China’s travel industry sees double digit growth for domestic and outbound segments

July 11, 2019

Latest research from the world’s leading market intelligence agency Mintel indicates that China’s travel market is poised for positive growth in the years ahead.

Today, the Chinese travel market is dominated by the domestic segment; Mintel research reveals that when it comes to the number of travellers, the domestic segment saw a stable growth rate of 11.3% between 2013-18. Furthermore, Mintel estimates that the domestic segment will grow at a CAGR (compound annual growth rate) of 10.5% over 2018-23 to reach 9,168 million travellers in 2023.

Taking a look at the outbound travel segment, the number of Chinese tourists travelling abroad grew at an estimated rate of 12.6% in 2018, signalling a recovery from the previous three years when rates increased between 4-9%. Looking ahead, Mintel predicts that the outbound travel segment will grow at a CAGR of 11.3% between 2018-23, to reach 251 million travellers in 2023. To put things into perspective, Mintel research shows that China’s outbound travel segment grew at a high CAGR of 19.6% between 2009-14; suggesting that the segment is entering market maturity in the years ahead.

When asked about their reasons for outbound travel, it seems shopping is no longer a key motivator as was the case in recent years. Instead, 64% of surveyed Chinese consumers* say that historical sites (eg The Eiffel Tower, the Egyptian pyramids) play a major role in their decision to travel abroad over travelling domestically; meanwhile, more than half (53%) of these respondents say they are influenced by unique landscapes (eg canyons) and theme/amusement parks (respectively). Similarly popular, Mintel research shows that delicious food (51%) encourages Chinese consumers to travel outbound. On the other hand, just one third (34%) of Chinese respondents choose to travel abroad for famous shopping malls (eg Galeries Lafayette).

Saskia Zhao, Research Analyst, Mintel China Reports, said:

“The growth of the Chinese tourism industry is mainly driven by the domestic travel market, with Mintel research predicting a steady growth rate for the segment over the next couple of years. After a few challenging years, China’s outbound travel market has rebounded and returns to double-digit growth. However, the outbound segment has the potential to maintain a high growth rate as compared to the domestic segment. That said, Mintel foresees the outbound travel segment will soon enter into a stage of market maturity. Looking ahead, offering regular outbound travel products may not be sufficient to fuel growth as these product offerings leave little room for profits—moreover, a price war is not a strategy for sustainable growth. The opportunity in the outbound travel market lies in product differentiation. Suppliers in the travel industry need to be prepared to compete on service quality, product variety and innovations based on consumer need. For example, the appeal of shopping when travelling outbound is no longer what it used to be. Now, travel destinations would do well to leverage natural landscapes, local culture, street views and food to attract Chinese consumers.

Pay extra attention to families with children

While one might expect singletons and couples without kids to travel more often than those with kids—all due to their flexibility in arranging trips—Mintel research shows that the opposite rings true. Nearly seven in 10 (68%) married Chinese consumers with kids have travelled abroad in the last 12 months*, as compared to 49% of married consumers without kids and 60% of singletons, according to Mintel research.

Meanwhile, two-thirds (66%) of Chinese respondents who are married with kids say they would travel outbound for historical sites. Furthermore, theme/amusement parks are more appealing to families with kids; over half (57%) of married consumers with kids say that they will travel abroad for theme/amusement parks, while just 42% of singletons and 34% of consumers married without kids say the same. Islands are also more appealing to families with kids (41%) than those married without kids (31%) and singletons (35%).

“Families with kids travel more frequently primarily because they tend to have higher incomes and, therefore, bigger travel budgets. Crucial for destinations and travel companies is to motivate parents to travel abroad by communicating the message that travelling with kids can be easy and enjoyable. According to Mintel Trend ‘Slow It All Down’, taking a step back and enjoying the moment is what consumers appreciate in today’s modern, fast-paced world. Island vacations and other destinations can apply the concept of ‘zero burden’ in their marketing campaigns. It is essential that they deliver the message that having fun with kids can be achieved easily and effortlessly.” Saksia continued.

Short videos have great potential as travel information sources

Finally, Mintel research shows that short videos have great potential for holiday planning; half (50%) of Chinese consumers who plan to travel abroad get their information from travel-focused shows or films (ads). In comparison, over two-thirds (68%) of Chinese respondents with plans to travel abroad look to travel guides on travel websites (eg Ctrip, mafengwo) for travel-related information, while 45% rely on websites of destination tourism/attractions.

“Mintel Trend ‘Without Words’ discusses how consumers are busier today than ever before and have less time to read text advertisements. As such, pictorial messages are replacing text when communicating with consumers. Short videos can be viewed as the next evolution of pictorial messages, and due to its well-known popularity among Chinese consumers today, we foresee short videos will become a mainstream tool of communication in the future, especially within the travel industry.” Saksia concluded.

* 3,000 internet users aged 20-49, November 2018

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For the latest in consumer and industry news, top trends and market perspectives, stay tuned to Mintel News featuring commentary from Mintel’s team of global category analysts.

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