Prepared for China Natio nal Tourist Office (CNTO)
China National Tourist Office (CNTO): Survey of U.S. Travelers to China Results Summary: Transcription Introduction Over the past three decades, China has seen strong growth in international tourism arrivals. In 2012, China was the third most popular tourist destination in the world, behind only France and the U.S. In the first half of 2013, there were 13 million international visitors to China, not including visitorss from Hong Kong, Macau and Taiwan. Of those 13 million visitors, one out of eight are U.S. travelers, making the U.S. the largest tourism source country for China outside of Asia, according to statistics published by China National Tourism Administration (CNTA). Over two million American travelers visited China in 2012, and they traveled for a variety of purposes leisure trips, business trips, visiting friends and family, attending a conference or trade show, cultural exchange, etc. This study encompasses all U.S. outbound visitors to China, regardless of trip purpose. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 2
The number of American visitors to China has increased by 60% over the past eight years, as shown in the slide above. U.S. arrivals increased steadily between 2004 and 2007, slowing to roughly 5% in 2008 and 2009 due to the global economic recession. The number of U.S. travelers recovered quickly in 2010, jumping to a record high that has been maintained over the past two years. Study Objectives Last year, PhoCusWright completed a study for CNTO focusing on travelers attitudes and behaviors. Research findings provide detailed insight into past trips and future intentions, trip characteristics, and traveler behaviors in relation to both destination selection and travel purchasing decisions. The study followed the travel life cycle from desire and destination discovery to shopping, booking, travel and sharing. The current study takes a closer at how Americans plan and book trips to China. Specifically, the study objectives are as follows: 3
1. Understand travel arrangement and purchasing methods for U.S. travelers when they plan trips to China; and 2. Identify the various trip arrangers, providers and facilitators: the shepherds. Our mission is to focus on shepherds, not sheep. The research addresses several key questions: How did travelers arrange their travel? For example, did they arrange the trip themselves or was it a package arranged by a tour operator, a business trip arranged by an employer, a student exchange arranged by a school or university, or a trip arranged by an organization to promote cultural exchange? How did they book the essential elements of their trip? For this research, we focused on three key elements: flight, accommodations and securing a Chinese visa. Who are the major players for each of these categories of arrangers and booking methods? Key Takeaways Most travelers shepherd themselves! More than half (52%) of American travelers to China arranged trips on their own: Most of these are flexible, independent travelers. Over the past few years, the global travel landscape has undergone significant changes, driven by security concerns, economic upheaval, increasing availability of information sources and the rise of social networking. Out of these changes arose a growing number of flexible, independent travelers who like to experience new ways of life, explore off the beaten path and travel based on their own itinerary, tastes and intentions. Travelers in this consumer segment prefer to make their own arrangements. Another one fifth (22%) reported arrangement through a travel agent or tour operator: Some travelers in this category may perceive that they arranged the trip themselves, with a travel agent or tour operator simply facilitating the booking. Booking channels vary with different arrangement methods Self arrangers booked directly with suppliers (e.g., airline, hotel) and through online travel agencies (OTAs): flexible, independent travelers tend to be very price sensitive For business trips, the employer s travel agency plays a key role Even for travel with third party arrangements (e.g., school, university, association or special interest group), much booking is done directly with suppliers and OTAs: many of the third party travel arrangers are only involved in the travel planning phase but not in booking Different arrangement methods mean different behavior and traveler expectations Overall, good previous experience is most commonly the reason for using a particular booking channel OTAs and search engines are mostly perceived as having the best price Business travelers book through their employer s agency because they are required to do so 4
Overall, travelers are satisfied with their trip to China, but self arrangers aren t necessarily the happiest Satisfaction is high for destination activities, lodging, travel arrangements, food, flights, domestic transportation, etc. However, for individual travel components, satisfaction varies based on arrangement method. Travelers who arranged their trip through tour operators are more satisfied with lodging Major players have significant market shares in travel booking United Airlines is the most frequently mentioned airline among travelers who booked directly with an airline About half of travelers who booked a flight or hotel through an OTA used Expedia In contrast to the OTA segment, for travel agencies, tour operators and other arrangers (e.g., group leaders, organizations), the landscape is very fragmented. No single player or group of players stands out. Question: When you mention that more than 52% of people arranged trips for themselves, but that another 22% report self arrangement through a travel agent or tour operator, I m not clear on what that means. Is the total share of self arrangers 52% or 74%? Bing: 52% reported that they arranged the travel by themselves on their own; another 22% said they arranged the travel through a travel agent or tour operator. Douglas: This is a topic that Bing and I spent quite a bit of time discussing. The challenge we had here was related to the concept of an independent traveler. We were not sure how they would think about their own role when they were using a travel agent or tour operator. Would they think that they were self arranging, or would they think that the travel agent or the tour operator was the arranger? We made a very clear distinction between these two methods, and will describe the findings in greater detail below. Methodology PhoCusWright fielded an online survey of U.S. adults from August 16 22, 2013. To qualify, respondents were required to be age 18 or older, American citizens and have traveled to China in the past three years. A total of 17,126 individuals were surveyed to obtain the target of qualified responses. 795 responses qualified, representing a 4.6% incidence of travel to China. The results are weighted by age, with weighted results calculated from a base of 796 (weighted N). The margin of error is +/ 3.5% at a 95% confidence level. 5
