How travel giant Ctrip rides the Chinese tourist phenomenon

In 2014, Ctrip, a leading online travel agency in China, launched a unique travel package in China: 88 days around the world for US$200,000. The company deliberated whether such a product would even have a market.

“How long do you think it took to sell the 22 tickets issued for the first trip?” Jenna Qian, Ctrip’s CEO of destination marketing, asked me when we met at a coffee shop in central Beijing.

Jenna Qian, Ctrip CEO of destination marketing

“Around a week,” I hazarded a guess.

She smiled at me and said, “17 seconds.”

The phenomenon of Chinese tourists

This is an extreme example of the most significant phenomenon the global tourism industry is experiencing today: the enormous demand from Chinese tourists for trips outside of China. This is demonstrated by the number of tourists, the money they spend, and the rate at which both parameters are growing.

In 2017, Chinese tourists crossed China’s borders 131 million times, according to the UN’s World Tourism Organization (UNWTO). They spent US$258 billion in total during those trips, almost double the total of American tourists and triple that of German travelers.

“Chinese tourists are the most powerful single source of change in the tourism industry,” said Taleb Rifai, the then secretary general of UNTWO, in an October 2017 interview with South China Morning Post.

These tourists are a driving force for growth, and not just specifically in the tourism and hospitality industries. Hotels, restaurants, and a wide range of retailers in various countries are adapting to the Chinese tourist, enabling the use of popular Chinese mobile payment apps and employing Chinese speakers as service providers. And this is only the start: just 9 percent of Chinese citizens have a passport currently, compared to 40 percent of Americans.

Ctrip is riding this tourist wave. It is now one of the largest online travel companies in the world in terms of market capitalization—almost US$25 billion on Nasdaq. It employs some 30,000 people and reported revenues of around US$4 billion last year, compared to US$64 million a decade ago.

Factors for strong Chinese tourism

While China’s status as the most populous country in the world cannot be discounted, there are two other factors that play a major part. The first is the rise of a strong middle class (~400 million people by 2020) for which a trip abroad has become a status symbol. The second is more relaxed regulations regarding tourism. In 2000, only 10.5 million trips across the border were recorded, according to China’s national tourism administration, and most of those were either in some official capacity or family visitations approved by the government.

Chinese tourists in Italy / Photo credit: Getty Images

In the past, Chinese tourists could only visit 10 approved countries. The change started in the middle of the previous decade. Today, Chinese tourists can—and do—fly all over the globe. A 2017 Chinese joint tourism survey by Nielsen and Alipay showed that respondents planned to visit, on average, 2.7 locations outside the country in 2018.

Government influence

Opportunities for businesses