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UNDERSTANDING THE21 CENTURY TRAVELLER

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© EUROMONITOR INTERNATIONAL 2013

UNDERSTANDING THE 21ST CENTURY TRAVELLER—HOW TO CAPITALISE ON CHANGING TRAVEL HABITS

Caroline Bremner Head of Travel and Tourism Research

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VI ABOUT THE TEAM

1 INTRODUCTION

2 CHANGING TRAVEL HABITS Downtime decoded

Consumers at the heart

Advanced vs. emerging countries

SoLoMo (Social, Local, Mobile) reshapes travel

Mobile to shake things up

Technological shift

Online travel agents (OTAs) take centre stage

Apps enhance the tourist experience

8 NEW BUSINESS MODELSCollaborative consumption

Social travel on the radar

Car rental ahead of the curve

Airbnb.com—the poster child of the revolution

Airbnb vs. hotels

13 SENIORS AND GENERATION YMature workers enjoy flexibility

Youth—future imperfect

Target Generation Y (Millennials)

Design with Millennials in mind

Social media is a cornerstone

CONTENTS

Contents

© EUROMONITOR INTERNATIONAL 2013 v

Multi-generational fun

Next generation of Japanese travellers flock to Europe

18 TARGETING THE AFFLUENT From status symbol to experiential travel

Emerging markets boost luxury hotels

Willing to pay extra for amenities

22 CHINA OUTBOUND TRAVEL Airlift critical for success

Word of mouth rules—pass it on

Mobile revolution

26 SUMMARY OF FINDINGS

28 HOW CAN EUROMONITOR INTERNATIONAL HELP?

29 APPENDIX

© EUROMONITOR INTERNATIONAL 2013vi

This white paper has been compiled by Caroline Bremner, Head of Travel and Tourism with contributions and help from the Countries & Consumers and Travel & Tourism research teams at Euromonitor International. Caroline has 17 years of market research experience, specialising in travel and tourism for over ten years.

• Caroline Bremner, Head of Travel and Tourism

• Daphne Kasriel-Alexander, Countries and Consumers—Consumers Editor

• Michelle Grant, Travel and Tourism Research Manager—Hotels

• Nadejda Popova, Travel and Tourism Senior Analyst—Airlines

• Angelo Rossini, Travel and Tourism Contributing Analyst—Online Travel

ABOUT THE TEAM

© EUROMONITOR INTERNATIONAL 2013 1

The travel industry is riding a wave of change, with a highly unpredictable macro-environment, fast-paced technological shifts and changing consumer behaviour. Despite this unpredictability, there are plenty of opportunities for travel companies willing to invest in new technology, product development, customer relationships, and even take a chance on new business models.

Amongst this sea of change, there are five prominent trends helping travel companies prepare for future challenges and create strategies resulting in growth:

• Changing travel habits

• New business models

• Seniors and Generation Y

• Targeting the affluent

• China outbound travel

The trends discussed in this whitepaper will help you understand the needs of the 21st century traveller, allowing you to think more strategically about business decisions. As trends converge across nations, platforms and incomes, it’s more important than ever for your company to set itself apart from competitors.

INTRODUCTION


Downtime decodedCocooning is no longer restricted to Gen Z consumers and geeks. Technology is everywhere and consumers cram several experiences into the same moment as they go about their days with smartphones and tablets in hand. Significant population segments have user rates reaching borderline addiction levels, and even holidaying consumers cannot bring themselves to disconnect. Many are ‘smoasting’, or imitating celebrities and using social media to boast of holiday fun, while brands use gamification to expand consumer engagement.

Global Internet Users: 2010-2020

Million

Source: Euromonitor International from International Telecommunications Union/World Bank/Trade Sources

Note: Data from 2013 onwards is forecasted

CHANGING TRAVEL HABITS

Changing travel habits


Consumers at the heart As online bookings and social media usage continue to rise, power has shifted from travel companies to technology players and even consumers themselves. Thanks to travel reviews and social networks, travellers have more information than ever about travel products and destinations. In addition, they have more choices in how they book trips, including offline and online offers, mobile bookings, dynamic packaging, home swaps and low cost and even free options.

