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Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 1
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Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 2
This booklet is the result of research South African Tourism did in China since 2004 and is to help market South Africa in China. The aim of the project was to understand the whole of the Chinese market and not the section we are currently seeing. We also did qualitative research in Hong Kong to understand its market and the links in the trade channel. Against this research, the Asia Portfolio and our country office in China have developed activation plans for the market. These plans are available from our office in Beijing (see address on the back cover).
Current information on arrivals from China to South Africa are available on our website www.southafrica.net/research and www.southafrica.net/trade
This booklet is the result of research South African Tourism did in China since 2004 and is to help market South Africa in China. The aim of the project was to understand the whole of the Chinese market and not the section we are currently seeing. We also did qualitative research in Hong Kong to understand its market and the links in the trade channel. Against this research, the Asia Portfolio and our country office in China have developed activation plans for the market. These plans are available from our office in Beijing (see address on the back cover).
Current information on arrivals from China to South Africa are available on our website www.southafrica.net/research and www.southafrica.net/trade
South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers: international leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to:
South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers: international leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to:
SA Tourism is the Tourism Marketing Organisation of South Africa
Understand the market
Understand the market
Choose the attractive segments
Choose the attractive segments
Market the destinationMarket the destination
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 3
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 4
Market OverviewMaturity of the Market
* The duration of the four phases of the life cycle may vary significantly; their graphical representation with equal distances may thus be misleading Note: Framework based on Michael Porter: Competitive Strategy, 1980, Chapter 8 (Industry Evolution)
China, as an emerging travel market, is entering the growth phase
Consumer
Product
Marketing
Overall strategy
Competitor
Channel
� Uninformed, Price insensitive, multi-purpose
� Very individualized
� Status oriented
� few
� One-stop-shops
� Unsophisticated, isolated, experience based
� Combine with trade initiatives
� Develop positioning
� Seek information & opportunity; discover leisure
� Emergence of packages (seeking scale effects)
� Emerging specialization / focus
� Integrate products; information/choice provider
� “shout”: get as many as you can
� Facilitate scale effects (e.g., packages)
� Very informed, price sensitive, focus on leisure
� Specialized packages
� High competition
� Clear focus
� Specialization; Information provider
� Adapt trade and market to select segments
� Understand segments and select
MarketMarketSymptomsSymptoms
TourismTourismAuthorityAuthorityActionsActions
introduction growth maturity
KenyaNigeria
US
Germany, Netherlands,
France, UK, Japan
% of population
travelling for leisure
Time*
Tourism Industry Life Cycle Italy
SADCChina, India
South Africa
This phase may be very long
Australia
Botswana
Canada
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 5
Facts about ChinaFacts about ChinaFacts about China
Geographic Characteristics
� Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam
� 9,596,960 Square Kilometers (slightly smaller than the US)
Population
� 1,313,973,713 (July 2006 est.)
� Annual population growth (2006): 0.59%
Gross Domestic Product
� $10 Trillion (2006 est.)
� GDP per capita $7,198*
� Annual GDP growth 10.5% (2006 est.)
Geographic Characteristics
� Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam
� 9,596,960 Square Kilometers (slightly smaller than the US)
Population
� 1,313,973,713 (July 2006 est.)
� Annual population growth (2006): 0.59%
Gross Domestic Product
� $10 Trillion (2006 est.)
� GDP per capita $7,198*
� Annual GDP growth 10.5% (2006 est.)
Market OverviewGeneral Statistics
China accounts for 20% of the world's population
Note: * International dollarsSource: CIA Fact Book, China, 2007; International Monetary Fund, World Economic Outlook Database, September 2006; Time Magazine, 11 January 2007
Sichuan
Yunnan
Hainan
Fujian
Guangdong
Zhejiang
Jiangsu
Shanghai
Shandong
Heilongjiang
Hubei Anhui
HenanShaanxi
Shanxi
Hebei
Beijing
Guangxi
Xinjiang
Qinghai
Tibet
Gansu
Guizhou
Ningxia
Inner Mongolia
Jilin
Liaoning
JiangxiHunan
Chongqing
Tianjing
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 6
Chinese Population by Age Group Chinese Population by Age Group –– Male and FemaleMale and Female
Market Overview Age Characteristics
Source: www.iiasa.ac.at/Research/LUC/ChinaFood/data/anim/pop_ani.htm; United Nations (1999): World Population Prospects, The 1998 Revision, New York
A fertility decline since the mid-1970s and the further increase in life expectancy gives rise to an ageing Chinese population
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 7
Market Overview Regional Characteristics – Population and Income
Tier 1: < 10,000 RMB
Tier 2: > 10,000 RMB
Liaoning Pop: 42.2MM
BeijingPop: 14.9MM
XinjiangPop:
19.6MM
QinghaiPop:
5.4MM
Xizang/TibetPop: 2.7MM
YunnanPop:
44.2MM
Sichuan Pop:
87.3MM
GansuPop: 26.2MM
NingxiaPop: 5.9MM
ShaanxiPop:
37.1MM
Shanxi Pop:
33.4MM
HenanPop:
97.2MM
HubeiPop: 60.2MM
GuizhouPop: 39MM
GuangxiPop:
48.9MM
HainanPop:
8.2MM
GuangdongPop: 83MM
JiangxiPop:
42.8MM
FujianPop: 35.1MM
Zhejiang Pop: 47.2MM
AnhuiPop:
64.6MM
Jiangsu Pop: 74.3MM
ShandongPop: 91.8MM
HebeiPop: 68.1MM
Inner MongoliaPop: 23.8MM
JilinPop: 27.1MM
HeilongjiangPop: 38.2MM
HunanPop: 67MM
ShanghaiPop:
17.4MMChongqing
Pop: 31.2MM
TianjinPop:
10.2MM
Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market
Guangzhou
Annual Urban Disposable Income
Close to a third of the country’s population can be found in four provinces (Henan, Sichuan, Shandong, Guandong) while wealth is concentrated in the coastal regions
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 8
Market Overview Regional Characteristics – Income
Shanghai and Beijing residents enjoy the highest standard of living in China
16,68315,638
14,54613,628
11,467 11,17510,482
9,438 9,221 9,1068,008
0
3,000
6,000
9,000
12,000
15,000
18,000
Shanghai Zhejiang Tianjin Jiangsu Chongqing Liaoning
Per Capita Annual Disposable Income of Urban Households, 2004
RMB
Beijing Guangdong Fujian Shangdong Tibet
Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 9
3340
49
48
1812
0%
20%
40%
60%
80%
100%
2001 2006
Agriculture
Industry(includingconstruction)
Services
Market OverviewGDP and Relative Wealth
Note: * International dollarsSource: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006; www.asiasource.org/profiles
Composition of the GDP – 2001 vs. 2006
Percentage Contribution
China remains a poor country with a relatively low GDP per capita even when compared to other developing nations
Wealthiest Countries vs. Developing Countries, 2005
34,273 Canada7
33,479 Hong Kong8
33,432 Austria9
32,571 Switzerland10
18,341Czech Republic38
14,109Argentina50
12,161South Africa55
11,937Chile57
11,523Libya58
34,740 Denmark6
35,115Iceland5
40,610 Ireland4
41,399 United States3
42,364 Norway2
69,800Luxembourg1
10,186Mexico65
7,198China (People’s Republic)87
8,561Brazil68
8,368Thailand69
3,320India122
GDP per capita ($*)CountryRank
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 10
31,817
25,718
22,731 22,633 22,413 22,08120,867 20,666 20,064 19,843
2,9621,010 651
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
U.S
.
UK
Fra
nce
Ger
man
y
Can
ada
Bel
gium
Sw
eden
Italy
Aus
tralia
Japa
n
Bra
zil
Chi
na
Indi
a
Per Capita Personal Disposable Income per Annum1 (PPP), 2006
USD
The disposable income of the Chinese population is fractionally higher compared to that of India, but lower than fellow developing nation, Brazil
Market OverviewRelative Market Attractiveness (Wealth)
1 Personal Disposable Income is personal income after the deduction of personal direct taxes and fees, and current transfers abroad (such as gifts) – EIU DefinitionSource: EIU 2006
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 11
83
66 64
38
33
22 22 22 21 19 18 17 16 16 14 14 12 10 10 8 8 8 8 7 7 7 7 7 7 6 6 6 5 5 5 5 4 4 4 4
0
30
60
90
Ger
man
y
UK
US
A
Chi
na
Mal
aysi
a
Japa
n
Rus
sia
Italy
Hon
g K
ong
Can
ada
Fran
ce
Net
herla
nds
Sin
gapo
re
Ukr
aine
Mex
ico
Sw
eden
Sw
itzer
land
Rep
Kor
ea
Bel
gium
Turk
ey
Taiw
an
Hun
gary
Aus
tria
Pol
and
Egy
pt
Bel
arus
Den
mar
k
Rom
ania
Cze
ch
Indi
a
Finl
and
Nor
way
Irela
nd Iran
Spa
in
Indo
nesi
a
Bul
garia
Aus
tralia
Sau
di
Lith
uani
a
Market OverviewRelative Market Attractiveness (Travel Propensity)
Note: Long-Haul outbound data was calculated using the proportions estimated from WTO data source and applying it to the Euromonitor data. It is the closest approximation as this data is not available. Data for the USA was sourced from U.S. Department of Commerce, ITA, Office of Travel and Tourism Industries, September 2006 as 2005 WTO data was incomplete and skewed the results.
Source: Euromonitor
Top 40 Outbound Markets in the World — 2005
Mill
ion
Mill
ion
14.8
12.4
5.1
4.7
4.3
3.9
3.8
3.4
3.2
3.0
2.9
2.9
2.1
2.1
2.0
1.7
1.4
1.3
1.1
41
0
9
18
27
36
45
US
A
UK
Japa
n
Sw
eden
Mal
aysi
a
Can
ada
Chi
na
Ger
man
y
Aus
tralia
Fran
ce
Sin
gapo
re
Indi
a
Indo
nesi
a
Rep
Kor
ea Italy
Egy
pt
Rus
sia
Bra
zil
Isra
el
UA
E
38%34%55%8%27%10%21%60%47%19%17%83%5%10%22%14%36%56%22%64%
Long-Haul as a % of
Total Outbound
Top 20 Long-Haul Outbound Markets — 2005
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 12
Market OverviewOverseas Travel
31.028.5
20.2
16.6
12.110.5
9.28.4
4.53.73.7
34.5
2.9
5.35.1
0
10
20
30
40
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total Outbound Travellers, 1992–2006
Number of Travellers (Millions)
’92–’06 CAGR:
19.3%
Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005
The Chinese travel market has been growing rapidly and the WTO predicts it will be the biggest travel market in the world by 2020
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 13
Market OverviewVacation Participation
10%
4%
2%
0%
2%
4%
6%
8%
10%
12%
Total Population Urban Population Population of Guangzhou, Shanghaiand Beijing
Travel Intensity of the Chinese Population, 2004
Percentage of
Population that Travel
Source: CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005
In 2004, outbound departures represented only two percent of the population of China
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 14
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 15
Travel PatternsMain Destinations
Hong Kong and Macau
71%
Source: Asia Travel Tips.com (www.asiatraveltips.com) “New ETC / UNWTO Study on Chinese Outbound Tourism Market to Be Launched at ITB 2007”; U.S. Dept. of Commerce “China Outbound Tourism Industry”
The market is dominated by travel to Hong Kong and Macao: outbound departures to these destinations constitute 71% of all Chinese outbound travel
Other 7%
Other Asia 17%
Europe5%
Regional Distribution of Outbound Travel, 2005
13,525
8,479
1,117
845
843
770
596
532
477
355
0 6,000 12,000 18,000
Korea
Macau
Hong Kong
Thailand
USA
Singapore
Top 10 Outbound Destinations, 2005
Number of Travellers (Thousands)
Japan
Vietnam
Russia
Malaysia
WTO estimates 100MM outbound
Chinese tourists by 2020
WTO estimates 100MM outbound
Chinese tourists by 2020
SA represented 2% of “Other” arrivals and 0.5% of non-Hong
Kong/Macau arrivals
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 16
60
27
40
73
0%
20%
40%
60%
80%
100%
1993 2003
Travel forprivate reasons
Travel for non-private reasons
Travel PatternsTravel Purpose
Source: Xu Fan, Marketing on China Outbound Tourism
The structure of the Chinese outbound market has changed dramatically over the last decade: in contrast to the situation in 1993, more than 70% of Chinese outbound tourists travelled for private reasons in 2003
Structure of Outbound Passengers, 1993 and 2003
Percent Travellers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 17
Chinese arrivals to South Africa are comparable to arrivals from Canada and India
443
249
183
110 112
7048 34 34 37 26
488
259 255
125106
8954 49 44 42 32
0
100
200
300
400
500
600
UK
Ger
man
y
US
A
Net
herla
nds
Fra
nce
Aus
tralia
Italy
Can
ada
Indi
a
Chi
na (i
nlc
Hon
g K
ong)
Japa
n
2002
2006
Source: SAT
5.08%3.23%6.81%9.74%2.93%6.37%-1.36%3.09%8.68%0.94%2.46%‘02–‘06 CAGR
Thou
sand
s of
Arr
ival
s
Total Volume by Market (excluding Africa), 2002 and 2006
Travel PatternsImportance to South Africa
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 18
389,525,83444,3528,7051.8910%China
347,925,64551,4647,2282.3343%Italy
393,259,79936,04513,0581.705%India
720,711,128101,1397,1792.5010%France
1,212,223,110116,24410,6792.5021%Netherlands
2,762,411,837249,50411,1422.2515%Germany
2,409,343,703233,41810,3481.903%USA
4,534,943,950469,7309,8321.908%UK
425,044,53540,81810,6242.136%Canada
Value (Rand)3ArrivalsSpend Per Trip in SA (Rand)3Distribution2Seasonality
Index1Market
1 An index value of 0% represents perfect seasonality, i.e. the market is not characterised by large fluctuations from month to month. A value of 100% means that seasonality is very poor, i.e. the market is characterised by large fluctuations month by month; 2 Average number of provinces visited by all foreign tourists; 3Total Foreign Direct Spend (excl capex)Source: Combined SAT Departure Survey Dataset, 2005
Travel PatternsImportance to South Africa
Although Chinese arrivals to South Africa are higher than arrivals from Canada and India, the economic impact of Chinese travellers is currently smaller
Importance to South Africa, 2005
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 19
41,96244,352
51,265
30,595 29,804
37,129
42,991
0
10,000
20,000
30,000
40,000
50,000
60,000
2000 2001 2002 2003 2004 2005 2006
Travel PatternsTravel to South Africa
Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005; SAT Arrivals, 2006
Chinese arrivals to South Africa grew at an annual average rate of 3% between 2002 and 2006
Chinese Inbound Tourists to SA, 2000–2006
’02–’06 CAGR:
3.2%
Number of Travellers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 20
Travel PatternsTravel to South Africa
37,12942,991
51,26544,352
0
20,000
40,000
60,000
2002 2003 2004 2005
Arrivals to SA
No. of nights
Spend per trip to SA
(Rand)
Spend per day in SA
(Rand)
Source: Combined SAT Departure Survey Dataset, 2002–2005
Despite arrivals showing positive growth over the period 2002-2005, spend has decreased considerably
12.4
21.3 21.7
16.0
0
5
10
15
20
25
2002 2003 2004 2005
14,01911,872
8,7059,458
0
5,000
10,000
15,000
20,000
2002 2003 2004 2005
1,236
551 530451
0
500
1,000
1,500
2002 2003 2004 2005
(’02–’05)CAGR
6.1%
(’02–’05)CAGR
-14.7%
(’02–’05)CAGR
-24.6%
(’02–’05)CAGR
9.1%
Arrivals from China to South Africa, 2002–05 Spend Per Trip from China to SA, 2002–05
Spend per Day in SA, 2002–05Length of Stay in SA, 2002–05
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 21
Travel PatternsGrowth in Arrivals
42,991
51,265
44,352 41,96237,129
34,500,000
31,000,00028,500,000
20,200,000
16,602,300
0
20,000
40,000
60,000
80,000
100,000
2002 2003 2004 2005 20060
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000China Inbound to SAChina Outbound
South Africa is not yet fully capitalising on the Chinese outbound tourism boom
Chinese Travellers: Total Outbound vs. Inbound to South Africa, 2002–2006
Travellers
20.1%3.2%
Total OutboundInbound to SA’02–’06 CAGR
Source: Combined SAT Departure Survey Dataset, 2002–2005; Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; SAT Arrivals, 2006
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 22
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 23
ChannelStrategic Position of South Africa in the China Travel Market
Low maturity of Product
Lowmaturity of
Chinese travel market
high
low
low high
Low number of
pax (market share)
Low variety of packages
Low market penetration
Increasing growth rates
High price levels
Low market transparency
Low consumer sophistication
and experience
Low tendency of channel to specialize
High relative price
Low frequency of tour groups
South Africa is a low scale product within a market which has not yet developed sophisticated demand or supply structures
Low knowledge of sales staff re
product
Profitability driven by market access
SA as a tourist SA as a tourist product in product in
ChinaChina
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 24
ChannelStrategic Position of South Africa in the China Travel Market
Product Evolution
Market Evolution
Mature
New
Emerging
Established
Tourism Product and Market Life Cycles in Group Package Tour Prevalent Markets
SA Product in Hong
Kong
Invention / Reinvention
Strategy
Scale Strategy
SA Product in Japan
SA Product in ChinaConcentration
Strategy
South Africa as a travel product in China remains in its emerging phase
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 25
Consumer Insights and Activation Strategies should be recalibrated earlier than in other markets
Consumer Insights and Activation Strategies should be recalibrated earlier than in other markets
ChannelMarket Characteristics
Source: Development of Chinese Travel Agencies; Monitor Analysis
Emerging and Fast Changing MarketEmerging and Fast Changing MarketEmerging and Fast Changing MarketCurrent Structural Characteristics of the Market
Current Structural Characteristics of Current Structural Characteristics of the Marketthe Market
� Leisure travel is concentrated in 3 golden weeks
� Group tour is the dominant form of leisure travel
� Organization sponsored leisure travel is significant
� ADS positively influences choices of outbound travel destinations
� There are 3 distinct regional markets
� Integrated travel agencies dominate the self-funded leisure travel market
� Foreign companies participate mostly through HK
� Leisure travel is concentrated in 3 golden weeks
� Group tour is the dominant form of leisure travel
� Organization sponsored leisure travel is significant
� ADS positively influences choices of outbound travel destinations
� There are 3 distinct regional markets
� Integrated travel agencies dominate the self-funded leisure travel market
� Foreign companies participate mostly through HKC
hann
els
Con
sum
ers
� Highly fragmented market with large number of players at city level
� No true national players, largest travel agencies have regional influences
� Little differentiation, all players are very similar in structure and selling commodity products
� No universally well recognized brand in the market
� Intense competition due to large number of players and little differentiation
� Particularly for smaller volume destinations, group failure is prevalent so scale is key
� Highly fragmented market with large number of players at city level
� No true national players, largest travel agencies have regional influences
� Little differentiation, all players are very similar in structure and selling commodity products
� No universally well recognized brand in the market
� Intense competition due to large number of players and little differentiation
� Particularly for smaller volume destinations, group failure is prevalent so scale is key
Fast changing market conditions drive marketing uncertainties
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 26
ChannelPolicy Environment
1949� Communist party
established People’s Republic China
� Foreign participation generally barred in Chinese economy
1954� CITS established
for inbound travel only
1950 1960 1970 19901980 2000
1957� CTS established
to service overseas Chinese travel in China
1980� CYTS established
as an all purpose travel agency
1980s� China broke away
from centralized economy
� Organizational outbound travel becomes pervasive
1987� CITS, CTS, CYTS
formally break apart� More independent
travel agencies established
� Number of travel agencies growing rapidly
1983� HK was first
approved ADS destination
1990s� Chinese economy
becomes highly regionalized
� Beijing, Shanghai and Guangzhou become 3 key economic centres
1999� First year of golden
week policy� Aimed to boost
domestic consumption
� Might be replaced by paid vacation
Source: Development of Chinese Travel Agencies; Monitor Analysis; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005
Social andeconomic change
Travel industrychange
2006
2006� Now 81 ADS
countries / regions; the USA is not on this list
2003� SA is granted
ADS
