In recent months, mainstream and travel trade journalists issued a flurry of articles about the growth of Chinese outbound tourism. I find the sheer magnitude of the numbers and the estimates remarkable:
- As of year-end 2012, Mainland China was the biggest source of foreign tourists in the world, with 83.2 million Chinese citizens having traveled abroad during the year, a 398% increase over the previous ten years. This number is pegged at 97 million for 2013, with some observers seeing continued annual growth of 15%–20% for the next few years.
- Collectively, Chinese travelers will spend roughly $129 billion from mid-2013 to mid-2014 on outbound travel, more than any other nationality, having surpassed both the US and Germany for the first time in 2012.
- More than one million Chinese citizens have assets exceeding $1.6 million, with foreign travel generally thought to be an essential part of their spending habits. Of this elite group, 68% spend more than $8,000 while overseas, and 28% spend more than $16,300. Many with less modest incomes, especially in second- and third-tier cities, are also saving for their first visit to the West.
- China is on track to become the second largest cruising market after the US by 2017.
I should add a caveat here that a large number of these Chinese nationals will spend their money for travel to nearby destinations like Hong Kong, Macau, South Korea, Thailand, Taiwan, Singapore and Japan. But travel to the US, Europe and other Western countries is also experiencing significant growth, and at an accelerating pace.
What Does This Mean for Small Ship and Expedition Cruising?
I was curious what these trends mean for the small ship and expedition cruise segments of the industry – the area that I know the best – and wanted to learn a bit more. This blog post explores some of the marketing issues involved in tapping into the Chinese market, as well as the many cultural challenges in bringing these travelers aboard small cruise ships. By small, I am referring to vessels carrying fewer than 500 passengers, but more often in the range of 100 to 200.
My own interest in Chinese outbound tourism was piqued by the rapid increase in visitors from that nation to Antarctica, quadrupling over four seasons from 563 to 2,328 (including residents of Hong Kong). This latter number, for the 2012-13 season, is still relatively small in the scheme of things, but good enough to put the nation in fifth position, with nearly 7% of the total visitors and more than either Canada or France. Only the U.S., Germany, Australia and the U.K. sent more tourists to Antarctica last season. China is expected to achieve an even greater percentage when the current season concludes in March.
Let’s try for a moment to get behind these statistics. After all, these travelers are people and not just numbers. They are customers with cultural backgrounds and aspirations that factor into their buying decisions when they travel overseas. We can look at some of these, realizing of course that generalizations and anecdotes about a nationality only go so far in helping us to understand motivations and behaviors.
What else is behind the ability and, perhaps more importantly, the desire of Chinese nationals to leave their country’s boundaries to travel – not to Hawaii, Paris, London or New York – but aboard a small ship exploring, in some cases, remote corners of the world?
Improvements in the Visa Process
Most of the articles I’ve read and the cruise marketers I’ve spoken with agree that recent loosening of visa requirements and a streamlining of the process have helped.
But there’s a long way to go for some countries where small ships operate, and the visa documentation process still can be onerous. By way of background, Chinese nationalities are currently permitted visa-free entry to only 44 countries compared to 173 for the U.K., Finland and Sweden and 172 for the U.S., Denmark and Germany.
Slow, outdated visa processes are not reflective of the country’s status as the second-largest economy in the world or of the desire of Chinese nationals to travel overseas. Making progress in this regard, the U.S. along with some 20 other countries have taken steps to allow online visa applications, reducing approval times and permitting multiple-entry. The Obama Administration publicized in 2012 its goal of increasing visa-processing capacity for Chinese travelers by 40% in 2013.
The U.K. Created quite a splash last October when it waived the requirement for some Chinese groups to apply for a separate visa beyond that needed for the European Union’s Schengen area. The U.K. also launched a 24-hour “super priority” application and is considering other visa concierge services to make entry even easier.
Rather than fear potential immigration problems as in the past, some Western countries are proactively making themselves more competitive to win their share of China’s outbound tourism spending. But there are still barriers with other governments. Small ship operators interested in this market will want to ensure beforehand that countries hosting embarkation and itinerary ports-of-call pose no visa challenges to potential Chinese groups or individual travelers.
Doing Business is Easier
In recent years, licenses have been granted to major travel services to organize Chinese tour groups overseas, such TUI and American Express. Prior to that, the government prohibited foreign companies from participating directly in outbound tour business. Nevertheless, it will likely be some time before Western small ship cruise operators can market and handle bookings directly.
In the meantime, the key to developing business is a close working partnership with established agencies based in China, according to Kenneth Keng, principal of Amazing Cruises & Travel in New Jersey. Of the 2,300 Chinese travelers to Antarctica during the 2012-13 season, his firm was responsible for nearly half, with four full-ship charters and a half-dozen groups. Amazing also took nearly 500 Chinese guests to the Arctic this past summer.
“Particularly with groups interested in something like expedition cruising, it’s important for an operator to have good relationships and connections with local business people within Chinese society,” he said. “You must meet them on their turf and earn their trust before they’re willing to recommend their clients to your cruise programs.”
