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Chinese outbound tourism is expected to continue growing at extraordinary rates into the foreseeable future. Credible projections estimate that by 2020, over 200 million Chinese will travel the world each year. It’s way past time for the North to get serious about this burgeoning market, and that means doing things a bit differently. New accommodation options to bolster the case for direct flights are critical if we’re to capitalize on this growth opportunity.
Where things stands
In 2016, more than 1.2 million Chinese travellers visited Australia. And that’s been growing at an incredible clip. That number represents a global market share of around 3% of Chinese travellers. If we’re to continue at this rate, we could expect some 6 million or more Chinese visitors per year by 2020.
Chinese travellers are also amongst the biggest spenders when they are on the road. According to Tourism Australia’s China 2020 Strategy Plan, by 2020 Chinese visitors could potentially spend between $7 billion and $9 billion at the upper end of the projected range.
The potential for growth is staggering. According to merchant bankers Goldman Sachs, a mere 4% of China’s population hold a passport, compared to 35% in the USA. Goldmans expect this figure to reach 12% by 2025. By that time, the number of Chinese residents travelling overseas will almost double from 120 million in 2015 to 220 million.
Of these, an estimated 28% are from the ‘urban middle’ class, compared to just 3% from the ‘urban mass’. Two-thirds of current outbound travellers are millennials (15-35 years old). A key driver of the travel bug will be the 74 million millennial college graduates in the coming decade.
Goldman Sachs’ estimates actually sees Australia’s share decline, but nonetheless expect that Australia will receive some 2 million Chinese travelers by 2025. The truth lies somewhere in between, I’m sure … so perhaps we could conceivably see some 3-4 million Chinese travellers grace our shores each year between 2020 and 2025.
Take a breath and think about it. What these estimates point to is that over that five year period, between 6 million and 20 million Chinese visitors will come to Australia. Boiled down, we’re talking about between 23,000 and 77,000 each and every week.
Chinese travellers travel for fun (sports, touring, online gaming, media and eating out), leading to structural upside in fun-related experience-based spending. A secondary factor is to shop, but for millennials this is not the core aspiration.
As China gets wealthier, its ‘urban middle’ population will also increase its household wealth. As incomes grow, international travel can be expected to grow commensurately. The ‘urban middle’ population comprises government employees and urban white-collar workers and SME owners. These two cohorts have an estimated working population of 146 million persons today, of which 28% already own passports.
Below this group are the ‘urban mass’ group of urban blue collar and migrant workers, comprising a further 246 million workers. A mere 4% of this group holds a passport. As this group increases its household incomes, we can expect the passport ownership rate to increase and drive interest in international travel.
Tourism for the masses, not mass tourism
These demographic trends and patterns point to a shifting nature of Chinese tourism. Whereas in the past, so-called mass tourism dominate the landscape – characterized by the ubiquitous bus-load of tourists following a flag-waving, megaphone toting, tour guide – what we are increasingly seeing is a more independent approach to travel.
Thus, we are witnessing a transition from ‘mass tourism’ to ‘tourism for the masses’.
These travellers are organizing their own itineraries. They do so with some assistance from agents, but tend to eschew the mass market wholesale booking agents that have (and continue to) dominate the landscape. Online channels and social media are drivers of choice and decision-making, which means accessing these audiences requires a very different approach to communications and distribution. The growth of contactless payments technologies in China also points to the importance of mobile technologies as a communications channel rather than websites per se.
No longer is it enough to run generic television campaigns and promote mass products via wholesale agency channels. This may work for well-known destinations where large volumes can be expected (e.g. Sydney and the Gold Coast), but won’t really make that much sense for regional places that simply don’t generate the volumes that make it worthwhile for wholesale agents to bother with.
For these guys, it’s a numbers game, and regional markets are simply too small compared to the low hanging fruit of capital cities and well-known landmarks.
Compelling content, distributed via social media platforms and through trusted referral channels will increasingly drive personalized engagement with the independent Chinese traveller audience.
We’re already seeing how this works well with campaigns such as those run by 8 Dragons Digital, a Victoria / Hong Kong multimedia marketing outfit, which has driven massive growth in hotel bookings in regional Victoria via campaigns executed in partnership with Chinese digital travel platforms. They’ve also put together a high productions value 30-minute episode promoting the Whitsundays to the Chinese audience. (Just check out their Chinese language video contact on YouTube, to get a flavour.)
