…and from major Chinese cities to secondary US Gateways. It seems that, on the basis of the Brand USA Trends Update for China presented at the recent IPW in Washington D.C., Chinese travelers will keep coming to the United States in larger and larger numbers for the foreseeable future—no matter what. And the “no matter what” includes President Donald Trump and his political rhetoric and policies affecting those who want to come to the United States.
Jerome Leroux—he’s vice-president, Asia-Pacific & director, Greater China Region, at AVIAREPS, Beijing and represents Brand USA there—a eschewed a review of arrivals data, except to note that China should become the USA’s number one overseas source market by 2021. Instead he focused on trends and the type of ancillary data that support the trends. We’ve taken Leroux’s lengthy presentation in outline form below.
China-U.S. Airlift is Soaring
Direct non-stop airlift between China and the U.S. has more than quadrupled in the last decade.
More than 4.8 million (annual) non-stop seats are now available direct from China to the U.S.
In 2016, airlift to the West Coast along jumped by 61 percent.
Chinese airlines have increased their market share at the expense of U.S. airlines and now account for 57 percent of annual seat capacity.
There are now 15 U.S. Non-Stop Gateways to China
Los Angeles Washington, D.C. Dallas
San Francisco Boston Detroit
New York Las Vegas San Jose
Honolulu Chicago Saipan
Seattle Houston Guam
Current annual seat capacity stands at 4,846,873 seats—a capacity jump of nearly 600,000 more seats than there were eight months ago.
There were 55,000 new seats added in the last three months alone.
There are 16 China Non-Stop Gateways to the U.S.
Beijing Shenyang Jinan
Shanghai Shenzhen Tianjin
Guangzhou Qingdao Xian
Chengdu Chongqing Hangzhou
Wuhan Jinan Changsha
Issues to Watch in 2017
- U.S. Travel Ban
—It is receiving little media coverage in China.
—There is little interest in the issue among media and general public.
—The perceived image is that it is regarding increased safety in the U.S.
- Rhetoric on China
—Disagreements on policies at the top echelons between the two countries are expected.
—The Chinese public is not concerned with U.S. politics.
—Rhetoric does not offend the average man in the street.
- Visa Rejections
—Visa rejections for MICE groups have created concern among both Chinese travel partners and some U.S. destinations.
- Open Skies
—Open Skies agreements are critical in order to allow for continued airlift growth.
2017 New Trend No. 1: Shift to Mobile
- Shift to Mobile
—Travel search and planning: over half of destination search and planning is done on mobile.
—Bookings: 72 percent of online bookings on Top 5 OTAs are done directly via mobiles, 81 percent of online hotel bookings are made on mobiles.
—Regarding booking apps: OTAs lead the way, with traditional tour operators and travel agencies playing catch up.
- Media Consumption
—Source of information: media, information and entertainment are now consumed primarily on mobile.
—Apps: phone-based news apps have become the No. 1 source of information; social media are NO. 2, and traditional media are becoming irrelevant.
Trend No. 2—Changing Purchasing Patterns
- FIT Segment is Booming
—Up 20 percent last year vs. +11 percent overall outbound.
—In certain states, pure FIT now represents 40 percent of travel and is rapidly rising.
—Semi-FIT (air/hotel/packages) represent up to an additional 40 percent of the market.
- Growth is found Online
—20 per cent growth in online purchases of travel in 2016
- OTAs and Supplier Websites Gaining Market Share
—Three OTAs dominate: C-trip, Qunar and Tuniu comprise more than 80 percent of China’s OTA sector.
—Air tickets (No. 2 after OTA booking) and accommodations (No. 3) are increasingly being booked directly on the websites of service providers.
Trend No. 3—Rise of Tier Two Cities: Airlift
- Tier One Gateways: Thee years ago, there were only three cities in mainland China with direct non-stop flights to the U.S.—Beijing, Shanghai and Guangzhou.
- Tier Two Gateways—this year, China has 16 gateways with direct non-stop flights to the U.S., including: Beijing, Shanghai, Guangzhou, Chengdu, Kunming, Wuhan, Xian, Nanjing, Hangzhou, Changsha, Chongqing, Jinan, Qingdao, Xiamen and Shenzhen.
- Airport Development—a China is building 66 new airports, nearly all of which are in Tier 2 cities.
Trend No. 3—Rise of Tier Two Cities: Population
Key to the rise of China’s Tier 2 markets is the massive population of its secondary markets.
Trend No. 3—Rise of Tier Two Cities: Growth in Spending Power
- Tier 2 Growth: The GDP of Tier 2 cities is growing 9-10 percent per year, significantly faster than Tier 1 cities, which are growing at 6-7 percent.
- Tier 2 Affluence: The spending power in Tier 2 cities is soaring and by 2020, 46 percent of China’s affluent class will live in Tier 2 cities.
- Tier 2 Travel Spend: A major Q4 2016 study by C-trip and the China Tourism Academy revealed that the top three biggest spending markets on outbound travel are Tier 2 markets.
Travel Trade Overview
- Travel behavior, purchase patterns, long-haul experience, FIT vs. Group ration and advance booking window vary from region to region.
- The nuances of each region can only be truly understood by people from those regions.
- Knowledge of local customs, attitudes and behaviors ensure successful marketing of a destination.
Established relationships are key. (Said Leroux: “You have to be on the ground; you have to be proactive.”)