(This is the first of two parts covering the just-released Chinese Luxury Traveler 2017. Part Two will run in the next issue of the INBOUND report.) The United States placed second—behind only Antarctica and France—as one the Most Memorable Travel Destinations for Chinese luxury travelers according to the Hurun Report and International Luxury Travel Market Asia (ILTM Asia) and their just released report, The Chinese Luxury Traveler 2017. We’ve tried to consolidate the information in the 26-page report on the travel model, retail and trend of the Chinese luxury high net worth individuals, but kept most of the material and its supporting tables so that what you read is, in essence, a complete report. For those concerned about the U.S. slip to third place, you may be able to take solace in the outlook for the next three years, in which The Americas place second behind Europe as a destination that luxury travels plan to visit. The report follows.
Eight Key Findings
- Travelers prefer adventure tourism, it will be the luxury travel trend in the next three years. Around the world travel, polar exploration, and outdoor adventures are themes for the Chinese luxury traveler in the next three years. Compared to the dominance of travelling for leisure in the past few years, this year, there is a marked increase in the Chinese luxury travelling for adventure. It should be noted that the Post-80s generation has displayed an increased interest in Africa and the Polar Regions, with numbers rising from 23 percent and 17 percent last year to 36 percent and 32 percent, respectively, this year.
- The seasons significantly influence traveler’s choice of destination. The time of year has a large bearing on the choice of location. In summer and autumn, the Post-80s luxury travelers possess a marked preference for island-hopping, with Phuket (27 percent), Maldives (18 percent) and Fiji (16 percent) and China’s Sanya (16 percent) are the most popular choices. In winter and spring, Australia (16 percent) and Phuket (18 percent) are popular among sun-worshippers, while ski enthusiasts flock to Japan (32 percent), Canada (8 percent) and Switzerland (7 percent) also are the traveler’s most likely destination.
- Island with Beach was the dark horse of vacation themes last year. Although Leisure at 41 percent was still the most popular vacation theme, polar exploration and outdoor adventures have continued their momentum from the past two years and rank second (31 percent) and fourth (20 percent) respectively. As a new option in this year’s study, island holidays were the dark horse of vacation themes and surpass both cruises (13 percent) and self-drive holidays (14 percent) and other traditional modes of travel to rank third. Island holidays are especially popular among the Post-80s generation and rank first with almost fifty percent (46 percent).
- Europe and Southeast Asia are theoutbound destination of choice.
Last year, Europe and Southeast Asia have grown in popularity as a destination accounting for 45 percent and 44 percent of respondents respectively. In just two years, Southeast Asia has successfully surpassed the Americas become the Chinese luxury traveler’s new choice, displaying a shocking 34% increase in millennial favor and jumping from last year’s fourth place to take the crown this year.
(a) Luxury hotels are still the first choice for China’s luxury travelers. Ritz-Carlton and Four Seasons hotels are the most popular choices, ranking first and third. Boutique hotels are increasingly favored, with Banyan Tree jumping from sixth place last year to fourth place this year, while Aman entered the top ten in seventh place. Hilton wins the “Most Popular Luxury Business Hotel” title, with Shangri-La, Sheraton, and top ten newcomer Marriott following closely after. The hotel of the most luxury traveler members is also The Ritz-Carlton, with the popularity of the brand experiencing a 19 percent increase over the last two years, taking the crown from Hilton. In the same two years however, Marriott drop from second to sixth.
(b) At 81 percent, resorts are overwhelmingly popular among luxury travelers and are their favorite type of luxury accommodation. Business hotels (18 percent), bed and breakfasts (9 percent), and apartment hotels (6 percent) are also preferred, but by a much smaller margin of travelers.
(c) 60 percent outbound luxury travelers spend more than 3,000 yuan ($440) per night. Thirty-two percent of luxury travelers have accommodation budgets of over 5,000R ($735) per night. Humanized Service is the most important consideration, followed by a good view of the room.
(d) At 56 percent, local cuisine is the most popular hotel restaurant cuisine option for Chinese luxury travelers. Japanese and Cantonese cuisine follow after by 32 percent and 31 percent respectively. French cuisine, Italian cuisine and Sichuan cuisine are all topped the list ten, while the Korean cuisine and hot pot did not in top ten.
(e) Private dining room is receiving more attention as venues for private banquets and business dinners.
(f) Accommodation sharing is still in its early stages in the luxury market. Private home-stay options like Airbnb are selected by only 25 percent of respondents, trailing behind the boutique hotel (48 percent) and the cruise (45 percent). 69 percent of respondents remain neutral or will not explore home-stay in the next three years.
