12 Dec 2014
The trend is all-important for Australia as the country's share of China's outbound tourism expenditure is about $A6.4 billion annually.
"Unlike coal, Chinese visitors are both a renewable and a rapidly growing source of income."
Richard Holdcroft, Award-winning journalist
Photo credit: Sunflowerey / Shutterstock.com
To put this in perspective, that is more than a third of the $A17 billion the nation currently earns from thermal coal exports.
But unlike coal, Chinese visitors are both a renewable and a rapidly growing source of income. Tourism Australia believes their value to Australia could reach $A13 billion by 2020.
A report titled China's Outbound Tourists – a Multi-Decade Investment Theme by Fidelity Worldwide Investment's Hong Kong office has analysed the Chinese tourism market to explore why it is experiencing such explosive growth and what it means for the rest of the world.
In the year to June, 930,000 Chinese short-term visitors arrived in Australia. In overall terms this does not rank particularly highly as a Chinese tourism destination.
It fails to make the Top 10 list which is dominated by Hong Kong (40 million) and Macau (19 million) and then Thailand and South Korea, which each attract some 4.5 million Chinese visitors annually.
But for Australia it is a key market, ranking second behind only New Zealand, with 1.2 million annual visitors.
And while the number of Kiwi visitors to Australia rose just 18 per cent over the previous decade, Chinese visitor numbers grew by 250 per cent over the same period.
Surveys of Chinese visitors show they feel safe and secure in Australia, appreciate the friendliness of the people and enjoy the natural attractions such as beaches, the Great Barrier Reef, unique wildlife and dolphin and whale watching.
New Zealand is also popular with Chinese tourists for its unspoiled environment but with fewer iconic attractions it has to put more effort into highly targeted offerings such as themed weddings, and honeymoon and golf tour packages.
According to Fidelity, the penetration of travel to Australia from mainland China is at 7 per cent, relatively low compared with somewhere like Taiwan which is at 45 per cent.
“A growing middle class with higher wages, more paid annual leave and access to faster visas and cheaper flights is expected to see outbound tourists from China increase from 110 million last year to more than 200 million by 2020," the report says.
“This is a conservative estimate – at the 2013 Baoa Forum, President Xi Jinping said the number could reach 400 million by 2019."
Fidelity predicts by 2019, Chinese tourists will be spending $US246 billion a year abroad. As their report notes, it looks “increasingly plausible one day China's biggest export could be its people."
Tourism Australia can take credit for the popularity of Australia as a holiday destination for Chinese, as their marketing drive into China has been highly effective, according to Catherine Yeung, Fidelity's Investment Director for Equities in Hong Kong.
“Australia's online marketing in mainland China has been very good, particularly in its use of social media," Yeung says.
“The 'There's nothing like Australia' campaign is being well received, as is the australia.cn website, the Chinese version of australia.com."
Tourism Australia's Deputy CEO Frances-Anne Keeler says the organisation has gone to great lengths to tailor its marketing efforts to suit China.
“Australia.cn is a world first - the first national tourism website built for China, in China, so it's behind that country's firewall," she says. “Now we are using the two most popular Chinese social media platforms, WeChat and Weibo, to drive traffic to the site."
TA research indicates Australia is currently the number one-ranked aspirational holiday destination for Chinese tourists.
“The international launch of TA's current 'There's nothing like Australia' campaign was held in China, and its current iteration, 'Restaurant Australia', was designed to address a perception gap in the Chinese market about Australian dining," Keeler says.
About 100,000 Chinese school and university students are studying in Australia and the contribution of the education sector to Chinese visitor numbers is significant.
“The student path is another huge driver of Chinese visitors to Australia," Yeung says.
“As the parent of a child in Australia, I may want to visit once or twice a year, bring the family, perhaps buy a property ... it's a big factor."
Australia's casinos are also proving very popular with the region's big-spending gamblers. Asian VIP gamblers placed more than $A46 billion in bets at Echo Entertainment's three Australian casinos in the year to June, up 50 per cent in just one year.
Australia's two biggest casino operators, Echo and Crown Resorts, are betting on the long-term growth prospects for this market.
Echo plans to fly rich Chinese gamblers directly to the lavish new $A2 billion casino complex it recently won the right to build in Brisbane, which is slated to open in 2022. Crown's huge $A2 billion new six-star casino and hotel resort targeting Chinese gamblers is pending planning approval and scheduled to open in Sydney in 2019.
There is growing competition from other countries in the region for the Chinese dollar. But with Australia's unique offerings, new high-quality resorts in the pipeline and well-targeted marketing, Fidelity's Yeung is confident bullish predictions for tourism growth in Australia are realistic.
Keeler too is optimistic and she dismissed speculation the recent devaluation of the Chinese currency would significantly affect visitor numbers, especially given it has been offset by movements in the Australian dollar.
“What we've seen in the past is currency movements haven't made a huge difference to tourist numbers, although there may be some minor reduction to the average spend," she says.
“China is by far the biggest growth market for us, and that's not about to change any time soon."
Richard Holdcroft is an award-winning journalist who has previously worked at the South China Morning Post in Hong Kong.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 Dec 2014
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