China’s fast-growth outbound market is ripe with potential for inbound operators. But it has its challenges.
Among them: Chinese consumers are unfamiliar with standard tour products. They also tend to be price-driven and hungry for certain non-travel U.S. goods. This makes them susceptible to targeted low-ball travel offers that are subpar, according to one California-based tour operator in the market.
Those are among the issues that the NTA (National Tour Association) hopes to address through its new Visit USA Travel Center in Shanghai. The NTA opened the center in November 2010 to help its members sell inbound travel.
China is the world’s fastest-growing travel market, according to the NTA. Chinese visitors also spend more, on average, during their stays than visitors from any other country.
NTA president Lisa Simon told Travel Market Report the Visit USA Center is intended to help NTA members build connections with their counterparts in China to develop and facilitate inbound group travel to the U.S.
The center also will fulfill a need for education in both markets.
The goal is to foster an understanding of the cultural issues and language barriers involved in serving the Chinese market, especially for U.S. tour operators, destinations and ground suppliers.
It may also help educate unwary Chinese consumers about what to expect from legitimate U.S.-bound travel offerings.
Targeting Chinese travelers
Currently, China’s U.S.-bound leisure travelers are being unfairly preyed upon, suggested Harry Chen of Joy Holidays in Millbrae, Calif., and a member of the NTA’s China Task Force.
Chen told Travel Market Report that a number of Chinese American-owned travel agencies in the Los Angeles area sell low-ball travel products that are substandard, offering tour packages priced as low as $50 or less a day, inclusive of hotels and meals.
Then, according to Chen, tour directors peddle travel add-ons and consumer goods, preying on Chinese consumers’ desire to buy health food, vitamins and cosmetics in the U.S.
The travel add-ons include activities that legitimate operators normally include in their programs – for instance, tours to Las Vegas and the Grand Canyon. Chinese travelers are not pleased when they discover that the sites they want to see are optional add-ons, Chen said. Many go home miffed, and spread the word.
Some of the firms in question also operate stores in their travel agencies that sell vitamins, health foods, and other consumer goods of interest to Chinese travelers. They make “a ton of profit” from the sales – more than from selling travel, Chen said. “Shopping is the main agenda and tour/travel is ancillary.”
NTA positive impact anticipated
Chen believes these low-balling agencies are poisoning the market for legitimate tour operators who want to handle inbound travel from China.
However, he expects the NTA’s Visit USA Center in Shanghai to have a positive impact, as tour companies approved to sell in China get the word out to Chinese travelers about what to expect for their money.
The NTA maintains a list of U.S. operators and Chinese travel agencies approved for inbound leisure group travel under a 2007 U.S.-China Memorandum of Understanding. The approved list includes about 170 operators in the U.S. and 1,200 travel agencies in China.
The low-ball programs aimed at individual Chinese travelers to the U.S. take place outside the group market defined in the Memorandum of Understanding, according to Chen.
“Hopefully, by informing agents and individual consumers in China that there are better options for people, they will spend more time and money to really have an enjoyable, learning experience of the U.S., for a more accurate impression of the U.S.,” he said.
The Visit USA Travel Center in Shanghai operates under a grant from the Commerce Department as part of the NTA’s China Inbound Program.
Bottlenecks in obtaining tourist visas is a key factor holding back growth in inbound travel from China, Chen said. The U.S. maintains only four interviewing centers throughout the country.
“Surveys find the U.S. is top dream destination for Chinese. Easing the process for getting visas will definitely help,” he said.
Leisure travelers can skirt the visa issues by traveling in groups, Chen noted. Even so, the leisure group market is growing slowly compared to other groups.