DFS$Insights$ Predicting*the* Future*Drivers*of* Chinese* International* Travel*

Transcription

1 DFS$Insights$ Predicting*the* Future*Drivers*of* Chinese* International* Travel* Jim$Beighley,$EVP$Strategy$and$Market$ Development$ 1

2 By$de;inition,$travelers$are$on$the$move$ WHO$vs.$ $WHERE$ ORIGIN$vs.$ DESTINATIO N$ Chinese*in*Tokyo* Japanese*in*Hawaii* Indonesians*in*Singapore* 2

3 Today$we$invite$you$to$see$the$world$ through$our$eyes $ What$we ll$talk$about$today:$ How$we$use$data$to$drive$ strategy$ Our$Market$Potential$Forecasting$ Model$ How$we$Segment$our$Customers$ Our$Approach$to$Strategy$ What s$next$

4 Five$Main$Takeaways$ 1. Asian$travelers$will$continue$to$make$markets$all$over$the$world.$$ 2. Predicting$where$travelers$come$from$and$where$they$will$go$is$a$complex$art$ form.$$ 3. Chinese$outbound$travel$is$huge,$and$the$growth$has$only$just$begun.$$$ 4. China$is$more$like$a$CONTINENT$than$a$COUNTRY.$ 5. Travel$retail$will$be$the$growth$engine$of$the$retail$industry$in$the$future$ $so$ get$ready!$$

5 DFS$is$at$the$intersection$of$$3$industries$ Travel$Retail$ Travel$&$ Tourism$ Luxury$ 5

6 Travelers$;irst,$Customers$second$ Visa$requirements$ Air$seat$capacity$ Hotel$room$availability$ Currency$exchange$rate$ Distance/length$of$trip$ Demographic$pro;ile$ Psychological$pro;ile$ Group/$FIT$ Spend$capacity$ Communication$channels$ 6

7 GLOBAL$TOURISM$TRENDS$ 7

8 UN$WTO:$ Despite$the$ongoing$global$economic$challenges$and$ geopolitical$changes,$international$tourism$results$ were$above$expectations$and$long$term$forecasts. $ Source: UNWTO! 8

9 Accelerating$Growth$in$Tourism$:$$Driven$by$Asians,$Traveling$ Everywhere$ Source: UNWTO!

10 The$World$Underestimated$China$ In$2006$the$WTO$famously$predicted$that$Chinese$outbound$ travel$would$reach$the$staggering$number$of$100$million$in$ the$year$2020.$ Actually,$China$will$exceed$that$number$by$2015.$ And$by$2020,$we$believe$there$could$be$200$Million$ outbound$travelers$from$china.$

11 Chinese$Consumers $Favorite$Past$time$ 40%$ According$to$ McKinsey s$2012$china$consumer$report,$ 40$per$cent$of$those$surveyed$said$ retailgtainment $was$one$of$their$ favourite$leisure$activities.$$ US$102$BILLION$$ Value$of$spending$by$Chinese$travelers$on$international$ tourism$in$2012,$of$which$$ 65%$ was$shoppinggrelated$$ (Source:$UNWTO)$

12 THE$ART$OF$FORECASTING$$ FUTURE$OPPORTUNITY$ 12

13 China$too$is$at$the$intersection$of$$3$industries$ Travel$Retail$ Travel$&$ Tourism$ Luxury$ 60%$ Amount$of$Chinese$luxury$goods$spending$ transacted$overseas,$2012$$ (Source:$Bain$&$Co.)$ 13

14 Forecasting$China s$market$potential$ DFS$set$out$to$understand$how$to$better$forecast$the$Chinese$travel$ phenomenon$ Understand$trends$in$rising$wealth$and$consumer$behavior$across$ China$$ Identify$the$key$indicators$of$outbound$travel$and$luxury$ consumption.$$ Design$a$forecasting$model$to$understand$and$identify$the$most$ important$corridors$of$chinese$outbound$travel$ End$goal:$a$Market$Potential$Index:$!What,!!Where,!When,!!Why!

