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Executive Summary & Trends

1. Country Overview

        1.1 Economy
        1.2 Key Demographics
        1.3 Government Policies

2. Tourism Overview

        2.1 Tourism Overview
        2.2 Domestic Tourism Trends
        2.3 Outbound Tourism Trends

3. Chinese Travel Distribution & Trends

        3.1 China's Total Travel Market: market trends and distribution channel analysis
        3.2 Domestic Travel Market: travel distribution and sector trends for:
             3.3 Airlines
             3.4 Hotels
             3.5 Car Rental Market
             3.6 Cruises
             3.7 Railways
             3.8 Online Travel Agents (OTAs)
        3.9 Meta Search Engines
        3.10 Traditional Travel Agencies
        3.11 Outbound Travel Market Distribution Trends

4. Chinese Travellers - Search and Buying Behaviour

        4.1 Internet Users & E-commerce
        4.2 Use of Online Facilities

5. Marketing, PR & Sales

        5.1 Advertising Media and Online Marketing
        5.2 Marketing Strategies by Key Travel Segments

6. Case Study

        6.1 Ctrip - near monopoly in Chinese online travel market

7. Useful Contacts

Research Methodology

Figure 1: China’s Real GDP (2002-2012F)

Figure 2: China’s nominal GDP (2002-2012F)

Figure 3: Per capita GDP in real terms (2002-2012F)

Figure 4: Per capita GDP in nominal terms (2002-2012F)

Figure 5: Comparison of China’s GDP per capita with other leading countries, 2006

Figure 6: Employment in China (2002-2010F)

Figure 7: Exchange rate against key currencies (Average Annual Rates, 2002-2012F)

Figure 8: China’s foreign exchange reserves (2002-2007)

Figure 9: Utilised foreign direct investments into China (2002-2006)

Figure 10: China’s rank in global FDI flows (2006)

Figure 11: Foreign direct investments into China by sector (2002 and 2006)

Figure 12: Foreign direct investments into China by country (2002 and 2006)

Figure 13: Population of China (2002-2012F)

Figure 14: Share of population by age group (2000, 2005, 2006 and 2025F)

Figure 15: Urbanisation in China (1978-2006)

Figure 16: Population by region (2005 and 2006)

Figure 17: Per capita disposable income of urban and rural households (2002-2007)

Figure 18: Per Capita Annual disposable income of urban households by region, 2005

Figure 19: Share of urban households by income class (base year 2000)

Figure 20: Average family size in China

Figure 21: Education profile of Chinese aged six years and older, 2006

Figure 22: Number of new students enrolment by level and type of school (2002-2006)

Figure 23: Number of Internet users in China (2002-March 2008)

Figure 24: ADS status awards (2007)

Figure 25: Visa processing time for Chinese

Figure 26: Growth in China Travel and Tourism (Value, 2002-2012F)

Figure 27: Travel & Tourism expenditure by travel purpose (2002-2012F)

Figure 28: Growth of domestic tourism (2002-2007)

Figure 29: Urban resident volume by purpose of visit (2005)

Figure 30: Tourism receipts “Golden Week” vs. rest of the year (2005)

Figure 31: Preferred domestic tourism destination for the rich

Figure 32: Domestic tourism of urban and rural residents (2002-2007)

Figure 33: Domestic tourism of urban residents by major cities – Per capita tourism expenditure

Figure 34: Domestic tourism of urban residents by gender, 2005

Figure 35: Domestic tourism of urban residents by age, 2005

Figure 36: Outbound Chinese (Million, 1995-2020F)

Figure 37: Geographic break-down of outbound travellers by destination (41 million; 2007)

Figure 38: Chinese outbound by destination (2002-2007)

Figure 39: Region wise outbound volume distribution (2002-2007)

Figure 40: Hot travel destinations within Asia (ex Macau and Hong Kong)

Figure 41: Purpose of travelling to Hong Kong (% of respondents)

Figure 42: Outbound travellers to Japan (2001-2006)

Figure 43: Mode of travel to Thailand (2006)

Figure 44: Outbound travellers to Singapore (2001-2007)

