China Outbound — Asia Sustainable Travel

Why it matters?

Unparalleled economic influence

When it comes to outbound travel, no country has had a greater influence than China over the last decade. With 155 million outbound trips from China in 2019, Chinese tourists spent USD 255 billion abroad, accounting for 20% of global tourism spending.

That equates to the entire Russian population traveling internationally and spending the same amount as Finland's national GDP in a single year.

It's no surprise that destinations all over the world have been eager to welcome back Chinese tourists following the Covid-19 pandemic.

Since January 8, 2023, when China lifted international travel restrictions, it appears that the majority of the world has been preoccupied with when and how many Chinese travelers will return to their destinations.

China outbound spending 2018 — Graph by: Bloomberg

This economic might is poised to double by 2023

Despite a slower-than-expected recovery of air capacity, 110 million border crossings from mainland China are expected in 2023, which would be about two-thirds of the level seen in 2019, reported by SCMP.

According to a recent Bain report on Chinese consumers, China is projected to add 250 million people to middle-and high-income classes between 2022 and 2030. For many of these affluent consumers, travel is their number one leisure activity as per the latest Hurun report.

Chinese consumers growth 2030 — Sources: Bain-Atlagamma 2021 Worldwide Luxury Market Monitor; Bain Analysis

Questionable tourism business models prompt industry players to caution against rolling out red carpet too soon

From an economic perspective, the return of Chinese travelers is a much-needed boost for many destinations around the world. Chinese tourists are known for their high spending habits, particularly on luxury goods and experiences.

Furthermore, due to the sheer size of the Chinese outbound tourism market, even a small increase in Chinese arrivals can have a significant impact on the economy of a destination.

In the post-Covid era, “[many businesses] need tourists back, we need money,” Paul Pruangkarn, chief of staff at the Pacific Asia Travel Association in Bangkok, told Bloomberg in an interview.

Simultaneously, we have seen the negative impact of poorly managed travel services.

The most notable example is so-called “zero-dollar tourism”, which is frequently associated with package tour groups.

The term originated from the fact that much of the money was spent before visitors left China and didn’t circulate in the local economies.

Aside from economic concerns, many critics argued that this business model encourages overcrowding in popular tourist destinations and has a negative impact on local environments.

Hylton Lipkin, General Manager at Alba Wellness Valley by Fusion comments, “there is no denying that everyone wants more business. The reopening of China and the easing of travel restrictions are a game changer, but at what cost?”

“It’s great for local communities to have a massive influx of business. However, as in the case of Thailand’s Maya Bay, the local people suffered a total loss due to degradation, pollution, and essentially human destruction. The question that needs to be asked is how ‘’Planet’’ fits into the People-Planet-Profit equation. No Planet, there will be no visitors and no income.”
— Hylton Lipkin
General Manager at Alba Wellness Valley by Fusion

A palpable opportunity for responsible tourism with the Chinese travelers waiting to be unlocked

According to a recent joint report by Trip.com, McKinsey, and Accor, Chinese travelers are concerned about climate change and are looking for ways to make more responsible travel decisions.

85% of Chinese travelers say traveling sustainably is important or very important.
60% are concerned about climate change and believe that commercial aviation should become carbon-neutral in the future. This is comparable to their counterparts in the United States.
The majority of Chinese travelers surveyed — 20% always and 42% occasionally — look for sustainable travel options.

In light of this, it may make sense for sustainable tourism providers to target the young independent traveler as well as the customized or semi-organized tour traveler.

“This is because China’s Post-90s consumers are highly aware of the complexities of the climate and environmental challenges in China and worldwide,” says Gary Bowerman, Co-author of Chinese Outbound Tourism Handbook 2023: 88 Practical Ways to Prepare for the New Wave of Chinese Visitors.

"Travel sentiment surveys tell us that young Chinese travelers want to incorporate low-carbon experiences into their trips," Bowerman adds. “What surveys cannot tell us is how Chinese tourists will adopt these wishes in real time."

That results in a ‘say-do’ gap, which is a discrepancy between what they say they will do and what they actually do.

According to the same report, the top three barriers to traveling sustainably for Chinese travelers are the affordability and accessibility of sustainable travel options, difficult-to-verify sustainability information, and a lack of clear sustainability labels.

Almost 70% believe that sustainable travel options should be clearly labeled on online travel websites/providers. Over half believe that online travel providers can make it easier to find sustainable options.

Over half of those polled believe that sustainable tourism is a shared responsibility. Travelers should not have to pay a premium for environmentally friendly options.

Almost 40% are unsure what constitutes a sustainable travel option or whether it is reliable.

To capitalize on this exceptional market opportunity, tourism industry players must convert Chinese travelers' intentions into action by making sustainable travel options affordable, accessible/visible, and verifiable.

“By making smarter decisions, and with the help of incentives from travel providers, travelers could reduce 10 to 20 percent of their environmental footprint on a typical trip.”
— McKinsey Report

Chinese traveler hiking in Tibet — Photo by: OK Deal Travel Club

The Strategy: End-To-End Sustainable Travel Product Development Cycle

Using the World Economic Forum’s sustainable travel product development cycle as a guide, travel and hospitality brands can identify and build a roadmap to increase demand and improve brand image with all target audiences.