China’s tourism market has historically been shaped by government policy
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 27
ChannelStructural Issues
Consumer PerspectiveConsumer Consumer
PerspectivePerspective
Golden WeeksGolden WeeksApproved Destination Status (ADS)Approved Destination Status (ADS)
� ADS countries have the lowest visa barriers and are best promoted– Attracts large number of self-funded
leisure travellers� The number of ADS destinations is
expanding rapidly, so ADS alone is not sufficient to stimulate growth
� ADS countries have the lowest visa barriers and are best promoted– Attracts large number of self-funded
leisure travellers� The number of ADS destinations is
expanding rapidly, so ADS alone is not sufficient to stimulate growth
� The Chinese government has instituted a policy creating three week-long holidays
� Intent was to stimulate domestic consumption, but its future now appears to be confirmed
� The Chinese government has instituted a policy creating three week-long holidays
� Intent was to stimulate domestic consumption, but its future now appears to be confirmed
Product StructureProduct StructureSponsored TravelSponsored Travel
� The Chinese market is marked by an unusually high percentage (almost 50%) of sponsored travellers
� Sponsored travel typically follows a distinct buying process
� The Chinese market is marked by an unusually high percentage (almost 50%) of sponsored travellers
� Sponsored travel typically follows a distinct buying process
� SA is priced relatively high in the market as compared to its competitors
� SA tours are fairly uniform and based roughly on the HK tour model
� SA is priced relatively high in the market as compared to its competitors
� SA tours are fairly uniform and based roughly on the HK tour model
111
222
333
444
Four key structural issues powerfully influence traveller behaviour
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 28
-20
0
20
40
60
80
100
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2006
� Outbound travel agencies can only organize vacation package tours to ADS locations – Can’t promote leisure travel to a a non-ADS
destination� Outbound travel agencies are responsible for
screening tourist candidates for potential over-stayers
� Chinese citizens can individually travel to non-ADS countries provided they get visas
� Outbound travel agencies can only organize vacation package tours to ADS locations – Can’t promote leisure travel to a a non-ADS
destination� Outbound travel agencies are responsible for
screening tourist candidates for potential over-stayers
� Chinese citizens can individually travel to non-ADS countries provided they get visas
ChannelStructural Issues: Approved Destination Status
Approved Destination Status
Number of ADS
Countries
Hong KongMacao (1983)
Thailand (1988)
Singapore Malaysia (1990)
Philippines (1992)
South Korea (1998)
Australia New
Zealand (1999)*
Japan*Vietnam
Cambodia Myanmar
Brunei (2000)
Nepal Malta
TurkeyEgypt
Indonesia (2002)
2 3 5 6 7 914
19
28
* Selected ADS countries are only approved for Beijing, Shanghai and GuangdongSource: China National Tourism Administration
EUIndia
Maldives Sri Lanka
S. AfricaCroatia Hungary Pakistan
Cuba (2003)
81
Sweden Iceland Norway
Switzerland Lichtenstein
Jordan Ethiopia Kenya
Mauritius Tanzania Tunisia Zambia
Zimbabwe Northern Marianas
Fiji Vanuatu Russia
Brazil Mexico Peru Antagua
& Barbuda Barbados
Laos Mongolia Tonga Island
Grenada Bahamas St Lucia
UK (2004–2006)
11
China had established ADS agreements with 28 countries / regions when the research was originally undertaken in 2004, it reached 73 by December 2005 and climbed to 81 by March 2006
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 29
ChannelStructural Issues: Sponsored Travel
Reasons for Sponsored TravelReasons for Sponsored Travel
Sichuan
Yunnan
Hainan
Fujian
Guangdong
Zhejiang
Jiangsu
Shanghai
Shandong
Heilongjiang
Hubei Anhui
HenanShaanxi
Shanxi
Hebei
Beijing
Guangxi
Xinjiang
Qinghai
Tibet
Gansu
Guizhou
Ningxia
Inner Mongolia
Jilin
Liaoning
JiangxiHunan
Chongqing
Tianjing
Beijing� 12,000 South
African PAX� 70% Sponsored
Shanghai� 4,000 + South
African PAX� 50% Sponsored
Guangdong� 9,000 South
African PAX� 25% Sponsored
� Common in state owned enterprises (SOE) and joint ventures (JV)– Salaries are low for SOE employees and
Chinese employees in JVs– Sponsored travel is a form of compensation
� Less common in wholly owned foreign enterprises (WOFE)– Salaries are high in WOFE
� Also common are company sponsored government trips– An effective means of government
relationship building
� Common in state owned enterprises (SOE) and joint ventures (JV)– Salaries are low for SOE employees and
Chinese employees in JVs– Sponsored travel is a form of compensation
� Less common in wholly owned foreign enterprises (WOFE)– Salaries are high in WOFE
� Also common are company sponsored government trips– An effective means of government
relationship building
Sponsored Travellers Are Valuable Consumers
Sponsored Travellers Are Valuable Consumers
� Concentrated demand, no need for aggregation – Organizational buyer acts as demand
aggregator� Less price sensitive
– Not paying out of own pockets– Company established budget
� Relatively easier to identify targets – Number of organizations is relatively small
� Concentrated demand, no need for aggregation – Organizational buyer acts as demand
aggregator� Less price sensitive
– Not paying out of own pockets– Company established budget
� Relatively easier to identify targets – Number of organizations is relatively small
Source: Monitor Interviews; Monitor Analysis
22
Close to 50% of leisure travel is sponsored by organizations
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 30
ChannelStructural Issues: Golden Weeks
Source: Development of Chinese Travel Agencies; Monitor Analysis
EffectsEffectsRationalesRationales
� Government sees growth in service industry as a solution to unemployment in the failing state owned sector
� Government believes the high saving rate inhibits economic growth
� Government wants to stimulate the domestic economy by encouraging domestic consumption
� Government sees growth in service industry as a solution to unemployment in the failing state owned sector
� Government believes the high saving rate inhibits economic growth
� Government wants to stimulate the domestic economy by encouraging domestic consumption
� Not yet clear if the golden week policy has stimulated domestic consumption or merely changed the consumption pattern
� Travel and other leisure activities became highly concentrated around the 3 golden weeks
� Airports and train stations are over-crowded, hotels over-booked and prices higher during the golden weeks
� “Prices are generally 10%–20% higher during the golden weeks because our costs are higher.”
– CYTS HO
� Not yet clear if the golden week policy has stimulated domestic consumption or merely changed the consumption pattern
� Travel and other leisure activities became highly concentrated around the 3 golden weeks
� Airports and train stations are over-crowded, hotels over-booked and prices higher during the golden weeks
� “Prices are generally 10%–20% higher during the golden weeks because our costs are higher.”
– CYTS HO
DecisionsDecisions
� Switch work days around public holidays with weekend days to make 3 one week holidays
� The intent was to encourage consumption of goods and services, especially travel related services, with longer holidays
� Switch work days around public holidays with weekend days to make 3 one week holidays
� The intent was to encourage consumption of goods and services, especially travel related services, with longer holidays
33
Golden Weeks are a policy started in 1999 to boost the domestic economy
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 31
ChannelStructural Issues: Golden Weeks
Source: Monitor Interviews; Monitor Analysis
33
Sponsored Travellers Travel Outside the Golden Weeks
Sponsored Travellers Travel Outside the Golden Weeks Policy Could Be Changing SoonPolicy Could Be Changing SoonChinese Self-funded Travellers Don’t
Have Flexible Vacation TimesChinese Self-funded Travellers Don’t
Have Flexible Vacation Times
� Sponsored travel is “business”– Although 80% of the activities
are leisure, it is still considered work. Therefore it doesn’t overlap with national holidays
� Sponsored leisure travel could loose part of its appeal if scheduled during national holidays– Takes away personal leisure
time– Lower enjoyment because of
crowded transportation and attractions
� Sponsored travel is “business”– Although 80% of the activities
are leisure, it is still considered work. Therefore it doesn’t overlap with national holidays
� Sponsored leisure travel could loose part of its appeal if scheduled during national holidays– Takes away personal leisure
time– Lower enjoyment because of
crowded transportation and attractions
� Golden weeks strain transportation infrastructure– Overcrowded airports and
railway stations
� Strain domestic product capacity– Overbooked / sold hotels,
attractions– Travellers have bad
experiences; lots of complaints
� Policy may shift towards annual paid holiday– Internal discussion within
government at present– Unclear when, if ever, the new
policy will be implemented
� Golden weeks strain transportation infrastructure– Overcrowded airports and
railway stations
� Strain domestic product capacity– Overbooked / sold hotels,
attractions– Travellers have bad
experiences; lots of complaints
� Policy may shift towards annual paid holiday– Internal discussion within
government at present– Unclear when, if ever, the new
policy will be implemented
� Most Chinese don’t have paid holidays other than the 3 golden weeks– They have no choice but to
travel during Chinese New Year, May Day and National Day holidays
� Chinese like to travel with family and / or friends– It’s difficult to fit the schedules
together other than during the 3 golden weeks
� Most Chinese don’t have paid holidays other than the 3 golden weeks– They have no choice but to
travel during Chinese New Year, May Day and National Day holidays
� Chinese like to travel with family and / or friends– It’s difficult to fit the schedules
together other than during the 3 golden weeks
Golden Weeks are the busiest leisure travel times
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 32
ChannelStructural Issues: Golden Weeks – Constrained Airlift Capacity To SA
Sichuan
Yunnan
Hainan
Fujian
Guangdong
Zhejiang
Jiangsu
Shanghai
Shandong
Heilongjiang
Hubei Anhui
HenanShaanxi
Shanxi
Hebei
Beijing
Guangxi
Xinjiang
Tibet
Qinghai
Gansu
Guizhou
Ningxia
Inner Mongolia
Jilin
Liaoning
JiangxiHunan
Chongqing
Tianjing
South Africa
Hong Kong
Malaysia
Singapore
Beijing (12,000 PAX)�Hong Kong �South Africa�Singapore �South AfricaAirline presence: Singapore Air, Malaysia Air, Cathay
Beijing (12,000 PAX)�Hong Kong �South Africa�Singapore �South AfricaAirline presence: Singapore Air, Malaysia Air, Cathay
Shanghai (4,000 PAX)�Hong Kong �South Africa�Singapore �South Africa�Kuala Lumpur �South AfricaAirline presenceCathay, Singapore Air, Malaysia Air
Shanghai (4,000 PAX)�Hong Kong �South Africa�Singapore �South Africa�Kuala Lumpur �South AfricaAirline presenceCathay, Singapore Air, Malaysia Air
Guangdong (9,000 PAX)�Hong Kong �South Africa
Airline presenceSingapore Air, Malaysia Air
Guangdong (9,000 PAX)�Hong Kong �South Africa
Airline presenceSingapore Air, Malaysia Air
SAA 7 flights per weekCathay 5 flights per week
Singapore Airlines 7 flights per week
Channels complain of airlift capacity constraints during golden weeks
Channels complain of airlift capacity constraints during golden weeks
� Chinese travellers make purchasing decisions late– Difficult to do advance booking– Airlines don’t trust Chinese travel agency’s
advance booking plans� Ad hoc booking made difficult by
– SAA does not fly to Beijing or Shanghai but now has an office in Beijing
– There is no market mechanism to consolidate last minute bookings
� There are insufficient flights during 3 golden weeks– International airlines do not respond to
Chinese golden weeks demand because of yearly fluctuations and last minute booking
� There is a general frustration within the channel for golden weeks flight tickets
� Perception within the channel that sending groups to SA is difficult
� Chinese travellers make purchasing decisions late– Difficult to do advance booking– Airlines don’t trust Chinese travel agency’s
advance booking plans� Ad hoc booking made difficult by
– SAA does not fly to Beijing or Shanghai but now has an office in Beijing
– There is no market mechanism to consolidate last minute bookings
� There are insufficient flights during 3 golden weeks– International airlines do not respond to
Chinese golden weeks demand because of yearly fluctuations and last minute booking
� There is a general frustration within the channel for golden weeks flight tickets
� Perception within the channel that sending groups to SA is difficult
Source: Monitor Interviews; Monitor Analysis
Malaysia Airlines 3 flights per week
Note: Consumer research findings indicate that late
bookings are the exception rather than the norm
33
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 33
ChannelStructural Issues: Product Structure
EuropeEuropeEurope
South East Asia
South East South East AsiaAsia
Australia and New ZealandAustralia and Australia and New ZealandNew Zealand
SASASA
RussiaRussiaRussia
Destinations Price (RMB)Price (RMB)
14,000–16,000
4,000–9,600
10,000–16,800
11,000–18,000
12,000–23,000
Average Number of Days
Average Number of Days
8
7
9
10
10
Price per DayPrice per Day
1,875
800
1,489
1,500
1,500
Direct FlightDirect Flight
No
Daily
Daily
2x per week
Daily
Flight Time (Hours)
Flight Time (Hours)
14
7
13
8
9
Note: CITS (Head Office) used as sampleSource: Channel Interview and Visits
SA is priced above its competitors in the Chinese market
44
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 34
ChannelStructural Issues: Product Structure
* Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted** Excluding Eastern EuropeSource: Channel Interview; Retail Survey; Monitor Analysis; CITS (Head Office) Used as Sample
Group Package Tours
Group Package Tours
Non-group Package Tours
Non-group Package Tours
Number ofProducts
10
2
2
19
03
0
0
0
0
Availability of Direct Flight
Availability of Direct Flight
�
—
�
—
�
Europe**Europe**Europe**
Australia and New ZealandAustralia and Australia and New ZealandNew Zealand
Eastern EuropeEastern EuropeEastern Europe
South East AsiaSouth East AsiaSouth East Asia
SASASA
44
SA has low product diversity as compared to other long-haul destinations
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 35
ChannelStructural Issues: Product Structure
DAY 1DAY 1 � Depart to Johannesburg, SA
DAY 2DAY 2 � Sightseeing in Johannesburg. Visit the Gold Mine city and watch the mining process
DAY 3DAY 3 � Leave for Sun City after breakfast. Enjoy a day with the wildlife at Pilanesburg. Try your luck at the casino at night
DAY 4DAY 4 � Visit the Lion Park in the morning and head for the Museumafter lunch. Spend the afternoon watching diamond mining
DAY 5DAY 5 � Arrive at Cape Town in the morning. Stop at the ostrich farmand eat an ostrich lunch
DAY 6DAY 6 � Start your route to Seal Island. Sightseeing at the Cape of Good Hope. Visit penguin beach and then back to Cape Town
DAY 7DAY 7 � Shop in V&A shopping center and head for the airport after lunch
DAY 8DAY 8 � Arrive in Shanghai the next day
44
SA has a standardized package based on the HK model
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 36
ChannelChannel Map
* Domestic flights, if any, are purchased directly form airlines; special players, like Longway, bridge multiple categories (inbound operator and business specialist). In this diagram, Longway is considered a business trip specialist; in peak season, volume shifts to self-funded travellers; FIT leisure travel to SA estimated at less than 5%; retail only travel agents for SA might act as integrated travel agents for domestic and more popular international destinations
Source: Monitor Interviews; Monitor Analysis
Product Owners Intermediaries China Outbound Travel Agents
Consumers
Chi
na re
gula
tions
bar
fore
ign
play
ers
from
Chi
na o
utbo
und
mar
ket
40%, 0%
15%, 0%
40%, 0%
40%, 95%
<5%, <5%<20%, 20%
30%, 30%SA Attractions
SA Hotels
SA Transportation
Retail Only Travel Agents*
Integrated Travel Agents
Self-funded Travellers
Organizational Buyers
Sponsored Travellers
0%, 95%
0%, <5%
20%, 20% 50%, 50%
15%,15%
HK Wholesalers Large Travel
Agencies
Ticketing Agents
15%, 0%
Business Trip Specialist
30%, 30%
<5%, 0%
<5%, <5%
SA Inbound Tour Operators
Airlines
% = Airline% = Others
SA group packages flow through multiple channels to Chinese consumers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 37
Aggregate
Focus
Sponsored
Doesn’t Aggregate
Self-funded
Role of Travel Agent Archetypes
Aggregates
30%30%
50% 50% (+15% (+15% wholesale)wholesale)
20%
Role filled by organizational
buyers
Role filled by organizational
buyers
Business trip specialists
Integrated Travel Agents
Retail only travel agencies
Note: Bubble size denotes total SA bound volume; percentage is percent of total SA volumeSource: Monitor Interviews; Monitor Analysis
Consumer pull from organizational buyers is most important for sponsored travellers
Travel agents for the self-funded market are
sub-scale for SA. Current group failure
rate is very high (above 50%) with few
exceptions
ChannelStrategy
To grow demand for South Africa, sponsored and self-funded travel require distinct strategies: this strategy focuses on self-funded travel
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 38
IntegratedTravel Agents
IntegratedTravel Agents
� The market is highly fragmented with top 100 travel agencies controlling 50% of the market
� All large travel agencies do both wholesale and retail
– The share of direct sales through owned retail outlets to end consumers is usually above 50%
– Most of these travel agencies also have significant sales to organizational buyers (business and / or government)
– Most of the wholesale comes through non-exclusive reseller networks� Wholesale margin is slim (2%–5%)
� Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang (Shanghai), Spring International
� Main channel for reaching end consumers are newspapers� Consumers do preliminary research on their own. By the time they visit or call the
travel agencies, they have a pretty good idea of where they want to go and are looking for detailed product information
� Resale networks are established through personal relationships and trade shows� Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a
wholesale transaction
� Sell to organizations through personal relationships or formal biding process(usually annually)
� The market is highly fragmented with top 100 travel agencies controlling 50% of the market
� All large travel agencies do both wholesale and retail
– The share of direct sales through owned retail outlets to end consumers is usually above 50%
– Most of these travel agencies also have significant sales to organizational buyers (business and / or government)
– Most of the wholesale comes through non-exclusive reseller networks� Wholesale margin is slim (2%–5%)
� Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang (Shanghai), Spring International
� Main channel for reaching end consumers are newspapers� Consumers do preliminary research on their own. By the time they visit or call the
travel agencies, they have a pretty good idea of where they want to go and are looking for detailed product information
� Resale networks are established through personal relationships and trade shows� Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a
wholesale transaction
� Sell to organizations through personal relationships or formal biding process(usually annually)
OverviewOverview
InteractionsInteractions
ChannelIntegrated travel agents play the most significant role in the Chinese trade
Source: Interviews with the Chinese Trade
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 39
ChannelBusiness travel specialists help organizational buyers to set up their itineraries
Business Travel Specialists
Business Travel Specialists
� Business travel specialists focus on serving organizations– They have have few retail outlets (often only one location)– Over 70% of their outbound business are from organizations– They usually have long term relationships with buying organizations– Approximately 100–150 business specialists nationally
� The biggest of these business travel specialists are in Beijing– Ministries of Chinese central government are among the biggest customers– Local governments tend to go to local travel agents– There are considerable less business travel specialists outside of Beijing
� Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Travel International (Beijing) and CTS Shenzhen Port, etc.
