Outbound tourists ride on agency packages, with prices set months in advance

When the renminbi fell to 6.58 against the US dollar, the lowest level in five years, on June 17, it sent alarm bells ringing in many sectors -but not in the tourism industry.

Experts predict the yuan's descent against the greenback is unlikely to dent China's outbound tourism market.

Although exchange rates matter in all destinations, not just the United States, the dollar-yuan rate has implications for other rates. However, given the yuan's internationalization, Jiang Yiyi, director of the International Tourism Development Institute, believes reasonable fluctuations in exchange rates are to be expected and should not cause undue concern.

She says the yuan's current weakness has only a marginal effect on Chinese tourists' purchasing power abroad. And executives at top travel agencies agree.

"The biggest cost in US trips is the flight," reads a statement from Ctrip, a major online travel agency. "Prices of most of our travel products were announced six months ago. Recent exchange rate fluctuations have not caused much changes in price. On Ctrip, the average price of a trip to the US works out to about $3,000 per person.

Beijing Utour International Travel Service Co Ltd also fixes the yuan prices of its travel products in advance, sometimes two years ahead. "The yuan's recent depreciation won't be reflected in our prices, but (Chinese) tourists' purchasing power may weaken a bit when they visit US malls," says Li Mengran, Utour's publicity manager.

For example, she says, a Chinese tourist may spend $100 this year for a bag that may have sold for $90 last year.

More than half of Utour's summer trips to the US have been sold, and Li says they are expected to be as popular as those in previous years.

She says boutique tours and in-depth, short-term travel products with a focus on children's interests are well received among Chinese travelers. Summer camps in the US, Britain and Canada, for example, are much sought after. Parents also prefer Singapore and Malaysia, as they involve shorter flights.

Two factors are key to outbound Chinese tourists who double up as consumers abroad. One is the widening price gap between imported goods in China, which are perceived as superior, and the same products bought abroad. Chinese travelers tend to buy a lot at duty-free shops during their trips as this works out cheaper than buying imported goods in China, which are subject to high taxes and are therefore expensive.

The other factor is Chinese consumers' low confidence in domestic brands, which experts blame on poor quality supervision, especially of goods like infant formula and maternity products, medicines, health supplements, even personal hygiene items.

The travel-and-shop phenomenon is consistent with the broad global trend of the past five years. Over the next decade, the growth in travel spending is broadly expected to outpace the global economy, according to Visa Inc.

China tops the chart with a projected growth of 86 percent over a 10-year period in terms of spending on international travel, which is estimated to rise from $135 billion last year to $225.4 billion in 2025.

According to Ctrip's 2016 Outbound Trips Report, Chinese people made more than 120 million outbound journeys last year, up 12 percent year-on-year. Those aged 25 to 35 travel overseas the most, accounting for 45 percent. Those aged 36 to 45 rank second with 28 percent.

In terms of Ctrip's city breakdown, tourists from Shanghai, Beijing, Guangzhou, Shenzhen and Hangzhou travel abroad the most, accounting for half of all overseas travelers. And in terms of individual travelers versus group tours, the former lead with a little over 50 percent.

Top overseas destinations are Hong Kong, Seoul, Phuket, Singapore and Tokyo.

The evolution of outbound tourism in China has brought in its wake new demands, particularly from young Chinese travelers. They demand personalized luxury and digital innovations, according to a May 30 report by Marriott International and the Hurun Research Institute.

The report's key findings reveal a shift in travel habits among the 18-36 generation. Besides personalized luxury experience, they seek value throughout the hospitality ecosystem, from planning a trip to guest services to selecting the right kind of loyalty program.

The report says China's young luxury travelers prefer digital methods to seek services and information. Interactive guest services on smart devices are far more popular than traditional guest services, and travelers also expect this smart technology to record and manage their personal preferences.

Furthermore, they conduct their research on digital platforms. WeChat, the instant-messaging app, has emerged as the primary source of travel information, either via official accounts and the accounts of friends and professional travel advisers. Third-party apps are also important information channels, such as those operated by CTrip, Qunar and Tuniu.

According to Research Co Ltd's 2016 China Online Travel Market Research report, the online outbound travel market recorded sales last year of 36.8 billion yuan ($5.58 billion; 4.95 billion euros). Online sales now account for 20 percent of all bookings in China.

Diverse in their motivations, young Chinese are seeking a wider choice of unique and novel travel experiences. They are interested in adventure travel, polar exploration and road trips that take them to a wider range of destinations, the report said.

Rupert Hoogewerf, chairman and chief researcher of Hurun Report, says, "Despite the (Chinese) economy slowing, the impact on outbound travel of high net worth individuals seems to have steadily grown. The young luxury travelers have developed significant spending power, minted on the back of the recent boom in Chinese entrepreneurship, together with a growing class of second-generation 'rich kids'."

wangzhuoqiong@chinadaily.com.cn

(Top) Chinese travelers arrive at Incheon International Airport in Seoul. (Above) Chinese travelers in Seoul, South Korea and Kyoto, Japan, top international destinations. Liu Debin, Liu Xingzhe, and others / For China Daily

(China Daily European Weekly 06/24/2016 page26)