initial outbreaks will result in initial short-term panic, human nature dictates that over time consumers will start to become accustomed to such outbreaks and view such disruptions as unavoidable, yet temporary, inconveniences rather than life threatening pandemics. Assuming that this risk adverse nation, China, can acclimatise to such risks is a very liberal assumption however (especially with the tour operators making the decision), and it will nevertheless result in temporary, yet significant, spikes in travel, creating havoc for the industry.

 

Political instability also serves as an equally strong risk to tourism, of which Thailand must be the textbook example of a great travel destination plagued by divisions that have negatively impacted on tourist arrival numbers. Chinese arrivals to Thailand experienced a significant drop of 38% for the first quarter of 2009 following the protest enforced closure of Bangkok’s main airport last year while the ASEAN summit protests which prevented the free movement of world leaders including President Hu Jintao was sufficient evidence that Thailand remained a destination of choice only if you didn’t mind risk being holed up in an airport or hotel for a few extra days. Since then the Thai authorities have been slowly reclaiming ground through aggressive campaigns and the relaxing of visa restrictions that are already paying dividends. To be sure, Thai authorities are not promising an end to the disruptions, but their strategy of attacking the wallet and ease of use will perhaps shorten consumer’s memories when picking a holiday. 

 

A particular risk when targeting China is furthermore that of bilateral relations political risk. The collective urge to travel to Paris has lost its sparkle somewhat since Parisian demonstrators took it upon themselves to disrupt the Beijing Olympics torch relay through their capital. Even most recently, following Turkey’s Prime Minister’s declaration that the upheavals in Xinjiang could not be described as anything other than a ‘kind of genocide’, the Chinese official diplomatic notes of protest filtered rapidly through to its citizens that under no circumstances was Turkey to be promoted or engaged with inside China so long as bilateral tensions remained in place.

 

The combination of the perception of lack of development and outright personal danger has stifled Chinese outbound travel to numerous regions including the Middle East, Africa and South America. Mexico serves as a good example here where despite its renowned beautiful surroundings the destination is generally avoided by Chinese tourists out of fears for person safety from criminal elements whilst their North American and European counterparts take it more in their stride. While the reporting of a murder in Mexico does make the average Western tourist think twice about a Christmas getaway, the publicised news of a Chinese person being singled out in a criminal act serves as a progressively powerful deterrent.

 

Nothing tests a destination’s crisis communications system more than a wholly unexpected and immediate disaster however. Although the crisis can take on a number of forms, if the cause was man made and the consequence of extreme negligence or latent discrimination (i.e. avoidable) destinations with the appropriate systems in place will without doubt fare better than the unprepared.   

 

Crisis’ of all shapes and sizes catch those in responsible positions either by complete surprise or the magnitude of the crisis is the surprising factor. Either way they will not disappear as a threatening source to the reputation of destination’s we have been tasked to protect, the ‘calm’ we are enjoying right now would be a good time to prepare for the next storm to strike.

August 18th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , , , , , , | No Comments »

Über Luxury Cornering the China Market

China Traveller

July 2009

 

As China continues to contribute to the enlargement of the world’s high disposable income pool, five star accommodation is becoming par for the course amongst China’s burgeoning elite. Revitalized by this new market that is currently growing in stark contrast to the rest of the world, owners and managers of ‘luxury’ five star hotels and resorts are sparing no effort to attract the generals of opulence.

 

While even group package Chinese tourists have already proven their passion for purchasing luxury products when abroad it is the upper most section of the ladder that the decadent brands are pursuing. For those who have both a before and current view of China’s urban life the targeting of China as a new luxury market will come as no surprise. Previously dominated by RMB1.2 Xiali taxi’s (with exception of the government driven black Audi’s); RMB10 per dish meals; RMB6,000 per/m2 apartments and clothing & accessories not even attempting to replicate international fashion trends, urban China today is virtually another world with stretch limo Hummer’s (not to mention the previously unheard of Sichuan province based company that just bought Hummer!); fantasy restaurant bills under RMB200; RMB30,000 per/m2 apartments and Gucci/ Prada outlets seemingly everywhere. In fact, similar to other newly wealthy countries, China’s growing adjustment to wealth has gone from the sublime to the ridiculous resulting in a situation where it is now almost impossible to order a bottle of champagne in a club without the accompanying sparklers and fanfare screaming ‘look at me, look at me’. Even my favourite burger joint now has a promotion offering Moët & Chandon, seriously…, champagne with a burger?         