Kenneth, who was born in Taiwan, similarly notes that while China represents a huge market, it’s not one that is easy to crack. “For specialty cruising, marketing here is very people-intensive; you can’t compete on price alone,” he said. Chinese travelers trust recommendations from people they know. This type of relationship building is also critical in strengthening a small ship brand and competitive position in the long run.
And while much is being said about the increase in online bookings in other parts of the world for a range of travel products, Kenneth confirms that the relatively esoteric nature of expedition cruising for now makes it the exclusive domain of local agencies and face-to-face service channels.
Chinese travelers are, however, researching their holidays online in increasing numbers, and U.S. firms like Amazing Cruises and Quark Expeditions (a TUI company) have stepped up the pace of posting cruise information in Mandarin on their websites.
Changing Traveler Demographics, More Interest in Adventure
According to the Tourist Research Center of the Chinese Academy of Social Sciences, outbound tourism will see rapid growth from these demographic segments:
- Young affluents (ages 18-30),
- Senior professionals (ages 45-55), and
- Small groups of families and friends (ages 30-45)
While these segments are increasingly traveling apart from organized group tours, Kenneth Keng says that independents now account for just 10% of the market for expedition cruising; groups still account for 80% to 90%. He admits that Chinese adventure cruise enthusiasts are trending younger, from an average of mid-50s five years ago to the mid-40s now. “These passengers are young professionals eager to see something unique and share it with their friends back home. They are pioneers in this sense, but they also want to learn something from the trip and satisfy their own curiosity,” he added.
This agrees with reports from Trip Advisor China, the official Chinese travel search site: interest in outdoor and adventure destinations more than tripled in the past year. And, in an article last October in The Atlantic, Gabrielle Jaffe writes that China’s affluent are no longer limited to standard package tours and now seek more customized adventures overseas, even trips such as bird-watching expeditions. Those wanting these tours tend not to be first-timers, and are more comfortable using foreign languages. Many have studied or traveled overseas previously for work.
Jaffe writes insightfully that China’s developing tourism market is perhaps most similar to that of the United States, mirroring how Americans traveled abroad a half-century ago. “In the U.S., cruise ship and bus tours promising ‘Europe in 18 days’ in the 1950s and 1960s were soon followed by the advent of the hippie trail and luxury individual travelers trying to recreate the Grand Tour. China, it seems, is headed in the same direction.”
Changing Behavioral and Environmental Norms
The rapid development of China’s tourism in recent years has been matched by reports of poor behavior on the part of the country’s travelers. While some of the anecdotes about these tourists’ manners are innocuous and in many ways no different than that of American, German or Japanese travelers, some of the incidents have raised eyebrows, receiving sensationalistic treatment in both the Western and Chinese domestic press:
- A teenager from Nanjing carved his name into a 3,500-year-old temple edifice in Luxor, Egypt.
- On a Chinese blogging platform, a group of tourists visiting the Paracel Islands posted pictures of themselves fishing, hunting and eating several types of exotic marine life, some of which were endangered species. They also broke off bits of colorful living coral to take home as souvenirs.
- Beach-goers in Sanya, an island town in southern China, posted photos of themselves holding a dolphin that had become stranded near the shore. The dolphin already may have been sick, but it later died.
Of course, travelers from other nations can and do precipitate unfortunate occurrences like these, either unknowingly or intentionally. But there’s something more interesting at play here, and social media seems to be part of it. In all the cases mentioned above – and in others, such as the occasional mistreatment of Chinese circus animals – embarrassment and outrage by the public were quickly expressed on the country’s popular social media sites. This will likely have an educational, behavior-tempering effect going forward.
Along with this public pressure, the Chinese government last October issued a Tourism Law of the People’s Republic of China. While much of the new law is intended to protect Chinese nationals from unregulated Chinese tour operators, there also is a section instructing Chinese tourists how to behave overseas. Some of the rules strike Westerners as rather basic or perhaps obvious: no spitting in public and flushing the toilet after use, for example. But they also point to an increasing self-discipline for China’s citizens as they venture overseas.
An article in the November 6 issue of The Economist notes, “China’s new travelers want to be respected in the countries they visit, not looked down upon as a kind of scourge.” It goes on to say that the scrutiny brought about by the new tourism law should help rein in unruly tourists’ behavior. The headline of a piece in the August 8 issue of The Atlantic shouts the question, “Why Are Chinese Tourists So Abusive Toward Wildlife?” The author, Sophie Lu, suggests that the development of environmental conscience and practical know-how is a lengthy process that can take a while to put into practice.
When they venture abroad, the current generation of travelers is more inclined to seek instruction and cues on how to act appropriately. Making a similar observation about his Arctic and Antarctic customers, Kenneth Keng says, “These Chinese passengers are privileged and often relatively wealthy. While they’re good people, they don’t come from a culture that is used to experiencing wildlife in a protected environment.” He stresses the importance of Chinese-speaking guides experienced in environmental and wildlife issues – and in his employ rather than the group’s – who understanding the rules and can set a good example.
