Last week, the Alibaba-owned Chinese online travel platform Alitrip held its first promotional event in the US in Los Angeles. The event, “Attracting China’s 1.3 Billion Travelers,” was launched to promote Alitrip as the go-to partner for US travel agencies and suppliers interested in the fast-growing Chinese outbound tourism market.
The event featured keynote speakers including Roger Dow, President and CEO of the US Travel Association, and attracted more than 100 representatives from hotels, attractions, and destination marketing organizations (DMOs) from California and neighboring states.
Formerly known as Taobao Travel, Alitrip was spun off from Taobao as an independent brand in October 2014. Backed by an early adopter base from Alibaba’s ubiquitous payment solution Alipay, Alitrip managed to secure 100 million users within just three years, siphoning market share long occupied by competitors like Ctrip and Qunar.
Previously, Alitrip’s growth had mostly been focused on domestic airline ticket and hotel sales. However, the company has recently built direct partnership with international destinations and suppliers. Earlier this month, Alitrip announced an agreement with the Singapore Tourism Board and several local receptive agencies to provide destination guides and exclusive offers through the Alitrip platform.
Despite concerns over its devalued currency and sluggish economy, China continues to impress the world with its tourist exports. According to a recent study by British research firm GfK, 109 million Chinese travelers ventured abroad in 2015, collectively spending some $229 billion on overseas retail purchases.
The US in particular has seen a surge in Chinese visitation, with 2.5 million tourist visa applications (a rise of 52.6 percent YoY) filed since the end of 2014, when the US extended their validity to 10 years for Chinese citizens. In the first half of 2015 alone, 1.2 million mainland Chinese visited the US, an increase of more than 18 percent over the year before.
According to Sherri Wu, Alitrip’s Chief Strategy Officer, the event in Los Angeles marked an important step for the company’s strategic growth in the US, a top priority market. Alitrip’s efforts to build relationships with US destinations and suppliers are not only motivated by the growing number of Chinese visitors, but also by the rapid demographic change of the country’s travelers.
The future growth from Chinese outbound tourism will be led by an entirely new generation of free independent travelers (FIT), who are in search of novel experiences rather than a laundry list of the usual attractions.
“What [FITs are] looking for today is extreme experiences, such as skydiving, bungee jumping, and other outdoor travel,” Alitrip’s Sherri Wu told CLA last week. “Those customers can’t find these products easily in the Chinese market.”
Alitrip plans to launch a dedicated destination page for the US, where DMOs, attractions, and suppliers can work directly with Alitrip to provide unique itineraries and tips to Alitrip customers. This could give Alitrip a leg up on competitors like Ctrip, Qunar, and Qyer, which still heavily rely on user-generated content (UGC) to educate customers.
In addition to being thrill-seekers, the new generation of Chinese visitors is also young, affluent, and tech-savvy. Some data has shown that this group accounts for 75 percent of China’s FIT market and 73 percent of its luxury market. Looking to tap this tech-loving demographic, Alitrip announced plans to expand its “Park of the Future” and “Post-Post Pay” services.
The “Park of the Future” concept lets theme park or zoo visitors buy tickets, pay for merchandise, navigate around the park, and access exclusive offers on their mobile devices, all integrated into the Alitrip platform.
“Post-Post Pay” is a hotel booking solution — powered by Alipay and Sesame Credit — which lets hotel guests who booked through Alitrip check in with a quick scan of their mobile devices and pay after they leave, without waiting in line or submitting payment info to the hotel.
Some industry leaders are already testing the waters with Alitrip. Last November, Marriott International – now the largest hotel chain in the world – announced plans to launch a flagship store on Alitrip and explore the “Post-Post Pay” feature at some of its properties.
Whether these strategies will help Alitrip outpace Ctrip and Qunar (which merged last year) remains unknown. But it is clear that companies who hope to win the lion’s share of the China market must take the effort to understand fast-changing consumer demographics and adapt business strategy accordingly.
China Luxury Advisors (CLA) is a global consultancy that advises and works collaboratively with luxury brands, tourism boards, vacation destinations and upmarket retailers on their China consumer strategy. Our personalized boutique style of China market consulting defines us and lets you transcend.