At the same time, they can adopt this framework to guide them in addressing the top concerns of the world's largest outbound market's travelers.

Phase 1: Product Development

Our advice is to incorporate customer expectations and an industry-recognized certification framework into a brand’s product development phase.

"Expectations among Chinese travelers are elevated by the quality and range of consumer experiences they take for granted every single day in urban China," says Bowerman.

“Tourism providers will have to think on their feet, respond to inquiries quickly, and be prepared to tailor-adapt planet-friendly and sustainable travel experiences to meet the aspirations and intentions of different travelers.”
— Gary Bowerman
Co-Host of The Southeast Asia Travel Show

It's critical to stay true to brand values while also evolving product offerings in response to consumer feedback obtained through surveys or focus groups. This must be done in conjunction with assessing and measuring a company’s operations against recognized frameworks such as B Impact Assessment, The Butterfly Mark, and GSTC Criteria.

We created a guide on how to select the right sustainability certification to build credibility and allow consumers to verify a company’s sustainability claims.

——> Roadblocks addressed: affordability and verifiability

Phase 2: Awareness Building & User Experience Optimization

Bowerman shares that “tourism providers that offer innovative, offbeat and value-driven sustainable experiences, and which have an intriguing and relatable backstory, will find that interested Chinese tourists will discover them.”

China’s unique social media ecosystem allows brands to interact and engage with Chinese consumers in ways that are different from Instagram and Tiktok.

It may be overwhelming for independent and small businesses to navigate through China’s fast-moving digital-commerce labyrinth at first.

The key is to deploy top 3 actions on the key areas of digital media - content, platforms, and payment.

Content: localization, localization, localization

Brands must make it easy for Chinese travelers to find them by having their information available in the Chinese language on their website and social media. Additionally, brands need to audit & optimize their website for Mandarin Keyword Searches to increase their ‘searchability’ on Baidu.

Platforms: prioritization

Many businesses fall victim to the do-it-all fallacy, only to discover that it's a race to the bottom when they're forced to spend more than expected.

Brands should first establish an active presence on a key social media platform, before investing in another social media platform. It’s about doing fewer things better. The top four Chinese social media platforms for travel brands are RED (or Xiaohongshu), WeChat, Douyin (China's version of Tiktok), and Weibo.

The same approach applies to choosing an online travel agent (OTA). While Ctrip is the most popular OTA in China, other OTAs such as Qunar and Fliggy also have a large following. The key is to monitor and respond to customer reviews as 7 out of 10 Chinese travelers take them into account when booking a hotel or travel service.

Brands with higher marketing budgets may consider engaging with influencers or key opinion leaders (KOLs) to boost brand visibility. We recommend that brands create guardrails and incentives to maximize the impact of influencer engagement using responsible influencer engagement strategies.

Payment: digital wallet integration

Brands that want to avoid paying OTA commissions by securing direct bookings on their website will likely convert more reservations if they accept digital payments like Alipay and WeChat Pay.

China is at the forefront when it comes to seamless and contactless shopping experiences. Nearly 60% of Chinese tourists said Alipay is their preferred payment method, while 35% said WeChat Pay is their preferred payment method for international trips.

Both of these digital payment methods will charge a transaction fee, just like other payment networks such as Visa and Mastercard.

——> Roadblocks addressed: accessibility and visibility

Phase 3: Recognize & Reward Customers To Elevate Brand Relatability

"When a tourism company builds a product or experience around the environmental desires of young and independent Chinese travelers," says Bowerman, "it must also create the perceived value of such service in terms of the experience itself and the broader benefit for the environment or local community."

"Young Chinese travelers are experimental and eager to embark on novel outdoor adventures, but they are also acutely aware of personal branding and aesthetic style - and these elements are hardwired into their tourism mindset."
— Gary Bowerman

Having said that, Chinese travelers will frequently want to share their green travel experiences on social media. Brands that are successful in developing smart mechanisms to include their branding in these social media posts may benefit from increased exposure and thus bookings.

Furthermore, rewarding those who "do good and talk about it" pays off. Airlines such as China Southern Airlines and Hainan Airlines, for example, already allow passengers to opt out of meals in exchange for loyalty program points. Travel platforms could also run a carbon reduction campaign in which travelers are rewarded with discounts for purchasing environmentally friendly products.

——> Roadblocks addressed: affordability and verifiability

TL;DR

China is the most influential outbound travel market. In 2019, Chinese tourists made 155 million outbound trips and spent USD 255 billion abroad, accounting for 20% of global tourism spending.

Chinese travelers’ economic might is expected to double by 2023. China is projected to add 250 million people to middle-and high-income classes between 2022 and 2030.

However, questionable tourism business practices prompt industry players to caution against rolling out red carpet with haste.

There is a palpable opportunity for responsible tourism with the Chinese travelers waiting to be unlocked. To capitalize on this exceptional market opportunity, tourism industry players must convert Chinese travelers' intentions into action by making sustainable travel options affordable, accessible/visible, and verifiable.

The World Economic Forum’s sustainable travel product development cycle can serve as a framework as a guide for travel and hospitality brands to address the top concerns of the world's largest outbound market's travelers.