What’s the impact of the Chinese luxury traveler on the overall luxury travel market? “The Chinese Luxury Traveler 2017” survey by ILTM and Hurun Report Inc., shows how these travelers could have a dramatic effect on the overall luxury travel market worldwide in terms of demand and pricing.
What’s the Size of the Market?
In 2016, according to a report issued by Ctrip and the China Tourism Research Institute, Chinese tourists made 122 million overseas trips, up 4.3 percent compared with the previous two years. An increasingly larger portion of those travelers are in the luxury category (according to the new ILTM survey), with the number of yuan billionaires hitting 1.34 million last year, up 14.1 percent from the previous year.
How Much Do They Spend?
The ITLM survey found that Chinese luxury travelers had an average wealth of nearly 22 million yuan ($3.24 million) and their travel expenditures reached nearly 380,000 yuan ($55,985). Their purchasing power also has grown significantly over the past two years, climbing from 14 million yuan ($2.06 million) per capita in 2015 to 22 million yuan ($3.24) this year, a 57 percent increase.
Where Do They Travel? According to the ITLM, Chinese luxury travelers are enthusiastic about overseas travel with the amount of time spent overseas for tourism purposes rising 5 percent to 70 percent of those surveyed. While the economic slowdown in China in 2016 led to some luxury travelers spending more time at work, this did little to reduce their appetite for travel.
Destinations visited abroad over the past year by these travelers are, in order: Europe (45 percent); South and Southeast Asia (44 percent); Americas (31 percent); Oceania and Pacific Islands (26 percent); Japan and South Korea (24 percent); Polar Regions (23 percent); Hong Kong, Macau, and Taiwan (21 percent); Africa (15 percent); and the Middle East (10 percent).
Where Do They Stay?
Of those Chinese luxury travelers surveyed by ITLM, 32 percent had accommodations budgets topping 5,000 yuan ($736) per night with an average budget of 3,800 yuan ($560) per night. Millennial Chinese luxury travelers’ hotel budgets actually rose 7 percent compared to last year, from 3,113 yuan ($458) to 3,325 yuan ($490) per night.
Luxury hotel brands are still the first choice for Chinese high-end travelers, but high-end boutique brands are increasingly more popular. Top luxury brand choices, for both major and boutique luxury brands, were, in order: Ritz-Carlton, Banyan Tree, Four Seasons, Mandarin Oriental, Fairmont, Peninsula, Aman, Langting, Park Hyatt, and St. Regis. Preferred accommodation types were holiday hotels (81 percent), business hotels (18 percent), B&Bs (9 percent), and apartments (6 percent).
When Do They Go?
Like high-end travelers in other parts of the world, time of year has a major effect on where Chinese luxury travelers plan future trips. Indeed, 59 percent of those surveyed said they avoid traveling during national holidays. In summer and fall, Millennial Chinese luxury travelers, in particular, focus on travel to exotic islands, with Phuket (27 percent), Maldives (18 percent), Fiji (16 percent), and Sanya (16 percent) being the top choices.
During the colder winter and spring, these travelers venture out to warmer destinations like Australia (16 percent) and Phuket (16 percent), but there also is a large enthusiasm for skiing, with high-end Chinese travelers going to Japan (32 percent), Canada (9 percent), and Switzerland (7 percent).
Why Do They Come Here?
The research company YouGov’s survey, “Affluent Perspective 2017: Chinese Luxury Shoppers in America,” found the majority of China’s affluent consumers (56 percent) plan to visit America within the next two years. Indeed, China is crucially important for the U.S. travel industry. The U.S. National Travel and Tourism Office says Chinese travelers spend the most of any foreign visitors—an estimated $34.8 billion generated by 2.6 million visitors through the first 10 months of 2016. This translates to an average spend of approximately $13,400 per traveler.
Among the Chinese affluent preparing a trip to the U.S. in the next couple of years, many of them want to go shopping for high-end luxury goods. Data shows that 51 percent of this group say they travel internationally to buy luxury goods and services, with the U.S. ranking fourth among countries they visit most for shopping. Those who do so are young, cultured, educated, successful, extremely happy, and comfortable anywhere in the world. They also prefer well-known brands that are recognized around the world.
How Do They Book?
Travel agencies dedicated to the luxury market have grown at a rapid rate over the past two years, offering customized travel products. And 72 percent of younger Chinese luxury travelers made use of them in 2017, up 7.5 percent compared with the previous year.
Top outbound Chinese travel agency brands used by Chinese luxury travelers were 8 Continents, CITS Amex, CITS, Ctrip, CTS, CYTS, Diadem, D-Lux, HH Travel, Magic Travel, My Tour, and Zanadu. So, like their luxury traveler counterparts here in the U.S., Chinese luxury travelers seem to like the service provided by travel advisors to fulfill their travel needs.
As always I welcome your feedback on what’s changing in the luxury market today. I look forward to getting your comments. Let’s keep the conversation going!