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 »

Interview with Magic Cities Germany

Magic Cities GermanyChina Traveller

October 2009

 

Q: How would you define the Chinese traveler?

A: It is difficult to define as it is changing in China all the time. Ten years ago most of the Chinese outbound travelers were first time travelers, they would usually travel for two weeks and see 10 counties in one stint. More recently it has changed in that many tourists travel to one destination only. These FIT travelers spend more money, they understand the world of travel and as such do not have unrealistic expectations or demands. Today’s Chinese traveling consumer conducts research before their trip, mostly on the Internet and prefer Chinese language portals. They also trust the comments made in the local online chat rooms.

 

Q: Which trends do you foresee increasing in popularity?

A: Smaller groups traveling for a longer duration is becoming more popular, especially amongst those from Beijing and Shanghai. It also seems Guangzhou travelers understand more about outbound travel than their fellow countrymen due to their proximity to, and influence under, Hong Kong travel agencies. A small minority even prefer to travel with Hong Kong groups.

 

Q: Most recent figures for outbound Chinese travel to Germany?

A: From January to June 2009 there has been an average 11% drop in travel for all the cities we represent. Three cities however posted positive gains including Berlin, Dresden & Hamburg. Berlin in particular is growing in popularity and is becoming Europe’s third most attractive city after Paris and London. Hainan Airline flights to Berlin are supporting this growing trend.

 

Q: Average length of stay for Chinese travelers to Germany?

A: With ADS group travel the average length of stay in Germany is a mere 2-3 days stay. Currently we are negotiating with tour operators to develop mono-destination packages for Germany. Furthermore, Germany is very much encouraging FIT travel. FIT travellers tend to travel for an average of 5-7 days.

 

Q: Breakdown in terms of ADS versus FIT travelers?

A:  It is hard to determine exactly who falls into what categories. To date the majority of travel to Germany is dominated by business travel. For example, an average of 700,000 Chinese travel to Germany annually, of which 60% or more are business travellers. I can estimate that in 2008 we received less than 20,000 ADS tourists, but at the same time that is not a fair reflection as a Schengen visa is easier to apply for in other European consulates.

 

Q: Financial crisis and swine flu impact on arrivals from China?

A: Swine flu did have a huge impact on arrivals while the financial crisis had an impact on our business travellers who make up the bulk. Lufthansa for example is struggling a little with their business class offerings as are other airlines. Since July of this year however the numbers are starting to pick up and we expect their will be a recovery in the second half of the year.

 

Q: How is brand Germany perceived in the China market?

A: The overall image of Germany in China as a tourist destination is not so good as it is perceived to be rather industrial with a lack of romance. Next year there will be a big push for FIT travel promotions. In the past tour operator relations were more important but now things are different as almost everyone has ADS. We are thus now starting to look at the end consumer as we believe they must first be knowledgeable of the product before they decide to travel to our destination.

 

Q: Rough geographical breakdown of Chinese arrivals to Germany?

A: Our tourists predominantly come from Beijing, Shanghai, Guangzhou and Hong Kong – but mostly from Beijing. We also conduct promotions however in Chengdu, Chongqing, Shenyang, Hangzhou and Nanjing etc.

 

Q: Which countries compete with brand Germany?

A: French and Italian cities more likely than most to be our competitors whilst Swiss, Austrian and Czech Republic cities compliment our German cities, we are in a great position to cooperate with them.

 

Q: Major obstacles to positively brand Germany to a Chinese audience?

A: Education, education, education! Chinese consumers are generally not aware of how beautiful Germany is.

 

Q: Methods/tactics to generate better awareness in China?

A: We are engaging in more interactive type events, more Internet based platforms. For example we are cooperating with the Travel Channel of www.sina.com to highlight our ‘Magic Winter’. It includes a questionnaire with a lucky draw to win a trip to Germany. We are also working with travel agencies to produce more interesting and realistic products. Lastly, we are providing travel agents with the opportunity to conduct online e-learning courses, something that was effectively carried out by Australia and Switzerland.

 

Q: How does Germany plan to leverage the 2010 World Expo Shanghai?

A: We will be supporting the efforts of Hamburg House (Euro 6 million investment) which is a sister city of Shanghai. We will also be supporting Dusseldorf with their independent pavilion. No plans to assist the German national pavilion thus far.

 

Q: Most creative or audacious tactic/ strategy/ campaign ever employed in China?

