07/06/2014 Talking Business with Linda Yueh

One in ten tourists worldwide are Chinese.

That number is set to double by 2020.

How are Chinese travellers transforming

the global tourism industry? Here in Hainan, I am Linda Yueh

and we're Talking Business. A warm welcome to the programme.

The rapid growth of Chinese tourists is transforming the global industry.

We hear from CEOs of global hotel chains, plus the head of China's

largest online travel site. And former basketball star Yao Ming

tells us what he thinks of sustainable development.

But first, I went around Hainan, known as China's Hawaii, to find

out how tourism has changed. Braving the crowds.

The Hawaii Hainan's beaches are teaming with tourists.

Can it last? TRANSLATION:

They have been everywhere domestically.

So new places, like Dubai, are very popular.

They've already been to Hong Kong, Macau, Japan and Korea, so they are

interested in new destinations. People from Hainan want to

travel internationally. And they have.

Nearly 100 million overseas trips were taken

by Chinese tourists last year. By 2020, the number

of trips is also expected to nearly double, to 200 million per year.

They spent more than any other travellers, about $1 billion.

And this figure is expected to triple.

This explosive growth in tourism has happened quickly.

20 years ago, this kind of place would be where

you would find Chinese tourists. That is because the government

tightly controlled the movement of its people overseas.

But now, it's all changed. That means that other countries

and their businesses are keen to compete with China to cash in

on the tourist dollars. The Chinese like Cambridge,

they like Oxford. They are interested in Bath.

They are interested in our history. We have to make sure that travel

agents can explain that in a compelling and exciting way,

particularly because the volumes, we hope, are going to triple by 2020.

A Chinese love story, retold in a Broadway style.

This is China's attempt to appeal to travellers.

But will the fairy tale ending be enough to keep

the audience coming back for more? How are the taste is of Chinese

tourists changing? And what are

their favourite destinations? I caught up with CC Zhuang, the head

of cumin, China's largest travel site. Chinese travellers are more

interested in going overseas. We see tremendous growth in overseas

travel, especially coming from the second`tier cities. The smaller

cities, not Beijing or Shanghai, but some of the smaller places? Yes,

places like Chengdu. So I think it will be one of the trends over the

next few years, particularly the focus in south`east Asia, Australia,

Japan and South Korea, which are in a similar time zone. More than

Europe or the US? Yes, much more than Europe and the US. They still

have much more time lapse, more people flying as a group. It is much

less frequent travellers. For a similar time zone, Australia, New

Zealand, we see very high growth in independent travellers. They can

just book for themselves and just go. Europe predominantly is catering

to Chinese rather than international travellers, going to your website.

You become the biggest in China already. Are there plans to change

the site so you can attract more global visitors? Global visitors is

certainly one of our long`term targets. But I think in the

short`term and mid`term, we are still going to focus on Chinese

travellers. I think I can see that the travel technology is undergoing

significant disruptive changes. When people talk about travel, it is only

about flight booking, hotel booking. But that is only part of the travel

experience. That is a reservation before the trip. You can do that

with a PC, only before you get in the taxi and go to the airport. At

the terminals, the Company can no longer engage you. At the mobile

penetration, you will be able to contact consumers through the life

cycle of the trip, in terms of taxi calling, grounding, destination

services, restaurants, bars, destination theme parks. So, a lot

more service, we can provide for consumers. If you look at it this

way, imagine, ten years down the road, every person travelling is

somebody wanting to execute this experience. We have wisdom, mobile,

we know where the consumers eating, what he is doing, what his schedule

is. The conditions change, the weather changes, you know, a special

event happens, we can inform consumers through mobile

applications. If there is some payment, they can always go through

our payment centre in China. We can do all of the customer protection

for them. It's an exciting world. Imagine, you are helping millions of

Chinese people learn and unfamiliar land. They are doing some itinerary

arrangement to enjoy the time. So, I think there are some evenings we can

do for Chinese users. For the next ten years, we are going to focus in

China to help consumers to really enjoy their travels overseas, and

domestic. A little bit more about your business, you founded the

company, but you decided to sell majority stake to the big Chinese

search engine. Talk me through that, getting a shareholder, going public,

those kinds of things that you have done, that you are thinking about.