� There are two ways of getting organizational business– Through long term relationships with organizations– Through a formal bidding process (but one needs to have a reputation in order
to be invited to the bidding)� Businesses are less price sensitive and require more services
– Business travel specialists are less price sensitive– They prefer inbound operators who have the ability to customise itineraries (e.g.,
Crown)
� Business travel specialists focus on serving organizations– They have have few retail outlets (often only one location)– Over 70% of their outbound business are from organizations– They usually have long term relationships with buying organizations– Approximately 100–150 business specialists nationally
� The biggest of these business travel specialists are in Beijing– Ministries of Chinese central government are among the biggest customers– Local governments tend to go to local travel agents– There are considerable less business travel specialists outside of Beijing
� Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Travel International (Beijing) and CTS Shenzhen Port, etc.
� There are two ways of getting organizational business– Through long term relationships with organizations– Through a formal bidding process (but one needs to have a reputation in order
to be invited to the bidding)� Businesses are less price sensitive and require more services
– Business travel specialists are less price sensitive– They prefer inbound operators who have the ability to customise itineraries (e.g.,
Crown)
OverviewOverview
Source: Trade Interviews
InteractionsInteractions
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 40
ChannelBusiness Travel Specialists and Sponsored Travel
Companies sponsor leisure travel because . . .
Companies sponsor leisure Companies sponsor leisure travel because . . .travel because . . .
� It is a form of compensation, especially in SOEs
� It is a relationship building tool, especially with government agencies
� It is a form of compensation, especially in SOEs
� It is a relationship building tool, especially with government agencies
Destination is chosen by the organizer
Destination is chosen by the Destination is chosen by the organizerorganizer
� Typically the trip organizer chooses the destination– The person could be a sales
person, a department manager or a sponsored government official
� The travel participants have significant influence on destination choice
� Most of the organizers are SOE / government officials
� Typically the trip organizer chooses the destination– The person could be a sales
person, a department manager or a sponsored government official
� The travel participants have significant influence on destination choice
� Most of the organizers are SOE / government officials
Companies have set annual travel budgets
Companies have set annual Companies have set annual travel budgetstravel budgets
� In some instances they invite travel agencies to bid on the budgets
� More often companies have a few long term relationship travel agencies to assist all their travel needs
� In some instances they invite travel agencies to bid on the budgets
� More often companies have a few long term relationship travel agencies to assist all their travel needs
Travel agencies provide access to travel productsTravel agencies provide Travel agencies provide
access to travel productsaccess to travel products
� The destination is already determined by the time the travel agent becomes involved
� Travel agents put together the itinerary and handle all of the bookings
� Usually someone from the travel agency accompanies the group as a guide
� In this market, travel agents spend most of their time building and maintaining relationships
� The destination is already determined by the time the travel agent becomes involved
� Travel agents put together the itinerary and handle all of the bookings
� Usually someone from the travel agency accompanies the group as a guide
� In this market, travel agents spend most of their time building and maintaining relationships
Sponsored travel will require a consumer focused strategySponsored travel will require a consumer focused strategy
Sponsored travel destination choice is typically driven by the consumers or decision-makers in the organization
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 41
ChannelRetail Travel Agencies
Retail Only Travel Agencies
Retail Only Travel Agencies
� There is no retail only agency in the strict sense but a significant percentage of travel agents do resell low volume destinations products– Sometimes because they don’t have the required scale to form groups to
that destination– They might be outside of the major urban areas in rich provinces such as
Guangdong and Zhejiang– They may or may not have the necessary outbound tour licenses
� There are over 9,000 travel agencies in China– These are mostly independent economic entities– Divisions within these travel agencies could be owned and operated by
independent contractors (without licences) who pay a fee to the agency– 528 travel agencies have licences to organize outbound tours
� For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS Hangzhou, etc.
� Retailers advertise in local newspapers to drive traffic to their outlets� They pass on the consumer to wholesalers for a commission
– Sometimes the retailers do lose the opportunity for repeat sales to the wholesaler
– But consumers rarely repeat to long-haul destinations
� There is no retail only agency in the strict sense but a significant percentage of travel agents do resell low volume destinations products– Sometimes because they don’t have the required scale to form groups to
that destination– They might be outside of the major urban areas in rich provinces such as
Guangdong and Zhejiang– They may or may not have the necessary outbound tour licenses
� There are over 9,000 travel agencies in China– These are mostly independent economic entities– Divisions within these travel agencies could be owned and operated by
independent contractors (without licences) who pay a fee to the agency– 528 travel agencies have licences to organize outbound tours
� For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS Hangzhou, etc.
� Retailers advertise in local newspapers to drive traffic to their outlets� They pass on the consumer to wholesalers for a commission
– Sometimes the retailers do lose the opportunity for repeat sales to the wholesaler
– But consumers rarely repeat to long-haul destinations
OverviewOverview
InteractionsInteractions
Source: Interviews with the Chinese Trade
Retail travel agencies help fill in the (often large) gaps in the integrated travel agencies’distribution network
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 42
ChannelIn self-funded travel, the current market dynamics require scale
Decreased Cost� Increased margin� Decreased price
Decreased Cost� Increased margin� Decreased price
Increased PromotionsIncreased Promotions Increased Tour Varieties� Increased frequency� Increased products
Increased Tour Varieties� Increased frequency� Increased products
Improved Sales SkillsImproved Sales Skills
� Reduced price increases affordability of SA trips and reduces competitive price gap
� Increases awareness of SA as a destination and competitiveness of price
� Attracts more consumers as well as more consumer types
� Allows for greater conversion rates toward SA products
� Reduced price signals that greater volume can be generated
� Signals that other travel agents are gaining significant volume
� Indicates that product is selling well
� N/A
Number of Intended Travellers
Effects On
Number of Group-forming TAs
Demand / Number of TA
Demand / Number of TA
(Demand) (Supply) Number of Group Forming TAs
Number of Group Forming TAs
Number of Intended Travellers
Number of Intended Travellers
Product Momentum
Product Momentum
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 43
ChannelGroup Formation
2 Months 1 Month 1–2 Weeks3 Weeks
Initial Date Selection
Source: Monitor Trade Interviews; Monitor Quantitative Survey
Trade Process
Consumer Process
Marketing Efforts and Group Formation
Initial Booking of Flights and Ground Components
(nothing confirmed)
Form or Form or Fail Fail
DecisionDecision
Fee Collection (≈≈≈≈ 1 week)
Visa Processing
Finalize Price
SA Needs to Increase Scale of Group Forming Travel AgentsSA Needs to Increase Scale of Group Forming Travel Agents
Failure occurs due to lack of scale
Consolidation effort usually fails due to conflict of interest among travel agencies (ie fear of losing valuable LH customers)
Departure
Approx. 90% of those who commit actually join
the group
Decision about Travel Dates
Tentative Decision about Destination
Talk with Friends, Do Other Research
Gather Brochures
Commit to Group (destination and time)
Talk with Travel Agents
If Forms, Pay Full Fee
If Fails, Look for Other Destination and / or Other TA
Depending on the travel agency consumer may pay a deposit
which will be returned in case of group formation failure
Final deadline driven by visa
application duration
Airlines delay providing final price because (1) would rather fill seats with higher paying customers, (2) are wary of group failure and (3)
have poor communication with the trade
Group formation failure happens in the final three weeks prior to travel
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 44
ChannelGroup Formation
South Africa
2 Weeks
Australia
1 week
Thailand
Less than a week
Domestic
2 days
Group Formation Cut Off Points
By reducing visa processing and booking times, SA could become a beneficiary of other destinations’ group failure
By reducing visa processing and booking times, SA could become a beneficiary of other destinations’ group failure
� Currently SA visa processing time varies from 1 to 2 weeks —unpredictability forces travel agents to assume the longer period
� Flight booking is complicated because neither SAA nor CX have had local presence
� Australia has a streamlined visa application process with consistent timing
� Direct flights and local presence of airlines simplify booking process
� Visas are fast
� Do to high volume and local presence, airline seats are easy to confirm � No visa required
� Simple ticketing process
Note — this process varies somewhat by location. E.g. TAs in Guangzhou must mail documents to SA embassy in Beijing vs.
bringing directly to Australian consulate in Guangzhou
Note — this process varies somewhat by location. E.g. TAs in Guangzhou must mail documents to SA embassy in Beijing vs.
bringing directly to Australian consulate in Guangzhou
With Cathay’s recent entrance into the China market, communication
should improve
The key determinant of timing is visa application processing, and secondarily airline bookings
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 45
ChannelGroup Formation
Group Group Failed Failed
TravellerTraveller
Same destination, different dateStick with
Current TA
3
1
2
Switch to Other TA
Do Not Travel in
This Period
Different destination, same date
Same destination, Different date
Different destination, same date
Same destination, next vacation period
Different destination, next vacation period
7
4
5
6
Note: Some small (and for SA insignificant) volume will switch to FITSource: Monitor Trade Interviews
Limited
≈≈≈≈ 50%
≈≈≈≈ 20%
Same destination, Same date
≈≈≈≈ 25%
For to-scale destinations, most volume will just switch dates or tour packages, not destination
For SA, over half of attempted
groups fail
Timing
Destination
Timing and Agent
Destination and Agent
Agent
Period
Period and Destination
>5%
>5%
South Africa is particularly impacted by group failure dynamics because of lack of scale
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 46
ChannelIn the Chinese market, to deliver scale SAT will need to . . .
Control the number of group forming
TAs to protect scale development
Conduct direct promotion through
other media to target segments 1
2
42
3
Ensure that increased TAs increase volume
and concentration
Cooperate with select travel agents to tailor promotions to target segments
Educate wholesale and retail arms to
help them push SA. Equip them with selling and / or training tools
Build bridges with the trade to enhance
access to information about
products
1
Decreased Cost� Increased margin� Decreased price
Decreased Cost� Increased margin� Decreased price
Increased PromotionsIncreased Promotions Increased Tour Varieties� Increased frequency� Increased products
Increased Tour Varieties� Increased frequency� Increased products
Improved Sales SkillsImproved Sales Skills
Demand / Number of TA
Demand / Number of TA
(Demand) (Supply) Number of Group Forming TAs
Number of Group Forming TAs
Number of Intended Travellers
Number of Intended Travellers
Product Momentum
Product Momentum
Facilitate group formation by
shortening visa and ticket timelines
5
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 47
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 48
Consumers: Our Target MarketTravel Propensity
Tier 1: < 10,000 RMB
Tier 2: > 10,000 RMB
Liaoning Pop: 42.2MM36 TA
BeijingPop: 14.9MM
69 TA
XinjiangPop:
19.6MM15 TA
QinghaiPop:
5.4MM5 TA
Xizang/TibetPop: 2.7MM
3 TA
YunnanPop:
44.2MM16 TA
Sichuan Pop:
87.3MM15 TA
GansuPop: 26.2MM
9 TA
NingxiaPop: 5.9MM
4 TA
ShaanxiPop:
37.1MM14 TA
Shanxi Pop:
33.4MM17 TA
HenanPop:
97.2MM19 TA
HubeiPop: 60.2MM
19 TA
GuizhouPop: 39MM
7 TA
GuangxiPop:
48.9MM22 TA
HainanPop:
8.2MM9 TA
GuangdongPop: 83MM
111 TA
JiangxiPop:
42.8MM13 TA
FujianPop: 35.1MM
21 TA
Zhejiang Pop: 47.2MM29 TA
AnhuiPop:
64.6MM10 TA
Jiangsu Pop: 74.3MM36 TA
ShandongPop: 91.8MM
32 TA
HebeiPop: 68.1MM
15 TA
Inner MongoliaPop: 23.8MM
10 TA
JilinPop: 27.1MM
15 TA
HeilongjiangPop: 38.2MM
23 TA
HunanPop: 67MM
17 TA
ShanghaiPop:
17.4MM35 TA
ChongqingPop:
31.2MM13 TA
TianjinPop:
10.2MM13 TA
Note: “TA” represents the number of travel agentsauthorized to sell international tickets
Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market
Guangzhou
Share of Outbound Tourists by Province� Beijing: 30%� Guangdong: 22% � Shanghai: 12%
Annual Urban Disposable Income
Wealth and travelling population are concentrated in the coastal areas
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 49
22
12
4 4
30
0
20
40
Beijing Guangdong Shanghai Zhejiang Jiangsu
69
36 36 35
111
0
25
50
75
100
125
Guangdong Beijing Jiangsu Liaoning Shanghai
16,68315,638 14,546 13,628
11,467
0
10,000
20,000
30,000
Shanghai Beijing Zhejiang Guangdong Tianjin
Consumers: Our Target MarketTravel Propensity
Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market
RMB
Per Capita Annual Disposable Income of Urban Households, 2004 (Top 5 Provinces)
Number of Agencies
Number of Authorized Travel Agencies for Outbound Travel, 2006 (Top 5 Provinces)
Percent of Outbound Tourists
Share of Outbound Tourists, 2004 (Top 5 provinces)
Beijing, Shanghai and Guangdong appear to be the travel centers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 50
Consumers: Our Target MarketTravel Behaviour
BeijingBeijing� High concentration of sponsored travel
� Consumers less willing to spend out of own pockets
� Prices not as transparent as in Guangdong
� Price sensitive
� Fast to adopt new trends
� High concentration of sponsored travel
� Consumers less willing to spend out of own pockets
� Prices not as transparent as in Guangdong
� Price sensitive
� Fast to adopt new trends
GuangdongGuangdong� Some sponsored travel,
primarily from local sources
� Consumers are more willing to spend out of own pocket . . . but are highly “value” conscious
� Consumers have greatest access to price information (due to proximity to HK)
� Rapid acceptance of new products
� Some sponsored travel, primarily from local sources
� Consumers are more willing to spend out of own pocket . . . but are highly “value” conscious
� Consumers have greatest access to price information (due to proximity to HK)
� Rapid acceptance of new products
ShanghaiShanghai� Some sponsored travel,
significant portion of which is from wealthy surrounding regions
� Consumers are less willing to spend out of own pockets
� Prices are not as transparent as in Guangdong
� Not only price sensitive but value sensitive as well
� Slow acceptance of new products
� Some sponsored travel, significant portion of which is from wealthy surrounding regions
� Consumers are less willing to spend out of own pockets
� Prices are not as transparent as in Guangdong
� Not only price sensitive but value sensitive as well
� Slow acceptance of new products
Source: Trade Interviews; Australian Embassy
0
40,000
80,000
Business Visas Tourist Visas
Australian Visas Issued by Geography (2000–2001)
Visas
Beijing
Shanghai
Guangzhou
39,259
57%
26%
17%
66,903
34%
25%
41%
Chinese travelling behavior varies across these three geographies
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 51
Consumers: Our Target MarketTravel Behaviour
Source: Interviews with the Chinese Trade; Monitor Analysis
Chinese Travellers Like To� (Running horses and seeing flowers). To observe but not to experience something different
� Like to go back to a comfortable room at the end of the day but also want nightlife and different cuisine
� Like to travel in groups
� Want to see lots of landmarks and take pictures of themselves with the land mark and show the pictures back home
Cultural Differences Emerging Travel Culture
� Widespread opening of travel market occurred only over last decade
– Majority of travellers are relatively inexperienced
– Travel culture is only gradually forming — no critical mass of adventurous travellers
– Relatively conservative travellers
� Accustomed to sponsored travel– Traditional type of travel
– Sponsored travel is usually in groups
� Like to see as much as possible
� Individualism emphasized in West far more than in Chinese culture– Children are taught to be different in West– Children are taught to have discipline in
China� “Experience recreation” is popular in the West
but not in China
– E.g., extreme sports are popular in the West, but not in China
– E.g., most Chinese have never gone camping
� The ability to travel internationally is a status symbol in China
Differences in travel behaviour reflect culture differences between China and western countries as well as the development of a travel culture
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 52
Consumers: Our Target MarketTravel Behaviour
Group Visa Is Simplified by ADSGroup Visa Is Simplified by ADS
Better Value for MoneyBetter Value for MoneyGreater ConvenienceGreater Convenience
Source: WTO; Monitor Analysis; Tourism Boards of Thailand, Singapore and Malaysia
77.3%
60.4% 64.0%
0%
50%
100%
Thailand Singapore Malaysia
Group Tourist to Thailand, Singapore and Malaysia, 2000
Percent of Leisure
Travellers Taking Group
Package Tours
� Group travel is cheaper than individual travel– Better bargaining position– Less trial and error
� Low level of variety among travellers – Lack of flexibility lowers cost
� Psychological benefit of group travel– Feel safer
� Group travel is cheaper than individual travel– Better bargaining position– Less trial and error
� Low level of variety among travellers – Lack of flexibility lowers cost
� Psychological benefit of group travel– Feel safer
� Visa barrier is high for some travel destinations– Success rate is higher if applying through a
travel agency� ADS is the most accessible form of visa
– ADS by definition, only applicable to group travel
� Visa barrier is high for some travel destinations– Success rate is higher if applying through a
travel agency� ADS is the most accessible form of visa
– ADS by definition, only applicable to group travel
� Most Chinese face language barriers when travelling overseas– Need language services to help them get
around� Typical Chinese have little knowledge about
foreign countries– Need help to plan and book itineraries
� Can’t convert RMB into foreign currency freely in China– Need currency service
� Most Chinese face language barriers when travelling overseas– Need language services to help them get
around� Typical Chinese have little knowledge about
foreign countries– Need help to plan and book itineraries
� Can’t convert RMB into foreign currency freely in China– Need currency service
Generally, Chinese prefer to travel in group package tours
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 53
Consumers: Our Target MarketDestinations Travelled
0%
20%
40%
Thailand Malaysia Japan Korea,South
Germany Italy Netherlands Vietnam
BeijingShanghaiGuangzhouShenzhen
Percent of Respondents
Long-HaulShort-Haul
Please Tell All the Countries You Have Been to in the Past 5 Years for HOLIDAY Purposes(Multiple Allowed)
Source: Monitor Quantitative Research (F1 — Base: All Respondents)
37%
27%
21%19%
16%
13% 13%12%
11%9% 8%
6% 6% 6% 6%
Singapore Australia U.S. France New Zealand Canada U.K.
1.4% of our sample have
visited SA in the past five years
Thailand, Malaysia and Singapore are the primary international holiday destinations of Chinese travellers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 54
13%
24%
32%
28%
4%
0%
10%
20%
30%
40%
Below 5,000 10,001~20,000 Above 50,000
14%
31% 30%
20%
5%
0%
25%
50%
Below 5,000 10,001~20,000 Above 50,000
Consumers: Our Target MarketTravel Spend
How Much Do You Expect to Spend on Leisure Travel in the Coming Year (RMB)?
Spend per Person on Best Holiday in Past Five Years (RMB)
Source: Monitor Quantitative Research (F20, F23 — Base: All Respondents)
5,001~10,000 20,001~50,000 5,001~10,000 20,001~50,000
Percent of Respondents
Percent of Respondents
The price of a package tour to SA is
between 10,000 to 18,000 RMB
Chinese travellers in aggregate are the seventh highest spenders, spending US $15.4Bper year
Average annual budget = 21,293
RMB
Average spend per person = 20,550 RMB
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 55
Consumers: Our Target MarketPositivity and Interest in South Africa
Source: Monitor Quantitative Research (F35a, F35c — Base: All Respondents)
How Likely Are You in Going to SA in Next Two Years?
Percent of Respondents
18%
20%
27%
21%
14%
0% 25% 50%
When You Think About SA as a Holiday Destination, How Positive Are You?
