U.S. Not Ready for Surge in Visitors From China, Exec Says
by Robin Amster /China’s vast market of leisure travelers is delivering double-digit increases to U.S. inbound operators, but the U.S. travel industry has a ways to go before it is fully prepared to meet the needs of this relatively new market.
“China is opening up in terms of outbound travel and the opportunities are endless,” NTA (National Tour Association) president Lisa Simon told Travel Market Report.
But, she said, “the U.S. isn’t totally prepared to handle it. It needs a better understanding of Chinese culture, language, needs and travel preferences. There’s a sense of urgency that we need to do more preparation.”
NTA leads the way
NTA has been in the forefront of developing China’s booming market. It is the only U.S.-based association with a tour operator qualification program approved by the China National Tourism Administration.
NTA also operates a Visit USA Travel Center in Shanghai.
NTA continued its focus on China at its recent China Market Forum in San Diego, held during Contact, its annual education and networking event.
Simon spoke with Travel Market Report about the China market, the U.S.-based tour operators serving it and the industry’s readiness to welcome Chinese tourists.
What key points came out of this year’s China Market Forum?
Simon: We learned — from both the U.S. and the Chinese perspective — that the China inbound market is growing dramatically and will continue to grow.
The Chinese government has yet to open up every province in China for outbound leisure travel, and the U.S. continues to rank high as a destination for the Chinese. Both U.S. and Chinese government officials say this will be big business.
How large is the China inbound market?
Simon: Chinese arrivals to the U.S. for the first five months of 2012 increased 43% over 2011, a year when Chinese arrivals topped 1 million for the first time.
What is behind the growth in China leisure travel market to the U.S.?
Simon: There had been a lot of confusion and uncertainty about the China market. The Chinese were able to travel to the U.S. for business, education and family visits, but the Chinese government has to approve a destination for its citizens to visit as tourists.
China had been talking with the U.S. for years on this, but it was asking our government to do things that involved, for instance, regulating the private sector. The U.S. wouldn’t comply with that.
In 2007, however, the governments reached agreement and signed a Memorandum of Understanding enabling Chinese group leisure travel here through Chinese travel agents working with approved U.S. tour operators. The NTA is the facilitator of that approved tour operator list.
What kind of tour operators are on NTA’s approved list?
Simon: There are about 150 tour operators approved for China business in NTA’s China Inbound Program (CHIP). About 100 CHIP operators are Chinese-Americans who weren’t NTA members before. The other operators are U.S. companies who were already NTA members that decided to get involved in this new market.
Editor’s note: NTA has nearly 3,000 members. Of these about 700 are tour operators, the rest are suppliers and destinations.
What results are the CHIP tour operators reporting?
Simon: According to the CHIP tour operators, 7,176 Chinese leisure groups representing nearly 92,000 tourists visited in the first quarter of 2012, up from 6,187 groups with about 75,000 tourists in the fourth quarter of 2011.
Chinese inbound leisure travelers spend $6,000 [on average] while on vacation.
What is the profile of the Chinese leisure traveler?
Simon: We don’t have specific demographics, but they seem to be in their 40s and 50s, like our baby boomers, plus seniors and multigenerational families. The groups are small with 15 to 20 members.
Their interests include shopping, gaming and visiting historic icons like the Statue of Liberty and the Grand Canyon. First-time visitors are going to major destinations like New York City, Los Angeles, San Francisco and Las Vegas. We’re also seeing Chinese that want to get out of the gateways for what they’ve heard is a more authentic U.S. experience.
This is a very price-sensitive market. A lot of people see it as a budget market, but that’s not totally true. We’re seeing a bit more mid-range product, and some tour operators are specializing in high-end product, because there is a wealthy segment of the Chinese population and the Chinese economy is improving.
Are U.S.-based suppliers prepared to serve this market?
Simon: The U.S. isn’t totally prepared to handle it. It needs a better understanding of Chinese culture, language, needs and travel preferences.
There’s a sense of urgency that we need to do more preparation. It’s not that the Chinese won’t have a good experience, but we need to improve, for instance, in the language for signage and in food choices. The Chinese will try American cuisine, but on a two-week trip they want their own food.
We’ve already begun to see some Mandarin signage on the West Coast, in Las Vegas and New York City. Outside of these major destinations, at large hotels and tourist attractions, I think we’ll also begin to see Mandarin, along with Spanish and French, but most destinations aren’t fully prepared.
Are there any concerns involving U.S.-based operators’ tours for Chinese groups?
Simon: On some really low-cost tours we’ve seen coerced shopping experiences, where the tour operators and guides make additional revenue through kickbacks from the shopping venue. That’s how the tour operators offset low prices.
We don’t have the ability to police this, but if we find out we will eliminate that operator from our program.
How is NTA’s Visit USA Center in Shanghai doing?
Simon: It’s been a successful operation in that there had been no central force in China to promote the U.S. There are individual states and companies with representatives, but they’ve been promoting their own destinations. We’ve done road shows and sales missions, had pavilions at trade shows and offered our members translation services.
What’s ahead for NTA in China?
Simon: The future will reshape what we do, because it is now Brand USA’s job to promote the U.S.. Brand USA is planning to have a representative in China in 2013. We don’t know if we will keep an NTA office there, but we will stay involved in some capacity.
NTA’s CHIP program exists; we maintain the tour operator list, and we have an obligation to both the U.S. and Chinese trade to educate both sides in doing business together. For now we are co-sponsoring with Brand USA the U.S. pavilion at China’s largest trade show – the China International Travel Mart in Shanghai in November.