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  1. 30 vet Asia/Pacific Co-Founder – boutique rep firm of Bryant & Tripptree Firm appointed, PATA Regional Director Former Director Hong Kong Tourism-LA Establish HK Film Dpt VP Sales/Marketing Mandarin Oriental Hotels Barbara Bryant

  2. ATME EXECUTIVE CHINA THINK TANK Barbara Bryant, PATA North America Regional Director February 12-13, 2009

  3. Ron ErdmannDeputy DirectorOffice of Travel & Tourism Industries

  4. Admin international travel research Consults with clients on use and application of information Role is to create and improve upon international marketing intelligence Prior nearly decade with U. S. Travel & Tourism Admin until closed Experienced in developing and promoting rural tourism Ron Erdmann

  5. China Research Presented to: ATME:Think Tank Presented by: Ron Erdmann Office of Travel and Tourism Industries International Trade Administration U.S. Department of Commerce February 2009

  6. OTTI Resources on China Visitor volume to U.S. from China (monthly from I-94 form) U.S. resident travel to China (non-stop) (monthly) Other Data collected on DHS I-94 form (monthly—port, visa type, age of travelers, address in U.S., etc.) Visitor volume forecast (semi-annual) Visitor spending (annual) Visitor profile (annual) U.S. resident travel to China (annual) Chinese visitation to all countries (annual) China Outbound Study (one-time special study) China Travel Trade Barometer (quarterly planned)

  7. The China Outbound Travel Market

  8. China Outbound Travel Data from China National Tourism Office and Global Insight – Global Travel Navigator May 2008

  9. China Outbound Trends(total outbound travelers) Data from China National Tourism Office and Global Insight – Global Travel Navigator May 2008

  10. U.S. Market Share of Long-haul Travel

  11. What is Known about China Outbound Travel?Total Outbound 25 million in 2006 Only 12% to long-haul destinations; 70% to Hong Kong/Macau/Singapore. Strong growth across most top 20 destinations, especially Hong Kong, Macau, Korea, Italy, Australia. Tripling of travelers to Hong Kong from 2001-2006 (4.5M to 14M) Top long-haul destinations in 2006: Italy (807K), Russia (720K), Germany (442K), US (321K), & Australia (309K). Total travel to all long-haul destinations was 3.2 million in 2006, forecast to grow to 4.8 million by 2011. Sources: Global Insights Inc. Global Travel Navigator; OTTI, UNWTO

  12. Chinese Visitors to the U.S. 000s of visitors 16th

  13. China Spending in the U.S. Millions of Dollars 10th

  14. What is Known about China Outbound Travel to the U.S.? Outbound to the U.S.: 397,000 visitors to the U.S. in 2007—near doubling in six years. Flat visitor volume from 1993 to 2003. 25% growth through November 2008, but slowing considerably. U.S. share of Chinese outbound travel has declined for two reasons: Long-haul travel has declined as a share of total outbound U.S. share of long-haul had declined until four years ago. Share of long-haul has increased. Sources: Office of Travel & Tourism Industries (OTTI) & Global Insights Inc. Global Travel Navigator

  15. What is Known about China Outbound Travelto the U.S.? Trip Characteristics: Port of Entry: San Francisco (21%), Chicago (17%), LA (17%), NYC (10%). Destinations: concentrated in a few states (CA-57%, NY-32%, followed by: NV, DC, IL) Main Purpose of Trip: Business -51%; Visiting Friends & Relatives (VFR) - 23%; Convention - 11%; & Leisure/vacation 9%. Accommodations: 83% stay in hotels. Stay length: mean average of 28 nights, but is influenced by a few staying for a very long period of time. Median is 11 nights. Activities: Chinese are less active travelers than average travelers. OTTI tracks 25 Activities Top activities 2007: Shopping (88%), Dining in Restaurants (80%), Sightseeing in Cities (51%), Visit Historical Places (47%), Visit National Parks (29%), Visit Amusement/theme parks (28%) ….. Source: OTTI , Survey of International Air Travelers, 2007.

  16. What is Known about China Outbound Travel to the U.S.? Trip Characteristics (continued): Gender: 70% male. Female proportion is increasing. Age: Males—41 mean / 39 median; Females—36 mean / 35 median. Income: lower than most origin countries. $63,900 (mean) $36,700 (median) Spending: highest spending per traveler of any country ($5,200 at destinations, i.e., excluding airfares). High spending relative to income may reflect saving for “dream vacation” and souvenir purchases made on behalf of friends/relatives. Looking ahead: Trip characteristics will likely change if group leisure increases. Source: OTTI , Survey of International Air Travelers, 2007.

