A tourist poses for a photo in a traditional Chinese costume at the Summer Palace in Beijing on Tuesday. The tourism market in China, including domestic and international travel, is projected to grow by 14 percent annually to reach 5.5 trillion yuan by 2020, according to Boston Consulting Group Inc. [Photo / Bloomberg]

The nation is set to become world's second-largest travel market

BEIJING - China is expected to overtake Japan and become the world's second-largest travel and tourism market, at home and abroad, by 2013.

That's according to a report released by the Boston Consulting Group (BCG) on Wednesday.

China currently accounts for 6 percent of revenue from global tourism. That proportion will increase to 8 percent in 2013 and 14 percent in 2020, said the report.

"Not long ago, most Asian tourists came from Japan or South Korea - the region's more affluent markets but that is rapidly changing," said Vincent Lui, a Hong Kong-based partner at BCG, and one of the primary authors of the report.

The market in China, including domestic and international travel, is projected to grow by 14 percent annually to reach 5.5 trillion yuan ($839 billion) in 2020, he said.

Chinese tourism generated revenue of 1.55 trillion yuan last year, according to figures from the National Tourism Administration.

"There will be an average of 25 million first-time Chinese travelers every year, or 70,000 every day, for the next 10 years," said Lui.

The report indicated that international travel from China will become a major source of growth for providers in the destination countries.

"Compared with the already significant travel market domestically, the Chinese demand for international travel is still young. But it is expected to grow by 17 percent annually over the next decade, driven by rising incomes and aspirations," Lui said.

By 2020, about 25 percent of international travelers arriving in Japan and South Korea will come from China, while the country will contribute more than half the new arrivals to Europe, according to BCG's estimate.

Youchi Kuo, a project leader at BCG's China Center for Consumer Insights, said that China's tourism industry is still in its infancy and that travel remains a highly discretionary expense, secondary to upgrading a home or owning a car.

"Only a handful of companies, from travel agencies and hotels to airlines, understand the needs of Chinese travelers, 95 percent of whom claim they are poorly served on both the domestic and the international fronts," she said.

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As an illustration, Kuo said most of the complaints about hotels in China concerned a lack of cleanliness and basic comforts, and that travelers heading abroad find that most airlines lack signs in Chinese and few hotels offer special services.

Also, Kuo said the needs of middle-class travelers from China's smaller cities have been largely ignored, which presents a clear opportunity for companies looking for growth beyond the country's largest cities.

"Smaller cities have few travel agencies, so flight options and services are minimal. But we found that middle-class consumers in smaller cities are more likely to increase their spending on travel and to trade up than their counterparts in top-tier cities," said Kuo.

BCG's report was based on a survey of more than 4,250 Chinese travelers - inbound and outbound, business and leisure - in 15 cities during the third quarter of 2010.