China the “Wild West” for Global Travel Industry

December 1, 2014/0/0
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The massive growth of China’s outbound tourism market continues to attract the attention of international travel giants, which increasingly look to collaborate with leading local players. Considering the fast pace with which Chinese tourists have scoured (and shopped) the globe — 116 million mainlanders are expected to travel abroad this year, spending an estimated $155 billion — this is perhaps no surprise.

Last week, Turkish Airlines became the latest to tackle the mainland market via a partnership agreement with a Guangzhou travel agency. Chinese tourist arrivals in Turkey jumped 40 percent in the first eight months of the year, driven by younger independent tourists, spurring new urgency among tourism officials and companies to enlist Chinese partners to cater to growing demand.

The moves by Turkish Airlines follow previous efforts by major global online travel agencies (OTAs) such as Priceline (which bought a stake in China’s in August) and TripAdvisor and Expedia (both of which have local partners in China).

However, investment in China’s outbound travel market is not a one-way street. Driven by their expanding global footprint, Chinese online giants Baidu, Alibaba, and Tencent are in OTA talks overseas, looking to position themselves for continued growth as more Chinese travelers venture abroad (and book travel on their mobile devices).

Looking at the growing appetite for global travel, and the current underdeveloped state of the online travel market, we can expect many more of these partnerships in the years to come. According to the WSJ, currently just 15 percent of Chinese travelers book online, but numbers are rising quickly (29 percent YoY in 2013, according to iResearch). iResearch further projects that China’s online travel market transactions to rise from $36 billion last year to $46 billion this year, continuing to increase to $75 billion by 2017. Clearly an area to watch.