IHG Chinese Travel Report
Last month I wrote about the launch of IHG’s new Chinese branded hotel chain called HUALUXE. The new chain is set to have over 100 locations across China over the next 10-15 years. IHG clearly sees the Chinese market as a huge growth area for them.
In that vein they partnered with Oxford Economics to publish The Future of Chinese Travel Report. (Press release) This report details how the Chinese travel market will change over the next decade. The findings are quite intriguing.
Interesting Findings
Scale of the opportunity
- Annual arrivals from China will total nearly 97 million by 2023 (an increase of 5% per year)
- 88 million Chinese households will be able to travel overseas by 2023
Increase in family income is the key driver behind this change
- In the next decade, over 60 million Chinese households will cross the annual income threshold of $35,000, at which point international travel becomes more affordable
International cities set to benefit most
- Cities are the primary destinations for Chinese outbound travellers, with over 85% heading for major cities around the world
- Nearly 95% of total Chinese outbound travel spending is received by major global cities
- Among top destination countries, major cities alone receive almost half of each country’s total Chinese visitors
Access is key to attracting Chinese tourists
- Destinations with easier access, including simpler visa policies will gain most
- Reforms affecting Chinese travel show levels of arrivals to be 20%pts above historical trends
Emerging Trends
Three key trends in Chinese travel will emerge over the next 10 years:
1. Chinese demand for long-haul travel will experience huge levels of growth
- China will overtake the US, UK and Germany to become the largest source market for long-haul travellers by 2020
- As Chinese tourism demand matures, preferences will shift toward more expensive, longer-haul trips
2. Chinese travellers will mix business with leisure:
- By 2023, nearly two thirds (62%) of total Chinese outbound travel will be leisure-driven – a major shift in the purpose of travel for outbound Chinese away from business
3. Chinese travellers will spend more during overseas trips:
- Per-trip spending by Chinese travellers is expected to grow nearly 75% in nominal terms by 2023
- Continuing shift in preferences towards higher-cost accommodation and upscale shopping
Analysis
Just like in so many other industries, the Chinese travel market is booming. I find it interesting that 62% of Chinese travel will be leisure driven by 2023. That is a substantial amount and shows the growth of their middle class.
Speaking of middle class, I did see one depressing statistic. Only 60 million households will cross the $35,000 per year threshold in the next decade. In a country of almost 1.4 billion people that number seems incredibly low, especially considering inflation.
Either way, it is clear that the larger travel brands will have an increasing reason to cater to Chinese travelers. IHG clearly has a plan with their HUALUXE hotels and it will be interesting to see how the other large brands react to this type of information.
Conclusion
While it is clear to everyone that the Chinese will continue to dominate more of the market given their growth, I find many of the items detailed in the report fascintating. If you want to read it for yourself, you can find the full PDF of the report here and IHG has setup a website with some amazing infographics that I highly recommend as well. Happy reading.
Chase Sapphire Preferred® Card
Chase Sapphire Preferred® Card is the old king of travel rewards cards. Right now
bonus_miles_full
Learn more about this card and its features!
Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
This kind of projection is meaningless.
US is working very hard to make sure that such projections don’t become realities. Once we are done with Russia, China is the next.