Interview with Los Angeles Convention & Visitors Bureau – Jamie Lee, China Chief Representative

 

Jamie Lee, Chief Representative of LAWA/ LA INC China Office

Jamie Lee, Chief Representative of LAWA/ LA INC China Office

 

 China Traveller

May 2009

 

Q: Description of foreign travellers to LA in 2008?

A: LA received 2,345,741 foreign travellers in 2008. Our largest foreign market was Asia with 892,951 arrivals comprising Japan (279,748), South Korea (157,389), Chinese Taipei (108,267), Mainland China (83,327) and Hong Kong (36,530) leading the group. Europe produced the second largest regional group of arrivals with 824,512.

 

Q: What impact has ADS had on Chinese arrivals?

A: Prior to ADS, arrivals from China grew at 10% but it is currently growing at 20 – 30%. This needs to be seen in the context of Japanese arrivals experiencing double digit decline. 

 

Q: Breakdown of Chinese travellers by geographic location?

A: Beijing is responsible for the largest share of arrivals evident with its 7 flights per week. Shanghai also has 7 flights per week but includes cancelations from time to time, while Guangzhou has 4 flights per week. Beijing delivers a mix of travellers with various purposes while Shanghai is mostly for business and Guangzhou mainly for leisure travel. 2nd and 3rd tier cities also make a strong contribution with an estimated 30% of Beijing’s travellers originating in outlying cities.

 

Q: How has the financial crisis affected Chinese arrivals?

A: According to our January 2009 arrival figures there has been no impact thus far.

 

Q: When did LA INC establish representation in China?

A: We were the first US city-level tourism office to be approved by CNTA and consequently established our office in 2006. To date we do not know of other cities that have the same approval and thus they operate through PR companies.

 

Q: How is LA perceived by Chinese travellers?

A: LA is a recognised city with Hollywood playing a prominent role. There are both good and bad misconceptions however, but generally expectations are extremely high. Part of our job at LA INC is to moderate expectations, (e.g. they will not necessarily meet any of the Hollywood stars), ensure that the correct messages are disseminated that our visitors have a positive experience and return again in the future. 

 

Q: Characteristics of average Chinese traveller to LA?

A: Previously it was dominated by government officials attending functions and events, but now it has shifted to leisure groups. We still maintain a good mix of leisure and function purposes groups as LA is a must visit place with perfect weather all year round. Roughly 70% of our travellers come in groups while business travellers account for 10% and 5% independent travellers.

 

Q: Greatest challenge to promoting LA in China?

A: Sending out the correct messages and ensure that tour operators don’t package tours at too much of a discount that might have a negative impact of the traveller’s experience. We want to ensure we are offering the correct value.

 

Q: Measures taken to combat effects of financial crisis?

A: Hotels etc., have already reduced their prices. We are utilizing the time to conduct proper in-house training and improve strategic relations to ensure we are 100% ready when the crisis subsides and the market explodes.

 

Q: Who are your natural competitors (domestic and abroad)?

A: Domestically we all work together. Internationally our competitors are generally English speaking long haul destinations.

 

Q: LA’s strategy for attracting increased Chinese travellers?

A: We are looking towards the future of FIT travellers from China. With the maturing of the market, we expect China’s 1st tier cities to be more inclined towards FIT travel within three years.

 

Q: Tactics to promote LA in China?

A: We engage in media interviews and FAM tours. On a limited basis we also conduct receptive trainings which are coordinated with tour operators. We will also be coordinating more road shows into other provinces such as Hunan, Hebei and Shanxi etc.

 

Q: Most creative campaign undertaken?

A: China’s first Olympic gold medal was won at the 1984 Olympics in Los Angeles and accordingly last year on the 8th of August we organised an event with LA officials, Chinese sports persons, media and travel agents to celebrate that history. Corresponding visits were undertaken including a gold-to-gold itinerary for travel agents visiting the LA sports centre within an overall sports themed itinerary. The campaign met all our expectations. We continuously conduct direct-mailing to our partners, media, tour operators, airlines and other contacts as well as a monthly newsletter and press releases.

