This report attempts to calculate the number of Chinese luxury travelers, evaluates their consumption patterns, travel habits as well as key market trends over the last year. In addition, this report analyses the purchase of luxury products and examines the impact of Chinese wealth overseas.
Chinese luxury travelers are going overseas less, down to an average 2.8 trips a year. The frequency of travel is slightly higher in First Tier Cities. The internet and magazines are the main sources of information when deciding travel destinations. Chinese luxury travelers are going overseas in smaller groups, most often in a group of three to ten people. Expenditure on hotel rooms is higher than the global average and Chinese tourists are the largest travelling nationality in the world for the third year running - and have widened the gap with second place.
Rupert Hoogewerf, Hurun Report Chairman and Chief Researcher said: "ILTM Asia is the dominant player in Asia for luxury travel exhibitions and we are delighted to be partnering with them for the seventh consecutive year. The global travel industry has recognized that China’s luxury travelers are No.1 and are doing everything they can to appeal to this key group of luxury travelers".
Alison Gilmore, Event Director, ILTM Portfolio, said: “ILTM events are trade-only hubs created exclusively to develop the business of bespoke luxury travel. Agents and buyers attending ILTM Asia from across the region will have the opportunity to ensure they’re ahead of the game in meeting their clients’ increasing demands during three days of face to face pre-scheduled appointments, educational seminars and business networking. ILTM Asia is delighted to once again be working with Hurun Report - the leading authority on Chinese high net worth consumer trends".
Paul Hicks, CEO of GHCasia, the PR partner of Hurun Report said: “As the leading PR network in Asia specializing in the luxury travel sector, GHCasia is delighted to partner with the Hurun Report and find their unrivalled insights into the habits and aspirations of China’s high net worth individuals to be invaluable information ".
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 the United 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%. A key reason for the increase in the number of luxury travelers is the increase in Chinese HNWIs. 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 from Shanghai and Beijing, with 80% being male and an average age of 37 years. Data collected also includes B2B data through investigating domestic travel agencies and international hotels from ILTM’s database. 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 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.
Destination Inspiration
Internet and magazines main channels
83% on the internet every day
91% are in the habit of reading monthly magazines
Travel Formulation Trends
Destination decision：Themselves 60%
Travel companions：Family 40%；Friends 20%
Travel Purpose：Sightseeing 45%；Business 43%
Hotel selection：Location 61%；Brand 58%
Bookings
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%
Travel Habits
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 on ILTM’s domestic travel agency database, 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.
Tour group sizes are generally smaller for luxury travelers who are spending over US$10,000 (excluding flights). On average there are 7.1 people per group and only 16% of tour groups are larger than ten travelers. For big spending travelers, trips are usually longer, all over five days and half over eight days, with the average trip time being 9.6 days. Most fly business class and in China prefer Air China and internationally Singapore Airlines. Their preferred destination is France, followed by Switzerland. Most travel with family but also with alumni associations and private clubs. (Source: Hurun Report Chinese Luxury Consumer Survey 2013).
Hotel Reservations
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 survey of ILTM’s international hotels database, 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. (Source: Hurun Report Chinese Luxury Consumer Survey 2013).
Shangri-La is once again chosen as the most popular hotel brand among Chinese HNWIs and Hilton remains in second place. Peninsula, which was 5th last year has risen to 3rd. Sheraton, Park Hyatt, Four Seasons, and Intercontinental have all increased in popularity compared to last year.
Chinese HNWIs’ Preferred Hotel Brands - Top10
Rank
|
Rank Change
|
Hotel
|
Score*
|
1
|
-
|
Shangri-La
|
100
|
2
|
-
|
Hilton
|
76
|
3
|
Up
|
Peninsula
|
73
|
4
|
Up
|
Sheraton
|
64
|
5
|
Down
|
Grand Hyatt
|
61
|
6
|
Down
|
Ritz-Carlton
|
58
|
7
|
Up
|
Park Hyatt
|
57
|
8
|
Up
|
Mandarin
Oriental
|
56
|
9
|
Up
|
Four
Seasons
|
50
|
10
|
Down
|
Marriot
International
|
47
|
*Index Calculations: Based on the percentage of preference from those interviewed. Score is out of 100, the higher the score, the higher the degree in popularity. (Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Case Study 1：My Best Trip in 2012
Chinese HNWIs were most impressed with the US and Japan in 2012, followed by Italy and Switzerland. The average travel time was eight days and the average group size was three. Most trips were taken with family and friends and 49% flew business class. Most Chinese HNWIs decided the destination and the hotel themselves. Local business partners and third-party online booking websites were the most preferred booking methods. (Source：Hurun Report Overseas Travel Special Survey 2013)
Case Study 2：My Chinese New Year Trip in 2013
A growing number of Chinese luxury travelers are using the Chinese New Year holiday period to travel overseas. What was once a strictly domestic travel period and a time to visit family and friends at one’s birthplace is now a time where 47% of HNWIs travel overseas, up 15% on last year. Singapore, Thailand, and Malaysia are popular choices during this period and journeys last seven days. Two thirds fly either business or first class.
