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Catching the massive wave in luxury travel

By Xu Junqian in Shanghai | China Daily USA | Updated: 2016-12-16 10:41

The founder of Chinese high-end travel agency Zanadu hints that the luxury travel boom in China has yet to even begin

When Wu Zan first started his travel business, his initial objective was to target only the affluent Chinese, or the top 1 percent of the more than 100 million travelers leaving the country every year.

"When we first started, we were thinking about something other than wholesaling a trip - packing and rushing travelers into buses, canteens, and scenic spots. We wanted to be in the tailor-made segment. We wanted to be the Zegna instead of Zara for tourism," said Wu, the founder of Zanadu, China's leading luxury online travel agency.

The name of the company is a variation of the word Xanadu, the summer palace of one of China's most powerful rulers, Kublai Khan, and a widely acclaimed utopian retreat in modern China.

Four years after setting up his company, however, the 36-year-old has come to realize that the market is not like it used to be.

He noted that the country's luxury market was still at its peak in 2012 despite the central government's anti-corruption campaign and the slowing economy. This was also when he spotted the potential of another luxury market that focused more on experiences than materials.

Catching the massive wave in luxury travel

Today, this particular trend has taken the country by storm. In fact, customers from the burgeoning middle class have become just as important as the super rich.

The cost of a "non-standard Zanadu trip", which includes hotel accommodations, meals at Michelin-starred restaurants or Safari rides, ranges from 20,000 yuan ($2,896) to 100,000 yuan, depending on the destinations. Up to 80 percent of the trips booked from the website are "non-standard". The average cost of a Zanadu trip is around 40,000 yuan, close to the annual per capita income in China.

Zanadu, which has offices in Beijing and Shanghai and a staff strength of 50, currently boasts a membership of 1 million customers. About 50,000 of these clients are defined as "core members" who regularly place orders on the site.

Wu said that his clientele comprises mainly of discerning travelers, aged between 25 and 45, who are "looking for something more tasteful to record and post on their social networks" instead of taking selfies with landmarks or staying at conventional five-star hotel chains.

The trips curated by Wu's team include tracking wild gorillas in Namibia, Africa, diving into an ice cave in the Antarctic for a sauna session, and most recently, attending the Burning Man Festival held in the Black Rock Desert in Nevada.

While Zanadu has experienced triple-digit growth since its inception, far above the compound annual growth rate of China's tourism industry which is about 10 percent, Wu believes that the high-end travel market is poised for an even more explosive growth in the future.

"China has the world's largest population of middle class and rich people. These people have only started exploring the world in the past five years. About half of the overseas tourists from China in 2015 were on their maiden trips. We're just getting started," said Wu.

"People are now ready to pay more for milk, for fruits, for everything that boosts their quality of life. It is unsurprisingly that this also includes an annual trip to reward themselves after a year of hard work," added Wu, who also believes the trend is a response to the consumption upgrade advocated by China's State Council.

In addition, the growing numbers of passport holders bode well for the industry too.

Official statistics show that about 38 million Chinese citizens held passports in 2012, and the figure is believed to have been increasing quickly in recent years.

A report by Union Pay and China Tourism Academy showed that Chinese travelers made 117 million overseas trips in 2015, up 9.8 percent year-on-year.

These travelers spent a total of 104.5 billion yuan, an annual increase of 16.6 percent. Wu also expects Zanadu's membership figures to increase by 20 times within five years, with the number of core customers growing by a similar amount.

Formerly a host for MTV and an investment banker at Morgan Stanley, Wu is also among the first in the country to obtain an ordinary passport and travel abroad in 1994.

When asked about the challenges that lie ahead, Wu paused for a moment before revealing: "Keeping my team, growing the business as fast as the market is growing, and never sacrificing what Zanadu is all about - good taste."

Catching the massive wave in luxury travel

(China Daily USA 12/16/2016 page7)

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