Hong Kong – The Chinese tourists wandering through Paris’ Louvre this summer or shopping along New York’s Fifth Avenue are part of the nearly 65 million Chinese who will travel abroad this year, according to estimates by the China Tourism Authority.
These tourists are among China’s wealthy. But consider this: More than 20 times that number of Chinese citizens will travel within China this year.
So for those who can’t afford to visit to Europe, Chinese tourism developers are trying to bring Europe to China.
Witness the popularity of Thames Town – a places that looks and feels like an old English town, but is situated on the Yangtze River, not the Thames. This replica town on the outskirts of Shanghai isn’t alone. A Chinese firm plans to rebuild the historic village of Hallstatt, Austria, in Guangdong Province – much to the apparent ire of some Hallstatt citizens.
Yet looking at the throngs of newlyweds who throng to Thames Town, like those pictured above, clearly Chinese developers think they’re onto something.
So who is the domestic traveler in China? How much do they spend? The latest statistics released by the Chinese government is from 2009. In that year, the average amount of money a Chinese traveler spent per trip was 535 yuan (US $82). That doesn’t sound like a lot, but we’re talking about volume. According to the government, the number of trips taken by domestic travelers more than doubled between 1999 to 2009.
In 2009, Chinese made 1.9 billion trips. Considering the population of China is 1.3 billion, this averages out to one or more trips per Chinese citizen. While Hong Kong and Macau are top destinations, other resort areas like southern China’s Hainan Island and the eastern coastal city of Qingdao also draw many local tourists.
As a group, the Chinese low-to-middle market traveler is formidable. Marriott International’s COO and President Arne Sorenson is aware of this. In a recent interview, he told me the most interesting change he’s seeing in China’s hotel industry is the face of the guests.
“In virtually every one of our hotels in China today, the most significant guest – in terms of percentage of guests in the hotel – are Chinese travelers. That gets us into a different business than we were in, certainly 10 years ago, which was opening hotels, by and large, catering to global inbound travelers.” As a result, Sorenson sees a growing opportunity for middle market hotels aimed at the Chinese domestic traveler who may not be able to afford the Ritz Carlton (a Marriott brand) , but will find the rates at a Courtyard Marriott appealing. There are already 10 Courtyard Marriotts open in China, three under construction and five more approved.
“Most of the domestic travelers are still on a rather low budget, “ says Chak Wong, finance professor at Chinese University of Hong Kong. “I can see specialized hotels catering to the low-end benefitting from the boom. However, there are not a lot of specialized chains providing clean, cheap and efficient hotels like those in Europe yet. “
Sam Goodman is an entrepreneur and author of “Where East Eats West,” a foreigner’s how-to-guide on doing business in China. “If you’re not focusing on the high-end, then you need to focus on the low-end and go with the Chinese saying ‘bo li duo xiao’ which means ‘small profit, high volume,’ ” says Goodman. “As an entrepreneur, I look for ideas that are scalable. Travel, as a whole, is a very large industry, but extremely fragmented. The larger brands go to where the money already is. [They] have no real desire to nurture and wait for the smaller players to develop the market.”
While Marriott is one of the big names reaching out to the price-conscious traveler, it’s a challenge keeping pace with China’s growth. Sorenson acknowledges the number of middle market Marriott hotels breaking ground is still not enough. He says,” It’s much fewer in number than the potential China ultimately presents at a level like Courtyard. It could be possible we would participate in the (pricing) segment below Courtyard as well.”
With hotels and replica towns catering to domestic Chinese travelers, expect the travel landscape to change by the day.