Today’s tourists are more savvy adventurers, keen to seek out new

experiences beyond classic sun and sea and city breaks. They are

buoyed by confidence, gained online via consumer reviews telling it

like it is and are increasingly happy to swap homes with fellow tourists.

Daphne Kasriel-Alexander

Countries and Consumers—Consumers Editor

A Central Role for Consumers in Travel

Advanced vs. emerging countriesThe US and Western Europe remained the largest online travel markets in 2012, amounting to US$185 billion and US$170 billion, respectively, or 38% and 35% of global online travel sales. They are also the markets expected to grow the least over 2012-2017, as they approach maturity. Emerging economies have yet to embrace online travel fully, but have significant potential for growth over the next five years. China, India, Russia and Brazil are all expected to become major online travel markets, with healthy online travel value compound annual growth rates (CAGRs) between 10% and 20% over 2012-2017.



Online Travel: Global Ranking 2003/2013

BRICS vs. Select Key Markets, Based on US $ Sales

SoLoMo (Social, Local, Mobile) reshapes travelThe introduction of smartphones represents one of the most significant technological developments in recent years, and it is having a major impact on the travel industry. Travellers expect real time answers to questions and on-the-go booking capabilities.

Thanks to mobile and geo-social technology, (ability to find a user’s geographical location) travellers expect a higher level of customisation of services based on their stored preferences and current location. Travel companies should integrate SoLoMo functionality to capture the increased number of mobile and social consumers, encompassing: mobile websites, apps, geo-social media, reputation management, mobile alerts and bookings.

Mobile to shake things upThe rise of the online channel has revolutionised the travel industry, reshaping its distribution, competitive environment and the role of consumers, who have acquired greater power thanks to the array of information available and the choices offered by travel websites and social media. The inexorable rise of the mobile channel has kick-started a new stage in the revolution. This new development is expected to have a deep impact on consumer behaviour and pose new challenges to travel companies.

Mobile travel sales through smartphones and tablets were insignificant in 2010, reaching a double-digit share of online sales for a few key players only like Expedia, Priceline and Orbitz for their hotel bookings. However the pace of change is rapid, and mobile sales are forecast to account for over 10% of online



hotel sales in the most mature markets, such as the US and UK, in 2013. For example, IHG reported mobile revenues of US$330 million in 2012, accounting for 10% of online revenues, while Choice Hotels International Inc stated in May 2013 that mobile bookings account for 13% of its online sales.

The bottom line is this: if your company doesn’t have a mobile marketing strategy then it’s not likely to survive. Everything from customer service, to information and online bookings is moving in that direction.

Sales of Tablets and Other Portable Computers in the US

Source: Euromonitor International

Technological shiftSmartphones are forecast to outperform PCs in terms of sales over the next five years. Tablets are also doing very well, with volume sales expected to surpass those of laptops in 2013. In emerging markets in particular, mobile broadband growth is outpacing fixed broadband due to its more affordable infrastructure. Travel companies worldwide should focus their IT investment on the mobile channel, creating new apps and optimised websites for mobile usage.

The mobile channel is expected to be the new game-changer for the

travel industry in the next ten years, driving the increasingly important

real-time, social conversation between consumers and brands.

Angelo Rossini

Travel and Tourism Contributing Analyst—Online Travel



Forecast Sales of Internet Access Devices by Type: 2012-2017


Online travel agents (OTAs) take centre stageThe online channel has shaken up the ranking of top players in travel retail. In 2013, Expedia reached the top position among world travel retailers in terms of gross booking sales, surpassing Carlson Wagonlit Travel, while Priceline has assumed third position, surpassing TUI. Is the rise of the mobile channel set to have a similar impact?

The success of mobile sales has already resulted in the rise of new specialist players such as Hotel Tonight, active only in the mobile channel and specialising in last-minute deals. In the near future, new mobile-only OTAs will certainly become a force to be reckoned with. Whether MTAs (mobile travel agents) take off will remain to be seen, but for now, traditional OTAs are staking claims.