From a personal point of view, you're going to grow up, at a

certain point you go to face some competition. If you are facing some

very strong competitors, you're going to get some thing called a

prisoner's dilemma. If you are in a prisoner's dilemma, the best ways to

find out how to get out. Just a simple competition is no longer help

for each party. I think with a battle situation, travel is such a

large category, the battle is done, China is interested. They have been

in the market aggressively. As a smaller company, we are about five

or eight years behind Baidu. I think we have to figure out a strategy to

get out of the prisoner's dilemma and try to maximise the future. It

turned out to be a good strategy. As of today, we are the leading travel

search engine in China. Moving forward, I think we can do more

things with our partners. Finally, what is the single biggest

requirement for Chinese tourists is going overseas? Food. Food,

restaurants. Chinese? Chinese, particularly. Not Chinese food, that

you have to provide at least half Chinese food. I noticed there are

some restaurants trending in the Western world. It's called

half`half. They have some Chinese food and some local food. The

Chinese stomach is probably the most stubborn thing in the world. I think

travel providers have to refine their recipes. That was CC Zhuang.

For Chinese tourists, visas are a perennial issue, particularly when

travelling to the US and Europe. But the chief executive of Hilton Hotels

says the industry is pushing for change. You look at the US as a

great example. Just a year ago, a little over a year ago, the average

wait time was 60`90 days to get a visa. I don't know about you, but

it's a long time. It costs you thousands of dollars in off`air, you

have to stay in a hotel just to get a visa, then you have to wait 90

days, if you are lucky enough, you get one. Most people are going to

say, I'll try another option, that's just too hard. We worked hard with

the US State Department to increase staffing at consulates in China. As

a result, over the last year or two, the wait times are now under one

week. So, what do you see? A huge increase in Chinese travellers. Our

hotels alone, last year, we saw over a 50% increase in Chinese travel

just because of the wait times. There is more to do there. The

demand is increasing. 100 million is going to 200 million. We have to

continue, not just in the US but in Europe and other destinations around

the world, we have to continue to be smart about the use of technology

for issuing a visas, increasing the number of consulates, increasing

staffing levels to continue to meet demand. But I think we are making

terrific progress. How our global hotel is responding to the growth of

Chinese tourists is? And what are the changes mean for China's

domestic market? I caught up with the chief executive of

Intercontinental Hotels, to find out how they are catering to Chinese

taste is. In some ways, tourists and people that stay in hotels want the

same things. The basics of safety, security and consistency. That is

one of the reasons why you are seeing the global brands, not just

us, but the global brands taking a bigger share of the market. So,

there is a bit about giving good hospitality services. I think with

the Chinese, it is a relatively new phenomenon, as the middle`class

rose. They are quite particular about some things they want when

they travel. We have a China Ready programme. Being the biggest global

operator in China, we are very well placed for Chinese customers who

know our brand. A lot of them feel they want their local brands, they

want Chinese food, they want to be treated appropriately. Mandarin

speakers, some of those basics. It's not that dissimilar to many other

travellers. I think it's about the fast growth and making sure that you

are delivering and experience to the brand they are used to in the

country they come from. China, internal tourism has grown a great

deal. It How do has. You think it has changed and will change? The

outbound is it a big number, the internal numbers are enormous.

Again, what we find, interestingly, is that, particularly the growing

middle`classes, they absolutely want that consistency of this

international brand. We have 200 hotels in China. 200 in the

pipeline. Second biggest market... After the US? We have been here 30

years now. We launched a new Chinese brand which is understanding that

there those international qualities are important and consistency is

important. Chinese people want Chinese food and a Chinese

experience. It's more than localised brands, it's about downstanding what

the consumer wants. There is this always impression that global brands

do very well in China, including yours, against a Chinese`owned

managed hotels? If you look at consumers. We did a a survey. We

called our trends report in January, consumers who we spoke to around the

world, China, UK, Germany, India, US, they want definitely want the

security of this global brand. It stands for a trust, a trust mark.

They want localisation as well. They want a brand that is global, local

toll their market. The food is appropriate, setting is appropriate.

They want the personal touch, which is not about the right flavour of M

M's or apples in your room, it's about feeling personal. Which is why

this need we saw through our research of what Chinese customers

want led to the launch of the brand. It's about incite into the

customers. Some want local global brands, many don't. I think you have

to listen to your consumer as a global organisation. One of the

things about China many things about China, of course, one of the things

about China for global businesses is that it's a very difficult market.