Figure 45: Purpose of travel to Singapore (2005)

Figure 46: Dream destinations (2007)

Figure 47: Top 5 European destinations for outbound Chinese (2007)

Figure 48: Long haul travel destinations outside Asia (% respondents, 2007)

Figure 49: Outbound travellers to US (2000-2006)

Figure 50: Outbound group packaged tour travellers (Million, 1994-2006)ion China Report • Edition 1

Figure 51: Outbound by package type and destination

Figure 52: Expenditure by outbound travellers (1995-2006)

Figure 53: Outbound per capita travel expenditure (1995-2006)

Figure 54: Trip expenses at major destinations (2007)

Figure 55: Spending composition 2003

Figure 56: Chinese spending in Singapore by major items (2005)

Figure 57: Visa processing time (in business days) for major destinations

Figure 58: China total travel market value (2002-2012F)

Figure 59: China total travel market by segment (2002-2012F)

Figure 60: Chinese total travel market - online vs. offline (2002-2012F)

Figure 61: Chinese online travel market: direct vs. indirect (2002-2012F)

Figure 62: Chinese online travel market: direct vs. indirect distribution (2002-2012F)

Figure 63: Domestic travel market by segment (2002-2012F)

Figure 64: Chinese domestic travel market - online vs. offline (2002-2012F)

Figure 65: Domestic online travel market by segments (2002-2012F)

Figure 66: Chinese domestic travel market - direct vs. indirect (2002-2012F)

Figure 67: Chinese domestic travel market - direct vs. indirect distribution (2002-2012F)

Figure 68: Growth in domestic revenue passenger kilometres (2002-2012F)

Figure 69: Domestic Air Passenger Traffic (2002-2012F)

Figure 70: Passenger traffic (Passenger kilometre) growth by mode of transport – 2007E

Figure 71: Share of passenger traffic by mode of transport

Figure 72: Type of travellers

Figure 73: Chinese airports in global Top 100 ranking of airports by the number of passengers handled (2003-2006)

Figure 74: Distribution of aircraft movements – 2006

Figure 75: Passenger throughput trends at major Chinese airports (2002-2012F)

Figure 76: Number of airports (1990-2020F)

Figure 77: Domestic Airlines (2006 Passengers Carried)

Figure 78: China airline industry - grouped under the Big-3

Figure 79: Airline companies in China and their home-base

Figure 80: Comparative market share in major China air traffic hubs

Figure 81: Market share of China’s Big 3 airlines in terms of RPKs (2004 and 2007)

Figure 82: Development of air passenger traffic (2002-2007)

Figure 83: Private airlines pipeline in China

Figure 84: Domestic air bookings value (2002-2012F)

Figure 85: Domestic online air bookings and penetration (2002-2012F)

Figure 86: Direct vs. indirect distribution in online bookings (2002-2012F)

Figure 87: Overnight trips undertaken by Chinese tourists (2000-2012F)

Figure 88: Star rated rooms in China (2002-2007E)

Figure 89: Comparison of hotel pipeline in China and other regions (2007)

Figure 90: Y-o-Y Growth in RevPAR (2005-2007E)

Figure 91: Geographic segmentation of hotel revenues in China (2005)

Figure 92: Geographic distribution of hotels and utilisation rates (2005)

Figure 93: Breakdown of star-rated hotels by ownership type (2002 and 2005)

Figure 94: Hotel pipeline by brand (Oct 2007)

Figure 95: Number of rooms in non-star rated hotels (2002-2006)

Figure 96: Economy hotel capacity growth (total rooms, 2004-2006)

Figure 97: Competitive landscape of economy hotels

Figure 98: Overnight stays by Chinese customers segmented by accommodation type

Figure 99: Private vehicle ownership (1990-2006)

Figure 100: National expressway (2001-2050F)

Figure 101: Number of SMEs in China (1990-2006)

Figure 102: Percentage split of branded and unbranded hotel rooms

Figure 103: Domestic hotel bookings (2002-2012F)

Figure 104: Chinese hotel consolidators operating model

Figure 105: Domestic online hotel bookings (2002-2012F)

