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Marketing to Chinese Outbound Tourists: Towards Normalization.

By Pierre Gervois, Founder & Publisher of the STC magazine, CEO of China Elite Focus Magazines LLC (New York), keynote speaker and expert about marketing to outbound Chinese tourists.

In 2005, I had the first conversations with executives in luxury hospitality groups about the importance of improving the welcome for their first Chinese guests. I knew they used to receive a very poor quality of service, in large part because of the ignorance of the Chinese culture from the staff of luxury hotels, and also because of the persistence of stereotypes about Chinese travelers.

The General Managers of five star hotels I talked to from 2005 to 2007 told me more or less the same thing “Chinese tourists don’t stay in five star hotels”, and, as a consequence, they did not see the point of investing resources to improve the service for their Chinese guests.

Today, these same hotels advertise in the STC magazine and ask us to define their marketing strategy to attract more of high-spending Chinese guests and offer them the best possible service.

Things have obviously changed over the last ten years.

To better understand the way Chinese outbound tourism has dramatically changed over the last decade, let’s go back fifteen years ago, in the early 2000’s.

I would define three periods to describe the evolution of Chinese outbound tourism:

From 2000 and 2005, most of Chinese outbound travelers were business travelers traveling in official delegations to attend to trade shows and official business meetings in Western Europe and in The United States. At that time, it was nearly impossible for individual Chinese leisure travelers to obtain an independent leisure visa for Europe or the U.S., and the only way to have holidays overseas was to travel in the famous (or infamous) group tours organized by Chinese State-owned outbound travel agencies, in partnership with selected destination management companies in their country of destinations.  Basically, their passports were confiscated by travel agencies during their trip in coaches and low quality hotels, which is not a very enticing way to travel.

Gervois magazine - The new travel magazine for millennials travelers in the United StatesI talked with many of these first Chinese leisure travelers between 2000 and 2005, and they told me how displeased they were by the very poor quality of their travel experience, and how their feelings were hurt by the stereotypes who were widely spread within the travel industry: Chinese tourists were supposed to love to travel in coaches, were allegedly obsessed with discounts, and would prefer to stay in one star hotels. In fact, my Chinese friends were at that time willing to be free to explore a country on their own, were searching high quality – and expensive- travel experiences, and were particularly fond of nice suites in five star hotels. Basically, like a lot of affluent western travelers.  But not of a lot of travel and tourism professional understood and even listened to them at that time.  You were a Chinese tourist?  Then you had to fit in a certain category of negatively stereotyped traveler. Period. In some cases, that was very close to segregation, and surprisingly, very few western travel & tourism professionals realized how painful and sometimes humiliating it was for Chinese leisure travelers.

From 2005 and 2010, The travel and tourism industry started – slowly – to give up on stereotypes concerning Chinese travelers, and at a slower pace to gradually improve the service for Chinese travelers.  Some hotel chains started to offer in-room Chinese tea (It took several years of studies and commissioned researches for hoteliers to take such a simple and inexpensive step), or started to recruit a few Chinese speaking staff members.  But the industry did not yet understood where the core problem was: the structural inability of both the outbound travel agencies (OTA’s) and destination management companies (DMC’s) to understand this massive change in international outbound tourism.  In less than ten years, faster than in any other country in the history of international leisure tourism, a group of outbound travelers was growing at an impressive and never seen rate, from 5 million in 2000 to 57 million in 2010. With old fashioned organizations, Chinese OTA’s could not offer the kind of service that the new generation of Chinese travelers wanted from them: a good understanding of international travel opportunities.  On the other hand, DMC’s in Europe and the U.S. were still stuck in their preconceptions about Chinese leisure travelers and kept offering the same standardized programs (Traveling in coaches from a discount shopping mall to another and sleeping in very low quality hotels), that were by the way never favored by the Chinese travelers themselves.  But their advice was never solicited.  That was before the social media era.

Around 2008, the first social media networks started to become popular in China.  And yes, I remember the time (somewhere in 2008), where Facebook and Twitter were freely accessible in China. With the launch of Weibo in 2009 and dozens of other Chinese social media networks, Chinese outbound travelers started to post stories about their experiences about their overseas travel, and make comments about hotels (since 2008 with the launch of DaoDao, the Chinese version of TripAdvisor). I frequently read translations in English of comments written in Chinese Mandarin about famous luxury hotels in New York, London or Paris, and the first comments and reviews were incredibly negative. Most of them expressed how the staff of these famous hotels lacked of respect with their first Chinese guests, and did clearly offer them a second-class experience compared to other guests from western countries. I was also surprised to see that nobody in these hotels made the effort to request a translation of comments made by their Chinese guests and analyze them.

