Travel Patterns

Chinese Forces Remodel Global Tourism

  • Why it matters

    Why it matters

    China is changing the shape of world travel – not just in terms of tourists’ trends but buying up infrastructure too.

  • Facts

    Facts

    • According to a new report into world travel trends, the total number of international journeys rose to a record 1.23 billion in 2016/17.
    • Terrorist attacks and currency fluctuations have shaken up traditional vacation and travel patterns.
    • Safety has become an important factor for Germans selecting holiday destinations.
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    Audio

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schwebebahn_WSW mobil GmbH
The suspension monorail in the city of Wuppertal. Source: WSW mobil GmbH

Cologne cathedral, Neuschwanstein castle and the Brandenburg Gate have long been among the names Chinese tourists would try to pronounce when asked about their dream destinations in Germany. But the regional cities Wuppertal and Trier are the newest tongue-twisters on Chinese wish-lists.

But it’s not Wuppertal’s history as an industrial center, nor its Schwebebahn, a suspension monorail, that bring Chinese tourists from half way around the world. Nor is it the city’s ornate 19th century concert hall, despite the fact that more than 300 million television viewers have seen it used as a location in a Chinese reality TV show. And in Trier, it isn’t the 2nd Century Roman gate, the Porta Nigra, that has tour groups from Guangzhou flocking.

It’s the birth houses of the fathers of communism, Karl Marx and Friedrich Engels that the Chinese are coming to see. Indeed, in 2014 Wuppertal received a statue of Engels as a gift from the People’s Republic; and in 2018 Trier is to receive a 6.3 meter (21 foot) high monument to Karl Marx.

“Political developments, such as in the United States or Turkey, will have a direct influence on travel behaviors.”

Dr. Martin Buck, ITB, Berlin Trade Fair

“Red Tourism” is what Zhang Guangrui, director of Beijing’s Chinese Academy of Social Sciences and former director of the Chinese Tourism Academy, names the new tourist fad of his compatriots. And he’s talking about an enormous growth industry. The big draw-cards are the major sites in the history of communism. Mr. Zhang said even in 2015, 1.2 million Chinese tourists made pilgrimages to historical Communist sites in Russia. Cuba is also on their list, as is Paris, where Zhou Enlai (first premier of the People’s Republic) studied at university.

But it’s not only Asia’s growing middle class and their travel fads that are transforming tourism. Global travel trends haven’t changed as much in decades as they did in 2016.  According to a report by IPK International, for the Berlin travel trade show ITB Berlin, terrorist attacks and currency fluctuations have shaken up traditional vacation and travel patterns.

According to ITB’s “World Travel Trends Report 2016/2017,” the number of international journeys climbed 4 percent to a record 1.23 billion. The market research firm IPK International said the sector will see growth of 4 to 5 percent in the current year. But the global international tourism sector, worth some $2,000 billion, is hampered by dangerous uncertainties.

“Political developments, such as in the United States or Turkey, will have directly influence travel behaviors,” said Martin Buck, vice president of the competence center for travel and logistics at the Berlin trade fair Messe Berlin. “As will the policies of the European Central Bank and developments in China.”

These factors influenced the industry in 2016. For the U.S., the steadily rising dollar meant more Americans traveled overseas – an increase of 7 percent – a record level among industrialized nations. At the same time, their average travel expenditure rose to €1,800. In comparison, Europeans spent half, or €910 on average.

Europe’s tourism market suffered from the terrorist attacks from Paris to Brussels, Berlin and Istanbul. The ITB’s report estimates that up to the end of August 2016, although Europeans took 2 percent more trips abroad than in the previous year, they didn’t take more beach holidays. Figures for Turkey were down 30 percent, and Egypt’s numbers fell by 50 percent. Even the 10-percent growth in journeys to the Spanish coast can’t fully account for the drop in numbers traveling east.

From travel companies, capacity-buying has been a game of roulette. Tui was one beneficiary which posted a 13-percent profit after having invested in hotels in Spain.

Competitors whose main operations are in the eastern Mediterranean struggled, with Thomas Cook, Europe’s second-biggest travel company, losing 870 million GBP, or $1,046 million on holdings in Turkey, Egypt and Tunisia. Subsidiary Öger Tours was hit particularly hard. A turnover increase of 186 million GBP in Spain was not enough to cover the company’s losses and pre-tax profits fell by 16 percent.

In contrast, more people traveled to visit friends and relatives, according to the ITB report.

Despite terrorist attacks in Würzburg, Ansbach and Berlin, the number of overnight stays in Germany rose 3 percent to 448 million. According to Germany’s Federal Bureau of Statistics, 2016 was the seventh record year in a row.

“Austria also profited strongly from the trend,” said Mr. Buck of the ITB. The country seems to be safe and is easy for Germans to reach by car. “The subject of safety plays an ever-greater role in holiday bookings,” he said.

Paco Buerbaum, a market research analyst at IPK, said the decline in beach holidays was a direct result of fear of visiting countries where terrorist attacks had occurred.

For European resorts, the fact that Asian visitor numbers fell by 1 percent on fears of terrorist attacks caused concern. But overall, international overnight stays in Europe to the end of September were up by two percent – after rising five percent the year before.

At the same time, European travel operators run the risk of losing market share to rising Chinese competitors – especially through targeted acquisitions. Before Christmas, the Czech venture capital firm Rockaway Capital took over Germany’s largest travel portal company Unister, a move financed by money from Beijing investment firm CEFC.

One year ago, China’s Fosun took over the iconic French package holiday giant Club Med. China’s HNA Capital swallowed up hotel operators Carlson and NH Hotels. Shanghai-based Jin Jiang hotel group has been trying to increase its stake in Europe’s largest hotel operator, Accor, for some time.

People once mocked the Chinese habit of quick photo-ops at famous tourist sites as “trophy tourism.” Now, given the number of Chinese take-overs, that phrase has a new and worrying meaning for European travel operators.

 

Christoph Schlautmann covers the logistics and waste management sectors for Handelsblatt. To contact the author: schlautmann@handelsblatt.com

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