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China Market Profile

China holds its position as California’s top overseas market with the continued expansion of new direct flights and gateway city additions to California. China’s rapid economic growth is slowing, but it remains an economic powerhouse as the second largest economy in the world. The market continues to be a critical focus for Visit California, which operates six offices across the region in Shanghai, Beijing, Taipei, Chengdu, Wuhan, and Guangzhou.

 

MAJOR TAKEAWAYS

  • Young travelers expect digital transaction methods be available.
  • Chinese travelers see California as a welcoming, free-spirited land of abundance.
  • Restrictive visa regulations continue to negatively affect Sino-U.S. travel.
  • Women are significantly more likely to travel abroad than men (59 percent to 41 percent).
  • FIT travelers are spontaneous and usually plan vacations only one to three months in advance.
  • Trade tensions between China and the U.S. remain a factor to watch.

China Profile

1.6 Million
In-Person Trips, 2018
$3.5 Billion
Visitor Spending, 2018

Market Conditions

GDP Annual Growth Rate

  • China’s GDP expanded 6.7% year-over-year in the first three quarters of 2018 to about 65.09 trillion yuan.
  • The IMF has maintained its forecast for growth in the Chinese economy at an unchanged 6.6% for this year.
  • China’s consumer price index (CPI), a main gauge of inflation, rose 2.5% year-over-year.

Exchange Rate


  • 1 Chinese Yuan equals 0.1479 U.S. Dollar
  • The RMB continues to depreciate due to trade issues and a strong U.S. dollar but shows no impact on travel to the U.S.

Travel & Planning Methodologies

Airlift

  • 149 weekly non stop flights
  • 45,000 weekly non stop seats (+7.5%)
  • 2 new routes added in past year
  • New route: Xian—Los Angeles by Hainan Airlines launched December 2018
  • New route: Shenyang —Los Angeles by China Southern Airlines launched December 2018

Booking

  • Planning timeframe: one to three months in advance (FIT Travelers — 40%–45% of the in-total)/Three Months to six months in advance (group travelers).
  • Booking timeframe: August–September for October vacation period; September–November for travel between December and February; March–May for travel between July and August.
  • Online tools are key in both the destination selection and actual booking.
  • Online platforms are the China outbound travel purchasing channels of the future.

Market Barriers & Risk Factors

VISA ISSUES

TRAVEL BOOKINGS

The prospects among key tour wholesalers for bookings to the U.S. in 2019 are pessimistic unless tensions from the U.S. China trade war are defused. Many large tour operators believe that the Chinese government will act in some way to put a brake on U.S. travel in 2019 if the current U.S. China trade war continues.

Competitive Landscape

U.S. market share of Chinese Visitors among competitor set (long-haul):

Other Market Insights

MARKET

General

  • Outbound: Chinese outbound tourists took 71.31 million trips in the first half of 2018, up 15% over last year.
  • U.S. ranks 5th on Chinese visitor Satisfaction Index developed by China National Tourism Administration. The top five countries are: Singapore (84.22), New Zealand (83.85), Maldives (83.05), Mauritius( 82.58), U.S. (82.17).
  • Digital transaction methods are a must especially for young travelers.

PRODUCT EXPERIENCE

  • The opening of the policy of ‘two births’ has led to the rapid increase of the family travel market. Additionally, the rise of outbound travel forms, such as parent-child travel and family travel, has promoted the increase of group travel.
  • Semi self-guided and high-end package tours are on the rise as mature travelers demand a customized and flexible travel experience.

AUDIENCE

  • Women are more likely to go abroad than men. In 2018, 59% of outbound tourists were women while 41% were men.
  • Group tours are still popular, especially in the second, third and fourth tier cities and regions. However, in addition to group tours and FIT, alternatives such as customized tours, private tours or booking a local guide through a tourism platform has become a new choice for Chinese tourists.
  • Family travel still accounts for the highest proportion of travel at 30% while solo travel is at 8%. Travel has become one of the most popular leisure and consumption ways for single men and women.

 

Sources

  • AVIAREPS Research
  • National Bureau of Statistics
  • Tradingeconomics.com
  • National Bureau of Statistics of China
  • CTR
  • iResearch
  • Bloomberg.com
  • China Market Profile
  • Average weekly flights and seats, DIIO: January –December 2018
  • U.S. Department of Commerce
  • Tourism Economics
  • CTrip Travel Orders Statistics
  • Carat CCS

 

 

 

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