Apps enhance the tourist experience More cities are creating apps to make the experience of sightseeing more pleasant, informative and convenient. Launched in July 2012, Rio Wonders is a free mobile app created by Rio de Janeiro’s Department of Tourism. Available in Portuguese and English, the app offers tourists a complete guide to Rio de Janeiro with information on hotels and restaurants, as well as shopping and cultural activities.

Some apps cater to both locals and tourists. Released in November 2012, YPlan is a free event discovery app for Londoners. Users can access a curated list of up to ten different suggestions every night, and can book tickets to the theatre, concerts, wine tastings and other activities via the app. As YPlan helps promoters get rid of excess capacity at the last minute, users are generally offered discounts.

Y Plan App Interface


Collaborative consumption Collaborative consumption, also called the “collaborative economy”, the “peer economy”, the “asset-light lifestyle” and the “sharing economy”, describes traditional thrift-led behaviour bringing consumers and producers together through activities like lending, exchange, swapping and bartering.

What’s new is the ability to operate at scale and across geographic boundaries through technology. Indeed, the slogan of popular website, collaborativeconsumption.com, is “sharing reinvented through technology”. This trend is revolutionising consumption and has been hailed as a response to recession, the green zeitgeist and a longing for community.

Rachel Botsman, co-author of the book “What’s Mine is Yours” and coined the term collaborative consumption, identifies three types of the sharing economy:

• Product service systems—enabling companies to offer goods as a service rather than selling them as products. Goods that are privately owned can be shared or rented peer-to-peer

• Redistribution markets – where used goods are moved from somewhere they aren’t needed to somewhere they are – sometimes sold on eBay, or donated on sites like Freecycle

• Collaborative lifestyles—People with similar needs or interests share and exchange less tangible assets such as time, space, skills and money. Last October, auction giant eBay launched a new UK beta service, Secretguru, where people can buy time from professionals in areas ranging from mural painting to business mentoring

Underlying this web-powered sharing is trust – what she calls “reputation capital”. Indeed, all these collaborative consumption online services rely on ratings and reciprocal reviews to build trust among their users.

NEW BUSINESS MODELS

new business Models


It doesn’t seem coincidental that many peer-to-peer rental firms were set up between 2008 and 2010, in the aftermath of the global financial crisis. Some see sharing as a post-crisis antidote to overconsumption and a response to the consumer longing for community – after all, most shares thrive in densely populated areas. It also curbs resource use. Zipcar claims that every time someone rents from them, 20 personally-owned vehicles are taken off the road.

Rachel Botsman, in the Harvard Business Review, however, stresses that “collaborative consumption is not a niche trend, and it’s not a reactionary blip to the recession. It’s a socioeconomic groundswell that will transform the way companies think about their value propositions—and the way people fulfil their needs.”

Social travel on the radarTravel in itself is a social activity, but the social aspect permeates all the way through the supply chain. In the age of social media, consumers are the heart of business activity, be it brands engaging with consumers on Facebook, Twitter, LinkedIn or Pinterest or consumers doing it for themselves by renting out, trading in/up, selling on or sharing. Online and mobile developments have enabled them to increasingly bypass traditional distribution, which has helped to drive growth in new business models and, particularly, peer-to-peer.

Car rental ahead of the curveCar rental players quickly realised the car sharing phenomenon struck a chord with consumers, with fractional ownership as a way for consumers to adapt to new economic pressures. This allowed consumers to free up precious disposable income and dip in and out of an aspirational lifestyle on their own terms. Car rental players recognised when dealing with a commoditised product that the model cannot stand still; it needs to evolve and respond to competition from different models.

Avis’s US$500 million acquisition of Zipcar in the US in early 2013 illustrates just how important car sharing is to the company’s long-term strategy, with it acquiring Zipcar’s almost 800,000 members. Hertz opted for the organic rather than acquisitive route with Hertz on Demand, providing greater flexibility to its customers in terms of rental duration.

new business Models


Airbnb.com—the poster child of the revolution The meteoric rise of Airbnb.com should not cause the hotel industry to worry about the vacation rental market. Both business models have co-existed for a long time without infringing significantly on each other’s growth.