A: As you know Berlin is renown for its great nightlife. Also in the past we would engage in the usual (‘boring’) workshops and seminars. We accordingly broke the mould recently and hosted a party in Beijing and invited 140 journalists, 100 persons from German companies and travel agency representatives who were all entertained by a famous German DJ. We have received great media coverage so far and it was overall a great success. Next year we will include a consumer part which we are very excited about.  

 

China Representative, Zhaohui Li. Ms. Li serves as China Representative to the Magic Cities of Germany which includes Berlin, Cologne, Dresden, Düsseldorf, Frankfurt, Hamburg, Hannover, Leipzig, Munich & Stuttgart.

October 14th, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , | Comments Closed

David Liu on Mainland Tourism to Taiwan

David LiuChina Traveller

October 2009

 

While I am delighted to see Taiwan being awarded with Approved Destination Status (ADS) it appears as if there is little in terms of a concerted effort to promote and attract Mainland travellers to the Island thus far. The granting of ADS was a recent event and as such most stakeholders are still trying to find their feet but complacency over this new tourism ‘hot spot’ should not be permitted.

 

Initial feedback from Mainland travellers who have now had the opportunity to visit Taiwan have not been overwhelming in their praise with some commenting that they were somewhat disappointed by the lack of modern designed cities, saying that the Mainland cities compared more favourably. This to me indicates that a perception error is in place and the Taiwan promoters would do well to highlight the more enjoyable aspects of travelling to Taiwan.

 

This is merely a symptom of a larger issue however that it is essential for Taiwan promoters to define their messages and ensure that they are relevant to the Mainland target audience, the relevant messages must be an extension of Taiwan’s real attractions. So far it seems as if Mainland travellers mostly only visit the orthodox attractions such as Taipei 101. While these are natural itinerary stops, what in my opinion impresses Mainland travellers the most about Taiwan are the numerous alleys in Taipei that host hidden treasures of exquisitely designed restaurants and shops, the juicy and exotic fruits, scrumptious seafood, magnificent night markets and endless restaurants with delicious menu listings. Furthermore, I think Mainlanders are often taken aback by Taiwan’s exhibited friendliness, its greatest hospitality asset. China as a successful developing country has the best of all hardware, but Taiwan has unparalleled software, friendliness and helpfulness that comes from the bottom of the heart. This is Taiwan’s key differentiator and must thus be strongly promoted.

 

The majority of Taiwanese also have misperceptions of China. Many believe that Mainland China is a rural backwater and while this is correct in some areas, it is clear to all who have visited China that the country is so vast that its first and second tier city dwellers can be described as nothing less than cosmopolitan consumers with a taste for the world. China’s outbound tourists are largely consumers with a higher education and are seasoned travellers, as such their expected levels of service are high. 

 

Mainland travellers to Taiwan are not normally first time travellers, by the time they travel to Taiwan they have already experienced the high levels of service competing South East Asian hotels and destinations have on offer. Taiwan must show through its hospitality industry that Mainland travellers are welcome, they have to show their high level of services offerings. Many Taiwan hospitality practitioners ask me what the ’secret’ is to successfully attracting Mainland travellers, but I tell them that it does not exist, it is a myth. One has to invest in order to be successful, you have to invest in PR, marketing, and you have to be consistent. Taiwan did an excellent job enticing Japanese tourists, but now they must start to entice the Mainland tourists, they need to catch up. Frankly speaking, I have not noticed any promotional work of Taiwan yet.

 

For starters Taiwan needs to establish a visible representative office in Beijing as soon as possible for both relationship purposes but also to get a clearer understanding of the local consumer market. B2B engagement and promotions are very important and a good place to start as well.

 

Before your relations with the tour operators are even in place however, one needs to define what messages your destination wishes to carry. The messages must be relevant, colloquial and easy to remember. Furthermore, it is advised to focus a large proportion of your resources on Internet promotional platforms due to its inherent cost effectiveness. This would include titan platforms such as C-trip but also ordinary chat forums and bloggers. Advertising and marketing can be very expensive on the Mainland, much more than in Taiwan, and as such creative online solutions must be employed to get a better return on investment.

 

The Mainland China audience appreciates celebrities so the Taiwan market will be well advised to leverage off such famous spokespersons, thankfully, Taiwan has an inexhaustible supply. 

