SHANGHAI — The rise of young, rich Chinese travelers and the future growth potential of China’s outbound travel boom were key topics discussed at luxury travel event ILTM Asia, which wrapped its three-day run here Thursday.
Rupert Hoogewerf, chief executive officer of Hurun Report Inc., which releases a Forbeslike annual rich list for China’s wealthiest citizens, spoke of wealth creation in China in the face of a broader economic slowdown, and the potential for the luxury travel industry given that context.
“This has been a really interesting year, 2016 is the first time that superwealth-creators in China have taken over from the U.S., 568 dollar billionaires in China compared with only 540 in America,” he said. “By 2020 people are looking at China outbound travel hitting 240 million people.”
China’s luxury travel industry is still booming, largely because of generation Y consumers, known in China as the “post-Eighties” and “post-Nineties” generations, according to Hoogewerf.
Hurun’s “Chinese Luxury Traveler 2016” report released this week looked at the shifting preferences of these wealthy young travelers. Surveying 525 respondents in this age range with an average personal wealth of 38,770,000 yuan ($5.8 million), found that 70 percent of the wealthy class of the post-Eighties generation had inherited their money, while 90 percent of the post-Nineties wealthy had inherited their fortune from their parents.
“These young, wealthy travelers are spending an average of $65,000 per annum on tourism — a lot of it on shopping, driven by luxury fashion and the bling, bling kind of stuff,” Hoogewerf said.
The report found that the passion for travel among this demographic remains high in 2016, with respondents planning to take an average of 3.4 trips abroad in the next year. In terms of expected frequency, 60 percent of those surveyed expect to take three to five trips.
According to the report, on average, over 60 percent of respondents said clothing, bags, watches and jewelry are their favorite items to shop for while traveling.
The report also found a change in the types of travel desired by China’s young and wealthy, with experiences becoming more important.
The top reason for China’s young and rich to travel in the past year was “leisure,” at 82 percent, followed by “exploring the world,” 40 percent. International trips are predicted to rise by 25 percent over the next three years, while “adventure,” “polar expedition,” and “road trip” travel will increase by 52 percent, 38 percent and 75 percent, respectively during this time, according to the report.
Europe and Japan remain the top destinations of choice for young, wealthy Chinese, the survey found.
“When we look at the desired destinations of these young luxury travelers, it’s Europe and Japan, and in Europe, France is still number-one,” Hoogewerf said, predicting that any cooling effect on tourism from last year’s terrorist attacks in Paris should be short-lived.
Though safety is a consideration for Chinese travelers across the board, events like the attacks in Paris, or the MERS outbreak in Korea, cause a short-term blip in number of travelers from China, rather than a long-term lull, according to conference participants.
One of the main differences between the travel habits of this younger generation and their parents is that the youngsters are more flexible in terms of when they travel. Whereas the older generation sticks to traditional holiday periods, such as Chinese New Year and October holidays, China’s wealthy, young travelers are traveling when it takes their fancy, year round, according to Hurun’s research.
Zan Wu, ceo of China’s best-known luxury online travel agency, Zanadu, predicted continued growth in China for the luxury travel sector, in spite of the country’s broader economic malaise.
“We are still at the beginning of this trend for outbound travel in China, what we will see this year is that there might be a slowing in growth, but the luxury travel sector in China will still be growing,” he said.
Australian Rachel Botsman, an expert in “collaborative consumption” who is currently teaching an MBA course on the subject at Oxford University, gave the feature presentation at the event’s opening forum.
Her message to the travel industry professionals, and particularly hoteliers, in the theater was to engage with new ideas and aspects of the sharing economy, such as Airbnb, or risk being left behind.