 

Make no mistake, China’s new economic elite have serious money and they are happy to depart with a significant amount of it so long as the exercise heightens their social standing, music to the ears of luxury brand marketer’s intent on finding their emotional pressure points. But the challenge of targeting China’s economic elite is everything but child’s play, not only is the market unique due its relative youth but is further compounded by China’s cultural uniqueness long shut off from the rest of the world, which begs the question, how does an international marketer successfully attract the attention of individuals from a historically inward looking society?

 

Those in the best position to target China’s wealthy will not only have a reputed international brand but will also have dedicated operations on the Mainland itself targeting the source of the market. The aggressive entry of the world’s top luxury hotel brands is further depressing an already saturated market for the time being but the backroom planners are well aware that the pure numbers game that only China can produce will save the day in the near to medium future, and result in an enviable brand loyalty along the way essential in attracting a nation that is starting to look outwards.

 

Luxury hotel and resort groups without a China presence will find it more difficult in attracting sustainable Chinese numbers but do have the benefit of utilizing platforms such as the recently held Asia Luxury Travel Mart in Shanghai in addition to other traditional marketing tools. Such establishments might find it challenging to retain the loyalty of Chinese travellers however due to their lack of on-the-ground experience of satisfying particular Chinese clientele requirements, ranging from basic communication, hospitality offerings to cuisine.

 

Contrary to previous fears of Chinese group tour stowaway’s and the accompanied discriminatory visa procedures a number of informed destinations, led by Japan, are changing tack to target this lucrative Chinese luxury market by making provision for FIT visa procedures ensuring that those that have the means no longer have to be accompanied by tour guides and bank embarrassing deposits as a return guarantee. By cooperating with inventive partners such as VISA, who already have all required information of the potential traveller readily available, this trend is set to snowball.               

 

So just how does a luxury brand marketer target China’s economic elite? If looking for a silver bullet you will surely be disappointed as the answer is: ‘by getting back to basics’. Throughout the various interviews conducted on behalf of the China Traveller since its inception I have rarely heard the word ‘research’ mentioned. Dissimilar to the heyday of ADS promotions, the shotgun targeting approach is no longer relevant if brands expect to see a return on investment. Market segmentation, the most basic of marketing concepts in any MBA course or ‘10-Day MBA’ book for that matter, will also have to dig far deeper than the current ‘white collar target audience’ declaration and shed light on the varying preferences held by wealthy consumers based in different geographic locations, different age groups, different gender, different industries, different language abilities and different behavioural segmentation etc.               

 

Every luxury brand on earth will soon be gunning for the Chinese Yuan and if my Google alerts are anything to go by a new luxury hotel or resort seems to be launching every day somewhere on earth, ensuring that the international luxury market will remain a buyers market for the foreseeable future. Unlike the luxury market obligation, Chinese market share will not be served on a silver platter.

July 7th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , | No Comments »

Pursuing Green for Green

Naked Retreats eco-resort in Moganshan, Zhejiang province

Naked Retreats eco-resort in Moganshan, Zhejiang province

 

 

China Traveller

June 2009

 

With the steady maturing of China’s outbound tourism market a number of destination and hospitality brands are banking on the emergence of a growing segment of Chinese travellers now opting to partake in the niche ecotourism market to ensure their continued growth.

 

Despite China’s place as the world’s third largest economy and source of an enlarging pool of consumers with considerable disposable incomes, it is debateable what length of time will be required before a significant number of Chinese tourists start to chose eco-sensitive options, especially when considering the country’s delayed industrial revolution and accompanied level of development in comparison to its developed counterparts.

