The endless boom

Updated: 2013-02-08 08:50

By Yang Jinsong (China Daily)

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The endless boom

There are now 1 billion tourists worldwide each year, with 1.8 billion expected by 2030. guess where most will come from?

Over the past 60 years, the world's tourism industry has been growing faster than its economy, with the number of travelers increasing in that time from less than 1 million a year to more than 1 billion, and tourism sales revenue from $1 billion to $1.2 trillion (880 billion euros).

In this time the middle class has grown as the essential spending power in global tourism, first emerging in developed economies such as the United States and Japan, and later in developing countries such as China and India.

With more than 1 billion people now traveling each year, the middle class continues to play an essential role in the further blossoming of this industry.

The rise of tourism and the middle class has gone hand in hand. In the 1950s, the annual increase of international travelers was 10.6 percent, in the 1960s it was 9.1 percent, and 5.3 percent for the 1970s. This was also the period when the global middle class grew the fastest.

Western countries had the largest middle class, and so the chief market of the global tourism industry was in Europe and North America for a long time. However, with the rise of the middle class in emerging markets such as China and India, the situation is gradually changing as they venture out. These markets themselves are also becoming more attractive to inbound international tourists.

In 1991, Europe accounted for 60 percent of the global tourism market. That dropped to 53 percent in 2012. North and South America, meanwhile, witnessed their market share drop from 22 percent to 17 percent during the same period.

In the early 1990s, emerging markets accounted for no more than 32 percent of the industry. In 2011, however, the number rose to nearly 47 percent. It is clear the rising middle class in developing countries is the new driving force of the world's tourism industry.

According to a report by the United Nations World Tourism Organization, the number of annual global tourists will reach 1.8 billion by 2030. If we define "middle class" as people with an annual income of $6,000 to $30,000, the number of this segment will rise to 3.6 billion by 2030, according to a report released by Goldman Sachs investment bank. Among them, 85 percent will be from the BRICS countries (Brazil, Russia, India, China and South Africa) and what Goldman Sachs refers to as the N11 developing nations (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam).

If the bank's analysis proves correct, the international tourism industry will be driven by these emerging markets in 2030.

The rise of the middle class not only changes the geography of the world tourism industry, but also reshapes it with different spending concepts. This is particularly evident with the Chinese middle class.

This group is more sensitive to the special selling points of travel products than to the more conventional aspects of tourist travel. Many seek higher self and social esteem through specialized tours and different price ratios.

Most of them have already had gainful experience in traveling abroad for educational or business reasons before getting married. After forming a family, they tend to visit the same destinations again, and are more particular in choosing the most suitable products.

Middle-class families with children have the strongest spending capability. Their choice of travel products is based on a combination of personal expectations, time and expense.

Chinese tourists in general display a number of particular traits. They are more willing to purchase local products as they respect local culture and hope to contribute to protecting cultural heritage. They are also more aware of the consequences of climate change, and so are more willing to travel in an energy-efficient way.

The Chinese middle class largely sticks to its principles and focuses on culture, history and discovery when traveling. Through these methods they find others from the same social circle and gain social recognition at the same time.

They are also becoming more discriminating in their choice of tour operators and travel agents.

Chinese middle-class tourists are restricted by their work schedule. For long-term travel, the Chinese are more likely to choose the two "Golden Weeks" of national holidays - Spring Festival in January or February and the National Day break in October. A smaller proportion will choose to travel during the summer vacation and annual leave.

Traditional working methods and a relatively strong work ethic leads to an unpredictable working schedule, which makes it difficult to plan for travel in advance.

Also, most of the middle class in China will choose to travel in small groups, usually with family, so travel products must consider children's and adults' needs.

These market demands have brought new challenges to China's tourism industry, mainly because they come from people of different backgrounds who have different demands for travel products, be it adventure holidays or family-orientated packages.

A thorough market analysis of the consuming habits of the middle class is therefore essential. Travel operators should not only attach importance to cultural recognition, but also to approach target clients via modern technology, such as social media.

The challenges increase with each link in the tourism industrial chain.

Holiday hotels with spacious rooms, storage and self-catering facilities will be preferred. Chinese middle- class travelers have high demands regarding shopping, and they are more likely to choose shopping centers with children's day care services.

Transportation must be comfortable and safe, while recreational activities should consider the interests of every family member. Also, they need to provide Chinese food and traditional local cuisine.

The adjustment necessary to supply these aspects of the market will be expensive, but if operators fail to manage it properly, it will be a disaster for the tourism industry.

Although the tourism market for the middle class emerged long ago and continues to provide precious opportunities, profits are not fully guaranteed. Risks and challenges lie within.

Market players should have a profound understanding of the middle class. Tourism and travel products should be verified and updated constantly. Only by doing so will China's middle class continue to influence the world.

The author is a researcher with China Tourism Academy. The views do not necessarily reflect those of China Daily.

(China Daily 02/08/2013 page8)

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