It is likely that vacation rentals will appeal mostly to leisure travellers with lucrative business travellers firmly loyal to hotels, thanks to corporate travel policies, loyalty programmes and the standardised experienced a hotel offers. There has been a shift to more family and multigenerational travel, so renting an apartment or villa provides more space at a lower cost than staying at a hotel for these groups.

Airbnb vs. hotelsAirbnb.com sold more than 10 million room nights since 2007, compared to more than one billion hotel room nights booked in 2012 in the US alone. Airbnb.com had more than 300,000 listings in 2012, while Smith Travel Research says that the South Atlantic region of the US has four times as many hotel rooms as that. Despite the media attention, the company is a relatively small player in the lodgings market even when viewed as a competitor to the global hotel companies.

Given the recent economic woes, travellers are keen to rent less expensive lodging while homeowners, struggling to meet rent or mortgage payments, may be more willing to rent their spaces. The vacation rental market therefore performed a bit better than hotels in 2009. Global value sales only declined by 8% while the hotel industry declined by 12%.

The vacation rental market is highly fragmented and many small owners cannot afford to invest in online websites themselves. The advent of websites such as Airbnb.com, Homeaway.com and Flipkey.com helped shift predominantly offline sales towards online, which may explain the bulk of their growth rather than stealing share from hotels.

For now, developed markets like EMEA and North America are the most comfortable renting a holiday home. However, emerging markets are warming up to the idea.

new business Models


Comfort with Private Hotel Rental

Source: Euromonitor International Analyst Survey—Analyst Pulse; September 2013

Note: Showing percent of analysts reporting their comfort level with a private holiday rental, while the

owners are not there

Courting controversy

Airbnb.com’s success has been a double-edged sword, drawing attention of local governments to the vacation rental industry as a whole. In many cities, there are rules preventing residents from renting out rooms for transient purposes. Additionally, owners of these properties may be subject to sales, occupancy or income taxes, but many are not remitting these taxes to authorities.

Cities like New York City are cracking down on illegal listings and issuing fines that are in the tens of thousands of dollars. Quebec is coming down on the most flagrant violators of the law prohibiting short-term rentals, while governments in Barcelona and Berlin are considering new legislation to make it even more difficult for short-term rentals. The risks associated with renting out a property or a room may dampen growth in the vacation rental market, favouring hotels that are in compliance with local ordinances.

new business Models


Collaborative consumption will continue to evolve and shape the

travel and tourism industry, but its fate is likely to be determined by

community stakeholders.

Michelle Grant

Travel and Tourism Research Manager—Hotels

Compromise as the way forwardThe city government of Amsterdam, which began cracking down on illegal hotels in June 2012 and had a contentious relationship with Airbnb.com, took steps to embrace Airbnb.com rentals. In June 2013, the city government announced it would allow people to rent out their places occasionally to no more than four people at a time. The regulations consist of tourists paying taxes and complying with fire safety regulations. The city believes 20% of Airbnb.com’s listings are illegal hotels and will continue to shut those down.


Mature workers enjoy flexibilityOlder workers are benefitting from more flexible work lifestyles with many using digital communications to work out of the office and accommodate leisure into their working lives. Brands are factoring the new working reality of older consumers into what they sell.

Journalist Stephanie Rosenbloom, in a February 2013 New York Times article, stresses how the travel industry is adjusting to working boomer needs: “While many vacationers strive to get away from e-mail and smartphones, tour operators say boomers are telling them they no longer want to be out of touch with their offices and families”.

Pamela Lassers of upmarket travel firm Abercrombie & Kent discusses how the core of the firm’s business has shifted from a ‘getting away from it all’ ethos. Today: “Safari lodges in Africa are installing internet connections... They’re [boomers] in the middle of the Serengeti...and they want to update their Facebook page.”

Youth—future imperfectYoung consumers are facing up to a different, less predictable reality in terms of purchasing aspirations, work, living set-ups and role models. A third of respondents to Euromonitor International’s Global Youth Survey, which polled young people aged 16-24, say that unemployment and lack of job opportunities will probably have an impact on their future happiness, and another 40% say it definitely will. This means three out of four young people are concerned about future job prospects.