 

All who have visited China’s famed tourist sites can attest to the hundreds of packed buses offloading thousands of local tourists dashing for the restaurants, souvenir vendors and the obligatory photo opportunities creating everything but a tranquil experience. Even famed natural sites are inundated by these large crowds staying in eye-soaring concrete hotels heaving with activity completely devoid of any selling point other than ‘renao’ (lively). An over simplified presumption of current mass tourism (read: group) as it exists in China could not be further from conservation – it is all about consumption.

 

But evidence has started to emerge that a niche market of ‘back to nature tranquillity seekers’ is starting to emerge. From a personal observation, I never observed any Chinese travellers when trekking in the Thailand jungles five years ago. At that time, Chinese tourists were confined to group tour packages that would not go beyond itineraries packed with multiple sites, activities and shopping stops in a single day. A comparison of the same time with personal trips to neighbouring countries with incentive company outings consisting mainly of local staff members could not produce a more stark contrast. Back then there was an absence of eco-sensitive travel push-pull factors, the tourists themselves, who at that time had limited international travel experience, had little interest in anything other than a destination’s main attractions, while tour operators stood to lose out on the lucrative multiple-stop itineraries that have come to define group travel profitability.    

 

However, over the past two to three years I have observed a growing number of independent group travellers from China who seek a more relaxed and tranquil travel experience when abroad in South East Asia. These groups, usually four to six people consisting of families, couples or friends, are the trailblazers of China’s maturing market who either pick a relaxing spot (e.g. Koh Samui-Thailand) to spend the majority of their holiday, or who travel off the beaten track (e.g. North Luzon-Thailand) seeking the destination’s premier natural landmarks and landscapes. While these trailblazers might not share the same socio-economic status as they range from third-tier city teachers to first-tier city company executives, what unites them is the ability to conduct their own research and develop their own itineraries, the curiosity to dig deeper in alien cultures, the confidence to communicate in a foreign language (English), and the aspiration to travel freely and independently. While all forms of travel cannot avoid consumption, these trips have a far greater emphasis on emotional over material consumption and thus bode well for the emergence of eco-sensitive travel.

  

Before eco-sensitive destinations abroad can realistically expect to attract Chinese tourists it would be prudent to first take a look at the home market. To date China’s domestic tourism market has little to offer in terms of eco-friendly resorts for the simple reason that eco-friendly models are rarely supported and are often hindered by local stakeholders stress on quick profits in a booming economy. This challenge is compounded by the lack of a universally agreed upon definition of ecotourism, a banner that disappoints more often than not – containing only some flora with no supporting sustainable policies whatsoever. Despite high levels of development and environmental consciousness abroad, no international consensus on green tourism standards exists, so it is possible to infer that such standards will not be developed and abided by in China anytime soon.

 

In the absence of local ecotourism options a number of entrepreneurs have taken the initiative to fill the void and respond to a potentially lucrative domestic market. One such example is Naked Retreats which operates a boutique eco-resort in the pristine bamboo forest of Moganshan (Zhejiang province). Commenting on the growth of sustainable tourism in China, Naked Retreats Chairman Grant Horsfield says: ‘In many cases the term is misused by the tourism and hospitality industries which often use the term ’sustainable’ for their marketing purposes…a good example of how you notice the increase in this form of tourism in China is the rapid increase in outdoor environmental clubs, but once again, these clubs are not necessarily doing anything environmental. The most important element of eco-friendly and sustainable tourism is how the local communities are benefiting. This is still small in China.” He further added that there “was absolute evidence of growth in sustainable tourism in China but that it is still in its early stages because of the lack of real understanding of what eco-friendly and sustainable tourism actually means.”

