China Country Market
Insights and Opportunities
Overview: China is rapidly becoming one of the most important outbound tourism markets in the world. According to the UN World Travel Organization (UNWTO), China is the fastest growing travel market in the world and the largest travel market in Asia. According to the China National Tourism Administration (CNTA), during the first nine months of 2008, China’s outbound travelers reached 34.39 million, a 14.8% increase over the same period of the previous year.
On December 11, 2007, the U.S. and China signed a memorandum of understanding (MOU) to facilitate Chinese group leisure travel from China to the United States. U.S. destinations can now market more confidently themselves in China.
Prior to this agreement, Chinese travel agencies could only organize and market leisure tour group packages to countries that have a bilateral agreement with China, often referred to as Approved Destination Status (ADS) agreements. The tourism MOU between China and the United States fulfills that function, and opens this market for U.S. companies.
Partly as a result of this agreement, the United States is becoming an increasingly popular destination for Chinese travelers. During the first nine months of 2008, Chinese arrivals totaled 388,000, up 28 from 2007. Visitation from Hong Kong, at 113,000, was up only one percent. As a combined entity, visitation totaled 503,000, up 21 percent for 2008. Around 36 percent of Chinese travel was business travel.
Based on the tourism MOU, nine Chinese provinces and municipalities are included in the scheme of the tourist group travel by Chinese citizens to the United States in Phase I. They are Beijing, Tianjin, Hebei, Hubei, Hunan, Shanghai, Jiangsu, Zhejiang and Guangdong. Currently, the China National Tourism Administration (CNTA) and the U.S. Department of Commerce are negotiating on the exact date of Phase II implementation date, after which twelve more Chinese provinces, municipalities and autonomous regions will be included. In Phase II, Chinese citizens in Shaanxi, Shanxi, Shandong, Anhui, Hainan, Guangxi, Heilongjiang, Jilin, Liaoning, Sichuan, Yunnan, Chongqing will also be allowed to participate in tour group travel to the U.S. All CNTA-designated travel agencies located in the above mentioned twenty-one provinces, municipalities and autonomous regions will be entitled to organize Chinese tour groups to travel to the U.S. The implementation of Phase II is expected to start sometime in 2009.
The U.S. travel and tourism industry stands to benefit enormously from the tourism MOU as Chinese visitation is forecasted to reach 579,000 by 2011.
Opportunities: Although Chinese tour groups were victims of two bus crashes in early 2009 in the U.S., which drew the attention of authorities on both sides as to the quality control and overall management on the American inbound tour operators, the number of Chinese international travelers is still expected to rise as disposable incomes continue to rise, and more Chinese travelers seek to travel outside Asia to the United States and other long-haul destinations.
Chinese group travel on mixed business and tourist itineraries in the past has led to significant growth opportunities in the business travel and the meetings, incentives, conventions, and exhibition (MICE) segments. In recent years, large-scale incentive travel has become an increasingly common tool for rewarding Chinese employees, and this should continue to be an area of strong growth.