 

In conclusion, based on my experience Mainland travellers are eager to travel to Taiwan and I am confident that if the appropriate itinerary is provided, it will be as memorable a trip as any other comparison. I am not convinced however that at this moment in time Taiwan is being proactively and appropriately promoted on the Mainland. Taiwan needs to catch up quickly, it is not the only available destination and the current emerging promotional and experiential trend is not an attractive one.

 

David Liu is Managing Director of Weber Shandwick China. Born in Taiwan, David has been working in the Mainland’s public relations industry for the past 10 year. He can be reached at dliu@webershandwick.com

October 12th, 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 »

Interview with VisitScotland

visitscotland-logoChina Traveller

August 2009

 

Q: How would you define the Chinese traveler for the Scotland market?

A: 40% of our travellers from China are made up of business travellers and other short-term travellers. Another large component includes scholars. We receive on average around 10,000 Chinese travellers per year, basically, 10-15% of Chinese travellers who go to the UK travel to Scotland. 

 

Q: Breakdown in terms of ADS versus FIT travelers?

A: Over the past two years FIT travel has been the emerging trend amongst Chinese travelers, evidence of which can be seen on Ctrip and other online operators. This, FIT, will no doubt be the future trend but it is still early days. A very rough estimate of FIT travel to Scotland puts it at 10% of total Chinese travel.

 

Q: Financial crisis and swine flu impacted on arrivals from China?

A: The biggest impact of the financial crisis is that booking lead times are much shorter now and people are searching for greater value for money. From the China side trips to Scotland have also been delayed as a consequence but it is good news that travel has started to pick up from June. Nevertheless, tour operators continue to search for bargains to kick start stalled operations. Like the rest of the world the UK is not immune to the effect of swine flu, but in terms of outbound travel the US and Mexico have suffered greatly, while Scotland by comparison have not been that badly affected. The UK is very aware of these challenges and taking the threat seriously. 

 

Q: Define brand Scotland?

A: We have a shared industry ambition to grow revenues from tourism by 50 per cent by 2015.  Attracting visitors who want to experience a luxury break in Scotland will be an important element in achieving this goal.  Scotland has much to offer the luxury traveller, from world class five star resort hotels, to Michelin stared restaurants and high quality local produce – all set against a backdrop of vibrant cities and some of the most breathtaking scenery and heritage in Europe.” VisitScotland brand research shows that Scotland has world famous icons such as whisky, tartan, golf and castles along with strong, romantic and rich imagery. The people of Scotland are respected and admired throughout the world but there were issues with the destination being seen as expensive and remote. Emerging from the research were three key words, each representing the Scottish brand: Enduring – The buildings and architecture, history, culture and tradition. Dramatic – Dramatic scenery, beautiful light and the drama of the changing weather. Human – The Scots are seen as down to earth, innovative, solid and dependable, and full of integrity and pride.

 

Q: Golf as a draw card for Chinese tourists?           

A: Due to being the home of golf, St. Andrews, 8% of travelers to the UK include golf as part of their itinerary and the Chinese are showing great interest in this area. Accordingly, our golf operators are working very closely with their Chinese counterparts. Recently, VisitScotland and Connect2Golf launched an amazing opportunity for golfers in China to become Scottish golf club members in the Home of Golf by joining the new Scottish Prestige Golf Club. This includes the opportunity to play at over 30 courses throughout Scotland, from Gleneagles, venue for the 2014 Ryder Cup, to Carnoustie Championship, seven time venue of the British Open, and Turnberry, home of the 2009 British Open, and experience the world’s oldest and best greens and fairways, played on by so many of the world’s greatest golfers. The Scottish Prestige Golf Club has been created for Chinese golfers.

 

Q: Who do you target?

A: While our main target is affluent and well travelled Chinese, business extenders, golf players and repeat travellers to the UK, at the same time we will continue to push for increased ADS business most ADS tours only stop at Edinburgh as part of an eight day tour through the rest of the UK. At VisitScotland we would like to show the other parts of Scotland, especially of the more high end offerings. Accordingly we are working closely with golf operators and our PR key messages include golf as part of our priority target.

 

Q: What methods/tactics to generate better awareness in China?

