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Exactly how much is the Chinese market expected to grow?

InterContinental Hotels Group has partnered with Oxford Economics to publish one of the most comprehensive studies into the Chinese travel market ever undertaken.

InterContinental Hotels Group has partnered with Oxford Economics to publish one of the most comprehensive studies into the Chinese travel market ever undertaken.

The report reveals the scale of the opportunity for global travel destinations to benefit from shifting patterns in Chinese travel, with London, New York, Los Angeles, Tokyo, and Sydney expected to benefit most – with Melbourne and the Gold Coast in Australia also due to see an uplift.

The Future of Chinese Travel report shows that favourable economic and demographic trends shaping the Chinese travel market are set to fuel huge increases in demand for international travel over the next decade. It also reveals the opportunities this growth will present, as Chinese traveller preferences evolve towards long-haul, leisure-driven travel.

Chinese travel 3

The study reports that increases in leisure and retail spend will contribute to significant increases in the value of Chinese travellers to local economies; particularly Australia which is one of the top spending locations for the Chinese. Holiday trips proved to be the most popular purpose of travel for Chinese visitors to Australia, generating the highest average per-night spend ($449 nightly) compared to other travel purposes. Sydney and Melbourne are named amongst cities with the highest lengths of stay compared to other long-haul city destinations in the Asia-Pacific region.

 

By 2023, it is projected that Chinese arrivals in Australian cities will increase dramatically:

  • 109% increase in Melbourne
  • 98%  increase in Sydney
  • 90% increase in Brisbane
  • 86% increase in the Gold Coast

Richard Solomons, Chief Executive Officer of IHG, commented: “This is a ground-breaking piece of research, which demonstrates the sheer scale of the ‘China outbound’ opportunity for cities and local economies worldwide. With the shift towards leisure travel, coupled with the 90 million Chinese households able to take long-haul trips by 2023, the country’s growing importance in the global travel market cannot be underestimated. With 30 years of experience in China, the recent launch of our new Chinese brand, HUALUXE Hotels and Restaurants, and the roll-out of our China Ready programme, IHG is well-placed to meet this growing demand.”

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Karin Sheppard, Chief Operating Officer, IHG Australasia, Japan & Korea, and Franchising for AMEA, said: “China is one of Australia’s most valuable inbound markets and every year we welcome a large number of Chinese travellers at our hotels throughout the country. Today nearly 50 percent of our hotels here are China Ready accredited and we will grow this number alongside the growth that we can expect from Chinese guests.”

“Having a clear China strategy was critical if the Australian tourism industry was to fully leverage the projected increase in arrivals to Australia from its most valuable inbound tourism market.”

            John O’Sullivan, Managing Director, Tourism Australia

“China now represents Australia’s second largest and most valuable inbound tourism market, already worth more than A$5 billion a year and with the potential to reach more than S13 billion by the end of the decade.

“With so many other countries now competing so fiercely for the market, we can’t afford to take success for granted. This means understanding what Chinese travellers are looking for in an overseas holiday and, where needed, adapting and developing our tourism experiences to better fit their needs and expectations,” he continues.

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Adam Sacks, President, Oxford Economics, commented: “The Future of Chinese Travel Report provides a comprehensive view of Chinese travel and shows that overseas trips will become possible for tens of millions of new Chinese households within the next 10 years. History shows that destinations which improve access for Chinese travellers, experience a significant growth premium in the number of arrivals.”

“This represents a clear opportunity for both countries and international cities to benefit from the huge future increases in Chinese outbound travel.”

              Adam Sacks, President, Oxford Economics

 

The future of Chinese travel report: Key findings

Infographic Chinese travellers

  • Annual arrivals from China will total nearly 97 million by 2023  (an increase of 5% per year)
  • Melbourne arrivals are projected to increase by 109% by 2023
  • Sydney arrivals are projected to increase by 98% by 2023
  • Arrivals to Australia from China will total over 1 million by 2023
  • 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

 

Three key trends in Chinese travel will emerge over the next 10 years

Chinese travel 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
  • 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
  • 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
  • Sydney (2.2% CAGR) and Melbourne (1.9% CAGR) are amongst the top 25 city destinations globally which will see increase in Chinese traveller spending by 2023
  • Continuing shift in preferences towards higher-cost accommodation and upscale shopping

 

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

 

HUALUXE Hotels and Resorts

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IHG opened the first hotel under its HUALUXE Hotels and Resorts brand – HUALUXE Yangjiang City Centre – last month. The HUALUXE brand was developed based on extensive market insight, reflecting its deep understanding of Chinese guests. IHG plans to take the brand to 100 cities across Greater China over the next 15 to 20 years, and over time, introduce the brand to key international destinations, such as London and New York.

 

IHG’s China Ready Programme

As part of IHG’s ‘China Ready’ programme, tailored offerings are provided to make Chinese guests feel appreciated and welcomed. Already rolled out to over 80 hotels across 24 counties, IHG’s China Ready hotels have Mandarin-speaking staff, trained Chinese chefs and provide cultural awareness training to their people. Other services include facilities for guests to pay with UnionPay, the only domestic bank card organisation in China, tailored food and beverage offerings and Mandarin-speaking television channels in hotel rooms.

 

In Australia alone, 11 properties are China Ready accredited, including:

  • Holiday Inn Parramatta
  • Holiday Inn Potts Point Sydney
  • InterContinental Sydney
  • Crowne Plaza Melbourne
  • InterContinental Melbourne The Rialto

 

IHG in Greater China

IHG has more than 30 years of experience in Greater China, having opened its first Holiday Inn hotel in China in 1984. It continues to lead the hospitality industry there, opening 11-thousand rooms in 2014 alone, its most ever during a calendar year and more than double that of its nearest international competitor.

Are you surprised by these numbers?