Detailed Findings Who is the Shepherd? One of the important objectives of this study is to identify the arrangerss who coordinate travel for U.S. travelers to China. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 6
As the pie chart above shows, more than half (52%) of U.S. visitors to China arranged their travel on their own. This finding is very striking. Over the past several years, the U.S. travel industry has seen a shift towards independent travelers who build their own itinerary and book their own travel. An additional 22% of travelers reported that they arranged their travel through a travel agent or tour operator. Seventeen percent of travelers reported that their travel was arranged through work/business, while an association or special interest group arranged travel for 4% of visitors to China. The share of travelers whose trips were arranged by an educational institution or as part of a government delegation was small, just 3% and 1%, respectively. 7
Flight Booking This section explores how U.S. travelers booked their flightss to China, what booking channels they used, and which airlines they flew. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 8
PhoCusWright asked respondents to indicate which channel they used to book their air travel. More than one third (37%) of U.S. visitors to China booked directly via an airline. Of these, the most common airline flown was United Airlines (45%), followed by American Airlines (15%) and Delta Air Lines (13%). Question: The chart shows that 37% booked directly with the airline. Does this include all supplierdirect booking channels (e.g., airline website, call center, etc.) Bing: Yes, this includes all methods of booking directly with the supplier. The OTA channel is the second most popular booking method, with roughly one in five travelers booking via an OTA. Expedia captured nearly half of OTA bookings, followed by Orbitz (16%) and Travelocity (13%). All other booking channels represented a relatively small share. Eight percent of travelers booked via an online travel search engine, while 7% booked via a retail travel agency or tour operator, respectively. Booking method varies by arrangement method, but overall, booking directly with airlines and via OTAs are the most common methods. 9
Note that the 8% share attributed to an online travel search engine would have actually taken place via a supplier website or OTA. Travelers often do not recognize that online travel search engines such as Kayak do not process transactions and believe that they have booked via the online travel search engine. 10
This slide illustrates how flight booking channels vary by arrangement method. The first row indicates the channel share for all respondents. The rows below, however, break out booking channels for each type of arrangement method. Most travelers are self arrangers, and nearly half of this group booked direct with the airline, while an additional 25% booked via an OTA. Among those who arranged travel through a travel agent or tour operator, more than one in six booked their flight through a tour operator, compared to just 3% for those who made their own arrangements. Booking directly with an airline is common across all arrangement methods, with the exception of arrangements made by a school. In this group, more than one in three bookings were made via an OTA. For trips arranged by an employer, 28% of bookings were made via the employer s travel agency or travel manager. 11
This slide provides insight into why travelers chose the particular flight booking method they used. Travelers were most likely to choose their booking method based on a positive prior experience (37%). Thirty six percent reported that they typically book using the selected method, while a belief that the method offered the best prices/offers (35%) or convenience (34%) also ranked high. 12
This slide compares reasons for using a particular flight booking method, broken out by booking channel. For many of the cited reasons, there was little difference across booking channels. However, travelers who booked via airline or retail travel agent were more likely to choose their booking methods because they trust the brand. Travelers who booked via OTAs or online search engines were more likely to indicate that the channel has the best prices/offers. Finally, travelers who booked via their employer s travel agent were more likely to choose their booking channel due to a company/organization requirement. Note that PhoCusWright s consumer research shows there is a clear distinction between travelers who book via OTAs and travelers who tend to book directly with a supplier or via a traditional travel agent. Younger travelers who are less affluent tend to be more price sensitive and are more likely to rely on an OTA or travel search engine. Older, more affluent travelers are more likely to book directly with suppliers. Travelers are more likely to book with traditional travel agents when planning a major, once in a lifetime type trip. 13
Very often, when we look at consumer research, we tend to break up travelers into distinct groups, and it is easy to think that an individual is always the same type of traveler. Yet the same traveler might behave quite differently depending on the type of trip they are taking. These findings illustrate that phenomenon. 14
When travelers were asked to indicate the airline they flew for their last trip to China, an impressive 28% reported that they flew on United Airlines. Thirteen percent flew Delta, 13% flew Air China and 12% flew American Airlines, while all other airlines captured a relatively small share of travel to China. 15
Accommodation Booking PhoCusWright asked respondents the same series of questions in relation to accommodations. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 16
In contrast to flight bookings, OTAs rather than suppliers captured the largest share of bookings. Twenty two percent of travelers booked their last trip to China via an OTA, while 16% booked directly via a hotel chain or property. Of those who booked via an OTA, half booked via Expedia, while hoteldirect bookers were most likely to choose Marriott. One in ten travelers used a tour operator or online travel search engine to book their travel. Among those who booked via tour operator, Gate 1 Travel was the most common tour operator used. Notably, 8% of travelers reported that they did not stay in paid accommodations. 17
