Sage Brennan | 02 September 2015
Recent data shows that in July — even as Xi Jinping was reportedly ordering China’s stock market regulators to propel its indexes upward ahead of an international diplomatic mission, and hedge fund managers were swooning in the wake of rumored economic weakness — Chinese travelers nonetheless intensified their gleeful assault on popular tourism destinations around the world.
America’s National Travel & Tourism Office (NTTO) reported last week that overall inbound passenger growth from China to the U.S. was up 25.7 percent year-over-year in July. Demand for travel to key gateways like Los Angeles, New York, San Francisco, and Chicago continues to grow, and Chinese carriers have answered the call, increasing overall capacity by 38 percent year-over year. The NTTO estimated total capacity on non-stop flights from China to the U.S. in July was 379,600 seats, up 27.7 percent.
Another key destination in the Chinese tourism universe, France, reported an even more impressive 50 percent gain in the first quarter of 2015. Many European retailers in our regular polls have seen order-of-magnitude sales growth from Chinese travelers this summer.
For several years, as much as 70 percent of spending on luxury goods by China’s citizens has been transacted outside its borders. Decades of pent-up demand for international travel and global shopping among Chinese consumers has driven overall travel volumes in both leisure and business segments, and spending levels continue to increase.
Across all sectors of the Chinese international travel industry, we continue to track expansion of tourism to a broader diversity of destinations, with independent travelers venturing further afield in search of unique experiences and shopping bargains.
CC Zhuang, CEO of leading travel booking site Qunar.com, feels that his company is “immune” to the economic downturn, saying during an earnings conference call on August 25, “Based on empirical evidence…leisure travel, our primary focus area, has been quite immune…July stats indicated that our growth momentum continued to be very strong across business lines.”
Added Zhuang, “We are also well positioned for any potential macro headwinds.”
Zhuang also outlined Qunar’s plans to launch an Expedia-like prepaid hotel option for customers this fall, taking on additional inventory risk with an eye to increasing lucrative five-star hotel bookings. This is a sure sign that the top end of hotel demand from China is expanding rapidly, while luxury bookers will “trade up” if they are given the option on a trusted Chinese booking platform.
I spoke live last Monday with CCTV’s Michelle Makori about these issues and more: http://www.cctv-america.com/2015/08/24/luxury-counselor-sage-brennan-on-chinas-luxury-spending