 

 

Entrepreneurs have taken note of the gap in China, more established brands in the eco-sensitive realm such as Banyan Tree (See ‘Interview with Banyan Tree’s Claire Chiang’) can expect a two-fold result, near term profitability for local properties and medium to long-term brand loyalty development for properties abroad, operations of which are all guided by the company’s triple bottom line (economy, society and environment). Claire Chiang, senior vice president of Banyan Tree Holdings, has observed that: “today’s Chinese traveller is seeking rewarding travel experiences and cultural exploration, as opposed to previously when the interest was largely to accumulate as many travel destinations as possible”, and considering that the majority of Banyan Tree’s clientele at properties in China are of local origin and the fact that they enjoy a hospitality experience that abides by eco-sensitive practices, it has a net positive effect on nurturing this new market.   

 

While numerous country destinations are also set to profit from the emergence of this niche market and leading the charge is New Zealand with its 100% Pure New Zealand global campaign (See ‘Interview with Tourism New Zealand’s Asia regional manager, Mark Frood‘). Asked if he had observed any evidence of Chinese interest in sustainable tourism, Mark Frood stated: “Yes, Chinese are more and more interested, this is what we are about. Taking photos of glaciers, taking these natural wonder photos by themselves, it is a statement of freedom.”

 

Thus in anticipation of the maturing of the Chinese outbound market accompanied by a shift in emphasis of quality over quantity in the near to medium future, a number of destinations and hospitality brands have already adjusted their strategies to profit from the most lucrative potential of China’s future tourism: longer stays, higher spending, return customers in search of something more authentic as well as tranquillity and exclusivity.

 

The very nature of sustainable tourism implies exclusivity as an environmental protected and conservation area by definition cannot host hordes of tourists at one time due to the damaging effect on the environment. Accordingly, destinations that effectively implement sustainable tourism strategies will be the recipients of the most sought after economically blessed tourists.

June 8th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , , | No Comments »

Destination USA

Americantours International Chairman/ CEO Noel Hentschel with China’s ‘big five’ tour operators

Americantours International Chairman/ CEO Noel Hentschel with China’s ‘big five’ tour operators

 

 China Traveller

May 2009

 

Next month will be the one year anniversary of the United States receiving Approved Destination Status (ADS) from the China National Tourism Authority, an approval that allows for group tourist travel to the US. But for all the hype that has been following China for some time now, is this really a market that can live up to expectations?

 

It is no secret that the US remains one of the most attractive destinations on earth for aspiring Chinese travellers, for a number of reasons. Home to countless international icons made famous through Hollywood, there is genuine hype surrounding brand America in China. In addition to the tourist spots many local consumers simply wish to visit the US out of curiosity as the world’s most powerful nation, something not easily missed on the citizens of an aspiring super power.

 

A further advantage for brand America as a tourist destination is its international economic and educational prowess. Most countries attracting Chinese tourists started off initially with ADS and since then have migrated to sharpen their FIT strategies in the current maturing of the market to attract non-group individual travellers. For the US the opposite holds true. The US has attracted significant numbers of Chinese travellers to date for various purposes but under business and/or student visas. Due to its experience in attracting these independent travellers, the US will have little difficulty in rolling out holistic promotional campaigns targeting both groups as well as independents.        

 

Official Chinese statistics indicate that 46 million of its citizens travelled abroad in 2008 (Hong Kong & Macau included in outbound category) whilst the United States received around half a million mainland travellers meaning that a mere 1% of China’s total outbound travellers arrived on US shores for the year. Impressive growth is clearly evident already however as the city of Los Angeles has seen a growth in Chinese arrivals of 20-30% since ADS as opposed to an average of 10% growth before. 

 

The past year has seen a flurry of activity on both sides of the Pacific to ensure that this untapped market receives its due attention. Tour operators have been leading the charge, the vehicle for unlocking the considerable market, evident recently at a press conference launch of the Trust Travel Alliance (TTA), an alliance comprising Americantours International, and the big five Chinese tour operators CITS, CTS, CYTS, China Comfort Travel and CITIC Travel in Beijing. TTA officially launched three tour packages at the press conference with departures to start within a matter of months.  