Percent of Respondents
22%
16%
10%
6%
46%
0% 25% 50%
Very Positive Extremely Likely
Positive Likely
Neutral Not Sure
Negative Unlikely
Very Negative Extremely Likely
Though 14% of our market is positive towards SA, only 6% is extremely likely to visit SA in the next 5 years
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 56
Consumers: Our Target MarketBarriers to Travel to South Africa
12%
13%
16%
17%
21%
22%
25%
27%
30%
41%
42%
44%
5%
6%
16%
20%
0% 25% 50%
Other
Visa
SA too Poor
Not Enough Time
Not for Family
Food
Prefer Asia
Expensive
Flight too Long
Not Good for Independent Travel
Other Better Destinations
Language
Concern on Health
Don't Know Enough
Personal Safety
Not Comfortable with African Blacks
Which Reasons Describe Why You Do Not Want / Haven’t Yet Been to SA?
Percent of Respondents
Source: Monitor Quantitative Research (F45 — Base: All respondents)
Biased perception about SA people, safety concerns and lack of knowledge present strong barriers for Chinese travellers to visit South Africa
Visas are not perceived to be
a barrier
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 57
Consumers: Our Target MarketAccommodation Preference in South Africa
16%
37%
9%
18%
8%
12%15%
17%
7%10%
19%
31%
0%
25%
50%
Prefer at Least 5 Star
Accommodation
Prefer 5 Star But Can Also
Do 4 Star
Combination of 5, 4, and 3 Star Accommodation— Save Money
Prefer at Least 3 Star
Accommodation
Prefer Staying with Friends and-or Family
Other
China
All Visitors
Preference of Accommodation in SA
Share of Respondents
Note: “China” are visitors to SA who live in China with Chinese nationality; question was only asked in 2002 surveySource: South African Tourism Exit Survey 2002 and 2003Q1–2
Chinese tourists prefer to stay in high end accommodations
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 58
Consumers: Our Target MarketConsumer Market Definition and Size
Using the Urban Population in Beijing, Shanghai, Guangzhou, and
Shenzhen as the Starting Point:
Who have travelled internationally on leisure
trips (outside of close Asia) in the last 5 years
CURRENTTotal Number of
People in Our Market
46.6M
Between the ages of 25 and 60
And, who have a household income of 10,000 RMB + per
month (or have been on sponsored trips)
2.5M
2.9M
27.2M
China Market Definition
Source: China City Statistical Yearbook, 2002, Based on 2001 Census Data and 4% Urban Population Growth Rate; Monitor RDD Survey, Oct 2003
Using the Greater Urban Population in the Wealthiest Provinces in China as the
Starting Point:
MAXIMUM potential number of people in our
EXTENDED market
241.9M
12.9M
15.0M
129.6M
By extending our market definition to include the urban population of the wealthiest provinces (instead of only the 4 main cities), the market size can be expanded to 12.9M people
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 59
Consumers: Our Target MarketWhere to Focus: Sizing the Relevant Market – Narrow Definition
Total Number of People in
Our Market
= 2.5M100%
Using the urban population in Beijing, Shanghai, Guangzhou and Shenzhen as a filter, the market size is 2.5M people
Total Chinese population*
Urban population in Beijing, Shanghai,
Guangzhou, and Shenzhen
Between the ages of 25 and 60
Have travelled internationally on leisure trips in the last 5
years (outside of close Asia)
And, who have HH income of 10,000 RMB+ per month (or
have been on sponsored trips)
* Source for total population: http://www.cia.gov
1,298.8M(100% of total)
2.9M(1.2% of total)
27.2M(10% of total)
46.6M(18.6% of total)
2.5M(1.0% of total)
CURRENT FUNNEL
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 60
Consumers: Our Target MarketWhere to Focus: Sizing the Relevant Market in Greater City Region
Total Number of People in
Our Market
= 12.9M100%
A decision was taken to use the extended market definition, effectively enlarging the size of the actual market from 2.5M to 12.9M Travellers
Total Chinese population*
Urban population in wealthiest provinces
Between the ages of 25 and 60
Have travelled internationally on leisure trips in the last 5
years (outside of close Asia)
And, who have HH income of 10,000 RMB+ per month (or
have been on sponsored trips)
1,298.8M(100% of total)
15.0M(1.2% of total)
129.6M(10% of total)
241.9M(18.6% of total)
12.9M(1.0% of total)
EXTENDED FUNNEL
EXTENDED FUNNEL
* Source for total population: http://www.cia.gov
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 61
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 62
Consumers: Target SegmentsWhere to Focus: Breakdown of Total Market – Narrow Definition of 4 Cities
Total Number of People in Our Market
Focus Segments
= 1,218k49%
Experienced Wanderlusters
408k
Upcoming Wanderlusters
189k
Purpose Travellers
285.5k
Organised Wanderlusters
335.5k
Actual Size: 2.5M Travellers
Total Chinese population*
Urban population in Beijing, Shanghai,
Guangzhou and Shenzhen
Between the ages of 25 and 60
Have travelled internationally on leisure trips in the last 5
years (outside of close Asia)
1,298.8M(100% of total)
2.9M(0.22% of total)
27.2M(2% of total)
46.6M(4% of total)
2.5M(0.19% of total)
And, who have HH income of 10,000 RMB+ per month (or
have been on sponsored trips)
CURRENT FUNNEL
* Source for total population: http://www.cia.gov
= 2.5M100%
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 63
Consumers: Target SegmentsWhere to Focus: Breakdown of Total Market in Greater City Region
Total Number of People in Our Market
Focus Segments
= 6,284k49%
Experienced Wanderlusters
2,105k
Upcoming Wanderlusters
975k
Purpose Travellers
1,473k
Organised Wanderlusters
1,731k
Four focus segments were identified, representing 49% of the market size
Total Chinese population*Urban population in
GREATER REGIONS OF Beijing, Shanghai,
Guangzhou and Shenzhen
Between the ages of 25 and 60
Have travelled internationally on leisure trips in the last 5
years (outside of close Asia)
1,298.8M(100% of total)
15M(1.2% of total)
129.6M(10% of total)
241.9M(18.6% of total)
12.9M(1.0% of total)
And, who have HH income of 10,000 RMB+ per month (or
have been on sponsored trips)
* Source for total population: http://www.cia.gov
= 12.9M100%
EXTENDED FUNNEL
EXTENDED FUNNEL
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 64
Importance of Importance of Associations*****Associations*****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa
DemographicsDemographics Information SourcesInformation SourcesTrip BehaviourTrip Behaviour
Top 5 Sources (General)� Friends / relatives 56%� Newspapers 33%� TA 25%� Travel magazines 23%� TV travel programmes /
documentaries 13%
Seasonality� Travel anytime 47%� Travel Oct 30%
Travel Partner� Spouse only 43% � Friend 36%� Family 23%
Group Travel� Open to 65%
Time Taken between Booking and Taking Trip� <2 weeks 30%� 2 weeks–1 month 58%� >1 month 11%
General Characteristics� Avg. Age 37� Married 82%� Children 66%� Top Region(s)
– Guangzhou 33%– Shanghai 32%– Beijing 20%
Social Characteristics� HH Income p.a., (‘000s RMB)
– <10 26%– 10–15 34%– >15 40%
� Higher education 67%� Higher profession* 36%
Purchasing BehaviourPurchasing Behaviour
Purchase Channels**** (For international travel)� CTS 45%� CITS 30%� CYTS 18%� Others 12%
Reasons for TA Usage� Helping decide activities 58%� Making bookings 54%� Offer variety of packages 43%
Consumers: Target SegmentsOrganised Wanderlusters: Segment Overview
Organised Organised WanderlustersWanderlusters
Segment Size
% of Market 13.4%
# of People 1,731k
HH Travel Spend p.a: >15,000 RMB
Conversion Challenge
Awareness of SA 58%
Positivity towards SA 27%
Consideration 33%
Plans to go next18 months 18%(Annualized: 12%)
* Those people with a ‘higher level profession’ are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data
Average of Score of 1–7� Safe and secure
environment 6.33� Rest and relaxation 6.17� Authentic travel
experience 6.09� Easy to get around 6.04� Offers wide variety of
experiences 5.96� Offers historical and
cultural experience 5.92� Welcoming People 5.79� Value for money 5.74� Offers beach experience 5.61� Offers natural wildlife
experience 5.49� All year round travel 5.19
Frequency of Vacations� Avg. # of vacations: 2 or more
(in last 5 years)
Past 5 Years� Thailand 60%� Singapore 46%� Malaysia 38%� Australia 37%� Japan 19%
Future (Upcoming 3 Years)� Japan 21%� Australia 16%� France 14%� United States 12%� Canada 9%
Trip Reason (Top 5)**� Scenery 85%� Relaxation 77%� Experience foreign
culture/ food 71%� Beach 71%� Architecture 66%
Main Activities (Top 5)***� Taste local food 96%� Visit cities 95%� Shop 92%� Relax on beach 92%� See most local icons 90%
Positive� Plentiful Wildlife 86%� Welcoming to tourists 82% � Luxury Safaris 65% � All year round destination 60% � Value for money 58%
Negative� Apartheid 77%� Very hot 74%� Politically unstable 68%� AIDS 66%� Expensive to fly to 60%� Dangerous 49%
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 65
Channel� Travels in groups because they are
convenient and makes visas easier to obtain� Highly likely to use one of China’s large
travel agencies for the following services:– Decide on activities at destination,
making bookings, provide different packages to choose from
South Africa� Generally do not hold strong negative
perceptions of South Africa– Lower than market average believe that
apartheid still affects SA and AIDS is an important issue
� Few (15%) have friends and relatives who have been to South Africa
� Top barriers are lack of knowledge on what to do in South Africa, concerns about health and safety, and fear that they will face a language barrier
Travel Desires� Considers scenery and relaxation most important when choosing
destinations� Popular holiday activities include tasting local foods, visiting cities,
shopping and relaxing at the beach� Australia is the most favourite holiday destination
Potential Travel to South Africa� Would like to visit SA on a group package tour � As with their other holidays, segment would also prefer to relax at
the beach and to see natural beauty in SA� Above average length of stay and spend per person: 13 days for
a price of RMB 24,000 per person
Demographics� 57% females� Above average share (33%) in Guangzhou and
below average share (20%) in Beijing� Work experience reflects regional differences
– Relatively high share of 21% are self-employed or work at family firm
– Relatively high share of 14% are business owners
� Lower education level — 32% only have high school education
� Higher income level — 40% earn over RMB 15,000 per month household income
Past Travel Profile� Self-paying travellers � High number of destinations in past 5 years
– All have travelled to 2+ destinations � Many travel during golden weeks, as a large
share (45%) have no paid vacation days
Interest and Awareness� Low worldly� Lower interest and awareness of South Africa� Friends and relatives, newspapers and travel
agents are where most first hear about destinations
Behaviour Profile� Very few (19%) prefer independent travel� Most make bookings 2 weeks to 1 month before travelling� Very high dependence on travel agents and word-of-mouth when seeking information about
destinations� High share (43%) travelled with only their spouse on their favourite holiday
Spend� Highest holiday budgets amongst the 4 priority segments
– 100% have budget of RBM 15,000 or more per year� 72% spent RMB 15,000 or more on their favourite holiday
Channel� Travel agents are used for almost all bookings, with the two most popular being CTS and CITS
Consumers: Target SegmentsOrganised Wanderlusters: Customer Portrait®
Desired ExperienceDesired Experience Beliefs and AssociationsBeliefs and
AssociationsPurchase and
Usage EnvironmentPurchase and
Usage Environment
Purchase andUsage BehaviorPurchase and
Usage Behavior
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 66
Consumers: Target SegmentsOrganised Wanderlusters: Consumer Portrait® Story
A well-travelled Chinese woman looking for a new destination
Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on international holidays every so often. She has taken numerous trips with her husband, always to different destinations, whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries of her hectic life.
Convenience and reliability are most important in the buying process
Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel Services (CTS), and turns to them first.
Why not South Africa next?
On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to have more packages for her to choose from.
A well-travelled Chinese woman looking for a new destination
Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on international holidays every so often. She has taken numerous trips with her husband, always to different destinations, whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries of her hectic life.
Convenience and reliability are most important in the buying process
Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel Services (CTS), and turns to them first.
Why not South Africa next?
On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to have more packages for her to choose from.
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 67
Importance of Importance of Associations*****Associations*****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa
DemographicsDemographics Information SourcesInformation SourcesTrip BehaviourTrip Behaviour
Top 5 Sources (General)� Friends / relatives 45%� Travel magazines 24%� TV travel programmes /
documentaries 21%� TA 19%� Newspapers 16%
Seasonality� Travel anytime 32%� Travel Oct 31%
Travel Partner� Friend 31% � Spouse only 30%� Family 20%
Group Travel� Open to 53%
Time Taken between Booking and Taking Trip� <2 weeks 27%� 2 weeks–1 month 49%� >1 month 24%
General Characteristics� Avg. Age 35� Married 87%� Children 53%� Top Region(s)
– Shanghai 40%– Guangzhou 27%– Beijing 26%
Social Characteristics� HH Income p.a., (‘000s RMB)
– <10 43%– 10–15 27%– >15 30%
� Higher education 82%� Higher profession* 38%
Purchasing BehaviourPurchasing Behaviour
Purchase Channels**** (For international travel)� CTS 47%� CITS 35%� CYTS 23%� Others 19%
Reasons for TA Usage� Helping decide activities 59%� Making bookings 43%� Offer variety of packages 38%
Average of Score of 1–7� Safe and secure
environment 6.33� Rest and relaxation 6.17� Authentic travel
experience 6.09� Easy to get around 6.04� Offers wide variety of
experiences 5.96� Offers historical and
cultural experience 5.92� Welcoming People 5.79� Value for money 5.74� Offers beach experience 5.61� Offers natural wildlife
experience 5.49� All year round travel 5.19
Frequency of Vacations� Avg. # of vacations: 2 or more
(in last 5 years)
Past 5 Years� Thailand 51%� Singapore 41%� Malaysia 36%� France 26%� Australia 24%
Future (Upcoming 3 Years)� Japan 21%� Australia 17%� United States 14%� France 12%� Switzerland 11%
Trip Reason (Top 5)**� Scenery 86%� Relaxation 78%� Experience foreign
culture / food 75%� Beach 75%� Architecture 73%
Main Activities (Top 5)***� Taste local food 98%� Learn about culture 96%� See most local icons 94%� Visit cities 93%� Relax on beach 92%
Consumers: Target SegmentsExperienced Wanderlusters: Segment Overview
Experienced Experienced WanderlustersWanderlusters
Positive� Plentiful Wildlife 92%� Welcoming to tourists 76% � Luxury Safaris 74% � All year round destination 72% � Value for money 70%
Negative� Apartheid 82%� Very hot 78%� AIDS 71%� Politically unstable 66%� Expensive to fly to 57%� Dangerous 51%
Segment Size% of Market 16.3%# of People 2,105kHH Travel Spend p.a. (‘000s RMB):� <10 13%� 10–20 48%� >20 39%
Conversion ChallengeAwareness of SA 58%Positivity towards SA 27%Consideration 33%Plans to go next18 months 18%(Annualized: 12%)
* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 68
Channel� Believes the advantages of group travel lie in
convenience, little effort, and ease of getting a visa
� Travel agents are influential, as more than half use them for helping to decide on activities at the destination, and over one-third get advice on destination choice
South Africa� Many positive perceptions about SA: believes that
South Africa offers plentiful wildlife, is welcoming to tourists, and has good value for money
� However, very few believe SA is a developed country and most think it is very hot, politically unstable, and still affected by Apartheid
� More likely than others to have friends or relatives who have visited SA; though, this word of mouth is likely to be neutral
� Top barriers preventing a trip to SA are concern about personal safety, lack of knowledge, and concerns about health
Travel Desires� While on holiday, almost all like to taste local food and learn
about the culture– Also likely to want to seeing local icons, relax on the beach, and
visit cities– More likely than others to want to meet local people and stay
with local people in their homes� Important factors when choosing a destination include scenery,
relaxation, architecture, and foreign culture / food� Favourite past destinations include Thailand and Australia� Future trips are likely to include Japan, Australia, USA, and France
Potential Travel to South Africa� If visiting SA, extremely likely to want to view wildlife
– Also interested in relaxing on the beach and enjoying natural scenery; less likely than others to want to do the wine route
– Most would want a group package tour, though more likely than other segments to want to stay at a resort and have a luxury holiday
� Would spend about RMB 25,000 per person for 1–2 week holiday in South Africa
Demographics� An average age of 35� About half males / half females� Most are married and about half have kids� Almost half living in Shanghai, working for either SOEs
or MNCs� Highly educated — 82% have university education
Past Travel Profile� All are self-paid travellers� Well-travelled, with one-quarter having been to five
or more destinations over the past five years– TSM are most popular past destinations,
followed by France, Australia, Germany, Japan, South Korea
� More likely than others to travel when the weather is better at destination than in China; – One-third travel in October
Interest and Awareness� Highly worldly, by definition, and especially likely to
read international news� Influenced by friends, travel magazines, and TV travel
programmes� Very aware and actively interested in SA; 40% have
even searched the Internet for SA information
Behaviour Profile� Many in Segment 5 prefer independent travel and only
about half (lower than other segments) typically book full package group tours
� Most book about one month before going on their holidays, but tend to plan for slightly more time
Spend� Much higher budgets than the average, with about 40%
spending over RMB 20,000 each year on holidays
Channel� Internet is significantly the most popular information
source; others sources used may include word of mouth, travel agents, and travel magazines
� When travelling independently, more likely than others to book directly from airlines or hotels
� Most likely to travel with friends or a spouse� Very unlikely to travel with colleagues
Consumers: Target SegmentsExperienced Wanderlusters: Customer Portrait®
Desired ExperienceDesired Experience Beliefs and AssociationsBeliefs and
AssociationsPurchase and
Usage EnvironmentPurchase and
Usage Environment
Purchase andUsage BehaviorPurchase and
Usage Behavior
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 69
Consumers: Target SegmentsExperienced Wanderlusters: Consumer Portrait® Story
Seasoned traveller looking for a new country to visit
Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby.
Interest in both group tours and independent travel
“The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at the destination though.
Why not South Africa next?
For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the various package types available, and the travel documentary he saw on South Africa has given him a positive impression and desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip toSouth Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision.
Seasoned traveller looking for a new country to visit
Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby.
Interest in both group tours and independent travel
“The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at the destination though.
Why not South Africa next?
For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the various package types available, and the travel documentary he saw on South Africa has given him a positive impression and desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip toSouth Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision.