  17. U.S. China MOU on Group Leisure Travel Under to U.S. law Chinese can visit so long as they receive a visa. Under Chinese law, Chinese travel agencies can only sell packaged leisure tours to Chinese to countries with whom they have a bilateral agreement or ADS In December 2007 U.S. China Tourism MOU Signed MOU implemented in 2 phases Phase 1: July 2008 covers 9 provinces (over 70 % of the market) Phase 2: U.S. is ready to implement when China agrees

  18. U.S. China MOU on Group Leisure TravelKey Provisions China National Tourism Administration (CNTA) authorized travel agencies may work with tour operators who are vetted by associations with programs approved by CNTA U.S. travel destinations able to market their brand in China To date NTA is the only U.S. association with a program In China the Government sets and monitors standards In the US the industry sets and monitors standards.

  19. Supply Side Considerations Liberalized restricted agreement (no open skies) Non-stop current cap of 10 flights/day per “side” U.S. at cap (based on January non-stop OAG schedule. China at half the cap level. Thus, based on current caps, short-term growth in non-stop flights must come from Chinese carriers. Long-term growth must come from upward-adjusted caps. 57% of all traffic between China and U.S. (inbound+outbound) is non-stop. Non-stop is growing as a share of all traffic.

  20. Who’s Flying Whom? Traffic Mix: US Flag = 58%, & Foreign Flag = 42% of total air traffic 62% U.S. Citizens vs. 38% Non-Citizens Chinese to the U.S.: 40% fly foreign flag carriers 60% of U.S. carriers Americans to China: 57% fly U.S. carriers 43% of foreign flag carriers

  21. China Outbound Travel Study Purpose: to develop a fuller understanding of the China outbound travel market in support of increasing tourism exports to the U.S. Collaboration among: Alfred P. Sloan Foundation, Travel & Tourism Industry Center, University South Carolina U.S. Department of Commerce, Office of Travel & Tourism Industries (OTT) U.S. Travel Association Over 20 U.S. destination and travel-industry partners Multi-phase comprehensive project: Qualitative and quantitative components Methods: Telephone / focus-group / in-depth interviews Surveys of long-haul travelers, U.S. visitors, Chinese government officials, Chinese travel trade Focuses on Chinese long-haul travelers outside of Asia

  22. travel trade interviews(n=30) governmentofficial interviews(n=20) 11 customer focusgroups in 11 Chinesecities (n=8/session) phone interviews in China (n=1600) in-person customer interviews in the U.S. (n=400) Phase 3 China Outbound Travel Study Phases and Elements telephone surveyin 11 Chinese cities(n= 7,000) Secondary Source Review (Demographics, Economics, Politics) Phase 1 Phase 2

  23. Phase I Telephone SurveyMethodology Purpose: gain better understanding of Chinese long-haul travel market Potential of U.S. destinations and businesses Chinese views of the U.S. Focus: on Chinese who… Have traveled outside of China Are at least somewhat likely to travel outside of China Are at least somewhat likely to/interested in visiting the United States Method: Telephone interview 7000 randomly selected Chinese adults, ages 18 and older from 11 urban areas 3 “tier 1” cities; 8 “tier 2 cities” accounting for virtually all outbound travel

  24. Cities Surveyed3 Tier 1; 8 Tier II

  25. Outbound Travel Low outbound travel incidence 8% 1+ leisure trips outside mainland China past 3 years 10% 1+ leisure trips outside Asia past 3 years 21% are “at least somewhat” likely to travel outside of Asia in the next two years Most travel to nearby Asian countries U.S. top non-Asian country (9%) Most visitations connected to Landmark/Sightseeing cities and cities with China towns

  26. Possible future travel 21% of Chinese “at least” somewhat likely to travel outside of China in next two years Most likely destinations are Asian France ranked third (12%) America ranked sixth (10%) 35% are “at least somewhat” Interested in traveling to America A significant amount would like to but are unlikely to travel to America When asked to pick one dream destination America was number one Only two Asian countries made top ten Difference between desire and perception of possible or likely

  27. Chinese attitudes America is… Dominant; Exciting; Successful America isn’t Friendly; Safe; Familiar Want to come to America to… Learning and Discovery Experiencing a different culture Seeing something new and different Interests Seeing and experiencing something new and different important to Chinese tourist Sightseeing cities, landmarks, and tourist attractions scored high Rest and relaxation--scored moderately high. Interest in traditional vacations to resorts & beaches was low. Chinese tourist has a different ideas on rest & relaxation or how to facilitate it

  28. Dream Destinations The United States is the most frequently cited dream destinationfor Chinese citizens, followed by France. “Europe has a deep cultural background and is full of historical attractions. In addition, each historical attraction has its own style and this enables each different country in Europe to present a different culture.” Traveler, Chongqing “You can go to see the glaciers and national parks in Canada – such natural sceneries are the most famous attractions of Canada.” Traveler, Wuhan “The statue of Liberty is so famous as a national symbol – I would be eager to see it. The USA’s advanced economy is another attraction for me, as I want to experience this in-person.“ Traveler, Xian “Hollywood in LA and Disneyland – such modern developments attract me to the U.S. very much.” Traveler, Wuhan