Technology is of fundamental importance to youth. Euromonitor International’s Annual Study 2011 showed that with the exception of internet banking, younger respondents do more

SENIORS AND GENERATION Y

seniors and generation Y


on the internet more often, from ordering takeaway meals to tweeting. It also reveals that young adults are four times as likely as consumers aged 60+ to own internet-equipped mobile phones (40% versus 12%).

According to Neil Howe, author of recent book “Millennials Rising”, “The charge you hear today is kids are addicted to social media, internet and cell phones. It’s not technology; it’s their friends and groups they’re addicted to.”

Target Generation Y (Millennials)The hotel industry is preparing for the next generation of guests: Generation Y, the population group born from 1981 to 1990. They are targeting these travellers by embracing mobile, incorporating social media and updating their design and style. Hotel brands are shifting their marketing strategies towards more digital marketing and user-generated content to create brand loyalty amongst the Gen Y consumer group.

According to the Pew Research Center, 81% of US consumers between the age of 25 and 34 have smartphones and 37% own a tablet. As a result, hotels are increasingly looking to connect with these travellers through mobile channels. They are building mobile websites and apps for booking rooms, but also getting creative by launching gaming and concierge apps. Hotel companies are also rethinking rooms by incorporating technology, design, sustainability and localisation to respond to consumer demands.

Even marketing strategies have pivoted to reach this generation which is sceptical of traditional marketing. For example, Holiday Inn Express revived its Stay Smart campaign in June 2013 and updated it for Generation Y by creating the website StaySmart.com for user-generated content.



Where in the world are Generation Y?

Design with Millennials in mindSince Millennials grew up going to third party destinations, such as Starbucks, to complete work and homework, they prefer to work in common spaces rather than in hotel rooms. To capitalise on this trend, hotels should reinvent lobbies to be more welcoming, encouraging socialisation with more residential atmospheres.

There should be more emphasis on setting up communal spaces with comfortable chairs and tables that facilitate gatherings. This is also enhanced with televisions and gaming consoles. Some hotels are integrating their business centres into the lobby to make it easier for colleagues to work and access food and beverage options. Another key part of the lobby overhaul is incorporating elements from the local community, including locally sourced food and beverage options and local art.

Social media is a cornerstoneHotels like Marriott found that social media is an effective channel to target Generation Y and Generation X travellers. Marriott actively monitors its social media pages on Twitter and Facebook seven days a week and incorporates three detailed, meticulous sweeps on every comment on a daily basis. It acknowledges posts and aims to resolve any negative issues within 12 hours.



Marriott’s new look for Gen YIn June 2013, Marriott unveiled a new, simplified brand identity for its eponymous brand represented by a single letter “M”, followed by the tagline “Travel Brilliantly”.

The main objective of the campaign is to target a new web-savvy generation of travellers. The new identity is at the centre of a multi-year marketing campaign that reveals the changes that are taking place at Marriott, such as the introduction of updated rooms, a new mobile app, new meeting spaces and lobbies and revamped dining experiences. The campaign is supported by a full multimedia budget, with TV, mobile, digital advertising and a website dedicated to the new brand.

To engage guests, Marriott launched a co-creation platform, which encourages the submission of ideas for new hotel technology, style and design. The initiative is expected to successfully reposition Marriott as a forward-looking company, reinvigorating its relationship with old and new guests.

Multi-generational funMulti-generational holidays are now considered to be mainstream, with the extended family vacation making a comeback due to budget constraints. A mid-2012 study by Age UK and Silver Travel Advisor shows the average number of family members holidaying together is now six. A mid-2012 survey by LV= travel insurance indicated that many family parties feature two adult generations and, possibly, grandchildren too. The UK Passenger Shipping Association (PSA) has also indicated that multi-generational cruises are thriving.

Next generation of Japanese travellers flock to EuropeAccording to the Japan Travel Foundation, the growth in those aged 35-49 is the most important change in the Japanese market to Europe and represents the next generation of Japanese travellers to Europe. Generation X (born between 1965 and 1980) travel independently and prefer railway trips as well as rent-a-cars. There is plenty of scope for European destinations to work more closely with travel retailers to ensure Europe remains front of mind for long-haul Japanese tourists, not only seniors but also Generations X and Y.



