How the Chinese Learned to Embrace Independent Travel; 70 percent of Chinese tourists traveling abroad are now choosing to go independently

How the Chinese Learned to Embrace Independent Travel

By Gabrielle Jaffe

For years, the prevailing image of Chinese travelers was this: masses of red-hat wearing people organized in tour groups, pouring out of big, noisy buses. But this stereotype is now out of date. According to a recent report from Hotels.com’s Chinese International Travel Monitor, 70 percent of Chinese tourists traveling abroad are now choosing to go independently.So what’s behind this trend? For one, Chinese tourists these days are young: Travelers under 45 now account for 90 percent of China’s market share, according to the China Tourism Academy. And while those matching hats seemed like an attractive souvenir to older generations, to a growing number of sophisticated travelers, they, and the tour groups giving them out, just seem passe.

“There’s been a big cultural shift. This generation is embracing individuality in every aspect: ‘I choose my own job, I choose my own boyfriend, so why not my own travel?’” says Mei Zhang, the founder ofBeshan, one of the few Chinese operators offering high-end, personalized, private tours. “Media is playing a part too: On one hand, bus tours are depicted as dumb—you wouldn’t see a celebrity caught dead on one of these. On the other hand, bloggers such as Gu Yue (who backpacked from Beijing to Berlin to see his girlfriend) are creating a huge amount of romantic adulation for the idea of life out on the open road.”

Much of what made group tours appealing to previous generations no longer applies to China’s savvy new urbanites. Their parents, and tourists from less-developed parts of China, value the security that organized tours provide, especially in countries where Mandarin isn’t spoken. But these new independent travelers are not nervous first-timers. They have traveled extensively before and are comfortable using foreign languages, having often studied or worked abroad.

“Many Chinese travelers have already outgrown the domestic tour industry,” says Professor Wolfgang Georg Arlt, Director of the China Outbound Tourism Research Institute. “Most operators only offer standard tours of things they have already seen. Only a very select few are offering something more sophisticated or are catering to special interests such as wildlife watching. There have also been a lot of bad experiences with tour groups and forced shopping trips.”

In addition, the growth in online resources has encouraged independent travel. Sites such as Ctrip,Elong and Kuxun allow users to search for and book flights and hotels themselves, while others such asQyer and Mafengwo offer free, Lonely Planet-esque practical guides and forums that help Chinese-speakers to plan their own adventure.

Meanwhile, websites such as Zanadu offer access to the kind of “aspirational accommodation” that is seen often in films, glossy magazines and billboards (think stilted private suites hovering atop the ocean in the Maldives) but is rarely offered as part of a tour itinerary. Zan Wu, the founder of Zanadu, says, “Our typical users are not necessarily super rich. They might be white collar workers making 15,000 RMB [$2,460] a month, but they’ll happily spend $250 a night on a hotel. They feel comfortable about their income and their income growth in the future. They like to enjoy life.”

As luxury accommodation becomes just as important to these travelers as ticking off the sights, money is redirected from traditional tour operators to hotels. These hotels recognize that the Chinese are nowthe world’s largest source of tourism dollars and are quickly learning how to accommodate them in the form of Chinese language websites, Mandarin-speaking staff, and smaller touches such as offering Chinese food at breakfast and Chinese tea and television in the guest rooms.

Yet perhaps the biggest reason that more Chinese people are traveling independently abroad is that it has simply become a lot easier to obtain visas. As late as the 1980s, only Chinese people on business and official trips were permitted to travel overseas, with government approval needed for every single visit. Then, in the 1990s, the government introduced the unique Approved Destination Status System, which paved the way for group travel abroad. Soon thereafter, China’s neighbors began issuing individual “leisure visas” and visas on arrival, but most Western nations were reluctant to follow suit.

“Consulates resisted issuing individual visas because of the perceived risk of illegal immigration. With the group visas, the tour operator could be held responsible if someone didn’t return to China,” explains Roy Graff, the managing director of the tourism consultancy China Contact.

But with the rise of affluent Chinese tourists, attitudes are changing.

“The watershed moment was in the run-up to the 2008 Olympics. These events put the wealth of China on the global stage,” says Graff, adding that “Western countries realized that the segments of the population that can afford to travel abroad are already part of a developed economy and aren’t likely to overstay their visas and disappear.”

Nowadays, Chinese citizens who have a couple of stamps in their passports are highly likely to obtain visas for Western countries, who themselves are competing for Chinese tourists. Last week, on a trip to China with London Mayor Boris Johnson, U.K. Chancellor of the Exchequer George Osborne announceda relaxation of the country’s visa rules for Chinese citizens. And last year, U.S. President Obama announced Washington’s goal of increasing visa-processing capacity in China by 40 percent, an ambitious target, but one justified by the roughly 1.5 million Chinese people who visited the country in 2012, a gain of 35.3 percent on the previous year.

The sheer scale and speed at which China’s tourism industry is developing makes it unique. However, the country is not the first in which independent travel has made inroads on group tours. In the 1980s, Japanese tourists became famous for traveling en masse throughout Europe and North America, toting expensive cameras and hopping into and out of tour buses. However, that model soon gave way to more independent forms of travel.

Even still, the analogy is not perfect: “Japan is a smaller country with a more homogenous culture and economy. When they rose, they all rose together,” says Graff. “But what is happening in China is more a tiered segmentation than a shift. Younger, more experienced travelers, from higher income brackets, are going abroad and traveling independently but at the same time we are seeing a new wave of travelers from second and third tier cities going on group tours, mostly within China.”

China’s developing tourism market is perhaps most similar to another nation: the United States. “It’s also a big market with a very big domestic market. Only a small percentage of the population had passports before 9/11,” says Graff. In the U.S., cruise ship and bus tours promising ‘Europe in 18 days’ in the 1950s and ’60s were soon followed by the advent of the hippie trail and luxury individual travelers trying to recreate the Grand Tour. Today all three strands sit comfortably alongside each other. China, it seems, is headed in the same direction.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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