18 September, 2018

China Outbound Travel continues to flourish – at the benefit ofAustralia

Australia might only have a modest market share in China international outbound travel. But its foundations and therefore the prospects are more promising than for most of other areas in this world. This shows another analysis of data of a pilot study on the travel behavior of the Chinese population, recently collected in a survey-at-source with 1’000 respondents (representative of the Chinese travelling population) by myself in cooperation with Survey Yes (Suzhou Zhongyan Network Technology Ltd.).

Australia has a modest market share – but great prospects.

With a market share of about 2.6% of slightly more than 51 million international trips (outside Mainland China, Hong Kong, Macau and Taiwan), Australia might momentarily not be the global leader in attracting Chinese tourists. However, the prospects for the future are very promising. According to the author of the study, Christian Laesser from Switzerland, who has recently been visiting the Tourism Group at the University of Queensland under the Jim Whyte Fellowship scheme, there are several drivers which will fuel future demand. These include a customer-friendly visa regime, special and unique nature attractions, a generally authentic tourist environment, the many personal links Chinese have with their ethnic community in this country (family members for instance), the increasing familiarity with travelling to and within Australia (because of those strong personal ties), and, importantly, the positive safety and security conditions. The only apparent downturns are related to the cost of travel, which are perceived as comparably high.

When it comes to hard choices between destinations,
Australia is – most of the time – the winner.

In about 50% of all outbound travel cases, Chinese are making a travel choice from a real “choice set” containing at least two different continental destinations. Europe appears in about 30% of all those choice sets, followed by North America in 27% and Australia in 26% respectively. In such “competitions”, the odds of Australia winning against Europe are 3:1 and against all other destinations (except North America) 2:1. In contrast, the odds are even (1:1) when they have to make a choice between North America and Australia. Europe is losing mostly because of an arduous and little customer-friendly visa regime (e.g. Chinese need different types of visa if they want to travel vs, visiting friends and relatives), the lack of personal links and relationships (there are fewer personal reasons to travel to Europe in comparison to Australia), safety and security (which repeatedly has been an issue), and value for price.

Hence, and according to the study leader, Europe might momentarily have a high market share. But at the same time other destinations, including Australia, are successfully contesting and undermining that position.

Travelers to Australia are the OTAs (online travel agencies) darlings.

The study-at-hand confirms what has been revealed many times before: When it comes to travel planning and booking, Chinese, across all generations, have generally a very high online affinity, accessing a rich variety of sources. This holds true in the case of travels to Australia. More specifically, one can observe an exceptionally high market share of mostly online tour operators and travel agencies, both for information collection and bookings. In contrast, direct online booking sources (e.g. a hotel booking page) are used to a comparably lesser extent. Convenience and efficiency are probable reason for this type of information search and booking behavior.

The proportion of pure group travel of Chinese is generally overestimated.

With almost 70% so called “Free Independent Travelers” (FIT), Australia has the largest share of these travelers in an intercontinental comparison. There are many possible reasons for that. On the one hand, it can be stated that numerous hybrid/ intermediate alternatives of the travel organization are increasingly softening the rigid division into FIT or group travel. For instance, it is not completely clear what applies when a traveler arrives in Australia as FIT, but later joins a group there. In addition, the predominant travel types when coming to Australia signify little organizational complexity. Those types - for instance - include “Visiting friends and relatives (22%), “Taking a cruise” (22%), and “City trips” (18%). Finally, there is also a high share of so-called “Free wheelers” (21%); tourists which do not follow a specific touring plan but enjoy instantaneous decision-making, right on the spot. This type of behavior might be feasible in small groups, but never in large ones.

Australia is weak in daily travel expenditure, but going strong in shopping expenses.

“Chinese” trips to Australia last about 12 days, whereby they spend about 330 AUD a day for their travel. This amount does not include their shopping expenditure, which amounts to an additional 1’900 AUD per trip (158 AUD/ day; of which less than half is spent on gifts). This pattern is quite similar to travels to the US and Canada. In contrast, daily expenditure when travelling to Europe is about 30% higher, whereas expenditure for shopping is about 20% lower.

The future is bright…if Australia does not just rely on its good luck.

The prospects for China outbound travel to Australia are very promising. Travel is convenient in such a way that accessibility is constantly improving, and a customer-friendly regulation of the sector makes it easy for Chinese to travel to this country. In addition, personal relationships of the Chinese community in Australia with their friends and relatives will further fuel an increasing flow of visitors. This might keep daily travel expenditures comparably low; however, gift shopping will continue to be high as this is key to fostering those relationships.

Business around this flow of tourists will most likely to continue to thrive as well. But regulators and the local business communities need to make sure that a high share of the economic benefit and profit margins remain within Australia. This country is more than a commodity supplier of great special and unique nature attractions, where one can spend a great time with spouses, friends, and relatives.

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