 

For all its potential however, the US remains a destination with too many attractions to choose from. While on the whole all US states and cities will benefit from the growth of Chinese tourist arrivals, the current market environment will punish complacency and reward the proactive. Case in point, the LA Convention & Visitor’s Bureau was the first city level US tourism office to be approved by CNTA and embarked on promotions in China from 2006. As can be seen in our interview with LA INC in this edition, the bureau is already reaping the rewards. According to a recent LA Times article the California Travel & Tourism Commission also recently established a presence in China’s 1st tier cities of Beijing, Shanghai and Guangzhou. Most of the state/city tourism bureaus are visible at the industry trade shows in China but standard China business practice dictates that a transitory presence is no presence at all. 

 

The recession in the US with the accompanied budget cuts does not help matters and understandably many tourism bureaus have their hands tied in promoting themselves in China. The current global economic downturn is cyclical however and there are a number of bureau’s preparing the ground for when the crisis lifts in order to take full advantage of a new bullish market. While promotions of any type are never free of cost, there are creative alternatives (co-branding, Web 2.0 etc.) to spending money in an efficient and effective manner (Heightened Competition with Dwindling Resources Requires a Strategic Shift) that would be more appropriate to bureaus operating on a shoestring.

 

Encouraging signs of significant growth in Chinese travel arrivals to the US are already evident. LA reported strong growth in the month of January while ADS teething problems seem to have been overcome with the launch of the Trust Travel Alliance and other similar initiatives. With Chinese consumers’ keen interest in travelling to the US coupled with the limited effects of the financial crisis on the local market, the only question which remains is how market share is going to be carved up between competing US states and cities.

May 26th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , , , | No Comments »

Heightened Competition With Dwindling Resources Requires a Strategic Shift

China Traveller

April 2009

 

As the global financial crisis deepens in North America and Europe with no end in sight, it is expected that some of the more prudent tourism destinations will be redoubling their promotional activities in markets with the ability to evade the worst of the downturn. The fact that marketing budgets have been decreased in light of the crisis however alludes to the catch 22 situation that many marketers find themselves in. China in particular matches this description with senior tourism officials confident of continued outbound travel growth throughout 2009, yet the strengthening of the Renminbi, coupled with crisis induced slashed budgets, over the past few years has equally resulted in decreased marketing budgets.

 

The unique environment within which we find ourselves has forced marketers in China to raise the bar on creativity, to achieve better results on the back of fewer resources. While few crisis driven tailor made campaigns are immediately recognisable, creative campaigns born out of intensified competitiveness are and should serve as lighthouses in a sea of new strategies.                

 

Celebrity Endorsement: Celebrity endorsement of destinations is becoming an important tool in the overall promotional kit. The increase in celebrity endorsement promotions in the local consumer industry is indicative that such tactics resonate with the Chinese audience. While a standard tactic in general consumer PR in China, with hindsight it is surprising that celebrity endorsements have not featured more in the promotion of destinations. A creative example includes Jamaica’s inclusion of China’s father of rock, Cui Jian, in a recent FAM tour. Furthermore, in 2008 the Canada Tourism Commission included ice skating celebrities Shen Xue and Zhao Hongbo in their promotions, a strategic step that will go a long way in the run-up to the 2010 Vancouver Winter Olympic Games. For her part, Chinese actress/director and at the time world number one blogger Xu Jinglei was invited to South Africa to view and report on the country’s highlights leveraging on her popular online platform. Upon her return Ms. Xu published an English language learning guide filled with pictures of herself set against a South African backdrop and locally relevant dialogues, the book quickly entered the top ten best sellers list in Shanghai.