 

Q: Strategies/ trends becoming more popular over time to promote in China?

A: Promotions will become more hi-tech, greater focus on IT with multi-media presentations to underscore strong promotional strategies.

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

Interview with Beijing Regent Hotel

Beijing Regent Hotel Manager Scott Walton on Beijing’s challenging

Beijing Regent Hotel Manager Scott Walton on Beijing’s challenging hospitality industry

 

China Traveller

May 2009

 

The Beijing 2008 Olympics have come and gone, the global financial crisis has started to make its impact on China’s inbound travel sector, swine flu is creating further market panic, while new five star hotels continue to be rolled out throughout China’s capital.

 

Scott Walton, Hotel Manager of the Beijing Regent Hotel, took some time from his busy schedule to discuss with the China Traveller the challenges faced by premier hotels in Beijing and how his team is going about tackling them.  

 

Q: Average occupancy rates?

A: 2008 was our second year of operation, this was an excellent year primarily due to the Olympic boost. The only problems we experienced were pre and post Olympic due to problematic visa issues affecting the market. On average we experienced a 50% occupancy rate for 2008, while we estimated a 60% occupancy. For the first two months of 2009, our low season, we recorded 35-45% occupancies while for March, which is supposed to experience an increase, recorded roughly 43% occupancy. Our more established competitors have registered slightly higher than that, but the Regent Beijing is gaining in market share.

 

Q: Local/foreign guest occupancy ratio?

A: In 2008 the ratio was 52% Asian and 48% Western. Of the Asian segment, 50% were local Chinese, 25% Hong Kong Chinese and the remainder from the rest of Asia. In 2009 thus far, 60% account for the Asian segment as the US and European markets decline.

 

Q: How would you define the Chinese hotel guest?

A: Our local hotel guests are refined with extremely high expectations, they are very good at communicating those expectations to us. The Regent Beijing conducts much local business and our guests tend to be from the upper echelons of society including i) upper-end income earners in Beijing; ii) government business (Beijing, and other 1st and 2nd tier city government employees); iii) and a great number of Hong Kong Chinese. We are proactively targeting more 2nd and 3rd tier city customers with higher disposable incomes.

 

Q: What are the major obstacles to positively brand Regent Beijing amongst a local audience?

A: An essential obstacle is that international hotels are still not as widely known in the local market. We have found that we had to re-define ourselves after the Olympics and to that end we are exploring the services of specialist PR companies to assist us target the local market and other avenues.

 

Q: What measures are you taking to combat the slowing global economy?

A: We recently employed a new director of sales and marketing with tremendous pedigree. As the Beijing pie has shrunk with a growing inventory and while the Beijing tourism authorities are pushing hard to increase demand the market will remain a challenge for some time. Accordingly the Regent Beijing is making greater efforts to look after its existing client base and we are sparing no efforts to train, train and re-train our staff. Furthermore the Regent Beijing is looking to explore non-traditional markets and keep long term relationships strong.

 

Q: What methods/tactics does Regent Hotels employ to generate better awareness in China?

A: We are looking to partner with an internationally recognised PR company who are specialists in the local market. Internally we do conduct our own target marketing using CRM databases and we furthermore target the local F&B market with using a dinning card which proves to be popular and successful in Beijing.

 

Q: Are there any new branding strategies you would highlight as becoming more popular over time?  

A: We are leveraging more from our owners prominence in Beijing and China, Madam Chen Laiwa, and her reputation in the music and art world. Accordingly we push for art features in the local and foreign media focusing on art work displayed in the hotel.

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 »

Interview With Tourism Authority of Thailand

 

 

Amnuay Thiamkeerakul, Tourism Authority of Thailand's China Director, the helmsman leading his brand out of the storm

Amnuay Thiamkeerakul, Tourism Authority of Thailand's China Director, the helmsman leading his brand out of the storm

 

China Traveller

March 2009

 

Q: How would you define China’s outbound travel industry at the beginning of 2009?