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 70
Importance of Importance of Associations****Associations****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa
DemographicsDemographics Information SourcesInformation SourcesTrip BehaviourTrip Behaviour
Top 5 Sources (General)� Friends / relatives 48%� Newspapers 25%� Travel magazines 19%� TV travel programmes /
documentaries 17%� Internet 16%
Seasonality� Travel between Jul–Oct 85%
Travel Partner� Friend 30% � Family 27%� Alone 20%
Group Travel� Open to 56%
Time Taken Between Booking and Taking Trip� <2 weeks 33%� 2 weeks–1 month 53%� >1 month 14%
General Characteristics� Avg. Age 35� Married 73%� Children 49%� Top Region(s)
– Shanghai 36%– Guangzhou 31%– Beijing 17%
Social Characteristics� HH Income p.a., (‘000s RMB)
– <10 34%– 10–15 41%– >15 25%
� Higher education 67%� Higher profession* 32%
Purchasing BehaviourPurchasing Behaviour
Purchase Channels (For independent travel)� TA / Tour operator 57%� Direct from airline 20%� Internet TA 18%� Direct from hotel 7%
Reasons for TA Usage� Helping decide activities 35%� Making bookings 33%� Deciding destination 31%
Average of Score of 1–7� Safe and secure
environment 6.33� Rest and relaxation 6.17� Authentic travel
experience 6.09� Easy to get around 6.04� Offers wide variety of
experiences 5.96� Offers historical and
cultural experience 5.92� Welcoming People 5.79� Value for money 5.74� Offers beach experience 5.61� Offers natural wildlife
experience 5.49� All year round travel 5.19
Frequency of Vacations� Avg. # of vacations: 1 in last 5
years
Past 5 Years� Thailand 18%� South Korea 14%� Japan 14%� Australia 10%� United States 8%
Future (Upcoming 3 Years)� Australia 20%� Japan 18%� France 15%� Singapore 9%� Europe 9%
Trip Reason (Top 5)**� Relaxation 81%� Scenery 79%� Value for money 76%� Beach 72%� Experience foreign
culture / food 70%
Main Activities (Top 5)***� Taste local food 94%� Visit cities 93%� Learn about culture 91%� See most local icons 89%� Relax on beach 84%
Consumers: Target SegmentsUpcoming Wanderlusters: Segment Overview
Upcoming Upcoming WanderlustersWanderlusters
Positive� Plentiful Wildlife 84%� Welcoming to tourists 66% � Luxury Safaris 54% � Value for money 53% � All year round destination 50%
Negative� Very hot 82%� AIDS 76%� Apartheid 72%� Politically unstable 66%� Dangerous 60%� Expensive 57%
Segment Size
% of Market 7.6%
# of People 975k
HH Travel Spend p.a >10,000 RMB
Conversion Challenge
Awareness of SA 58%
Positivity towards SA 27%
Consideration 33%
Plans to go next18 months 18%(Annualized: 12%)
* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 71
Channel� Most do not use travel agents to help decide
on activities at destinations� Travel in group tours mainly for convenience and
safetySouth Africa� Personal safety is the main barrier to travel to SA
– Also more likely to mention high costs and lack of time to see the country as barriers
� Strong positive perceptions that South Africa offers plentiful wildlife and is a welcoming destination to tourists
� Common negative beliefs that SA is very hot, faces an AIDS issue, and is still affected by apartheid
� One-quarter know friends and relatives who have been to South Africa, though many of them give it a neutral rating
Travel Desires� Good value for money is an important consideration in
destination choice� Travels to relax and to enjoy beautiful natural scenery� Enjoys tasting local food and visiting cities, similar to most Chinese
travellers– Also more likely to enjoy more atypical activities of staying
with locals in their homes, off-road driving, golfing and gambling
� Japan is very popular — Japan is the 3rd most common destination they have travelled to in the past and the 3rd most likely destination to travel to in the future
Potential Travel to South Africa� If travelling to South Africa, interested in seeing wildlife and the natural
beauty� They would prefer to travel in a group package tour� On average, plan to spend RMB 19,000 per person for a 10 day trip
Demographics� Half male, half female, with an average age of 35
– A large share (27%) is single and 51% do not have kids yet
� 31% live in Guangzhou and another 36% live in Shanghai
� 76% earn over RMB 10,000 household income per monthPast Travel Profile� All are self-paying travellers � All have visited only 1 destination in the past 5 years
– 18% went to Thailand, 14% to South Korea and 14% to Japan
� Most have travelled during the summer months of July through September
Interest and Awareness� Highly worldly, with 70% eating foreign foods regularly
and 49% participating in adult hobby classes (e.g., history)� Interested in SA and a high proportion (22%) have
asked travel agents about holidaying in South Africa� Friend and relative recommendations are the most popular
ways to first hear about a destination
Behavior Profile� Total planning time (from origination to actual trip) is
about 1–2 months� Over half regularly travel in group package tours� Most common travel companions are friends and family
Spend� High enough holiday budgets and holiday spend to
afford a holiday in South Africa*– 52% have annual holiday budgets RMB 15,000+ per
person – 63% spent RMB 15,000+ per person on their
favourite trip
Channel� 57% rely on travel agents and tour operators when
they do independent travel� CTS and CITS are the most popular travel agencies
used� 46% looks into 3 different sources of information when
deciding on holiday destinations and planning them– Most popular information sources are Internet and
friend and relative recommendations
Consumers: Target SegmentsUpcoming Wanderlusters: Customer Portrait®
Desired ExperienceDesired Experience Beliefs and AssociationsBeliefs and
AssociationsPurchase and
Usage EnvironmentPurchase and
Usage Environment
Purchase andUsage BehaviorPurchase and
Usage Behavior
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 72
Consumers: Target SegmentsUpcoming Wanderlusters: Consumer Portrait® Story
A less experienced traveller seeking beautiful natural sceneryIvy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan because her parents had gone and come back with beautiful pictures of Mt. Fuji.
Prefers group tours with some free timeThough it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local delicacy.
Why not South Africa next?
She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and CITS retails stores near her office to see what kind of group packages they offer to both destinations.
A less experienced traveller seeking beautiful natural sceneryIvy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan because her parents had gone and come back with beautiful pictures of Mt. Fuji.
Prefers group tours with some free timeThough it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local delicacy.
Why not South Africa next?
She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and CITS retails stores near her office to see what kind of group packages they offer to both destinations.
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 73
Importance of Importance of Associations*****Associations*****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa
DemographicsDemographics Information SourcesInformation SourcesTrip BehaviourTrip Behaviour
Top 5 Sources (General)� Friends / relatives 35%� Travel magazines 22%� Internet 21%� Newspapers 15%� TV travel programmes /
documentaries 16%
Seasonality� Travel anytime 63%� Travel Oct 14%
Travel Partner� Colleague 52% � Friend 17%� Spouse only 16%
Group Travel� Open to 49%
Time Taken between Booking and Taking Trip� <2 weeks 29%� 2 weeks–1 month 47%� >1 month 24%
General Characteristics� Avg. Age 40� Married 90%� Children 71%� Top Region(s)
– Shanghai 50%– Beijing 30%– Shenzhen 15%
Social Characteristics� HH Income p.a., (‘000s RMB)
– <10 55%– 10–15 20%– >15 25%
� Higher education 95%� Higher profession* 38%
Purchasing BehaviourPurchasing Behaviour
Purchase Channels**** (Total Accommodation)� CITS 30%� CTS 28%� CYTS 20%� Others 13%
Reasons for TA Usage� Making bookings 52%� Helping decide activities 46%� Offer variety of packages 36%
Average of Score of 1–7� Safe and secure
environment 6.33� Rest and relaxation 6.17� Authentic travel
experience 6.09� Easy to get around 6.04� Offers wide variety of
experiences 5.96� Offers historical and
cultural experience 5.92� Welcoming People 5.79� Value for money 5.74� Offers beach experience 5.61� Offers natural wildlife
experience 5.49� All year round travel 5.19
Frequency of Vacations� Avg. # of vacations: 2 or more
(in last 5 years)
Past 5 Years� Thailand 37%� Singapore 34%� United States 30%� France 26%� Australia 24%
Future (Upcoming 3 Years)� Australia 20%� United States 20%� France 17%� Italy 10%� Hawaii 9%
Trip Reason (Top 5)**� Scenery 80%� Architecture 73%� Relaxation 70%� Beach 65%� Historical sites 64%
Main Activities (Top 5)***� See most local icons 96%� Visit cities 94%� Taste local food 92%� Learn about culture 92%� Relax on beach 88%
Consumers: Target SegmentsPurpose Travellers: Segment Overview
Segment 8: Segment 8: Purpose Purpose
TravellersTravellers
Positive� Plentiful Wildlife 88%� Welcoming to tourists 81% � Value for money 75% � All year round destination 68% � Good weather 65%
Negative� AIDS 86%� Apartheid 82%� Very Hot 64%� Politically unstable 63%� Expensive to fly to 54%� Dangerous 47%
Segment Size% of Market 11.4%
# of People 1,473k
HH Travel
Spend p.a.(‘000s RMB):
� <10 24%
� 10–20 46%
� >20 29%
Conversion ChallengeAwareness of SA 58%
Positivity towards SA 27%
Consideration 33%
Plans to go next18 months 18%(Annualized: 12%)
* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 74
Consumers: Target SegmentsPurpose Travellers: Customer Portrait®
Channel� Travel agents are used for fulfilment
primarily: for making bookings on trips segment decided
� Group travel is attractive because it is more convenient, safe and cheap; not as likely to use group for language or visa reasons
South Africa� Strong positive perceptions of South Africa,
including good wildlife and welcoming to tourists� AIDS is the strongest negative perception of
SA� Over one-third have friends or relatives who
have travelled to SA compared to other segments– World of mouth is more positive than
market average� Top barriers include concern for personal safety,
health, and lack of knowledge– More likely than others to be concerned by
lower value for money and lack of time to see the country
Travel Desires� Besides having beautiful natural scenery, unique architecture is
also a key criteria for choosing a destination� When on holiday, likely sees most of the local icons, visits the
cities, and tastes local cuisine� Australia and the United States are the most likely future
destinations as well as the most common favourite past destinations
� Holidays within Asia are less popularPotential Travel to South Africa� On a trip to South Africa, the desired activities are seeing the
natural beauty and relaxing at the beach � Most want to travel in a group a package tour� A significant portion (40%) want a mix of an active holiday
and relaxing time on the beach� An average trip to SA should last about one week and cost RMB
10,000 to 15,000 per person
Demographics� Predominantly a male segment� Higher average age of 40� Most are married and have kids� Half live in Shanghai and one-third live in Beijing� The majority work in state-owned enterprises /
government and another 31% work for multinational companies
Past Travel Profile� All sponsored travellers� Extremely well travelled: all have visited 2 or more
destinations in past 5 years� Most do not travel at any particular time of the
year� 90% receive vacation days from their employer
– Those with vacation days generally will take 8+ days off each year
Interest and Awareness� Highly worldly segment who are particularly
likely to interact with foreign suppliers and clients and go on international business trips
� Friend and relative recommendations are less important when compared with the overall market and Internet is more important as sources of influence for hearing about holiday destinations
Behaviour Profile� Preferences for group vs. independent
travel are mixed– 38% prefer independent travel —
much higher than market average� Relatively short time between origination
and making a booking– 30% make reservations within 2
weeks of choosing destination� Very likely to travel with colleagues on
holiday
Spend� Average-sized holiday budgets which are likely to be
RMB 15,000 to 20,000 per year� Spend on favourite trip is slightly higher than budget,
at RMB 20, 000+ per personChannel� Highly involved travellers — 65% use 3 different
sources to evaluate and plan a holiday– Internet is by far the most common source of
information– Also significantly more likely to use travel
magazines, and country tourism boards
Desired ExperienceDesired Experience Beliefs and AssociationsBeliefs and
AssociationsPurchase and
Usage EnvironmentPurchase and
Usage Environment
Purchase andUsage BehaviorPurchase and
Usage Behavior
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 75
Consumers: Target SegmentsPurpose Travellers: Consumer Portrait® Story
Sponsored traveller out to see the world
Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway.
An educated and informed traveller
Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the local culture of a foreign country.
Why not South Africa next?
One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South Africa over France as the destination of their sponsored trip.
Sponsored traveller out to see the world
Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway.
An educated and informed traveller
Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the local culture of a foreign country.
Why not South Africa next?
One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South Africa over France as the destination of their sponsored trip.
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 76
Consumers: Target SegmentsChina Priority Segments Summary
Segment 3Segment 3
� All self-paid travellers� All high worldly� Average age: 35� Half males / half females� Very well travelled� One-third travel in October
Segment 4Segment 4 Segment 5Segment 5 Segment 8Segment 8
Purchase and Usage
Environment
Purchase and Usage
Environment
Desired Experience
Desired Experience
Beliefs and AssociationsBeliefs and
Associations
Purchase and Usage Behaviour
Purchase and Usage Behaviour
� All self-paid travellers� All low worldly� Average age: 37� More females (57%)� Well travelled + high budget� Travel during golden weeks
� All self-paid travellers� All high worldly� Average age: 35� Half males / half females� Inexperienced travellers� Travel July–October
� All sponsored travellers� Mostly high worldly� Average age: 40� Mostly males (76%)� Very well travelled� Most flexible re: timing
� Destination choice: culture, architecture, scenery
� Activities: culture, local foods, cities, relaxation
� In SA: wildlife, culture, relax at beach
� SA for 10–15 days at 25K rmb
� Destination choice: scenery and relaxation
� Activities: local foods, cities, shopping, relaxing
� In SA: relax at beach + natural scenery
� SA for 10–15 days at 24K rmb
� Destination choice: value for money, relax, scenery
� Activities: local foods, cities, meeting locals
� In SA: wildlife + natural scenery
� SA for 7–11 days at 19K rmb
� Destination choice: scenery and architecture
� Activities: local foods, cities, local icons
� In SA: see all icons, then relax at beach
� SA for 6–10 days at 17K rmb
� Travel agents influential: itinerary + destination choice
� Group travel: convenient, easier to get visa
� 1/3 know others that travel to SA: neutral WOM
� Barriers: safety, health, lack of knowledge
� Travel agents very influential� Group travel: convenient,
easier to get visas� Few know others that travelled
to SA� Barriers: lack of knowledge,
health, safety, language
� Travel agents less influential� Group travel: convenient, safer� 1/4 know others that travel to
SA: neutral WOM� Barriers: safety, health, high
costs, lack of time
� Travel agents useful for fulfilment only
� Group travel: convenient, safer, cheaper
� 1/3 know others that travel to SA: positive WOM
� Barriers: safety, health, lack of knowledge, value for money, lack of time
� Info sources: Internet, travel agents, WOM, mags
� Half like independent travel� Planning time: 2–3 months� Travel with spouse or friends� High spend� Use TAs for most bookings:
CTS and CITS
� Info sources: travel agents, word of mouth
� Little independent travel� Planning time: 1–2 months� Travel with spouse� High spend� Use TAs for all bookings: CTS
and CITS
� Info sources: Internet, word of mouth
� Little independent travel� Planning time: 1–2 months� Travel with friends + family� Mid-level spend� Use TAs for all bookings: CTS
and CITS
� Info sources: Internet, magazines, tourism boards
� Half like independent travel� Planning time: 1–2 months� Travel with colleagues� Mid-level spend� If make own booking; TAs: CITS
and CTS
Upcoming Experienced Organised Purpose
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 77
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 78
Chinese travellers to South Africa are typically aged between 25 and 44; the number of arrivals aged 18 to 24 has seen strong growth over the period 2002-2005
16%
6%
1% 1%
34%
9%
33%
0%
10%
20%
30%
40%
50%
18-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs 65+ yrs Refused
Source: Combined SAT Departure Survey Dataset, 2002-2005
Current Chinese Travellers to South Africa: DemographicsAge
20.0% -7.9%9.4% -2.4%5.6%5.5%’02–’05 CAGR
Percent of arrivals
China: % of Volume by Age, 2002–2005 Combined
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 79
19%14%
20%22%26%
0%
25%
50%
75%
100%
< R5, 000 R5,000 toR9,999
R10,000 toR19,999
R20,000 toR39,999
> R40,000
Current Chinese Travellers to South Africa: DemographicsIncome and OccupationChinese visitors to South Africa are distributed fairly evenly across different income categories
China: % of Volume by Income, 2003–2005 Combined1
Percent of
arrivals
Note: 1Breakdown of income category data not available for 2002Source: Combined SAT Departure Survey Dataset, 2002-2005
12%
43%
2%6%10%
3%
24%
0%
25%
50%
75%
100%
Business Clerical -sales
Executive Other Professional Retired Student
China: % of Volume by Occupation, 2002–2005 Combined
-19.8%156.4% 30.9%1.7%7.8%10.3%-6.6%‘02-’05 CAGR-8.8%-27.6%17.0%23.4%-8.9%‘03-’05
CAGR
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 80
Current Chinese Travellers to South Africa: DemographicsCity of Residence
410
414
419
736
875
1,205
1,336
1,580
1,803
2,889
3,395
4,541
12,703
28,942
373
0 10,000 20,000 30,000 40,000
Haimen
Changsha
Chengdu
Sian
Nanking
Xiamen
Victoria Harbor
Tiajin
Fuzhou
Shenyang
Shenzhen
Guang X'hou
Peking
Shangai
Beijing
Arrivals (Thousands)
The majority of Chinese visitors to South Africa hail from Beijing and Shanghai
Source: Combined SAT Departure Survey Dataset, 2004-2005
Top 15 Cities of Residence, 2004–2005
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Current Chinese Travellers to South Africa: DemographicsTravel Partner
57
3
18
5
10
19 20
0
10
20
30
40
50
60
70
Alone Children under 18 Colleagues Family/childrenover 18
Friends Spouse/partner Tour group
Chinese visitors tend to travel alone
-16.2%29.8% 70.6%-7.0%19.6%39.1%22.6%’03–’05 CAGR
Volume of Tourists by Travel Partners, 2003–2005
Source: Combined SAT Departure Survey Dataset, 2003-2005
Arrivals (Thousands)
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 82
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 83
Current Chinese Travellers to South Africa: Travel BehaviourKey Numbers
Note: Spend without CapexSource: Combined SAT Departure Survey Dataset, 2002-2005
138,60811,30940,43912,30364,024Total Volume (’03–’05)
2.4
11.0
0.58
R891MM
R820
0.8
R515MM
82,639
General Holiday
1.8
25.5
0.77
R105MM
R329
0.66
R81MM
15,316
VFR All China Arrivals
Business TourismBusiness
1.5
16.1
0.76
R557MM
R565
1.05
R423MM
51,779
1.4
8.0
0.38
R162MM
R736
0.55
R62MM
13,979
2.0Avg. Number of Provinces Visited (2002–2005)
16.02005 Average Length of Stay
0.66TFDS excl. Capex to Prepaid Spend (’03–’05)
R1,820MMTotal Prepaid Spend (’03–’05)
R511Average Spend / Day (’03–’05)
NAValue / Volume Index (’03–’05)
R1,196MMTFDS excl. Capex (’03–’05)
175,737Total Volume (’02–’05)
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 84
Current Chinese Travellers to South Africa: Travel BehaviourSeasonality of Travel
8%
11%
6%
10%
9%
11%
8%
10%
6%
7%
8%
8% 9% 8%
9%
8%8%
8% 7%
7%
9%9% 9%
9%
0%
4%
8%
12%
16%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China
All Visitors
Seasonality, 2005
Share of Respondents
Source: Combined SAT Departure Survey Dataset, 2005
Seasonality out of China has worsened with peaks occurring in February, May, September and November; the peaks are closely correlated with the Golden Weeks national holidays in China
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 85
Current Chinese Travellers to South Africa: Travel BehaviourTimes Visited
54.8%38.7% -100.0%23.5%-1.1%6.3%‘02–’05 CAGR
Thousands of Arrivals
Change in Volume by Times Visited, 2002–2005
Source: Combined SAT Departure Survey Dataset, 2002-2005
27.5
7.4
20.8
5.2
37.1
76.6
13.44.6 2.4 3.9 0.7 138.6
104.1
0.6
2.9
0.5
4.3
0.5
1.4
0.7
0
40
80
120
160
2002 First Time 2–3 Times 4–5 Times 6–9 Times 10+ Times Lived in SABefore
2003–2005
Lived in SABefore
10+ Times
6–9 Times
4–5 Times
2–3 Times
First Time
The majority of arrivals are first time visitors
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 86
Source: Combined SAT Departure Survey Dataset, 2002–2005
In both 2004 and 2005 the split between leisure and business travellers was relatively evenly distributed
Percent of Arrivals
44% 43%
39% 39%
11% 9%
10%6%
0%
25%
50%
75%
100%
2004 2005
Other
VFR
Business
Holiday
Visits of Chinese Travellers to SA, 2004 and 2005
7%
38%
47%
9%
0%
20%
40%
60%
GeneralHoliday
Business VFR Other
41.6%8.7%7.6%0.7%’02-’05 CAGR
China: Percent of Volume by Purpose2002–2005 Combined
Current Chinese Travellers to South Africa: Travel BehaviourPurpose of Visit to South Africa
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Current Chinese Travellers to South Africa: Travel BehaviourSouth African Package Tour Types
43%
55%
0% 10% 20% 30% 40% 50% 60%
Package
Independent
76%
20%
16%
42%
4%
5%
28%
1%
1%
3%
3%
0%
20%
40%
60%
80%
100%
Air Accom
Independent Travellers –Where Purchased?
