China National Day Golden Week 2017 Review

Transcription

1 October 18, 2017 China National Day Golden Week 2017 Review This year, China s National Day Golden Week holiday took place on October 1 8. Total spending on retail and food services posted a record high of 1.5 trillion ($226 billion), up 10.3% year over year. During the first seven days of the holiday, tourism-related revenues reached 549 billion ($83 billion), up 13.9% year over year. What was evident from this year s Golden Week holiday was: 1) Chinese outbound tourists are focusing more on local experiences and are spending in a more diversified and rational manner. Demand for experiential travel and customized travel is increasing. 2) Apart from the more conventional destinations, mainland tourists are becoming increasingly adventurous, with new destinations seeing more than 50% growth in the number of tourist bookings: Morocco, Turkey, United Arab Emirates, Czech Republic, Croatia, Finland, Austria, Germany, Vietnam, Cambodia and Italy. 3) Mobile payment gained traction during this year s National Day Golden Week holiday, as overseas transactions for Ant Financial s Alipay grew eightfold, compared to the same period last year. Another Record-Breaking Golden Week Data from the China National Tourism Administration (CNTA) showed that 705 million trips were made during the combined eight-day National Day and Mid-Autumn holidays this year, with tourism-related revenues reaching 584 billion ($88 billion). During the first seven days of the National Day Golden Week holiday, 663 million trips were made, which is up 11.9 % from the seven-day holiday last year, with tourism-related revenues reaching 549 billion ($83 billion), implying an increase of 13.9% year over year. Five years ago, 428 million trips were made during the seven-day holiday. 1

2 The CNTA also estimates that the number of outbound tourists exceeded 6 million during the holiday period, a slight increase compared to last year. In addition, 71% of outbound tourists spent over 8,000 during the National Day Golden Week holiday, according to data from Xinhuanet. Statistics from online travel agent Ctrip showed that 46% of outbound travel is still concentrated in Southeast Asia, with Thailand benefitting the most from Chinese outbound travel. Quality Tourism on the Rise Chinese outbound tourists are focusing more on local experiences and appear to be spending in a more diversified and rational manner. We believe this is driven by their solid purchasing power, as well as the rise of the middle class in China. Experiential travel: Airbnb announced that domestic bookings increased 126% and overseas bookings increased 32% during the holiday period. Local bed-andbreakfast player Tujia also saw an over 400% increase year over year. A Spokesperson for Tujia noted that tourists are looking for more personalized experiences and high-quality accommodations, with an average spending of 557 per room per night during the Golden Week holiday. Customizable travel: There is also growing demand for a more personalized holiday experience, as more than half of Chinese tourists prefer customizable travel. Some 45% of Chinese tourists chose traditional package tours, 44% chose self-planned trips and 11% chose tailor-made travel services, according to data from Ctrip. Solid purchasing power: Some 70% of Chinese outbound tourists spent more than 8,000 during this year s National Day Golden Week holiday, according to data from Xinhuanet, of which 24% spent between 15,000 and 20,000, and 6% spent more than 20,000. Among Chinese outbound tourists, more than 90% chose fourstar-or-above accommodations this holiday, according to Ctrip data. Figure 1. National Day Golden Week Spending by Chinese Outbound Tourists 3,000 or below 3,000 8,000 8,000 15,000 15,000 20,000 Above 20,000 0% 10% 20% 30% 40% 50% Note: As of October 3, Source: Xinhuanet 2

3 Less Conventional Destinations Are Becoming Popular As we had anticipated in our China National Day Golden Week 2017 Preview, Southeast Asia, Thailand and Japan were the top beneficiaries of Chinese outbound travel during this year s National Day Golden Week holiday, and Korea was the biggest loser. According to the CNTA, the most visited countries this year included Russia, Thailand, Vietnam, Singapore and Malaysia, and the top cities were Moscow, St. Petersburg, Bangkok, Pattaya and Singapore. Apart from the more conventional destinations, mainland tourists are also becoming increasingly adventurous. Data from the CNTA show that Chinese outbound tourists traveled to 1,155 overseas cities in 88 countries for this year s holiday. According to Ctrip, several new destinations saw more than 50% growth in the number of tourist bookings this year: Morocco, Turkey, United Arab Emirates, Czech Republic, Croatia, Finland, Austria, Germany, Vietnam, Cambodia and Italy. Winners and Losers According to Ctrip, 46% of Chinese outbound tourists chose to travel to Southeast Asia during the National Day Golden Week. We see Thailand and Japan as the top beneficiaries of Chinese outbound travel during the holiday, and Korea as the largest loser. Figure 2. National Day Golden Week Favorite Destinations by Chinese Outbound Tourists Middle East and Africa, 6% Australia, 5% America, 7% Europe, 11% Japan/Korea, 12% South Easia Asia, 46% Hong Kong/ Macau/ Taiwan, 13% Note: As of September 28, Source: Ctrip Thailand the Favorite Destination for Chinese Travelers There has been a recent crackdown in China on zero dollars tours i.e., tours where Chinese tourists are tricked into buying a cheap tour package only to find their expenses increase significantly once they arrive at the destination. As a result, 260,000 Chinese visitors travelled to Thailand during this year s Golden Week, a year-over-year increase of 35% from last year, according to the Tourism Authority of Thailand. These Chinese tourists are expected to generate tourism-related revenues of over THB11 billion (or $33 million) for Thailand during the holiday, according to the Ministry of Tourism and Sports. 3

4 Mobile Payment Gains Traction Overseas transactions for Ant Financial s Alipay grew eightfold over the National Day Golden Week holiday, compared to the same period last year, according to Ant Financial. In comparison, the transaction value of overseas payments in Hong Kong reached billions of renminbi during the Golden Week holiday, nearly double the transaction value in Japan during the same period. Source: Alipay.com Retail Saw Solid Growth; Popularity of Duty Free Shops Continues Retail and restaurant revenues reached 1.5 trillion ($225.6 billion) during the holiday, with daily average sales up 10.3% year on year, according to the Ministry of Commerce. Duty free shopping continues to be the favorite among Chinese tourists. According to data from WeChat, over 52% of outbound tourists shopped at duty free retailers over the National Day Golden Week holiday. Figure 3. National Day Golden Week Most Popular Stores Among Chinese Outbound Tourists Food & Beverage Others Convenience Stores Pharmacies Duty-Free Retail Note: As of October 8, Source: WeChat 4

5 Losers South Korea Misses Out During Golden Week As already discussed in our China National Day Golden Week 2017 Preview, Korea has fallen off the league table for the top-10 most-popular destinations for Chinese tourists. Since the THAAD missile incident earlier this year, the number of Chinese tourists to Korea has plummeted. Ctrip predicted a fall of around 70% in the number of Chinese outbound tourists to South Korea during the National Day holiday. For our analysis of the performance of Korea s retail sector in the aftermath of the THAAD missile incident, see our Deep Dive: Future-Proofing Department Stores in Asia Part 1 Figure 4. Chinese Outbound Travel Annual Change (%) 150% 100% Malaysia is becoming a popular desqnaqon. 50% 0% -50% -100% The THAAD missile incident's impact on Korea. 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Hong Kong Macau Thailand Japan South Korea Singapore Taiwan Malaysia Source: National Tourism Organizations 5

6 Deborah Weinswig, CPA Managing Director FGRT New York: Hong Kong: China: Simic Chan Senior Research Associate Hong Kong: 2nd Floor, Hong Kong Spinners Industrial Building Phase 1&2 800 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 18th Floor New York, NY Tel: FungGlobalRetailTech.com 6