Tuesday, June 28, 2022

Asia remains first choice for mass, but VIPs venturing further


It’s difficult to enter a tourist hotspot in Asia without observing signs written in simplified Chinese, or a street vendor shouting greetings in Mandarin - a testament to the influence that Chinese outbound tourism has had in Asia. 

Statistics from the China Outbound Tourism Research Institute (COTRI) show that China is expected to see around 180 million border crossing in 2019, a figure which is expected to hit 400 million by 2030. 

While this is a promising statistic as a whole, experts believe that Asian countries, in particular, will need to step up their game if they want to keep their slice of the pie.

In the past, the majority of outbound travel has been to the Greater China region, which includes Hong Kong, Macau, and Taiwan.

Prof. Glenn McCartney from the University of Macau said this has been due to a level of “familiarity” to the tourists’ home country that these destinations offer. 

According to the professor, this market segment has been attracted to countries that are proficient in Mandarin (or Cantonese), that support familiar payment methods, such as Alipay and WeChat, and that offer food they are familiar with. 

“There is a large Chinese outbound travel segment that still travels [based] on levels of familiarity,” said McCartney.

However, COTRI has seen a shift, especially from the wealthier segment of Chinese tourists, who have been venturing off the beaten path.

“First and second-tier city residents, who make up the majority of Chinese outbound travelers, are generally moving away from popular destinations in favor of more novel, less-visited locations.”

This type of tourist is becoming more sophisticated and selective about their travel experiences - which has led to the birth of “customized travel,” according to Dr. Wolfgang Arlt, founder and director of COTRI. 

Customized travel, as opposed to the well-known “package tours,” typically involves a smaller private group with a greater say over chosen itinerary and activities. Forced shopping and typical sightseeing spots are not common items on these itineraries, and “experiences” have become the main objective of travel. 

For integrated resort operators in Asia, this means offering their Chinese customers something unique, genuinely local, and experience-rich, say experts. 

“There is increasing travel for experiences,” adds McCartney, pointing out that Malta and Ireland have become popular recently as these locations were used for the filming of HBO’s Game of Thrones TV series.

This profile of Chinese traveler places more importance on quality and value for money, rather than quantity and cheap prices, added Dr. Wolfgang. 

“They are more and more interested in new, authentic offers based on local culture and nature if provided and communicated in the right way, through the right channels.”

Some of the proposed integrated resort concepts for Japan appear to be headed in the right direction. 

Tribal gaming operator Mohegan Gaming & Entertainment recently revealed the concept for their Hokkaido IR project in Tomakomai, promising horse-riding, cross-country skiing, and other outdoor activities as part of their offerings. 

Melco Resorts & Entertainment’s Morpheus Hotel tower in Macau, designed by the famous architect Zaha Hadid, which opened in June 2018, was built with the intention of becoming a tourist attraction of its own. 

During its opening, Melco CEO Lawrence Ho said the building was designed as a landmark that would be seen as “uniquely Macau.”

However, the right products in the right place are not the only requirements to satisfy demanding Chinese tourists, say experts. Seamless travel experiences and “China-ready” destinations are key. 

On the technology front, this means the development of cashless payment systems.

“Prior to the emergence of mobile payment apps in China, the country was primarily a cash-based society. However today, apps like Alipay and WeChat are transforming China into a cashless society where transactions are commonly carried out via the phone in your pocket,” said Dr. Wolfgang.  

Yes, social media matters,” McCartney remarked. The use of the smartphone and apps such as WeChat and Weibo. Not just for payment methods but a host of functions beyond. So cashless payment methods are the way forward for destinations receiving Chinese outbound.”

On the customer experience front, McCartney points out that there is a need for customer service in host countries to be “China-ready.”

“There is a level of face-to-face service and hosting expectations. So for countries to be 'China-ready', sure, they must have the technology in place, but at the same time, must have a level of service staff trained to host Chinese visitors, such as language and customs.” he said. 

In 2015, the Cambodian Ministry of Tourism announced the development of a “China-ready Accreditation System,” an initiative aimed at developing better travel products to suit the Chinese market. This included upgrading infrastructure facilities across the country, a more favorable visa policy for Chinese visitors, and cultivating professionals and talents in the tourism industry. 

Its efforts may be paying off with Cambodia appearing in the top 15 travel destinations for Chinese for the first time this year.

In the gaming industry customer service staff will need to go further than just learn the language, they will need to know Chinese customs and thought processes back-to-front. 

Looking ahead, Dr. Wolfgang says that there is a huge opportunity for the tourism and entertainment industry to tap into 3rd and 4th tier cities in China.

The lowering of entry-requirements for Chinese citizens, and the increased flight connectivity, particularly in 2nd, 3rd and 4th tier cities, will also help to spur the outflow of tourists, he said. 

“Today, no more than 10 percent of Chinese citizens possess passports. Almost all live in 1st and 2nd tier cities.”

“Yet, there are growing numbers of residents from third and fourth-tier cities who are starting to take their first trips abroad. This growth is being aided by the growing numbers of international flights and visa centers becoming available outside of first-tier cities.”

Dr. Wolfgang believes that Asia will continue to be a destination of choice for first-time travelers, as well as gaming travelers. This is good news for mass-market focused gaming operators, who will benefit by tapping into 3rd and 4th tier cities in China. 

However, experts believe the region will see less growth from high-income tourists - those who will be looking for more remote, and exclusive destinations. With that in mind, it appears that attracting VIP tourists is set to become a whole lot harder. 

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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