A: We have engaged in a number of travel trade training activities for the larger tour operators and have also focused on FAM tours that tour operators, travel agents and the media can see for themselves exactly what we have on offer. VisitScotland was the first UK destination to launch a Chinese language agent training website. In terms of creative tactics we have tended to refocus our attention to hosting non-travel trade media. Furthermore we have successfully hosted the ‘Scotland Home of Gold Challenge Day’ in Shanghai in 2006/07. All our efforts are backed-up by annual trade missions to China. Our strategic partner, VisitBritain presents the whole of Britain to the China audience.

 

Poling Lee joined VisitScotland as Trade Promotion Executive in September 2005. She is responsible for identifying markets and developing the trade network in the Middle and Far East markets, in particular in her native China.

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 »

Interview with Ritz-Carlton’s Regional Sales & Marketing Vice President, Simon Manning

Ritz-Carlton LogoChina Traveller

July 2009

 

Q: Average occupancy rates in China?

A: Our occupancy rates are different for different cities. Hainan and Guangzhou are doing very well, in fact Guangzhou is quite unique as it is one of the few luxury five star hotels and we are doing well there. Ritz-Carlton is the fastest growing luxury five star group in China. We currently have six hotels with more than 2200 luxury rooms and 263 club and suite rooms. Some 60-70% of occupancy in our China properties are made up of local Chinese, while up to 80% in second tier cities.

 

Q: How to differentiate from competitors?

A: Firstly, we pride ourselves on our high levels of service and this is really the brand DNA of The Ritz-Carlton. During the financial crisis we did not cut down on staff. Secondly, what we refer to as our ‘Ladies & Gentlemen’, we highly value our internal staff and accordingly have achieved the best employer in Asia and China accolades. Opportunities exist for our Ladies & Gentlemen to move overseas and operate in different environments to improve their skills. This includes our rank and file and is not limited to management. Ritz Carlton is furthermore striving to become the social centre of cities, and we are moving towards that end through not only guests staying with us, but by enjoying our experience through weddings, dinning etc. Through this we are defining and generating loyalty beyond the normal hotel-customer relationship.

 

Q: Define the Ritz Carlton local Chinese clientele?

A: Out of the business travel segment our clientele is made up of local Chinese working for MNC’s, they are usually educated abroad. Our clientele also include SMME owners and a large percentage is also made up of MICE group tours. In the luxury travel segment we have young people between the ages of 23 and 40, children of SMME owners, overseas educated professionals and the generally affluent.

 

Q: Breakdown of Chinese travellers staying at The Ritz-Carlton abroad?

A: We are aware that numerous Chinese travellers stay with The Ritz-Carlton in Los Angeles, San Francisco, New York, Washington and Atlanta. Similar to the States, we also have many Chinese professionals staying at Ritz-Carlton in Europe when visiting their company headquarters. In addition to business travel, we also receive incentive travel groups but these are normally smaller groups, however, the MICE segment is enjoying good growth.

 

Q: How is brand Ritz-Carlton perceived in the China market and who does it target?

A: As the local experience grows our brand increases in stature. Top business persons are very familiar with our brand. As people show their wealth through visible consumer goods, Ritz-Carlton will always do well amongst Chinese people with high disposable incomes.

 

Q: How do your branding activities differ in terms of targeting potential foreign and local clientele?

A: It is different in China as all of our communications with consumers are conducted in Mandarin however, we never translate our Ritz-Carlton logo for any market. We leverage off the European originated ‘legacy of service’ whereby we never show the actual products but instead support our brand with visuals that taps the individual’s emotions. Our local operations are executed in a local friendly manner and we are furthermore proud of our China specific CSM programmes that are unique in the world, such as our Dinning Programme.

 

Q: Major obstacles encountered in China?

A: We only open our hotels when we are 100% ready, and this was something that was very difficult to educate our operators on from the very beginning, by far our biggest operational challenge. Initially we also spent much time on a suitable translation of Ritz-Carlton into Chinese which in the end resulted in a phonetic translation. We never benchmark ourselves to other hotels, we instead benchmark ourselves against other luxury brands. Furthermore, we don’t advertise our restaurant brands as they are secondary to our Ritz-Carlton brand. Other challenges are sometimes of a political nature, such as the visa restrictions that were in place last year during the Beijing Olympics.

 

Q: What methods/tactics does Ritz-Carlton hotels employ to generate better awareness of itself in China?

A: We have clearly defined market segments that we target. For example, out of the total China team we have a dedicated team of 15 professionals focusing exclusively on the business travel market, whilst we have duplicate teams focusing on lifestyle, group travel etc. These efforts are supported by our dedicated PR team and all teams contribute in an integrated manner with goals determined at the centre. All divisions operate as one team and that is our strength.