- China’s luxury travelers are placing a higher premium on comfort when they travel. Sixty-one percent of respondents, on their most memorable trips, travelled in business or first class. Air China has the most popular membership scheme among domestic airlines (54 percent), with China Southern Airlines(22.4 percent) and Cathay Pacific (21.9 percent) coming in after. Among foreign airlines, Emirates and Singapore Airlines both run ahead of the pack at 23 percent and 22 percent respectively, benefiting from their reputations for offering both cost-effective and high level services. The fact that Singapore and Dubai airports are such important hubs for flight transfers also contribute to their popularity.
- Customized travel services start to spread, with agencies placing a strong emphasis on the quality of travel itineraries to retain customers.
More than half of luxury travelers (58 percent) said that they have experienced customized travel services. They are partial to travel agencies that provide well-designed itineraries, personalized services, and are actively problem-solving, placing 59 percent, 55 percent, and 49 percent of emphasis on each aspect respectively. The emphasis placed on problem-solving ability of travel agencies has experienced an 11% increase in two years. Agencies in “Hurun Mainland China Outbound Luxury Travel Agencies 2017 Top 12” ranking include 8 Continents, Diadema, D-Lux Travel*, CITS Amex, HHtravel, My Tour, Magic Travel, Ctrip, Zanadu, CITS, CTS, and CYTS. Agencies in the “Hurun Hong Kong Outbound Luxury Travel Agencies 2017 Top 6” include Wincastle Travel Limited, Cathay Pacific Holidays, Charlotte Travel*, American Express, Swire Travel, and Westminster. Agencies in the “Hurun Taiwan Outbound Luxury Travel Agencies 2017 Top 6” include One Style Tour*, Seascape Escape, Let’s Travel*, American Express, International Travel Information Services, and Lion Travel. (In alphabetical order, *new to list).
- Travel retail. While on holiday, Chinese luxury travelers like to purchase cosmetics (45 percent), local produce (43 percent), bags and suitcases (39 percent), clothes and accessories (37 percent), and jewelry (34 percent). Other than local produce, the four other most popular purchase categories are all dominated by female consumers. Compared to numbers two years ago, there is a noticeable increase in the percentage of travelers who bought cosmetics. With regard to the purpose of the purchase, 76 percent of purchases are personal, while 47 percent of purchases are gifts, and 4 percent are purchased on the behalf of others.
Travel trends for the next three years: Around-the-world Travel and polar exploration are the most anticipated travel trends for Chinese luxury travelers in the next three years, accounting for 43 percent and 36 percent of respondents, while outdoor adventure (26 percent) follows immediately behind. In contrast with data from two years ago, luxury travelers are expanding their horizons, travelling not only for leisure but also to satisfy their individual tastes. This includes island-hopping and culinary tours or wine-tasting, both of which make an appearance in the top ten anticipated travel trends ranking.
Young luxury travelers still love Island with Beach, with 30 percent of respondents expecting to go on an Island with Beach travel in the next three years. As new additions to the list, culinary tours and wine-tasting trips along with art and culture tours are also well-received by the Post-80s generation, ranking fourth (27 percent) and seventh (16 percent) respectively. Last year’s favorite—cruise trips—drop out of favor by 14 percent and now rank eight.
↑ Ranking up ↓ Ranking down – no change * New to the Top 10
Travel destinations for the next three years: Europe, a classic destination, remains first at 49 percent with the Americas (38 percent) and Africa (37 percent) following in second and third place. For the Post-80s generation, Europe is still the most sought after destination (46 percent), but there has been a 19 percent fall in numbers from last year. In contrast, Africa (36 percent) and the Polar Regions (32 percent) have experienced a 13 percent and 15 percent surge in popularity, coming in at third and fourth place.
Activities respondents would like to try in the next three years: Horseback riding, surfing, and sailing are the top three activities high net-worth individuals would like to try the most in the next three years. Art collecting comes in at fourth place, paragliding in fifth, while other activities on the list include marathon running, rock climbing, bungee jumping, and fasting.
Source: Hurun Best of the Best – Chinese Luxury Consumer Survey 2017
↑ Ranking up ↓ Ranking down – no change
Popular travel destinations in the summer and fall: Many luxury travelers choose to beat the heat on Island with Beach, whether that is in Phuket (27 percent), the Maldives (18 percent), Bali (12 percent), Fiji (13 percent), Hawaii (10 percent), or Sanya (16 percent). The Post-80s generation seems to echo these sentiments, as all seven ranked destinations are islands, with the Maldives and Thailand’s Phuket in first and second place.