 

Blockbuster Films & Music Video’s: Mindful of the positive influence the blockbuster hit Lord of the Rings had on New Zealand’s tourism, the Australia Tourism Commission spent in the region of AUD$40 million on the promotion of Australia staring Nicole Kidman and Hugh Jackman. While strategically sound in theory to splash out on such visible promotions, the strategy clearly went astray as the final product did not live up to expectations. From local viewers the author spoke to, it appears that Vicky Cristina Barcelona proved to have a stronger pull factor to Spain than Australia achieved, a frustrating point considering it was probably not one of Woody Allen’s objectives. A number of destinations have lobbied Chinese film makers to shoot on their soil, some with varying yet limited results, but it will be interesting to see which destination manages to host the production of a Chinese blockbuster hit that will have a direct impact on their Chinese travel arrivals. Chinese music video producers are on the same track, seeking new and exciting natural backdrops that will blow their audience away.    

 

Maximising Resources Online: Few would disagree that the Queensland Tourism Authority’s ‘Best Job in the World’ campaign was other than utter genius. With almost 35,000 applicants around the world promoting their video’s amongst their friends resulting in enormous online and off-line buzz, it is difficult to think of a more creative campaign. The campaign has clearly resonated with the Chinese audience with Clare Wang wining the wild card vote with three times the votes of her closest competitor. Destinations would do well to take a feather out of Queensland’s hat and tailor make similar campaigns for the China audience.

 

There are also a number of online consumer PR tactics that have yet to migrate to travel & tourism PR agencies in China. Social networking platforms such as Chinese versions of Facebook employed to promoted consumer products and services, viral games development, and the production and posting of online specific video’s have been developed to great effect in other industries thus far. Most destinations to date have also ignored what is being said about them on local bbs (Bulletin Board System) sites (the infamous Chinese Internet chat rooms) relying merely on traditional media monitoring. Monitoring and positively influencing bbs sites has proven to be both an economical and effective strategy for consumer products as it is difficult to find a more interactive platform in the virtual world we live in. Reacting at the eleventh hour to damaging bbs chatter in a time of crisis is simply no longer an option. 

 

Lastly, a mix of traditional and new tactics are also on the cards. A growing number of countries have already sent influential Mainland bloggers on FAM tours to their countries with great effect. Recently a single Chinese tourism beat blogger on invitation in South Africa posted numerous articles that received over a million hits amongst travel enthusiasts as well as hundreds of positive comments and requests for additional information. Such tactics strike at the heart of the target audience and permit for the necessary interactivity that is an effective builder of emotional bonds with your brand.

 

As the Chinese consumer market advances in maturity destinations and travel organisations will be required to embrace increasingly sophisticated strategies to maintain and/or increase competitive market share. Coupled with China’s unique economic strength the financial crisis has added impetus to the need to rethink strategies in China’s travel & tourism industry.

May 21st, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , , | No Comments »

Gainers and Losers of 2008’s China Outbound Travel

China Traveller

March 2009

 

With damaging storms, upheaval in Tibet, the Sichuan earthquake and the hosting of the Beijing Olympics, 2008 was expected to be an unassuming year for Chinese outbound travel. Initial figures collected from China’s exit ports however indicate that despite all the herculean challenges met, outbound growth remained surprisingly robust for most regions.

 

With the exception of troubled Thailand, South East Asian countries benefited significantly with overall high growth rates while Europe almost universally suffered under a cloud of downturn pessimism (complete table of figures on data page, pg. 7). Growth rates were also reversed in a number of African and Latin American countries, a serious issue of concern for developing countries reliant on foreign arrivals for job creation.

 

No surprise in that Hong Kong remains the most popular destination with over 17 million Mainland travellers visiting the Special Administrative Region in 2008, closely followed by Macau with over 15 million arrivals. Neighbouring Japan remains the global destination of choice for Chinese travellers receiving 1.55 million persons at a growth rate of 6.8% over 2007. Vietnam was the second largest recipient of Chinese visitors with 1.45 million at a whopping 58% growth over 2007. It is interesting to note the disparity in figures between China and Vietnam as destination itself only recorded 650,000 visitors. The disparity can been explained due to Vietnam sharing a border with China, a consequence of which Chinese figures include local border day trips, with the Chinese persons returning on the same day, whilst Vietnamese figures only include over night stay.   