 

Q: Additional comments?

A: Ritz-Carlton is ahead of its competitors in China with the right deal structures and the right partners, and the best is still to come. Our new properties in China will be our flagship properties, namely the Ritz-Carlton in Pudong which will be the best five star hotel in China, and the new Ritz-Carlton to be launched in Hong Kong is also set to become one of the best hotels in the world which will win all the accolades, set in a phenomenal location, the tallest building in the world, the International Commerce Centre.

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

Interview with Disney USA Parks and Resorts

Disney USA Parks & ResortsChina Traveller

July 2009

 

Q: What offerings does USA Disney have for Chinese travellers?

A: Disney USA Parks and Resorts is new to the China market and accordingly we have different information going out to the travel trade including park maps, recommended attractions, specific programmes in the parks etc. We are also highlighting our Youth Educational Series, which is popular in China so far. We are furthermore looking at how we can offer Chinese meals.

 

Q: What is the year-on-year growth of Chinese nationals visiting?

A: While we don’t disclose specific attendance figures but I can say that our growth in the China market is acceptable under the current circumstances. We look to tourism from China as a growing business opportunity.

 

Q: Do you think Disney Paris limits potential Chinese visitors to USA Disney?

A: Absolutely not. It is important to understand that each of our worldwide parks and resort hotels are different and have their own character and offerings. Not all Chinese who visit Paris visit Disneyland Paris. Visits to Disneyland Paris sometimes compete with many of the other popular itineraries set by tour operators.

 

Q: Do you think Disney Hong Kong has a positive or negative impact of Chinese visitors to USA Disney?

A: It has no impact at all. The USA Disney is the original and therefore is very different from the Hong Kong Disney. Hong Kong Disney is more for short-to-medium haul destination travelers etc.  It is important to understand that we successfully operate Disney Parks in many regions of the world. For example, even though Disneyland Paris is closer to the UK, we still see strong attendance from the UK at our Florida parks. Each experience is different.

 

Q: Profile of the typical Chinese visitor?

A: Our customers come from all over China. Prior to ADS our visitors were mainly older ones of group trips or government delegations. Post – ADS we are attracting more family travel, students and generally white collars.

 

Q: What is the breakdown of Chinese visitors in terms of group travel vs. FIT travelers?

A: At a very rough guess I would say about 80% ADS and 20% FIT travelers.

 

Q: Who is your target audience in China?

A: We are targeting the middle class, ages 30-50. We are currently not engaging in B2C promotions but focusing our energies on training and educating travel agents, how to package and sell our product. Media also plays a big role in this.

 

Q: How is the Disney brand perceived in the Chinese market?

A: As a place for kids. The local market does not know what a theme park actually is whilst the US market naturally understands. Our job is to educate that it is not only for kids, but for adults as well.

 

Q: What type of strategy/ tactics does USA Disney employ to generate a better awareness on the Mainland?

A: We educate and rely on the media to get the correct messages out. We leverage on FAM trips through cooperation with airlines, executive profiling interviews and exhibition participation.

 

Q: What is the most creative campaign USA Disney has ever undertaken to brand itself in China?

A: As we have just entered the China market we rely on cooperating with airlines and tour operators. For example we have hosted theme trips with United Airlines and CITS to offer a 12 day USA tour that included Disney USA Parks and Resorts. The group consisted of over 300 people from all over China for Chinese New Year. The trip was a great success that resulted in loyal future customers. We have also teamed up with Continental and Ctrip’s Elite Traveller magazine that featured Disney in a 30 page article.

 

Q: New media branding? 

A:  We have a fully translated Chinese website with all of Disney’s international information and our 5 global parks. We have new media plans that are to be implemented but until then we will continue to rely on Sohu and Sina cooperation.

 

Q: Additional comments?

A: We have great faith in the China market with all the pent-up excitement that is building u here, a Disney destination for all ages.

 

 Nicky Tang is the Asia Pacific Sales Director for Disney USA Parks and Resorts

July 1st, 2009 | Michael Jones | Tags: , , , , , , , , , , , , , , , , | No Comments »

Interview with Tourism New Zealand’s Asia Regional Manager, Mark Frood

Tourism New Zealand LogoChina Traveller

June 2009

 

Q: Definition of Chinese traveller?

