Will Beijing’s sabre-rattling affect Chinese travel decisions?

China’s threat to draw up a blacklist of countries targeting gambling is most likely directed at the online industry, though may be enough to deter some travelers even if the government doesn’t follow through with its action. The Ministry of Culture and Tourism fired a warning shot in late August that it intends to ban its nationals from visiting certain gambling destinations, saying that those cities are “disrupting the order of China’s outbound tourism market and endangering the personal and property safety of Chinese citizens.” It was a wake up call for Asia’s integrated resorts, which have become increasingly reliant on China’s outbound tourism industry, which is forecast to account for one in five international trips by 2030. However, it’s not the first time Beijing has used tourism as a tool to wield influence elsewhere.  “The key to this is not to overreact. It comes on and off over the years,” Desmond Lam, professor of integrated resort and tourism management at the University of Macau, said on an Asia Gaming Brief webinar. “That message really comes to tell the operators not to target Chinese gamblers, but it’s mainly for online gambling.” Lam said he believes Macau will be safe, with the Philippines seen as the likely recipient. Beijing last year called on Asian nations to ban online gambling activities. Cambodia promptly complied, announcing that it would shut down its industry, although Manila has not followed suit. “We are at the very early stages of economic recovery. The Chinese government sees gambling as wasteful indulgence and something that will cause social disorder,” he adds. The Philippines welcomed a record 8.2 million international tourists in 2019, who spent $9.31 billion. The Chinese were the second-biggest contributors to visitor receipts after South Korea, generating $2.33 billion.  Shirley Tam, senior vice president of premium marketing at Okada Manila, told the panel she wasn’t concerned about the Philippines being put on the list.  “We need to focus on diversification and not just on the Chinese players but growing the business in Southeast Asia, Singapore and Malaysia and there’s potential in Thailand,” she told the panel, which was focused on future trends in Chinese tourism. “There is also more of a shift in concentration on the domestic players. We have 300 million people so there is also a lot of potential domestically,” she adds. Professor Wolfgang Arlt, founder of the China Outbound Tourism Research Institute, said he doesn’t think an actual blacklist will materialize. He explains that the central government needs to play a delicate balancing act, as the freedom to travel is cherished in China. After being restricted for a year, the people are unlikely to take too kindly to being told where they cannot go, especially if some of the destinations are the cheapest and closest to home.  “It’s the threat and showing the instruments of torture,” he said. “The threat will be enough. It’s more targeting online gaming and not the people who go into a casino in Cambodia. It’s threatening people to push them into better behavior,” he said, adding that the threat was probably enough to keep integrated resort operators awake at night.  Lam agreed that the threat itself may be enough to deter some gamblers from visiting certain countries if when they return they need to justify to immigration what they have been doing. However, as no further details are currently available, it’s not possible to assess just how big the impact might be. The panelists also discussed how there is still strong pent up demand among Chinese to travel once restrictions are lifted, although their preferences may be subtly changing.  “Our research is showing that many Chinese will be more interested to travel as a family and not just do superficial shopping etc, but to slow down and do things that are more connected with the culture and to get more contact with the locals,” Arlt said.  Tam said Okada Manila is also seeing pent up demand from its Chinese customers for when travel restrictions are lifted and is already working to satisfy more diversified demand.  “There is a demand for families and not just coming by themselves to gamble,” she said. “We are working on children's facilities, the spa facilities, the retail facilities, so we are focused on developing that sector of the IR as well.” Even in Macau, Lam notes there has been a shift in customer desires and says the market needs to adapt and evolve to keep customers coming back. “People are not just coming for the casinos. Our students are interviewing and hearing that they want more diversity. The percentage who say they come to visit casinos has been dropping. We hear them say they want more shopping and dining.” Lam said he expects the Macau government will give a much clearer mandate on the need for non-gaming diversity during the upcoming concession tendering process, which is currently scheduled for mid-2022.  There’s no one-size fits all for China, although there are some essentials that destinations targeting the market need to bear in mind. Customer satisfaction is key and Arlt argues it is much more effective to focus efforts on providing the best guest experience possible than to launch expensive marketing campaigns. Word of mouth is by far the most important way of influencing Chinese travelers. “Key opinion leaders, Chinese understand that they are paid,” he said. “Key opinion consumers are customers who share the livestreaming and share how wonderful it is.” “You need to focus on customer satisfaction for recommendation marketing. Maybe they won't come back but their friends will come back.”