  29. Activity Importance vs. U.S. Perception “The performance by the native Hawaiians was fantastic – it gave history and drama to us tourists.” Traveler, Guangzhou “The buildings’ architecture in New York was unique – every building had its own design and structure.” Traveler, Wuhan “The most impressive sight I saw is the Grand Canyon – it is really a miracle.” Traveler, Shenzhen

  30. Phase II Focus GroupsMethodology Purpose: Qualitative assessment of… views of the U.S. as a country and leisure destination competing destinations destination choice process marketing insights for U.S. business and destinations to promote travel exports Method: 8 participants per group 4 previous leisure travelers to the U.S. (or business trip with leisure component) in past 3 years 4 previous leisure travelers to other long-haul destinations (or business trip with leisure component) in past 3 years One focus group in each of same 11 tier 1 and tier 2 cities from Phase I phone survey

  31. Common Themes Desire and affinity to experience the outdoors and natural wonders Taking lots of pictures/ having ample time at sightseeing locations to take lots of pictures Fear of violence in America/ wide spread gun owner ship The need to have mandarin translations/ uncomfortable with not knowing what is said or is going on The feeling that Americans are nice but do not respect them or believe they have money to spend and make our hospitality worth while Mandarin Hotline to contact incase of emergency

  32. China Study Phase IIITraveler Segments USA FocusHave visited the U.S. - 400 in person Interviews China Traveler Market Phone Interviews with 1,600 Identified Chinese Travelers Outside AsiaHave traveled outside of Asia, but have not visited the U.S. Within AsiaHave not traveled outside of Asia, but plan to (but not U.S.) PotentialHave not traveled outside of Asia, but plan to (including the U.S.)

  33. China Study Phase IIIFocus of Questions Images of the U.S. as a Leisure Travel Destination Atmosphere or Mood of US Expected to Experience Distinctive Tourist Cities & States in U.S. Distinctive Tourist Attractions in the U.S. Activity Participation & Comparison of US to others Factors when deciding on a leisure destination, with comparisons of the US to other destinations Use of Media & MORE…………………….

  34. Some Additional Sources of Information on China USTravel – China Study Phases I – III, see US Travel Website U.S. Department of Commerce Office of Travel & Tourism Industries – www.tinet.ita.doc.gov Monthly Arrival Figures Monthly Air Traffic Data to and from China Annual Survey of Chinese Travelers to US & U.S. to China Inbound Forecasts (2 per year) & Annual Spending Estimates U.S. Commercial Service Offices in China See Website - http://trade.gov/cs/ Also Offering China Webinar February 18th - See OTTI TInews

  35. Heather HardwickVice PresidentMenlo Consulting

  36. Specialty is marketing analysis, strategic planning, branding and product development Strong expertise in educational travel, adventure travel, group travel and cruising Frequent speaker Heather Hardwick

  37. Examining the Outbound Travel Market from China Heather Hardwick Vice President Menlo Consulting Group February 12, 2009

  38. China Market Overview • Most populous country in the world • World’s fourth largest economy • World’s third largest country by area • Key cities and gateways include Beijing (15M), Shanghai (17.5M) and Guangzhou (10M) • World’s #1 Internet users and mobile communications users

  39. Most populous nation and growing Population of China Source: World Bank World Development Indicators; Chinese State Population and Family Planning Commission

  40. China’s Growing Middle Class Number of Chinese Households in Middle Class Lower Middle Class (HHI ~USD 3K-5K) Upper Middle Class(HHI ~USD 5K-12.5K) Source: McKinsey Quarterly

  41. GDP is expected to continue to grow, albeit at a somewhat slower rate Actual and Projected China GDP Growth Rates Sources: China National Bureau of Statistics; The Economist

  42. Chinese outbound travel is booming Outbound travel from China and Hong Kong Source: CNTA, compiled by Pacific Asia Travel Association (PATA)

  43. Double digit growth has become the norm Growth rates in outbound travel from China and Hong Kong Sources: CNTA, PATA

  44. China’s growing travel spending International Tourism Expenditures Sources: UNWTO, China State Foreign Exchange Administration

  45. Most outbound travel is within Asia Top Asia Pacific destinations for travelers from China Source: relevant NTOs, compiled by Pacific Asia Travel Association (PATA)

  46. Chinese travel to North America is taking off Arrivals to North America from China PRC USA Canada Source: Pacific Asia Travel Association (PATA)

  47. California has seen substantial growth from China in recent years

  48. California is making a move in the market • California opened an office in China in January 2009 • All (100%) Chinese view a Chinese Web site as the most important way for them to learn about California. • Only 1% Chinese consumers and a handful of tour operators and media reps have been to California. • Almost all Chinese know of Los Angeles and San Francisco. They also have special ties to China as sister cities to Guangzhou and Shanghai. One-third recognize San Diego. • Motivations for visiting California include nature/parks, theme parks, and sunshine Source: California Travel and Tourism Commission (CTTC)

  49. What drives Chinese tourists to California? Source: California Travel and Tourism Commission (CTTC)