China Market Workshop August 3, 2010 Ontario Tourism Marketing Partnership Corporation
Agenda China Market Intelligence Marketing in China Break Doing Business in China Panel Discussion 2
China Market Intelligence Ontario Tourism Marketing Partnership Corporation
Agenda Approved Destination Status Market Profile Outbound Travel Market China Travel to Ontario Canada Consumer Sentiment in China SWOT Analysis 4
Approved Destination Status (ADS) As part of its tourism policy, China has certain restrictions on the promotion of tourism and the ability of its citizens to travel to other countries Outbound travel is controlled by the government of China through the CNTA Approved Destination Status is a mechanism that allows the promotion of a destination in China, as well as the organization of Chinese group tours to that country Without ADS, Chinese nationals would generally be permitted to travel to Canada for business, to study, or to visit friends and relatives Outbound travel started in China in 1983 to Hong Kong and Macau 1999 Australia granted ADS 135 countries now have ADS 5
ADS ADS agreement signed June 24, 2010 ADS will allow Canada to market tourism experiences to the consumer and allow for the sale of group leisure travel through tour operators in China The granting of ADS does not change the market dynamics and it remains a constrained developmental market with great potential Examples of these restraints: Strict visa requirements Mandatory travel deposits for Chinese groups of up to $12,000 per person held in trust with travel agents blocking of web sites and off shore hosted social media sites government owned and operated travel agencies, Censorship and strict media controls. 6
Canada-China Inbound Tour Operator Accreditation Program TIAC certifying inbound operators on behalf of government Ensure best practice and consumers have safe and quality tour Companies need to: Have been in business for two years Have the appropriate insurance in place Show commitment to Canadian travel industry Have expertise in China Have membership in organizations Have relationships with China www.tiac.travel/china 7
China Market Profile Ontario Tourism Marketing Partnership Corporation
Population Population spread one third urban - two thirds rural Source: Canadian Tourism Commission 9 Ontario Tourism Marketing Partnership Corporation
GDP of Administrative Divisions Equaled to Selected States Source: Canadian Tourism Commission 10
Key Economic Indicators 2007 2008 2009 2010 2011 2012 Real GDP (% Change) 13.0 9.6 8.7 9.6 9.1 9.0 CPI (% Change) 4.8 5.9-0.7 4.3 4.1 3.4 Unemployment Rate (%) 4.0 4.1 4.2 4.2 4.2 4.1 Private Consumption (% Change) 10.2 8.5 9.5 9.2 9.7 9.9 Personal Disposable Income (% Change) 19.9 15.1 10.6 14.0 14.6 13.7 Exchange Rate (1 Yuan - CAD) 0.1411 0.1537 0.1672 N/A N/A N/A Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010 11 Ontario Tourism Marketing Partnership Corporation
Characteristics of Market Political support for outbound tourism is growing Access to passport and currency is easier Government introduced paid annual leave Increase in government pension commitments Gap between rich and poor is widening Less than 5% of population hold half of the country s savings deposits Forecast 40% of the population will be middle class by 2030 Shanghai Expo broadening horizons Less barriers and easier to travel now Chinese not going to come automatically Many aspects of the travel market are managed by the government 12
Characteristic of the Travel Climate in China Characteristics China Airline Market Lodging Market Airport Infrastructure Road Infrastructure Broadband Penetration Credit Card Penetration Global Distribution System Airline Ownership Travel Retail Chain LCC Airline Penetration Highly regulated Deregulated World Class, Highly developed Excellent High Good Monopoly Government Regulated Very Low Less than 2% 13 Source: PhocusWright Emerging Online Travel Market Place in China Unfavourable for business Favourable for business
14 Source: PhocusWright Emerging Online Travel Market Place in China
Outbound Travel Market Ontario Tourism Marketing Partnership Corporation