From 2008 to 2010, the first travel destinations, travel agencies and hotels started to realize that they needed to communicate properly with Chinese outbound travelers, but very few marketing options existed. China Elite Focus was historically the first digital marketing agency (founded in june 2008 in Shanghai) who was exclusively specialized on digital travel marketing for affluent Chinese outbound travelers, with a unique focus on luxury destinations.  The launch of China Elite Focus was followed by a flurry of creation of other independent digital marketing agencies in China, Europe and the US, and defined all together an entire new marketing category: digital marketing to Chinese outbound travelers. The quick development and the popularity of Chinese social media networks as well as the first digital campaigns to promote international travel to Chinese potential travelers contributed critically to a better connection between travel operators worldwide and the emerging category of young and affluent Chinese first-time outbound travelers.

But access to the information was still a big issue, specifically for high spending travelers: From China, how to know what is the best hotel in New York you absolutely want to stay in? What is the best exclusive golf course in Scotland? How to book a table in the Paris’ finest restaurants?  No curated information was available at that time in Chinese Mandarin.  The existing travel magazines published in China did not had such sophisticated informations, and no website existed. That is the main reason we launched the Shanghai Travelers’ Club magazine (or the STC magazine) in 2009 as an electronic newsletter and since 2012 as an iPad & iPhone digital publication.

From 2010 to 2015, all the elements of the complex puzzle were in place: a dynamic social media network environment in China, the emergence of digital only Chinese travel agencies using extensively social media, the growing desire of Chinese travelers to discover foreign countries, and the understanding by western travel, tourism and retail companies that, yes, this is it, Chinese travelers are the world’s biggest spenders and the #1 group of Chinese outbound travelers. This is an interesting period where we saw two different categories of Chinese travelers intersecting on different paths. Senior travelers, mostly top executives of large Chinese companies who reward themselves after a life of hard work with a once or twice a year luxury international travel experience, and their children, in their early twenties, who quickly become frequent global travelers (six to ten times a year), and end up spending more than their parents in travel and shopping.

One of the important reason for the exponential growth of Chinese outbound tourism (120 million in 2015) is luxury shopping, and in particular the desire to have a genuine shopping experience. Buying a Gucci bag in Milan, a Louis Vuitton suitcase in Paris or a Tiffany diamond in New York was seen in the early 2010’s as a necessary sign of social status for the young and affluent generation. International luxury brands understood too late this trend and hastily opened too many stores in China in this period, many of them with more sales associates than Chinese customers. (They are now closing stores and start to focus on improving the customer relations at their flagship stores in the US and in Europe for Chinese shoppers.)

GERVOIS magazine Advertising and sponsored content opportunitiesOn January 19, 2012, President Obama issued the “Executive Order #13597” who had a major impact in Chinese outbound travel.  This decision had to major consequences:
First, “to increase nonimmigrant (i.e. tourists) visa processing capacity in China by 40% over the coming year”, meaning allocate more human resources at U.S. consulates in China in order to be able to review and process more leisure visa requests.  Second, “to ensure that 80% of nonimmigrant visa applicants in China are interviewed within 3 weeks of receipt of application”, meaning to allow a much faster process for individual Chinese tourists planning holidays in the U.S..  This rather technical Executive Order created a psychological change in the perception the United States as a  luxury holidays destination by Chinese travelers.  Previously more considered as a business destination, the U.S. were seen as of the beginning of 2012 as a much more “tourist friendly” destination by the Chinese, and they started massively to consider to spend holidays in this country, who appeared as newly opened to them. We saw a surge in requests on Chinese search engines about “travel and holidays in the US” in the first half of 2012, and the U.S. travel and tourism industry operators started to feel the economical benefits of an increased influx of Chinese leisure visitors as early as the summer 2012. (1.5 million Chinese visitors came to the U.S. in 2012, 3.1 million are expected for 2019).

In november 2014, China and the United States negociated a reciprocal agreement to extend the validity of tourists visas up to ten years (multiple entries).  It means that since november 2014, a Chinese tourist with a valid tourist visa to the United States can keep this visa for up to ten years, with multiple entries. That is very close to the “Visa Waiver program” with european tourists, and has strongly encouraged Chinese travelers to choose the U.S. over Western Europe destinations, who do not offer tourists visas with such a long validity for Chinese visitors.

At the end of 2015, We could say that 80% of tourism offices, hotel chains, retailers, and airlines had in place elements for a marketing strategy focused on Chinese tourists, even a modest one. What a change if we compare to 2005, where virtually less than 5% of them had a strategy in place.

