WHAT ARE THE OPPORTUNITIES FOR MIDDLE-EAST AND NORTH AFRICA BRANDS TRYING TO CAPTURE WEALTHY CHINESE TRAVELLERS?
JUNE 21, 2017 (SHANGHAI): Over the past decade, outbound Chinese travellers have remade the world tourism market. Currently worth US$ 168 billion and still on the rise, the 120 million and growing band of Chinese consumers travelling the world in search of local culture, experiences, food and shopping in 2016 is proving to be a tantalizing demographic.
The Middle East and North Africa (MENA) region has lagged in popularity, but is now witnessing a boom in Chinese visitors. Growth is being driven by local travel incentives introduced into the region, including visas on arrival for Chinese nationals visiting the UAE, and the rising sophistication of Chinese travellers who are seeking new destinations o the beaten path. In addition, China’s One Belt, One Road initiative, which cuts through the region, has the potential to put MENA on the map for travel savvy Chinese.
In this issue of The Luxury Conversation we look at the opportunities for brands and business in the region. How can they capture this growing tide of Chinese travellers?
TRAVEL AND TOURISM
The MENA region is seeing a tourism boom from China. In Abu Dhabi, plans to attract 600,000 Chinese tourists a year by 2021 would represent a 265 percent increase on the figures recorded for the first nine months of 2016.
In Dubai, 540,000 tourists arrived from China in 2016, up from 450,000 a year earlier and cementing the country’s place as a top 10 source market for the emirate. Thirteen Chinese cities, including Beijing, Guangzhou, Shanghai and Shenzhen, as well as Hong Kong and Taipei, are connected to Dubai with more than 100 weekly flights.
Meanwhile, even before Morocco’s decision to drop visa requirements for Chinese visitors in July 2016, Chinese travel company, Ctrip, predicted a 3,500 percent increase in visa applications to the country. With 42,000 Chinese tourists in 2016 – a 300 percent year- on-year increase from 2015 – Morocco has announced a goal of 100,000 visitors from the Middle Kingdom this year. This would be a particularly impressive fact given no direct fights exist between the two countries.
Simon Press, Arabian Travel Market Senior Exhibition Director
“It’s crucial that tourist hubs throughout the Middle East maximise their reach
into mega-markets such as China. Demandcycles, budget trends,tech-savvy
hotels, food and beverage, sightseeing, culture and heritage centres, can
easily be met in many key destinations across the region.”
Elie Milky, Vice President for Business Development in the Middle East at American-Belgian
hotel brand Carlson Rezidor
“We run nine hotels in the United Arab Emirates (UAE) and we will open another 14 resorts by 2019. This is mainly because of the fast- growing number of guests from Asia, China in particular. All of our hotels in the Middle East employ Mandarin-speaking staff.”
Pascal Gauvin, IHG Chief Operating Officer for India,
the Middle East and Africa
“If a customer stays an average of 1.9 or 2 nights in Dubai, [the Chinese] stay an
average of 7.3 nights. That’s a huge difference. They stay longer than anybody
else because they don’t only go to one place for one event, they like to go to a
place to understand, to do sightseeing around it, take their time. The Chinese
are not the type of people that just go on the beach and do nothing. They like
activities, and Dubai is an active city, there’s always new things to do.”
It’s no secret that Chinese travellers are some of the most high-spending on earth. By 2019, Chinese tourists will spend $264 billion abroad – about the size of Finland’s economy, and larger than Greece’s. Shopping is vital to most Chinese tourists’ plans, accounting more than half of their spending, and Chinese shoppers abroad are expected to buy more luxury goods this year than tourists from all other countries combined.
Up to 25 percent of luxury goods sold in Mall of the Emirates are purchased by Chinese tourists, according the Majid Al Futtaim Group, which has 11 malls across the Middle East including Mall of the Emirates.
Dubai’s retail sector accounts for more than 40 percent of all tourism spending. This is expected to increase in the coming years with the introduction and development of quality retail o erings, including Muscat’s Palm Mall and Riyadh’s Mall of Saudi, which will include indoor indoor skiing when it opens its doors in 2022
Alain Bejjani, CEO of Majid Al Futtaim, which boasts a
portfolio of 21 malls and shopping centres around the Middle East
“We implemented a China outreach program. We do active marketing in
China with tour operators to lure more visitors in. Any economic integration that
actually promotes and facilitates inflows of people and goods is beneficial to
companies like ours.”
Louis Ferla, Cartier’s Managing Director in Dubai
“We have a mix of sales associates from different nationalities in our boutiques, which enables us to provide the best service to visitors in Dubai, including Chinese travellers.”
Hamad Buamim, Director General of the Dubai Chamber of Commerce.
“With the help of airlines like Emirates, Chinese are becoming major
contributors to retail and trade overall, and are coming to Dubai as
a stopover to Africa and Europe.”
While shopping remains important, there is a shift away from the material to the experiential. According to a report by Airbnb Inc., Chinese tourists are searching for lesser known cities and villages when traveling to countries and regions related to the Belt and Road Initiative.
In conjunction with this rise of interest in cultural tourism from Chinese travelers- eager to one-up their friends with photos from far flung destinations posted to their WeChat Moments newsfeed- MENA countries such as Saudi Arabia have made culture a central pillar of their tourism strategy. The country plans to increase the number of public and private museums from 155 to 241, increase the number of UNESCO listed world heritage sites from four to 10 and up the number of archaeological sites suitable to visit from 75 to 155 – all by 2030.
Lahcen Haddad, Moroccan Minister of Tourism
“Large segments of the Chinese middle class are drawn to the authentic
cultural and historical touristic experiences that Morocco offers.”
Nick Cakebread, Managing Partner at Asia-based luxury marketing consultancy, Reuter Communications
“When you look online in China, more and more affluent travelers in China are posting, searching and commenting on cultural experiences, destinations and trips. Today’s post 80’s generation in China now desire authentic and culturally relevant experiences. Trips that take them o the beaten path. They want that once in a lifetime experience.”
Lynda William, Founder and Managing Director of VIM & VIGOUR PR
“To attract the right tier of Chinese traveller who wants luxury experiential holidays, you have to be strategic. Look at what they are reading, where they spend their leisure time, what other brands they are spending with – whether that be fashion, unique experiences, yacht clubs, or skydiving. Formulate a plan to reach them through relevant targeted campaigns and partnerships. ”
It’s clear that the appeal of the MENA region among affluent Chinese will increase in coming years as travel habits mature and become more sophisticated. The combination of high quality accommodation options, retail and cultural elements all combine to make the region more and more attractive to Chinese travellers, and businesses have already found success by focussing on the needs of this particular group.
The business opportunity for brands in the region is exponential for those that understand the needs and aspirations of today’s modern Chinese traveller, which include:
NB: Quotes used from experts in this edition of the Luxury Conversation have been sourced from personal interviews, publicly available press materials and other social media channels.
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