Nature rules, ok
Australia is an attractive destination because we boast some of the most amazing natural wonders and experiences offered by our planet. The allure of our natural assets should not be underestimated. Of course, we immediately think of the Great Barrier Reef – one of the world’s must-see ‘bucket list’ items. And, unsurprisingly, the Reef is a massive attractor for Chinese travellers.
But there’s a lot more than the Reef. About five years ago, I was telling a friend in Shanghai about the black skies and watching the stars of an evening, even commenting on the visibility of the Milky Way. Her response was, with a tone of surprise and wonderment: ‘you can see the stars?’
The message here is simple: don’t underestimate the power of our natural environment when it comes to an audience that has been going through the ravages of hyperspeed urbanisation. We take it for granted. When you don’t get to see the stars, you won’t.
The NQ region
North Queensland boasts incredible natural assets, which would deliver incredible and authentic Australian natural experiences for visitors from China.
The reality is, within a 2-hour travel distance from Townsville, a visitor can experience the reef, islands, ocean and estuary sports fishing, horse riding, beachcombing, hiking and bushwalking, bird watching, rock climbing, archaeology and historical tours and mountain biking. We’ve world reknowned butterfly sanctuaries and amazing wetlands such as Cromarty and the Town Common. And there’s much more than that, I know.
They can eat their way through the North, and experience the ‘outback’ in and around Charters Towers. Agritourism is big in Europe, and I’m sure many visitors from China would get a real buzz from a visit to a cattle station. Ride a horse, be part of a muster.
What the region lacks is not natural assets. What it lacks is (1) a decent infrastructure of accommodation offerings that can actually cater for the potential volume of Chinese visitors, and (2) a serious strategic commitment to supporting the development of marketing and logistics channels.
The shortage of accommodation options was pointed again most recently by the Pure Projects report. The Ville, as the report noted, is the only 4-5 star hotel offering in Townsville (p. 16). That’s not nearly enough.
Perhaps with that in mind, we will see a more willing acceptance of projects that can deliver more and better travel accommodation for the region. The more accommodation options across the breadth of the city-region (not just in the old downtown), the greater the critical mass and allied commercial interests there would be to drive the development of volume growth through new distribution and marketing channels.
Projects that come before Council that can contribute to new, high quality-high volume accommodation for travellers should be embraced. This is especially true if the project proponents are already internationally positioned, and can place the city-region onto the Asian map. Global capital, global experience, global networks and market access. It’s a no brainer if we can get people like that to take an interest.
International resorts are necessary to provide accommodation options for large volumes of travellers. These resorts would ideally be designed to amplify the focus on the ‘great outdoors’ – by providing opportunities for visitors and guests to enjoy outdoor-oriented activities associated with both the land and sea. These activities would include horse riding, lazing around on the beach, recreational fishing in sheltered bays and nature watching.
Additionally, we can expect that proponents of such facilities would work tirelessly to grow direct international air links with ports in Hong Kong and China. It’s in their interests, and that of the region.
Numbers again …
Chinese tourism is something that takes place in large numbers. It’s a big place. If Australia can expect to host 3-4 million Chinese visitors each year in the 2020s, Townsville North Queensland should ambitiously aim to capture 5-7% of this – or around 200,000 per year.
Serious new accommodation options are going to be needed if we’re going to be in the race.
Two hundred thousand a year is equivalent to 3,846 every week, 12 airplane’s worth. We’re talking two flights in, and two flights out each and every day … bringing visitors in from overseas or other domestic ports, and taking them on their way again. We’ll probably see this fluctuate a bit, with some high seasons and low seasons. The North’s climate is like that.
The Air Niugini flight, linking Townsville to Hong Kong via Port Moresby is a tremendous start. It’s conceivable that in the future this airline could open North Queensland up to direct links into China.
By attracting the right accommodation options being developed in the city-region, together with North Queensland’s ‘great outdoors’ assets, a robust business case could be developed to drive this new channel and deliver for Chinese independent travellers opportunities to visit Australia and enjoy our natural wonders.
And there’s no better place to start than in North Queensland.