Japan Outbound Segmentation by Age and Travel Experiences % Volume

Share 2012


The speed of change is fast and furious so travel brands must embrace

new technology, tap into social media to reach key demographic

segments and even experiment with new business models. Brands

with vision that innovate with their product, service and customer

experience will keep ahead of the pack.

Caroline Bremner

Head of Travel and Tourism Research


From status symbol to experiential travelLuxury travel recorded a significant recovery after the decline experienced in 2009, with luxury hotels and premium air travel growing by between 5% and 10% per year over 2010-2012.

Luxury travel is evolving, with authenticity, experiential travel and sustainability becoming increasingly important, especially in the traditional luxury travel markets. The classic model of luxury travel is still valid in emerging markets. However, in Brazil and China, the new model of luxury travel is also gaining ground.

Luxury guests have fully embraced technology and SoLoMo (social, local, mobile), with social media playing an important role for luxury brands in order to create engagement, receive valuable feedback and gain loyalty. According to The Affluence Collaborative research group, 72% of the wealthy are active Facebook members, and they increasingly use Twitter.

Key SoLoMo services to provide via smartphone/tablet:

• Localised sales and offers

• Personalised information

• Real time social sharing

• Online concierge services

TARGETING THE AFFLUENT

targeting the affluent


Luxury travel: From status symbol to experiential travel

Emerging markets boost luxury hotelsA shift in economic power from developed to developing markets has created an additional middle class consumer base of around 2 billion people worldwide. With ever rising annual disposable incomes, middle class consumers are becoming more sophisticated, boosting demand for luxury hotels worldwide.

Business travel is a core market for luxury travel, with 5-star hotels across the globe and premium air traffic relying heavily on business visitors. Business travel demand will be driven by Asia Pacific and the Middle East and Africa.

While a limited hotel supply will continue to drive both average daily rates (ADRs) and occupancy rates in the US, Asia is likely to see a strong ADR thanks to high intra-regional demand, but see lower occupancy rates due to great dynamism in pipeline development and the large number of new hotel openings which took place over 2010-2012.



Value sales of luxury hotels across the globe

Note: Value sales of luxury hotels (5- and 4-star hotels) in 2012. Grey indicates countries outside Euromonitor

International’s core countries researched.

Willing to pay extra for amenities • Travellers are nearly unanimous in their willingness to pay extra for at

least one amenity.

• Daytime activities or excursions are most appealing; nearly half of consumers will pay extra for these types of amenities.

• Although most travellers do not spend extra on upgraded airline seats or hotel rooms, around 40% of British respondents are willing to pay more for these amenities, giving travel companies an opportunity to better target their customers and offer upgrade options to those who may be especially interested.

• Ecotourism and environmentally-accredited amenities are of interest to travellers from emerging markets in Asia and Europe, particularly China and Russia. Even mainstream travel companies should consider offering “green” and environmentally-friendly products and services to meet growing demand from these consumers.



Willing to Pay Extra for Travel Amenities

Source: Euromonitor International Out and About Survey

Note: Shows percentage of travellers who said they were willing to pay extra for the indicated travel amenity;

Survey research includes 6,200 online consumers in 15 countries


Thanks to its rising affluence, China is becoming an increasingly important source market for international tourists. According to the United Nations World Tourism Organisation’s (UNWTO) predictions, the number of outbound Chinese travellers is forecast to hit 200 million by 2030.

Not surprising, for first-time overseas travellers, Hong Kong and Macau are usually their first choice, thanks to proximity, affordability and lack of language barriers, but more and more Chinese are keen to travel internationally. Relaxing visa requirements and improving visa processing procedures are sure-fire ways of boosting visitors. It is also important to understand Chinese visitors’ cultural sensitivities and cater to their preferences.

As revealed in the WTM Global Trends Report 2012, an appetite for luxury reaches beyond China’s nouveau riche as even white-collar workers are keen luxury shoppers. Throngs of emerging market shoppers around the world are aspiring for more consumption. They now enjoy malls, chain stores and are learning to rely on credit. Those with wealth are blending shopping with tourism as they spread their consumption wings.

