How to Recapture Chinese Outbound Travellers in a Post – COVID-19 World
April 22, 2020
A view on outbound Chinese travelers from our Asia experts
IN A POST-COVID-19 WORLD
What destinations and travel companies can do now to initiate a quick and sustained recovery
Uncertainty still looms over the travel industry, with the number of travel bans, visa restrictions and large-scale quarantines growing daily across the globe. IATA predicts a slump of USD 63 to 113 billion airline revenues worldwide, from which USD 50 billion are in Asia; USD 8.3 billion is likely to be wiped off the duty-free market in Asia Pacific; top outbound destinations for Chinese tourists have seen a 30 to 75% drop in arrivals since the outbreak. With extensive travel restrictions and reduced consumer spending across the world, there’s no question that the tourism industry is weathering its biggest challenge in recent history.
The Chinese market is arguably the most important market for various industries – but especially for tourism. China comprises the world’s largest outbound travel market, both in terms of generated arrivals (174 million in 2019) and total travel expenditure. The unanticipated outbreak has not only interrupted 75% of outbound travel plans during one of the country’s busiest seasons, it has also left the tourism-dependent businesses around the world reeling in its wake. And destinations that are particularly reliant on Chinese travellers (over 15% of total arrivals) such as Australia, Cambodia, Japan, South Korea, Thailand, Vietnam, and more are feeling the impact.
Yet quick and effective measures to contain the spread offer a promising outlook for recovery. As of this writing, the epidemic in China is slowing and businesses are fast returning to normal operations. Experts believe the outbreak will be curbed in the next few months, if not the coming weeks, and select airlines have started slowly resuming flights. According to a recent survey by China Tourism Academy, seven out of 10 practitioners plan to run sales and marketing initiatives in full force as soon as the situation is clear. This gives the travel industry hope, as well as a new challenge: How to recapture the Chinese outbound travel market as quickly as possible, and how to stand out when players in a crowded market are keen to recover from overwhelming losses.
Here, we recommend a plan of action to help companies stay ahead of the curve.
Travel companies may be split on whether to keep a low profile or be connected at a time of uncertainty. Unless a crisis occurs for your brand, businesses must leverage the power of technology to stay relevant to consumers, with the goals of strengthening brand equity and preparing to move forward after the crisis has passed. During the outbreak, the average daily Internet usage among Chinese users was at record-high of around seven hours, offering brands an abundance of opportunities to engage with travellers through social channels. Remember: They may not be travelling now, but they will soon – and when they do, brands that remain top of mind stand to gain the most.
Whether it’s informative or customer service-driven messages (for example, KLM recently published a blog post from an in-house medical doctor offering reliable information about air travel), or context-sensitive content centred around compassion (see news of landmark buildings in UAE such as Dubai’s Burj Khalifa orchestrating a “Wuhan Jiayou!” lightshow in early February going viral), social content is vital to upholding a positive brand image – and better still, engaging hopeful travellers. Staying close with consumers also allows brands a quicker and greater understanding of their changing needs (think: a cost-effective form market research), hence better anticipation of behaviour once consumption bounces back.
Keep Up with the Times
In China, consumer perceptions, preferences and behaviours change almost as quickly as those two field hospitals were built. It is expected, too, as speed is paramount in China – some of the country’s largest companies pride themselves on swift reactions to ever-changing market dynamics. In response to thousands of cancelled trips and heightened travel restrictions since Chinese New Year, for example, Ctrip launched a new cloud-based virtual tour initiative in mid-February, granting travellers free access to a few thousand attractions in China and 48 other countries to maintain interest. This is just one of many recent examples.
Post-COVID-19, Chinese travellers’ travel tastes are likely to be inspired by a desire for a healthy lifestyle, a sense of purpose, family-first priorities, as well as cultural quests. Expect a renewed interest in island escapes, wellness getaways, escorted cultural exchanges, off-the-beaten-path destinations, sports tours, sustainable travel, community-based voluntourism, and more. Such changes in demand suggest the need for destinations and brands to quickly reposition or review their offerings to meet these newfound interests.
Nurture the Young
While Chinese parents’ insatiable appetite for Western education is not new, it has certainly become more apparent during this time. Extended school closures have kept China’s 276 million students at home until further notice, leaving working parents with additional stress to keep children occupied. This is the least of their concerns, however, as their children missing months of learning is more critical to always-eager, performance-oriented Chinese parents, and many are pondering how to catch up.
This offers an excellent opportunity for destinations and travel companies to design and market new experiences targeting young travellers, with guided itineraries packed with fun-filled activities to learn, explore, exercise and socialise through travels, in addition to the growing demand of educational camps and weeks-long academic programmes overseas. Given that Chinese parents are willing to spend up to USD 45,000 per year on studies and out-of-school activities that can give their children an edge, this segment presents immense opportunities in the short-term as well as the in the future.
The Next Wave
The good news for everyone is that travel is cited as one of three things Chinese consumers currently crave the most, after hot pot and milk tea. It delivers a promising message to the industry that people will start travelling again as panic subsides. Wavemaker’s February 2020 survey (with 12% of respondents from Hubei province) indicates that 78% of Chinese consumers maintain an optimistic outlook.
The upcoming Labour Day holiday has been lengthened to five days this year, running from 1 to 5 May, followed by another long weekend over Dragon Boat Festival 25 to 27 June. It should be noted that these two periods will likely constitute the next peak periods for domestic travel and short-haul trips (subject, of course, to changes in travel restrictions). Golden Week has also been extended to eight days, from 1 to 8 October this year, due to a late-coming mid-Autumn festival, opening up additional opportunities. Apart from statutory public holidays, China has seen growing numbers of travel during non-holiday periods and weekends, highlighting tremendous potential for quick market rebound.
The SARS outbreak in 2003 gives us some level of assurance and confidence – businesses bounced back and hotel occupancy recorded an immediate, sharp increase as soon as the World Health Organization (WHO) lifted travel advisories. Losses were succeeded by nearly instant gains, hence bringing minimal impact to annual profit margins. Seventeen years on, a more advanced and globalised world is better equipped for crises – and taking a realistic yet optimistic outlook of the future is paramount. The desire for travel is resilient, and new markets and consumer segments continue to be unlocked. In this age of constant change, it is wise to always be prepared, nimble, and willing to adapt.