 

The order of remaining neighbouring countries with the highest Chinese arrivals include: Korea in third place (1.34 million); Singapore surpasses Thailand for fourth place with 713,000 arrivals; Thailand (624,000); Malaysia (623,000); Taiwan replaces Indonesia for seventh place (279,000); Indonesia received 248,000 arrivals on the back of impressive 46% growth over 2007 while the Philippines came in last with 163,000 arrivals on negligible 1.7% growth.

 

Travellers to Australia continued to grow at 3.7% resulting in 413,000 arrivals. Australian tourism figures also reflect lower numbers than China’s (356,400) which is partially explained by China’s numbers including all types of travellers (business, students, relative visits etc.) as opposed to pure tourism figures. New Zealand received 73,000 visitors at a growth of 7.7% over 2007. The United States, taking advantage of its fairly recent ADS (Approved Destination Status) status surged ahead with 775,000 arrivals, 8.5% growth on 2007 figures, while Canada almost reported zero growth resulting in 230,000 visitors.

 

With the exception of Russia (790,000 visitors at 7.2% growth over 2007) Europe performed poorly with Germany recording 253,000 visitors, a decline of 6.9%. The UK received 234,000 visitors (decline of 1.4% over 2007) while arrivals to France declined by 5.9% over 2007 resulting in 202,000 arrivals. The blanket drop in European arrivals has a number of influencing factors. Firstly, the number of natural calamities to hit China in 2008, along with the hosting of the Beijing Olympics, was always going to have the greatest impact on long haul destinations, and with Europe being the greatest recipient of Chinese outbound travel for so many years it was natural that for them to feel the greatest pinch. Canada, another long haul destination, as previously mentioned also reported near zero growth but the United States avoided the same fate due to its stronger business and student exchange relations with China as well as its newly acquired ADS status. Fearing illegal immigration, Europe also raised the bar on visa requirements for Chinese travellers that clearly had a direct relationship on the drop in tourist numbers. Lastly, the now infamous Olympic torch relay spectacle that occurred in Paris, protests in the UK compounded by the German Chancellor meeting with the Dalai Lama in the wake of unrest in Tibet galvanised potential Chinese tourists into an anti-Europe group.   

 

Brazil also received less visitors than in 2007 with a decline of 1.2% resulting in 23,000 visitors but the country to suffer the steepest decline in arrivals according to available information is 2010 FIFA World Cup host South Africa attracting a mere 34,000 Chinese visitors, a decline of 13.5%. In the Middle East the UAE registered robust growth of 19.8% totalling 118,000 visitors.   

 

Comparing the available Chinese figures with the actual destination arrival figures however, it becomes clear yet again the discrepancies that exist due to a number of reasons including the infamous Hong Kong/Macau factor as well as the fact that many Chinese travellers concurrently visit multiple destinations, the second and third stop, or more, of which are not reported at exit ports. Taiwan reported an additional 50,000 arrivals, while Singapore registered over 300,000 more Chinese visitors. Thailand reported an additional 150,000 plus visitors while Turkey and New Zealand reported an impressive 35,000 (more than double the Chinese figures) and 37,000 additional arrivals respectively. As allured to above, Hong Kong in particular and Macau account for much of these discrepancies serving as a hub for transferring flights.

May 19th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , | No Comments »

The Global Financial Crisis’ Impact on China’s Outbound Travel Market

Sightings of sightseers in 2009?

Sightings of sightseers in 2009?

 

China Traveller

January, 2009  

 

Few if any commentators would have been able to correctly predict last year that 2008 would herald a bailout of the US financial system, in the form of the US$700 billion ‘Emergency Economic Stabilization Act of 2008′. The collapse of notable financial institutions and free-falling stock markets across the globe gave impetus to the seriousness of the crisis, many commentators comparing the situation to the Great Depression of 1929 iconized by mile long unemployment lines.