The Chinese population is ageing and a larger proportion of wealth is accounted for by the older demographic group rather than the popular Generation Y audience for many Western companies. This is significant, as the median age is set to double in China. At the WTTC Asia Summit, Amadeus indicated that it thought demand from Chinese seniors has been vastly underestimated.

CHINA OUTBOUND TRAVEL

http://blog.euromonitor.com/2012/10/download-the-wtm-global-travel-trends-report-2012.html

China outbound travel


Ranking Countries2012/2017 Absolute Growth in Chinese Arrivals Arrivals 2017

1 Hong Kong, China 4,629.4 19,739.8

2 Thailand 3,708.8 6,528.9

3 Taiwan 2,718.5 5,309.2

4 South Korea 2,308.4 5,691.6

5 Singapore 2,038.5 4,092.7

6 USA 1,627.9 3,221.4

7 Switzerland 1,501.5 2,164.9

8 Philippines 1,080.6 1,372.0

9 Macau 1,008.8 8,966.8

10 Malaysia 875.5 2,244.8

11 Cambodia 820.8 1,155.7

12 Vietnam 719.7 2,148.4

13 France 533.6 1,821.6

14 Japan 502.2 2,008.6

15 Australia 477.1 1,103.5

16 Germany 469.8 1,232.7

17 United Arab Emirates 464.0 764.7

18 Angola 429.5 541.4

19 Spain 356.3 537.0

20 Indonesia 355.7 940.9

21 Russia 341.5 1,171.9

22 Austria 328.3 684.7

23 Italy 245.5 498.5

24 New Zealand 187.4 402.7

25 Croatia 178.5 221.8

Airlift critical for successSchedule airlines dominate in China, with only one major national low cost carrier (LCC) – Spring Airlines. However, passenger growth for LCCs is predicted to vastly overshadow that of schedule airlines, with actual passenger numbers for LCCs rising to 30% of total air passengers by 2016. Foreign low cost airlines are trying to expand in China, despite the tight government control. AirAsia has just opened its 24th route in China. Other foreign LCCs include Scoot and Tiger Airways. China is building 82 new airports and



improving 101 leading up to 2015.

Improving the local infrastructure in second and third tier cities as well

as opening up the market to more low cost players will be crucial in the

development and competitiveness of China’s transportation sector to

ensure that travel demand can be met.

Nadejda Popova

Travel and Tourism Senior Analyst—Airlines

Air transportation in China

Online ever afterChina is home to the largest online population on earth. With more than 600 million internet users in 2013, China is embracing e-commerce. Online travel sales recorded a strong 36% rise in China in 2012 and are expected to continue to grow at an annual average of 18% over 2012-2017. Traditionally, Chinese tourists travelled in groups, however, OTAs have helped stimulate demand for independent travel.

Online travel retail is dominated by home-grown players. Trip.taobao.com has relied on its parent company, taobao.com, to become the largest C2C e-commerce platform in China, with 500 million registered users. Hotel brands need to understand Chinese consumers’ online habits better in order to target



them more aggressively, by working with Hotel Assistant and having a presence on YouKu and Tudou.

Word of mouth rules—pass it onSocial media is key to communications, with home-grown companies providing an equivalent service to international sites. According to Chinese search engine Tencent, social media penetration in China is at 42% of the total population, with 91% of internet users visiting social media sites. Facebook, Twitter and Youtube are blocked in China and local equivalents, RenRen, and microblog Weibo can be heavily censored. Chinese consumers also rely heavily on recommendations from family and friends.

Mobile revolutionThe number of mobile internet users now outnumbers PC based users in China with 420 million mobile users in 2013. Travel companies such as CWT, Qunar, C-trip and Mangocity are embracing the mobile trend with the development of mobile applications for Android, iOS, Windows and Blackberry platforms.

Leading online travel retailer Ctrip is firmly focused on mobile travel with over 10% of business in 2012 from its mobile app. The company had 30 million mobile registered clients by the end of 2012. Meta-search player Qunar has over 75 million monthly visits and its mobile application was downloaded over 34 million times.

When planning a trip, how do you typically get information about destinations and activities?