63% of HNWIs decide where to travel during the Chinese New Year break whereas 27% of trips are decided by family members. Nearly half of HNWIs decide the hotel, with 27% decided by family members. Secretaries are only called upon in 13% of cases, presumably due to the special nature of the Chinese New Year break. Third-party booking sites account for 35% of travel bookings. (Source：Hurun Report Overseas Travel Special Survey 2013)
Travel is Still the Preferred Leisure Pursuit for Chinese HNWIs
Tourism reigns supreme as the number one leisure pursuit for China’s wealthy, with 63% of surveyed HNWIs listing travel as their preferred form of leisure activity, up 2% on last year. Reading is the second most popular, up 2% to 42%. Tea tasting and driving remain steady in 3rd and 4th, and spending time with one’s family remains in 5th.
There is little difference between the Top 5 preferred leisure pursuits among HNWIs in First Tier and Second/Third Tier Cities, however, going to spas and wine tasting are more popular among HNWIs in First Tier Cities.
In 2012, swimming surpassed golf as the preferred sport among Chinese wealthy individuals and remains the most popular this year.
Golf, hiking, yoga, and badminton make up the remaining Top 5 preferred sports. Yoga is the first choice when looking at women (48% preference) whereas the figure is a mere 9% among men. Horse riding is up from 7% last year to 15% this year and ranks 6th. (Source: Hurun Report Chinese Luxury Consumer Survey 2013).
Nationwide food safety fears, among other factors, have prompted HNWIs to focus an increasing amount of their attention on improving their health, particularly through physical exercise. In First Tier Cities, HNWIs prefer yoga, tennis, and horse riding, whilst in Second and Third Tier Cities they are more interested in hiking and skiing.
Top Travel Destinations among China’s Wealthy Consumers
Sanya, Hong Kong, and Yunnan continue to be the hot travel spots for Chinese Luxury Travelers. Last year’s top four Chinese domestic destinations held on to their ranking this year, led by Sanya and Hong Kong respectively, and followed by Yunnan and Tibet. Tibet has seen a marked increase in preference, now listed as a preferred choice by 24% of Chinese HNWIs, up from 17% in 2012. Sichuan and Xiamen both made the Top 10 this year, up from 13th and 11th respectively the year before.
Rank
|
Rank Change
|
Region
|
%
Popularity
|
1
|
-
|
Sanya
|
47.7%
|
2
|
-
|
Hong Kong
|
38.0%
|
3
|
-
|
Yunnan
|
28.1%
|
4
|
-
|
Tibet
|
23.9%
|
5
|
Up
|
Hangzhou
|
17.2%
|
6
|
Up
|
Xinjiang
|
15.5%
|
7
|
Down
|
Macau
|
15.3%
|
8
|
Up
|
Xiamen
|
14.9%
|
9
|
Up
|
Sichuan
|
13.0%
|
10
|
Down
|
Qingdao
|
11.1%
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Chinese Luxury Consumer’s Preferred International Luxury Destinations
Europe Dominates Top 10 List
In a repeat of the previous year, France and the US are still the most popular international travel destinations. Australia dropped from 3rd to 7th place, falling out of the Top 3 where it had comfortably sat for three successive years. The London Olympic Games has presumably had an impact on the popularity of the UK, which has jumped from 13th in 2011 to 5th place. Among Chinese billionaires, the UK is even more popular and is ranked 3rd, with a 32% preference score. Germany and Italy made the Top 10, meaning that half this list is made up of European countries.
Rank
|
Change*
|
Country
|
%
Popularity
|
1
|
-
|
France
|
34.0%
|
2
|
-
|
US
|
33.8%
|
3
|
Up
|
Singapore
|
26.5%
|
4
|
Up
|
Switzerland
|
23.1%
|
5
|
Up
|
UK
|
22.2%
|
6
|
Up
|
Italy
|
20.9%
|
7
|
Down
|
Australia
|
19.4%
|
8
|
Down
|
Dubai
|
17.1%
|
9
|
Up
|
Germany
|
16.2%
|
10
|
Down
|
Maldives
|
13.9%
|
11
|
Down
|
Japan
|
13.5%
|
12
|
Down
|
Canada
|
12.6%
|
13
|
-
|
Korea
|
12.0%
|
14
|
-
|
Thailand
|
11.1%
|
15
|
Down
|
New Zealand
|
10.9%
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
China’s North/South Divide: Regional Travel Preferences among China’s HNWIs
Regional
Asian countries perform well when looking at the preferences of HNWIs in China’s southern regions. In South China, Singapore is joint top with France (39.6%), with the UK at 34%. In Central and Western China, the US reigns supreme with 41.2%. New Zealand (21%) and Switzerland (28.6%) are most popular in the North. Dubai is popular in Southern China (26.4%) and in Central and Western China (29.4%) Australia is popular in Central and Western China (26.5%) and Thailand is popular in South China (20.8%).
