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- 28 Jan 2016
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Luxury Target: The Rise Of Chinese Millennial Travellers

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Chinese millennial travellers are steadily increasing their reach, volume and spend, and are therefore a key segment to watch and adapt to for luxury travel retail, writes Added Value.

It is predicted that by 2030, Chinese travellers will be spending around $700 billion USD on outbound travel and a growing proportion of this is expected to come from the estimated 300 million Chinese millennials.

The Chinese outbound tourism market has been boosted in recent years by a number of key factors including the rising numbers of young people travelling, high disposable incomes, ongoing urbanisation and the relaxation of visa arrangements. In order to succeed, luxury travel brands, and in particular airlines and destinations targeting Chinese travellers, need to continually adapt their marketing strategies in line with the new demographics and changing consumer profiles.


 Today, Chinese millennials represent 22% of the Chinese population & are fast becoming an important segment 


Today, Chinese millennials (post 80s and post 90s) represent 22% of the Chinese population and are fast becoming an important segment of the travel industry. They typically travel four times a year, have white collar professions and often make more money than their parents. Millennials are digitally savvy, dependent on technology and are rapidly redefining the travel industry and brands need to take note quickly.

Alluring the Chinese millennial traveler presents some unique challenges. They are looking for brands that not only enhance their self-image, but also deliver an immersive experience.

In China, Internet connectivity and smartphone-use also have the highest penetration rates in the world. Digital and mobile media are constantly evolving to keep pace with millennials as they increasingly use online channels to search for travel information, read reviews and make purchases. They aspire to be inspired, taking interest in destinations with personality and being attracted by opportunities to experience local culture.


 Chinese millennials are now more inclined to travel further afield and spend more money 


Traditionally, Hong Kong and Macau were favoured destinations for Chinese tourists but the dynamic is changing. Chinese millennials are now more inclined to travel further afield and spend more money as both their appetite for adventure and disposable incomes grow.

South Korea in particular is experiencing an influx of Chinese millennials. According to Skift.com, Chinese visitors accounted for 43% of South Korea’s inbound tourism market in 2014 and under half of all 20 to 40-year-old visitors came from China.

This significant growth that South Korea has experienced as a destination for millennials can be attributed to a number of factors, especially the impact of Korean culture in China. From cosmetics and duty-free items, to soap operas and pop music, Korean products have become enormously popular among the Chinese youth.


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Table 1: Data from CTR China National Resident Survey (CNRS-TGI)


Despite the fact that China is increasingly becoming a lucrative market for the global travel and tourism industry, companies need to innovate and revamp their marketing strategies to claim a share of the market. International airlines and destinations are still struggling to understand Chinese culture and the traveler mind-set.

For example, Air China, China Eastern Airlines and China Southern Airlines all ranked 70% and above in overall awareness among Chinese consumers, compared with less than 40% for international airline brands showing that current awareness of local airlines is considerably higher than that of international carriers.

Brands that can better understand and cater to the needs and desires of Chinese millennial travellers will stand out in the market; one way to succeed in this area is to dig deeper into Chinese culture.


 Brands that can better cater to the needs & desires of Chinese millennial travellers will stand out in the market 


Cultural Insight offers an alternative perspective. Using different methods of cultural analysis from semiotics to anthropology, this approach enables brands to look through the lens of culture, rather than consumers. It enables brands to understand how meaning is produced within specific cultures and how meanings evolve.

Inviting fresh outlooks and inspiring brand thinking, allows us to recognise things consumers are unable to express. A Cultural Selling Proposition (CSP) encapsulates such a shift in branding and will enable brands to activate culture and establish deeper and more meaningful relationships with consumers.

Travel brands need to keep pace with the rapidly changing trends and consumer profiles in the China market. The relationship between brands and consumers is constantly renegotiated to fit new conditions.


 Today, the market is wide open, presenting enormous opportunities for forward thinking industry players 


Consumer insights and culture play a crucial role in this process if a brand hopes to stay relevant and capitalise on China’s fast growing travel market.

Today, the market is wide open, presenting enormous opportunities for forward thinking industry players aiming to build their brands and gain the loyalty of Chinese travellers.

*Source: All data collected from: CTR China National Resident Survey (CNRS-TGI)



Tune in next month for Luxury Society’s joint article with Digital Luxury Group on : ‘5 Challenges For Luxury Brand Business In China’.



To further investigate the wealthy Chinese traveller on Luxury Society, we invite you to explore the related materials as follows:

- Are You Reaching The Global Chinese Luxury Consumer?
- A Closer Look At Luxury Consumption In Asia
- Targeting the Travelling Chinese Luxury Consumer


more

Panos Dimitropoulos and Sam Woollard are Account Director of Cultural Insight & Client Development Director, respectively, at the China offices of marketing consultancy Added Value, a global brand development and marketing insight consultancy which provides brand, consumer and cultural insights, as well as to strategic and operational marketing services.

www.added-value.com