A: We are targeting the ‘Interactive Traveller’, persons who participate in all the activities we have to offer, longer duration stays and higher spender. Chinese travellers are on their way to becoming interactive travellers, they don’t necessarily bungy jump yet, but they are at least going to watch, showing interest. The interactive travellers are normally in smaller groups, two couples, a family, of independent travellers. Currently they are small in number, but they exhibit very high growth.

 

Q: Breakdown of ADS versus FIT travellers? Growth rates?

A: ADS tour groups make up about 40% of overall travel to New Zealand. FIT travel accounts for 8-10% of total travel, however it becomes complicated as visiting friends and relatives account for about 8-10% of total Chinese travel to New Zealand, however, many of these then go on to become FIT travellers as well. FIT growth is estimated at around 80% per annum.

 

Q: How would you define brand New Zealand?

A: ‘100% New Zealand’, our global campaign, is an emotional connection with our natural surroundings that include clear, blue skies, pure foods etc. Our brand is about connection with people, with the various cultures our Islands offer, whether it be the indigenous Maori people, our farmers, operators of the tourism activities etc. We understand that we are not the only brand with beautiful scenery, and our destination is a far distance to travel, so we need to convey an essential experience and be the best at it.

 

Q: How is brand New Zealand perceived in the China market?   

A: We are perceived well when understood. There is an awareness of New Zealand, mostly focused on sheep, mountains and so forth. Through our branding exercises we are making Chinese more aware, for example, we currently have a consumer campaign in Shanghai in full swing.

Q: Emerging trends amongst travelling Chinese?

A: Sustainable tourism has a good hook as China is going to lead the world in green technology, energy etc., and this is going to permeate into the rest of the society. New Zealand is known as a clean and green country so this works well for us. So sustainable tourism already resonates in China to a degree. The younger Chinese back packing style of travel will definitely get there one day.

 

Q: Evidence of Chinese interest in sustainable tourism?

A: Yes, Chinese are more and more interested, this is what we are about. Taking photo’s of glaciers, taking these natural wonder photo’s by themselves, it is a statement of freedom.

 

Q: Is New Zealand branded differently in China than abroad?

A: As part of our global campaign the age segment we are targeting in China is the youngest target audience. In China we target 35-50 year olds. We also focus on families and couples, people who have normally travelled 3-4 times before. These travellers normally have no visa issues and they are English independent. We also find that for our target segment the travel decision is quite collaborative between the male & female in the family or group, with perhaps the female having perhaps a little more decision power, but the planning of the trip is a lot of fun for them, both male and female.

 

Q: When will the China market mature?

A: New Zealand is perfect for FIT and in the past some thought it strange of us to focus more on this segment. Now local tour operators are approaching us more and more to target the FIT travellers. Online bookings are starting to take off but for the present travel agents remain important. I believe China’s market will mature within five years.

 

Q: Methods/tactics to generate greater awareness?  

A: We currently have a consumer campaign in Shanghai that is focused on TV and online media. We have also completed translating the Tourism New Zealand consumer, trade and media websites into Mandarin.

 

Q: How much emphasis placed on the new media?

A: A great deal. We are not so sure how well newspapers are doing and we have shifted our attention to screens (motion & sound), and online media does this well. Our activities include use of bloggers, video sharing platforms such as Tudou and Youku, standard TV, outdoor TV such as Focus Media etc. Through these platforms you get immediate feedback, you need to provide the essential experience, and do it the best. Such a campaign needs to be 100%, everybody needs to be on their toes and the consumers will judge you and judge you swiftly. We have done our research though, so we know what we are doing, we are ready.

 

Q: Most creative or audacious campaign?

A: Our most audacious campaigns have been those focusing on opinion leader FAM tours as we don’t put any restraints on them. For example, we have sent Wang Zhongjun of the Huayi film company, Hong Huang (blogger, TV host), Wang Chaoyong (founder of Chinese America’s Cup), Yuan Yue (blogger, TV host) to New Zealand in the past. These individuals are of a high profile so become great ambassadors to our country. In this way, these individuals, and their followers, experience their own emotional attachments to our brand. Tourism is an emotional purchase.

 

Q: Branding strategies that will become more popular over time?

A: More referral strategies, where consumers become the biggest referrals. If you get it right they will do your job for you, but if you do it badly you will find out very quickly, word of mouth to the extreme.

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 »
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