Figure 106: Hotel aggregators in China

Figure 107: Direct vs. indirect distribution in domestic online hotel bookings (2002-2012F)

Figure 108: Value of car rental market in China (2002-2012F)

Figure 109: Domestic online car rental bookings and online penetration (2002-2012F)

Figure 110: Direct vs. indirect distribution in domestic online car rental bookings (2002-2012F)

Figure 111: Market size of domestic cruise industry (2002-2012F)

Figure 112: Major Yangtze cruise routes

Figure 113: Major inland cruise routes

Figure 114: Major coastal cruise routes

Figure 115: Cruise liners capacity share

Figure 116: Cruises along the Yangtze River

Figure 117: Major outbound cruise routes

Figure 118: Rail - Number of passengers carried (2000-2007)

Figure 119: Investment in transport fixed assets (2000-2006)

Figure 120: Domestic rail bookings (2002-2012F)

Figure 121: Share of OTAs in China travel market (Domestic, 2002-2012F)

Figure 122: Domestic OTA market – online revenue composition

Figure 123: Market share of leading OTAs at the end of 2007 Second Quarter

Figure 124: Revenue distribution of Ctrip (2002-2007Q3)

Figure 125: Revenue distribution of eLong (2002-2007Q3)

Figure 126: Revenue comparison between eLong and Ctrip (2002-2006)

Figure 127: Number of travel agencies in China (2002-2006)

Figure 128: Number of travel agencies in Top 15 regions

Figure 129: Number of authorised travel agencies for outbound travel by city/province (2007)

Figure 130: China outbound travel market value (2002 to 2012F)

Figure 131: Chinese outbound travel market - online vs. offline (2002-2012F)

Figure 132: Chinese outbound online travel market - direct vs. indirect (2002-2012F)

Figure 133: China outbound online travel market by segment (2002 to 2012)

Figure 134: Outbound travel bookings (2002-2012F)

Figure 135: Outbound airlines market value (2002-2012F)

Figure 136: Online vs. offline in the outbound airlines travel market (2002-2012F)

Figure 137: Direct vs. indirect distribution in outbound airlines online travel market (2002-2012F)

Figure 138: Outbound hotels market value (2002-2012F)

Figure 139: Outbound online hotel market - online vs. offline (2002-2012F)

Figure 140: Outbound cruise market value (2002-2012F)

Figure 141: Outbound car rental market value (2002-2012F)

Figure 142: Outbound railways value (2002-2012F)

Figure 143: Comparison of China’s broadband cost with select countries (2006)

Figure 144: Internet penetration in China (June 2002 to Dec 2007)

Figure 145: Internet penetration in various countries (as of December 2007)

Figure 146: Retail E-commerce in China (2002-2007)

Figure 147: Top eight online purchases for 2006 (as a % of respondents)

Figure 148: Online travel purchasers and % of Internet users (2003-2006)

Figure 149: China mobile subscriber base – Historical and forecast (2002-2012F)

Figure 150: China’s bank cards market – Volume and average spending (2002-2008F)

Figure 151: Bank cards in China (2002-2006)

Figure 152: Distribution of Internet population (as of December 2007)

Figure 153: Major Internet access points (as a percentage of Internet users)

Figure 154: Internet access point for urban and rural netizens (as of December 2006)

Figure 155: Internet user demographics (as of June 2007)avel Distribution China

Figure 156: Internet penetration rate by age group (as of June 2007)

Figure 157: Online activities of Internet users (as a % of sample surveyed) (as of June 2007)

Figure 158: Broadband netizens and % of total netizens (2002-2007)

Figure 159: Broadband households (2004-2010F)

Figure 160: Installed base of computers – including desktops and laptops (as of June 2007)

Figure 161: Sources of information for travel research by outbound Chinese traveller

Figure 162: Leisure travel information sources (% of respondents)

Figure 163: Travel planning and decision making figure

Figure 164: Main factors influencing travel planning and decision making

Figure 165: Advertisement expenditure by media type (2002-2008F)

Figure 166: Daily average reach (millions) by channels in primetime (top ten for each sector)

