Courting the high-spending Chinese traveller

This article appeared originally in Gulf News: link to original article

At the Santorini restaurant in Greece, four types of menus, each identified by a different cover colour, were placed at the reception. Out of curiosity and pure ignorance, I asked why the restaurant has all these menus.

As I was attempting to open each and look for myself, I was told that they were in four languages – English, French, Italian, and Russian. I looked around, and other than my wife and I, the others were all Chinese customers. I couldn’t resist not asking how come they didn’t have a fifth menu in the Chinese language.

The answer I got was they could not find a translator. Well, it’s that kind of thinking that gets you out of business in an industry such as tourism. That’s how you easily lose the floor to competitors.

Luckily, customers in the restaurant did not mind speaking fluent English, being part of the more than 300 million Chinese who either learnt English or are learning (Economist 2011). Bottom-line is if you are in the tourism business, you should either speak Chinese, have menus in Chinese, or both!

In April, Dubai welcomed 16,000 Chinese tourists from a single company, Nu Skin, which decided to award its employees a paid-for trip to the UAE for an outstanding financial performance. Of course, there were lots of flights bringing those tourists in, hotel rooms that were booked, and vehicles that were utilized to take them around.

Aside of such details, the main take from the entire scenario is the choice of the UAE, which clearly outlines where the country has been placed on tourists’ destinations map. This also signals how the dynamics of the industry have been changed for good.

The most interesting thing is having tourist traffic of such magnitude coming from the Far East at a time when the travel season has still to pick up ahead of summer. The trend itself, and the emergence of Chinese tourists and spenders, is the new centre of gravity for tourism makers. If anything, it is what everyone is keeping an eye on and what we need to keep an eye on as well.

A recent piece by The Economist showed that 1 out of 10 tourists worldwide are Chinese, out of the only 5 per cent of the entire Chinese population who hold passports. So imagine how this trend will pick up when the percentage increases, and how spending by Chinese tourists will be pushed much higher than the current $129 billion reported by World Trade Organisation for 2013.

This is the reason why countries around the corner, like Australia and South Korea, are making sure they got what it takes to have these tourists drop by whenever they feel like spending their money. Here, however, is a different type of tourism that only Macau excels at: gambling.

Australian, and other international companies are working on expanding their casinos’ businesses through Queensland, Sydney, and other destinations to grab a share of Macau’s casino revenues, estimated at $45.2 billion in 2013 (Financial Times).

South Korea is developing a different model that addresses middle-class Chinese gamblers by awarding licences to construct and manage foreign-only casinos (Quartz).

Similar trends are being observed in Philippines, Vietnam, and Singapore. Japan is also seeking to legalise the business before its Tokyo 2020 Olympics. As per World Bank figures, China has “lifted more than 500 million people out of poverty” since 1978. China has similarly “reduced its extreme poverty rate from 84 per cent in 1980 to 10 per cent” in 2013 (Economist).

With the most credit going to growth reforms and some to its one-child policy, China seems to have found the right recipe to push more and more people out of poverty into a grey zone between poverty and middle-class. And this has contributed to an overall increase in Chinese travellers going everywhere and spending more than anyone after slacking behind Americans, Germans, British, and French tourists between 1995 and 2005.

Now, the thought that I want to leave you with: what does it imply to know that 67 million Chinese passport holders are spending 1.5 times more than 110 million US passport holders (Forbes, 2012)?

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