Today, what could be the trends for the years to come? The first world that comes to my mind is normalization. For the last fifteen years, travel and tourism marketers considered Chinese tourists as a kind of “exotic” category of international traveler, with all the stereotypes and preconceptions attached. Now that more than 100 million Chinese travelers discover the world every year in virtually every country on the planet, tourism and travel professionals have a much better understanding of what the most important group of tourists really want.  And it’s – how surprising – exactly what Americans and European travelers want when they travel abroad: A carefully curated travel experience, nice hotels, local cultural and food discoveries, and the possibility to choose, alone, what to do during the day. Before starting a marketing campaign focused on Chinese outbound travelers, it’s now time to have the exact same mindset that for a marketing campaign targeted at any other nationality of tourists. And, please, forget about the stereotype of the Chinese traveler allegedly only interested by discounts. They are not. They want quality, sophistication and authenticity.  And they know it doesn’t come cheap.

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Luxury hospitality guru Pierre Gervois on how to cater to Chinese tourists in the U.S.

Watch Pierre Gervois’ exclusive interview for China News

Pierre Gervois - TV interview for China News 2016

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More content about luxury travel to the United States in 2016 in the prestigious Shanghai Travelers’ Club magazine

Shanghai Travelers' Club magazine coversThe Shanghai Travelers’ Club magazine, the Chinese language publication read by China’s Elite global travelers has disclosed its much anticipated 2016 Editorial calendar yesterday. And clearly, Affluent Chinese travelers love the United States! According to Pierre Gervois, the New York City based Publisher and Editor-in-Chief of this publication “The new generation of Chinese business travelers have clearly chosen the United States as their strategic country for their business browth. We have seen in the past two years a very strong interest from Chinese corporations – and wealthy Chinese invividuals- to invest in the United States. The more they come to the U.S. for business, the more they tend to come back with their family for a U.S. luxury leisure experience”

It’s no more just about luxury shopping: Philanthropy and real estate investment are also hot topics. The January 2016 issue will have “Philanthropy in America” as its main feature. “Many Chinese CEO’s residing in the U.S. are willing to create their own philanthropic foundations in America, as they used to do in China. We’ll publish stories to help them to understand how to create a charity organization with all the necessary partners: banks, wealth management advisors & attorneys” added Pierre Gervois.

Driving a vintage 1960 Cadillac on Road 66 is also part of a true luxury American experience. (You can also rent a brand new Cadillac SUV). The march 2016 issue will feature a “Luxury road trip to America” story. Ralph Lauren ripped Jeans, Louis Vuitton beaten up keepall bag, vintage Rolex, Room 101 skull necklace, a motel with neon signs, this is America.

After the success of the September 2015 men’s fashion issue “The Gentleman Traveler”, The September 2016 issue will also feature a Men’s fashion special edition, with in depth stories about America’s best fashion designers. “Having a tailor made business suit made in USA makes a statement for Chinese global business executives” said Tyron Cutner, the Shanghai Travelers’ Club magazine Men’s Fashion Editor.

Real Estate is probably the hottest topic for Chinese travelers. They invested $22Billion in real estate last year (including the $2Billion Waldorf Astoria building and it’s growing fast. Very fast. The november 2016 issue will feature the most expensive houses and apartments in the United States ($15M+), as well as profiles of New York City best real estate attorneys  and U.S. interior architects.

“Winter Holidays in the American West” will introduce snow experiences in the American West: Colorado, Nevada or Arizona are beautiful in winter time and very desirable destinations for Chinese frequent travelers to the U.S. who had already visited New York and Los Angeles multiple times and want to experience a truly authentic American Christmas time.

Request the 2016 Editorial Calendar & Media Kit of the Shanghai Travelers’ Club magazine here.

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“The new generation of affluent Chinese tourists in the U.S.”: Exclusive interview with Pierre Gervois

Pierre Gervois exclusive interviewWe had the pleasure to have an interview with Mr Pierre Gervois, CEO of the publishing company China Elite Focus and Publisher of the Chinese luxury travel magazines “Luxury Hotels of America” and “Niuyue Mag”. Mr Gervois, the leading marketing expert for U.S. hotels and CVB’s has answered to our questions about the art of promoting the United States as a tourist destination in China.

How do Chinese tourists choose their leisure destinations?