Shanghai vs. Beijing
Shanghai’s HNWIs still prefer France and the US, but Japan is in third and Korea is in 7th, both of whom do not appear on the overall list. New Zealand, 8th most popular destination among Beijing’s HNWIs, doesn’t make the Top 10 in Shanghai. By contrast, Australia is the 5th most popular International destination among Shanghai’s HNWIs, but only 10th most popular in Beijing.
Shanghai’s HNWIs International Travel Preferences
Rank
|
Country/Region
|
1
|
France
|
2
|
US
|
3
|
Singapore
|
4
|
Switzerland
|
5
|
Australia
|
6
|
Korea
|
7
|
UK
|
8
|
Japan
|
9
|
Italy
|
10
|
Dubai
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Beijing’s wealthy prefer European countries – Italy is in second with a 31% preference rating. New Zealand also performs comparatively well in the region, up to 9th and with a 21% preference rating.
Beijing’s HNWIs International Travel Preferences
Rank
|
Country/Region
|
1
|
France
|
2
|
Italy
|
3
|
US
|
4
|
Singapore
|
5
|
Switzerland
|
6
|
Germany
|
7
|
UK
|
8
|
New Zealand
|
9
|
Maldives
|
10
|
Australia
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
There are subtle differences in preferences between First and Second/Third Tier Cities. In Second/Third Tier Cities, preferences are generally more concentrated in the larger, more established travel spots. Preference for the US is relatively high in Second and Third Tier Cities (36%) compared to First Tier Cities.
First Tier City HNWIs International Travel Preferences
Rank
|
Country/Region
|
1
|
France
|
2
|
US
|
3
|
Singapore
|
4
|
Italy
|
5
|
Switzerland
|
6
|
UK
|
7
|
Germany
|
8
|
Australia
|
9
|
Dubai
|
10
|
Maldives
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Second & Third Tier City HNWIs International Travel Preferences
Rank
|
Country/Region
|
1
|
US
|
2
|
France
|
3
|
Singapore
|
4
|
Switzerland
|
5
|
UK
|
6
|
Australia
|
7
|
Dubai
|
8
|
Italy
|
9
|
Germany
|
10
|
Japan
|
(Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Chinese Tourists Outspend Russians, Japanese and Americans Combined
Chinese shoppers are for the third consecutive year ranked No.1 in terms of spending on tax free shopping, representing 24% of all tax free shopping purchases made within Global Blue. Chinese shoppers now outspend Russians, Japanese, and Americans. Chinese traveler consumption growth compared to the previous two years has slowed, but still shows rapid growth of 50% year on year compared to the global traveler shopping expenditure rate increase of around 30%. Chinese travelers are spending €875 more, an increase of 8% on the previous year, with the average gap widening. It is worth noting that a considerable part of Chinese traveler spending is made on behalf of friends. Global Blue is the world’s largest tax-refund organization, data does not include tax-free shopping at airports and data only represents spending by Global Blue members. (Source: Global Blue statistics on Chinese Traveler’s Tax Free Shopping Spending 2012)
Gifting Significant Part of Travel Expenditure
Gifting is the number one factor driving Chinese travel shopping. A watch is considered the ideal gift for men (28%) followed by red wine (26%).
Jewelry is the absolute first choice gift choice for women, accounting for 58% of responses, followed by clothing at 25%. Men are more inclined to buy women jewelry as a gift (60%) whereas women buy other women clothing (28%).
Jewelry is preferred by HNWIs in First Tier Cities, whereas gift cards are preferred in Second/Third Tier Cities. Travel packages are also a popular gift, 6% will choose a travel package as a gift for men, and 8% will choose a travel package as a gift for women.
China's rich prefer French and Italian luxury brands. Moutai has struggled this year, falling to thirteenth place in the Hurun Research Institute’s statistics as Preferred Brands for Gifting 2012, down from fifth the year before year. However, Moutai is the only Chinese brand to make the list of preferred brands.
Overseas Study, Immigration, and Overseas Property Purchasing Also Drive Travel
80% of HNWIs plan to send their child overseas to study and high school is considered the most suitable time to start their child’s international education. The average age to send one’s child overseas is 17.
Despite the unsurprising preference for English-speaking countries, Switzerland and France have increased in popularity as a study destination. HNWIs in First Tier Cities favour the US, whereas the UK is preferred by those in Second and Third Tier Cities. New Zealand has fallen dramatically from a peak in popularity experienced in 2011 and is now ranked 10th. (Source: Hurun Report Chinese Luxury Consumer Survey 2013)
Current immigration policies also reflect the popularity of certain education destinations among Chinese HNWIs. 60% of Chinese HNWIs have already or are seriously considering emigrating overseas. The US and Canada are again the most popular immigration destinations among China’s HNWI class. Overseas education and immigration have also contributed to the boom in overseas property purchases.
Rank
|
Luxury
Overseas Residential Purchases Projection Over Next 24 Months
|
1
|
US*
|
2
|
HK
|
3
|
Singapore
|
4
|
London
|
5
|
Sydney
|
6
|
Canada
|
7
|
Other S.E.
Asian countries**
|
*Particularly West Coast
**Particularly Thailand and Malaysia
(Source：Hurun Research Institute)