Long haul travel in the next 3 years v the last 3 years Will Travel More in the Next Three Years China 59% Korea 45% France 42% Mexico 40% Australia 37% US 34% Germany 27% UK 26% Japan 25% 16 0% 10% 20% 30% 40% 50% 60% 70% Base: Long-haul pleasure travelers. Notes: Up arrow indicates a result that is significantly higher than 2008; Double up arrows indicate a significant upward trend since 2007. Down arrow indicates a result that is significantly lower than 2008; Double down arrows indicate a significant downward trend since 2007. *Net change is the percent who will travel more minus the percent who will travel less in the next three years. Source: Global Tourism Watch Summary Report 2009 (Survey was conducted in selected large cities within each country)
Outbound Travel From China Overnight & Day Trips^ 80 Million Trips 60 40 20 12.1 16.6 20.2 28.9 31.0 34.5 41.0 45.8 50.7 57.2 60.6 62.5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009F* 2010F* 2011F* 2012F* 17 Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010 ^Majority of Day Trips to Hong Kong Ontario Tourism Marketing Partnership Corporation
Overnight Travel to Multiple Destinations from China Visits in millions 2009 % change 2009/2001 % change 2009/2012 World 26.79 173.3% 24.0% Asia 21.58 173.9% 22.7% Europe 3.51 145.8% 33.8% South America 0.10 261.1% 40.1% North America 0.67 113.5% 24.0% CANADA* 0.16 97.8% 14.4% UNITED STATES 0.51 118.9% 27.0% Central America 0.01-17.8% 30.2% Caribbean 0.02 163.0% 27.9% Middle East 0.24 476.1% 19.4% Africa 0.66 582.5% 13.0% 18 Note * Does not account for Canada recently receiving Approved Destination Status (ADS)* Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010 Ontario Tourism Marketing Partnership Corporation
Visits to Major Destinations Outside Asia by Residents of China in 2009 Destinations France Germany United States Australia Italy Austria Switzerland Canada* United Kingdom Visits in 000's 2009 873.91 595.89 508.84 366.33 207.05 196.43 187.14 160.83 88.18 % Change 2009/2001 202.6 151.2 118.9 131.9 131.7 120.6 279.0 97.8 52.0 % Change 2012/2009 29.2 38.7 27.0 32.4 27.3 28.9 42.5 14.4 35.3 19 Note * Does not account for Canada recently receiving Approved Destination Status (ADS)* Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010
Visits from China to Selected non- Asian Destinations with ADS Status 1200 1000 110% increase since 2010/2004 Visits in '000 800 600 400 200 153% increase 2007/2003 139% increase 2010/2004 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F UNITED STATES FRANCE GERMANY ITALY 20 Approved Destination Status Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010
Visits from China to Selected non-asian Destinations with ADS 250 200 Visits in '000 150 100 41% increase 2010/2005 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010F AUSTRIA SWITZERLAND UNITED KINGDOM CANADA 21 Approved Destination Status Source: Oxford Economics; Tourism Decision Metrics, July 13, 2010
Barriers for Long Haul Travel in the Next 2 Years Barriers China (n=300) Can t afford to travel / financial reasons 10% Unfavourable exchange rates 4% Poor economy 18% Prefer closer destinations or shorter trips 6% Personal reasons 44% Worried about losing my job 7% Too much hassle at airports and borders 4% Too busy / no time / no vacation time 38% Concerned about safety or terrorism 13% No real reason to travel now 7% Unstable political situation 5% Concerned about health risks 13% No interest in travel / have other priorities 1% Concerned about potential conflicts / war 6% Base: Those who are not planning to take a long-haul trip in the next 2 years. Notes: Green circles indicate a result that is significantly higher than 5+ groups. 22 Source: Global Tourism Watch Summary Report 2009 (Survey was conducted in selected large cities within each country)