 

The People’s Republic of China for its part followed suit by announcing a US$586 billion stimulus package, focussing unsurprisingly on infrastructure (railways, subways, airports and communities devastated by the Sichuan earthquake) and exports, in November that won the Middle Kingdom plaudits around the world. Initially, numerous commentators looked to China to save the world from the global financial crisis but as time has passed scepticism of China’s ability to serve as the world’s economic lifeguard have grown.

 

The global financial crisis is already making its mark on the global travel industry, with hotel groups in Europe already registering single digit occupancy rate drops for the months of September and October compared with 2007. International business centres such as New York, London, Paris, Los Angeles, Hong Kong, Madrid and Sydney are also said to be experiencing declines in hotel occupancy levels. Despite 50% of respondents stating they were interested in travelling to China in an international poll conducted during the Beijing Olympic Games, flavour of the month China is only expecting 1.5% growth in inbound tourism hovering at 2007 levels of 132 million visitors.  

 

But what is the likely effect the global financial crisis will have on China and its outbound travel market? For a start, caution to such a far reaching question is that there is little consensus on how China will be affected by the crisis. Many commentators are predicting China’s GDP to slow to around 7% in 2009, a far cry from earlier predictions of 9%+. But some economists have already started to consider a GDP growth rate of as ‘low’ as 5% to be more realistic. The sceptical international media reporting coming out of China with accounts of factory closures in the heart of China’s export driven provinces are painting a bleak outlook. A recent Newsweek article, ‘Why Beijing Is in a Risky Place’, made clear comparisons between the US’s economic structure before the Great Depression and found strong similarities with present day China. The argument, that China with its investment and export driven economy will find it challenging to grow its economy in a time of an unparalleled global credit squeeze, has merit and furthermore points out scepticism of China’s ability to re-focus and rely on its internal consumer spending as an alternative vehicle for growth. Some worrying signs are already evident, the universal indicator of falling consumer spending, car sales in China for 2008 experienced less growth than in 2007.

 

According to Shao Qiwei, CNTA chief, China’s outbound travel grew by 12% in 2008 resulting in 46 million tourists going abroad. This was despite an expected lull in travel influenced by unrest in Tibet (which temporarily froze government delegation trips abroad), the Sichuan earthquake and the Beijing Olympics. It is naturally debateable how many of the 46 million actually travelled beyond Hong Kong and Macau (which is included in China outbound figures) as a number of visa officers the author spoke to confirmed a decrease in visa applications compared with 2007. The CNTA chief further forecasted that China outbound travel would record a more modest grow of 9% in 2009, if correct, the lowest growth rate since 2006.    

 

Currently, no clear effect of the global financial crisis on China’s outbound travel seems to be evident as numerous travel agencies have reported strong pre-Spring Festival sales. The strong sales have been attributed to both real and imagined price drops with consumers bargain hunting. While the Chinese economy has proven to be resilient in the past it is hard to imagine that it can seamlessly weather the global financial storm however. It is likely that as the full effects of the crisis begins to unfold on the Mainland its potential outbound travellers will either stabilise at current levels (first time outbound travellers counterbalancing traditional travellers feeling the pinch), decrease, or at the very least become less audacious and opt for shorter lengths of stay at short to mid-distance destinations. While this is reassuring news for neighbouring Asian countries it does not bode well for more ‘adventurist’ destinations in the Pacific, Middle East, Eastern Europe, Latin America and Africa.

 

As countries in these long-haul and less understood regions will already be experiencing decreased arrivals from their traditional North American and European sources, they would be well advised to throw their textbook marketing strategies out, take the gloves off and aggressively protect and promote their brand in the fickle China outbound market. Competition for China’s outbound market share will experience heightened ferocity levels in 2009, but there is little alternative considering the flat-lined North American and European markets, while failure to engage China intelligently may well result in numerous tourism executives and officials joining those dreaded unemployment lines.

May 15th, 2009 | Michael Jones | Tags: , , , , | No Comments »