(1) Package = Flight & Accommodation; Full Package = Flight, Accommodation & Food; Fully Inclusive Package = Flight, Accommodation, Food & Coach(2) Includes ONLY travellers whose primary purpose of travelling is holiday(3) Based on Q14) Which one of the following packages did you buy for your trip to South Africa? (4) Based on Q12) Where was airfare to SA/ accommodation in SA bought/paid for?Source: SAT Annual Tourism Report 2005; Combined SAT Departure Survey Dataset, 2005
Package travel accounts for more than 40% of Chinese visitors to South Africa
Package Type, 2005
85% 83%
6% 6%
1% 2%2%7% 7%
1%
1%
0%
20%
40%
60%
80%
100%
Air Accom
Package Travellers –Where Purchased?
Travel/ Agent Retailer Tour Operator Direct from Airline/ Accommodation Internet Other
Full-Package – 7.9%Fully-inclusive Package –35.2%
Myself Stayed with Family or Friends
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 88
Current Chinese Travellers to South Africa: Travel BehaviourReasons for VisitingChinese tourists are keen to explore business opportunities in South Africa and are also attracted by the country’s natural beauty
Volume of Chinese Tourists by Reasons for Visiting SA, 2005
Source: Combined SAT Departure Survey Dataset, 2005
8,620
6,579 6,430 6,2075,806 5,617
4,481
3,760 3,5292,991
2,210 2,147
1,286794 641
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Bus
ines
sop
portu
nitie
s
The
scen
ic b
eaut
y
Exp
erie
ncin
g a
diffe
rent
cou
ntry
Bus
ines
s/in
vest
men
tin
tere
sts
Exp
lorin
g po
tent
ial
busi
ness
ven
ture
s
The
wild
life
Sou
th A
frica
'sdi
ffere
nt c
ultu
res
Fam
ily/fr
iend
s
To b
e ab
le to
rela
xan
d es
cape
The
clim
ate
Sto
p ov
er
Div
ersi
ty o
fat
tract
ions
Sou
th A
frica
'sun
ique
ness
Val
ue fo
r mon
ey
Stu
dy/e
duca
tion
Travellers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 89
Current Chinese Travellers to South Africa: Travel BehaviourTop Activities
27,116
24,56222,541 22,002
18,70117,545
10,475 10,166
6,696
2,3071,208 1,164 947 728
0
10,000
20,000
30,000
40,000
Vis
iting
nat
ural
attra
ctio
ns
Vis
ited
a C
asin
o
Wild
life
Cul
tura
l, hi
stor
ical
and
herit
age
Bea
ch
Bus
ines
s
Soc
ial
Them
e pa
rks
Adv
entu
re
Spo
rting
Non
e
Trad
ing
Hea
lth
Med
ical
Note: Excludes nightlife and shoppingSource: Combined SAT Departure Survey Dataset, 2005
Natural attractions, casino visits and the wildlife on offer are favourite Chinese tourist activities
Volume of Chinese Tourists by Activity, 2005
Travellers
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Current Chinese Travellers to South Africa: Travel BehaviourReasons for Satisfaction
1
2
2
2
3
3
3
3
4
4
6
11
16
16
35
0 5 10 15 20 25 30 35 40
Entertainment
Business
Attractions
The diverse experiences
Restaurants/food/w ine
Weather/climate
The culture & heritage
The diverse experience
Good infrastructure
Good serivce
Visiting family/friends
Hospitality and friendly people
The w ildlife/game parks/safari
I had no outstanding experience
The scenic beauty
Volume of Chinese Tourists (Thousands)
Most Chinese visitors were satisfied with South Africa’s scenic beauty; many tourists however felt that they had no outstanding experiences
Top 15 Reasons for Satisfaction with SA, 2004–2005
Source: Combined SAT Departure Survey Dataset, 2004-2005
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Current Chinese Travellers to South Africa: Travel BehaviourDestinations within South Africa
Northern Cape2%
Western Cape55%
Eastern Cape5%
Free State3%
KwaZulu Natal12%
North West23%
Limpopo1%
Mpumalanga*6%
Provinces Visited by Chinese Travellers, 2005
Gauteng76%
Among Chinese travellers, Gauteng, the Western Cape and the North West were the most visited provinces
* Includes Kruger Park (1) Includes travellers whose primary or secondary purpose of travelling is holiday(2) Based on Q2a) During your visit to South Africa, which of the following provinces did you visit? (3) Based on Q7, what were the main attractions or landmarks that you visited in South Africa.Source: Combined SAT Departure Survey Dataset, 2005
>50%10-50%
Legend
<10%
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Current Chinese Travellers to South Africa: Travel BehaviourGeographic Spread
General Holiday Geographic Spread by Accommodation Type, 2002-2005
55%
79% 84%
70%
95%
65%
100%89%
53%
45%
21%
47%
11%0%
35%
5%
30%
16%
0%
20%
40%
60%
80%
100%
Gauteng WesternCape
Eastern Cape Kwa-ZuluNatal
Mpumalanga Limpopo North West NorthernCape
Free State
Paid Accommodation Unpaid Accommodation
Other than in Gauteng and the Free State, most Chinese visitors stayed in paid accommodation
Note: Paid accommodation includes all accommodation types except for staying with friends and familySource: Combined SAT Departure Survey Dataset, 2002-2005
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Seasonality by Province, 2003-2005Seasonality by Province, 2003Seasonality by Province, 2003--20052005
Current Chinese Travellers to South Africa: Travel BehaviourSeasonality by Province
0
1
2
3
4
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Gauteng Western Cape Eastern Cape KZN China
0
1
2
3
4
5
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Mpumalanga North West Northern Cape Free State China
Monthly arrivals indexed to monthly arrivals
Monthly arrivals indexed to monthly arrivals
2003 2004 2005
2003 2004 2005
Arrivals of Chinese tourists are seasonal in most provinces
Source: Combined SAT Departure Survey Dataset, 2003-2005
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Current Chinese Travellers to South Africa: Travel BehaviourOther African Countries Visited
Other African Countries Visited, 2002-2005
Congo
Liberia
Gabon
Togo
Rwanda
Seychelles
Algeria
Sudan
Libya
Mali
ChadNiger
Egypt.
Angola 2.5%
Dem. Rep. Congo
EthiopiaNigeria 0.7%
Namibia
Mauritania
Zambia3.1%
Tanzania
Kenya2.7%
Somalia
Botswana2.4%
Mozambique2.7
Morocco
Madagascar
Cameroon
Zimbabwe6.7%
GhanaGuinea
Tunisia
Uganda
Cote d'Ivoire
SenegalBurkina Faso
Western Sahara
Eritrea
Malawi
Swaziland1.6%
Lesotho 1.7%
Cen. Afr. Rep.Sierra LeoneBeninGuinea-Bissau
Gambia
Equat. Guinea
Burundi
Djibouti
Mauritius
Chinese visitors tend not to visit other African countries while in South Africa; only Zimbabwe receives some Chinese tourists from South Africa
(1) Includes travellers whose primary or secondary purpose of travelling is holiday(2) Based on Q8d) Including this trip, what other African countries are you visiting?Source: Combined SAT Departure Survey Dataset, 2002-2005
>5%
4-5%
Legend
2-3%
1%
Not mentioned / Score below 1%
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 95
Mean = R12,598Mean = R12,598 Mean = R11,013Mean = R11,013
Average Prepaid Spend, 2002–2005 Average SA Spend Per Trip, 2002–2005
While Chinese tourists have been spending more in preparation for their trip to SA, they have been spending less once they arrive
14,019
11,872
9,4588,705
0
5,000
10,000
15,000
20,000
2002 2003 2004 2005
Exp
endi
ture
per
trip
, exc
l cap
ex (R
ands
)
11,107 10,884
13,329
15,070
0
5,000
10,000
15,000
20,000
2002 2003 2004 2005
Exp
endi
ture
per
trip
, exc
l cap
ex(R
ands
)
Source: Combined SAT Departure Survey Dataset, 2002–2005
Current Chinese Travellers to South Africa: Travel BehaviourSpending in South Africa
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Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 97
Potential Market and Their PerceptionsMarket Potential
While Chinese travellers to South Africa remain small in contrast to the total outbound market, 33% now indicate that they are likely to visit the country in the future
11% 17% 60%5% 3% 4%
0% 25% 50% 75% 100%
South Africa
Current & Likely Past & Likely Never, but LikelyCurrent, but Unlikely Past, but Unlikely Never & Unlikely
Current & Likely: Have visited for leisure in past 18 months (Q16b) and intend to visit for leisure in the future (Q14)Past & Likely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and intend to visit for leisure in the future (Q14)Never, but Likely: Have not visited for leisure in the past 5 years (Q16b) and intend to visit for leisure in the future (Q14)Current, but Unlikely: Have visited for leisure in past 18 months (Q16b) and do not intend to visit for leisure in the future (Q14)Past, but Unlikely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and do not intend to visit for leisure in the future (Q14)Never & Unlikely: Have not visited for leisure in the past 5 years (Q16b) and do not intend to visit for leisure in the future (Q14)
Source: Brand Tracking Survey, November 2006 (n = 525)
The combined The combined ““likelylikely”” segments translate to 4,257,000 segments translate to 4,257,000 people (33% of 12.9M total market size)people (33% of 12.9M total market size)
Loyalty Segments (based on all respondents), 2006
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15%8%
36%
34%25%
47%
54%
44%
31%
2%1%2%2%9%
6%
58%
0%
20%
40%
60%
80%
Mar-04 Feb-05 Nov-05 Nov-06
Top-of-Mind Awareness Unaided AwarenessAided Awareness Percent Very Familiar With
Total Awareness and Familiarity (based on all respondents)
Potential Market and Their PerceptionsAwareness Over Time
2004� Aided (Q14): Which of the following international destinations for leisure purposes have you ever seen or heard travel information about? (By information we mean advertisements, special
offers, brochures, website information, articles, travel posters, television programming, etc.) (Select all that apply)� Unaided (Q13): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for enjoyment.” When
you think about “international destinations for leisure purposes,” which countries come to mind? � Top-of-Mind (Q13): First mention to unaided awareness question.� Percent “Very Familiar” with Each Country (Q15): Of all respondents, the percentages who are “very familiar” with each as an international travel destination.2005/2006� Aided (Q9): Which of the following countries have you heard of as an international destination for leisure purposes prior to this survey?� Unaided (Q7): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for leisure and
enjoyment.” When you think about “international destinations for leisure purposes,” which countries come to mind? � Top-of-Mind (Q7): First mention to unaided awareness question.� Percent “Very Familiar” with Each Country (Q11): Of all respondents, the percentages who are “very familiar” with each as an international destination for leisure purposes.Source: Brand Tracking Survey, November 2006
n=525n=399n=681n=813Based on all respondents
7%4%10%7%Percent very familiar with
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 99
Potential Market and Their PerceptionsReasons for Visiting SA vs. Reasons for Not Visiting SA
60%52%
49%30%
30%27%
27%19%
12%10%
2%
0% 25% 50% 75%
General issues of safetyConcerns for my personal safety
Uncertain about political climate / civil unrestConcern about AIDS
Don’t know anyone thereToo much time to get there
Not a relaxing destinationToo expensive to get thereToo expensive once there
Nothing interesting to do thereOther (please specify)
64%
62%
58%
47%
47%
44%
41%
36%
35%
33%
0% 25% 50% 75%
To relax
To experience a different culture
To see the scenery / beauty
Engage in a variety of activities
Warm climate
My friends / family recommended it
To fulfill a dream
Friendly people
I went as part of a group
My travel agent recommended it
Reasons for Visiting South Africa*, 2006
Reasons for Not Visiting South Africa**, 2006
* Based on those who have visited South Africa for leisure in the past 5 years ((n=121); 23% of all respondents); **Based on those who have not visited South Africa in the past 5 years for either business or pleasure ((n=186); 35% of all respondents); Reasons for Visiting South Africa (Q35a): Why did you choose to visit South Africa as a destination for leisure purposes? (Select all that apply); Reasons for Not Visiting South Africa (Q34): Why haven’t you visited South Africa for leisure purposes in the past 5 years? (Select all that apply)
Source: Brand Tracking Survey, November 2006
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57%
46%
46%
29%
21%
14%
2%
3%
0% 10% 20% 30% 40% 50% 60% 70%
Special offer on safari
Chance to explore "off thebeaten path"
Use South Africa as a base tovisit surrounding countries
Special offer on flights
See friends / family
Special offer on hotels
Nothing would make me want toreturn
Other (please specify)
What Would Encourage First Time Visitors to Go to South Africa? (2006)
Potential Market and Their PerceptionsEncouraging First Time Visitors
Special offers on safari, a chance to explore off the beaten path and visits to surrounding countries are the most important factors encouraging visitation
Based on those who have not visited South Africa in the past 5 years and do not intend to in the future ((n=134); 26% of all respondents)Encourage Visitation (Q40): What, if anything, would encourage you to visit South Africa for leisure purposes in the future? (Select all that apply)Source: Brand Tracking Survey, November 2006
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Reasons for Interest in Leisure Visit to South Africa in the Future (based on those who have not visited South Africa in the
past 5 years, but intend to in the future for leisure), 2006
Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=91); 17% of all respondents)Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply)
Potential Market and Their PerceptionsDrivers of Attraction for Future Visitors
Interest in a different culture and scenic beauty are the two key drivers for future visits to South Africa
68%
51%
42%
32%
26%
26%
25%
22%
21%
20%
19%
14%
12%
11%
1%
0% 25% 50% 75%
To experience a different culture
To see the scenery / beauty
To fulfill a dream
To relax
To see the change since apartheid/see historic sites
My friends / family recommended it
My travel agent recommended it
Engage a variety of activities
Saw a special offer
Friendly people
Warm climate
To go on safari
Business
To visit friends / relatives
Other (please specify)
Source: Brand Tracking Survey, November 2006
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 102
Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=52); 10% of all respondents)Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply)
Potential Market and Their PerceptionsReasons for Not Returning
Safety-related concerns prevent some Chinese visitors from returning
Source: Brand Tracking Survey, November 2006
Reasons for Not Returning for Leisure (n=52)
� General issues of safety (health, weather, roads, crime, etc.) 50%
� Concern about AIDS 38%
� Afraid of political climate/civil unrest 38%
� Too much time to get there 37%
� Concerns for my personal safety 35%
� Did not feel safe 27%
� Would prefer to visit other places first 19%
� Don’t know anyone there 17%
� Not a relaxing destination 13%
� Nothing interesting to do there 12%
� It’s boring 12%
� Too expensive once there 6%
� Too expensive to get there 4%
� Unfriendly people 4%
� Other (please specify) 2%
Reasons for Not Returning to South Africa(based on those who visited South Africa for leisure in the past 5 years)
Warning some bases below 75
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Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 104
Activation StrategyOrganised Wanderlusters
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Product� Would be a relaxing, natural scenery
oriented holiday in SA with some planned activities to taste local food, visit cities, and shop
� Trip format should be a group package tour
� As there is a higher budget for this segment, package options should be available (some variation in activities) so traveller can effortlessly choose the most suitable one
Product� Would be a relaxing, natural scenery
oriented holiday in SA with some planned activities to taste local food, visit cities, and shop
� Trip format should be a group package tour
� As there is a higher budget for this segment, package options should be available (some variation in activities) so traveller can effortlessly choose the most suitable one
Place / Channel� Focus on large travel agencies. Train
agency sales force so they are knowledgeable about South Africa’s offerings and can design packages that are most suitable for these high-budget consumers:– Travel agents are main source of
travel information– There is high reliance on travel
agents to plan activities at destination, prepare packages, and make bookings
Place / Channel� Focus on large travel agencies. Train
agency sales force so they are knowledgeable about South Africa’s offerings and can design packages that are most suitable for these high-budget consumers:– Travel agents are main source of
travel information– There is high reliance on travel
agents to plan activities at destination, prepare packages, and make bookings
Activation StrategyOrganised Wanderlusters
The 4 Marketing “Ps”
Promotion� Educate the segment about what there
is to do in SA: – South Africa can offer you a unique
holiday experience of visiting the stunning natural scenery of the tip of Africa
– There are also great beaches and relaxation opportunities
– South Africa is a developed and safe country to visit
Promotion� Educate the segment about what there
is to do in SA: – South Africa can offer you a unique
holiday experience of visiting the stunning natural scenery of the tip of Africa
– There are also great beaches and relaxation opportunities
– South Africa is a developed and safe country to visit
Price� 20,000–30,000 RMB per person for a
10–14 day trip (all inclusive of flights, accommodation, etc.)
� Mid-point 24,000 RMB for a 13 day trip� Higher holiday budgets than other
segments
Price� 20,000–30,000 RMB per person for a
10–14 day trip (all inclusive of flights, accommodation, etc.)