Stage in the Travel Purchase Cycle China (n=1,465) Don t really know much about it 7% Visited Canada Never Visited Canada Know a bit about it but wouldn t consider it for a holiday 18% It intrigues me as a holiday destination 49% Would definitely like to go there someday 18% Am actively considering taking a holiday there 3% Have definitely decided to take a holiday there 1% Have already booked a holiday trip there 0% Have no interest in going back 1% Would definitely like to go back someday 3% Am actively considering taking another holiday there 1% Have definitely decided to take another holiday there 0% Have already booked another holiday trip there 0% MADE PURCHASE DECISION 1% Base: Long-haul pleasure travelers. Notes: Green circles indicate a result that is significantly higher than 5+ groups. 23 Source: Global Tourism Watch Summary Report 2009 (Survey was conducted in selected large cities within each country)
China Travel to Ontario Ontario Tourism Marketing Partnership Corporation
Netherlands Switzerland Spain Overseas Visits to Ontario - 2001-2008 500 400 300 200 100 0 25 Hong Kong Brazil Thousand Visits United Kingdom Japan Germany France Mexico India Mainland China South Korea Australia Italy Israel 2001 2008 Source: Statistics Canada; International Travel Survey, 2001, 2008
Forecast of Key Overseas Markets to Ontario 2008-2012 400 300 Thousand Visits 200 100 0 United Kingdom Japan Germany France Mexico India Mainland China South Korea Australia Brazil Netherlands Spain 2008 2012F 26 F Forecast *Forecast done prior to the Approved Destination Status (ADS) Source: Statistics Canada; International Travel Survey, 2008; MTOUR Forecast Jul 2009; MTOUR Forecast Nov 2009
Market Size and Forecast China Trips to Ontario 150 130 Thousand Visits 110 90 70 50 30 54 61 47 43 69 100 96 76 86 93 102 111 10-10 2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F 27 Source: Statistics Canada; International Travel Survey 2001-2008 MTOUR, Travel Forecast, June 2009 *Forecast done prior to the Approved Destination Status (ADS) Ontario Tourism Marketing Partnership Corporation
Canadian Provinces Share of Total Visits from China 2008 100% 90% Total visits to Canada145.2 thousands 80% 70% 70% 60% 52% 50% 40% 30% 20% 10% 15% 9% 3% 0% BC Ontario Alberta Quebec All Other NB: Share is based on total visits to Canada. Travelers might have visited multiple Provinces for one trip 28 Source: Statistics Canada; International Travel Survey 2008
Expenditure of Visitors from China to Ontario 2008 Total Expenditure in CND$ Average spend per person per trip CND$ Spend by type CND$ With Airfares $152.5 million $2,006 Without Airfares $88.4million $1,169 Transport * Accommodation Retail/Other (Total) Food & Beverage (Total) Other 44% 21% 16% 12% 7% * Includes Airfares Source: Statistics Canada; International Travel Survey 2008 29
Visitor Characteristics 2008 (Pre ADS) Visitor Arrivals by Quarter Q.I (January - March) Q.II (April - June) Q.III (July - September) Q.IV (October - December) Age Profile Under 25 25-44 45-64 65+ Average Age Average Length of Stay Party Size One Person Two People Average Number of People Main Purpose of Visit Pleasure VFR Business Other 17% 27% 36% 20% 9% 43% 34% 14% 44.5 15.1 Days 74% 22% 1.3 12% 52% 30% 5% Source: Statistics Canada; International Travel Survey 2001-2008 30
Activities of Visitors from China on Trip to Ontario 2008 Shopping 84% Sightseeing 77% Visit Friends/Relatives 60% National/Provincial Nature Parks 55% Historic Sites 37% Bars/Nightclubs Museums/Art Galleries Casinos Zoos/Aquariums/Botanical Gardens Festivals/Fairs Cultural Performances Theme Parks Sports Events 23% 23% 21% 18% 18% 14% 12% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Statistics Canada; International Travel Survey 2008 31
Air Capacity 2009 396,000 to Canada Planned summer capacity increase with ADS Air Canada Double daily Beijing/Shanghai - Toronto. Beijing/Shanghai - Vancouver Air China Increase from daily Beijing/Vancouver to 10 a week Addition of Beijing/Toronto service in 2011 Hainan Airlines Possible 3 flights week Beijing/Toronto Fall 2010 China Eastern Possible daily 2010 summer peak China Southern Possible 2011 32
Canada / Ontario - Consumer Sentiment in China Ontario Tourism Marketing Partnership Corporation