Source: Euromonitor International Consumer Survey—Out and About, 2013


Technology is one of the primary drivers shaping travel behaviour. Brands should develop a strong multi-channel strategy. Investing in new platforms such as mobile and tablets is a necessary step for brands to keep pace with connected consumers, regardless of age, sex and income.

The travel social revolution is on the rise. Now, consumers are both brand ambassadors and consumer activists. To tap into this spirit, brands must use social media to build brand loyalty.

Direct suppliers should develop mobile sites to prevent intermediaries from taking the lion’s share of mobile sales.

Collaborative consumption is growing quickly. Launching or buying a peer to peer network may not suit every brand’s strategic vision, however, keeping an eye on P2P will ensure brands can compete against this channel.

Airbnb is the poster child of the peer-to-peer movement, blazing a trail for the alternative accommodation scene. Hotel brands, amongst others, can benefit from studying Airbnb, looking at its ‘acting global and thinking local’ approach, its distribution and expansion strategy.

Like it or not, the sharing economy is hard to stop because consumers seek authentic experiences and value for money, and the technology is already there to make this happen. Market research on demographics and consumer preferences, supported by big data, will help brands fight off the threat posed by disruptor models.

If you want to know what the future of travel may look like, look no further than Generation Y—the first truly digital natives. Business development cannot be successful without taking Generation Y’s preferences into consideration.

SUMMARY OF FINDINGS

suMMarY of findings


In the sharing economy, brands must relinquish some control to their customers. Consumers want their voices heard, so companies should seek input on branding, service, design and technology. If your brand isn’t listening to what consumers want, they will go somewhere else.

With multi-generational travel increasing, it’s up to travel brands to ensure products hold appeal for diverse age groups.

The greater the personalisation, the more successful a brand will be. However, the level of service must be consistent across all channels and touch points where the brand interacts with customers.

Luxury brands must embrace the technological advances discussed in this white paper. Demand for luxury travel is shifting eastwards, so it’s imperative to understand what is important to consumers in emerging markets.

Driven by the desire for unique experiences, luxury travellers have been around the world and back. Now it’s time to get creative and introduce them to new experiences in their back yard.

Consumers of different income brackets are willing to trade up when buying travel products, requiring travel providers across the board to identify new opportunities about how to fine-tune their ancillary revenues.

Catering to 200 million outbound Chinese visitors by 2030 will be challenging, so reliable market research on Chinese travellers’ preferences online and offline will be critical to travel brands’ success.

Governments must take steps to facilitate visa regimes and also must encourage the Chinese government to open up the Chinese airline and technology sectors.

The Chinese online arena is unique, so it is important for travel brands to forge relationships with local social media and online travel players. Having a mobile social strategy created especially for China will be necessary for brands to capture the hearts, minds and wallets of the Chinese.


Travel and tourism organisations use our market research database, Passport, for market and strategy reviews, target-setting, merger and acquisition analysis, promotional campaigns, customer segmentations, trend spotting and forecasting. Our research supports airlines, car rental agencies, hotels, national tourism organisations and tour operators. Read Passport reviews now.

Passport Survey research explores the travel preferences and behaviour of online consumers worldwide. Results are based on responses to Euromonitor International’s Out & About survey, fielded in 2012, which includes 6,200 online consumers in 15 countries.

For more information about our travel and tourism research, please request a demonstration.

HOW CAN EUROMONITOR INTERNATIONAL HELP?

http://go.euromonitor.com/Passport-Reviews.html

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Terms used in this white paper include:

• Generation Y Thoseborn between 1981 to 1990, also known as the Millennial Generation Seniors or the Swing Generation is a label for the generation born from 1925–1945 notably during the Great Depression (1929–1939) and World War II (1939–1945)Baby Boomers born between 1946 and 1964

• Generation Z Those born between 1991 and 2010 and nicknamed “digital natives” and are weaned on things digital with their lifelong experience of communications and media technologies.

• Generation X Those born between 1965 and 1980

• P2Ppeer to peer

• SolomoSocial local mobile

• RevPARrevenue per available room

• FITFree independent traveller

• OTA Online travel agent

APPENDIX

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