Europe gears up to capitalize on prowess of China as a source market
The European Union is preparing activities for the forthcoming EU-China Tourism Year. The decision to christen Europe as the first partner destination for the ITB China event is such initiative.
ChinaTravelNews, Ritesh Gupta - Outbound travel from China remains an attractive proposition, and several factors have contributed to this - the growth in the number of households that can afford international trips (when incomes per annum reach USD 35,000 - USD 40,000, foreign travel becomes affordable), being sturdy spenders per trip or per night basis etc.
In this context, Europe is gearing up to garner a sizable chunk of this market, and is showing signs of the same by working on deeper cooperation with the Chinese authorities.
One such initiative has been the decision to sign Europe as the first ever partner destination for ITB China. The European Travel Commission, underlining the commitment of the European tourism sector to engage in joint public-private marketing initiatives, recently chose to be the “Official Partner Destination of ITB China 2017”, the three-day business to business travel trade fair scheduled to take place from in Shanghai this year (10-12 May).
“China continues to be the main driving force for growth in international tourism. Outbound travel from China has grown at a double-digit pace in the last decade, reaching record numbers in 2016. However, if we place these figures into a European context, Europe currently reaches only 2% of these travelers. That’s why more effort is needed to welcome Chinese travelers in Europe, as well as to reinforce the positive perceptions that Chinese have of our destination,” explained Eduardo Santander, Executive Director at European Travel Commission.
Eduardo Santander, Executive Director at European Travel Commission
According to the Commission, Chinese tourists in Europe have steadily increased over the past few years. Over 10 million Chinese visitors arrived in Europe in 2016.
“And this year, we expect to welcome more than 11.4 million. We forecast an annual average growth of +9.3% Chinese travelers in Europe over the next five years,” shared Santander.
Chinese visiting Europe spend on average between €1,500 and €3,000 per trip, a much higher share than any other market.
Dealing with competition and tailored requirements
“Competition (for attracting Chinese travelers) is fierce,” acknowledged Santander.
He added that the European travel industry is aware of the need to remain competitive in China and “being the official partner destination for ITB China will help us to better understand the needs of Chinese visitors and to deepen our cooperation with the Chinese authorities and the local travel and tourism industry, especially in the view of the 2018 EU-China Tourism Year”.
There are peculiar requirements of Chinese travelers, and different stakeholders have been venturing into new areas over the years. For instance, foreign hotel companies have been refining their products, serving guests via WeChat messaging app, running training programs etc. to make Chinese travellers comfortable, be it for customer service or amenities (for example, Meliá Hotels International has created its Peng You staff training program for more than 80 properties). Similarly, Ctrip has been working on initiatives like Chinese Preferred Hotel Program, working with Marriott, Best Western, Accor, Hilton etc. to facilitate bookings.
“China is a very big market with different customer segments, unfamiliar travel distribution structures and different online and offline travel intermediaries. Many European destinations tend to have some degree of uncertainty about where to start trying to make an impact,” said Santander.
Cultural misunderstandings arising from miscommunication is another big barrier.
“It is critical to understand the market and that means, most importantly, having someone on staff that can speak the language. We rely too often on our Chinese counterparts to speak our same language. And it can be difficult to concentrate on building a relationship, while selling your product and trying to understand each other all at the same time,” he said.
Another challenge for foreign companies in China is the importance of building strong relationships with the sector.
“Guanxi plays a far more important role in China than it does in Europe. For a business to succeed in China it is essential to spend time building relationships with companies, government agencies and trade organisations. We believe that our participation in ITB China will be an excellent opportunity to build all those important relationships with the Chinese travel trade,” added Santander.
Foreign companies need to minutely look at preferences of travelers.
For instance, China has emerged as major contender for cashless transactions. Alternative payment methods such as WeChat Pay, Alipay etc are quite popular. Foreign brands need to facilitate cross-border payments.
So how authorities are planning to facilitate commerce, to boost outbound travel from China to Europe?
“We are currently seeking on Europe wide understanding of the importance of cashless transactions and alternative payments methods from Chinese companies. We are developing certification and training programmes to encourage European destinations and their operators to accept and use methods to facilitate cross-border payments. Ultimately the Chinese traveler is the bigger expender worldwide, and if Europe would like them to spend money in its destinations, there’s no other way excepting to adapt quick to this essential need. In this respect we’re also working with our associate Global Blue to facilitate the VAT recovery in a timely, easy, comfortable and safe way,” shared Santander.
Plans for ITB
The European Travel Commission is currently developing a new pilot programme to support the promotion of European destinations and touristic products in strategic markets like China.
“We intend to put in place a series of cooperative marketing programmes jointly with the industry. We will invite companies with an interest in increasing tourism flows to Europe to participate in this programme such as airlines, operators, key distribution retailers and OTAs. We believe this is a win-win situation for European and Chinese business partners because not only does it open opportunities for trade and investment, but we are also laying the foundations for better cooperation and understanding of our respective industries,” shared Santander.
The European Union and the European Travel Commission are preparing an ambitious programme of activities in the frame of the forthcoming EU-China Tourism Year, including business to business matchmaking events and communication marketing campaigns. “We are also planning a series of conferences and seminar addressed towards European travel providers about the characteristics of different demand segments of Chinese travelers, the specific structure of the Chinese tourism industry and best practices for the successful interaction with Chinese business partners,” Santander said.
At the same time, the EU expects to progress China-EU visa facilitation during the year. In terms of market access, the EU is working with the Chinese authorities to facilitate investments in their respective tourism sectors. “Chinese companies clearly see Europe's touristic potential and have invested heavily in past years. And China is progressively opening up to EU investments in its tourism sector as well.”
“We are confident that this evolution will continue in the next few years,” concluded Santander.