Learnings from the Chinese travel market (so far)
August 19, 2008
We’re still a long way from having a clear picture of what’s actually going on in the Chinese travel market, but here’s what we have learned so far.
The Chinese travel market is huge. Domestic travel takes the lion’s share of the market with over 1 billion travelers per year although inbound travel with 50 million travelers in 2006 (WTO) and outbound travel with 41 million travelers in 2007 (ChinaContact Outbound Travel Handbook) are no slouch either. The WTO predicts that by 2020, China will become the biggest travel reception country and fourth largest outbound travel country in the world. Inbound travel is favoured by the government because it brings in foreign exchange.
There is huge potential for online travel but also barriers. According to Web 2.0 Travel Tools the Chinese online travel market, valued at US$204 million and growing at a breathtaking speed (72% in 2006), is still puny compared to the American market (US$83 billion in 2006). The biggest obstacle seems to be online payment as Chinese are still wary about online transactions and the use of credit cards. This, however, should change over time as both consumer perceptions changes and Alipay, the Chinese version of PayPal, is becoming more and more widespread. We also noticed that Chinese still like to use the phone. Pretty ladies with phone receivers in their hands take up the best real estate on most Chinese travel websites. It says something if Ctrip, the leading online travel giant in China with over fifty percent market share, also operates the largest call center in Asia’s travel industry. Not surprisingly, the most common form of booking a trip in China is still via calling a local travel agent.
Chinese are bargain hunters. Two of the most successful online travel sites are vertical search engines akin to Kayak: Kuxun and Qunar (Chinese for “Where to”). The latter even boasts cool features such as tracking and predicting prices over time.
Adding a social touch. China Web 2.0 Review compared a few travel 2.0 websites last year and it seems that there is still huge potential for travel websites with a social touch in China. In the meantime, online forums still dominate the internet landscape.
Western companies don’t have it easy here. There are licenses for everything and in most cases cooperation with local partners is mandatory for success. We also noticed that marketing strategies which may work abroad, may not necessarily work in China. After pretty much botching a campus promotion campaign at several Beijing universities, we went back to the drawing board and came up with other promotion measures that would most certainly fail in Europe. But we are consoling ourselves that even Google is having a hard time here.
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Learnings from the Chinese travel market (so far) | China travel industry news on August 20, 2008:
[...] GetYourGuide Blog – News & Development » Archive » Learnings from the Chinese travel market … We’re still a long way from having a clear picture of what’s actually going on in the Chinese travel market, but here’s what we have learned so far. [...]
Johannes on August 20, 2008:
it is interesting that chinese share a lot of social information on the web, while prefering buying products on the phone. this is like starting in the age of facebook and progressing “backwards” to Amazon/Ebay etc.
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