Major changes in the consumer profile of Chinese luxury travelers
Hurun Report has recently released the 2013 edition of The Chinese Luxury Traveler, a comprehensive analysis on the latest travel trends of the Chinese wealthy consumers. Many of the findings picture an increasingly sophisticated Chinese luxury traveler, who prefer to travel less in groups and who are motivated in their choice of destination not only on shopping but also culture and cuisine.
Another very interesting finding of the Hurun Report is that Chinese luxury travelers spend more on accommodation, a sign that they begin to appreciate and value staying at a prestigious luxury hotel rather than a budget hotel. This evolution also indicates that an increasing number of rich Chinese are eager to embrace a broad luxury lifestyle. The report, however, highlights, that while rich Chinese do spend more on accommodation, but they still spend less on food, hotel shopping, and spas.
But probably the most important conclusion of the Hurun Report is that Chinese luxury traveler tour groups are getting smaller, which marks a huge step in the evolution of the Chinese consumer, no longer eager to buy the same product as their pier group and that they want to stand out. By travelling and shopping individually, they realize that not only do they receive a personalized treatment but are no longer perceived as the traditional Chinese luxury group shopper. This can be ‘exploited’ by luxury brands to boost sales by producing more limited edition products.
Although the number of annual overseas trips for Chinese luxury travelers is down from 3.2 to 2.8, and among Chinese super rich, down from last year’s 4.2 overseas trips to 3.4 this year, Chinese luxury travelers are spending more on shopping than any other nationality, on average €875 per trip.
This is of course, music to the ears of luxury fashion brands which have less retail exposure in China and who have understood that it is in major Western destinations that they should focus their investments to open larger and more exclusive stores, differentiating them for the ‘regular stores’. Louis Vuitton is one such example, having opened 3 Maison flagship stores this year alone – each store, not only larger but each one with a distinct interior design and concept, as a enticement for travellers such as the rich Chinese for an exclusive and upgraded luxury shopping experience.
Prada, Gucci, Bottega Veneta and Tiffany & Co are among the major luxury brands preparing to open mega-stores in Europe, this year – for each brand, their largest store globally, to date. In an effort to enhance the exclusivity perception and provide a unique shopping experience, many luxury brands have turned to opening pop-up or temporary stores. Recent examples include: Dior and Chanel recently opened in Paris and London, respectively, mono-brand beauty stores (make-up, skincare, fragrances); Louis Vuitton opened last month a pop-up store in Forte dei Marmi (Italy) which resembles a regular store and Chanel is due to open its pop-up boutique in Saint Tropez (French Riviera), later this month.
According to statistics provided by the National Tourism Administration, the number of Chinese outbound tourists in 2012 was a staggering 83 million, an increase of 18.4% year on year.China’s outbound tourism market is now larger than that of Germany and theUnited States, putting it firmly on the map as the world’s largest outbound tourism market. It is expected that China’s outbound market will continue to grow throughout 2013 with numbers reaching 94 million, which translates to a year on year rise of 15%. At present, there are 2.8 million US$ millionaires in China, a year on year increase of 4%, based on findings by the Hurun Research Institute this year.
One hundred HNWIs were asked about their travel habits from the period of March and April 2013. Most of those surveyed are fromShanghai and Beijing, with 80% being male and an average age of 37 years. The report also contains authoritative research results from this year’s Hurun Report Chinese Luxury Consumer Survey, released in January this year.
The Decision Making Process
The internet and magazines are the most important media channels for seeking out travel information. 60% of HNWIs Chinese will make the decision themselves, usually traveling with family or friends for the purpose of sightseeing, but increasingly for business. The most important factor when choosing a hotel is the location and brand.
Bookings are made by the HNWIs themselves or by a family member and the logistics are taken care of by an assistant through third party online booking sites. Business travel is mainly scheduled through local business partners.
Internet and magazines main channels / 83% on the internet every day 91% are in the habit of reading monthly magazines
Hotel bookings：HNWIs themselves 38%；Secretary/assistants 30%
Personal travel hotel booking：Third party online booking sites 22%
Business travel hotel booking：Local business partners 24%
Although Spring Festival and the October holiday are still popular travel times, there is not one particular time when Chinese HNWIs do most of their traveling; rather they tend to stagger their trips in order to avoid peak periods. According to Hurun Report’s survey most package tours last for 9.8 days on average and most consist of between three to ten travelers (53%). 43% of travel groups contain over ten individuals. Trips overseas last for an average of 7.4 days with 63% in the five to eight day travel time bracket.
On each overseas trip, Chinese travelers visit one or two countries and the preferred destination is France, followed by the US. Family, friends, and the entrepreneurs themselves control the booking process. The deciding travel factors are shopping, culture, cuisine, and finally business potential. 43% of Chinese travelers spend over US$5,000 (excluding flights) per trip, and 11% of them spend over US$10,000.
Most Chinese HNWIs decide the destination and the hotel for themselves. Local business partners and third-party online booking websites are the most preferred booking methods.
According to Hurun Report’s Chinese tourists are becoming an increasingly important segment for international hotels. 52% of international hotels list Chinese travelers in their Top 5 key customer segment. The hotel brand is the most important factor, although service provision is increasing in importance when choosing where to stay.
Shangri-La is once again chosen as the most popular hotel brand among wealthy Chinese HNWIs and Hilton remains in second place. Peninsula, which was 5th last year has risen to 3rd. Park Hyatt, Four Seasons, and Intercontinental have all increased in popularity compared to last year, while Grand Hyatt, Ritz Carlton and Marriott International have decreased in popularity among luxury Chinese travelers.
According to Oliver Petcu of CPP-LUXURY.COM, the preference for a certain hotel brand is defined by several factors:
- presence of the brand in China – reputation of the propertie(s) which operate in China (service, facilities etc)
- how ‘Chinese friendly’ the hotel brand is (website and literature in Chinese, packages and offers adapted to the preferences and habits of the Chinese traveller, Chinese speaking staff etc.)
- dining (Chinese would appreciate more an authentic Chinese restaurant with a Chinese Chef, than a Michelin starred celebrity Chef)
All data sourced from Hurun Report / Additional comments by Oliver Petcu