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May 31, 2012

China’s dazzling numbers

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Visit any five-star hotel in Dubai, or luxury shopping mall, and you will notice a difference from just two short years ago. Not in terms of the rooms, the stores or the restaurants – but in their customers. The Chinese are landing and in greater numbers than ever before with a large increase in flight connections between China and the UAE since approved destination status was granted in late-2009. 

Nobody is sure exactly how big it is going to get with potential critical mass beyond the comprehension of most. However there is consensus on one thing – the Chinese outbound tourism market is going to be the biggest and most important in the world, possibly even by the end of 2012.

According to the China Tourism Academy, 57 million Chinese travelled abroad in 2010. In 2011, that fi gures was thought to have risen to 70 million. The World Tourism Organisation forecast that fi gures would rise to 100 million by 2020 – but that seems conservative, considering the 20 percent year on year growth of recent years. 

“The top ten ranking by international tourism spend shows one remarkable change in 2010, with China (US$55 billion) moving up into third position, overtaking the United Kingdom (US$49 billion),” stated a 2011 report from WTO. “China has shown by far the fastest growth with regard to expenditure on international tourism in the last decade, multiplying spend four times since 2000. Ranking as the seventh biggest source market in 2005, it has since overtaken, respectively, Italy, Japan, France and the United Kingdom.”

According to the US State Department of Commerce (2010), an average Chinese tourist spent US$7,000 per stay. That is more than any other nationality. 

But before we get carried away and rush out to buy our Business Mandarin For Dummies, how is this going to translate, if at all, to the meetings and events industry?

Professor Dr Wolfgang Georg Arlt is the director of the China Outbound Tourism Research Institute (COTRI), the world’s leading independent research institute for analysis, consulting and quality assessment relating to the Chinese outbound tourism market. 

Professor Arlt shared some of his thoughts on how the Chinese tourism boom could affect the meetings and events industry with meetme. “Often business and leisure travel is mixed, as most Chinese travellers are first generation rich and still working and therefore always looking for business even when travelling for leisure,” explains Professor Arlt. 

“China is now number three in international tourism both in number of travellers and money spent abroad. COTRI predicts that in 2013, maybe even in 2012, China will be the number-one international tourism source market in the world, overtaking Germany and the United States. 

“Adding South East Asia, India, and Japan to the Chinese numbers, Asia will be the most important international tourism source market in the world in five years’ time.” 

While many of these figures are related to overall tourism numbers, it’s clear that there is a significant element of business travel.


The UAE experience

Global figures and numbers with lots of noughts on the end are all well and good, but how does this translate to experience on the ground in the UAE? Gillian Taylor, Business Tourism Manager, Abu Dhabi Tourism & Culture Authority (ADTCA) says that although it does not have an exact breakdown for visitors or the purpose of their visit, it’s clear that the Chinese (and wider Asian market) are important. 

“We believe around 60 percent of visitors are in the emirate for business purposes – and that around 10 percent are here for meeting and event purposes,” says Taylor. “That said, Asian markets are extremely important to us and last year represented more than two thirds of our international hotel guests, which amounted in total to 2.1 million.” “Asia’s improved performance in hotel guest standings for Abu Dhabi is mainly driven by India – which soared 64 percent last year on 2010; and China, which went up 74 percent.

“The number of Chinese nationals staying in Abu Dhabi’s hotels during 2011 increased by 15 percent, with 67 percent staying at upmarket hotels.” 

These figures are impressive, especially when you consider that Abu Dhabi does not fit the typical profile of a hot Chinese destination – most tourists stick to tried-and-tested locations in Europe, the US and Asia. 

Taylor believes that performance is down to a number of factors – including the opening of an dedicated ADTCA office and visitor centre in Beijing; the opening of Ferrari World Abu Dhabi, which brought great awareness to the Chinese market; and an increase in the number of direct Etihad flights from China to Abu Dhabi.

“Currently a lot of Chinese visitors to Abu Dhabi are travelling for business reasons, whether for development projects, or oil and gas related especially with Etihad’s direct flights from three cities in China,” says Taylor. “With a stronger RMB currency, and reduced room rates in Abu Dhabi, the Chinese can afford Abu Dhabi as a destination to experience the luxury and culture we have to offer once they have finished their business.” 

“In the case of China, direct flights are a big factor as they make the destination more convenient. As the capital of the UAE, Abu Dhabi is also seen as a more stable and international destination. We will be developing our trade channels even further, in the cities of Beijing, Shanghai and Chengdu where there are direct flights into Abu Dhabi. 

“For leisure tourists, attractions such as the Sheikh Zayed Grand Mosque and Yas Island (with Ferrari World Abu Dhabi) are definite draws. Abu Dhabi being a tax-free destination is an incentive for the Chinese who are big shoppers. But more importantly, many of them visit Abu Dhabi to experience the culture and heritage that the emirate has to offer – an authentic Arabian experience.” 

But before meeting planners and venue managers start counting their RMB, there is still work to be done to attract, educate and accommodate outbound meeting and event business from China. Some words of tempered advice come from Alexander Glos, CEO of the i2i Group – a B2B media company based in Beijing. 

“Business tourism, specifically meetings and events, is increasing,” says Glos. “The Chinese outbound meeting and event organisers are looking for exciting and innovative locations to host corporate, government, association and other types of events. The UAE is a perfect place for this. 