PG: They massively (more than 80%) search and find their leisure destinations through the Internet and more precisely, independent travel and tour- ism related websites, social media networks, and blogs. China’s most popular online travel agencies and booking engines, such as the very well made ctrip.com, are used for the technical part of the airline ticket purchasing and hotel booking, but beyond that, the choice of destination and hotel is made on influential, independent, travel and tourism websites and blogs. Word-of-mouth has an incredible influence in the choice of a leisure destination, a hotel brand, or the planning of a shopping experience. As most of the young generation of Chinese travellers are first-time travellers (and probably the first persons in their family to experience an overseas leisure trip since their parents and grandparents have probably not ever had this chance), they have no personal or familial emotional connection with foreign destinations, hotel brands, or cultural or entertainment activities. They need to learn from what other people say and write to forge their opinions before they gradually acquire the personal experience of a world traveller.
Why choose to go first to New York or Los Angeles? Why choose shopping sessions at Saks Fifth Avenue or at South Coast Plaza? Why choose to spend a day at Universal Studios Hollywood? The answers to these questions can be found on an incredibly active network of hundreds of independent travel blogs, mostly hosted on China’s most popular social media networks such as Weibo (a very successful mix of Twitter and Facebook) or blogging platforms such as Dian Dian and Douban (very similar to tumblr.com). Endorsement by one or several of these independent travel blogs is worth more than the thousands spent on advertising banners in big, official, online travel agencies. In a digital media environment saturated by direct advertisement—specifically in travel and tourism—genuine and independent endorsement by key opinion leaders is critical.

Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre GervoisHow can U.S. industries work with the network of Chinese outbound travel agencies?

PG: One of the biggest issues that U.S. hotels and destination management companies have to deal with is the relative weakness of the network of official, state-owned, Chinese outbound travel agencies in terms of their ability to advise their clients in choosing a specific leisure destination. One of the main reasons is the lack of training and expertise of Chinese travel agents who have very little experience in international travel themselves, and therefore, the lack of confidence of the new generation of Chinese travellers in the ability of their local travel agents to advise them in choosing a destination or a specific kind of hotel overseas. Things are slowly changing as the National Tour Association (NTA) has developed programs to invite Chinese travel agents to participate in familiarization tours to the U.S., but these initiatives remain isolated and can influence only a fraction of all Chinese travel agents. It’s important to consider that the highly professional net- work of U.S. inbound travel agencies have very few counterparts in China with the same levels of professionalism and expertise.

From a U.S. perspective, what are the differences between Western Europe inbound tourists and Chinese inbound tourists?

PG: There is a world of difference: European inbound travellers have been exposed to U.S. brands for decades, and associate them with values such as freedom, independence, lifestyle, and quality. Most European tourists have in their subconscious minds the stories of their fathers or grand- fathers about the GI’s coming to liberate Europe, bringing with them new products and new values; they may also recall the American movies they watched during their childhoods. When visiting the U.S., they have a deep emotional connection with the country.
For Chinese tourists, this emotional connection is non-existent; fifteen years ago, the concept of a leisure trip to the western world was unthinkable. Moreover, until recently very few American products were available in China, and American movies were not available in Chinese cinemas. The U.S. travel and tourism industry must understand that very specific marketing and promotion campaigns are needed to attract Chinese tourists; these require very different strategies from what has been done in the past with Western European markets. The new generation of Chinese tourists sees the U.S. differently than a British or an Italian tourist would see it, and it must be translated into the marketing campaigns undertaken by hotels, retailers, or entertainment parks targeting Chinese visitors.

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Utah is waiting for more affluent Chinese visitors

Hundreds of thousand of affluent Chinese tourists enjoying beautiful American landscapes, eating good food, discovering the americans warm welcome… and spending a lot of dollars.
That’s the vision that some Utah tourism-industry executives have, now that China and the United States have an arrangement designed to let Chinese groups travel for fun throughout America. The vision includes someday soon topping the record 320,000 Chinese visitors to the United States in 2006.

“This is a dream destination for the Chinese,” said Keith Griffall, chief executive officer of Western Leisure Inc., a Midvale-based group tour company. “They really haven’t had that opportunity to come here before, and the numbers could grow dramatically. Three hundred and twenty thousand sounds like lot of people, but it could get into the millions easily, and we are looking to get just a little bit of that pie.”

Western Leisure is taking advantage of a memorandum of understanding between the two countries that was signed in December. The agreement provides “approved-destination status” by the Chinese government and permits Chinese group leisure travel to the United States. Travel restrictions have been loosened in recent years for the Chinese, coinciding with a growing number of middle-class Chinese being able to afford long trips. Chinese individuals and groups with visas can travel to the United States for business and education, but Chinese regulations of its travel agencies restrict group leisure trips to nations that have a bilateral agreement with the Chinese government.