Figure 167: Quoted ad rates of selected television channels in China

Figure 168: Top newspapers (all languages; Circulation in million)

Figure 169: Top China dailies - Ad rates (2006)

Figure 170: Minutes spent per day on newspaper, by age bracket and by education level

Figure 171: Reading online news (% of Internet users)

Figure 172: Production of radio programmes data (2002-2006)

Figure 173: Contribution of different modes of transport in total passenger travel (1978-2006)

Figure 174: China’s Internet advertising market (2005-2010F)

Figure 175: Ctrip net revenue by segment (2007)

Figure 176: Share of hotel booking in Ctrip’s net revenues (2002-2007)

Figure 177: Ctrip’s revenues from hotel booking

Figure 178: Share of air-ticketing in Ctrip’s net revenues (2002-2006)

Figure 179: Ctrip – Air-ticketing revenues (2002-2007)

Figure 180: Share of package tour in overall net revenues (2002-2007)

Figure 181: Ctrip’s way of building customer base and achieving growth

Figure 182: Ctrip’s marketing channels

Chinese travel market definition
 
For the purpose of this report, the Chinese travel market refers to travel demand by Chinese citizens currently residing in China, which consists of the domestic travel market (Chinese travelling in China) and the outbound travel market (Chinese travelling abroad), and excludes the inbound travel market (foreigners travelling in China).
 
The size of the Chinese travel market is estimated as a sum of revenues of five different sub-segments; namely airline, hotel, cruise, car rental and railway corresponding to domestic and outbound market segments. The revenues generated from travellers for all purposes such as business, leisure, visiting friends and relatives (VFR), religious, meetings and conferences make up the market. Furthermore, we have based our valuations on the spending of Chinese travel consumers on travel and accommodation only, whereas travellers' additional expenditure on food & beverage, shopping and other leisure activities is not considered.

We have estimated the overall market size using a mix of demand-supply approaches. To estimate the overall market size in China, we have calculated the value of the different sectors of the travel industry individually. To validate the estimations, the demand side approach has been used at an overall level. We have also adopted demand side approaches to estimate the inbound and outbound markets.
 
Consumers - For the purpose of this report, we have considered the consumption of travel products and services by Chinese consumers only. Thus, the spending on travel products and services by foreigners coming into China (inbound market) are calculated separately for different segments and deducted subsequently. Similarly, we have calculated the spending on travel products and services by Chinese travellers going abroad (outbound) and added this to the domestic market.
 
Suppliers - The suppliers of travel and related services are based in China and earn their revenues in China. However, the outbound market, i.e. spend by Chinese outside China, are estimated on the basis of average spend per tourist on different travel products i.e. hotel, airlines, etc.
 
Online bookings are defined as customers who purchase the travel product with an online payment. It does not include those bookings where actual payments are made offline even though the booking may have been made online or over email. We have considered only those online booking revenues where the purchase is made directly by the customer on the supplier or OTA (online travel agents) website and hence the revenues generated from online booking at supplier website by travel agents is excluded.

Methodology for market sizing

We have used a bottom-up approach to arrive at the total market size. The travel market is segmented into domestic, inbound and outbound travel markets, which are further categorised into sub-segments such as airlines, hotels, railways, car rentals and cruise. We have used a two-pronged approach comprised of primary and secondary research. The primary research involved extensive in-depth interviews with the leading travel companies in China, as well as interviews with other relevant industry experts and panel members across the different sectors.

Domestic and inbound travel market

To arrive at the value of the domestic market, we combined total revenues generated by different travel segments in China and then subtracted the value of the inbound market. We used a bottom-up approach to value the domestic as well as the inbound market. We calculated the expenditure of inbound tourists in each sector separately and then calculated the overall market, using surveys and other qualitative information from both primary and secondary research.

Outbound travel market

A combination of bottom-up and top-down approaches were used to estimate the value of the outbound travel market. We have derived the historical values for the total outbound expenditure by multiplying our estimated per tourist spend with the total number of tourists. From this, we extracted the expenditure on accommodation and travel from the total outbound expenditure. We have forecast spend by Chinese in the individual segments and calculated the results to arrive at the overall outbound market.