How have you found it? You have been in China for so long, in terms of

competing in that market? Is regulation, changes in terms of

policies? I mean, it is difficult, but I think as a global business our

whole business model is partnership. We have 4,700 hotels our main brand,

we own seven out of 4,700. It's about partnership. We choose

carefully who we work with. Work with the right local partners who

own the market. In China, yes, it's a different system. The government

has been very clear. Travel and tourism is one of the five pillars

of economic growth. They have put resources, put finance behind it.

They encouraged it. They recognise you cannot grow an economy, you

can't urbanise an economy without that. That has been helpful to our

industry. Government has been clear about what it wants. We have gone

along with that. What do you see is the fastest growing market for

tourism in the world? For tourism? Our business, if you look globally,

half business, half tourism in that sense. So there is no question I

think probably China is right up there. Both business and tourism?

Both business and tourism. The China outbound into other parts of Asia is

very big. Also, look at the Maldives now, it has become a China

destination, which it wasn't before. It's understanding the travel flows

and those needs. China is at the heart now of our business and will

be for many years to come I think. That was Richard Solomans. How have

holidays changed for Yao Ming and his family? Since retiring from the

MBA he has joined a body advising the Chinese government and still

commands millions of dollars worth of endorsement deals. I had a chance

to sit down with a Chinese star. The last 15, 20 years China become a

rising power. People become richer than before. After that, you know,

including me, want to see the world. The world, everywhere on this

planet. I heard recently the number is somewhere around 100 million

people cross the border from China last year to visit another country,

another area as a tourist. I think it becomes a culture in China. I

remember when I was young, when holiday came we would say ` let's

visit another uncle's family, let's visit another family members family

and visit our cousins. Now, it's, which city is our next stop. That is

how it has changed for Chinese It's a people. Change, I think, that has

been fairly recent, isn't it? Because people think of, sort of,

the fast growth in China, I think that when you are living here and

you see the middle`class develop, I think the pace of change is really

quite extraordinary? Talking of the middle`class, like you say, that is

a major power for any country. Any country. The number, the numbers are

very big, particularly in China, 1.3 billion population here. The

middle`class can be one billion, one day. What kind of a business

opportunity can create off and also can bring the benefit to all those

tourism cities such as here or maybe around ice Asia or even in the

world. I think that's a very bright future. I wanted to ask you a little

bit about sports men and women in China who are becoming global

figures in tennis, in track and field, of course, you know, you are

the famous son. How has that changed? Do you expect more Chinese

athletes to become global figures? Let me explain a little bit. In the

past, some sports stars have been heroes for us. I remember the names

when they won Gold for Team China we were all very excited about it. We

almost like worshipped them right there. I mean, but back to old days,

I must say (inaudible) they will be labelled as a national hero. They

are living a very sportsman, they are living in a small box of a life,

training, training and living in a small area. Their folks are there.

They are very little to touch outside. Today I would say our

generation is more has had more character. I'm sorry, I should not

use that word "character." Personalities. Our talking and our

acting is more like ourself. Not because we change, we have more

flexibility to do what we like. What do we like to do. What we like to

say. I believe that path will never change. Speaking of the country, do

you have concerns about China, as it changes so rapidly and dramatically?

Yes, I worry. Like you said, I'm worrying about that, but I'm glad to

see that kind of topic is on a panel, or the national meetings,

they all have an agenda, a topic about how can we (inaudible) country

sustainable. We cannot build anything we want everywhere. We have

to think about 50 years from now. 1 00 years from now. It's taking time,

but I'm glad that already people are but I'm glad that already people are

already starting to think about it. That was Yao Ming, like his family

millions of Chinese travel abroad. For an industry it means adapting to

Chinese tastes, particularly the need for Chinese food. But it also

raises challenges for China to keep tourism dollars at home. That is all

we have time for. Check out our website and me on Twitter. Join us

next time for more Talking Business with me, Linda Yueh.

Good evening. Most of us saw rain at some stage during the day. Some of

that rain was quite heavy and thundery. That band of rain will

clear away from the far north of the United Kingdom, leaving behind a lot

of dry weather. There