Respondents have been to their destinations of choice an average of six times, and they plan to return to their favorite locations twice in the next three years. Respondents prefer to travel with family or friends, with an average of three people per trip. There is no strong preference for Economy (48 percent) or Business (45 percent) class, as ticket price is a concern in shorter excursions.
Popular travel destinations in the winter and spring: In the cool, drier spring and winter seasons, the Post-80s generation and other generations alike rank Japan, Thailand, and Australia in their top three. With high net-worth individuals recently displaying an increased interest in sports and outdoor adventures, skiing has become a favorite in the winter months. Japan (32 percent), South Korea (10 percent), Canada (8 percent), and Switzerland (7 percent) are all home to world-class ski resorts. For luxury travelers who do not enjoy extreme sports, escaping the cold remains an important reason for travel; Thailand (18 percent), Sanya (12 percent), Australia (16 percent), and New Zealand (9 percent) are all good choices for this purpose. Thailand’s Phuket is the only destination to be on both the Summer/Fall and Spring/Winter lists.
A higher percentage of travelers (20 percent) choose to travel First Class in the spring and winter as travel destinations tend to have longer flight times, thus comfort becomes a necessity instead of an option.
Preferred travel destination overall
—Maldives was crowned the preferred international luxury travel destination.
—Domestically, Sanya is still the number one preferred luxury travel destination for the seventh consecutive year.
Source: Hurun Best of the Best – Chinese Luxury Consumer Survey 2017
↑ Ranking up ↓ Ranking down – no change * New to the Top 15
Market for customized travel services expanding: The market for customized travel services will expand among Chinese luxury travelers in the future. 40 percent of respondents express their wish to use customized travel services in the next three years, while only 10% prefer the more traditional guided group tours.
In the next year, 59 percent of respondents still do not have pre-planned holidays. Those who plan to travel during the October National Holiday (22 percent), the summer (18 percent), and Chinese New Year (17 percent) are in the minority. For domestic luxury travelers, whether or not the destination is visa-free is not a primary concern (77 percent). The Post-80s generation hope to travel an average of 3.2 times in the next year.
Island with Beach became last year’s dark horse: Traveling for leisure at 41 percent remains the most common mode of travel for the Chinese luxury traveler. Polar exploration and outdoor adventures continue to grow in popularity and rank second (31 percent) and fourth (20 percent). As a newly added option this year, Island with Beach at 23 percent have become a dark horse in travel trends, surpassing cruise trips (13 percent), road trip (14 percent), and other traditional modes of travel to rank third. Island with Beach shows even more popularity with the Post-80s generation and rank first with 46 percent. According to the Hurun Institute survey, surfing is one of the activities that the high net worth people want to try in the next three years.
Enthusiasm for overseas travel continues, Europe and Southeast Asia favored: The 334 individuals surveyed take an average of 3.3 overseas trips annually, adding up to 27 days, of which tourism accounts for 69%. Compared with numbers from 2015 and 2016, respondents spent fewer days travelling abroad, but the proportion of time devoted to tourism increased by 5%, demonstrating its undiminished importance.
In the past year, Chinese luxury travelers show a strong bias towards Europe (45 percent) and Southeast Asia (44 percent). In just two years, Southeast Asia has successfully overtaken the Americas to become the new fan-favorite and is even more popular among the Post-80s generation, jumping from last year’s fourth place to this year’s first with a stunning 34 percent increase.
The Ritz-Carlton is the Best Luxury Hotel Brand and has the Most Popular Membership Scheme: In the past year, The Ritz-Carlton became the “Best Luxury Hotel Brand” while Banyan Tree follows in second. Newcomers to the top ten list include Fairmont, Aman, and other boutique hotels. Hilton wins the title of “Best Upscale Business Hotel Brand” while Shangri-La, Sheraton, and Marriott follow. Wanda Hotels & Resorts enters the top ten list for the first time.
The hotel with the most luxury traveler members is also The Ritz-Carlton. The Ritz-Carlton’s popularity has arisen by 19% from two years ago and steals the crown from Hilton. Marriott has fallen to sixth place from its place in second in 2015. There is no noticeable change in the way the Post-80s generation choose hotel memberships.
Resorts are the Most Popular Style of Luxury Hotel: With 81 percent of the vote, resorts are the most popular style of luxury hotel. Business hotels (18 percent), bed and breakfasts (9 percent) and apartment hotels (6 percent) received significantly lower preference rates.
(This concludes PART ONE of the Chinese Luxury Traveler 2017. Look for PART TWO in the next issue of the INBOUND report.