� Mid-point 24,000 RMB for a 13 day trip� Higher holiday budgets than other
segments
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Overall DriversOverall DriversOverall Drivers Overall BarriersOverall BarriersOverall Barriers
� Believe holidays are a time to relax and see beautiful natural scenery
� Shopping abroad appeals to Segment 4 —they have a high income and shopping is a main activity during their holidays
� International vacations are a regular part of life. They are experienced travelers and set aside a high holiday budget every year
� Believe holidays are a time to relax and see beautiful natural scenery
� Shopping abroad appeals to Segment 4 —they have a high income and shopping is a main activity during their holidays
� International vacations are a regular part of life. They are experienced travelers and set aside a high holiday budget every year
� Most do not receive any paid vacation days� Most do not receive any paid vacation days
Drivers for South AfricaDrivers for South AfricaDrivers for South Africa
� Relatively high desire to go to South Africa
� Perceive South Africa as a destination with beautiful natural scenery and is welcoming to tourists
� Already traveled to many countries and South Africa is a destination they have not been to yet
� Relatively high desire to go to South Africa
� Perceive South Africa as a destination with beautiful natural scenery and is welcoming to tourists
� Already traveled to many countries and South Africa is a destination they have not been to yet
Barriers for South AfricaBarriers for South AfricaBarriers for South Africa
� Lack awareness of South Africa and knowledge on what there is to do there as a tourist
� Concerned about safety in South Africa, and to a lesser degree health and communication difficulties
� Lack awareness of South Africa and knowledge on what there is to do there as a tourist
� Concerned about safety in South Africa, and to a lesser degree health and communication difficulties
Activation StrategyOrganised Wanderlusters: Drivers and Barriers
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Activation StrategyOrganised Wanderlusters: Critical Leverage Points in the Buying Process
� Key leverage point for Segment 4 — there is high conversion rate between awareness and positivity, desire, making plans and actually going to South Africa
� Lack of information about what there is to do in South Africa isSegment 4’s main barrier
� Train travel agents to be knowledgeable about South Africa so they can share the information with Segment 4
� Distribute posters and brochures widely amongst the major travel agencies with pictures of South Africa’s natural scenery
� Key leverage point for Segment 4 — there is high conversion rate between awareness and positivity, desire, making plans and actually going to South Africa
� Lack of information about what there is to do in South Africa isSegment 4’s main barrier
� Train travel agents to be knowledgeable about South Africa so they can share the information with Segment 4
� Distribute posters and brochures widely amongst the major travel agencies with pictures of South Africa’s natural scenery
The key stages for Organised Wanderlusters are Destination Awareness, Origination of Need / Desire to Take a Holiday and Destination and Trip Type Selection
� Promote South Africa as the destination where they can relax while viewing stunning natural scenery
� Launch a campaign to portray South Africa as the world’s best place for diamond shopping
� Promote South Africa as the destination where they can relax while viewing stunning natural scenery
� Launch a campaign to portray South Africa as the world’s best place for diamond shopping
� This segment prefers travelling via group package tours and does so because they are convenient
� All South Africa products should be full group package tours� Offer several package options with variations in activities so
traveller can easily choose the package they prefer most
� This segment prefers travelling via group package tours and does so because they are convenient
� All South Africa products should be full group package tours� Offer several package options with variations in activities so
traveller can easily choose the package they prefer most
Origination of Need / Desire toTake a Holiday
Origination of Need / Desire toTake a Holiday
Destination and Trip Type SelectionDestination and
Trip Type Selection
Trip BookingTrip Booking
Usage / Trip BehaviourUsage / Trip Behaviour
Post-trip EvaluationPost-trip Evaluation
Destination AwarenessDestination Awareness
Trip PlanningTrip Planning
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Activation StrategyExperienced Wanderlusters
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Product� Desires a trip to view the rich wildlife of
South Africa, with some activities to experience Africa culture, to see natural scenery, and to relax at the beach
� Trip format should be a group package tour
� Package options include upgrade to luxury accommodation, as many in segment do have higher budgets
Product� Desires a trip to view the rich wildlife of
South Africa, with some activities to experience Africa culture, to see natural scenery, and to relax at the beach
� Trip format should be a group package tour
� Package options include upgrade to luxury accommodation, as many in segment do have higher budgets
Place / Channel� Direct to consumer communication via
the Internet would work best, as they:– Use Internet significantly more than
other information sources– Lack of knowledge about South
Africa is a key barrier� Additionally, educate travel agencies on
South Africa product offerings so agents can help travellers decide on activities at destination
Place / Channel� Direct to consumer communication via
the Internet would work best, as they:– Use Internet significantly more than
other information sources– Lack of knowledge about South
Africa is a key barrier� Additionally, educate travel agencies on
South Africa product offerings so agents can help travellers decide on activities at destination
Activation StrategyExperienced Wanderlusters
The 4 Marketing “Ps”
Promotion� South Africa offers rich diversity of (safe
and developed) cultural experiences and nature-based activities:– Beautiful natural scenery and wildlife– Famous cities such as Cape town
with fresh local seafood
Promotion� South Africa offers rich diversity of (safe
and developed) cultural experiences and nature-based activities:– Beautiful natural scenery and wildlife– Famous cities such as Cape town
with fresh local seafood
Price� 20,000–30,000 RMB per person for an
8–14 day package (all inclusive of flights, accommodation, etc.)
� Mid-point is 25,000 RMB per person for 13 days, or 1,900 RMB per day
� Higher price point reflects high budget and holiday spend of segment
Price� 20,000–30,000 RMB per person for an
8–14 day package (all inclusive of flights, accommodation, etc.)
� Mid-point is 25,000 RMB per person for 13 days, or 1,900 RMB per day
� Higher price point reflects high budget and holiday spend of segment
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 110
Overall DriversOverall DriversOverall Drivers Overall BarriersOverall BarriersOverall Barriers
� Like to go on holiday to explore foreign cultures and try different kinds of foreign cuisines
� Vacations are opportunities to see beautiful natural scenery which one cannot find at home
� Occasion to go to a place with better weather than in China
� Like to go on holiday to explore foreign cultures and try different kinds of foreign cuisines
� Vacations are opportunities to see beautiful natural scenery which one cannot find at home
� Occasion to go to a place with better weather than in China
� Tend to have destination in mind before going to travel agents and not easily influenced by agents
� Tend to have destination in mind before going to travel agents and not easily influenced by agents
Drivers for South AfricaDrivers for South AfricaDrivers for South Africa
� High interest, positivity and desire to go to South Africa
� Many positive impressions of South Africa, including plentiful wildlife, welcoming to tourists, luxury safaris, all year round destination and good value for money
� Many have friends and relatives who have been to South Africa and returned with good word-of-mouth
� High interest, positivity and desire to go to South Africa
� Many positive impressions of South Africa, including plentiful wildlife, welcoming to tourists, luxury safaris, all year round destination and good value for money
� Many have friends and relatives who have been to South Africa and returned with good word-of-mouth
Barriers for South AfricaBarriers for South AfricaBarriers for South Africa
� Particularly worried about personal safety in South Africa
� Associate South Africa with apartheid and AIDS
� Particularly worried about personal safety in South Africa
� Associate South Africa with apartheid and AIDS
Activation StrategyExperienced Wanderlusters: Drivers and Barriers
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Activation StrategyExperienced Wanderlusters: Critical Leverage Points in the Buying Process
The key stages for Experienced Wanderlusters are Destination and Trip Type Selection and Trip Booking
� Segment 4 likes to do diverse types of activities on holiday, ranging from nature to culture
� Promote South Africa as a destination which has a variety of offerings, from scenery and wildlife to an unique African-European culture to fresh seafood
� Segment 4 likes to do diverse types of activities on holiday, ranging from nature to culture
� Promote South Africa as a destination which has a variety of offerings, from scenery and wildlife to an unique African-European culture to fresh seafood
� There is a need to translate high interest, positivity and desire to go into actually making plans. With high spending and rich travel experience, Segment 5 is also the target of competitors
� Emphasize positive perceptions that South Africa is an all-year-round destination and good value for money to differentiate from competitors
� Train travel agencies so they are more knowledgeable and can help travellers decide on activities to do in South Africa
� Offer more high-end packages with longer stays and optional luxury upgrades
� Include activities of viewing wildlife and natural scenery, experiencing African culture and relaxing at the beach
� There is a need to translate high interest, positivity and desire to go into actually making plans. With high spending and rich travel experience, Segment 5 is also the target of competitors
� Emphasize positive perceptions that South Africa is an all-year-round destination and good value for money to differentiate from competitors
� Train travel agencies so they are more knowledgeable and can help travellers decide on activities to do in South Africa
� Offer more high-end packages with longer stays and optional luxury upgrades
� Include activities of viewing wildlife and natural scenery, experiencing African culture and relaxing at the beach
Origination of Need / Desire toTake a Holiday
Origination of Need / Desire toTake a Holiday
Destination and Trip Type SelectionDestination and
Trip Type Selection
Trip BookingTrip Booking
Usage / Trip BehaviourUsage / Trip Behaviour
Post-trip EvaluationPost-trip Evaluation
Destination AwarenessDestination Awareness
Trip PlanningTrip Planning
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Activation StrategyUpcoming Wanderlusters
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 113
Product� Would like a planned itinerary that
combines safari, great, nature, (and potentially the beach and a visit to developed cities)
� Should also include meals to taste local cuisine
� Ideal organization would be a group package tour including a Chinese-speaking guide, where everything is organized and convenient for the traveller
Product� Would like a planned itinerary that
combines safari, great, nature, (and potentially the beach and a visit to developed cities)
� Should also include meals to taste local cuisine
� Ideal organization would be a group package tour including a Chinese-speaking guide, where everything is organized and convenient for the traveller
Place / Channel� Emphasis on information over the
Internet because: – Seek information on the Internet
more than any other place– Involved travellers who want to have
rich information before choosing and planning holidays
� Travel agents should be also educated in order to drive up desire by offering good value for money and targeted packages
Place / Channel� Emphasis on information over the
Internet because: – Seek information on the Internet
more than any other place– Involved travellers who want to have
rich information before choosing and planning holidays
� Travel agents should be also educated in order to drive up desire by offering good value for money and targeted packages
Activation StrategyUpcoming Wanderlusters
The 4 Marketing “Ps”
Promotion� Addressing drivers: South Africa is a
unique destination to see the striking natural scenery of Cape Point as well as exotic African wildlife
� Addressing barriers: South Africa is a safe holiday destination that offers good value for money as well as provides enough time to see all its important offerings in a short trip
Promotion� Addressing drivers: South Africa is a
unique destination to see the striking natural scenery of Cape Point as well as exotic African wildlife
� Addressing barriers: South Africa is a safe holiday destination that offers good value for money as well as provides enough time to see all its important offerings in a short trip
Price� 15,000–25,000 RMB per person for
5–10 day trip (all inclusive of flights, accommodation, etc.)
� Mid-point 19,000 RMB per person for 10 days,190 RMB per day
� Wide range due to wide range of desired trip length
Price� 15,000–25,000 RMB per person for
5–10 day trip (all inclusive of flights, accommodation, etc.)
� Mid-point 19,000 RMB per person for 10 days,190 RMB per day
� Wide range due to wide range of desired trip length
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Overall DriversOverall DriversOverall Drivers Overall BarriersOverall BarriersOverall Barriers
� Relaxation is by far the most important part of a holiday
� Beautiful natural scenery makes destinations very attractive
� Friend and relative recommendations excite them to go on holiday to particular destinations
� Relaxation is by far the most important part of a holiday
� Beautiful natural scenery makes destinations very attractive
� Friend and relative recommendations excite them to go on holiday to particular destinations
� Limited time to travel — do not travel on sponsored trips and most take 7 or less days of vacation each year
� Although they have a high holiday budget, they are price sensitive want good value for their money
� Limited time to travel — do not travel on sponsored trips and most take 7 or less days of vacation each year
� Although they have a high holiday budget, they are price sensitive want good value for their money
Drivers for South AfricaDrivers for South AfricaDrivers for South Africa
� High awareness and active interest in South Africa
� South Africa’s natural beauty and wildlife seem very attractive
� High awareness and active interest in South Africa
� South Africa’s natural beauty and wildlife seem very attractive
Barriers for South AfricaBarriers for South AfricaBarriers for South Africa
� Most of their friends and relatives who have been to South Africa returned with neutral to negative reviews
� South Africa’s personal safety and health issues are worrisome
� Most of their friends and relatives who have been to South Africa returned with neutral to negative reviews
� South Africa’s personal safety and health issues are worrisome
Activation StrategyUpcoming Wanderlusters: Drivers and Barriers
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Activation StrategyUpcoming Wanderlusters: Critical Leverage Points in the Buying Process
� There is a need for relaxation on holiday. Promotions should target their desire to go on one international holiday trip eachyear, rewarding themselves for a hard year of work
� There is a need for relaxation on holiday. Promotions should target their desire to go on one international holiday trip eachyear, rewarding themselves for a hard year of work
� This is the critical point for Segment 3 as we are “losing” the most people here. Their high active interest and positivity dropsharply on desire and plans to go
� Through an informative website, emphasize how the natural beauty and wildlife of South Africa is one-of-a-kind. Turn their already positive perceptions of South Africa into action and distinguish South Africa from competitors with similar offerings
� Address their concerns of crime and AIDS with more positive media coverage (newspaper or TV) on any improvements South Africa has made in this area
� This is the critical point for Segment 3 as we are “losing” the most people here. Their high active interest and positivity dropsharply on desire and plans to go
� Through an informative website, emphasize how the natural beauty and wildlife of South Africa is one-of-a-kind. Turn their already positive perceptions of South Africa into action and distinguish South Africa from competitors with similar offerings
� Address their concerns of crime and AIDS with more positive media coverage (newspaper or TV) on any improvements South Africa has made in this area
The key stages for Upcoming Wanderlusters are Origination of Need, Destination and Trip Type Selection and Trip Booking
Origination of Need / Desire toTake a Holiday
Origination of Need / Desire toTake a Holiday
Destination and Trip Type SelectionDestination and
Trip Type Selection
Trip BookingTrip Booking
Usage / Trip BehaviourUsage / Trip Behaviour
Post-trip EvaluationPost-trip Evaluation
Destination AwarenessDestination Awareness
Trip PlanningTrip Planning
� Offer packages of different length, some as short as 5 days, tomeet the wide range of desired trip duration
� Offer more packages fit for this segment which take place between July to October. This segment’s vacationing time is very concentrated during the months but constrained by their few number of vacation days
� Offer packages of different length, some as short as 5 days, tomeet the wide range of desired trip duration
� Offer more packages fit for this segment which take place between July to October. This segment’s vacationing time is very concentrated during the months but constrained by their few number of vacation days
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 116
Activation StrategyPurpose Travellers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 117
Product� Would like an itinerary that allows one to
see all the unique sights of South Africa: combining stunning nature, mountains, and the beach with modern city icons and architecture
� Desires group package tours that are mix of active holiday and relaxing downtime
Product� Would like an itinerary that allows one to
see all the unique sights of South Africa: combining stunning nature, mountains, and the beach with modern city icons and architecture
� Desires group package tours that are mix of active holiday and relaxing downtime
Place / Channel� Target organizational buyers for
companies and government organizations:– Sponsored travellers do not have as
much direct interaction with travel agents
� As they are very involved, educate consumers on what South Africa has to offer through Internet websites, country tourism boards, and travel magazines
Place / Channel� Target organizational buyers for
companies and government organizations:– Sponsored travellers do not have as
much direct interaction with travel agents
� As they are very involved, educate consumers on what South Africa has to offer through Internet websites, country tourism boards, and travel magazines
Activation StrategyPurpose Travellers
The 4 Marketing “Ps”
Promotion� Building awareness by referencing other
familiar destinations: South Africa possesses the natural scenery and wildlife of Kenya as well as the modern infrastructure of Australia and the US
� Promote South Africa as a destination that recently gained ADS status and therefore, is a new “must-see”destination
Promotion� Building awareness by referencing other
familiar destinations: South Africa possesses the natural scenery and wildlife of Kenya as well as the modern infrastructure of Australia and the US
� Promote South Africa as a destination that recently gained ADS status and therefore, is a new “must-see”destination
Price� Two price ranges: 6–7 days packages
for 10,000–15,000 RMB per person or 15–21 day package for 20,000–30,000 RMB per person (all inclusive of flights, accommodation, etc.)
� Mid-point is 17,000 RMB for 11 day trip, 1,500 RMB per day
� Wide range suggests varying budgets for different types of organizations that pay for the sponsored travelling
Price� Two price ranges: 6–7 days packages
for 10,000–15,000 RMB per person or 15–21 day package for 20,000–30,000 RMB per person (all inclusive of flights, accommodation, etc.)
� Mid-point is 17,000 RMB for 11 day trip, 1,500 RMB per day
� Wide range suggests varying budgets for different types of organizations that pay for the sponsored travelling
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 118
Overall DriversOverall DriversOverall Drivers Overall BarriersOverall BarriersOverall Barriers
� Like traveling because it is relaxing and a time to enjoy beautiful natural scenery
� Opportunity to explore different styles of architecture in the world
� Holidays are often sponsored and thus a opportunity to have fun for free or at a low cost
� Like traveling because it is relaxing and a time to enjoy beautiful natural scenery
� Opportunity to explore different styles of architecture in the world
� Holidays are often sponsored and thus a opportunity to have fun for free or at a low cost
� Do not have full control over destination choice
� Do not have full control over destination choice
Drivers for South AfricaDrivers for South AfricaDrivers for South Africa
� South Africa is one of the few countries they have not been to yet
� Believe South Africa offers stunning natural scenery has good weather and is an all-year-round destination
� Holidays in South Africa are good value for money
� South Africa is one of the few countries they have not been to yet
� Believe South Africa offers stunning natural scenery has good weather and is an all-year-round destination
� Holidays in South Africa are good value for money
Barriers for South AfricaBarriers for South AfricaBarriers for South Africa
� Concerned about personal safety and health in South Africa
� Some lack of knowledge about what to do there and what icons they can see
� Concerned about personal safety and health in South Africa
� Some lack of knowledge about what to do there and what icons they can see
Activation StrategyPurpose Travellers: Drivers and Barriers
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 119
Activation StrategyPurpose Travellers: Critical Leverage Points in the Buying Process
The key stages for Purpose Travellers are Trip Planning and Trip Booking
� Segment 8 prefers package tours that are a mix of active holiday and relaxing downtime
� Design packages which pack in a variety of activities, includingseeing nature, mountains, local icons and architecture and resting at the beach
� Offer two ranges of price points to cater to different budgets of organizations sponsoring the trip (lower price for a 6–7 day trip and a higher price for a 15–21 day trip)
� Segment 8 prefers package tours that are a mix of active holiday and relaxing downtime
� Design packages which pack in a variety of activities, includingseeing nature, mountains, local icons and architecture and resting at the beach
� Offer two ranges of price points to cater to different budgets of organizations sponsoring the trip (lower price for a 6–7 day trip and a higher price for a 15–21 day trip)
� Sponsored travellers do not interact much with travel agents� Target organizational buyers for companies and government
organization� Provide an informative Internet website, country tourism board
and travel magazine articles — Segment 8 includes many travellers who seek information from several sources when planning holidays
� Sponsored travellers do not interact much with travel agents� Target organizational buyers for companies and government
organization� Provide an informative Internet website, country tourism board
and travel magazine articles — Segment 8 includes many travellers who seek information from several sources when planning holidays
Origination of Need / Desire toTake a Holiday
Origination of Need / Desire toTake a Holiday
Destination and Trip Type SelectionDestination and
Trip Type Selection
Trip BookingTrip Booking
Usage / Trip BehaviourUsage / Trip Behaviour
Post-trip EvaluationPost-trip Evaluation
Destination AwarenessDestination Awareness
Trip PlanningTrip Planning
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 120
Agenda
� Market Overview
� Travel Patterns
� Channel
� Consumers
– Our Target Market
– Target Segments
� Current Chinese Travellers to South Africa
– Demographics
– Travel Behaviour
� Potential Market and Their Perceptions
� Activation Strategy
� Hong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 121
Hong KongMarket Overview
HK enjoys a high standard of living and has an affluent population by global standards
� Total Area: 1,092 square km
� Population: 6,940,432 (July 2006 est.)
� GDP: U.S. $253.1B (2006 est.)
� GDP per Capita: $33,479*
� GDP real growth rate: 5.9% (2006 est.)
� Total Area: 1,092 square km
� Population: 6,940,432 (July 2006 est.)
� GDP: U.S. $253.1B (2006 est.)
� GDP per Capita: $33,479*
� GDP real growth rate: 5.9% (2006 est.)