Unaided Destination Awareness Unaided Destination Consideration China China United States 23% United States 15% Australia France Singapore Canada Thailand Malaysia United Kingdom Maldives 20% 16% 16% 15% 14% 13% 11% 10% Australia Canada Indonesia Thailand Singapore Maldives Malaysia France 13% 10% 10% 9% 9% 8% 7% 7% Indonesia 9% Northern Mariana Islands 5% Respondents were asked to name destinations that come to mind for a long-haul vacation. The country roll-up figure is essentially the total awareness for a country, including all sub-destinations. 34 Source: Harris/Decima, Global Tourism Watch, 2009 Ontario Tourism Marketing Partnership Corporation
Key Motivation For Visiting Canada Seeing beautiful scenery Exploring vibrant cities that are in close proximity to nature Observing wildlife in their natural habitats Visiting national parks and protected areas Exploring nature in close proximity to a cosmopolitan city Sampling local flavours Experiencing aboriginal culture and attractions Seeing historical and cultural attractions City activities (e.g. sightseeing, shopping) Experiencing a country s unique character and local lifestyles City cultural experiences China % 90 89 88 88 87 86 86 84 83 79 77 35 Source: Harris/Decima, Global Tourism Watch, 2009 Ontario Tourism Marketing Partnership Corporation
Icons and Images that Inspire Interest in Canada Maple leaf/canadian leaf Waterfalls CN Tower/Toronto Tower Snow Snow capped/covered mountains Mountains (general) Niagara Falls Skiing/snowboarding Vancouver Scenery/landscapes/natural beauty Dr. Bethune Toronto Great lakes/lakes China % 21 13 7 7 5 3 3 3 2 2 2 1 1 36 Source: Harris/Decima, Global Tourism Watch, 2009 Ontario Tourism Marketing Partnership Corporation
SWOT Analysis Ontario Tourism Marketing Partnership Corporation
Strengths Economic growth will be continue to be strong Growth in private consumption will remain high Good trade and media relationships Increased air capacity Importance of long haul travel for Chinese is on the rise Canada is perceived as a desirable destination Ontario has a large Chinese community Canadian Embassy and Consulates cooperative in support of tourism activities Ice-wine, Niagara Falls, colourful maple route, honeymoon destination are wellknown in China. 38
Weaknesses No clear position of what Ontario is and how it differentiates from other provinces Transit visa requirements which discourage China/Canada/US air services Lack of Chinese speaking resources within Ontario industry Canada one of the last countries to receive ADS - putting it at a disadvantage Strict visa process Cost of airfares is high Canada is perceived as expensive destination magnified when US/Canada joint itineraries are compared Offline and online media constrained by government censorship and controls - Facebook, Twitter, You Tube are blocked, local social media sites are carefully controlled and also experience temporary closure periods Deposits of up to $12,000 per person need to be deposited with travel agencies prior to departure of ADS leisure groups 39
Opportunities Ability to advertising to consumer directly - awareness Tour operators can promote Canada Good potential for MICE and high-end travel Strong growth in online use and engagement opportunities video, social networking VFR Consumers respond to luxury / status products Able to learn from competitors mistakes (prior ADS countries) Develop US / Canada combined tour programs 40
Threats Threat to quality of groups tour programs Increased funding from competitors in China Chinese travellers and Chinese government extremely sensitive to health concerns Depreciation of currencies making key competitor countries more attractive destinations 41
Summary Great potential for Canada and Ontario ADS - large price-sensitive group traveler but can t ignore the high-end traveler Short term it will remain a medium size market for Ontario with strong annual growth Will require a consistent investment for the long term in order to start building the awareness The granting of ADS does not change the market dynamics and it remains a constrained developmental market with great potential Source: Canadian Tourism Commission 42
Thank you Ontario Tourism Marketing Partnership Corporation