The December memorandum with the United States opens the Chinese market for U.S. companies. Western Leisure is one of about 80 companies in the United States that are officially approved to work with outbound travel operators in China to get Chinese groups to visit the United States in packaged group leisure tours. Western Leisure is working with Julian Tours, based in Washington, D.C., to market services under the name “American Travel Dreams” and has a representative at an office in Beijing.

The number of Chinese visitors to the United States has been on the rise since 2003, when 157,000 Chinese travelers came to America. The 320,000 Chinese visitors in 2006 put China as the 17th-largest international travel market for the United States. The Department of Commerce expects 579,000 Chinese to visit by 2011. The United Nations World Tourism Organization is predicting that overall outbound Chinese travel could reach 100 million by 2020.
U.S. Secretary of Commerce Carlos M. Gutierrez has said the new memorandum should allow more Chinese visitors to “experience America’s hospitality, cultural diversity and natural beauty.”

Griffall, who has served on the Board of the Travel Industry of America for the past six years and is past president of the National Tour Association, said the growing incomes in China are creating a huge potential market for tourism. “If you look at the big picture, the size of the population and the number of people able to travel now because of the money they’re making, you can look and it will appear kind of overwhelming,” he said. “Not all of them can travel, but the fact is that more can, and more and more will be able to.”

Banner Advertisement - Gervois Hotel Rating - May 2017 campaign featuring Pierre GervoisFusheng Wu, associate professor at the Asian Studies Program and director of the Confucius Institute at the University of Utah, believes a lot of affluent and upper-middle-class Chinese want to visit the United States. He has Chinese friends who have traveled to Europe for recreation because of a travel memorandum between China and the European Union.
“I know a lot of people who want to come to the United States just to take a look, because the United States, in a lot of Chinese people’s minds, really represents the ultimate achievement of the Western civilization. There’s a lot of interest in coming to the United States, and lot of people have the financial resources to do that.”

When they come, they probably will spend big. The Travel Industry Association estimates that in 2006, the typical Chinese visitor in the United States spent more than $6,000 on a trip, compared with the typical $1,000 per stay for domestic travelers. Total spending by the 320,000 visitors in 2006 was more than $2 billion, according to the U.S. Commerce Department. That included $1.6 billion on travel products and services and $431 million to U.S. carriers. As said Pierre Gervois, CEO of China Elite Focus, a marketing agency specialized on the affluent and very affluent Chinese outbound tourists “This new wave of Chinese tourists coming to the United States wants to discover the “real” America, with beautiful landscapes and the authentic America”
Leigh von der Esch, managing director of the Utah Office of Tourism, said the office has no firm or current numbers on Chinese visitors, but most
their visits have been business-oriented. She said the office will try to ensure that the products being marketed to the Chinese contain lots of information about Utah. “The first thing we want to do is familiarize our product with the Chinese tour operators so we’re ‘top of mind’ within what they’re selling,” she said.

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Inaugural tour of Chinese group leisure travelers to the United States

The National Tour Association (NTA) and the Travel Industry Association hosted a welcome event June 19, 2008, marking the inaugural tour of Chinese group leisure travelers to the United States.

More than 260 Chinese travelers were in attendance, along with U.S. and Chinese government and industry leaders. Guests included China National Tourism Administration Chairman Shao Qiwei, U.S. Ambassador to the People’s Republic of China Clark Randt, U.S. Department of Commerce Secretary Carlos M. Gutierrez, Travel Industry Association President and CEO Roger Dow, National Tour Association Chairman and CEO Bob Hoelscher, CTP, and NTA President Lisa Simon, CTP.

“NTA is proud to join with TIA in hosting this monumental event as the U.S. opens its doors to these new international leisure visitors,” said NTA Chairman and CEO Bob Hoelscher, CTP. “NTA tour operators participating in the China Inbound Program are ready to assist Chinese travel agents, and the initial NTA list included more than 90 U.S.-based tour operators.”

Following this inaugural event, six different groups of Chinese travelers will now tour Washington, D.C., and New York before traveling to Los Angeles, Hawaii, and San Francisco.

“This welcome event marks the beginning of a great time for the U.S.,” said NTA President Lisa Simon, CTP. “We have the opportunity to boost the U.S. economy and project a welcoming image to these visitors. NTA hopes each of these travelers will go back to China with an incredible travel experience and plan to return to the United States often.”

Simon added that “NTA is the industry partner that has enabled the Memorandum of Understanding to be facilitated by implementing the list of tour operators approved to work with Chinese travel agents.”

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