* International dollarsSource: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006
Top 15 Wealthiest Countries, 2005
30,862 Netherlands15
30,897 Australia14
31,208 Finland13
31,244 Belgium12
31,397 Qatar11
32,571 Switzerland10
33,432 Austria9
33,479 Hong Kong8
34,273 Canada7
34,740 Denmark6
35,115Iceland5
40,610 Ireland4
41,399 United States3
42,364 Norway2
69,800Luxembourg1
GDP per capita ($*)CountryRank
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 122
Hong KongTravel Patterns
44.6%42.7%
33.0% 32.6%
25.5%23.3%
20.5%
6.4%4.4% 3.9%
0%
25%
50%
HongKong
Singapore Australia Malaysia Japan Taiwan SouthKorea
China Thialnd Philippines
Incidence of Leisure Travel
Source: CTC
Likely key drivers include:
� An affluent population– Among the highest per
capita GDP in Asia– Low tax rate– High disposable income
� Small state with limited domestic tourism possibilities
� Travel convenience as the regional passenger air hub
Expatriates unlikely to be a key driver
� . . . as non-Chinese nationals are only 7% of total HK population
Likely key drivers include:
� An affluent population– Among the highest per
capita GDP in Asia– Low tax rate– High disposable income
� Small state with limited domestic tourism possibilities
� Travel convenience as the regional passenger air hub
Expatriates unlikely to be a key driver
� . . . as non-Chinese nationals are only 7% of total HK population
% o
f tot
al a
dult
popu
latio
n
HK residents have the highest incidence of leisure travel among the Asian countries
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 123
Hong KongTravel Patterns: Breakdown of Outbound Travel by Destination
South and Southeast Asia, including destinations like Thailand, Singapore, the Philippines and Malaysia, are the major drawcards for Hong Kong travellers
66,513
5,787
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Thousands
416,908
2,163,346
811,968
348,384
254,229
0
1,000,000
2,000,000
3,000,000
4,000,000
72,300
Others
China and
Macao
Note: 1Excludes “Others”Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006
Outbound HK Travellers, 2005Outbound HK Travellers,
20051
South and Southeast Asia
Americas
Europe and Middle East
North Asia
Australia and New Zealand
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 124
Hong KongChannel: Strategic Position of South Africa in Hong Kong Travel Market
High Maturity of Product
HighMaturity of
Hong Kong Travel Market
high
low
low high
High market share has been to SA
Variety of packages
has exhausted
market
High market penetration
Slowed growth rates
Price pressure of commodity products
High market transparency and
comparability
High consumer sophistication
and experience
Tendency of channel to specialize
Competitive pricing
Frequency of groups
appropriate
South Africa is an established destination within an experienced market
Standardised knowledge of sales staff re
product
Profitability driven by scale
SA as a SA as a Tourist Tourist
Product in Product in Hong KongHong Kong
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 125
Hong KongChannel: Hong Kong — A Problem of Shelf-Space
Dominant Market Logic
Market is defined by “off the shelf products”
Market is defined by “off the shelf products”
Successful products require “shelf space”
Successful products require “shelf space”
Successful marketing requires strong brand
Successful marketing requires strong brand
� Consumers have tiered destinations based on awareness and preference
� Consumers choose destinations in the same tier based on departure date and duration of trip
� Group tours, perceived as cheaper and more convenient, is the preferred way of travel particularly for far away unfamiliar destinations
� Consumers shop around in different retail stores for best value
� SA currently is a known but not preferred second tier destination for HK consumers
� SA travellers are mostly between 30–40 years old, upper middle class, travelling with 8 day 5 night group tours
� Almost none — existence of repeat travel
� Scale is king
– High volume concentration in top players
– Strong brand name, wide retail coverage, and low price leads to high market share
– Product standardization facilitates mass marketing and sales
� SA has passed the new product introduction / novelty stage and is a highly standardized product regularly available with all major wholesalers and integrated retailers
� SA is currently positioned as a mid-to-high end destination for good value accommodation and food
� SAA has strong presence in the trade, which can be better leveraged to promote SA
� SAT has minimum presence in the market and in the trade
Competitor Perspective
Consumer Perspective Channel Perspective
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 126
Hong KongChannel: South Africa Leisure Travel Channel Structure*
In Hong Kong, group package tours represent over 90% of total leisure travel to South Africa
Integrated travel agents, which are vertically and horizontally integrated, command 70% of the long-haul leisure travel market in Hong Kong
Product Owners
Intermediaries Retailers Consumers
20%, 0%75%, 0%
5%, 0%
5%, 5%
0%, 95% 0%, 25%
0%, 5%
0%,5% 0%, 75%
15%, 15%
15%, 15%
5%, 5%
>5%, >5%
70%, 70%
>5%, >5%
SA Attractions
SA Hotels SA Inbound Tour Operators
SA Transportation
SubSub--agentsagentsSelf-
funded Travellers
Incentive Tours
HKWholesalers
Airlines TicketingConsolidators
Biz Travel Biz Travel SpecialistsSpecialists
Integrated Integrated RetailersRetailers
>5%, >5%
x%, y%: where x=% of total flight volume,
y=% of total tour product volume
* Only includes group package tour volume, which covers 90% of the total leisure travel market for South AfricaSource: Channel Interviews
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 127
Hong KongChannel: Hong Kong is an important hub for air travel in East Asia
Hong Kong is a regional air hub channelling traffic between East Asia and major long-haul destinations in North America, Europe, and Australia
� Hong Kong is the regional hub for SAA, and the home base of Cathay Pacific
� Over 50% of SAA’s passengers arriving in Hong Kong are in transit to other neighbouring countries, such as Japan, Korea, China, and Taiwan
� Hong Kong is the regional hub for SAA, and the home base of Cathay Pacific
� Over 50% of SAA’s passengers arriving in Hong Kong are in transit to other neighbouring countries, such as Japan, Korea, China, and TaiwanSouth
Africa
Hong KongTaipei
Tokyo
SeoulBeijing
Shanghai
North AmericaEurope
Australia / New Zealand
Hong Kong consumers enjoy direct flights to most of the major long-haul destinations around the world as well as cheaper air fares, leading to one of the highest travel incidence rates in the region
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 128
Hong KongChannel: Price and flight time to South Africa are comparable to competitors
EuropeEurope
U.S. and U.S. and Canada*Canada*
Australia and Australia and New ZealandNew Zealand
SASA
KenyaKenya
Eastern Eastern EuropeEurope
Destinations Price (HK$)Price (HK$)
10,000–12,000
8,000–13,000
6,000–7,000
8,000–12,500
7,000–9,000
7,000–9,500
Average Number of Days
Average Number of Days
8–10
8–10
5–7
8–10
8
5–7
Price per Day(HK$)
Price per Day(HK$)
1,200–1,500
1,000–1,500
1,000–1,400
1,000–1,500
1,000–1,100
1,000–1,400
Direct Flight Frequency
Direct Flight Frequency
3x per Week
Daily
Daily
Daily
None
Daily
Flight Time (Hours)
Flight Time (Hours)
10
12~13
12~16
13
16
7
* Post 9/11, most tours to U.S. and Canada are semi-group tours, designed particularly to accommodate VFR tripsSource: Channel Interview and Visits
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 129
Hong KongChannel: Product Diversity
* Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted** Excluding Eastern EuropeSource: Channel Interview; Retail Survey; Monitor Analysis
Group Package Tours
Non-group Package Tours*
Number of Products
6~7
4~5
1–2
5~6
5~7
4–510+
5
0
0
0
1
Availability of Direct Flight
�
�
�
—
�
—
Europe**Europe**
U.S. and U.S. and CanadaCanada
Australia and Australia and New ZealandNew Zealand
Eastern EuropeEastern Europe
Central / South Central / South AmericaAmerica
SASA
South Africa has relatively low product diversity* as compared with other major long-haul destinations
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 130
Hong KongChannel: South African Product in the Market
The standard 8 day 5 night product covers over 80% of the current SA leisure travel market in Hong Kong
DAY 1DAY 1 � Depart to Johannesburg, SA
DAY 2DAY 2 � Head to Cape Town and take cable car up Table Mountain. Shop in V&A shopping center and dine in Chinese Restaurant
DAY 3DAY 3� Start your route to Seal Island. Travel to Groot Constantia sampling
wines. Sightsee at the Cape of Good Hope. Visit penguin beach after a lobster lunch
DAY 4DAY 4 � Start the Garden Route, and continue through to Oudtshoorn. Stop at an ostrich farm after an ostrich lunch
DAY 5DAY 5� Breakfast in Oudtshoorn. Arrive at Cheetah Land and Crocodile
Farm. Play with the wildlife. Take a steamboat to Knysna and stare in awe at the splendid sunset
DAY 6DAY 6� Depart from George Town. Arrive at Johannesburg at noon. Spend
the rest of day visiting the diamond center. Dinner at CarnivoreRestaurant
DAY 7DAY 7 � Breakfast in Johannesburg. Then depart to see gold pouring and mine dancing in Gold Reef City. Shuttle to the airport after lunch
DAY 8DAY 8 � Arrive in HK the next day
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 131
Decreased Cost� Increased margin� Decreased price
Decreased Cost� Increased margin� Decreased price
Increased PromotionsIncreased Promotions Increased Tour Varieties� Increased frequency� Increased products
Increased Tour Varieties� Increased frequency� Increased products
Improved Sales SkillsImproved Sales Skills
Demand / Number of TA
Demand / Number of TA
(Demand) (Supply) Number of Group Forming TAs
Number of Group Forming TAs
Number of Intended Travellers
Number of Intended Travellers
Product Momentum
Product Momentum
PreferencePreference
AwarenessAwareness
China Market Dynamics
Consolidated and stable, high switchabilityamong TAs
Market currently maintains sustainable scale
Shelf space and promotion at retail
level enhances awareness
11
22
Key HK Intervention Point
Market Saturation — SA as a one-off
destination
Word of mouthas a major informationsource for consumers
Reasonable Levels ofReasonable Levels ofAwarenessAwareness
Low preference and target market saturation, rather than scale, are the key barriers to further increasing demand for SA leisure travel
Variables Added to Explain HK Market
Number of people already
been to SA
Number of people already
been to SA
Build strong brand
Introduce new products
Unlike China, where scale is a major issue, SA products are widely accessible in the Hong Kong market but suffer from market fatigue
Hong KongChannel: South African Product in the Market
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 132
For SAFor SAFor SA
� Scale has been achieved
� Awareness does not necessarily translate into preference
� Low product variety leads to market saturation and low repeat travel
� Scale has been achieved
� Awareness does not necessarily translate into preference
� Low product variety leads to market saturation and low repeat travel
Hong KongChannel: Several Core Themes Emerge
Market DynamicsMarket DynamicsMarket Dynamics
� As a mature market, the Hong Kong outbound travel channel is highly consolidated and developed
� Competition is fierce as it is easy for consumers to compare and switch among different retailers and wholesale products
� Product availability and front-line staff ability to sell at the retail level are key to generating sales
� Product variety helps attract new consumer segments and create repeat travel
� As a mature market, the Hong Kong outbound travel channel is highly consolidated and developed
� Competition is fierce as it is easy for consumers to compare and switch among different retailers and wholesale products
� Product availability and front-line staff ability to sell at the retail level are key to generating sales
� Product variety helps attract new consumer segments and create repeat travel
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 133
Hong KongTarget Market: The relevant market is just under one million people
54,290 56,297 59,831 56,50863,899 66,513
4,6114,799
4,7094,428
5,0045,787
0
20,000
40,000
60,000
80,000
2000 2001 2002 2003 2004 2005
Other
ChinaandMacau
Hong Kong Resident Departures, 2000–2005
Thou
sand
s
Total PopulationHong Kong
Total Adult Population
Total Leisure Traveller
Total Out of Asia Traveller
X44.6%*
X35.2%*
* Of total adult population Source: Tourism Australia, Hong Kong Market Share 2005, 2006; U.S. Department of Commerce, Hong Kong Travel and Tourism 2001; Monitor Analysis
Based on the HK departure record, annual outbound travel outside of China and Macau reached 5.8M in 2005
6,865,600
5,422,300
2,418,300
851,000
72,300
58,90161,096
64,54060,936
68,903
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 134
Hong KongTarget Market: Travel Behaviour
* High UFR and less group package available after 9/11 Source: Monitor Trade Interviews; Monitor Analysis
50%60%
70%
90%95%
50%40%
30%
10%5%
0%
50%
100%
Asia U.S. andCanada*
Europe,Australia /
New Zealand
SA NewDestinations
FIT and Non-groupPackageTour
GroupPackageTour
Group Package vs. FIT andNon-group Package Tours
� Like group package tour because they are more convenient and cheaper
� Particularly for further, less familiar destinations
� For SA, group tour remains the predominant form of leisure travel because . . .– With limited repeat travel,
most travellers travel to SA for the first time
– Many HK people perceive SA to be relatively unsafe, particularly Johannesburg
� Like group package tour because they are more convenient and cheaper
� Particularly for further, less familiar destinations
� For SA, group tour remains the predominant form of leisure travel because . . .– With limited repeat travel,
most travellers travel to SA for the first time
– Many HK people perceive SA to be relatively unsafe, particularly Johannesburg
Percent of Leisure
PAX
HK travellers prefer group package tours, particularly for further, less familiar destinations
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 135
Hong KongTarget Market: Destinations Visited
1 Excluding China, Macau and “Other”Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006
Destinations1 Visited, 2005
Japan Singapore Philippines Indonesia Pakistan / India / Sri
Lanka
USA New Zealand UK Other Europe
Middle East Italy
578555
367
234 229197
9163
46
224205
142
301
238
45 45 35 28 13 13
615
0
100
200
300
400
500
600
700
Thailand Taiwan SouthKorea
Malaysia OtherSoutheast
Asia
Australia Canada South &Central
America
France Germany Switzerland
Asia Europe and Middle EastAmericas, Australia and New Zealand
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 136
Hong KongTarget Market: Travel Spend
International Tourism Expenditure, 2004 (U.S.$Bn) Tourism Expenditure per Capita, 2004 (U.S. $)
USA Japan Italy Nether-lands
Russian Federation
Source: WTO, World’s Top Tourism Spenders, 2005
Hong Kong
Hong Kong Austria Denmark Switzerland Netherlands
66
57
38
29
21 1916 16 16 14 13
71
0
10
20
30
40
50
60
70
80
Germany UK France China Canada Belgium
1,9361,842
1,4591,355 1,352 1,310
1,181 1,1311,007
2,197
0
500
1,000
1,500
2,000
2,500
Singapore Norway Belgium Ireland Sweden
Hong Kong travellers are high spenders
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 137
Total number of people in our marketTotal number of people in our market
Hong KongTarget Segment: The relevant market is just under one million people
Based on the HK departure record, annual outbound travel outside China and Macau reached 5.8MM in 2005
Source: HK Consumer Research 2001, Canadian Tourism Commission; Monitor Analysis
The population of Hong Kong is our starting point
Total Adult Population
Total Leisure Traveller
Total out of Asia Traveller
2.4M
0.9M
5.4M
6.9M
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 138
Hong KongTarget Segment: SA Traveller Profile — Demographics
� Relatively Young: 78% between 25–44 years old*
� Upper middle to high income*
� Professionals: 58% are professionals*
� More female than male**
� More likely to be married
� Frequent traveller
� Relatively Young: 78% between 25–44 years old*
� Upper middle to high income*
� Professionals: 58% are professionals*
� More female than male**
� More likely to be married
� Frequent traveller
* SA Exit Survey Results, Monitor Analysis** Channel Interview, Focus Group
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 139
Hong KongTarget Segment: Overview
General Characteristics� Avg. Age
– 18–34 30%– 35–54 35%– >55 19%
Social Characteristics� Monthly HH Income
(‘000s HK$)– <15 11%– 15–40 36%– 40–75 35%– >75 18%
Purchase Channels (Airfare)� TA 79%� Tour operator 9%� Airline 9%� Company 3%
DemographicsDemographics Purchasing BehaviourPurchasing Behaviour
Likelihood of Likelihood of Recommending SARecommending SA
Top 5 Sources (General)� Friends / Family / TA 78%� Newspaper Adverts 20%� Internet / Website 10%� TV Adverts 10%� Travel Magazines 7%
Information SourcesInformation Sources
Seasonality� Travel July 11%� Travel Aug 11%� Travel Feb 10%
Travel Partner� Significant other 44% � Friends 27%� Children 25%
Group Travel to SA� Open to 90%
Preference of Accommodation in SA� 5 star but can do 4 star 44%� At least 5 star
accommodation 19%� Friends / family 13%
Trip BehaviourTrip Behaviour
ActivitiesActivitiesPast / Future LH TravelPast / Future LH Travel
Information in red comes from Brand Tracking data
Hong Kong: Hong Kong: Market Market
OverviewOverview
Market Size
# of People 851k
PP Travel Spend per trip HK $15,900
Conversion Challenge
Awareness of SA 49%
Positivity towards SA 17%
Consideration 17%
Plans to go next18 months 5%
(Annualized: 3.33%)
Importance of Importance of Associations*****Associations*****
Main Trip Type (Top 5)� Tour no. of destinations 35%� Visit friends / relatives 20%� Trip to big city 12%� Enjoy nature / outdoors 8%� Culture / history trip 7%
Main Activities in SA (Top 5)� Restaurant, Theatre, Bar,
Nightclub 88%� Shopping 75%� Beach 40%� Visit natural attractions 39% � Wildlife / game viewing 38%
Would Recommend SA� Yes, definitely 87%� Yes, probably 8%� Possibly 2%� No, probably not 2%� No, definitely not 1%
Frequency of LH Vacations� Avg. # of LH vacations:
– 1 33%– 2–5 53%– >5 11%
Most Recent LH travel� U.S. 7%� Australia 6%� Canada 6%� UK 4%� Other Europe 3%
Future LH Travel Next 2 Years� Mainland U.S. 21%� Canada 15%� Australia 13%� Europe Tour 7%� UK 6%
Average of Score of 1–7� Safe and secure
environment 6.05� Rest and relaxation 5.84� Easy to get around 5.81� Value for money 5.80� Authentic travel
experience 5.73� Offers wide variety of
experiences 5.72� All year round travel 5.63� Welcoming People 5.61� Offers historical and
cultural experience 5.30� Offers natural wildlife
experience 4.98� Offers beach experience 4.93
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 140
Hong KongCurrent HK SA Traveller — Travel Behaviour*
� Experienced Traveller: 70% travelled long-haulone to three times in the past three years
� Travel with Group Package Tours: 70%travel with all inclusive packages
� Short Stay: 70% stay less than 7 nights
� Book within the last month before departure
– However, might not confirm by the tradeuntil 9–14 days prior to scheduled departuredate
� Highly price sensitive
� 76% travel to SA for the first time
� Experienced Traveller: 70% travelled long-haulone to three times in the past three years
� Travel with Group Package Tours: 70%travel with all inclusive packages
� Short Stay: 70% stay less than 7 nights
� Book within the last month before departure
– However, might not confirm by the tradeuntil 9–14 days prior to scheduled departuredate
� Highly price sensitive
� 76% travel to SA for the first time
Source: SA Exit Survey Results; Channel Interview; Focus Group; Monitor Analysis
We can identify certain behavioural attributes . . .
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 141
Hong KongCurrent HK SA Traveller — Seasonality of Travel
9%
7%
9%7%
8%8%
10%
8%
9%8%
9%9%
4%
8%
7%
9%
8%
10%
10%
8%
7%
6%
16%
6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
All Visitors Hong Kong
Percent of Travellers
Monthly
Source: Combined SAT Departure Survey Dataset, 2002–2005
Seasonality, 2005
SA benefits somewhat from the
summer peak season, which
coincides with the low season in SA
SA benefits somewhat from the
summer peak season, which
coincides with the low season in SA
The peak seasons for leisure travel are during Chinese New Year in February and the summer vacation
Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 142
Hong KongCurrent HK SA Traveller — Accommodation Preference in South Africa
19%
44%
8%
2%
13% 13%15%
17%
7%10%
19%
31%
0%
25%
50%
Prefer at Least 5 Star
Accommodation
Prefer 5 Star but Can Also Do 4 Star
Combination of 5, 4, and 3 Star Accommodation
(Save Money)
Prefer at Least 3 Star
Accommodation
Prefer Staying with Friends and /
or Family
Other
Hong Kong
All Visitors
Preference of Accommodation in SA
Sha
re o
f R
espo
nden
ts
Note: “HK” are visitors who live in HK with Chinese or HK nationalitySource: South African Tourism Exit Survey 2002 and 2003Q1–2
HK travellers have a strong preference to stay at high end hotels when in SA
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