A: China’s outbound travel industry has been affected by the global financial crisis, but not seriously. Outbound travelers are still willing and able to go on leisure tours and companies still need to attend MICE related events, and lucky for us, Thailand is still the perfect choice for these types of travelers.

 

Q: How would you define the Chinese traveller?

A: The Chinese traveler comes from the nation’s developed urban centers and is motivated to go abroad for different reasons – leisure, business and so on. They want to go experience destinations that offer a wealth of tourism resources, such as natural beauty, fun activities, great food and more. There is good growth in FIT travelers now and while Europe and the US were very attractive, due to the current situation many are choosing to travel to neighboring countries more. Furthermore, where more high end travelers also used to favor the West more, many come of the high end segment travel to Thailand to stay in resorts, play golf, go to the spa’s and enjoy our unique cuisine.

 

Q: What sorts of trends have emerged among Chinese travellers and which ones do you foresee increasing in popularity?

A: With current outbound travel just under 50 million a year, and a potential outbound travel market of over 250 million, the most important trend to take note of is growth. China’s enormous potential translates into enormous hope in the industry.

 

Q: How would you define brand Thailand and what does it offer travelers?

A: In a word: ‘Amazing’. We offer an amazing portfolio at an amazing value, lending on our tagline for 2009 ‘Amazing Thailand, Amazing Value’. While our destination is great value for money, we have nevertheless suggested to some tour operators to raise package prices to more reason levels that all those visiting will have a better experience. Thailand as a destination was opened-up by European backpackers almost thirty years ago, and while we will always welcome all people to Thailand, few countries have the wide variety of offering we have. We furthermore brand extensively in the luxury market. We have something for everyone to enjoy Thailand and as such, stand as a comprehensive brand.  

 

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

A: Brand Thailand enjoys a high level of positive awareness in the China market. We are known for our hospitality, rich culture, delicious cuisine and beautiful scenery, all of which can be enjoyed at a great value given our proximity and easy connection to China’s major cities, which is where we focus our targeting – Beijing area, Shanghai area, Guangzhou area and the Chengdu/Kunming area.

 

Q: What is the rough breakdown of Chinese arrivals to Thailand, which provinces/cities do travelers predominantly come from?

A: Arrivals stand at around 1,000,000 and are drawn from the all over China, namely the Beijing (25%), Shanghai (25%), Guangzhou (25%) and the rest of China (25%).

 

Q: What countries compete with brand Thailand?

A: China’s travel markets, both domestic and outbound, are immense. With such large outbound figures and such great potential to grow those figures, countries don’t compete – we promote. We promote in a market that’s far from saturated… In fact, if I had to name a competitor I’d say it’s China’s domestic travel market, that’s a market I want a piece of. There is also a new generation of FIT travelers who speak English, more independent minded, that now make up 25% of our arrivals. We also have high repeat visit rates in both lower and higher income segments.

 

Q: What are the major obstacles Thailand has encountered during its quest to positively brand itself in front of a Chinese audience?

A: The recent political unrest has been our biggest obstacle. The travel sector is key to the Thai economy, and we’re currently working to show would be travelers that Thailand is a perfectly safe destination.  We are doing this by inviting the media to Thailand to see, first hand, that we still have the same friendly people and beautiful scenery as we always have. We have also taken concrete steps such as placing a waiver on visa fees from March until June for many countries including China.

 

Q: What successes has brand Thailand gained in the China market and what drove them?

A: In 1988 Thailand became the third nation to gain ADS status after Hong Kong and Macau. This has given us a long history of travel exchange and cultural ties which contributes greatly to the success of brand Thailand in China.

 

Q: How to combat the slowing global economy?

A: We’ve waved visa fees through to the 5th of June, which when combined with low airfares, makes a tour to Thailand extremely attractive. We will also continue to remind domestic travelers of Thailand’s amazing value.