15 Bringing$the$pieces$of$the$model$together$ China$Travel$$ Forecasting$Model$ 15

16 The$4$Step$Framework:$$ Predicting$Market$Potential$and$Behavior$ Where do they come from? And how many are they? China Outbound Tourists Segmented by Province (28) Where are they going? Long-Haul Short-Haul How are they traveling? FIT Conducted FIT Conducted Who are they? And what are they buying? Luxury Consumer Non-luxury Consumer Luxury Consumer Non-luxury Consumer Luxury& Consumer& Non-luxury Consumer Luxury Consumer Non-luxury Consumer 16

17 Understanding$What$Matters$ Trying$to$unlock$the$relationship$between$outbound$travel$ and$development$inside$china.$ 17

18 Unlocking$the$Travel$Formula$ Urban!expenditure!is!the!key!driver!of!outbound!travel* In other words: 18

19 Middle$Class?$Will$Travel!$ Year in which average population of the city becomes middle class *disposable income per capita exceeds RMB30, Million Donguan Million Hangzhou Guangzhou Ningbo Suzhou Shenzhen Shanghai Million Beijing Jinan Nanjing Wuxi Xiamen Million Baotou Hothot Qingdao Taizhou Tianjin Yantai Population: Million Source: DFS GROUP The Economist LIMITED Intelligence Unit + China Bureau of statistics million Changsha Dongying Maanshan Wuhan Xi an Yangzhou Zhongshan Zibo million Anshan Datong Hengyang Liuzhou Panzhihua Qinhuangdao Xiangfan Zhaozhuang Zhuhai Zunyi million Fuzhou Langfan Harbin Hefei Jining Linyi Nanchang Shenyang Shijiazhuang Tai an Tangshan Weifang Xiangtan Xiangfan Xuzhou Zhengzhou Zhuzhou million Changde Guiyan Haikou Huainan Jilin Chaoyang Taiyuan Xingtai Luoyang million Anyang Changchun Chengdu Dalian Guilin Huainan Jiaozuo Kunming Luoyang Nanning Pingdingshan Wuhu Zhangjiakou million Daqing Huaibei Qiqihar

20 Where$Will$They$Be$Going?$ How$attractive,$affordable,$ appealing,$safe$are$these$ destinations?$ 20

21 CHINA$ $CONTINENT$OR$COUNTRY?$ 21

22 Top and fastest growing origin markets for Europe 2005 Inner Beijing Mongolia Liaoning 2012 Tianjin Jiangsu Shanghai 2018 Zhejiang 22%$ CAGR$2009$g$2013$ Guangdong 22

23 Top and fastest growing origin markets for Asia 2005 Beijing Tianjin Liaoning 2012 Shandong Hubei Shanghai Zhejiang Fujian %$ CAGR$2009$g$2013$ Guangdong 23

24 Top and fastest growing origin markets for America 2005 Shanxi Beijing Liaoning Shandong 2012 Shanghai 2018 Sichuan Chongqing Zhejiang 37%$ CAGR$2009$g$2013$ Guangdong 24

25 Why Does This Matter? To$design$marketing$strategies$that:$! Match$the$ corridors $and$! Reach$the$right$people$

26 THE$ART$OF$KNOWING$OUR$CUSTOMER$ 26

27 Tracking$the$evolution$of$the$Chinese$traveler$ TRAVEL SHOPPING Adventurous$ Freegspirited$ Exotic$ destinations$ Individualistic$ Authentic$ experiences$ Value$seekers$ Obligations$to$do$ shopping$ favours$ Pregtrip$ planning/$ shopping$lists$ 2004$ 2008$ 2012$ 2015$ Rapid$change$in$ the$demography$ and$experience$ of$chinese$ travelers$ Increased$diversity$ in$needs,$tastes$and$ behaviour$de;ined$ by$province/city$of$ origin$ We$expect$to$see$ increasingly$discerning$ consumers$and$ polarization$of$tastes$and$ experiences$of$travelers$

28 Diversity in China A tale of three cities Beijing Practical at heart Shenyang Not so adventurous Chengdu Carpe diem Not so brand conscious. Wary of buying fake goods in Beijing. Prefer to form a big tour group of their own and negotiate a customised conducted tour. Not well-traveled, yet. Most go to nearby countries like Korea and Japan. If further away, prefer conducted tour groups. Both men and women from Shenyang interested in going to Korea for cosmetic surgery. Enjoy good food, while traveling. Some travel to visit universities abroad for their children. Enjoy downtown duty free shops. Bored of HK as a destination. Love to visit islands for a change of scenery. 28