“Regrettably, many meeting planners in China are not very familiar with facilities and opportunities in the UAE, but this will improve over time and I’m sure the UAE will be one of the premier meeting destinations for the Chinese in the coming years.”

Glos goes on to acknowledge the inbound business travellers from Japan, Korea, Singapore and Malaysia to the UAE and points to the fact that their business will continue. However, he also recognises that China will have the biggest impact in the next five to 10 years.

“It’s important to note that Asian inbound business is very diverse,” he says. “Chinese desires and tastes are very different from those of the Japanese, Koreans, Malaysians and certainly the Australian market. It’s good to focus on individual markets and their specific needs. Thinking of a pan-Asian marketplace, is probably incorrect, it’s like saying Europe is a common market source, which of course it is not, with multiple languages, customs, business etiquette and needs. The same applies throughout Asia.”

While Glos also believes that China is overwhelmingly the fastest growing outbound meetings market in the world, at the moment, Asian meetings into the UAE is a small part of the total business. However, he says Chinese meetings will be a big part. 

“It’s always hard to tell how fast China will grow in this regard,” says Glos, “but in the eight years that we have been developing business from China, we’ve seen the growth rate in excess of 25 percent annually. This will certainly begin to impact the UAE in the coming years.” 

“Great hotels, exciting things to do, world-class facilities, adventure, new locations, great shopping, great food and most of all an environment that is hospitable and welcoming to the Chinese – all of this combines to make the UAE a highly attractive market.” 

Abdul Rahim Baker of Dubai Convention Bureau is perhaps as well placed as anyone in the UAE to give first-hand experience of the influence of Asia, and especially China, on the local meetings industry.

 “The Asia Pacific market is growing rapidly for business tourism, and in particular meetings,” says Baker. “It is fuelled by corporate incentives from China, and South East Asian countries. There is also a rise in demand from Asia Pacificbased association in rotating their regional congress to Dubai.”

China has shown the most growth of the Asian markets, with the other main source being India, he says. With Asia being one of the few regions that is still seeing GDP growth, the middle class is expanding, hence increasing travel opportunities. As the economies of Europe and the US are slowing, Asia, and Latin America, will become essential markets to tap, says Baker. 


How to tap the market

Just how to tap that market is the US$150 billion question. That’s the value of the Chinese meetings, incentives, conferences and events industry, according to HelmsBriscoe (April 2011). And it is growing at 20 percent per year.

At the moment, the Middle East is relatively low on Chinese meetings planners’ agendas. The most popular destinations for events going outbound from China are in Asia including Taiwan, Macau, South Korea, Singapore, Thailand and Malaysia. Beyond Asia, North America is most popular, followed by Europe and then the MENA region. 

Gillian Taylor from ADTCA believes the increased internet penetration in China is the way forward.

“As of June 2011, the number of China internet users has reached 485 million,” she says. “With more and more Chinese travellers conducting their travel research online   before finalising their plans at the travel agent, we are looking to establish a strong online presence in China. We will be embarking on a social media campaign to boost the awareness and desire to travel to Abu Dhabi.”

Awareness is the first hurdle, but how to actually make that visitor experience memorable once in country is vital to making successful events and ensuring all-important word-of-mouth endorsement. 

“Naturally, there are language and cultural differences that need to be considered,” says Alexander Glos at i2i. 

“Typical Chinese groups are interested in business development, but also cultural exchange and familiarisation with the host destination. Having Chinese language skills, being able to offer various types of Chinese foods and drinks, and appealing to local Chinese customs are all important considerations in hosting and developing business with Chinese groups.”

Abdul Rahim Baker at DCB agrees. “Language is essential if one wants to tap the Chinese market,” he says. “Suppliers need to have staff fluent in Mandarin and adapt their collaterals and communication channels. A similar approach is required for the Japanese market.” 


The second wave

Now, that we have your attention, make sure you don’t take your eye off the fastmoving Chinese market for too long, as we are about the experience the Second Wave, according to COTRI.

This is great news for smaller destinations as an increasing number of selforganised travellers from China are slowing down and spreading further afield in their quest for prestige and knowledge.

“Increasingly travel-savvy and globally connected, below 45 years and green, the New Chinese Tourists are arriving in more diverse locations and stay for more than just a snapshot,” says Professor Arlt.

This is a major shift. The “New Chinese Tourists” are more likely to speak some English or other foreign languages. However, they still like to see signage and other information in Chinese, as a sign of respect for their country.

These “self-organised” travellers (not to be confused with “individual” travellers. In reality, many are rather “half-organised”, with tour operators providing visas, flights and maybe a few hotel bookings) prefer slower travel forms and are more likely to add smaller destinations and special-interest sights and activities to their itinerary. New Chinese Tourists are wealthier and more willing to spend money on sophisticated branded goods while travelling.

A number of factors have brought about this start of the second wave of China’s outbound tourism. There is the growing affluence of Chinese society and it has become easier to secure passports and visas for international travel. Increased and better quality information on destinations has also helped, especially with marketing campaigns produced in-language.

“Chinese visitors are very proud to be Chinese, and finding ways to reference their culture and language will be appreciated,” says Professor Arlt. “The UAE is a success story, a political friend, an icon of modernity and spectacular buildings – all elements of attraction for Chinese visitors.

“Chinese outbound tourism is about gaining prestige. Dubai and other destinations are certainly offering that.”

With the number of Chinese outbound tourists certain to top 100 million sooner than later, and with the lucrative meetings and events market already worth US$150 billion, isn’t it time you brushed up on your Mandarin?


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