Pride and Prestige as an Incentive for Travel
While progress is being made on both the environmental- and wildlife-awareness fronts, differences remain in what Chinese travelers are looking for when considering a small ship program.
Certainly, they are looking for bragging rights – to be the first among their friends and colleagues to visit Antarctica or the upper reaches of the Amazon River, for example – and in this their goals are not so different from many Western bucket-listers.
But Antarctica is a particularly interesting case, as Chinese travelers’ motivations may also parallel their government’s interest in the continent. According to a January 8 article in MySinchew.com, the recent exploits of the icebreaker Xue Long (Snow Dragon) in the rescue of passengers aboard the research vessel Akademik Shokalskiy shines a spotlight on China’s polar ambitions. A few points, based on recent articles, can help bring these into sharper focus:
- One of the primary goals of China’s five-year polar plan is to use scientific endeavors to increase the country’s status and influence.
- The Xue Long’s current mission – albeit a sidetracked one – is to bring construction materials for the country’s fourth research station and to scout for a fifth. The latter will provide it with one more than either the U.K. or Australia, and only one fewer than the U.S. And, a new more powerful Chinese icebreaker will enter service in 2015.
- China’s Antarctic research spending has doubled in the past decade whereas Antarctic budgets remain constrained for other leading research nations. While some of the country’s research will undoubtedly benefit many nations – e.g. deep-space research and investigations into the earth’s climatic record of the past 1.5 million years – other programs are mapping out Antarctic resources. Some observers say that China is taking the long-view on the eventual extraction of resources that are protected by the Antarctic Treaty through 2048.
I could list a few more points along these lines, but you get the picture. As they relate to tourism, they underline the pride and prestige of the Chinese population. These goals and achievements resonate loudly at home, and among those interested in exploring the world beyond their national boundaries.
China’s citizenry look at their nation’s current polar developments much the same way that British and Norwegian citizens did 100 years ago during the heroic age of polar exploration, or the way the Americans were glued to their TVs following the moon program in the 60s and 70s. The difference is that the Chinese can more easily follow their heroes into what is for them an exciting new travel frontier. These tourists are looking to their country’s future, and are avidly following it, in spirit and in the flesh.
Klaus Dodds, a professor of geopolitics at the University of London sums it up pointedly in the November 16 issue of The Economist: “China is saying, ‘We don’t give a damn about Shackleton, Scott, all these white European heroes. You can keep that. What we’re interested in is the future.’”
While this nationalistic pride is also motivational for Chinese tourism to the Arctic, it’s probably no surprise this isn’t a factor in small ship cruising to other regions and countries.
But there is interest among a tiny but growing number of Chinese travel trendsetters, and Western small ship and tour operators are priming the pump for what they see as an eventual strong market.
For example, in conjunction with Alabama-based International Expeditions, Kenneth Keng’s Amazing Cruises has begun promoting trips on the Upper Amazon through his network in China, and expects to see good results. And he continues to fine-tune an expedition cruise program for Chinese travelers in the Galapagos Islands.
Rudi Schreiner, president of the California-based European riverboat company Ama Waterways, is also keeping an eye on China’s outbound tourism market. “We attended the ILTM (International Luxury Travel Market) in Shanghai last year for the first time to get a sense of the potential market. There were only a few other Western small ship exhibitors present.”
He explained one of the reasons there is no rush to make inroads into the Chinese market among small ship operators is the current overall strength in bookings from the U.S. and E.U. markets. “We have the good fortune of having full ships early in the game because of Americans’ penchant for booking early,” he added. Other small ship operators I talked with made the same point.
And Karthick Prabu, the general manager and writer for Tnooz in Asia, advised Western marketers in a December article that Chinese travelers tend to be more spontaneous and have shorter planning timelines than their Western counterparts. “Planning for a vacation three to six months in advance is not the cultural norm in China.”
But it’s only a matter of time, added Rudi. “Wealthy Chinese travelers are now visiting European capitals, staying at top hotels and shopping for luxury goods. They seem to be focused on the more-extreme aspects of small ship cruising in remote regions. European riverboats aren’t yet quite on their radar.”
It isn’t so different from the Americans, he said. As a group, U.S. travelers really didn’t grasp the benefits of small ship cruising until the 1990s and the first decade of this century, a time when growth in this segment of the cruise industry really began to take off.
Tom Pelizzaro, president of St. Louis-based International Destination Marketing and a long-time representative for Galapagos cruise operator Metropolitan Touring, concurs on the eventual importance of Chinese travelers for the small ship market: “We all know it’s going to happen. When it hits, it will be huge.”
Have you had any experiences in marketing to outbound China tourists? I'd love to hear any questions or comments you might have.
Postscript: As I was getting ready to post this, several articles useful to those marketing to China's outbound tourism trade came across my desk. Both are written by Wolfgang Georg Arlt, founder and director of COTRI (China Outbound Tourism Research Institute, www.china-outbound.com). He's worth following if you're interested in this important market. Twelve Ways to Understand the Chinese Traveler and China's Outbound Tourism: The Young and the Old Joining the Middle Aged Abroad. Follow Wolfgang @COTRI_Outbound on Twitter.