29 TRAVEL$AND$SHOPPING$BEHAVIOURS$OF$ CHINESE$GOING$TO$THE$USA$

30 Approximately$3%$of$Chinese$ outbound$travelers$visited$the$ USA$in$2013$ Heilongjiang +94.5% Beijing 16.3% Hubei +81.1% Anhui +73.3% 20% Shanghai 16.4% Highest$volume$generating$ provinces$ Highest$growth$provinces$ 31.9% Guangdong 30

31 San$Francisco$is$the$4th$most$visited$city$$ Most$Chinese$visit$more$than$one$city$on$a$trip.$$ 49.2%$ 34.6%$ 30.8%$ 22.3%$ 18.5%$ They$are$con;ident,$ experienced$and$ more$likely$to$be$ traveling$fit.$they$ want$to$visit$the$us$ because$it$is$different$ to$china,$new$and$ exciting.$ Travel$Reasons$ Leisure$ 58.5%$ Business$ 15.4%$ VFR$ 10%$ Shopping 4.6%$ Other$ 11%$ Top$Motivators$for$visiting$the$US$ Relaxation$ 42.3%$ Natural$scenic$beauty$ 38.5%$ Different$from$home$ 35.4%$ Shopping$ 21.5%$ Culture/History$ 17.7%$

32 Approximately$64%$of$the$trip$budget$is$allocated$ to$shopping$and$tour$package$ Mean$traveler$spending$in$RMB$21,792$ Travel$ Package$ 34%$ Shopping$ 30%$ F&B$ 12%$ Entertainment$ 10%$ Transportation$ 7%$ And$they$make$60%$of$their$spending$decisions$before$they$leave$ home $ 32

33 Social$Media$and$Forums$are$powerful$in;luences$on$ shopping$and$other$purchase$decisions$in$the$us$ Perhaps$due$to$language$dif;iculties,$Chinese$are$less$likely$to$utilise$advice$during$the$ trip$and$more$likely$to$conduct$online$searches$in$advance$of$the$trip$to$assess$shopping$ and$other$purchase$decisions.$ 65%$$ of$travelers$$rely$on$ friends/$family/$ worduofumouth$to$ decide$on$where$to$ shop$in$the$us$$ Key$sources$of$inSluence$for$$ shopping$in$the$us$ Travel$websites/blogs/guides$ 60.7%$ Social$Networking$sites$ 56.1%$ Online$discussion/forums$ 40.8%$ 33

34 Applying$what$we$know:$Shanghai$to$USA$direct!$ Shanghainese$$ Fashion*and*travel* The$most$wellg traveled$fits$$ Why$FIT?$More$time$ for$shopping.$ Like$to$show$their$ individuality$in$their$ out;its.$ Know$where$to$ shop$to$get$the$best$ deals$when$ traveling.$ Budget$for$the$total$ trip$and$for$shopping$ is$lower$than$the$ national$average$ (33%).$$ Allocate$more$ budget$to$f&b$and$ Entertainment$vs.$ national$average.$ Rely$mostly$on:$ Travel$ websites/$ blogs/$ guides$ Online$ travel$ agents$ 53.7%$ 44.4%$ to$make$ shopping$and$ other$purchase$ decisions.$ Top$5$media$ used$by$ Shanghainese:$ Cgtrip$ WeChat$ Tuniu$ Qunar$ Travel.Sina$ 34

35 Five$Main$Takeaways$ 1. Asian$travelers$will$continue$to$make$markets$all$over$the$world.$$ 2. Predicting$where$travelers$come$from$and$where$they$will$go$is$a$ complex$art$form.$$ 3. Chinese$outbound$travel$is$huge,$and$the$growth$has$only$just$begun.$$$ 4. China$is$more$like$a$CONTINENT$than$a$COUNTRY.$ 5. Travel$retail$will$be$the$growth$engine$of$the$retail$industry$in$the$future$ $are$we$ready?$