As with flights, accommodation booking channels vary based on arrangement method. Among travelers whose trips were arranged by their employer, 33% reported booking via the employer s travel agency. For travelers whose arrangements were made by a school or association, trip organizers played a significant role in booking. Thirty eight percent of school arranged trips were booked by the trip organizer, as were half of trips arranged by associations. Note that the sample size for these two arrangement methods was relatively small. We did ask a follow up question for those who indicated a trip organizer booked their travel to determine which channel the trip organizer used. Anecdotally, hotel suppliers and tour operators were among the top channels used when trip organizers completed the booking. Due to the small sample size, those findings are not included in the study results. For self arrangers, the most popular booking channels were OTAs and directly with the hotel. Notably, 13% of travelers in this group reported that they did not stay in paid accommodation. Among travelers whose trips were arranged by a travel agent or tour operator, 37% reported accommodations were booked via a tour operator. 18
Reasons for choosing an accommodation booking channel were similarr to those cited in relation to flights. A positive previous experience ranked highest, followed by brand trust and a perception that the channel offers the best prices. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 19
Not surprisingly, brand trust is particularly high among travelers who elected to book directly with the hotel chain or property. Travelers who booked via tour operators or OTAs were more likely to cite best prices/offers. While travelers often choose their booking channel becausee it is their typical method, those who booked via a tour operator or employer s travel agent weree less likely to cite this reason. Lastly, travelers who booked via a retail travel agent are more likely to choose that method because they have knowledgeab ble and courteous professionals. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 20
Chinese Visa Application Americans traveling to China are required to obtain a Chinese visa, and this section provides insight into how travelers obtain the required document. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 21
Four in ten travelers applied for their visa directly with a Chinese embassy or consulate. Keep in mind that more than half of travelers are self arrangers and they are more likely to apply for a visa directly. Sixteen percent did so via a visa service company. Among this group, CIBT (11%) was the most popular visa service company, followed by Travisa (9%) and USPA (6%). Notably, one in eight travelers already had a valid visa to China and did not need to apply for one in relation to their last trip. 22
As with flights and lodging, visa application channels varied by travel arrangement method. Roughly one third of travelers whose travel arrangements were made by a school applied for their visa via the trip organizer. Among those whose travel was arranged by an association, one in five reported applying for their visa via an OTA. For self arrangers, applying directly to the Chinese embassy is by far the most common method, however one in six travelers in this category did not need to apply for a visa because their previous visa was still valid. Among travelers whose last trip was arranged via a travel agent or tour operator, visa service companies ranked highly as the second most common method (29%) of obtaining a visa. 23
Satisfaction with Last Trip To gauge the level of satisfaction among American visitors to China, PhoCusWright asked respondents to rate various aspects of their experience on a scale from Not at All Satisfied to Extremely Satisfied. Trip aspects studied include destination activities, accommodations, food, flights, domestic transportation, visa applications, planning, purchasing and the overall trip experience. Prepared for China National Tourist Office (CNTO) By PhoCusWright Inc. 24
Eight in 10 travelers to China are very or extremely satisfied overall. When asked to rate sightseeing and other leisure travel activities, for example, 47% were extremely satisfied and an additional 33% were very satisfied. A high level of satisfaction was also evident for accommodations, food/dining, and trip planning. At the bottom of this chart are trip aspects that offer opportunities for improvement, including the visa application process, domestic transportation within China and passport control/customs. While these aspects are still fairly well rated, they could potentially be better. 25
While flight satisfaction was relatively consistent across booking methods, travelers satisfaction with their accommodations varied somewhat by booking method. Travelers who booked lodging through a tour operator were significantly more likely to be satisfied than those who booked via other methods, with 67% extremely satisfied. Although more than half of travelers were self bookers and that group was most likely to book directly with the hotel, that approach did not yield the highest satisfaction ratings. Forty two percent of travelers who booked directly with the hotel were extremely satisfied, a smaller share than for the tour operator and employer s travel agency booking groups. 26
Demographics This section analyzes the demographics of U.S. travelers to China. This slide shows the age and gender composition of China visitors, in line with data published by CNTA. 27
Overall, the incidence of travel to China is 5% on average across all age groups. However, travel incidence to China varies by age, with 25 34 year olds most likely to visit China. One in ten adult American travelers in the 25 34 age group visited China in the past three years. The incidence is lower in all other age brackets. Question: Please define China travel incidence by age. Bing: Travel incidence means the percent of people who have traveled to China in the past three years. For example, overall, five percent of American travelers visited China in the past three years. 28
Two in five travelers to China visited the country just once in the past three years. Overall, however, American travelers who visited China in the past three years visited an average of 2.6 times. 29
Americans who visit China are slightly more likely to be affluent and tend to be more highly educated than the general traveler population. 30
Seven in ten U.S. visitors to China are employed. 31
The majority of visitors to China are Caucasian (65%), while 12% describe themselves as East or Southeast Asian. Chinese American travelers may be more likely to stay with friends and family when visiting China. 32