May 18th, 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 »

Interview with PATA’s John Koldowski

PATA Director of Strategic Intelligence Centre

PATA Director of Strategic Intelligence Centre

 China Traveller

January, 2009

 

In our first Thought Leadership column we interviewed John Koldowski, Director of the Strategic Intelligence Centre of Pacific Asia Travel Association (PATA), to gain his insight of the travel industry affected by the global financial crisis.  

 

Q: Can you provide us with a background of the travel industry up until the financial crisis struck?

A: Over the last 5 years, international travel & tourism has generally been growing in both arrival numbers and revenues earned. The average rate of growth for arrivals has been at around 7% per annum, while revenue growth has averaged at around 13% per annum over the same period. So the last few years in particular have seen relatively strong growth.

 

Q: What about the Asian market?

A: Asia has been a particularly strong performer, in both arrival numbers and revenue. Even though earlier in the year (2008), expectations were for a reduction in the growth of international arrivals, we were still bullish about Asia and were still predicting growth, albeit at a much slower rate.

 

Q: Has the crisis already struck or are we already experiencing its peak?

A: We have experienced growth so far this year (2008), but at a much lower rate than 2007. This is true for nearly all sub-regions within Asia Pacific, the only exception being the Americas, where the trend has been stronger growth over 2007.

 

Q: What about China?

A: The last few months have seen strong contractions in international arrivals, both at the aggregate inbound level and for foreign arrivals. Although China has a blooming domestic market, globalization will not allow any country to go unscathed. So it appears the downward trend will not be reversed in the short term.

 

Q: What does the immediate future hold in store for us?

A: This is what we are currently analyzing. But I would first like to speak of a related matter. In the aviation sector, our lifeline to the travel industry, the trends are all negative. Particularly through the month of September 2008, the Asia Pacific region all but led the global decline. According to the data from IATA, we found a very poor year-to-date result in Revenue Passenger Kilometers and freight movements as well. I just spoke with a friend from the Association of Asia Pacific Airlines, who informed me that in terms of actual passengers carried, June was flat and July saw a contraction in numbers on the Asia Pacific airline fleet. The negative forecasts for airports are therefore understandably somber. Premium traffic growth in particular has been taking a beating. And the forward bookings are looking soft too.

 

Q: We noticed many analysts have adjusted their economic outlook for 2008 and 2009, will there be no growth in the travel sector?

A: While the economic outlook is certainly weaker, there is still growth. It will vary greatly from country to country. But these top-level aggregate numbers are masking a more worrying concern, that of profitability. For example, the price of aviation fuel, while coming down in price, it is still unstable. The operating margin for the world airline fleet is very weak at the moment, and operating losses are expected to continue into 2009 at least. If this holds true, the aviation sector will only see profitability in a year.

 

Q: We are seeing news reports of airlines reducing or eliminating routes with weak demand, what impact will this have?

A: This leads us to another scenario, with reduced capacity, demand will push air ticket prices higher and it will not be as easy to get the booking you want, on the route you want, on the day you want and at the time you want. Air travel will get even harder, at least over the immediate future.

 

Q: Is it all bad news?

A: It is not all bad news. Some operators actually perform very well during a recession. I read an article from Lodging Econometrics recently stating that while there has been a reduction in the number of hotel projects in Asia Pacific between the first and second quarters of this year (2008), total planned room capacity is still on the rise. I am sure a very large proportion of that construction is planned for China.

 

Q: Let’s get back to China and our tourism sector. Will China still be the engine of growth during the recovery period?

A: Yes. Some analysts firmly believe that emerging economies such as China could do very well in a global economic downturn. In the long-run, the world economy always expands and then goes through periods of contraction. But the world will look different, from where new funds will come. Not only in China, but the rest of the world, to the fragmentation of our industry and the emergence of ‘long-tail economics’ into the business world, it is up to us to identify and capture the advantage when and where it appears. Over the medium-term however, we still expect the travel industry, buoyed by the business element, to generate growth. It will just be at much lower levels than we have been used to over the past half decade.

 

Mr. Koldowski is responsible for the collection, analysis and interpretation of travel statistics for PATA.

 

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